Housing Finance in Cameroon
Overview
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To download a pdf version of the full 2018 Cameroon country profile, click here.
Cameroon’s financial system is the largest in the CEMAC region. Although it boasts an estimated 412 licensed microfinance institutions, liquidity is a major challenge. The domination of its financial sector by foreign commercial banks impedes access to finance as these banks prefer lending to government, multinationals and businesses. Only 15 percent of Cameroon’s population bank with commercial banks. Approximately five percent of Cameroonians have access to mortgage finance from the formal private banking system. Cameroon’s long-term credit market remains underdeveloped. Only about five percent of Cameroonians have access to mortgage finance from the formal private banking system.
With a population growth rate of 2.62 percent and an urbanisation growth rate of 3.63 percent in 2017 Cameroon is 56.4 percent urbanised. The challenge is to provide housing for this growing and urbanising population, almost half of which live in informal dwellings and settlements. Average rental prices for three-bedroom accommodation range from CFA 60 000 (US$108) to CFA 125 000 (US$225) on average in urban and semi-urban areas respectively. As the middle class grows, and rate of urbanisation increases, there is a shift from ownership towards rentals especially for first time or new entrants in the urban and semi-urban areas. As the middle class grows, and rate of urbanisation increases, there is a shift from ownership towards rentals especially for first time or new entrants in the urban and semi-urban areas. Despite ongoing efforts towards increasing housing supply, Cameroon’s housing backlog is still significant. Government, private companies and individual investors (both local and in the diaspora) are looking to overcome the growing deficit of more than 100 000 units a year through ongoing investments in housing.
Cameroon’s housing sector continues to attract investment as there is a huge need for housing in all segments of the market and housing value chain. With economic growth, a huge and increasing housing backlog in all segments of the housing market, growing middle and upper classes, increasing capital inflows from Cameroonians in the diaspora and other international investors, increased local investment and better legislation and reforms, the housing market is destined for sustainable growth.
Find out more about information on the housing finance sector of South Africa, including key stakeholders, important policies and housing affordability:
- Macroeconomic Overview
- Access to Finance
- Affordability
- Housing Supply
- Property Markets
- Policy and Regulation
- Opportunities
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2018 edition, which has up-to-date profiles for 54 African countries.
Download yearbookCameroon
Macroeconomic Overview
Cameroon is the dominant economy and most significant market in the Economic and Monetary Community of Central Africa (Communauté Économique et Monétaire de l’Afrique Centrale, or CEMAC) because of the size of its economy and its growing population. It is located in Central Africa and shares a border with Chad, Central Africa Republic, Equatorial Guinea, Gabon and Nigeria.[1] It is a low to middle income country with a population of just below 25 million people, and an annual 2017 population growth rate of 2.62 percent.[2]
Cameroon was colonised by Britain and France. French Cameroon became independent in 1960 as the Republic of Cameroon. The following year, British trust territory of Southern Cameroons voted to merge with French Cameroon to form the Federal Republic of Cameroon. In 1972, a new constitution replaced the federation with a unitary state, the United Republic of Cameroon.[3] The name of the country was later changed by presidential decree to The Republic of Cameroon. Southern Cameroon is currently engaged in a protracted battle with the government of Cameroon as it seeks to separate from the rest of the country.If these tensions do not ease, they could lead to a civil war in the country.
Cameroon’s economy – CEMAC’s engine for agricultural/industrial production and commercial services – saw a slowdown in economic activity and growth in 2017 due to a sharp decline in oil production and the unrest in the two English- speaking regions of the country. Economic growth is projected to reach four percent in 2018 mainly due to the start of natural gas production and construction work for the upcoming Africa Cup of Nations tournament.[4] Cameroon achieved an improved ranking of 163 in the 2018 Doing Business Report for ease of doing business.[5] Economic growth, increasing local and foreign direct investments, and a growth in population have created a growing middle class with a strong demand for products and services, including housing.
Modest oil and other mineral resources as well as favourable agricultural conditions provide Cameroon with one of the best-endowed primary commodity economies in Sub-Saharan Africa. It has the most diverse economy in the CEMAC region with a vision to become an upper middle income economy by 2035.[6] According to the World Bank, for this vision to be realised, it will have to increase productivity, unleash the potential of its private sector and grow its GDP by eight percent between 2015 to 2035. As part of its industrialisation efforts, efforts to develop agricultural, forestry and pastoral production are increasing. The mining industry has huge potential with new deposits continuously discovered, creating new opportunities for construction and the provision of subsidised, affordable housing. Major industries include petroleum production and refining, aluminium production, food processing, light consumer goods, textiles, lumber and ship repairs. However, huge investments in infrastructure and enhancement of the business environment are required to increase this sector’s value. This is being addressed by the government with ongoing projects to increase electricity supply through the construction of new hydroelectricity power plants and incentives to encourage private sector investment in specific manufacturing sectors such as the deep sea port in Kribi and the Lom Pangar hydropower project. A natural gas-powered electricity generating plant has also been opened to diversify the energy sector. Growth in this sector and the increasing investments in infrastructure will enable the expansion of the residential real estate market.
