PDF - Centre for Affordable Housing Finance Africa

214 Pages·2013·3.14 MB·English

Africa is growing through its cities. And every day, as people lock to urban centres in search of
opportunity and change, the demand for housing grows. With an annual urbanisation rate
of 3.5% over the past two decades, Africa’s cities are the fastest growing in the developing world.
Currently, about 40% of the continent’s one billion people live in cities and towns; and it
is estimated that in the next few years, some African cities will be home to as much as 85% of their
country’s population. Dificult to contemplate in the abstract, these numbers have a very local feel.
Africa’s cities are crowded and vibrant spaces. The residential opportunity is obvious.
The observation is reinforced by the economic context. With higher peaks, and lower troughs,
African markets offer a very real opportunity for global investors wanting more than
traditional markets can offer. And this growth story is only just starting. Across the continent, new
discoveries of oil, natural gas and minerals are promising to completely transform national balance
sheets, giving policy makers a iscal conidence they only dreamed of before. This is giving rise to
increasing investment in infrastructure – in transport routes and hubs, energy power stations,
and telecommunications networks – which themselves stimulate all sorts of backwards and forwards
linkages along the value chain.
Policy makers and practitioners are working hard to expand the reach of Africa’s nascent
mortgage markets. The potential opportunity in this market is signiicant and deserves increasing
attention, both for the impact it will have on the housing futures of its residents, and also on economic
growth prospects. Still, mortgage markets will only ever serve the minority. Investors will miss the
market if they do not consider the realities of affordability across the continent and design their
products accordingly. This is a clarion call to the sector: by focusing on the delivery and inancing of
mortgageable housing, they are missing the bulk of the market. The opportunity lies further
down the income pyramid, where the bulk of the population lives. The real challenge facing
housing practitioners is building to the market. The demand for affordable housing is signiicant – all
players acknowledge this – but the current average house price of about $31 000 doesn’t even begin
to scratch the surface. At that price, not even a fraction of the opportunity will be realised.
Investors, inanciers and developers must understand that the market is ripe for innovation
that will respond to the needs and capacities of the majority. Governments are also ready for this
change, and are clearly open to proposals that will address what seem like intractable problems when
tackled alone. As innovation in other markets has demonstrated, it is the disruptive business
model that will alter the terrain and create new opportunities for growth. In the housing sector, this
is about engaging with the reality of affordability and delivering to the market.
About this publication
This is the fourth edition of the Housing Finance in Africa Yearbook. Since last year, we have added 5 country proiles and updated the existing
39, bringing the total to 40 country proiles and 4 regional proiles. We have sought out new data sources, and rethought our approach to
the affordability triangles. We have been monitoring the news so that this Yearbook relects the mood and temperature of housing inance
markets on the African continent in 2013.
The Yearbook is intended to provide housing inance practitioners, investors, researchers and government oficials with a current update of
practice and developments in housing inance in Africa, relecting the dynamic change and growth evident in the market. It is hoped that this
Yearbook will also highlight the opportunities available for new initiatives, and help practitioners ind one another as they strive to participate
in the sector. While the general aim of the Yearbook is to offer a broad overview of housing inance and housing development in Africa, special
emphasis is placed on the key challenge of housing affordability and the critical need for housing products and inance that are explicitly
targeted at the income proiles of the majority.
This has been a desktop study. Using the CAHF’s research as baseline material, further information on more recent developments was
accessed from media reports, journal articles and practitioner websites. In some cases, material was shared by local practitioners. Of course,
the Yearbook is not comprehensive, neither in the scope of countries covered nor the data provided. It is intended as an introduction, with the
hopes that the detail provided will whet the appetite for more. The CAHF invites readers to provide comment and share their experiences
on what they are doing in housing inance in Africa.
Kecia Rust
Centre for Affordable Housing Finance in Africa
September 2013
Contents
Overview ............................................................................................................................................ 4
Explaining the indicators ............................................................................................................................................ 26
Country proiles ............................................................................................................................................
