YIMBY goes global? Unlocking Africa’s housing markets

Africa needs to house nearly a billion new urban residents by 2050. Who's going to build it – and how will it be paid for?

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Every generation has some version of a ‘build or be priced out’ story. In cities like Los Angeles, San Francisco and New York, jobs and opportunity have piled in, and housing has not kept up. In response to this, the YIMBY movement – “Yes In My Back Yard” – has started to become a real political force in some parts of the world.

But this story is playing out across the world, and in some regions, the wave of residents arriving in cities dwarfs that of US cities. Where entire neighbourhoods that don’t exist yet will have to be built from scratch. And where being pro-housing is far more complex, touching on land, roads, water, electricity, tenure, finance, construction systems, and the basic institutional plumbing that makes building at scale possible.

Over the next 25 years, Africa is expected to add close to a billion new urban residents. That’s the largest wave of urban population growth the world has ever seen. A defining question of this century is therefore: will Africa’s cities be able to absorb this growth in a way that creates prosperity, or will high housing and infrastructure costs choke off the benefits of urbanisation?

In this episode of Ideas in Development, we are joined by Kecia Rust, executive director and founder of the Centre for Affordable Housing Finance in Africa (CAHF), to discuss the full housing chain in Africa – from land and finance to construction and rental markets – and what it would take for African cities to absorb nearly a billion new residents over the next quarter century.

Africa’s housing chain and its weakest links

Housing delivery is not a single act but a chain of interdependent links. Kecia walks through two intersecting sequences. The horizontal chain runs from land and tenure, through infrastructure, construction, and on to management and maintenance. The vertical chain is finance: every link in the delivery process has to be paid for, and the financial products that make this possible – construction finance, mortgage finance, housing finance (mortgages and/or micro-mortgages) – depend in turn on capital markets and institutional investors higher up.

The chain is only as strong as its weakest link. And in African cities, Kecia argues that the most binding constraint cutting across every link is local government. Municipalities control tenure processes, approvals, bulk infrastructure connections, and regulatory compliance. When they lack the capacity to perform these functions, which is common, the entire system slows down, costs rise, and development spills into informality.

A housing development in Kenya is an illustrative example. After receiving municipal approval, the developer waited for the promised electricity connection, but it never came. They had to sacrifice one of their 20 planned plots to build their own substation and water treatment plant, meaning the cost of the entire project now had to be recovered from 19 houses instead of 20, pushing prices up for buyers.

Informality as opportunity, not just failure

This is where Kecia parts ways with a common policy instinct. Informality in housing is often treated as purely negative, equated with slums and deprivation, and seen as something to be eradicated. Kecia sees it differently.

In Nairobi’s Pipeline area, informal developers have built eight-storey tenement walk-ups without government approval. The government is now pursuing regularisation, which is reasonable.

“That housing is serving a target market that no one else in Kenya is serving.”

It sits in a price bracket above informal settlements but below anything the formal market or government subsidy programmes deliver, and it is in a prime location.

The same logic applies to South Africa’s backyard rental market, where homeowners build small rental units on their properties. This sector delivers more housing than any other form of supply in the country, and it creates small-business income for low-income homeowners who would not otherwise be on the supply side of the market.

Kecia cautions against romanticising informality, but emphasises that the energy, capacity, and market responsiveness within the informal sector represent an enormous opportunity. The policy question should not be how to eliminate informality but how to work with it: regulate what matters for safety, reduce barriers to entry, and recognise what is already working.

Mortgages, micro-mortgages, and the missing middle

Mortgages are a powerful instrument, enabling people to buy a house before they can pay for it outright, who then repay over subsequent years while living in the property. But they depend on conditions that are often absent in African markets: clear title, functioning foreclosure systems, formal employment, and affordable interest rates.

In many African economies, base interest rates are so high that a long-term mortgage becomes the equivalent of buying a house on a credit card. In these circumstances, this instrument often doesn’t make sense, so shorter-term ‘microloans’ and incremental building is, in practice, how most housing on the continent is already built.