The services sector is dynamic and dominated by transport, business and mobile telecommunications, construction, retail trading, hotel and catering and the financial services industry. The growth of these sectors alongside a growing middle class presents new opportunities for subsidised affordable housing and housing finance given the current inadequate end-user housing finance opportunities.
[1] The World Bank (2018). The World Bank in Cameroon. http://www.worldbank.org/en/country/cameroon/overview . (Accessed 10 Sept 2018).
[2] Ibid.
[3] Central Intelligence Agency (CIA) (2018). World Factbook: Cameroon. https://www.cia.gov/library/publications/the-world-factbook/geos/cm.html (Accessed 15 Sept 2018).
[4] Reuters (2018). “IMF says Cameroon’s economic growth to rise to 4 percent in 2018.” 7 July 2018. https://uk.reuters.com/article/cameroon-economy-imf/imf-says-cameroons-economic-growth-to-rise-to-4-percent-in-2018-idUKL8N1U308M (Accessed 15 Sept 2018).
[5] World Bank (2018). Doing Business: Reforming to create jobs. http://russian.doingbusiness.org/~/media/WBG/DoingBusiness/Documents/Annual-Reports/English/DB2018-Full-Report.pdf (Accessed 11 September 2018).
[6] Republic of Cameroon (February 2009). Cameroun Vision 2035. www.camerounenmarche.com/download/?lang=fr&strMode=getDoc&id=31 (Accessed 15 Sept 2018).
Access to Finance
Though Cameroon’s financial system is the largest in the CEMAC region, it is still in its infancy. There are 14 commercial banks and 412 licensed microfinance institutions (MFIs)[1], as well as non-banking financial establishments and foreign exchange bureaus. There is also the Douala Stock Exchange.[2] The banking sector is highly concentrated in the main urban areas and dominated by foreign commercial banks. Banks readily lend to government, multinationals and businesses but neglect retail and small businesses. Cameroon has a large unbanked population as only 15 percent of the population bank with commercial banks. Some commercial banks provide some housing-related finance in the way of mortgage loans.
According to the 2018 Doing Business Report, Cameroon’s ranking significantly improved to 68th in the ease of getting credit.[3] Mobile banking is increasing financial accessibility with companies such as MTN and Orange offering this service.
The Bank of Central African States (Banque des Etats d’Afrique Centrale/BEAC) regulates the banking and MFI sectors through the Central African Banking Commission (COBAC). Both COBAC and the Ministry of Finance and Budget license banks, and there are special regulations for small-scale credit co-operatives. The system is bank-centred, and the commercial banks in the country mainly fulfil traditional banking functions, with a tendency to prefer dealing with large, established companies, government and medium to high net-worth individuals. The long-term credit market remains underdeveloped. The distribution of banks is heavily skewed towards the main urban and semi-urban centres, with a significant part of the semi-urban and rural parts of the country denied access to formal banking facilities. This is a gap that MFIs are exploiting.
Access to housing finance is very low, available mainly to government employees through the government agency, Crédit Foncier du Cameroun. Only about five percent of Cameroonians have access to mortgage finance from the formal private banking system. The government continues to inject more funds into Crédit Foncier and has instituted reforms such as providing financial guarantees and broadening assets that can be used as collateral to make it easier to access housing finance. Property developers and private equity funds with money are getting into local partnerships to provide end-user financing for housing. A few partnerships are already in place: Ecobank and Credit Foncier du Cameroun,[4] and China Development Bank and Afriland First Bank,[5] which help provide end- user financing to individuals to buy or build houses. Title deeds are attached to only a small percentage of land because implementing the legal provisions on land ownership has been impeded by jurisdictional disputes as well as the high cost of title deeds. In 2012, Cameroon made amendments to the Organisation for the Harmonisation of Business Law in Africa (OHADA) Uniform Act on Secured Transactions that broadened the range of assets that can be used as collateral, making it easier for people to access finance.