Algeria ............................................................................................................................................ 29
Angola ............................................................................................................................................ 33
Benin ............................................................................................................................................ 37
Botswana ............................................................................................................................................ 41
Burkina Faso ............................................................................................................................................ 45
Burundi ............................................................................................................................................ 49
Cameroon ............................................................................................................................................ 53
Central African Republic ............................................................................................................................................ 57
Cote D’Ivoire ............................................................................................................................................ 61
Democratic Republic of Congo ............................................................................................................................................ 65
Djibouti ............................................................................................................................................ 69
Egypt ............................................................................................................................................ 73
Ethiopia ............................................................................................................................................ 77
Gambia ............................................................................................................................................ 81
Ghana ............................................................................................................................................ 85
Kenya ............................................................................................................................................ 89
Lesotho ............................................................................................................................................ 93
Libya ............................................................................................................................................ 97
Madagascar ............................................................................................................................................ 101
Malawi ............................................................................................................................................ 105
Mali ............................................................................................................................................ 109
Mauritius ............................................................................................................................................ 113
Morocco ............................................................................................................................................ 117
Mozambique ............................................................................................................................................ 121
Namibia ............................................................................................................................................ 125
Niger ............................................................................................................................................ 129
Nigeria ............................................................................................................................................ 133
Rwanda ............................................................................................................................................ 137
Senegal ............................................................................................................................................ 141
Seychelles ............................................................................................................................................ 145
Sierra Leone ............................................................................................................................................ 149
South Africa ............................................................................................................................................ 153
South Sudan ............................................................................................................................................ 157
Swaziland ............................................................................................................................................ 161
Tanzania ............................................................................................................................................ 165
Togo ............................................................................................................................................ 169
Tunisia ............................................................................................................................................ 173
Uganda ............................................................................................................................................ 177
Zambia ............................................................................................................................................ 181
Zimbabwe ............................................................................................................................................ 185
The Economic and Monetary Community of Central Africa, EMCCA (CEMAC) ........................................... 189
North Africa Regional Proile ............................................................................................................................................ 192
Southern African Development Community (SADC) ...................................................................................................... 195
The West African Economic and Monetary Union WAEMU (UEMOA) ............................................................... 199
Abbreviations
ACI Agence de Cession Immobilière (Land ECOWAS Economic Community of West African States
Development Agency), Mali FAEU Fonds d’Amenagement et d’Equipement Urbain
AFD Agence Française de Développement (French (Urban Development and Equipment Fund),
