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TUHF has been operating as a commercial property financier for 21-years, providing mortgage loans to property entrepreneurs who are in the business of providing affordable rental housing in metropolitan areas across South Africa. As an active advocate for urban regeneration and densification, TUHF has made significant strides in fostering economic growth in South African cities and it now aims to address the growing demand for affordable housing in other countries on the African continent.

A Legacy of Transformation

Since its inception, TUHF has championed the principle of making a difference one neighbourhood, one city block, and one community at a time. This high-touch approach has driven substantial social and economic benefits, nurtured micro-economies and promoted mixed-use and mixed-income communities.

Our approach goes beyond providing access to finance for property SMEs, it’s about empowering entrepreneurs to provide decent and quality affordable housing which in turns creates engines of economic growth and social well-being. By fostering inclusive micro-economies, we create business opportunities that stimulate local economies.

Expanding Beyond Inner Cities

TUHF began its journey with a focus on urban regeneration within the inner-city of Johannesburg. Over time, TUHF’s strategy evolved to meet shifting market demands, extending services beyond traditional inner-city areas to in-city neighbourhoods adjacent to key urban nodes, including townships. Today, TUHF offers financing across select areas that meet urban densification and affordable housing requirements in most of South Africa’s major metros including Gauteng, Western Cape, Eastern Cape, KwaZulu Natal, Free State, and Northern Cape.

Supporting Township Development

Through our uMaStandi township offering, launched in 2015, we have also addressed the demand for well-located and affordable housing in South African townships. uMaStandi has attracted significant interest from property entrepreneurs, filling a niche market where commercial property finance is often overlooked.

Empowering Property Entrepreneurs

TUHF’s streetwise approach goes beyond financing, it nurtures a collaborative ecosystem for property entrepreneurs. We encourage property entrepreneurs to engage deeply with their target neighbourhoods, leveraging TUHF’s extensive market knowledge and support network.

A Vision for the Future

As TUHF embarks on its next chapter, its vision is clear: to create impact through scale, enhance market reach, and continue driving urban revitalisation through strategic regeneration and densification. With a track record of financing over 50,000 units and a loan book of over R3.9 billion, TUHF is poised to extend its impact further across South Africa and beyond.

By Paul Jackson, CEO, TUHF

Having been part of TUHF’s leadership for more than two decades, I feel compelled to address the critical issue of affordable housing investment, and particularly how it relates to urban sprawl. Our simple thesis is this: investing in affordable housing within cities is key to stimulating economic growth and producing positive fiscal outcomes.

Our research shows a staggering backlog of 3.7 million affordable housing units across cities and townships. This challenge is exacerbated by urban sprawl, which hinders economic growth and strains fiscal resources.

Urban densification, especially through residential investment, drives local economies, enhances access to business opportunities, and facilitates job creation by leveraging existing physical, social, and administrative infrastructure. This leads to an increase in property values and civil discipline in making service payments, which ultimately strengthens the local and national fiscus over time. With a medium-term perspective, the state benefits from a stronger fiscal foundation, which enables further investment in infrastructure and housing development.

Investing in Affordable Housing in Cities: A Strategic Imperative

Some municipalities may argue that constructing new developments on the outskirts is cost-effective, but in truth this only exacerbates urban sprawl and perpetuates cycles of economic exclusion and poverty. Research consistently shows that individuals residing on the periphery are more likely to remain marginalised, unemployed, and economically disadvantaged. Low-density housing far from city centres stifles opportunities for business development and job creation. Those who do find work often face exorbitant commuting costs, which limits their ability to pay essential expenses such as rates, taxes, and utility bills.

TUHF, therefore, stands by our conviction that affordable housing investment should not be relegated to the periphery of cities. While it may require higher upfront costs, the long-term benefits – such as stimulating local economic growth and positive fiscal impact – far outweigh the initial expense.

The Disconnect Between Policy and Practice

Urban densification is a stated policy priority at all levels of government. However, the gap between policy and practice remains wide.

“Cities are built the way they are financed”, Philip Bertrand aptly stated. Unfortunately, public finance practices remain a significant barrier to well-located affordable housing. Government budget allocations often operate in isolation, resulting in affordable housing developments – especially RDP housing – being pushed to the outskirts due to lower land costs. This perpetuates economic exclusion and places a long-term burden on the fiscus.

Public sector budgets must be realigned to prioritise infill and well-located housing projects. Though these investments may require higher initial allocations, the alternative exacerbates urban sprawl which necessitates new infrastructure and services. These are often not paid for due to indigence, adding to an already considerable fiscal burden.

By contrast, in-city housing developments yield long-term benefits, including increased property values, enhanced service payments, and broader economic growth. The cost of in-city development is more than justified when considering the medium-term fiscal and economic impacts.

