Benin has a growing housing finance sector. As the mortgage market does not yet meet the breadth of the population who might afford a mortgage, most households still finance their housing independently, with savings or non-mortgage credit.
The lowest recorded interest rate on a mortgage in Benin is 8.47 percent, as of September 2016, and requires at least a 30 percent down payment. There are currently an estimated 539 mortgages in the country, with the average mortgage size being US$ 8 394. The cheapest newly built house by a developer recorded by CAHF is US$ 14 941, which is for a 40 square metre unit. Cement prices are lower than the continental average, at US$ 6.30 for a 50-kilogram bag.
With an urbanisation rate of 3.62 percent, demand for affordable housing will remain strong, both for rental and purchase. Housing microfinance will play an important role in increasing the supply of housing, and efforts to increase access should be undertaken. Lending rates in Benin are among the highest in UEMOA, and difficulty accessing title constrains the the housing market; banks have the option of accessing refinancing through Caisse Régionale de Refinancement Hypothécaire de l’UEMOA since 2012. With a good macroeconomic environment, sound policy, better data and increased access to affordable credit, an enabled housing market can increasingly provide housing that the average household in Benin can afford.
Find out more information on the housing finance sector of Benin, including key stakeholders, important policies and housing affordability:
- Access to Finance
- Housing Affordability
- Housing Supply
- Property Markets
- Housing Policy and Regulations
- Housing Sector Opportunities
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2016 edition, which has up-to-date profiles for 51 African countries.Download yearbook
Benin is a small country in the West African Economic and Monetary Union (WAEMU). For years, agriculture has been the main driver of the economy through cotton exports, which account for over 40 percent of export revenues. This has changed over the last decade, with services taking the lead. The country has recovered from a slowdown in agricultural production following 2009 and 2010 floods. GDP has increased steadily, from 5.4 percent in 2012, reaching 5.6 percent in 2013 and 5.5 percent in 2014. Over the past three years, GDP growth has been driven by an increase in agricultural production and in activities at the Port of Cotonou, resulting from modernisation works undertaken under the Millennium Challenge Account Programme. The World Bank’s 2016 Doing Business Report ranked for the second consecutive year Benin among the top 10 reformers in the world, with an overall ranking 158th out of 189 economies on the ‘Ease of doing business’ global index.
Economic growth remained strong, despite a decrease from 6.5 in 2014 to 5.2 percent in 2015 according to estimates. However, this growth has not translated into poverty reduction. Indeed, poverty incidence increase from 36.4 in 2011 to 40.1 percent in 2015. Inflation remained low despite a slight increase to 0.4 percent, compared to 1.1 deflation noted in 2014. The slight increase in the level of prices was driven by increase in prices of local food products, construction materials as well as housing services prices. Benin’s public finance is under stress due to changes in trade policy in Nigeria, which significantly reduced re-exportation taxes on rice and several imported products transiting in Benin. The situation worsened due to the continued decrease in international oil prices which consequently caused a depreciation of the Nigerian currency.
According to the 2013 general census, Benin’s population has reached 10.5 million. This figure increased to 10.9 million in 2015, according to the World Bank World Development Indicators. The urban population reached 43 percent of the total population in 2013 and grows at a steady 3.6 percent a year.
New presidential elections took place in March 2016 which saw the election of Mr. Patrice Talon as the new head of the State. In his program as candidate, Mr. Talon promised to develop a new social housing program in each capital of department, and in a number of urban agglomerations. To that end, he created a new Ministry of Living Environment and Sustainable Development.
Access to Finance
The country’s financial sector is concentrated in commercial banks; other sectors are still in their infancy. At the end of 2015, there were 15 banks (including two bank branches – CBAO Groupe Attijariwafa Bank and Coris Bank International) with about 199 branches and 264 ATM machines, with a total of 947 330 bank accounts for about 11 million inhabitants1. In 2015, loans disbursed were estimated at CFA Francs 1 064 billion (US$1.79 billion), a slight decrease of two percent from its 2014 level. 48 percent (CFA Francs 511 billion or US$857.89 million) of loans were medium- to long-term loans. Access to credit as measured by credit to the economy remained at 25 percent of GDP in 2015, as in 2014 compared to 24 percent in 20122. Lending rates remain moderate, but are among the highest in the region, averaging 8.5 percent in 20133. Despite the creation in 2010 of the Regional Mortgage Refinancing Fund (Caisse Régionale de Refinancement Hypothécaire – CRRH), lack of long-term financing remains the main reason for the low provision of long-term credit. In 2013, other stakeholders in the financial system included two pension funds (serving about 50 000 citizens) and the insurance sector, with an insurance premium equivalent of 1.7 percent of the country’s GDP4.
