Housing Finance in Burundi
Overview
This profile is also available in French here.
To download a pdf version of the full 2020 Burundi country profile, click here.
Burundi also known as the “heart of Africa” is located in the Great Lakes region of Eastern Africa. The country is predominantly rural and relies mainly on agricultural activities as a source of livelihood. In 2018, Agriculture accounted for 40.7 percent of the Gross Domestic Product (GDP) and increased by 3.3 percent in 2019, primarily due to high coffee exports, a slight increase in public investment and high agricultural production. Similar to most countries across the continent, the effects of Covid 19 pandemic poses to be a threat to the predicted economy growth in 2020.
Burundi’s population was estimated at 11 890 781 in 2020 making it one of the most densely populated countries in Africa. The country presents specific factors of poverty that affect the supply of housing which are: demography, density, low urbanisation and the problem of natural disasters. Affordability of houses for ownership and rental is still an issue in the urban areas which has led to majority of families to share rooms in more informal and less expensive houses which tend to have limited physical space and are poorly ventilated while sanitation, water and electricity are limited or absent.
To overcome the housing supply challenge and meet the needs of the population, Burundi will have to develop each year by 2030 an area of 855 hectares of land and build 25 631 housing units, more than half – 14 365. Housing affordability and supply will stand a better chance when cushioned by infrastructure development, supply of land and land tenure, real estate production, and access to basic services. Integrated community development projects being introduced in Burundi will improve access to basic services in the country while also creating economic opportunities in water supply, sanitation systems, roads, and bridge construction.
Burundi’s financial system is still in infancy after the effects of the civil war. Formal financial services are provided by 52 institutions approved by the Bank of the Republic of Burundi. There are also informal financial organisations called tontine associations and loan sharks. Access to financial credit and housing loans is low with only two percent of the population having obtained a loan at a financial institution in the last 12 months. More still needs to be done to ensure financial services also trickle down to rural areas which are the greater population in Burundi to enable financial inclusion.
Find out more information on Burundi’s housing finance sector, including key stakeholders, important policies and housing affordability:
- Introduction
- Access to Finance
- Affordability
- Housing Supply
- Property Markets
- Policy and Regulations
- Opportunities
- Availability of data on housing finance
- COVID-19 response
- Websites
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2019 edition, which has up-to-date profiles for 55 African countries.
Download yearbookBurundi
Introduction
Burundi is known as the “heart of Africa” and is located in the Great Lakes region of Eastern Africa. It covers an area of 27 834km2 of which 25 650km2 is land and 2 180km is water. The country is predominantly rural and relies mainly on agricultural activities as a source of livelihood. It is among the poorest countries in Sub-Saharan Africa with an estimated per capita income of US$261 in 2019.[1]
With a total population estimated at 11 890 781 in 2020[2], Burundi is one of the most densely populated countries in Africa with 435 people per square kilometre as of 2018.[3] The population growth rate is approximately three percent.[4] The rate of urbanisation remains one of the lowest globally at 13 percent.[5] The housing market in Burundi is characterised by insufficient supply and an ever-growing demand caused by a dynamic demography.[6] The country presents specific factors of poverty that affect the supply of housing which are: demography, density, low urbanisation and the problem of natural disasters. To overcome the housing supply challenge and meet the needs of the population, Burundi will have to develop each year by 2030 an area of 855 hectares of land and build 25 631 housing units, more than half – 14 365, in urban areas.[7] Energy infrastructure development is woefully inadequate with low electricity access of 2 percent in the rural areas and 58.5 percent in urban areas as of 2016.[8]
Agriculture remains the principal economic activity, accounting for 40.7 percent of the Gross Domestic Product (GDP) in 2018 and employing 90 percent of the working population.[9] In 2019 GDP increased by 3.3 percent because of high coffee exports, a slight increase in public investment and particularly high agricultural production.[10] Before the global COVID-19 pandemic, the country’s economy was expected to grow by 3.7 percent in 2020 and 4.3 percent in 2021 on the back of high coffee exports combined with a slight increase in public investment, average growth of 6 percent in food production and a steady prudent monetary policy.[11] The increase in public expenditure not being offset by good economic performance has meant that the fiscal deficit rose from 3.3 percent in 2018 to 4.2 percent in 2019. Nevertheless, it must be noted that the budget deficit was financed by means of advances received from the central bank and the accumulation of domestic payment arrears.[12]
The risk of debt distress remains high at 63.5 percent of GDP in 2019 compared to 58.4 percent in 2018 because of increased domestic debt. The inflation rate decreased from 16.1 percent in 2017 to 3.1 percent in 2019 resulting in the drop of food prices by almost 11 percent.[13] The COVID-19 pandemic is likely to impact negatively on all the economic indicators.
