DEADLINE: 28TH NOVEMBER, 2022
REALL NIGERIA
REQUEST FOR PROPOSAL FOR UNDERSTANDING END USER HOUSING FINANCE IN ABUJA- NIGERIA FEASIBILITY STUDY
EXECUTIVE SUMMARY
Reall is an innovator and investor in climate-smart affordable housing. With the long-term support of the Swedish International Development Cooperation Agency (Sida), we are building a climate-smart affordable housing movement in urban Africa and Asia. Through this, we aim to accelerate the transition to net-zero while improving the lives of 100 million people on low incomes by 2030.
Nigeria is a priority market for Reall. We invest in credible Nigerian affordable housing delivery partners to demonstrate commercial viability and impact, while working with key stakeholders and players across the ecosystem to address underlying market barriers. A central ambition of our strategy in Nigeria is to deepen the availability of affordable housing finance solutions for low-income and informally employed borrowers, through evidencing of the key facilitators and barriers of uptake as well as documenting current demand for housing finance.
We would like to further progress our work in Nigeria and create relevant knowledge products to advance our strategy and provide useful information for our partners and the wider global community. To do this Reall plans to conduct research focused on understanding the key sources of finance for low-income households in Abuja, including the facilitators and barriers faced by those seeking finance for housing needs. This will include understanding the cost of traditional financing mechanisms, mapping the gaps in formal finance systems and understanding how these could be brought into the affordable housing sector. In addition, we would like to better understand attitudes towards financing for housing from the perspective of the end user as well as the current demands for different types of housing solutions, including incremental building.
As a result of this work, we would like to develop a set of recommendations focused on how to improve access and uptake of end-user housing finance for low-income households in Abuja.
Reall seeks to procure a Nigeria-based consultant with significant research experience, expert knowledge of the Nigerian housing finance sector and proven experience engaging with banks and other financial institutions. The primary objective is to better understand end-user finance for housing in the Nigerian context, with a focus on Abuja. This will entail identifying key challenges, market barriers and impediments to scale to inform appropriate solutions.
Work is expected to be contracted in December 2022, with deliverables over the following 3 months.
(1) BACKGROUND
(1.1) ABOUT REALL
Reall is an innovator and investor in climate-smart affordable housing in urban Africa and Asia. By spearheading an affordable housing movement, we aim to accelerate the transition to net-zero while improving the life chances of 100 million people in Africa and Asia by 2030.
The escalating global housing crisis is one of humanity’s greatest challenges. At least 1.2 billion people worldwide live in substandard housing, often lacking access to clean water or a decent toilet. With urban populations in Africa and Asia increasing rapidly, that figure could reach a staggering 3 billion by 2030.
While the challenge is huge, the opportunity is enormous. Climate-smart affordable housing is a doorway to realising 16 of the 17 UN Sustainable Development Goals – transforming the lives of people on low incomes while driving sustainable urbanisation, inclusive growth, gender equality and urban resilience. For every climate-smart affordable home we build, we create five new jobs while shaping the greener cities of tomorrow.
Climate-smart affordable housing represents an untapped £14 trillion global market. We prove this in practice by showcasing innovative solutions and models that work, such as our climate-smart homes for low-income households. We then crowd in the public and private sectors to take these to scale – sharing open access evidence and learnings so that the best ideas can be adapted and adopted widely.
We amplify impact further by tackling critical market bottlenecks. Through local partnerships, open access data, disruptive technologies, and strategic influencing, we broker changes in policy, regulation and finance that transform the market. These span the entire value chain, from influencing local planning policies and driving down construction costs, to leveraging green investment and enabling low-income families to access affordable mortgages for the first time ever in our target markets.
Headquartered in the UK and possessing over 30 years’ experience in the sector, Reall’s priority focus is in Kenya, Uganda, Nigeria, India, and Pakistan, with a wider footprint that includes Ghana, Mozambique, Nepal, the Philippines, and Zimbabwe.
(1.2) REALL’S STRATEGY IN NIGERIA
Reall has been operating and investing in affordable housing in Nigeria since 2014. The majority of this work to date has been in partnership with the Millard Fuller Foundation (MFF), delivering affordable urban or peri-urban homes for Nigerians in the bottom 40% of the income pyramid.
Reall also pursues an ambitious market transformation agenda in Nigeria, working with key stakeholders and ecosystem players to amplify our housing investments and resolve systemic bottlenecks. By 2025, Reall aims to:
Expand housing finance solutions to low-income borrowers, enabling previously excluded people to access affordable housing finance
Address critical governance, policy, standards, and regulatory barriers that impede the market
Resolve data and evidence gaps that inhibit more effective solutions for affordable housing and people on low incomes accessing decent housing
Build capacity for low-carbon buildings, renewable energy, and green finance in the affordable housing space
(1.3) ACCESS TO HOUSING FINANCE IN NIGERIA
There is currently an endemic lack of affordable housing in Nigeria. While the real estate market has been expanding rapidly, so has the population in need of housing, and demand massively outstrips supply. The Nigerian Central Bank has stated that there is a growing deficit of at least 22 million homes. In order to bridge this deficit, Nigeria would need to build one million homes per year over the next 20 years. Despite this, the public and private sector combined is estimated to be providing only 75,000 units per year.
