Dakar, Senegal, March 24, 2022 – To help increase the supply of affordable housing in Senegal, where demand is growing rapidly, IFC and Senegal's Sovereign Wealth Fund, FONSIS, today signed a collaboration agreement to develop 20,000 homes in the country over the next 8-10 years through a dedicated vehicle created by FONSIS called Kajom Capital.
Under the agreement, IFC and FONSIS will acquire quality housing units from developers and make them available to lower-income earners through a rent-to-own scheme, helping thousands achieve their dream of owning their own home.
In Senegal, and elsewhere, developers are often reluctant to build lower-cost housing because potential buyers struggle to save or borrow the funds they need to make a down payment or purchase a house. The partnership between IFC and FONSIS will therefore address both supply and demand side challenges in Senegal's affordable housing market.
The project will kick-off by supporting the development of 200 houses in the region of Dakar. Roughly 120,000 people are expected to benefit directly in the long run from this initiative, which will also create numerous jobs locally in the construction industry.
"This rent-to-own vehicle, besides accelerating and fostering access to property, will also encourage Senegalese people to save and better plan for their retirement and children's education; it will offer investment opportunities to financial structures like insurances," said Papa Demba Diallo, CEO of FONSIS.
"Increasing access to quality affordable housing is critical to accelerating social well-being and economic development," said Makhtar Diop, IFC's Managing Director. "IFC is proud to partner with FONSIS to help address Senegal's affordable housing supply shortage through an innovative, private-sector led solution."
Rapid population growth in Dakar is straining the housing supply, especially for affordable housing. Dakar's housing deficit alone is estimated at 160,000—with a shortfall of 370,000 homes across all of Senegal.
The partnership between IFC and FONSIS directly supports the Government of Senegal's goal of ramping up the supply of affordable homes in the country by 100,000 units by 2025 through its "100,000 Logements" program.
The project is expected to attract an initial IFC investment of about $10 million over the medium term and more than $50 million over the long term. IFC and FONSIS expect to mobilize and attract other local and international institutional investors to support this development project.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
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About FONSIS
The Sovereign Fund for Strategic Investments (FONSIS) was created by Law 2012-34. FONSIS was set up as a limited liability company with capital fully owned by the State of Senegal. Through the creation of this Fund, Senegal decided to adopt a new vision of development and to implement its choice to use private equity for sustained economic growth, generating jobs and wealth. FONSIS brings together national and foreign investors on strategic projects, mainly those of the Plan for an Emerging Senegal (Senegal's policy framework for an emerging Senegal by 2035) while helping Senegalese companies become national champions. FONSIS invests directly or indirectly, either through thematic funds (SMEs, promotion of women, etc.) or sectoral funds (agriculture, health, etc.) that it puts in place.
At the end of December 2021, FONSIS' portfolio had 30 transactions carried out in Senegal in the following priority sectors: Health & Pharma, Agribusiness, Industry, Infrastructure & Transport, Renewable energies (with half of the solar production capacity installed in Senegal). FONSIS in the implementation of these projects has developed a leverage effect of 1 for 10. For each CFA franc contributed by the Sovereign Fund, its partners have invested 10 CFA Francs
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