[1] World bank (2020) GDP per Capita (current US$§) https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=BI (Accessed 22 July 2020)
[2] Economic indicator (2020) Burundi economic indicators https://www.economy.com/burundi/indicators (22 July 22)
[3] World Bank (2020) Population density (people per sq. km of land area) Burundi https://data.worldbank.org/indicator/EN.POP.DNST?locations=BI (Accessed 22 July 2020)
[4] Central Intelligence Agency (2020) Africa Burundi https://www.cia.gov/library/publications/the-world-factbook/geos/print_by.html (Accessed 25 July 2020)
[5] Central Intelligence Agency (2020) Africa Burundi https://www.cia.gov/library/publications/the-world-factbook/geos/print_by.html (Accessed 25 July 2020)
[6] United Nations Habitat report 2012. Burundi : profil urbain national Pg.20https://mirror.unhabitat.org/pmss/getElectronicVersion.aspx?nr=3459&alt=1
[7] United Nations Habitat report 2012. Burundi : profil urbain national Pg. 20https://mirror.unhabitat.org/pmss/getElectronicVersion.aspx?nr=3459&alt=1
[8] Banque mondial (2020) Burundi : offrir un meilleur accès aux services et aux débouchés économiques aux habitants pauvres des zones rurales. Communiqué de presse n° : 2020/068/afr https://www.banquemondiale.org/fr/news/press-release/2020/02/28/burundi-to-improve-access-to-services-and-opportunities-for-the-poor-in-rural-areas (Accessed 29 September 2020)
[9] Economic indicator (2020) Burundi economic indicators https://www.economy.com/burundi/indicators (22 July 22)
[10] African Development bank (2020) Burundi economic outlook https://www.afdb.org/en/countries/east-africa/burundi/burundi-economic-outlook (Accessed 25 July 2020)
[11] African Development bank (2020) Burundi economic outlook https://www.afdb.org/en/countries/east-africa/burundi/burundi-economic-outlook (Accessed 25 July 2020)
[12] African Development bank (2020) Burundi economic outlook https://www.afdb.org/en/countries/east-africa/burundi/burundi-economic-outlook (Accessed 25 July 2020)
[13] African Development bank (2020) Burundi economic outlook https://www.afdb.org/en/countries/east-africa/burundi/burundi-economic-outlook (Accessed 25 July 2020)
Access to Finance
Burundi’s financial system is still in its infancy. As of 31 July 2020, formal financial services in Burundi are provided by 52 institutions duly approved by the Bank of the Republic of Burundi (BRB) including 10 commercial banks[1], 2 financial institutions, 40 microfinance institutions and the Regie National des Post (RNP). Besides formal financial organisations, there are also informal financial organisations operating in the country called tontine associations known as “ikirimba” and loans sharks.In 2012, only 12 percent of the adult population in Burundi had a bank account, which represents 3.7 percent of population.[2] Fourteen percent had access to informal institutions of the rural types[3] and 73 percent were presumed to be totally excluded from the financial system. Account holder rates vary widely across socioeconomic categories. Men are twice likely as women to have an account, and 18 – 20-year-olds are half as likely as those over 30 years of age. The account holder rate reached 90 percent among government employees, 52 percent among private sector employees, 30 percent among traders and 5 percent among farmers on agricultural plots.
Access to financial credit in general and housing loans is particularly low, with only two percent of the population having obtained a loan at a financial institution in the last 12 months. The majority of borrowers only have one loan. The average loan size by activity sector for the first quarter which includes loans to central government agencies and local government is BIF1 159 million (US$605).[4] To increase access to finance, in 2017 the International Fund for Agricultural Development (IFAD) agreed to grant Burundi BIF4 billion (US$24.9 million). This grant is intended to improve financial inclusion services in rural areas. In total, 99 200 rural Burundian households in 17 provinces will benefit from it.[5]
Specific to housing finance, the country has put in place the Fond de Promotion de l’habitat Urbaine (FPHU) with the objective of mobilising savings to finance individuals and property developers. Furthermore, the government has put in place a housing fund aimed at providing housing loans for teachers.[6] Burundi has very limited banking services penetration according to the most recent national survey on financial inclusion conducted by the central bank (BRB) in 2016, which found a penetration level of approximately 22 percent. Several local commercial banks have branches in urban centers while microfinance institutions mostly serve rural areas. The Burundian government is a minority shareholder in three banks.[7]
[1] Banque de la république du Burundi (2020) Marche financier https://www.brb.bi/fr/content/dispositions-l%C3%A9gales-et-r%C3%A9glementaires-0 (Accessed 2 August 2020)
[2]Banque de la république du Burundi (2020) Enquête nationale sur l’inclusion financière au Burundihttps://www.brb.bi/fr/content/enqu%C3%AAte-sur-l%E2%80%99inclusion-financi%C3%A8re-1 (Accessed 2 August 2020) Pg. 2.
