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Less than 3% of Africans qualify for mortgage financing, which explains why across the continent you see partially built structures dotted across the landscape, waiting for the next cash injection to finish the project.
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Most houses in Africa are built with cash. It’s a slow, grinding process and the houses are often sub-par when built.
It’s easier for informal sector workers to get unsecured lending than mortgage financing.
Is there a better way?
There’s a fascinating test case underway on the Nairobi Securities Exchange to raise housing finance for the poor, and it involves blockchain and a company called Empowa, which has come up with a novel rent-to-own model that even street hawkers and informal sector workers can afford.
Last year, Empowa struck a partnership with the exchange focused on developing a Cardano blockchain-based platform for tokenising real-world assets (RWAs), specifically to address affordable housing finance in Kenya and across Africa.
Listen/read:
Providing housing to the informal sector using the blockchain [2025]
Houses for Africa: How Empowa has changed the landscape [2024]
Using blockchain and the Airbnb model to unlock home ownership in Africa [2023]
Empowa CEO Glen Jordan explains why the bank mortgage model has had such little impact in Africa.
“A mortgage is fit for purpose for the formally employed,” he says.
“It doesn’t work for those who are outside of the formal employment sector, or for those who supplement their income through the informal sector.
“If you look at anybody across Africa, everybody’s got a hustle. Even if they’re employed, they’ve got a hustle. Everybody’s got a side hustle. Everybody’s supplementing their income.
“The challenge with that is that more than 85% of that is unrecorded. And therefore, when you’re trying to supply housing finance, the challenge is obviously that’s you can’t get visibility of that.
“That’s why we have such low figures of access to housing.
“The reality is that most people are paying a lot of money for housing,” he adds.
“Because of this challenge, the lack of supply has actually meant that people are paying a lot of money for poor quality housing. So the cost-to-quality ratio that you’re getting of what you’re actually paying for is ridiculous, to be honest.”
The blockchain is a perfect tool to fix this problem.
Empowa received some funding from Cardano that will help it scale its low-cost (and climate resilient) housing programmes in Africa, now operating in seven countries.
The blockchain is an immutable ledger operating in real time that tracks who’s making rental payments, who’s late with their payments and how much funds are received into the property pool.
It’s ironic, says Jordan, that the default risks recorded by Empowa are way lower than the non-performing mortgage loans reported by the banks (averaging 3-6%).
It demonstrates that there is a viable – and vibrant – market in the informal sector for quality housing.
What it requires is a non-traditional approach and the kind of cash flow visibility provided by the blockchain.
“The [risk of default] is significantly lower because we don’t have to go through that legal process because it’s a tenancy agreement, not a mortgage. The distribution of the capital is actually through the developers, not through the bank. So that’s the effect, if you like, that’s the distribution of the capital mechanism. So the ownership is retained [by Empowa until the loan is fully paid].
Read: Blockchain is quietly powering everyday life across Africa
“So we’re distributing the capital through the developer and if somebody doesn’t pay, like a normal lease agreement, you have a deposit and as soon as it’s acknowledged that they’re not paying, that process then starts to get that person out of that lease agreement and to get somebody else in. So ironically, the risk in this environment is not from the individual payer, but it’s actually in the pipeline.”
We need a Marshall Plan for SA’s townships
“Right from 1994, at the time of transition, I have said we need a Marshall Plan to invest into townships,” says Jordan.
“The challenge has been how to invest into townships in a way that meets the needs of investors, that provides returns. This has been the challenge.
“And the reality is, a lot of people say the current affordable housing crisis around the world is unprecedented. We’ve never experienced this before. We did actually.
“After the Second World War, a lot of the housing stock had been destroyed. There was a severe housing shortage, with returning servicemen. But there was a political will to address it, and finance was made available to address it.”
This was a key reason behind the economic boom that followed the end of the Second World War – the huge demand and financing made available for housing.
Listen: Empowering South Africa’s “missing middle”
Jordan says Empowa’s model makes it possible at last to invest safely in township housing in a way that needs the needs of informal sector workers and investors looking for inflation-beating returns.
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