Central African Republic has a limited 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 Central African Republic is 15 percent, as of September 2016, and requires at least a 30 percent down payment. The cheapest newly built house by a developer recorded by CAHF is US$ 24 000, which is for a 50 square metre unit. Cement prices are higher than the continental average, at US$ 17.30 for a 50-kilogram bag.
With an urbanisation rate of 2.62 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. Inflation and forex risk are mitigated by membership to Communauté Économique et Monétaire des Etats de l’Afrique Centrale (CEMAC), but political instability has limited housing market development. 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 Central African Republic can afford.
Find out more information on the housing finance sector of Central African Republic, 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
Central African Republic
The Central African Republic (CAR) is a landlocked country at the heart of the African continent. The country has just under five million inhabitants and has a relatively low population density. Aside from abundant land, CAR is well endowed with natural resources such as timber, gold and diamonds. The urban population of CAR has substantially increased from 20.1 percent in 1960 to 40.3 percent in 2016, growing at an average annual rate of 0.99 percent. Additionally, 80 percent of CAR’s population lives off subsistence farming and livestock. Subsistence agriculture, together with forestry and mining, remain the backbone of the economy, with about 60 percent of the population living in outlying areas. The agricultural sector generates more than half of GDP. Timber and diamonds account for most export earnings, followed by cotton.
Important constraints to economic development include the CAR’s landlocked geography, poor transportation system, largely unskilled work force, and legacy of misdirected macroeconomic policies. Factional fighting between the government and its opponents remains a hindrance to economic revitalisation. Distribution of income is extraordinarily unequal. Grants from France and the international community can only partially meet humanitarian needs. Since 2009, the IMF has worked closely with the government to institute reforms that have resulted in some improvement in budget transparency, but other problems remain. The government’s additional spending in the run-up to the 2011 election worsened CAR’s fiscal situation. In 2012, the World Bank approved US$125 million in funding for transport infrastructure and regional trade, focused on the route between CAR’s capital and the port of Douala in Cameroon. In July 2016, the IMF approved a three-year extended credit facility valued at US$116 million. In late 2016, the World Bank approved a US$20 million grant to restore basic fiscal management, improve transparency, and assist with economic recovery. Participants in the Kimberley Process, a commitment to remove conflict diamonds from the global supply chain, partially lifted the ban on diamond exports from CAR in 2015, but persistent insecurity will prevent GDP from recovering to its pre-2013 level.
Since the end of 2012, CAR has been facing an increasingly complex political and humanitarian crisis. Intensified armed opposition to the central government by a coalition of armed movements called Séléka resulted in a coup d’état in March 2013, which was accompanied by numerous human rights violations. Subsequent armed resistance to the Séléka regime and revenge-motivated violence, often of an inter-communal nature, led to more violations of human rights and displacement. By the end of 2013, one fifth of the population (one million persons) were displaced. Despite the signing of a cease-fire agreement in July 2014 and the deployment of United Nations peacekeepers, the prospects for peace remain grim. However, the country is undergoing an internationally supervised transition involving several constitutional referendums as well as presidential and parliamentary elections.
The tentative economic recovery that began in 2014 is strengthening gradually, with a real GDP growth rate that reached 5.1 percent in 2016. This improvement is rooted in the recovery of the extractive sector, which surged by 22.8 percent following the partial suspension of the Kimberley Process. Inflationary pressures, which were strong during the crisis, should lessen in 2017 and 2018 due to the recovery of transport in the Douala-Bangui corridor and to improved food supply. Inflation, which was 11.6 in 2014, was expected to gradually ease from an average of 5.6 percent in 2015, to around 4.7 percent in 2016 and is forecast at 3.5 percent in 2017. Despite showing promising signs of growth the country is also bound by the constraint and potential security of having a regionally based economic structure, which is directly affected by the regional economic fluctuations and market. For instance the CAR is affected by the 2.1 percent inflation rate for the Central Africa sub-region. CAR is member of the regional central bank, Banque des états de l’Afrique Centrale (BEAC), which lowered its benchmark interest rate by 50 basis points to an all-time low of 2.45 percent in 2015. It is likely that this looser monetary policy will eventually be transmitted to the country’s financial institutions. Indeed, interest rates in CAR which are actually 2.95 percent, averaged 3.46 percent from 2009 until 2017; reaching its all-time highest level of 4.25 percent in July of 2009 and its lowest level of 2.45 percent in July of 2015.