Microfinance is mainly managed by associations, or savings and credit institutions and co-operatives. The licensed establishments have many branches across the country, a growing client base, and total savings of more than US$1 billion.[6] About half of the MFIs belong to the largest network of MFIs, the Cameroon Cooperative Credit Union League (CamCCUL). While MFIs have become increasingly important, their development has been hampered by a loose regulatory and supervisory framework. The conditions to carry out microfinance activities are defined at the sub-regional level by CEMAC.
Liquidity is a problem, and many MFIs are only able to satisfy a third of their customers at any time, depending on their credit requirements. To address the liquidity issue and to make more funds available to finance activities, including providing housing finance, the government has established a wholesale fund, financed by the African Development Bank (AfDB). The fund is worth CFA 21 billion (US$40 million) and has helped to usher in financial reforms.
Under Article 5 of the governing regulations, an MFI may be classified as category one, two or three.[7] Category one are co-operative institutions that provide savings opportunities exclusively to members, cannot seek profits and exist solely to empower their members. Category two are profit-seeking MFIs that offer savings and credit facilities to the public. Category three MFIs are profit-seeking and provide credit services to the public but do not accept savings.
The most popular credit institution is called njangi by English-speaking people and tontines by French-speaking people. This rotating savings model is usually made up of people of the same social class, same community or same cultural affiliation who have similar incomes or who engage in similar activities. Two types are commonly used for housing purposes: rotating funds, and savings and loans funds.
Rotating funds involve groups of individuals who come together on a regular basis with agreed fixed sums of money that is interest-free. At each meeting, a lump sum is given to one of the group members. The member who receives the money is agreed in advance by consensus among the group, and the number of members determines the loan period. A slightly different rotating savings model, made up of individuals with different income brackets, is more flexible. The money collected is auctioned and those who have not yet received a loan may bid for it. The person with the highest bid gets the loan.
Savings and loan funds allow members to contribute more than the agreed regular sum of money into a savings fund that is then loaned to other members in need with interest of 10 percent to 15 percent. The saver may withdraw the money but only after sufficient notification has been given to the association. This money earns interest for the saver.
[1] Koigi, Bob (2017). “Cameroon: 412 microfinance institutions greenlighted to operate in 2017.” 18 Jan 2017. Africa Business Communities. https://africabusinesscommunities.com/news/cameroon-412-microfinance-institutions-greenlighted-to-operate-in-2017.html (Accessed 15 Sept 2018).
[2] Ministry of Finance. http://www.minfi.gov.cm/index.php/en/component/content/category/images/documents/Depenses_de_l_etat_par_chapitre_section_article_et_paragraphe/38-state%20expenditure%20per%20budgetary%20head%20section%20article%20and%20paragraph.pdf
[3] World Bank (2018). Doing Business: Reforming to create jobs.
[4] Credit Focier du Cameroun (2016). www.credit foncier.cm
[5] Afriland First Group (2014). www.afrilandfirstgroup.com.
[6] ResearchGate (March 2017). Financial Performances of Microfinance Institutions in Cameroon: Case of CamCCUL Ltd. https://www.researchgate.net/publication/315912196_Financial_Performances_of_Microfinance_Institutions_in_Cameroon_Case_of_CamCCUL_Ltd (Accessed 11 Sept 2018).
[7] Ibid.
Affordability
The unemployment rate in Cameroon is 4.2[1] percent as of 2017, with underemployment reported to be about 76 percent, which may worsen given the current socioeconomic and political situation in the country. The population below the poverty line is reported to be 37.5 percent as of 2014. The national Gini-index is 46.5 suggesting relatively high levels of inequality. [2] It has a Human Development Index value of 0.556.[3] This puts the country in the Medium Human Development category. Most people (70 percent) earn an income or survive in the informal economy through subsistence agriculture and small, micro and medium-scale businesses. The formal private sector is not well developed, employing a very small percentage of the labour force. The government, through its agencies and parastatals, is the largest formal sector employer. The average monthly income per household in the formal public sector is CFA 150 000 (US$270), which is slightly lower than the average income per household in the private sector at CFA 175 000 (US$315). Average rental prices for three-bedroom accommodation range from CFA 60 000 (US$108) to CFA 125 000 (US$225) on average in urban and semi-urban areas respectively. Most families receive monthly remittance from the growing population in the diaspora. Remittance inflows from the diaspora into Cameroon continue to increase. In 2016, the value for personal remittances received in US dollars was estimated at 242 billion.[4] These funds are used primarily for the basic needs of families back in Cameroon and to fund projects for those in the diaspora.