Housing finance has been growing over the past decade, driven mainly by banks with donors showing some interest. Most housing loans are provided in two forms to individuals with regular employment who use their salaries as collateral: medium-term construction material loans, and group lending. The medium-term construction material loans are granted to individuals at an interest rate of 10.5 percent to 11 percent, and a repayment term from three to five years. The group lending products are usually granted to private organisations or to parastatals to distribute to their employees, where the organisation is responsible for repayment of the loans. Products such as ‘consumption loans’ (with a two-year maximum term) or ‘equipment loans’ up to CFA Francs 5 million (US$8 394) on average (with a five-year maximum term), are often used as housing finance, and often for home improvements.
In 2013, there was a total of CFA Francs 20.6 billion (US$34.6 million) housing loan provided by Benin banks5. This reached CFA Francs 6 billion (US$10.1 million) for the first two months of 2014, compared to CFA Francs 4.1 billion (US$6.88 million) for 2012. The increase is explained by the sale of the first units of the government promoted affordable housing programme. This continues to increase, as the government continues to sell out more and more housing units. In 2015, a total of about 200 units were sold out.
In December 2015, the Regional Mortgage Refinance Fund called Caisse Régionale de Refinancement Hypothécaire (CRRH)WAEMU (which was created in 2010 to facilitate the mobilisation of long term resources for member banks) leveraged an additional CFA Francs 18.3 billion, through its fifth bonds. This increased the resources mobilised by the Fund to CFA Francs 95.3 since its creation. This remains insufficient compared to the needs of the housing finance sector.
Some banks have designed specific housing finance products, such as the housing savings plan of Ecobank Benin, which provides access to relatively lower interest rate housing loans for savers. Ecobank and other commercial banks are also developing creative partnerships with local construction material wholesalers or retailers to offer housing finance products. In 2015, the Ecobank partnered with a construction material retail firm (Batimat) to offer up to CFA Francs 10 million loans in construction materials. In return the firm offers a 20 percent rebate on materials purchased in its shops.
In 2012, Bank of Africa Benin launched in partnership with the Benin Housing Bank the ‘housing loan’, a new product specifically targeted to those looking for long-term housing finance. The term of this loan can go up to 20 years, with an interest rate as low as 6.5 percent and is secured by a first order mortgage on the house for which the loan is requested.
The first of its kind in the country, Benin Housing Bank (BHB) was founded in 2004 by a public private partnership between the government and private stakeholders, including the Bank of Africa, to provide solutions to the demand for housing finance in the country. The BHB is capitalised at CFA Francs 5 billion (US$8.5 million) with the Bank of Africa Group as the main shareholder at 77 percent. It is expected to provide 50 percent of its loans to affordable housing projects, although this is not always achieved. BHB is indeed reportedly the most important originator of housing loans in Benin. At December 2014, the total outstanding loan by the BHB was CFA Francs 22.9 billion6 (US$38.44 million).
Lending rates offered by banks in Benin are among the highest in the WAEMU region. In 2013 the average interest rate was around 8.5 percent, down from 2012. This confirms the downward tendency noticed in recent years, (as low as 6.5 percent for long-term loans) as the macroeconomic and political environment remain stable and competition increases in the banking sector.
The savings culture of the Beninese has driven the growth of microfinance, making it a significant player in the country’s financial system. As of March 2014, there are 85 registered microfinance institutions with 742 service points, serving 2.25 million clients. The Fédération des Caisses d’Epargne et de Crédit Agricole Mutuel (FECECAM) is the biggest network, gathering more than 80 percent of clients. The penetration rate of microfinance reached 85 percent in 2014. CFA Francs 92 billion (US$154.45 million) represented the total outstanding debt of all of the 85 microfinance institutions (MFIs) for a total deposit of CFA Francs 77 billion (US$129.3 million)7. A significant change in the microcredit sector since 2013 is the joining of LITTO Finance as the second private corporate MFI with FINADEV, a branch of the ORABANK group.
