Burkina Faso 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 Burkina Faso is 13 percent, as of September 2016, and requires at least a 10 percent down payment. The cheapest newly built house by a developer recorded by CAHF is US$ 8 536. Cement prices are higher than the continental average, at US$ 10.12 for a 50-kilogram bag.
With an urbanisation rate of 5.73 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. For households, ‘CAP Lafia’, a product of Banque de l’Habitat du Burkina Faso (BHBF), offers low down payments on mortgages, while most commercial banks offer mortgages. Réseau des Caisses Populaires du Burkina (RCPB) offer products tailored for housing microfinance, developed with technical support from Développement international Desjardins (DID). 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 Burkina Faso can afford.
Find out more information on the housing finance sector of Burkina Faso, 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
Burkina Faso is a landlocked country in West Africa, and part of the West African Economic and Monetary Union (UEMOA). It has a population of about 18.11 million people and is one of the least urbanised countries in the world. After turbulent political environment Burkina Faso organised presidential and legislative elections in 2015 and municipal election in May 2016. The country’s economic prospects for 2016 are good; the growth rate is expected to reach five percent in 2016 due to recovery in mining and return of democratic institutions. Inflation is expected to remain modest at about two percent in 2016 due to good harvest and low world oil prices. The economic prospects depend on the ability of the new government to foster political peace, ensure institutional stability and curtail threats from religious extremist especially after the January 2016 terrorist attack. Burkina Faso like its neighbouring countries faces security challenges due to terrorist activities.
Burkina Faso’s cities are growing rapidly though, urban dwellers were 29.5 percent of the population in 2015 and could reach 35 percent in 2026 but cities and towns are poorly equipped to sustain growth. Inequalities persist and poverty remains high although the poverty rate fell from 46.7 percent in 2009 to 40.1 percent in 2014. The social and economic situations remain disturbing due to inequalities and poverty which is a source of future uncertainty and threats to the country’s new democratic institutions.
Access to Finance
Burkina Faso is part of the Central Bank of West African States (BCEAO), which includes seven other countries (Benin, Côte d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo). As of 2016, the financial sector of Burkina Faso was dominated by 12 commercials banks, five credit institutions, 10 insurance companies, one postal financial services outlet, two social security institutions, 50 exchange offices, 122 offices of funds transfer, 13 national funds of financing and 81 microfinance institutions with 489 branches. Access to finance in the country is low, only about fourteen percent of the country’s population over the age of 15 have a bank account, nine percent have savings and five percent have loans as stated in global Findex 2014. There are 30 Financial Service Providers listed on the MIX Market (an online repository of microfinance performance data and analysis) with US$197 million worth of loans dispersed to 180 000 active borrowers, US$248 million deposits and 1.3 million depositors in 2016. Réseau des Caisses Populaires du Burkina (RCPB) remains the leader with a gross loan portfolio of US$151.87 million, gross deposits of US $217.89 million, 71 990 active borrowers and 1 063 190 depositors.
The Housing Bank of Burkina Faso (Banque de l’Habitat du Burkina Faso, or BHBF), which started operating in 2006, was created to facilitate access to housing finance for low and middle income earning households. BHBF is funded by the government and its agencies, which contribute 30 percent, international institutions which contribute 25.33 percent and other private institutions which contribute 44.67 percent. In 2013, BHBF launched one of its successful products “CAP Lafia” which allows borrowers to purchase land and/or to build a home, provided that the borrower has a housing savings account or housing savings plan. The product is aimed at public, private and informal sector workers. To qualify, the borrower must be a client of BHBF. Borrowers are required to provide a 10 percent deposit, and the maximum loan term is seven years for land and 15 years for an ‘affordable house’. The CAP Lafia provides housing construction and land acquisition loans at a subsidised interest rate of five percent. The bank also provides added services such as an architect to view the plans before a loan is approved. The average mortgage distributed in 2013 according to the UEMOA note on the condition of housing loan in 2014 was 48 745 million cfa, the average bond term was 7.8 years and the average interest rate was 6.73 percent.
By 2016 practically all the commercial banks in Burkina Faso have introduced mortgage finance in their portfolios and so is the Réseau des Caisses Populaires du Burkina (RCPB), the most popular microfinance institution in the country. Currently RCPB offers some housing finance products called “Epargne Specialisé” that is special savings for financing special projects including housing. With the technical support of Développement International Desjardins (DID), a world leader in the microfinance sector, RCPB developed its first mortgage loan and one of its successful products in 2008. The minimum loan size was CFA Francs 5 million (US$10 000) with a mortgage on property. Borrowers were required to make a 15 percent deposit and the interest rate was fixed at 14 percent over 10 years for wage earners, and over five years for non-wage earners.