Development Agency) Burundi
AfDB African Development Bank FDI Foreign direct investment
ARRU Agency for Urban Rehabilitation, Tunisia FFH Fundo de Fomento de Habitação (Housing
BANCOBU Commercial Bank of Burundi Promotion Fund), Mozambique
BBCI Burundi Bank for Commerce and Investment FGCMPI Fonds de Garantie et de Caution Mutuelle de la
Promotion Immobiliere
BBS Botswana Building Society
(Real Estate Development Guarantee Fund),
BCB Bank Credit Bujumbura, Burundi Algeria
BCEAU Banque Centrale des États de l’ Afrique de l’Ouest FLISP Finance Linked Individual Subsidy Programme,
(Central Bank of West African States) South Africa
BCR Bank Commerciale du Rwanda FMBN Federal Mortgage Bank of Nigeria
BEAC Banque des Etats d’Afrique Centrale (Bank of FMO Nederlandse Financierings-Maatschappij voor
Central African States), Cameroon Ontwikkelingslanden (Netherlands Development
BHC Botswana Housing Corporation Finance Company)
BHM Banque de l’Habitat du Mali (Mali Housing Bank) FNB First National Bank
BHR Banque de l’Habitat du Rwanda (Rwanda FNM National Microinance Fund, Congo
Housing Bank) FOGARIM Guarantee Fund for mortgages for low or seasonal
BK Banque de Kigali (Bank of Kigali), Rwanda income groups, Morocco
BOAD Banque Ouest Africaine de Développement Forex Foreign exchange
(West African Development Bank) FPHU Fund for the Promotion of Urban Housing, Burundi
BRD Banque Rwandaise de Développement (Rwanda FSC Financial Sector Charter, in South Africa and
Development Bank) Namibia
CABS Central African Building Society, Zimbabwe GDP Gross domestic product
CAR Central African Republic GIZ Deutsche Gessellschaft für Internationale
CBB Construction and Business Bank, Ethiopia Zusammenarbeit (German Society for International
Cooperation)
CCODE Centre for Community Organisation and
Development, Malawi Global Findex Global Financial Inclusion Database
CDN Crédit du Niger (one of the commercial banks GLS Government Loan Scheme
in Niger) GNI Gross national income
CEMAC Communauté Économique et Monétaire de HDI Human Development Index
l’Afrique Centrale
HFB Housing Finance Bank, Uganda
(Economic and Monetary Community of Central
Africa, EMCCA) HFCU Housing Finance Company of Uganda
CFA Communauté Financière Africaine (currency in HfH Habitat for Humanity
West Africa) HMF Housing microinance
CGAP Consultative Group to Assist the Poor ICF Investment Climate Facility
CNEP Caisse National d’ Épargne de Prévoyance IFC International Finance Corporation
(National Savings and Providence Fund – one of IMF International Monetary Fund
the state-owned banks), Algeria
INPS National Institute of Social Welfare, Mali
COBAC Central African Banking Commission, Cameroon
IOR-ARC Indian Ocean Rim Association for Regional
COMESA Common Market for Eastern and Southern Africa Cooperation
CPA Comprehensive Peace Agreement, South Sudan IRS Integrated Resort Scheme, Mauritius
CPIA Country Performance and Institutional Assessment, KCB Kenya Commercial Bank
World Bank
KfW Kreditanstalt für Wiederaufbau (German
CRRH Caisse Régionale de Reinancement Hypothécaire Reconstruction Loan Corporation)
(regional Mortgage Reinance Fund), WAEMU
KYC Know Your Customer
DFI Development Finance Institution
LDC Least developed country
DRC Democratic Republic of Congo
LIC Low income country
DUAT Direito de Uso de Aproveitamento da Terra (right
LTV Loan-to-value (ratio)
to use and beneit from land), Mozambique
2
MCB Mauritius Commercial Bank SDFN Shack Dwellers Federation of Namibia
MDG Millennium Development Goal SDI Shack / Slum Dwellers International
MDI Microinance Deposit-taking Institution SHDC Seychelles Housing Development Corporation
MFC Mortgage Finance Company SHHA Self Help Housing Agency, Botswana
MFI Microinance Institution SIC Société Immobilière du Cameroun (Cameroon Real
MHC Malawi Housing Corporation Estate Corporation)
MHC Mauritius Housing Company SIP Société Immobilière Publique (National Real Estate
Company), Burundi
MINDAF Ministry of State Property and Land Tenure,
Cameroon SIPO Strategic Indicative Plan for the Organ (on Defence,
Politics and Security) (SADC)
NACHU National Cooperative Housing Union, Kenya
SMB State Bank of Mauritius
NAPSA National Pension Scheme Authority, Zambia
SME Small and medium-sized enterprise
NBBL Norwegian Federation of Co-operative Housing
Associations SNEC National Water Supply Company of Cameroon
NBS New Building Society, Malawi SNHB Swaziland National Housing Board
NDP National Development Plan, Botswana SNL Swazi Nation Land
NGO Non-governmental organisation SRH Société de Reinancement Hypothécaire (Mortgage
Reinancing Company), Algeria
NHA National Housing Agency, Zambia
SSA Sub-Saharan Africa
NHAG Namibian Housing Action Group
SSFR Social Security Fund of Rwanda
NHDC National Housing Development Company, Mauritius
SSHFC Social Security and Housing Finance Corporation,
NHE National Housing Enterprise, Namibia
Gambia
NHF National Housing Fund, Nigeria
TIPEEG Targeted Intervention Programme for Employment
NPL Non-performing loan and Economic Growth,
OMH Ofice Malien de l’Habitat (Mali Housing Agency) Namibia
OPIC Overseas Private Investment Corporation TMRC Tanzania Mortgage Reinancing Company
PMI Primary Mortgage Institution UEAC Union Economique de l’Afrique Central (Central
PPP Purchasing power parity African Economic Union)
PRS Permanent Residence Scheme, Mauritius UN United Nations
REIT Real Estate Investment Trust USA United States of America
RHA Rwanda Housing Authority USAID United States Agency for International Development
RISDP Regional Indicative Strategic Development Plan USD United States Dollar
(SADC) VAT Value added tax
SACCO Savings and Credit Co-operative WAEMU West African Economic Monetary Union
SACU Southern African Customs Union WAMZ West African Monetary Zone
SADC Southern African Development Community WHPI Women’s Housing Plan Initiative, Nigeria
SAPES Scheme to Attract Professionals for Emerging ZAMFI Zimbabwe Association of Microinance Institutions
Sectors, Mauritius
ZHPF Zimbabwe Homeless People’s Federation
SBM State Bank of Mauritius
ZINHACO Zimbabwe National Association of Housing
SBS Swaziland Building Society Cooperatives
Overview
Africa is growing through its cities. And every day, as people lock to urban centres in search of opportunity and change, the demand for
housing grows. With an annual urbanisation rate of 3.5% over the past two decades, Africa’s cities are the fastest growing in the developing
world. Currently, about 40% of the continent’s one billion people live in cities and towns; and it is estimated that in the next few years, some
African cities will be home to as much as 85% of their country’s population. UN Habitat expects the tipping point to be hit by 2030, when the
continent will be 50% urbanised. Dificult to contemplate in the abstract, these numbers have a very local feel. Africa’s cities are crowded and
vibrant spaces. The residential opportunity is obvious.
