The U.S. Government is bringing a $300 million investment opportunity to the U.S. market.
Through the Prosper Africa Build Together Campaign, the U.S. Government is strengthening private sector ties between African nations and the United States, spurring investment, and partnering with people across the African continent to realize a shared vision for a better future.
The U.S. International Development Finance Corporation (DFC) and the U.S. Agency for International Development (USAID) are supporting a pioneering investment vehicle to enable American investors to capitalize on West Africa’s rapidly growing housing sector.
These U.S. Government agencies are helping a West African company secure more than $300 million in private capital, including investments from pension funds and mutual funds. This transaction is a win-win: it helps American investors access new opportunities and provides an avenue for people in West Africa to build generational wealth through homeownership.
Caisse Régionale de Refinancement Hypothécaire (CRRH) – a West African mortgage refinancing company headquartered in Togo – will issue a bond to raise $256 million in the U.S. market alongside $64 million in West Africa. The DFC is providing a guarantee to reduce risk for investors, enabling them to access an untapped market while meeting their risk profiles.
Approximately 110 million people live in the eight countries (Benin, Burkina Faso, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo) that make up the West African Economic and Monetary Union (WAEMU). While there is demand for about 800,000 new housing units annually, WAEMU banks issue only 15,000 new mortgages each year. To meet the West Africa region’s surging demand for affordable housing, CRRH needs to raise $800 million over the next five years.
Homeownership is a major engine of wealth creation and a means to enhance the livelihood of individuals. However, homeownership is a challenge in West Africa, often requiring large down payments or full upfront payments from interested buyers.
American institutional investors, such as pension funds, mutual funds, and insurance companies, are facing low yields in U.S. markets. African capital markets offer institutional investors the higher yields they need, but with higher risks – both real and perceived. Support and risk mitigation from the U.S. Government, through the Prosper Africa initiative, makes it possible for investors to access these new opportunities.
This bond issuance will enable local banks to issue more mortgages with better rates and longer repayment timelines, making homeownership a reality for more families in West Africa. Long-term capital is in short supply in Africa, yet readily available in the United States, especially from institutional investors that invest over long periods of time.
Here are the organizations involved in this announcement and their roles:
- CRRH: Issue a bond to raise $256 million in the U.S. market and $64 million in West Africa.
- Bank of America and Brean Capital: Act as placement agents, marketing the U.S. bond to investors.
- DFC: Support reduces risk for investors through a guarantee.
- USAID: Helped to identify and structure this deal, decreasing the transaction costs of this pioneering transaction. Front-runner transactions can be more costly at first, but they pave the way for replication and scale.
- MiDA Advisors and CrossBoundary: Provided technical assistance to CRRH with funding from USAID’s INVEST initiative.
Prosper Africa is a U.S. Government initiative that connects U.S. and African businesses and investors with new trade and investment opportunities with the mission of driving sustainable growth across the continent, supporting economic recovery at home and creating jobs across all our nations as we Build Back Better Together.