The real frontier is therefore the micro-mortgage: loans of under $10,000, with shorter tenors, that can serve the vast majority of the market that conventional mortgage products cannot reach. India is making progress here, but in Africa the space remains almost empty. A global fund set up to invest in housing micro-lenders could find only one eligible institution on the entire continent.

“People earn their money differently now than when that mortgage was first invented.”

There are bright spots. In South Africa, First National Bank has started targeting the resale market for government-subsidised housing – properties now entering a second generation of ownership at prices that suit a micro-mortgage product of $10,000 to $15,000. A company called Empowa is using blockchain technology to recognise the irregular income patterns of borrowers who earn from multiple sources, enabling instalment-sale agreements that a conventional bank would not touch.

Rental markets: The unsung engine of African housing

While micro-mortgages are the frontier for ownership, rental markets are the under-appreciated backbone of African housing systems. In Kenya, ~90% of renters rent from individual landlords, not institutions. In South Africa, backyard rental is the single largest source of new housing supply.

Rental serves multiple functions. It is the entry point to city life for new migrants. It provides income to low-income homeowners who become small-scale landlords. And it creates the liquidity that makes the broader housing market function, as people need to be able to move in and out of properties at different life stages.

Kecia also makes a compelling environmental case. African inner cities are full of derelict or abandoned buildings that represent enormous untapped potential. In Johannesburg, a mortgage lender called Tuff has carved out a niche providing mortgages to landlord-entrepreneurs who buy, refurbish, and rent out units in neglected inner-city buildings.

“The greenest housing we’ve got is the housing that’s already built because it doesn’t add any more carbon.”

What YIMBY actually means in Africa

The YIMBY movement in high-income cities essentially boils down to legalising density and reducing veto points. Translated to Africa, the spirit is similar but the specifics differ enormously. The majority of the population is already locked out of formal housing systems, so the question is not overcoming nimbyism among wealthy incumbents, but making the formal system recognise and work with the enormous capacity that already exists outside it.

Kecia points to Cape Town as an example. A new bylaw recognises micro-builders as legitimate participants in the housing delivery system and classifies backyard rental as a formal house type.

“All it took was a bylaw. They’re still doing it the same way but now they can actually be regulated as they exist and then they can be counted.”

The city also set up a building control office in Khayelitsha, a low-income township, which became the highest-performing office by volume of plans processed.

Other bright spots include Development Workshop Namibia, which formalises site-and-service delivery so that households can build incrementally on serviced plots; South Africa’s growing multifamily residential rental sector, which is creating a new asset class that attracts institutional investors to moderate-income housing; and Nigeria’s Family Homes Fund, which has developed a suite of instruments addressing different links in the housing chain simultaneously.

What a pro-housing government should do

If a mayor came to Kecia and said they wanted to be a YIMBY government, her answer would be direct: make it easy. Finance is a constraint, but it is a constraint largely because risk and cost are so high. If local governments streamlined approvals, delivered the bulk infrastructure they promised, and reduced the regulatory friction that inflates development timelines, private capital would follow.

“The only reason that finance is a binding constraint right now is because it’s so expensive because the risks are so high.”

Beyond reducing friction, governments need to work across the full housing finance chain. That means getting macroeconomic policy right – high treasury bill rates crowd out mortgage lending, so there is a long-term growth case for keeping interest rates low enough to support a functioning housing market. Creating regulatory space for micro-mortgages is also key. As is supporting finance for those constructing housing, not just end-user finance. It also means finding ways to bring pension funds and institutional investors into the housing space by managing the risks that currently keep them out.

Above all, this requires recognising the breadth of supply that already exists.

“from a mother whose kids have gone to school and now she can offer rental accommodation… all the way through to somebody who can go and buy a block of flats.”

African housing markets are far more dynamic than policy frameworks give them credit for. The task is not to try and replace that dynamism with top-down delivery, but to create the conditions in which it can operate safely, at scale, and to the benefit of the majority.