Comoros has a growing housing finance sector. As the mortgage market does not yet meet the breadth of the population who might afford a mortgage, most households still finance their housing independently, with savings or non-mortgage credit.
The lowest recorded interest rate on a mortgage in Comoros is 10.5 percent, as of September 2016, and requires at least a 25 percent down payment. Cement prices are slightly lower than the continental average, at US$ 9.15 for a 50-kilogram bag.
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. The country lacks a deeds registry, while remittances are an important source of funds for housing. 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 Comoros can afford.
Find out more information on the housing finance sector of Comoros, 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
The Comoros Islands are an archipelago of four islands and several islets located in the western Indian Ocean about ten to 12 degrees south of the Equator and less than 200 miles off the East African coast. They lie approximately halfway between the island of Madagascar and northern Mozambique at the northern end of the Mozambique Channel. The archipelago is the result of volcanic action along a fissure in the seabed running west-northwest to east-southeast. The total area of the four islands is 2 034 km². The population of Comoros was estimated at 798 051in 2015 (an increase of 2.41 percent over 2014)
The Comoros Archipelago is divided between the Union of the Comoros, a sovereign nation formed by the three islands of Grande Comore, Anjouan and Mohéli; and an Overseas Department of the French Republic (département d’outre-mer), which was established in 2011 on the fourth island, Mayotte. This island is claimed by the Union of the Comoros (which considers it to form part of its territory according to Article 1 of its Constitution), but it has chosen to remain French in numerous referenda that France has held. Since independence in 1975, the Comoros experienced more than 20 coups or attempted coups. Controversial elections in 2007 led to military intervention by the African Union in March 2008. Political stability has since improved following a referendum on constitutional amendments in May 2009 and the formation of a consensus national unity cabinet in May 2010.
According to the African Economic Outlook 2015, despite average growth of around three percent since 2011, the economy has not managed to achieve structural transformation, mainly because of the country’s weak institutional capacities. The country is therefore struggling to lay the foundations for sustainable economic growth that will create jobs. Unemployment among youth and graduates in particular was estimated at over 50 percent in 2014. Youth employment is seen as vital to reduce poverty. Comoros is undergoing an energy crisis which is impacting the regional economy resulting in moderate growth. This has resulted in increased production costs for large businesses that choose to operate with power generators. Agriculture constitutes 40 percent of the country’s gross domestic product (GDP) with 80 percent of the population employed in the subsistence agriculture and fishing sector. Although the Comoros has many natural resources for tourism, such as its beaches and marine environment, it does not have as strong a tourist industry as its regional competitors Réunion, Mauritius, and Seychelles. Its weak tourist industry is mainly because of its insecure political climate, with many political upheavals over the past three decades. Tourists in the Comoros are mainly wealthy Americans and Europeans, while much of the investment in hotels has come from South Africa. The per capita income is US$880. The country lacks the infrastructure necessary for sustained development.
In its 2014 Annual Report, the Comoros Central Bank indicated that economic growth for the year which was estimated at 3.5 percent was only 2.1 percent. The inflation rate had come down to 1.4 percent from 6 percent in 2012. However budget deficit had worsened to 10.5 percent of GDP in 2014, compared to 8.6 percent in 2013. The current account deficit improved to 8.2 percent of GDP in 2014 from 9.6 percent in 2013, reflecting a contraction in imports of investment goods and lower fuel import prices, as well as higher remittances. While public debt slightly improved to 25.4 percent in 2014, compared to 26.3 percent in 2013.
The World Bank’s 2016 Doing Business Report ranks Comoros as 163rd out of 189 countries surveyed in terms of starting a business.
Access to Finance
Comoros has a relatively small and underdeveloped financial sector. Financial intermediation and credit to the private sector, while still low, have been expanding in recent years following the entry of two foreign commercial banks. However, the further development of credit markets remains constrained by poorly defined land ownership rights and weak enforcement of collateral guarantees. At present, the country’s financial system comprises seven lending institutions, of which the four commercial banks finance around 60 percent of the economy. A development bank, a National Savings Fund, a postal savings bank, and two networks of microfinance institutions (MFIs) also operate, together with three foreign currency exchange/money transfer agencies. Under current regulatory frameworks, financial institutions can independently set their own credit and lending policies, though commercial bank interest rates and loans to consumers and businesses are partly regulated, with upper and lower limits set at fourteen percent and seven percent respectively. 110 ATMs are found around the country. As at end 2014, 35 percent of the population had a bank account, an increase of two percent over 2013.
In its Annual Report of 2013, the Central Bank indicates that the credit granted to the private sector during the year was FC30 722 billion (US$68.89 million) out of total credit of FC59 233 billion (US$132.83 million) granted in 2014. Moreover, total credit granted to individuals increased from FC22 731 billion (US$50.97 million) in 2013 to FC26 126 billion (US$58.59 million) in 2014, that is a fourteen percent increase. Out of this, only 1.7 percent were long term loans granted to individuals compared to four percent in 2013.
In addition to these traditional banking institutions, networks of mutual savings banks (Meck) and credit (Sanduk) have been developed. These funds provide local banking services for rural and urban unbanked population. The Meck (Mutual Savings and Credit of the Comoros) are the Savings and Credit component of the Project Support to Economic Grass Roots Initiatives, and are funded by the State and the International Fund for Agricultural Development. The Sanduk were initially funded by the French Development Agency.