The Role of Private Investment

The challenge of affordable housing is not one that government can tackle alone. Private investment, particularly from micro- and medium-scale property developers, is essential. TUHF, with its 21-year track record, has demonstrated that it is possible to achieve significant scale in affordable rental housing. We provide inclusive development finance to property entrepreneurs in cities and townships, supporting urban densification and the economic benefits that come with it.

TUHF and its subsidiaries stand out as one of the few institutions willing to provide inclusive development finance to property entrepreneurs in inner-cities, in-cities and townships, achieving significant scale in affordable rental housing. Our model – if taken seriously as a national investment strategy aiming for 10,000 small-scale (average 20-unit) projects per year – is not only achievable but also crucial for addressing the affordable housing backlog.

We recognise that addressing urban sprawl requires tailored approaches, as each region presents distinct opportunities and challenges. Our ‘feet-on-the-ground’ strategy allows us to leverage local insights, ensuring our developments meet the unique needs of the communities we serve. In-depth, local market knowledge is a critical factor we consider when assessing potential financing partners and enhances our specialised approach to risk. We have found that local market knowledge and lived experience are often more reliable indicators of success for the entrepreneurs we finance, compared to traditional metrics. This hands-on approach increases our ability to make sound, well-informed business decisions.

Equally importantly, our focus on impact investment enables ordinary South Africans to enter the property market and stimulates inclusive, local economic growth. Job creation, small enterprise creation and access to opportunity are some of the micro-economic impacts we measure over and above our affordable housing outcomes.

Challenges in Affordable Housing Investment

However, accessing finance for affordable rental housing is only the first hurdle. Rising operational costs – including rising property taxes and service charges which have outpaced inflation – create additional challenges for developers.

Corruption in many areas of local government, including the national and metro police services, issues surrounding cross-border trade and bribery, and the rise of “construction mafias”, complicate the investment landscape. Some municipalities are beginning to address these challenges, but the problem persists.

Additionally, non-payment in certain areas further complicates the fiscal landscape, as demonstrated by the way inner-city revenues are used to subsidise less financially stable regions. All these factors combine to have a negative impact on property investment and are leading to disinvestment.

A Net Positive for Inclusive Growth

Despite these obstacles, well-located affordable housing remains a fiscally prudent and economically inclusive investment. By refurbishing existing buildings in inner cities, developers can capitalise on existing infrastructure, reducing the costs associated with outlying developments. Quality, affordable housing boosts property values and stimulates economic activity, making urban densification a financially sound strategy.

Inclusive economic growth is fundamentally a micro-economic issue. The creation of small and medium enterprises and job opportunities happens at the neighbourhood level. When safe, decent affordable housing is available in a neighbourhood, economic activity is stimulated by virtue of the fact that tenants can pay their rent, access goods and services from local small businesses and engage in the amenities available. Access to affordable housing is crucial for unlocking wealth-generating opportunities and fostering livelihoods.

TUHF’s partnership with The Jobs Fund is a testament to our commitment. Together, we have successfully delivered 125 affordable housing projects, creating nearly 3,000 units and over 1,900 jobs. This collaboration demonstrates the transformative potential of well-located affordable housing for local economic development. Local economic development, in turn, stimulates the fiscus as people pay their rates, taxes (including VAT) and utilities.

In conclusion, addressing urban sprawl requires a strategic, long-term approach that prioritises in-city affordable housing. By leveraging existing infrastructure and focusing on urban densification, we can create a scalable, replicable, and sustainable environment for inclusive economic growth. And the net effect is fiscally positive. Affordable housing is not just a social need; it is an investment in the future of our cities and our country.

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TUHF Limited is proud to announce the launch of a major initiative in collaboration with the PROPARCO Crisis Emergency Response Technical Assistance Facility (CERTAF), funded by the European Union, aimed at further enhancing our ability to incorporate sustainability into our operations. As a financial institution with a long-standing commitment to empowering small property entrepreneurs and supporting the development of affordable housing, we are excited to take this step toward integrating a comprehensive Environmental and Social Management System (ESMS) into our business practices.

TUHF: A UNIQUE PLAYER IN SOUTH AFRICA’S AFFORDABLE HOUSING MARKET

For over 21 years, TUHF has been at the forefront of financing small property entrepreneurs in the acquisition, construction, and renovation of affordable rental housing in South Africa’s central urban areas. Our work is driven by the need to address the growing demand for housing among low- and middle-income communities, contributing to the development of sustainable and inclusive urban environments. To date, TUHF has helped finance over 50 000 housing units, 95% of which are considered affordable.

This focus on affordable housing aligns with South Africa’s national strategy, established in 1996, to provide greater access to housing for all, particularly in the democratic era. Our ability to fund these projects not only improves living conditions but also stimulates economic growth and revitalizes city centers across the country.