Access to Finance
According to a publication on APA news website (July 2017), the CAR is primed to establish a housing bank; leading officials of Shelter Africa Center, a real estate and housing firm based in Nairobi, Kenya are posing the possibility of establishing a bank for housing. This is the result of a recent meeting between the company’s leading officials and the Minister of Housing to find potential solutions to the difficulties of state officials without decent housing. The intention from Shelter Africa is to explore potential avenues for finance toward projects that involve the construction of social housing in the Central African Republic, to put an end to the crisis in the country’s housing industry. However, the Minister warned that for such a housing scheme to become a reality, the country has to return to lasting peace and security.
However until the release of the aforementioned scheme there has been almost no housing finance instrument available in the country. The housing finance landscape remains underdeveloped, offering many opportunities for the development of this sub-sector. A few banks, such as Ecobank Centrafrique and the Sahelo-Saharan Bank for Investment and Commerce, offer housing credit (over a maximum fifteen-years term) and credit for equipment (for a maximum of three years) to individuals at between 8.5 percent and 17 percent interest rate a year, plus value-added tax (VAT), for up to CFA 50 million (US$85 280) for credit for equipment and without maximum amount for housing credit. These loans are secured by first order mortgages on the concerned properties and are in general supplied to public and private administration workers. Additionally, according to the World Bank data based on housing finance provided by Badev et al. (2014), the minimum income required for a prudent mortgage in CAR is US$13 894 and only 0.5 percent of the population can afford this; the access to mortgage market is therefore challenging for almost all of the population.
In 2011 and 2012, government officials from the Ministry of Urban Development and Housing undertook several exchange visits to Senegal and Morocco to learn from these countries in view of creating of a housing bank. Plans were to create a housing bank named the Central African Housing Bank (Banque de l’Habitat de la Centrafrique), and a housing promotion agency (Agence Centrafricaine de Promotion de l’Habitat). The Central African Housing Promotion Agency was launched in 2011 and the Housing Promotion Agency was created in 2009 and fully staffed in 2011. However, the creation of the Central African Housing Bank was never ratified. Additionally, all of these plans were compromised with the outbreak of violence that followed the March 2013 coup d’état with the reduction of economic and investment opportunities and the dysfunction of the government.
As part of the Central African Economic and Monetary Community (CEMAC), CAR shares a common currency with other member states and delegates monetary policy to the BEAC. The financial sector is regulated by two regional regulatory authorities named COSUMAF (Commission de Surveillance du Marché Financier de l’Afrique Centrale) to regulate financial institutions and COBAC (Commission Bancaire d’Afrique Centrale) to administer, regulate, and supervise countries member banks; additionally, there is a Division of Financial Control at the Ministry of Finance and Budget which work as national authority for financial institutions.
CAR had made progress in providing access to finance until the last political crisis again disrupted efforts. CAR’s financial sector is the smallest in the CEMAC region and accounts only for 17.6 percent of GDP today; it is thus largely underdeveloped and plays only a limited role in supporting economic growth. In addition to the BEAC National Office, the system currently comprises four commercial banks, holding approximately 93 percent of the total financial system’s assets in addition to, two microfinance institutions (MFIs), two post office banks, three insurance companies, and a social security fund. Other financial institutions are largely absent from the country’s financial system, and their development remains hampered by weak market infrastructure as well as the lack of the necessary legal, judicial, prudential, and regulatory frameworks. While the sector has seen some moderate expansion in recent years, financial intermediation levels are amongst the lowest in the world, and credit to the economy which was 15 percent of GDP in 2014, represented only 12.8 percent of GDP in 2016; additionally the main sectors benefitting from bank loans are in the same year are trade (20 percent), transport and communications (16 percent), forestry (12 percent) and other services (28 percent).
Access to housing related financial products remains a major challenge. Due to economic and security concerns, financial institutions, and particularly banks and MFIs, have largely consolidated their business in Bangui, the capital of the country. Bank branches and ATMs are mostly concentrated in three towns, with 71 percent of total branches located in Bangui. Coverage of banking services as measured by the number of branches per 100 000 adults was only 0.96 percent in 2013. In other words, there were fewer than 35 bank branches in the country in 2013. Ecobank Centrafrique is the most extensive banking company, with branches in each of the main urban centers. Ecobank has 12 branches all over the country, although eight of these are located in Bangui. The post office is in charge of the postal savings bank, primarily serving as a channel for salary payments to civil servants, a minimal percentage of which hold a savings account. According to the latest Getting Credit indicator of the World Bank’s Doing Business Report (2017), CAR was ranked 139th out of 190 countries. About 5.7 percent of the population holds a bank account and only 0.5 percent have outstanding loans, while only one percent have access to MFIs. Low levels of mobile penetration also dampen the potential expansion of access to financial services through mobile technology.