[3] Banque de la république du Burundi (2020) Enquête nationale sur l’inclusion financière au Burundi https://www.brb.bi/fr/content/enqu%C3%AAte-sur-l%E2%80%99inclusion-financi%C3%A8re-1 (Accessed 2 August 2020) Pg. 3
[4] Banque de la république du Burundi (2020) Commercial and other financial intermediaries 2020 first quarter of March 2020 https://www.brb.bi/fr/content/monnaie-et-cr%C3%A9dit (Accessed 2 August 2020)
[5] Agence ecofin (2020) Le Burundi bénéficie d’une subvention de 24,9 millions $ du FIDA en faveur de l’inclusion financière agricole www.agenceecofin.com/aide-au-developpement/0610-50939-le-burundi-beneficie-d-une-subvention-de-24-9-millions-du-fida-en-faveur-de-l-inclusion-financiere-agricole (Accessed 20 September 2020)
[6] Iwacu (2020) Les enseignants n’ont plus foi dans le Fonds de logement du personnel www.iwacu-burundi.org/les-enseignants-nont-plus-foi-dans-le-fonds-de-logement-du-personnel/
[7] United Sates of America Department of State (2020). 2019 Investment climate statements: Burundi www.state.gov/reports/2019-investment-climate-statements/burundi/ (Accessed 2 August 2020)
Affordability
In urban centres, renting houses has become a burden on households, and acquiring the first home remains a priority for many people in Burundi.[1] In the past, housing policy favoured civil servants, but today social housing projects are being considered in the country to alleviate poverty.[2] The majority of dwellers are reverting to less expensive informal housing construction compared to formal housing.[3] Many families in urban areas are forced to share rooms with other families due to the high cost of rental housing and lack of alternative housing provision.Access to housing in general and social housing in particular has been a fundamental right recognised by the Constitution of the Republic of Burundi that led to the establishment in 2007 of the National Housing and Urbanisation policy (PNHU). In order to increase affordability of housing and improve living conditions especially during the COVID-19 pandemic, a presidential decree was signed on 24 May 2020 to establish the Burundian Office for Town Planning, Housing and Construction (OBUHA) to manage state lands, evacuate wastewater and refuse and repair urban and semi-urban roads.It should be noted that since the emergence of the COVID-19 pandemic, affordability of households in Burundi has been negatively affected by the slow export of agricultural products and other export resources. The consumer price index for the month ending April 2020 revealed an overall annual inflation of 2.6 percent against 1.8 percent for March 2020. On a year-over-year basis, the consumer price index is up 7.6 percent for the month of April 2020 against an increase of 7.1 percent for the month of March 2020.[4] With the majority of the population (70 percent) already poor, Burundian households may face more affordability challenges due to the effect of COVID-19 on income and jobs, particularly for low income and informal workers. This could result in defaults in mortgage and rental payments and forced evictions.
[1] Burundi-eco (2020). Premier logement : des recours qui ne tiennent pas la route https://burundi-eco.com/premier-logement-des-recours-qui-ne-tiennent-pas-la-route/#.X1o_AYs69PY (Accessed 5 August 2020)
[2] Burundi-eco (2020). Premier logement : des recours qui ne tiennent pas la route https://burundi-eco.com/premier-logement-des-recours-qui-ne-tiennent-pas-la-route/#.X1o_AYs69PY (Accessed 5 August 2020)
[3] Burundi-eco (2020). Premier-logement : des recours qui ne tiennent pas la route https://burundi-eco.com/premier-logement-des-recours-qui-ne-tiennent-pas-la-route/#.X1o_AYs69PY (Accessed 5 August 2020)
[4] Institute of Statistics and Economics Studies of Burundi (2020). Statistics and studies https://www.insee.fr/en/statistiques ( Accessed 5 August 2020)
Housing Supply
The main issues facing the housing sector in Burundi are the supply of land, real estate production and the lack of infrastructure as well as access to basic services. To deal with housing supply challenges and urban development, the country put in place a National Urban Development policy in 2008 with the objectives of providing Burundians with access to adequate housing and quality basic services.