TECHNICAL ASSISTANCE FROM CERTAF: A KEY MILESTONE FOR TUHF’S FUTURE

In 2023, we signed a loan agreement with PROPARCO that included a commitment to integrate environmental and social considerations into our operations. With CERTAF’s support, we are now taking decisive steps to fulfill this commitment through the development and implementation of a tailored ESMS.

“We are extremely satisfied with the technical assistance provided by CERTAF. This collaboration is a crucial step in strengthening our commitment to environmental and social responsibility, ensuring that we can continue to provide affordable housing solutions while adhering to the highest standards of sustainability. The support we’ve received is not only helping us meet regulatory requirements but also enhances our ability to manage risks and serve our communities more effectively,” underlines Katherine Cox, Research & Development Impact Manager). 

A COMPREHENSIVE APPROACH TO ENVIRONMENTAL AND SOCIAL RESPONSIBILITY

The CERTAF technical assistance includes the design of an ESMS that will help us better identify, assess, and manage environmental and social risks. The ESMS framework covers a wide range of areas, including E&S policy, risk management procedures, due diligence tools, governance structures, and a grievance redress mechanism. TUHF considers women, vulnerable and disadvantaged groups as both end users and beneficiaries of our investments whether directly or indirectly, as such, the ESMS includes consideration to safeguard these groups in the communities in which we serve. CERTAF also provides capacity-building support to our team, ensuring that our staff is well-equipped to implement these systems and incorporate sustainability into their daily operations.

Mitigating Risks and Ensuring Long-term Sustainability

The CERTAF technical assistance (TA) initiative included a thorough gap analysis of TUHF’s existing governance frameworks, followed by the development of an action plan to close any gaps identified. The TA sought to address compliance risks, project delays, and challenges related to incorporating the ESMS into TUHF’s operations. Owing to CERTAF support, TUHF will be better positioned to mitigate environmental and social risks while continuing to provide critical financing to South Africa’s property entrepreneurs. More widely, it will help TUHF to become a more attractive longer term investment partner for PROPARCO and wider international financial institutions.

“We are confident that the ESMS framework will enhance TUHF’s operational sustainability, mitigating potential environmental and social risks, and will help them to become an even more attractive investment partner, while crucially creating a positive impact in the affordable housing sector in South Africa,” highlighted Alex Ingleson, CERTAF Senior Facility Manager.

Corroborating this, Kaidi Eddie-Obiakor, Senior ESG & Gender Expert under the CERTAF Facility, added that “Not only does TUHF’s unique business model set a standard for creating access to affordable housing, but by implementing ESG-aligned risk management mechanisms, TUHF adopts a more balanced approach to mainstreaming sustainability that moves beyond social impact to also effectively managing risks associated with its financing activities. This is an effective way for the company to establish long term relevance in the market”

LOOKING AHEAD

With CERTAF’s ongoing support, we look forward to continuing our mission of supporting property entrepreneurs while advancing our environmental and social impact. This partnership allows us to build a more resilient and sustainable business model that will benefit not only our institution but also the communities we serve.

For more information about:

• TUHF’s commitment to ESMS , please contact : lusandan@tuhf21.co.za; katherinec@tuhf21.co.za
• CERTAF, please contact: aing@niras.com; julie.carcaly@niras.fi
• PROPARCO: casalp@proparco.fr

“It is in your hands, to make a better world for all who live in it.” – Nelson Mandela

At the TUHF Group we are no strangers to taking impact-driven action. Our key objective is to be a good business – doing good by empowering entrepreneurs to transform the urban areas of South Africa which includes inner cities, in-cites and townships. Everything we do is underpinned by our inclusive growth and transformation objectives – and our services are purposefully designed to positively contribute to urban regeneration.

In the spirit of this and in remembrance of the life and legacy of former President Nelson Mandela, an icon of humanities in South Africa and worldwide, for our corporate initiative to observe Mandela Day this year we partnered with Jozi my Jozi, a movement that ignites hope and instils pride in our city, by participating in a city-wide clean-up initiative.

The theme for Mandela Day this year is aptly ‘It is still in our hands to combat poverty and inequity’, and under the banner and ethos of this theme our goal was to engage the Johannesburg community in creating a safe, clean environment while making volunteerism enjoyable. This initiative honours Nelson Mandela’s legacy by fostering positive change through the accumulative impact of individual action working together towards a united vision and goal, which directly aligns with our business mantra of Massive-Small, contributing to massive impact through accumulative small developments, one project and city block at a time.

A BIG THANK YOU to all our team members who participate in this incredible initiative. You all demonstrated the power of YOU and what can be achieved towards a greater goal when we pull our collective power to make an impact!