The observation is reinforced by the economic context. The state of the global economy has continued to have a signiicant impact on
African markets, and each country notes its impact on remittance lows, demand for its exports, and the performance of its currency. Still, as
investors have sought opportunities not available in traditional markets, Sub-Saharan and North Africa (including the Middle East) have both
outperformed OECD members and the global average. With higher peaks, and lower troughs, African markets offer a very real opportunity
for investors wanting more than traditional markets can offer.
GDP growth (annual percent)
8
7
6
5
nt 4
e
erc 3
p
h 2
wt
o 1
gr
P 0
D
G -1
-2
-3
-4
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Middle East & North Africa (all income levels) Sub-Saharan Africa (all income levels)
World OECD members
Source: World Bank data: http://databank.worldbank.org
And this growth story is only just starting. Across the continent, new discoveries of oil, natural gas and minerals are promising to completely
transform national balance sheets, giving policy makers a iscal conidence they only dreamed of before. This is giving rise to increasing
investment in infrastructure – in transport routes and hubs, energy power stations, and telecommunications networks – which themselves
stimulate all sorts of backwards and forwards linkages along the value chain.
The opportunity has not gone unnoticed. In the last two years, the number of investors seeking information and advice on the potential
to develop housing, whether for rental or ownership, whether targeted at students, new families or the elderly, has grown exponentially.
Developers, investors, and lenders are crossing borders, taking local experience with them into new contexts, expectant of the obvious
opportunity. Local players are also working hard to build their markets and compete with the international players. In the housing inance
picture of 2013, there are two big stories:
1. Policy makers and practitioners are working hard to expand the reach of Africa’s nascent mortgage markets. The potential opportunity
in this market is signiicant and deserves increasing attention.
2. Still, mortgage markets will only ever serve the minority. Investors will miss the market if they do not consider the realities of affordability
across the continent and design their products accordingly.
Expanding mortgage markets
Africa’s mortgage markets are small by international comparisons, but they are growing steadily, and increasingly receiving investor and policy
attention. For the second year in a row, Kenya’s Central Bank now explicitly reports on the performance of the country’s mortgage market
in its annual report, and conducts a mortgage lender’s survey annually to support its analysis. In that country, the mortgage market has grown
by 35.2% in the past year, comprising a total of 19 700 mortgages by the end of 2012. Thirty lenders compete to offer an increasing variety of
mortgage inance products. In late 2012, market leader, Housing Finance Kenya, raised KSh 5.2 billion (about US$61.07 million, and 79% above
its target) from the sale of a second tranche of a 7-year bond, to fund its expansion. Uganda’s mortgage market has also been growing: by the
end of December 2012, the total residential mortgage portfolio was estimated at about 0.98% of GDP. South Africa and Namibia remain the
market leaders for Sub-Saharan Africa, challenged only by the performance of some economies in North Africa.
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Africa Housing Finance Yearbook 2013
Mortgages as a percent of GDP
33.9
20
18.21
18
16
13.85
14 12.99
nt 12
e
erc 10 9.25
P
8
6
4 2.9
1.88 2.29 2.3
2 0.07 0.07 0.14 0.29 0.32 0.38 0.45 0.5 0.51 0.98 1 1.15 1.19 1.2 1.53
0
Central African Republic (2005 WB) Senegal (2010 Hofinet) Mozambique (2008 Hofinet) Burkina Faso (2013 WB) Tanzania (2013, TMRC) Nigeria (2013 WB) Ghana (2013 WB) Cameroon (2005 WB) Malawi (2013 WB) Uganda (BoU 2012) Egypt (2011 Hofinet) babwe (2012 response from CABS) Algeria (2013 WB) Burundi (2013 WB) Zambia (2012 Hofinet) Kenya (2013 WB) Botswana (2013 WB) Rwanda (2010 WB) Seychelles (2013 WB) Tunisia (2013 WB) Mauritius (2011 Hofinet Morocco (2013 WB) Namibia (2011 Hofinet) South Africa (2012 own analysis)
m
Zi
Source: World Bank data from Simon Walley; email correspondence from country-level practitioners; Hoinet; own analysis.