Building costs are high. It is difficult to build houses with uniform standards at a cost accessible to lower and middle income people. This has led to a discrepancy between production costs and purchasing power. Government has helped to reduce housing production costs to make housing more affordable by establishing government agencies such as Maetur to encourage the use of local materials and to reduce the price of land and inputs such as cement and sand. It has also stepped up funding for government agencies in this sector. Companies such as Quality Habitat Corp have set up factories to manufacture building materials, which should reduce cost of inputs. The government is also rolling out affordable housing projects across the country. Individuals provide 20 percent as their equity investment upfront and take a loan for the remaining 80 percent, which the government guarantees.18 Though at a very slow pace, this is helping to improve access to quality housing as individuals in the private and informal sectors are also beneficiaries.
[1] Trading Economics (2018). https://tradingeconomics.com/cameroon/indicators.
[2] Ibid.
[3] UNDP (2018). Human Development Indices and Indicators: 2018 Statistical Update
Briefing note for countries on the 2018 Statistical Update: Cameroon. http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/CMR.pdf (Accessed 15 Sept 2018).
[4] Indexmundi (2017). https://www.indexmundi.com/facts/cameroon/indicator/BX.TRF.PWKR.CD.DT
Housing Supply
The unemployment rate in Cameroon is 4.2[1] percent as of 2017, with underemployment reported to be about 76 percent, which may worsen given the current socioeconomic and political situation in the country. The population below the poverty line is reported to be 37.5 percent as of 2014. The national Gini-index is 46.5 suggesting relatively high levels of inequality. [2] It has a Human Development Index value of 0.556.[3] This puts the country in the Medium Human Development category. Most people (70 percent) earn an income or survive in the informal economy through subsistence agricultureand small, micro and medium-scale businesses. The formal private sector is not well developed, employing a very small percentage of the labour force. The government, through its agencies and parastatals, is the largest formal sector employer. The average monthly income per household in the formal public sector is CFA 150 000 (US$270), which is slightly lower than the average income per household in the private sector at CFA 175 000 (US$315). Average rental prices for three-bedroom accommodation range from CFA 60 000 (US$108) to CFA 125 000 (US$225) on average in urban and semi-urban areas respectively. Most families receive monthly remittance from the growing population in the diaspora. Remittance inflows from the diaspora into Cameroon continue to increase. In 2016, the value for personal remittances received in US dollars was estimated at 242 billion.[4] These funds are used primarily for the basic needs of families back in Cameroon and to fund projects for those in the diaspora.
Building costs are high. It is difficult to build houses with uniform standards at a cost accessible to lower and middle income people. This has led to a discrepancy between production costs and purchasing power. Government has helped to reduce housing production costs to make housing more affordable by establishing government agencies such as Maetur to encourage the use of local materials and to reduce the price of land and inputs such as cement and sand. It has also stepped up funding for government agencies in this sector. Companies such as Quality Habitat Corp have set up factories to manufacture building materials, which should reduce cost of inputs. The government is also rolling out affordable housing projects across the country. Individuals provide 20 percent as their equity investment upfront and take a loan for the remaining 80 percent, which the government guarantees.18 Though at a very slow pace, this is helping to improve access to quality housing as individuals in the private and informal sectors are also beneficiaries.
[1] Trading Economics (2018). https://tradingeconomics.com/cameroon/indicators.
[2] Ibid.
[3] UNDP (2018). Human Development Indices and Indicators: 2018 Statistical Update
Briefing note for countries on the 2018 Statistical Update: Cameroon. http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/CMR.pdf (Accessed 15 Sept 2018).
[4] Indexmundi (2017). https://www.indexmundi.com/facts/cameroon/indicator/BX.TRF.PWKR.CD.DT
Property Markets
The formal real estate market is concentrated in urban and peri-urban areas such asYaoundé, Douala and Limbe, and churn is concentrated in the middle-to-higher value market. Fifty-three percent of people own their own homes, which is mostly self-built while 30 percent are tenants. Both housing for ownership and rental is in high demand. Despite the focus on ownership, there are increasing opportunities for rental accommodation. Because supply increasingly lags behind demand, there is a constant minimum 10 percent year-on-year increase in house prices for rental. On average, it takes up to one month to find quality accommodation in Douala, Yaoundé and other main cities. This time has not decreased even with the increasing number of new housing units on the market. A growing number of real estate companies are providing buying/rental/ management services to clients. On average, it can cost up to CFA 125 000 (US$225) a month to rent a standard three-bedroom house in Douala and Yaoundé. This amount is about 20 percent cheaper in the smaller cities such as Buea, Limbe, and Bamenda. It costs up to CFA 10 million (US$17 885) to build a standard three-bedroom house, excluding the cost of land in the main cities like Douala andYaoundé. This cost is about the same and can even be more expensive in the smaller cities due to input costs. The cost of standard inputs increases the further away from Douala as most of the standard inputs are imported or manufactured around the main cities. The cost can be cheaper in the smaller cities depending on the inputs used. The average size of a standard three-bedroom house is 300m2.The cost of a serviced 500m2 piece of land in the urban areas is
CFA five million (US$9 000). This cost drops in smaller cities such as Buea, Limbe and Bamenda.