Currently, most new housing construction focuses on high income households, leaving an acute shortage of decent shelter for low- and middle-income households. The government has made some efforts to counter this with the National Social Housing Program (NSHP) which plans to deliver 300,000 affordable homes across the country, creating at least 1.8 million jobs. It is expected that by December 2022, 25,000 homes will have been delivered across 11 states through this program.
Yet, significant gaps in affordable housing remain and the private sector also has a critical role to play. Access to affordable housing finance for low-income Nigerians is a significant barrier. Commercial banks and formal financial institutions have been historically reluctant to expand mortgage portfolios beyond higher-income clients as insecure security and little information about borrower capacity and willingness to pay has undermined trust and encouraged investors to look elsewhere.
As a result, there is therefore an urgent need to promote the use of existing and new instruments in the market that could be used by developers, private sector participants, governments, and other stakeholders to raise and deploy finance into the housing sector for those on low and middle incomes.
(2) OBJECTIVES
Reall seeks to procure a Nigeria-based consultant with expert knowledge of the Nigerian housing finance sector and proven experience engaging with banks and financial institutions and/or with financial inclusion and innovative technologies.
The primary objectives of this work are to:
(i) Identify and analyse key sources of housing finance for low-income households in Abuja and understand key enablers and barriers encountered by housing finance institutions (banks, cooperative societies, microfinance providers) when lending affordable housing finance
(ii) Understand end user attitudes towards housing finance in Abuja and explore the demand for different types of housing solutions
(iii) Identify and evaluate housing finance institutions (banks, cooperative societies, microfinance providers) that are willing to collaborate with Reall to jointly explore and develop new solutions to develop new solutions to provide housing finance, and green finance, to low-income clients
(iv) Broker introductions for Reall with senior personnel at housing finance institutions identified in objectives above
(3) Scope of Work
The overarching purpose of this consultancy is to firstly present research findings on the key sources of housing finance for low-income households in Abuja, as well as end-user attitudes towards these options. Secondly, the consultant will be expected to identify and evaluate housing finance institutions (banks, cooperative societies, microfinance providers) that are willing to work with Reall. The purpose of this collaboration is to jointly explore challenges of lending affordable housing finance to underserved customers and find new solutions.
The procured consultant must therefore engage directly with housing finance institutions, preferably with senior personnel and staff.
Once identified, the consultant will be expected to evaluate the suitability of shortlisted institutions. Reall anticipates this evaluation exercise may include current lending practices and processes, appetite for lending to low-income and informally customers, and any required incentives to do so. However, we invite applicants to propose a set of relevant criteria to be evaluated against in their response to this Terms of Reference. The winning consultant will be expected to refine and expand upon these criteria further during the inception stage of the work.
It is expected that this evaluation exercise will make a clear recommendation for partnership with at least one suitable housing finance institution (bank, cooperative society, microfinance provider), along with a brokering of introductions for Reall with relevant senior staff.
Key outputs will consist of an inception report, a comprehensive written report and a concise five-page summary report of key findings and recommendations. These reports must be concise and accessible (maximum 25-30 pages each), augmented with relevant secondary research and data. In addition to these deliverables, the consultant will also have regular check-ins with Reall to report back on findings and learnings as the work develops.
(5) TIMINGS
Submissions are to be received by Reall by 9am GMT on 28th November 2022. From point of contracting, Reall expects this project to be concluded in 3 months. Dates agreed in the contract itself will supersede those in this Terms of Reference.
While there is some room for adjustment in terms of intermediary milestones, those for final outputs are fixed. If the applicant consultant feels that the proposed timeframe is insufficient, the proposed workplan should explain the reasoning.
Date Milestone Early December Consultancy contracted 30 days post-contracting Inception Report received, presentation to Reall on methodology and learnings so far 60 days post-contracting Draft of written reports and presentation to Reall learnings and findings so far 90 days post-contracting Final reports received, presentation to Reall on findings Brokering of introductions for Reall with senior staff at identified financial institution(s) Contract completed
Submissions should be made to info@reall.net by 9am GMT on 28th November 2022 and should include “Nigeria Feasibility Study” in the subject header. Any questions can also be sent to the same e-mail address. We will answer questions from prospective suppliers up to seven days before the due date of submission and will publish any relevant updates or further information to our website no later than seven days before submissions are due.