Although commercial banks and RCPB offer mortgage products access remains limited because majority of Burkinabes don’t have banks account and the commercial banks dispose of short term deposits while mortgage require long term deposits. The creation of a regional mortgage refinance fund called Caisse Régionale de Refinancement Hypothécaire (CRRH), by UMEOA hopefully will boost access to long term funding.
Burkina Faso is a poor country with 46.7 percent of households living under the threshold of poverty and earning CFA Francs 108 454 (US$185) or less a year. Other low income groups are those working in the formal sector earning the minimum wage or Salaires Minima Interprofessionnels Garantis, SMIG of 30 684 fcfa (US$52) a month. For the 14.5 percent of households representing the well-off population, who earn an income of more than CFA Francs 1.8 million (US$3 073) a year, access to property in the main cities is relatively straightforward, with most housing delivery and finance products designed for their needs. However, lower income households struggle and to be eligible for government subsidised housing a person must earn between one to eight times the SMIG. Government subsidised housing, delivered at the minimum housing standard defined by ministerial decree as including residential space of at least nine m2 and some sanitary provision, costs about CFA Francs 5 million (US$8 536), but even this is out of reach for most low income households.
Informal settlements have been growing in Burkina Faso’s main cities, illustrating an undersupply in housing, especially for lower income households. The government estimates that housing demand is growing by 8 000 units a year in Ouagadougou and 6 000 units a year in the country’s second largest city, Bobo Dioulasso. An analysis from 2009/2010 shows that only 17 percent of the population live in cement or concrete structures. The majority (65.6 percent) live in earth brick dwellings, and a further 12.4 percent live in baked brick dwellings.
The government has been a key promoter of housing delivery for many decades. The Centre for the Management of Cities (Le Centre de Gestion des Cités, or CEGECI) was originally established in 1987 with a mandate to implement the government’s housing objectives. In 2000, this mandate was extended to include the actual delivery of housing. In 2014 CEGECI has been empowered to effectively control the delivery schedule of the government subsidised houses and other social amenities such as, supply of electricity, water, health and recreation centres of the government housing program in order to accelerate delivery. The Construction and Real Estate Management Company (Société de Construction et de Gestion Immobilière du Burkina, or SOCOGIB) was also established by government, but was privatised in 2001. SOCOGIB still carries on with its mission to develop land, construct housing, sell and let accommodation and manage properties, and provides technical advice on home improvements. Housing constructed by SOCOGIB, can be considered economic and upper standing and comes with a 10-year warranty on the floor, walls and roof.
Since 2008, the government has developed a multi-year, social housing programme. The delivery target is 10 000 subsidised houses and the programme involves experimentation with local building materials in an effort to improve affordability while maintaining quality. The programme is funded entirely by the state, with 75 percent of the total delivery cost funded by the Housing Bank and the remaining 25 percent funded by CEGECI. To be eligible, a household must not own a plot or a house, must have an account at the Housing Bank, and must have worked for less than 15 years. Eligible households enter a raffle and names are drawn for the houses that are available. In July 2013, a draw was held for 1 500 houses delivered as part of the programme. As from 2014 the programme has gained large publicity in Cote d’Ivoire where there is a sizeable community of Burkinabe nationals (as Burkinabe diaspora is also eligible).
In an effort to improve affordability the new government has initiated a series of projects among which are the construction of 14 000 affordable houses to house about 84 000 people in Bassinko, a village situated about 15 kilometres from Ouagadougou. Other measures are to accelerate the implementation and completion of the projects initiated by President Compaore most of which did not meet delivery schedule due to political transition. To this end “Centre de gestion des cite, CEGECI,” the public institution that implements the government housing objectives is mandated by the new government to take over the control of the management of all the housing projects under the formers governments that are late in delivery and to assure the distribution of the completed houses to their beneficiaries.
The new government is accelerating the development of the new urban pole of Bassinko, 14 000 houses to be constructed by different private companies among which are, Societe Immobiliere Wend-Panga who is building 300 units of one to three bedrooms, prices range from 5.5 million fcfa to 7.5 (US$5 389 to 12 804), CGE Immobilier, CGE has a programme of 1 232 units made up of social, economic, medium standing houses ranging from 8.5 million fcfa to 25.5 million fcfa (US$14 511 to 43 533) built on 300 m2 each. The Bassinko project is the second largest housing project after the “projet de zone commercial and administrative, ZACA” in the heart of city of Ouagadougou, the capital. Eight developers are already implementing the programme among who are P&N Burkina Faso, a subsidiary of P&N Holding Group, a Spanish real estate development company. P&N is producing 1 000 bioclimatic houses that range in prices from the minimum 7.5 million francs cfa (US$12 804) to maximum of 12 million francs cfa (US$20 486). The houses are social and economic houses with land awarded by the government to the developers, water, sewage and electricity connection are also provided by the government. The houses are commercialised through the bank of habitat and participating commercial banks.
