STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
» Why housing matters
» Housing in Africa: key facts
» Housing in Africa: trend-drivers
» Recommendations for an inclusive housing sector
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
WHY HOUSING MATTERS
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Reduced poverty
• Better health outcomes
• Reduced overcrowding
• Improved labor mobility
Wealth creation
• 50%+ of households’ tangible assets
• Improved access to credit
Economic growth
• Housing represents 5-13% of GDP
• 5 jobs created per housing unit built
Effective housing delivery: Reduces poverty Creates household wealth Contributes to national
economic growth
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
HOUSING IN AFRICAkey facts
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
METHODOLOGY
Macro studies of comparative trends» Per-capita GDP growth and housing sector investment
(country accounts)» Household expenditure on housing (harmonized household
survey)
Desk review of current research and databases
Three country case studies» Primary data collection by global experts and local consultants» Nigeria, Cameroon, Ethiopia
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Sub-Saharan Africa
Middle East & North Africa
Latin America & Caribbean
South Asia
East Asia & Pacific
Europe & Central Asia
0
50
100
150
200
250
300
1990 1995 2000 2005 2010 2015 2020 2025 2030
millions
Africa is the only region in the world in which the slum population is projected to grow
Estimated urban populationliving in slums, 1990-2030
World Bank calculations, based on United Nations “World Urbanization Prospects” (2014).
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Africa is the most rapidly urbanizing region in the world…
But investments in housing have not kept up with urbanization and growth.
Housing investment as a % of GDP
Dasgupta, Lall & Lozano-Gracia (2014). “Urbanization and Housing Investment”, World Bank.
4.1%
4.9%
6.6%
9.1%
0% 2% 4% 6% 8% 10%
SSA lowincome
Other lowincome
SSA middleincome
Other middleincome
Housing investment, % of GDP (average 2001-2011)
Housing investment as a percent of GDP
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Government of Ghana 101,800
Bank of Ghana 66,500
UN-HABITAT 133,000
Amoa-Mensah 90,000
Mahama and Antwi 130,000
Karley 70,000
Africa suffers a chronic housing challenge, manifest in overcrowded, poor-quality and poorly situated dwellings and persistent low levels of investment
Thinking about this in terms of quantitative “backlogs” is of limited value in analysis and policy-making
GHANA: recent estimates of new housing need per year
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Rapid urban growth + low incomes + high costs = extensive informal housing for the foreseeable future
Typically formal housing costs 3x to 5x average annual incomes…In Africa, it costs 14x to 17x
0
20,000
40,000
60,000
80,000
100,000
0
4,000
8,000
12,000
16,000
20,000
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Cheapest newly built house by a formal
developer in 2013 (US$)
GNI per capita, 2012 (US$)
GNI per capita, US$ Cheapest Newly Built House
Affordability Range
GNI per capita vs. costs of new formal housing
Centre for Affordable Housing Finance (2014). “2014 Yearbook: Housing Finance in Africa”.
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
HOUSING IN AFRICAtrend-drivers
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
LAC MENA EAP
SSA
0%
20%
40%
60%
80%
100%
0 1000 2000 3000 4000 5000 6000
% urban population
GDP per capita (constant 2005 USD)
1961 1981 2009
2012Africa is urbanizing rapidly, but late and at low incomes
GDP per capita in the first year with an urban majority
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
In Cameroon, 70% of urban land is held without title
Land tenure, management and administration systems drive up costs and dis-incentivize investment in housing stock The average cost to
register property in SSA is 8.3% of the total value
the highest in the world
In SSA only 10%of total land is
registered
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
0 50 100 150 200 250 300 350
Improvedwater (%)
Improvedsanitation (%)
Paved roads(km/km2)
Mobile density(lines per thousand)
Generation capacity(MW/million)
Electricitycoverage (%)
SSA Low-Income Other Low-Income
Infrastructure coverage is low, and declining as urban populations grow.
