South Africa’s township housing market is demonstrating how purpose-driven private capital can help address one of the country’s most pressing social and economic challenges.
Sanlam Investments stewards R1.3-trillion in assets under management and administration, ultimately the retirement savings and investments of ordinary people. As a sustainability-led asset manager, it has committed to helping capital move further, delivering long-term value for investors while contributing to inclusive economic growth.
A recent transaction shows what that commitment looks like in practice. Sanlam Alternative Investments, the group’s private markets business, provided a R75m credit facility to affordable housing developer Indlu. That facility has enabled the delivery of more than 500 rental units across Gauteng townships, significantly exceeding the original target of 351 units over two years.
What makes this investment particularly meaningful is that its impact is visible on the ground. Every completed unit represents improved housing for a family, additional income for a township property owner and work opportunities for local contractors, artisans and suppliers.
Backyard rental accommodation has become one of South Africa’s fastest-growing sources of affordable housing as rapid urbanisation continues to outpace formal housing delivery. Yet, despite strong demand, many township property owners have historically been unable to access development finance because of the perceived risks associated with informal property markets. This is precisely the kind of market failure that patient, well-structured private capital is able to address and that conventional lending has not been.
Indlu, the funding vehicle established by Melana Housing Developments, combines development finance with planning, design, construction support and digital rental management through its Indlu Living platform. By integrating funding with technical expertise and tenant management, the business enables property owners to develop income-generating rental units while maintaining standards of quality and operational efficiency.
The developmental reach extends well beyond the units themselves. Funding supports previously disadvantaged South African property owners, while construction work is undertaken by local Black-owned contractors and suppliers. The programme generates employment through construction, property management and related services, and creates sustainable rental income streams for township entrepreneurs.
The investment forms part of Sanlam Alternative Investments’ SME Debt strategy, which provides growth capital to underserved sectors with resilient cash flow characteristics and measurable social impact. Over the past 15 years, that team has deployed R2.9bn across more than 150 transactions. This is in addition to R3.1bn invested in private equity, R17bn in renewable energy projects and R1.3bn in climate resilience projects. In total, Sanlam Investments has invested 85% of client assets in line with responsible investing best practices.
For us, this investment is about far more than financing buildings. It is about backing a model that empowers township property owners, expands access to dignified housing and creates sustainable economic opportunities within local communities. By combining private capital with specialist development expertise, we can help address critical housing needs while delivering resilient long-term value for investors.
The transaction also reflects the growing role that innovative partnerships can play in addressing South Africa’s infrastructure and social development needs. As the government continues to strengthen collaboration with the private sector to accelerate infrastructure delivery through public-private partnerships, scalable investment models of this kind demonstrate how capital can unlock practical, community-based solutions that deliver both financial and developmental outcomes.
That is the wider significance of a R75m facility in Gauteng’s townships. It is evidence that when private capital is deployed with developmental intent and specialist expertise, it does not have to choose between return and impact. It can deliver both, in places the market had previously written off.
Keamogetswe Monama is an investment analyst at Sanlam Alternative Investments