Political and social instability has weakened the social fabric, reduced saving and investment among the population, and lessened the number of donors involved in the microfinance sector. Between 2007 and 2011 UNCDF, UNDP, the Central African Government and various players of the microfinance sector launched a four-year US$4 million programme named Programme d’Appui à l’Emergence d’un Secteur Financier Inclusif en République Centrafricaine (PAE/SFI) to support the emergence of an inclusive financial sector in the CAR in order to give the poor and low-income population access to sustainable financial products and services provided by microfinance institutions operating in a sustainable legal and institutional framework. At the beginning of 2010 there were only five licensed MFI’s comprising 31 branches and 32 000 clients. Crédit Mutuel de Centrafrique (CMCA) is the most important MFI network in the CAR, with a gross loan portfolio of US$3.9 million shared by 6109 accounts owners, and deposits amounting to US$8.8 million in 2013. The Société Financière Africaine de Crédit (SOFIA), another MFI, began operations in March 2009, and by end 2014 had 330 borrowers with total loans of US$0.24 million; however during the same year, the SOFIA deposits amount was higher (US$3.25 million) highlighting the issue of financial access in CAR.
Affordability is of great concern in the CAR housing sector. The high cost of building materials, low incomes of Central Africans, and the general political and economic volatility make owning a house a mere dream for the average citizen. In 2015, a simple one-bedroom housing unit with a modern toilet costs on average CFA 13.9 million (US$24 000). Compared to the average monthly income of only CFA 20 844 (US$36), the cost of a one-bedroom house represents 576 times the monthly revenue. It is obvious that only a tiny proportion of the Central African population can access formal housing.
This crisis is expected to continue. The urbanisation rate, which was 35.5 percent thirteen years ago (1985), was 40.4 percent in 2015 (with a forecast of 61.6 percent in 2050). This increasing housing demand on one hand combined with the very small proportion of the CAR population which can access formal housing on the other hand; highlights the issue of housing affordability and the urgent need for a clear policy to solve the issue.
A large number of Internally Displaced Persons (IDPs) occupy rental units (estimates are around 70 percent). Unsurprisingly, the main challenge for this group of IDPs has been the inability to pay rent, having lost their livelihoods. In Carnot and Sibut the monthly rent varied between CFA 2 895 to 5 790 (US$5.27- US$10.54) while in Bangui this could be anything between CFA 52 110 to 579 000 (US$94.9-US$1 054.47), depending on the size of the house and the main purpose of renting.
In 2016 a standard 50kg bag of cement cost as much as CFA 10 000 (US$18.21). Other building materials such as a standard iron bar and a sheet of corrugated iron cost between CFA 2 000 (US$3.64) and CFA francs 8 500 (US$15.48), and CFA 5 000 (US$9.1) and CFA 20 000 (US$36.42), respectively. A major development in the housing sector in 2012 was the completion of the only cement manufacturing plant in the country, realised with Indian investment. It was expected that the price of a standard 50kg bag of cement bag could drop to CFA 7 500 (US$13.66). However, the CAR’s energy problems will have to be solved first, and given the recent political crisis, it is not clear when this plant will help achieve the previous expectation.
The state of affairs in the CAR’s urban areas has been strongly affected by the recent political and security crisis, which particularly damaged prospects and ambition for the development of good standardised towns and cities. A government project is underway to redesign urban/housing development and planning in Bangui, with the main aim of bringing structure to its breakneck urbanisation and establishing a sustainable healthy housing environment. Since the emergence of the crisis, a large portion of CAR’s housing stock has been pillaged, burnt or destroyed. The UNHRC (United Nations High Refugee Commissariat) estimates that at least 170 houses in Bangui’s 8th district and 900 in the 5th district have been partially or completely destroyed since December 2013. In Begoua, just north of Bangui, an estimated 800 houses have been partially or completely destroyed. It is estimated that 100 houses were partially or completely destroyed in Sibut town.
Even though the CAR Ministry of Housing has initiated and/or is implementing several projects, the recurring crises that the country experienced, has seriously inhibited many international companies willingness to build housing in CAR. For example, in 2011, the Ministry of Housing received funding from Celtel –Africa, a housing finance structure based in Nairobi, Kenya, to build 300 housing on two sites (one in the neighborhood Boy-Rabe (Bangui) and the other in the village on the road Kozobilo Boali); unfortunately, this last project has not been completed.