Law No 014/96/ADP of 23 may 1996 (J.O 1996 NO32) regulates the real estate development business in Burkina Faso. According to the government of Burkina Faso the sector has been growing at a rate of 7.5 percent per year since 2009.
There is not a formal market for real estate. Informal developers dominate the market although there is an emergence of private formal developers. Private developers are in most cases, in partnership with the government to participate in the construction of different on-going housing programmes in the country. The housing programmes concern primarily Burkinabe senior civil servants and those employed by the formal private sector. Houses developed by the formal sector come with a certificate of ownership which ensures security of tenure.
The rental prices market is not regulated in Burkina Fasso as result there is a lot of speculation going on especially for the low income zones. A room in a multi room house in the popular zone such as Karpala or Patte d’oie goes for 15 000 – 35 000 fcfa (US$25 – 60). A villa in residential zone costs 350 000 fcfa (US$598) and a luxurious villa costs about 2 000 000 fcfa (US$3 414). There is a strong rental market in Ouagadougou in spite of the fact that Burkinabes prefer to be homeowners, the fact is that purchasing or building a house is not accessible to an average Burkinabe.
Property prices have risen steadily over the past decade especially in Ougadougou and other urban centres, given an increase in the demand for houses due to growth of non-governmental organisations and other development agencies present in Burkina Faso. The growth in the market is challenged by the social and political situation of the country since the coup d’Etat of 2014 and the transition government. The future of the property market depends on the political stability of the country.
According to the World Bank’s 2016 Doing Business Report, Burkina Faso ranks relatively high. In the Dealing with Construction Permits index, the country ranked 76th out of 189 countries, relatively good score in the WAEMU member states. It takes 129 days, compared to the Sub-Saharan average of 162 days, 12 procedures compared to 14.4 in the region. It takes 67 days and four procedures, and costs 12.1 percent (above the Sub-Saharan average of 9.1 percent) of the property value to register a property in Burkina Faso. With stable democratic institutions, hopefully Burkina Faso property market will continue to grow.
Housing Policy and Regulations
Burkina Faso’s policy framework dates from the early 1990s, with the adoption of a new constitution in 1991 and a decentralisation policy in 1995. The national policy framework commonly called (RAF) “reorganisation agraire et fonciere” was created by “la loi du 23 mai 1996” and enacted by national decree on 6 February 1997. Some 49 urban and 350 rural administrative entities were created in this process. In 2009, a national policy on housing and urban development was enacted with a 10-year plan of action, to 2018. The policy puts an urbanisation strategy in the centre of its economic growth plans, and explicitly addresses the potential for real estate development to contribute towards growth. Part Three of the strategy aims to ensure access to comfortable housing for every citizen. The policy aims to raise awareness of the responsibilities of the private sector as well as to assist households in building their own housing.
Housing Sector Opportunities
The establishing of the Department of Housing and Urbanisation, and consequently of the Housing Bank of Burkina Faso in 1995, demonstrates the commitment of government to promote the housing sector and to champion housing for low income earners. The country offers immense opportunities for housing development especially for affordable housing given the economic status of the majority of the population. The law 057 of November 2008 which promotes and regulates property development activities is an advantage for developers and a tool for the government to encourage national informal practitioners to formalise and seize the opportunities offered by the government in mass construction of affordable houses. The ambitious program of 50 000 affordable houses to be constructed in the next five years, at a rate of 10 000 a year by the new government and other urban infrastructures are also opportunities for local and foreign investors and developers. This is a positive sign for housing development and housing finance in Burkina Faso.
Despite its status as a heavily indebted country, Burkina Faso has enjoyed strong growth in the past few years, largely as a result of political stability, good macro-economic management and a diversifying economy. Hopefully the country will regain a political stability since it has organised a peaceful and successful presidential and legislative election last year and a new government and other democratic institutions of the country are in place.
With political stability, the country’s housing opportunities are promising for the following reasons, a huge demand of affordable houses to satisfy, an accelerating rate of urbanisation, an increase in middle class revenues and an ambition governmental housing program.