Alternative Finance for Construction in Africa?

Published: Tuesday, June 27th, 2017 by Lenora

Finance and investment in housing continue to emerge as outlier themes in international development finance and impact investment. Our friends at ImpactAlpha often cover impact investment and other innovation in affordable housing, both in the US and emerging markets.

Africa's Alternative Finance Heatmap

Africa’s Alternative Finance Heatmap by AlliedCrowds

Reported by ImpactAlpha, a summary of alternative finance trends in Africa, Developing World Alternative Finance, by Allied Crowds, highlights construction as the number one sector to receive alternative investment in Africa with 691 capital providers. South Africa is unsurprisingly the largest in terms of capital providers with 360 capital providers. 92% of alternative finance in Africa comes from venture capital (38%), impact investors (30%) and public/semi-public finance sources (24%).

Although AlliedCrowds clearly has an interest in impact through finance, alternative finance for construction could mean a range of activities, both strictly speaking for social and environmental impact and not. Construction finance could hypothetically be for commercial and retail as much as road infrastructure and municipal services. It’s difficult to imagine that it means finance to lower and moderate income housing given clearly constrained circumstances for housing developers and entrepreneurs.

In addition, the AlliedCrowds methodology is driven by finance provider disclosure rather than capital deployed. While its methodology may identify capital providers who consider construction a target sector, it’s not necessarily indicative of actual commitments.