Infrastructure deficits inSub-Saharan Africa
Foster (2008). “Overhauling the Engine of Growth: Infrastructure in Africa.” World Bank.
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
A bag of cement in Nigeria costs twice that in the USA
The formal construction industry is inefficient and costly, relative to other regions
A warehouse building permit is 4x costlier in SSA than the OECD
Second only to South Asia
Low-cost formal housing averages: • $700/m2 in SSA• $350/m2 in India • $250/m2 in China
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
And government subsidies for housing have done little to promote wide-scale access
CAMEROON: house price-to-income ratio for government social housing
$680
$33,472$30,001
49
44
0
10
20
30
40
50
60
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Annual income Yaoundé(Olembe)
Douala(Mbanga-Bakoko)
Price-to-income ratio
Price (USD)Average house price Price-to-income ratio
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Formal housing finance products are not available to most SSA urban households
On average, estimates indicate that only 3% of households are eligible obtained loans for a formal financial institution
UGANDA: incomes and access to housing finance
Access to mortgage loans from commercial banks
Access to credit from MFIs and savings groups
No access to commercial banks, MFIs, or savings groups
>1M UGX per month
0.7%
100,000 to 1MUGX per month
37%
<100,000UGX per month
62.3%
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Formal tenure Informal tenure
Formal
incomeDevelopers
Mortgages
Contractors
• Cash
• Employer Non-BankFinancial Institutions
Informal
income
Contractors
• Non-BankFinancialInstitutions
• Housing MFIs
Self-improvers
• Cash
• Housing MFIs
• Tontines
Tenure and income characteristics influence housing finance and construction options• Most people have
informal income sources and/or informal tenure
• Limits collateralization for mortgage
Matrix of housing finance and construction based on tenure and income status
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Few people have mortgages• High interest rates (~20 percent)• Banks lack long term deposits
In Uganda, the least expensive mortgage required a minimum monthly salary of $400 which disqualified 99 percent of the population
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Microfinance loans are smaller and not securitized
Availability of microfinance for home improvement is growing, but rates are well below other regions
Microfinance markets vary widely from country to country• Kenya has 4 times as many MFIs as
South Africa, but half as much as the country’s total lending portfolio
Active Borrowers and Gross Loan Portfolio for MFIs, by region, 2014
Region Active
Borrowers Gross Loan Portfolio
(US$)Average amount loaned
per borrower (US$)Sub-Saharan Africa 4.5 million 7 billion 1,555East Asia and the Pacific
12.7 million 9.9 billion 780
Eastern Europe and Central Asia
2.7 million 12 billion 4,444
Latin America and the Caribbean
16.2 million 34.1 billion 2,105
Middle East and North Africa
1.6 million 1.1 billion 688
South Asia 47.3 million 8.5 billion 180
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
RECOMMENDATIONStargeted interventions for an inclusive housing sector
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Complementary interventions across the value chain, which address distinct needs of different income groups
upperincome
lower income
middleincome
formalconstructionaffordable
informalhousing
Upgrading informality:Basic infrastructureIncremental & self-constructionLeverage existing savings
Expanding access to finance:Liquidity & long-term capitalRegulatory framework for lendingUnderwriting
Cross-cutting areas:Land administrationPlanning & building standardsConstruction sector & materialsRental markets
formalfinance
MFIs
no housing finance
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Meeting housing needs in Sub-Saharan Africa will require working across the housing value chain:» targeted interventions at
weak points» addressing informality» leveraging the private
sector
Supply
Strengthen land management
Improve planning & regulations
Upgrade informal settlements & invest
in infrastructure
Strengthen construction sector
Reduce material costs
Demand
Develop regulatory framework for banks
Increase access to long-term capital
Promote access to financial services
Create alternative ways to assess credit
Support MFIs, other non-bank lending
Inclusive housing sector
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
SLUM CONDITIONS
• No improved water or sanitation
• Unsound structure
• Overcrowding
• No tenure security
PARTIAL UPGRADE
• Basic infrastructure
• Structure with a foundation or durable walls
• Perceived tenure security
SEMI-FORMAL
• Improved infrastructure
• Meets some building codes
• Self-construction
• Proxy for tenure
FORMAL HOUSING
• Piped water and sewer connection
• Meets all building codes
• Proof of ownership
Informality represents a spectrum of shelter locations, conditions, and tenure statuses.