Affordability is a serious issue since incomes are relatively low compared to housing unit prices. The cheapest properties cost about CFA Francs 8.9 million (US$14 941)8 for houses built under the Government Affordable Housing Program, or 18 times the per capita gross national income estimated at US$860 in 2015. However in 2016, a new actor entered the housing construction market, and is driving prices down. Global Service Immo, a private firm is now offering to construct basic one bedroom units for as low as CFA Francs 2 160 000 (US$3 626.29) for those who already own a piece of land. It is expected that this new trend will continue in the future, all things being equal.
Unfortunately, and in absence of adequate public policy, affordability of housing is exacerbated by rapid escalations in land prices, especially in newly urbanised areas. Speculation also drives prices, with more intermediaries positioning themselves between property owners and buyers. Increasing land prices have driven lower and middle income people to move further from the inner city to where they can afford land.
Thanks to the increase in the supply of cement, especially since the NOCIBE, a new cement plant that started operating, the price of this construction material has dropped by almost 20 percent, from CFA Francs 90 000 only four years ago to now CFA Francs 75 000. In other words, the 50kg bag of cement cost today only CFA Francs 3 750 or US$6.30. However the price of other construction materials have not changed much. A standard sheet of corrugated iron costs today US$4.97.
A minimum plot size for residential property in urban areas is 250m2. Owning a property requires a minimum of CFA Francs 8.9 million9 (US$14 941) for a one-bedroom housing unit in the government’s ‘10 000 affordable housing units’ programme. The programme delivered some 2 100 housing units in 2012 and a few more in 2013 and 2014, behind schedule. These added to 240 high-end villas built between 2008 and 2011, costing about CFA Francs 350 million (US$587 593) per unit. Properties in business or industrial estates cost as much as CFA Francs 144 261 a square meter.
Despite the absence of reliable information on the solvable demand for housing in Benin, it is obvious that housing supply is way below the demand. There are four major contributors to the housing stock in the country – households through self-construction, government agencies, public private partnerships and private developers.
While the information on self-construction does not exist, a few formal developments can be pointed out. In 2008, the government launched a big programme for the construction of 10 000 affordable housing units all over the country. The programme received a one-time support from the banking sector, with the Benin Housing Bank and Atlantique Bank for respectively CFA Francs 10 billion (US$16.8 million) and CFA Francs 2 billion (US$3.35 million). Several small developers were also contracted by the government to provide the units, including TIMMO, GCITT, and a few more. GCITT a private developer has been contracted by the government to provide 600 housing units using local material and the Hydraform® technology in the Bethel Real Estate in Abomey-Calavi. The development are made of two-bedroom, three-bedroom and duplex housing units costing each between CFA Francs 10.9 million (US$18 299) and CFA Francs 38.1 million (US$63 964)10. About 150 of these units have been built and sold at June 2016. Acquisition of these require a down payment of 40 percent of the unit, the remaining expected to be paid off over 12 months without any interest. From its launching to date, it is not clear how many housing units have been completed. But one can estimate that at most there are a little over 2 500 housing units built on all of the chosen sites. The number of sales remains unclear so far.
In 2013, two new housing providers were established – the Executing Agency of Public Interest Works in Benin (Agence de Gestion des Travaux d’Intérêt Public, or AGETIP-Benin) and the international NGO Voûte Nubienne based in France. While AGETIP Benin with its ‘Villas de l’Atlantique’ project focuses supply on urban areas in Cotonou and Abomey Calavi, the NGO Voûte Nubienne targets rural areas, mainly in the northern part of the country, doing a lot of local capacity building. AGETIP planned to develop three different types of villa in Fidjrossè, a residential neighbourhood in Cotonou and in Abomey-Calavi, for a total of 120 housing units costing between CFA Francs 76 million and 126 million (or US127 592 to US$211 534). The first phase of this project which covers 77 villas is still ongoing, but behind schedule, as the first villa was inaugurated only in July 2015. AGETIP is completing this project in partnership with local banks such as Ecobank Benin, the Banque de l’Habitat du Benin and the Sahelo-Saharan Bank for Commerce and Investment (BSIC). In 2014, AGETIP also launched the sale of new empty plots in the cities of Cotonou and Abomey-Calavi, costing between CFA Francs 2 000 (US$3.36) and CFA Francs 20 000 (US$33.58 a square meter11).