The 1964 Land Code classifies land as being either within the public or the private domain of the state. The public domain is defined as all natural and artificial resources that, by their very nature, should be publicly managed for the benefit of the population. They are inalienable and cannot be traded commercially, for instance waterways, classified parks, lakes and railways. The private domain of the state is defined as all unregistered land, landholdings acquired by the state and the exercise of eminent domain. Obtaining ownership rights over land in the private domain of the state is possible. This requires, however, that land be registered (and in most cases developed). The process for registering private property, culminating in the attainment of a title deed, is considered costly and time consuming. According to the World Bank’s 2017 Doing Business Report, it takes 75 days and five procedures, and costs on average 11.1 percent of the property value to register a property, resulting in a ranking of 167th out of 190 countries for registry of property. This, as well as the government’s weak land administration and management capacity in most parts of the country, explains the fact that only 0.1 percent of land has been registered. Between 1899, when the title deed was introduced, and July 2012 only 8 579 title deeds had been issued according to the land registry at the Ministry of Finance, the majority of which were for properties in Bangui and other urban areas. Homeowners in rural areas frequently only entered into verbal agreements regarding their ownership, often with involvement of a chief. The inclusion of unregistered land in the private domain of the state is therefore a very significant feature of CAR’s land tenure system. Ownership of registered property can be transferred via purchase, inheritance and lease.
The real estate market in the Central African Republic is almost non-existent, as there are no real estate operators in the country. As most houses are self-built, when owners want to sell, they advertise in the newspapers or announce their intention informally within their social networks.
Housing Policy and Regulations
CAR’s legal system is based on the French civil law system. As with other branches of government in CAR, the judiciary suffered from decades of insecurity and poor governance. Prior to the current crisis, several key legislative documents, such as the Family Law (Code de la Famille) and the 1964 Land Code were under revision. Due to the events of late 2012 and early 2013 until today, these review processes have not been concluded and other housing strategies and plans have been side lined.
The decree explaining the organisation and functioning of the Ministry of Housing stipulates the construction, management and promotion of administrative housing as its main directive. However, having only become a separate ministry in 2014, several of its officials explained that their mandate would soon be revised to cover all accommodation and housing issues. Other officials indicated that the focus on housing provided for civil servants would remain.
The Ministry of Urbanism allocates and manages CAR’s land. It allocates land, to, for instance, private parties but also to bigger projects such as housing schemes. The ministry also manages the country’s cadastre, a department which provides technical expertise to assess and demarcate land, determines criteria for the development of land and issues construction permits and title deeds.
The technical aspect of the cadastre is complemented by the Ministry of Finance and Budget, which takes care of the financial side of land registration. It also houses the land registration office (known as the Office of Domaines). This means that once the land registration office has issued a title deed, the related files are transferred to and stored at the Ministry of Finance and Budget.
In addition to the existing regulation frameworks governing the housing sector, some recent policies have been implemented including:
- 2015/16 doing business reform: The Central African Republic made resolving insolvency easier by introducing a new conciliation procedure for companies in ﬁnancial difficulties and a simpliﬁed preventive settlement procedure for small companies.
- Poverty Reduction and Growth Strategy (2011-2015): Over this period the government aims to undertake the following housing interventions: create decent housing for the population, provide the population with marked-out building plots and implement city planning systems. On this last objective, the country has received strong support from the African Development Bank, which will support Bangui’s City Development Strategy (CDS). The CDS was, however, not yet drafted before the crisis engendered by the March 2013 coup d’état, and as a result, the current political situation is very likely to delay the achievement of these goals.
Housing Sector Opportunities
Due to prevalence of expensive building materials there is a huge need for cost-effective housing in all segments of the market and housing value chain. At the same time, with the completion of the new cement plant, which is expected to lower the price of cement, the effective demand for housing should increase over the coming decade, while affordability will grow too.
With high economic growth perspective related to the current reconstruction period, a huge housing backlog, growing middle and upper classes, increasing capital inflows from CAR citizens in the diaspora and other international investors, increased local investment and better legislation and reforms, the housing market is destined for sustainable growth. Additionally, in a recent econometrical investigation, Nguena et al. (2016) found that reconstruction after years of conflict that has devastated infrastructure is a key determinant of housing finance. Further planned structural reinforcements such as the potential housing bank are indicative of a market open for expansion and primed for the introduction of new finance and housing products.