Katherine Cox
Research & Development Impact Manager at TUHF21
For the past 21 years, the TUHF Group has made a real impact through inclusive development finance in the affordable housing sector. Katherine Cox, Research & Development Impact Manager at TUHF21, reflects on how the organisation has embraced Environment, Social, and Governance (ESG) in its development finance practice.
In summary, TUHF has always prioritised the S in ESG as a critical impact area in South Africa. With that in mind, TUHF’s projects and, by implication, its finances have been and remain inherently green. Addressing governance, as a non-bank financial services company, TUHF is subject to regulation by the NCR and the NCA, subscribes to the Financial Sector Charter and is bound by regulations such as the Companies Act.
“Focusing on Social Impact and improving livelihoods, our approach begins with investing locally in ordinary South African women and men to effect inclusive economic development. We do this by increasing urban land values, creating jobs and economic multipliers by upgrading underutilised and decayed buildings, increasing residential density, and delivering quality affordable housing. This, in turn, increases the number of residents with access to affordable housing in inner-city, in-city and township neighbourhoods,” says Cox.
This approach empowers SME property entrepreneurs while providing well-located, affordable housing for tenants. In turn, these tenants support various businesses in their neighbourhoods by purchasing goods and services, creating economic multipliers in the local economy. Research conducted by the Centre for Affordable Housing Finance in Africa (CAHF) shows that the housing value chain has a direct multiplier of approximately R2.58 for every R1 spent.
“TUHF clients are often talented entrepreneurs overlooked by traditional financial institutions and denied access to funding,” says Cox. “TUHF provides access to inclusive finance for individuals/SMEs from previously disadvantaged backgrounds or who wish to invest in areas with a higher perceived risk but demonstrate the potential to run successful rental housing businesses. Their projects have significant positive social impact.”
This process starts when TUHF-funded projects enter the construction phase. TUHF clients often source contractors from within the communities where the projects are constructed, stimulating local economies. Job creation with associated economic and social impact is further strengthened over the projects’ lifecycle through property management, security and maintenance services on completed projects. Through the Intuthuko Equity Fund and uMaStandi alone, TUHF has created 753 permanent and 1,265 short-term jobs over the past six years,” says Cox.
“Driving sustainability and the critical need to mitigate the negative effects of climate change, TUHF’s projects are inherently green. In addition to retaining embodied carbon in existing refurbished buildings and financing projects in Brownfields urban areas, we encourage our clients to incorporate energy and water-efficient solutions into their projects. This re-use, re-development and resource efficiency contribute to the circular economy and responsible, sustainable development. In addition, green building infrastructure assists in reducing overpriced utility costs for the affordable housing market and ensures the buildings’ efficiency over the long term,” says Cox.
The impact of TUHF’s green building can be measured through the reduction of operational carbon (due to green building and location), the retention of embodied carbon and energy and water efficiency. Reducing operational carbon is important due to South Africa’s reliance on coal-fired power generation. Water efficiency is also now critically important going forward.
As TUHF-funded affordable housing is close to places of economic opportunity and other important urban amenities,residents travel shorter distances, thereby reducing emissions. They can access public transportation and spend less time and money on transport costs. Well-located affordable housing supports TUHF’s strategic imperatives of urban densification and combatting urban sprawl.
“During this financial year, TUHF delivered approximately 3,043 affordable housing units across inner cities, in-city neighbourhoods and townships. This translates into housing for more than 9,130 people with access to services and amenities in well-located urban areas,” says Cox.
To manage and ensure that ESG requirements are met, TUHF, with technical assistance from Proparco and the IFC,is implementing an Environmental and Social Governance System. This tool will enable TUHF to identify and manage Environmental and Social risk across the projects we finance and ensure accurate reporting.
TUHF will continue to realise its objectives of transformation, urban land reform, and driving financial inclusion for ordinary South Africans. This will be achieved by financing quality, sustainable, and affordable housing and continuing to improve urban livelihoods.