One emerging developer in the housing market is Global Service Immo. This private company started up a few years ago as a broker in the housing market, then moved on to developing and selling empty plots and finally launched in 2016 its affordable housing programme. Global Service Immo offers to those already owning a land plot to build their house starting from CFA Francs 2 160 000 (or US$3 626.29) for a basic one-bedroom housing unit. For a four-bedroom deluxe house, one would need only CFA Francs 20 million (or US$33 576.76). Contracting with Global Service Immo is on a payment by installed basis to be negotiated with them.
In December 2015 the Prime Minister of Benin launched a new development of 132 housing units especially for the Benin diaspora, the Green Park City. The project was planned over 12 hectares and received the support of Orabank. The 132 units will be completed by end 2017. With the Green Park City development, Chinese companies are entering the Benin housing market.
In Benin, most lands belong to individuals who can trade them as they will. However, there is no deeds registry, nor a cadastre. Land titling is thus a major challenge, despite the numerous efforts deployed by the Government over the past years to improve land security. According to the World Bank’s 2016 Doing Business Report, Benin ranked 82th out of 189 countries on the ‘dealing with construction permit’ indicator. This is a six-point improvement from 88th in 2015. However, it currently still takes an average of 88 days and 13 procedures to obtain a construction permit. The main improvements compared to 2015 are the establishment of a one-stop-shop and the reduction of the number of signatories required on building permits. On registering a property, no real progress has been made. It currently takes an average of 120 days and four procedures, and costs 11.7 percent of the property value, placing Benin at 172nd rank out of 189 countries. This discourages a lot of people from getting a construction permit. Fortunately, with the enactment of the 2013 Land Code, followed by the signing of a number of decrees in 2015, including the one creating the National Agency for Domains and Land (Agence Nationale du Domaine et du Foncier), which is to be a ‘one-stop window’ for property titling, things are expected to improve in the near future. On top of all these, the government decided in June 2016 to abolish registration fees on private properties.
Property market in Benin is in its infancy, and is mostly dominated by the trade of empty plots. This is at least partly due to the absence of a deeds registry in the country. Trade of built housing units is very limited, with only a few high-end units (built in preparation for the Community of Sahelo-Saharan States [CEN-SAD] summit in 2008) on the market. A few private actors are positioning themselves in the property market landscape, with their speciality being the brokering of empty plots (exclusively between private owners) and a few houses: Global Services Immo, Immo-Benin, Benin-Immo, Dommus Immo, West Coast Property, are a few examples of those actors which advertise both plots to sell or rent on their regularly updated websites. While Benin-Immo operates mostly in Cotonou and its surroundings, Global Service Immo covers the whole country with its activities. Global Service Immo is gaining recognition for selling only secured properties. West Coast Property which has an international span is specialised in the trade of high-end luxury apartments and houses in and around Cotonou.
The sale of the first units made available through the government’s ‘10 000 affordable housing units’ programme started in 2012. While the sale of the housing units has increased some new owners complained about the lack of amenities (water and electricity) promised. It is well known that the acquisition rate is much lower than expected. The main problem remains affordability, even for civil servants who find it very difficult to afford the required down-payment. The government is exploring the option of leasing to ease access to those properties.
Even though the Benin culture pushes for home ownership, the rental segment is still dominant in the property market, with prices increase, especially in urban areas where the demand for housing is very high. Housing prices are also driven up by land speculation. Over the past years for example, land prices have gone up by more than half, in just five years.