In 2016 the government approved a project agreement between BIZ Planners and Adviser limited and the Société Immobilière Publique (SIP) to relaunch the construction of social housing for public servants in urban areas valued at BIF1 114 billion (US$582 million) reimbursable over 25 years including a grace period of 10 years. The Government of Burundi’s commitment to the project is to provide access to land with exemption from customs duties, some taxes and duties on imported or local construction materials. The government still engages with the private sector on solutions to the issue of urban social housing although its efforts have been negatively affected by post-election conflict since 2017.
More recently, in 2019, the Government of Burundi, through the Ministry of Housing entered into an agreement with the Swedish company Blockhomes to build affordable houses for public servants in all provinces.
Many Burundians are likely to be vulnerable to the effects of the COVID-19 pandemic because almost 80 percent of the population lives in rural areas with very limited access to electricity, water and adequate sanitation. This is in light of a report by UN-Habitat (2020) on COVID-19 in African cities which established that people living in slums and informal settlements are at a higher risk of contracting COVID-19 especially in urban slums where physical space is constrained, rooms are often shared and poorly ventilated while sanitation, water and electricity are inadequate or absent.[1]
[1] United Nations Habitat (2020) Covid 19 in African cities: impacts, responses and policies recommendations Pg. 16
Property Markets
The property sector of Burundi is still underdeveloped as a result of political instability caused by a long civil war combined with land issues. It is however slowly developing in the capital city of Bujumbura with residential and commercial property under construction as a result of relative political stability that is driving up the demand for quality housing. Hence, the government is putting in place policies to encourage local and foreign investment in the property market sector to drive up property market growth. These efforts are also supported by the creation in 2009 of the Investment Promotion Agency (ANAPI) to promote investment in the country and facilitate market entry for investors by offering assistance in acquiring licenses, certificates, authorisations, and other permits required by law.To support the property market growth, a number of organisations offer mortgage finance and housing finance. These include National Bank of Economic Development of Burundi (BNDE), FPHU, Burundi Bank of Commerce and Investment (BBCI), Kenya Commercial Bank (KCB) among others. Ecobank Burundi offers housing finance products on short, medium and long-term basis. Nevertheless, the property market still faces challenges that negatively affect the development of this sector which are: a poor land tenure system that is caused by the fact that a large part of land remains undocumented, poor land records and a complicated property registration procedure.[1] Furthermore, there is a lack of data on tenants and the management of rent, and mortgages constrain housing subsidies planned.[2] The growth projection for the property market in Burundi is still weak due to political uncertainty[3] and COVID-19 which will negatively affect economic growth projections.
[1] Fortune of Africa (2020) Profile of real estate sector in Bururndi https://fortuneofafrica.com/burundi/profile-of-real-estate-sector-in-burundi/ (Accessed 20/8/2020)
[2] African Development Bank (2020) Africa economic outlook 2020 supplement Amid Covid 19 https://www.afdb.org/sites/default/files/documents/publications/afdb20-04_aeo_supplement_full_report_for_web_0705.pdf Pp 15(Accessed 20 August 2020)
[3] African development bank (2019) African Economic Outlook, 2019 https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/2019AEO/AEO_2019-EN.pdf Pp 19
Policy and Regulations
Burundi has a national housing and urban planning policy with the objectives of providing the country with a balanced urban framework and allowing each Burundian to access decent housing. Furthermore, in order to improve the living conditions of Burundians, the government has embarked on legislative and institutional reforms to stimulate the development of the urban housing sector with the aim of attracting investment in social housing development and the property market. Among key housing legislative reforms is Law No. 1/09 of 12 August 2016 on the code of urbanisation, housing and construction in Burundi. This code sets the rules governing town planning, housing and construction throughout the national territory. It also establishes rules applicable to construction in both urban and rural areas.[1] To support the legislative reforms in matters of urban development and social housing, the government has put in place an institutional framework for land and housing development. Its responsibility is devolved to the Ministry of Water, Environment, Land and Urban Planning through the general management of land use planning and town planning and housing.[2]
Land law in Burundi is governed by Law No 1/13 of 9 August and is based on the revision of the land code. Nevertheless, it is important to point out that in rural areas, land issues are managed on the basis of customs and traditions. This means that land is inherited from father to son. This system of succession leads to fragmentation of land and the decrease in the average size of holdings. Initially, it was 104 hectares per household in 1973, 0.7 per hectare in 1989 and 0.5 hectare in 2009. This practice has led to a multiplicity of land disputes and created tensions within families and communities.[3]
[1] République du Burundi (2016) cabinet du président de la république Pp 2
[2] United Nation Habitat report 2012) Burundi : profil urbain national. Pg. 14 12https://mirror.unhabitat.org/pmss/getElectronicVersion.aspx?nr=3459&alt=1
[3] United Nation Habitat report 2012) Burundi : profil urbain national Pg15 12https://mirror.unhabitat.org/pmss/getElectronicVersion.aspx?nr=3459&alt=1
Opportunities
Based on the institutional arrangement and the urban housing policies, a number of public-private partnerships have been concluded in the area of urban planning, in the field of water, sanitation and land rights. Among the public-private partnerships signed are: The development of the Kizingwe-Nyabugete site by the Direction Générale de l’Urbanisme et de l’Habitat in partnership with the APPN; the partnership between SIP and a study and construction company for the study of services and construction in the development of the Kizingwe site, public garden and playgrounds by Green Action Center for the Ministry of Water, Environment, Land and Urban Planning.
