Corporate and investment bank Rand Merchant Bank (RMB) and property financial technology company Indlu have launched a R1-billion blended finance programme to formalise and scale South Africa’s burgeoning affordable rental market.

The programme aims to bridge the national housing gap – currently estimated at 2.3-million units – by providing sustainable, affordable credit to micro-developers who have historically been excluded from traditional banking sectors owing to a perceived lack of formal collateral.

Indlu has identified an immediate project pipeline exceeding R915-million over the next 12 to 24 months, with a specific goal to raise R500-million for property entrepreneurs within the first year.

“Our ambition is to fundamentally change the landscape of informal settlements. By turning each tile in the urban mosaic into formalised, dignified infrastructure, we are building better African cities from the ground up,” says Indlu CEO Cobus Truter.

“The R1-billion deployment is expected to have a profound multiplier effect on the economy through significant job creation and social upliftment.”

To date, the model has already delivered over 2 200 high-quality rental units in areas such as Tembisa, Mamelodi and Cosmo City, proving the commercial viability of the backyard real estate sector.

Indlu empowers landowners to build, manage and earn from high-quality rental housing. Indlu has successfully facilitated about R311-million in financing to date, and the new platform is designed to meet a massive surge in demand, he says.

The model has already supported over 1 000 short-term construction jobs and nearly 400 permanent roles through local SMEs. Further, it serves as a powerful tool for gender equity, with 64% of Indlu’s current landowners being female.

“By ensuring every unit is integrated into formal municipal infrastructure, including water, electricity and sanitation, the programme significantly improves urban living standards and safety,” Truter adds.

Further, Indlu provides landowners with microfinance loans for construction, managed through a closed-loop digital ecosystem where the Indlu software application automates rental collection and loan servicing.

This ensures transparency for investors and steady income for property owners, says Truter.

“The Indlu Blended Finance Programme shows how South African capital markets can drive large-scale, powerful social impact without compromising financial performance. This programme attracts capital to critical development areas like financial inclusion and affordable housing, thereby empowering entrepreneurs to develop their own communities,” says RMB Sustainable Finance lead Alessandro Scalco.

RMB acted as the structurer and one of the lenders for the programme, using blended finance to support affordable housing.

A key component of this structure was the catalytic funding provided by skills and economic development organisation the FirstRand Foundation (FRF) and development finance investor FSD Africa Investments (FSDAi).

FRF provided a R30-million concessional loan commitment to establish the construction warehouse facility and FSDAi acting as the anchor funder of this facility.

“Low-income affordable rental housing is one of Africa's most overlooked and most bankable real-economy markets. With Indlu, we are using catalytic capital to anchor a new asset class, prove it to institutional investors, and create a replicable pathway that can finance dignified housing well beyond South Africa's borders,” says FSDAi chief investment officer Anne-Marie Chidzero.

This programme expands access to affordable housing finance for small-scale, primarily black and women property owners.

By addressing early-stage construction and tenanting risk, FSDAi and FRF’s catalytic funding unlocks private capital and ensures cost benefits are passed directly to developers and communities.