Housing Policy and Regulations
Benin’s first housing policy was adopted in 2005. This complements other urban development policies like the National Land Use Planning Policy statement and the Urban Policy statement. It aims to improve land tenure security and make public intervention more effective, to encourage individual housing investment efforts through relevant regulatory and operational provisions, to develop public private partnerships for the production of housing, and to define the rules and access conditions to housing. The housing policy framework prescribes that land subdivisions in any municipality should be subject to the existence of a master plan, a schematic structure and a land use plan. However, it is doubtful whether municipalities comply with this, as the framework does not make their role clear. The implementation strategy for the housing policy framework includes the improvement and strengthening of the regulatory and institutional framework for housing, the promotion of local building materials, and the establishment of a mechanism for housing finance, specifically the creation of a housing bank. One evident output thus far is the creation of the Benin Housing Bank.
A National Land Use Planning Policy was adopted in 2002 with the objectives of promoting land use planning and the rational management of resources, as well as strengthening basic infrastructure at the local level. The success of this is yet to be seen, however, as it is not well known to prospective stakeholders like local governments.
An important advance in the regulatory environment was the vote early in 2013 by Parliament of the new Benin Land Code. This reorganises land property rights and puts an end to the legal dualism inherited from the colonial era, creating a unified land tenure system. In November 2014, as part of the Doing Business reforms, the government took a total of 1412 important decrees to ease to implementation of the new Land Code, but also created two major agencies in the institutional architecture of land administration: the National Agency for Domain and Land (Agence nationale du domaine et du foncier – ANDF), and the Land Compensation Fund (Fonds de dédommagement foncier) under the Ministry of Finance. Likewise, Communes (local governments) were empowered on land administration with the enactment of decentralised organisation for land administration, among which the Commune’s Land Administration Commissions and the Communal Domain and Land Bureaus. This will help Communes to fully exercise their prerogatives in land administration as devolved by decentralisation laws. Among areas covered by the above-mentioned decrees are the shared property rights on high rise buildings, modalities for the division and reunion of property rights, arrangements for exercising the right of first refusal and leasing of preempted or expropriated buildings. The ANDF is specifically endeavoured with the mission of developing a transparent, accessible and up-to-date national land management information system. Those are important for the protection of property rights in the Republic of Benin.
More recently, the Benin Parliament adopted the first Spatial Planning Framework Law in May 2016. This will have the effect of better organising spatial planning which may open up opportunities for new developments in the coming years.
The newly elected government continued on the line as the previous government, with the clearly stated goals of (i) encouraging the formalisation of property transactions; (ii) facilitate asset transfers; (iii) revitalise the property market; (iv) facilitate access to bank credits; (v) develop the Benin mortgage market; (vi) eliminate the undervaluation of properties. To that end, the Government made important decisions including: (i) zero taxation of asset transfers; (ii) the abolition of mortgage registration and cancellation fees. Likewise, the Government took a number of measures to ease the acquisition of land titles.
Housing Sector Opportunities
People in Benin take pride in owning their house. The demand for housing is therefore very high. There is also a strong commitment by the government to invest in the housing sector, as illustrated by the launch of the ’10 000 affordable housing units’ programme in 2008. Likewise, the legal and institutional framework to secure property rights is being strengthened, especially since the voting in 2013 of a new land code, but also the creation of several entities to that end. All this should soon be complemented by the enactment of a new land policy note by the government. The policy aims to help secure access to land and land ownership, facilitate the access of public authorities to land, improve management by the state and decentralised communities of their respective jurisdictions, and regulate land transactions and land transfers. Roads and other infrastructure is also improving fast while access to basic service is also being enhanced. However, the landscape of private developers is still to be filled, as most of the delays encountered with the government programme are due to the lack of professional private developers interested in the affordable housing segment of the market. Likewise, provision of houses for those with highest revenue is so far done by only a few developers. The new Government has also clearly expressed its intention of increasing the housing supply, especially in provincial capitals and a few urban agglomerations. All these leave a lot of room for new developers to position themselves and seize the opportunities offered by the Benin formal housing market which remains mostly untapped.
The signing of a new Millennium Challenge Account programme for Benin for US$403 million in early September 2015 for five years, holds promises for the improvement of energy infrastructure, which has been so far a big constraint to developing businesses in the country.