Almost every country in southern Africa suffers from a backlog of housing and especially low-income housing. In addition, in most countries, only a small proportion of the population typically has access to traditional sources of housing finance like mortgage loans. A recurrent problem is a shortage of capital for the construction of new housing stock and for capitalizing a healthy housing finance market, as well as a shortage of financing products that suit the circumstances of poorer people. However, what is also true of most southern African countries is that each, to a greater or lesser degree, has a retirement fund industry and that retirement funds are an effective and established means of aggregating large pools of long-term savings and of directing investment into the economy. The question at the heart of this paper is whether and how retirement funds might play a greater role in funding the construction of housing, particularly low housing, and in opening up access to housing finance products. income The Fin Mark Trust commissioned Genesis Analytics to consider this question in southern Africa with an emphasis on four countries, namely, South Africa, Namibia, Zambia and Botswana. The purpose of the paper is to locate all of the various models that connect pension funds to housing construction and housing finance in some way, to discuss the pros and cons of these models, and to capture lessons that might be shared with other regulators, policymakers and donors throughout the continent.

This study shows at a general level is that despite the serious shortage of housing and poor access to housing finance in southern Africa and although pension fund assets are not insignificant, pension funds are still generally poorly connected in the minds of trustees, asset managers and policymakers to the pursuit of better housing conditions. Little serious thought has to date gone into linking pension assets and housing. This is borne out by the acute lack of research on the topic. Additional research, especially in other parts of the continent where interesting models may be in play, will therefore be essential. The pension/housing models in use in southern Africa can be divided into two groups: 1. 2. Those that assist a pension fund member with the finance of a home and for the purchase or construction of those to do with the investment strategy of pension funds in housing investments (investment models). The two groups are not mutually exclusive. End– related user finance is helpful for small home improvement loans and for assisting with financing options at the level of the individual. The investment models are useful for unleashing large capital flows into housing construction and the wholesale provision of housing finance across the economy.