This activity is not even touching the tip of the iceberg. Still, even in developed mortgage markets in Africa, it is not uncommon for moderate
and high-income households to buy their housing with cash. In many countries, even the wealthy build their homes incrementally, on a cashlow
basis, rather than purchasing a inished house from a developer with a mortgage from a bank. The World Bank estimates that if mortgages
were accessed by just 3% of Africa’s population, this could contribute as much as US$300 billion to the growth of African economies. It is for
this reason that a number of governments are giving explicit attention to the growth of their mortgage markets. In Nigeria, the government
has been working with the World Bank to develop a mortgage liquidity facility. The Mortgage Bankers Association of Nigeria expects that
the facility, due to be implemented by the end of 2013, will assist the market grow ten-fold over the next ive years, to an expected size of
200 000 mortgages. Government expects the facility to support the delivery of at least 75 000 units per annum. The expectation is not wholly
unprecedented. Egypt’s mortgage liquidity facility, launched in 2006, saw the doubling of its mortgage market on a year by year basis bringing
total number of mortgages to 29 631 by the end of 2011, comprising 1% of GDP. Tanzania also has a World Bank supported mortgage liquidity
facility, formed in early 2010. Its still early days, but by October 2012, the TMRC had reinanced 636 mortgages and by June 2013, mortgage
debt to GDP sat at 0.32%, up from 021% in 2012, and well on the way towards a 1% target by March 2015. Finally, in Togo, a regional mortgage
liquidity facility, the Caisse Regional de Reinancement Hypothecaire-UEMOA was created in 2012 to promote easy access to long term
inancing for commercial banks (its members) in the UEMOA region, to enable them to inance housing loans.
And yet, even if the goals of annually doubling mortgage markets were realised, even if every single person across Africa who could afford a
mortgage would actually access one, only a fraction of the population’s housing inance needs would be served. The houses that mortgages
are designed to inance are simply too expensive.
In August of 2013, housing practitioners from the countries proiled in this yearbook were asked to submit data on the costs of the cheapest
newly built house by a private developer in their country, and its size. This is the third time such data has been collected. Prices reported range
from US$5 800 (excluding land) in Mali, to US$13 300 in Egypt, US$28 000 in Tanzania, and $50 000 in Gambia. The most expensive house
reported in 2013 was found in Ethiopia, at $68 783, not dissimilar from in Zambia, and followed by the Seychelles.
5
Price and size: cheapest newly built house by formal developer
$220 000
300
120 000
S$)100 000 250
U
Price of the cheapest newly built house ( 468000 000000000 51120050000Size of this house (m)2
20 000
0
0
Ethiopia Zambia Seychelles Malawi Botswana Angola Gambia Libya Cameroon South Sudan Mozambique Algeria Uganda Djibouti Tanzania Mauritius Ghana South Africa CAR Tunisia Burundi Benin Nigeria Morocco Kenya mibia (excl. land) Egypt Zimbabwe Lesotho Swaziland Togo (excl. land) Mali (excl. land) Burkina Faso DRC Niger Rwanda Senegal
Na
Price of the cheapest newly built house, by a formal developer in 2013 (US$) Price of the cheapest newly built house, by a formal developer in 2011 (US$)
Price of the cheapest newly built house, by a formal developer in 2012 (US$) What is the size of this house (in m2)? (2013)
Source: Email surveys in 2010-2013, CAHF Research.
The realities of affordability
Of course, house prices relative to one another are in some ways meaningless. Different countries have different capacities, different incomes,
and different policies, and what might be affordable in one country could be unreachable in another. More useful is to explore the relationship
of house prices to the buying power of local residents. In the following graph, Gross National Income (GNI) per capita is plotted against the
2013 housing prices.
Relationship of income to house prices
GNI per capita, 2012 (US$)11246802 000000000000000000 23456780000000 000000000000000000000Price of the cheapest newly built house by a formal developer in 2013 (US$)
10 000
0 0
SeychellesMauritiusBotswana South AfricaNamibiaAngola Tunisia AlgeriaEgyptMorocco Swaziland GhanaNigeriaLesotho Zambia Cote d' IvoireCameroon SenegalKenya BeninZimbabwe Burkina Faso MaliSouth Sudan Sierra LeoneTanzania Rwanda GambiaMozambique Togontral African Rep.Uganda Madagascar Ethiopia NigerMalawiBurundi DRC
Ce
Price of the cheapest newly built house, by a formal developer in 2013 (US$) GNI per capita
S ource: GNI per capita, Atlas method (current US$) World Bank Data: http://data.worldbank.org/indicator/NY.GNP.PCAP.CD, and house prices from email survey
(August, 2013)
6