There is a deeds registry but accurate figures on the number of deeds is not available. With an ease to register property rank of 176, it takes 86 days to register property, and the cost to register is 19 percent of the property value with five processes to register the property.[1]
[1] World Bank (2018). Doing Business: Reforming to create jobs.
Policy and Regulation
The formal real estate market is concentrated in urban and peri-urban areas such asYaoundé, Douala and Limbe, and churn is concentrated in the middle-to-higher value market. Fifty-three percent of people own their own homes, which is mostly self-built while 30 percent are tenants. Both housing for ownership and rental is in high demand. Despite the focus on ownership, there are increasing opportunities for rental accommodation. Because supply increasingly lags behind demand, there is a constant minimum 10 percent year-on-year increase in house prices for rental. On average, it takes up to one month to find quality accommodation in Douala, Yaoundé and other main cities. This time has not decreased even with the increasing number of new housing units on the market. A growing number of real estate companies are providing buying/rental/ management services to clients. On average, it can cost up to CFA 125 000 (US$225) a month to rent a standard three-bedroom house in Douala and Yaoundé. This amount is about 20 percent cheaper in the smaller cities such as Buea, Limbe, and Bamenda. It costs up to CFA 10 million (US$17 885) to build a standard three-bedroom house, excluding the cost of land in the main cities like Douala andYaoundé. This cost is about the same and can even be more expensive in the smaller cities due to input costs. The cost of standard inputs increases the further away from Douala as most of the standard inputs are imported or manufactured around the main cities. The cost can be cheaper in the smaller cities depending on the inputs used. The average size of a standard three-bedroom house is 300m2.The cost of a serviced 500m2 piece of land in the urban areas is
CFA five million (US$9 000). This cost drops in smaller cities such as Buea, Limbe and Bamenda.
There is a deeds registry but accurate figures on the number of deeds is not available. With an ease to register property rank of 176, it takes 86 days to register property, and the cost to register is 19 percent of the property value with five processes to register the property.[1]
[1] World Bank (2018). Doing Business: Reforming to create jobs.
Opportunities
The formal real estate market is concentrated in urban and peri-urban areas such asYaoundé, Douala and Limbe, and churn is concentrated in the middle-to-higher value market. Fifty-three percent of people own their own homes, which is mostly self-built while 30 percent are tenants. Both housing for ownership and rental is in high demand. Despite the focus on ownership, there are increasing opportunities for rental accommodation. Because supply increasingly lags behind demand, there is a constant minimum 10 percent year-on-year increase in house prices for rental. On average, it takes up to one month to find quality accommodation in Douala, Yaoundé and other main cities. This time has not decreased even with the increasing number of new housing units on the market. A growing number of real estate companies are providing buying/rental/ management services to clients. On average, it can cost up to CFA 125 000 (US$225) a month to rent a standard three-bedroom house in Douala and Yaoundé. This amount is about 20 percent cheaper in the smaller cities such as Buea, Limbe, and Bamenda. It costs up to CFA 10 million (US$17 885) to build a standard three-bedroom house, excluding the cost of land in the main cities like Douala andYaoundé. This cost is about the same and can even be more expensive in the smaller cities due to input costs. The cost of standard inputs increases the further away from Douala as most of the standard inputs are imported or manufactured around the main cities. The cost can be cheaper in the smaller cities depending on the inputs used. The average size of a standard three-bedroom house is 300m2.The cost of a serviced 500m2 piece of land in the urban areas is
CFA five million (US$9 000). This cost drops in smaller cities such as Buea, Limbe and Bamenda.
There is a deeds registry but accurate figures on the number of deeds is not available. With an ease to register property rank of 176, it takes 86 days to register property, and the cost to register is 19 percent of the property value with five processes to register the property.[1]
[1] World Bank (2018). Doing Business: Reforming to create jobs.