The lack of basic services and socioeconomic infrastructure has limited opportunities for growth in Burundi. To improve access to services and opportunities for poor communities living in rural areas in Burundi, the World Bank has approved two grants with a combined value of BIF308 billion (US$160 million) from the International Development Association (IDA) to support improvement of essential services through solar power and local development in rural and remote areas.
The improvement of energy production and supply in local communities combined with integrated development plans provide great opportunities for investors in rural areas as the need for decent housing conditions will also increase. These projects will create further opportunities in small and medium enterprises through the availability of services and electricity. Furthermore, the World Bank finance plans to train women in entrepreneurship and encourage private investment in the provision of off grid energy services.[1] The integrated community development projects aim to improve access to basic services in the country at the same time creating economic opportunities in water supply, sanitation systems, roads and bridge constructions.
Thus, based on the investment policy system of Burundi which does not discriminate against foreign investors regarding land acquisition or lease[2], this offers opportunities for foreign investors to chip into the social housing development sector as the country seeks to improve the living conditions of Burundians.
[1] World Bank (2020)
[2] United Sates of America Department of State (2020). 2019 Investment climate statements: Burundi www.state.gov/reports/2019-investment-climate-statements/burundi/ (Accessed 2 August 2020)
Availability of data on housing finance
Access to data on social housing and housing finance in Burundi remains a challenge due to public or private institutional process constraints. Data on housing are not centralised, making the process of collection for decision making hard and lengthy. Nevertheless, the government efforts at improving the property market of Burundi and attracting investment will have a positive impact on housing and housing finance data management access.
Housing finance data in Burundi are mainly provided by specialised government institutions including private financial institutions that provide housing finance in the country including: National Bank of Economic Development Burundi (BNDE), Institute of Statistics and Economics Studies of Burundi, La Direction National du Cadastre FPHU, Directorate of Urban Planning and Habitat (DGHU), Department of Land Titles (Ministry of Justice), BBCI, KCB, Ecobank Burundi.
COVID-19 response
For a long time, the Government of Burundi hesitated to put in place restrictive measures to prevent the spread of the COVID-19 pandemic in the country. Due to the pandemic, the authorities of Burundi announced the suspension of all flights to and from Melchior Ndadaye International Airport in Bujumbura, the closure of airports for a period of 14 days with the possibility of renewal after evaluation of the evolution of spread of cases and the management process put in place. Regarding traffic by road from Burundi, the borders were closed on the Rwandan and Democratic Republic of Congo (DRC) side. On the other hand, people entering Burundi through the Rwandan border were quarantined by the Burundian authorities in a school in Ngozi, and those entering through the DRC border in Cibitoke. For those returning to Burundi from Tanzania, people were either turned back or quarantined in Giharo or Bukemba.
The central bank of Burundi did not reduce the interest rate, although the government has taken economic measures to alleviate the negative effects of COVID-19 on the economy and the daily life of Burundians. Among the financial measures put in place is the national contingency plan for preparedness and response to the COVID-19 crisis estimated at BIF 5 billion (US$26 million).
Furthermore, no moratorium on eviction was put in place or specific measure for informal settlement except measures such as the reduction of the price of electricity bill for households.
Websites
Banque de la république du Burundi (BRB). https://www.brb.bi/
La Banque Nationale pour le Développement Economique (BNDE). https://bnde.bi/
Institute of Statistics and Economics Studies of Burundi (ISTEEBU) http://www.isteebu.org/
Banque Burundaise pour le Commerce et l’Investissement(BBCI) http://www.bbcibank.com/
Fond de Promotion de l’habitat Urbaine (FPHU) http://www.fphu.bi
Ministry of Water, Environment, Land and Urban Planning. https://www.rcmrd.org/burundi
