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. Besides abundant land, CAR is well endowed with natural resources such as timber, gold and diamonds. Since 2008 until 2013, 61 percent of the population was rural with 39 percent living in urban areas. 80 percent of CAR’s population lives of subsistence farming and livestock.
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) was 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 referendum as well as presidential and parliamentary elections.
During the first nine months of the 2015 year, the upturn in CAR economic activity that began in 2014 was confirmed; however, according to the IMF in 2016, its dynamics was interrupted by the resurgence of cross-community violence at the end of September 2015. This worsening security environment held back the real GDP growth to 4.1 percent in 2015, compared to the initial target of 5.5 percent. Even if the country’s suspension from the Kimberley Process impacted negatively the export sector, most other sectors accelerated in 2014. Indeed, in spite of this difficult economic climate, the substantial efforts undertaken by the CAR transition authorities and the international technical and financial partners support resulted to a significant improvement in the management of public finances. This is assumed to be the main reasons why the CAR economy grew faster than in 2014, when a relative bad performance of growth (one percent) was recorded. Inflation, which was 11.6 in 2014, is expected to gradually ease from an average of 5.6 percent in 2015 to around 4.7 percent in 2016. Even if we expect continuously good performance, there is a lot to do if we consider the 2.1 percent global 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 averaged 3.7 percent from 2009 until 2015, reaching its 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
There is almost no housing finance instrument available in the country. The housing finance landscape remains underdeveloped, offering many opportunities for developing 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 Francs 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 base 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 the creation of a housing bank. Plans 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 never passed the stage of signing into law. Additionally, all of these plans are continuously 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 asset, 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 represents only 15 percent of GDP in 2014; additionally the main sectors benefitting from bank loans are in the same year trade (20 percent), transport and communications (16 percent), forestry (12 percent) and other services (28 percent).
Access to housing related financial product remains a major challenge. Due to economic and security concerns, financial institutions, and particularly banks and microfinance institutions (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 extended 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, CAR was ranked 133th out of 189 countries. About 5.7 percent of the population holds a bank account and only 0.5 percent has outstanding loans, while only one percent has access to MFIs. Low levels of mobile penetration also dampen the potential expansion of access to financial services through mobile technology.
A pension fund called the National Social Security Fund (Caisse Nationale de Sécurité Sociale) exists, but has the same structural problems as other public agencies in the country. Besides this there are only three insurance companies for the whole country, with a presence almost only in Bangui.
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 microfinance institutions 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 microfinance institution, 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 very higher (US$3.25 million) and thus highlights the issue of financial access in CAR.
Affordability is of great concern in the CAR housing sector. The high cost of building materials, the low incomes of Central Africans, and the general political and economic volatility make owning a house a mere dream for the average citizen. In 2014, a simple one-bedroom housing unit with a modern toilet costs on average CFA Francs 13.9 million (US$24 000). Compared to the average monthly income of only CFA Francs 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 urbanization 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 in other hand; highlights the issue of housing affordability and the urgent need of 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- US$10) while in Bangui this could be anything between CFA 52 110 to 579 000 (US$90-US$1 000), depending on the size of the house and the main purpose of renting.
In 2015 a standard 50kg bag of cement costs as much as CFA 10 000 (US$17). Other building materials such as a standard iron bar and a sheet of corrugated iron cost between CFA 2 000 (US$3.45) and CFA 8 500 (US$14.68), and CFA 5 000 (US$8.63) and CFA20 000 (US$34.54), respectively. A major development in the housing sector in 2012 was the completion of the only cement manufacturing plant in the country, realized with Indian investment. It was expected that the price of a standard 50kg bag of cement bag could drop to CFA Francs 7 500 (US$12). 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 standardized 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 urbanization 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 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 has experienced, 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 due to the recent crisis faced by the country.
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 it, however, to 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 2016 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. 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 recent inauguration of the new government in 2014 saw the splitting of the Ministry of the Reconstruction of Public Infrastructure, Urbanism and Housing into the Ministry of Urbanism and Public Infrastructure (hereafter the Ministry of Urbanism) and the Ministry of Accommodation and Housing (hereafter the Ministry of Housing). This split has added further complexity to the housing procedure since it is now managed by two different authorities.
The decree explaining the organisation and functioning of the Ministry of Housing stipulates the construction, management and promotion of administrative housing as its main mission. 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.
The main policy and regulation frameworks governing the housing sector include:
- Constitution of the Central African Republic (2004): Provides that all persons have a right to property, and the state and citizens have an obligation to protect those rights.
- CAR’s Law No. 63 of 1964 (Loi No. 63.441 du 09 janvier 1964 relative au domaine national): Abrogated the prior and Law No. 60/76, which allowed individuals to obtain occupancy rights to land identified by the state for habitation. Law No. 63 of 1964.
- Law No. 139 of 27 May 1960: Governs land tenure.
- Law Number 63.441 of 9 January 1964 (referred to as the 1964 Land Code): Defines the national domain and anticipates additional laws to address land tenure and private property. It recognizes customary law, but limits customary land tenure to use-rights. The law provides for the privatization of state land through land registration.
- Code de la Famille of (1997): The law includes detailed provisions on marital property and inheritance issues.
- Housing policy Statement and Housing Strategy (2008): Since its adoption in 2008, two important decisions have been made: the signing into law of the creation of the Central African Housing Bank and the creation of the Central African Housing Promotion Agency. The law creating the Central African Housing Bank was voted for in July 2010. These two organizations, along with the Urban Development Fund (Fonds d’Amenagement et d’Equipement Urbain, or FAEU), are the government’s main instruments for implementing its housing policy. The Housing Promotion Agency and the FAEU already exist physically but lack the resources (less than CFA Francs 50 million or US$100 000 a year) to undertake any serious initiative toward the housing sector besides providing a few plots of serviced land each year. Similarly, although the Housing Bank was formally signed into law, it does not exist (and is unlikely to come into existence any time soon), also due to limited government resources.
- 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
- Creation of the Fund for Urban Development and Equipment (FAEU) by Law No. 94 004 of 24 May 1994. Its main focus is to support and sustain the achievement of land subdivisions.
- The Decree No. 76 / MTPU / SG / DGU / DUH of 17 June 1982 on the urbanism regulation using the building permit. By projecting the form and landscape (urban facades) of the town of Bangui, its main objective was establishing the discipline in constructions. However it is regrettable that the day-care activities and urban policy is less intense those days.
Housing Sector Opportunities
Due to prevalence of expensive building materials there is a huge requirement for cost-effective housing at a faster speed and larger scale. Developers with cheaper and unconventional construction materials have significant advantages over competitors. 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.
Housing finance markets are destined for growth at virtually all income levels, but particularly within the lower to middle income ranges. The conjunction of all these events comes with many opportunities to invest in the housing sector, both for businesses and households in the near future.
Until the country stabilizes, it is unlikely that the housing sector will improve and expand. However, when investors are able to safely return to the country, there will be a significant need for the development and reconstruction of housing (of all types) as well as its supporting infrastructure. Additionally, in a recent econometrical investigation, Nguena et al. (2015) found that reconstruction after years of conflict that has devastated infrastructure is a key determinant of housing finance. As most of the housing units available in the country, especially outside of Bangui are traditional housing units, investments to renew such housing are expected to create many job opportunities.