Rwanda bond could ‘change terrain of diaspora investment’

AFFORD’s groundbreaking plans to raise $50m of investment for affordable housing in Rwanda moved a step closer to reality with a roundtable event focused on the development and launch of its RemitPlus Diaspora Bond.

Her Excellency Yamina Karitanyi, the Rwandan High Commissioner to the UK, was joined at the event by representatives from the United Nations, the UK Department for International Development (DFID) and investment, blended finance, housing, legal and PR specialists.

The meeting was held at the London offices of law firm Latham and Watkins, which is working with AFFORD to structure the RemitPlus Diaspora Bond.

The bond would initially raise $10m from the Rwandan diaspora and other investors to build 400 homes in Kigali. It is hoped the initiative will set a precedent for further bonds for housing in Rwanda and establish new trends in diaspora investment for development in Africa.

Project number one

There is a very limited precedence of disapora bonds, but AFFORD and its partners are confident there is a strong market, believing that members of the diaspora and other investors will buy the bond for both the financial return and for the social impact it could have on people and communities. Investment firms see investing alongside the diaspora as an ethical way to invest in frontier markets.

‘This is the entry point. This is project number one,’ said Gibril Faal, diaspora investment expert and former AFFORD chair. ‘We are hoping to change the terrain of diaspora investment.’

Ndidi Njoku, AFFORD chair, added: ‘This is a new form of development financing – a blended finance model that maximises diaspora investment. AFFORD is providing leadership for charities in moving into the impact investment and social enterprise space. We are looking for new investors and supporters in this journey.

‘[This is] an innovative and exciting project that is going to disrupt the market in a very positive way. Moving forward, AFFORD is seeking to engage impact investors, develop new opportunities and form new partnerships with the diaspora.’

Invest first, remit later

AFFORD executive director Onyekachi Wambu said: ‘Diaspora are an unrecognised force for investment. AFFORD has always tried to work with the grain of what the diaspora is doing.

‘Remittances are going to happen anyway. The concept is: invest first and remit later. It’s a major change in how you do a remittance. When it goes to a family member it does not have a further social impact.’

David White, chairman of Goldtree Holdings, said: ‘The biggest question is who’s going to buy it [this bond] and how to get them to buy it. One of the purposes of a fund like this is to create a precedent so people can look at it and see how it works.’

Mr Wambu said the development of the RemitPlus Diaspora Bond was being ‘enabled by partnership’ and the concept was founded on the basis that many investors ‘are as interested in development as they are in financial return’.

Rwandan High Commissioner Yamina Karitanyi added: ‘I’ve been very impressed with how the group has overcome all the challenges and addressed practical challenges on the ground.’

Rwanda faces an acute housing crisis. Rapid urbanisation drives an urgent requirement for new housing units, with demand of 31,000 units against 1,000 new constructions just in the capital city, Kigali.

A huge factor in the shortage of housing supply is the ongoing challenge of affordability, with average waged citizens priced out of the traditional market, and the real estate and construction sector of small and medium-sized enterprises (SMEs) unable to access the finance to solve the problems through the market.

Unlocking new private capital is one of the greatest challenges for governments, philanthropists, and private investors.  

Affordable housing timebomb

Olu Olanrewaju, associate director at specialist housing consultants Altair, which is supporting the AFFORD initiative, explained that a lack of large scale affordable housing and an increase in slum development is one of the ‘ticking timebombs’ in Africa. ‘We have been working to address challenges in affordable housing,’ he added.

‘If this can be done and achieved, it can be scaled for the region and we talk about half a billion. When you talk about it like that, it’s not a small market. If you can crack this bond it will open up bigger markets.’

In closing the roundtable, Ndidi Njoku said: ‘We have got to get this pilot right. This is about housing and a vision for affordable housing that will start to address a huge and pressing need in African countries.’

Global Entrepreneurship Week

The RemitPlus Diaspora Bond roundtable event was part of AFFORD’s participation in Global Entrepreneurship Week (November 18-24), which sees tens of thousands of events, activities and competitions held each November to inspire millions to explore their potential as an entrepreneur, connect and collaborate.

For more information about the RemitPlus Rwanda Diaspora Bond visit our website here and for more on blended finance and diaspora investment read our policy brief.

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