Innovative Approach to Affordable Housing Funding by Development Bank of Namibia
Development Bank of Namibia (DBN) collaborates with local authorities and developers to provide serviced land for affordable housing, managing risks through structured partnerships. The concept promotes access to finance for local authorities, supports land and housing delivery, and ensures ownership retention. The Nkurenkuru Project exemplifies DBN's tripartite joint venture model in executing housing projects with shared responsibilities.
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Presentation Transcript
Unlocking Affordable Housing DBNs Approach & Other Infrastructure and Utilities Funding
About Development Bank of Namibia o Established 2004 (Development Bank of Namibia Act) o Government of Namibia is sole shareholder o Large enterprises, infrastructure & SMEs o Pioneers new forms of lending o Develops financial markets o Transformative lending to address persistent economic issues o More information www.dbn.com.na
Value Proposition o A win-win proposal to deliver serviced land for affordable housing through an SPV with the local authority, developer & DBN; o Local authority avails land but assumes no risk, neither balance sheet nor project; o DBN manages risk through ring-fenced structure by appointing suitably qualified Developer, ensuring close Monitoring & Evaluation on performance; o Developer & Contractor benefit while ensuring housing solution remains affordable; o DBN finances the land servicing, while top structures financed by commercial banks (Case Study specific can be both);
High Level Concept o Promote access to finance for Local Authorities; o Support land (and housing) delivery; o Local Authorities maintain ownership of the land o Land not transferred = risk free concept o DBN bears the financial risk Risk measured with due diligence and market feasibility o Mandates o social progression o economic transformation; o Local Authority requires a Ministerial Approval and Council Resolution prior to agreement with DBN
The Nkurenkuru Project: o Executed via a tripartite JV arrangement between Developer, DBN and Local Authority under a Development Agreement o Undertaken on project finance basis o DBN lends to an SPV, while non-recourse to shareholders of the SPV TRIPARTITE DEVELOPMENT AGREEMENT Define Deliverables DBN Council Finance Development Appoint PM Avail Land SPV Manage Deliverables Developer RING-FENCED RISK & DEBT
The Nkurenkuru Project: o DBN partnered with Nkurenkuru Town Council in 2017 o Provision of bulk infrastructure (servicing) for 377 plots (mixed zonings) o Phase 1 project cost N$ 53.4 million (including VAT), based on BoQ prepared by engineers; o Developer also responsible for contract administration, procurement and supervision and alienation of sales (with assistance from NTC and estate agents) o DBN to recover capital and interest from sale receipts o Servicing nearing completion, while sales for top structure starting
Project Preparation Funding: o Local Authority obtains approval to seek PPF from DBN from Council and later the Line Ministry. o DBN enters into a PPF agreement with the LA for DBN to fund the Feasibility study which covers the costing and financial model. o DBN hires a Transaction Advisor/ Developer through a procurement process to assist with the feasibility study. o This is a recoverable grant.
Implementation: risk mitigation & legal o Roles and responsibilities articulated in Development Agreement (risk allocation) o Agreement vetted by external legal counsel o Feasibility study financed through Project Preparation Fund o Financial viability established prior to DBN project finance approval
Implementation: technical o DBN appoints the Developer via a procurement process; o Project Steering Committee established to oversee the project (with representatives from each participating party); o Project Team - chaired by the Project Manager who reports directly to DBN; o Project Manager coordinates between the Developer and Town Council; o Project Team meets once a month and from the time when necessary; o Project Team discuss progress, sales etc; o Project Team incentivised through performance payments;
Implementation: sales o DBN accommodates both plot only sales as well as plot & plans sales, with plot & plan to be financed by commercial banks; o Project Manager will enlist the services of Real Estate Agents in order to ensure timely sales and transfers of properties, in accordance to projected cash flow; o Sales will be guaranteed through upset prices and need to be within the market range as recommended by the Town Council;
Other Infrastructure and Utilities Funding o Product: Project Finance & Corporate Finance o Revenue: Ringfenced from the project being financed o Grace period: Max 36 months, depending on the project s needs o Security: Cession of the Escrow Account in which revenue from the project being funded will be deposited. Cash reserve to be built up. Cession over Debtors/ Receivables (from the funded project).
Development Impact o Development impact o job creation o economic sector stimulation (construction) o delivery of land/housing; o Economic activity stimulated through the provision of business, industrial and general business erven; o The Town Council benefits = additional rates and taxes
Council Resolution Request partnership with DBN Land & housing is delivered Request utilization of PPF Construction commences What next? Appointment of consultant/devel oper Project funding is availed Steering committee Ministerial approval If project is found to be feasible due diligence commences Feasibility study
Land Servicing per Region 2005-2023 (Number of ervens) Land Servicing per Region 1,400.0 4,000 3,500 1,200.0 3,000 1,000.0 2,500 800.0 2,000 600.0 1,500 400.0 1,000 200.0 500 - - Erongo //Karas Kavango West Khomas Ohangwena Omusati Oshana Otjozondjupa Zambezi Grand Total N$ mil Number of Erven
DBN Housing sector funding per Region 2005-2023 (N$ million) DBN Housing sector funding per Region (N$ million) 450.0 417.7 400.0 350.0 300.0 N$ MILLION 250.0 200.0 152.6 150.0 108.0 100.0 73.4 47.4 50.0 28.0 22.0 11.6 9.0 2.4 - - - - -