Governments need to direct policy and resources at assisting households move incrementally up the housing quality spectrum
Leverage the private sector to expand finance models that are customized to this market condition
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Identify and target specific bottlenecks in the housing value chain—either on the supply side or the demand side.
Calculations based on data from World Bank (2015), UN (2015) and CAHF (2014).
city planning & building regulations
access to land
infrastructure & services
end-user finance
construction & building materials
sectors
subsidies
developer finance
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Improve planning & building regulations» Strengthen public land
administration» Improve city planning institutions» Adapt land use and zoning
regulations» Incentivize density and infill
RWANDA Comprehensive land tenure reform Issued land titles with photomapping technology
TANZANIA Surveyed all communal lands, registered 60% so far,at a cost of $500 per village
ETHIOPIA Is building an urban legal cadaster in Addis Ababa which will eventually cover the entire country
KENYA Streamlined land administration processesReduced VAT on land
LESOTHO Introduced land administration authorityReduced wait times and improved application turnaround
GHANA Computerized land recordsCut time to register property from 169 days to 34
UGANDA Reduced property registration times from 227 days to 48
Recent successes
city planning & building regulations
access to land
infrastructure & services
end-user finance
construction & building materials
sectors
subsidies
developer finance
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Upgrade existing informal housing» Extend basic infrastructure » Provide tenure security to
promote investment» Support incremental and
self-build upgrading
NAMIBIA Incremental tenure and community upgrading
SENEGAL Conversion of temporary occupancy permits to permanent title deeds
KENYALESOTHO
TANZANIA
Tenure regularization through bulk surveying and land use planning
MAURITANIA Provided serviced plots less than 1km from original house with community infrastructure and microcredit support
Recent successes
city planning & building regulations
access to land
infrastructure & services
end-user finance
construction & building materials
sectors
subsidies
developer finance
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Strengthen the construction sector» Adopt performance-based
construction standards» Develop an increasingly
skilled labor force» Promote use of cheap local
materials
• Plastic formwork to cast uniform walls and floor slabs
• Reusable up to 50 times
• Reduces costs for production time transportation
South Africa: industrial construction techniques
Moladi formwork. Source: commons.wikimedia.orgcity planning & building regulations
access to land
infrastructure & services
end-user finance
construction & building materials
sectors
subsidies
developer finance
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
Expand housing finance down market» Facilitate the development of the
financial sector to expand access to formal mortgage products
» Support development of non-mortgage lending products for informal or irregular incomes
» Leverage remittances and community-based lending
Savings methods among savers, selected economies
ADULTS SAVING ANY MONEY IN THE PAST YEAR (%)
Demirguc-Kunt & Klapper (2012). “Measuring Financial Inclusion: The Global Findex Database." World Bank.city planning & building regulations
access to land
infrastructure & services
end-user finance
construction & building materials
sectors
subsidies
developer finance
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STOCKTAKING OF THE HOUSING SECTOR IN SUB-SAHARAN AFRICAChallenges and Opportunities
CONCLUSION
Work incrementally across the value chain and leverage the private sector to provide housing solutions at all income levels
The 2015 National Housing Policy takes a broad view of housing provision and tenure type:
» Collaboration across ministries and engagement with the private sector
» Subsidies allocated through verifiable income data and detailed demand analyses
» Social housing provision directed at specific groups
» Dedicated fund for bundled infrastructure investment
» Zoning code incentives for density
» Assistance for the construction sector through workforce development and materials suppliers
» Alternative strategies for housing finance products
Rwanda: developing an inclusive housing market
city planning & building regulations
access to land
infrastructure & services
end-user finance
construction & building materials
sectors
subsidies
developer finance
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