According to the Comoros Central Bank, there were 272 284 bank account holders as at December 2014, an increase of nine percent over the previous year. The number of clients who had a credit with the banks increased by 21.4 percent over the same period. NPLs as a ratio of total loans granted increased from 17.4 percent in 2013 to 18.8 percent in 2014.
The IMF reports that Comoros’s banking system is generally sound. Liquidity and solvency ratios remain high. The government has two priorities for strengthening the financial sector: the privatization of the Development Bank of the Comoros; and the restructuring of the National Post and Financial Services Institution (SNPSF), which is likely to include the separation of banking activity from the postal office and foreign direct investment in the creation of a new fully-fledged commercial bank.
Financial inclusion remains an issue with very low penetration rates. Compared to the regional average, even mobile phone subscription is extremely low, at 14 percent.
The Central Bank of Comoros continues implementing recommendations from the 2010 safeguards report and strengthening banking supervision with IMF and “Banque de France” assistance. The Central Bank of Comoros (BCC) started on-site inspections of financial institutions in 2012, and is working towards the establishment of a credit bureau too.
In 2015, the BCC has, in collaboration with the IMF, brought new laws aiming at improving the regulation and performance of the banking system. These laws relate to prudential ratios and risk management in general. The World Bank’s 2016 Doing Business Report ranks Comoros as 109th for getting a credit (from 168 in 2011) and 189th in respect of resolving insolvency.
According to the World Bank’s Worldwide Governance Indicators, the Comoros is regularly ranked in the group of countries whose performance is inadequate in terms accountability, political stability, absence of violence, government effectiveness, regulatory quality, rule of law and control of corruption.
The Comorian economy is structurally dominated by the public sector. This is reflected in the size of the wage bill of the civil service or similar services, which annually absorbs most of the central government budget and leaves little leeway for public investment. The main feature of the public sector in the economy is the predominance of government shareholding in the country’s main strategic enterprises such as the communications, water and electricity, and the Hydrocarbons Company of Comoros. Thus, government spending for social housing is quite limited. Moreover, given that the banking sector lacks dynamism, private lending for private construction for the middle and low income groups is also limited.
Approximately 65 percent of all housing units in the Comoros are made of straw with roofs made from cocoa leaves and are privately owned; about 25 percent were made of durable materials including stone, brick, or concrete. Of all housing units, nearly 90 percent were owned, three percent rented, and three percent occupied rent free. Around 98 percent of the population had access to improved sanitation systems and safe water.
Housing in Comoros varies from two-room structures covered with palm leaves to multilevel buildings made of stone and coral. The part of the house at street level often serves as a shop or warehouse, but in earlier times that level housed slaves or servants. Some Western-style houses, with indoor bathrooms and kitchens, also exist. Because of the practice of “matrilocality”—a societal custom where the offspring of a family reside with their mother—females often remain part of their mother’s household, even after marriage. This is owing in part to the practice of polygamy, as well as the traditional need for Comorian men to travel away from their communities in search of work. The family home can be expanded, or a separate structure can be built for a woman to inhabit with her children.
There is a big scope for eventual further credit facilities from private banks/financial institutions to improve on those houses. In the absence of affordable dwellings supplied by the market, a consortium from Iran has proposed to construct 5 000 housing units throughout the three islands over a period of four years.
While poverty remains pervasive in Comoros and the housing standard is elementary, on the other hand, the market for Comoros up market properties has been growing in recent years.
The growth in residential and commercial property ownership is the result of several trends including international aid, increased tourism and the nation’s relationship with France. Investors and business owners who want property in Comoros need to keep these trends in mind before taking the plunge. The purchase price of a three bedroom semi-detached house in Comoros can range from US$131 000 to US$700 000. Rental of a three bedroom apartment, if available, is between US$1 000 and US$1 500 per month. The Comoros’s Economic Citizenship Act, passed in 2008 allows the country to grant nationality to foreigners who make a substantial amount of investment in the country. This adds to the speculative strategies on the part of the few property developers who operate on the market. Although most of the housing units in Comoros are rudimentary, they are privately owned.
The World Bank’s 2016 Doing Business Report ranks Comoros at the 122nd position for registering property.
Housing Policy and Regulations
The Ministry of Territorial Management, Urbanization, Housing & Energy has the responsibility of overall administration of housing and related issues. However, given the shortage of affordable houses and the high demand, the market is quite ineffective.
Despite the fact that the credit market is at a basic stage, the Central bank of Comoros has put in place prudential norms. In its report of 2014, the Central Bank reports that compliance to Bank Prudential Ratios were also well respected by the financial institutions.
In recent years, authorities have undertaken several measures to enhance financial intermediation and strengthen the country’s banking and financial sectors. Such efforts include the facilitation of entry for foreign banks, reforms to the investment code in 2007 and the establishment of a National Agency for Investment Promotion. The country’s authorities have, in collaboration with the Central Bank of Tanzania, the Central African Banking Commission (COBAC), the French Prudential supervisory authority and IMF strengthened regulatory and supervisory frameworks so as to expand the scope of prudential regulations, and increase the effectiveness of control procedures.
Housing Sector Opportunities
The IMF indicates that the political context of the Comoros has continued to improve and program ownership has further strengthened since 2012. Since May 2011, the government has shown unwavering commitment to IMF-supported policies; and programme ownership is strong not only in government, but also among trade unions, the private sector, and wider civil society. There is a broad national consensus on the need to stay the course for achieving the completion point and continuing satisfactory implementation of the IMF-supported programme over the medium term.
Moreover, efforts have been made to improve business relationships with major international corporations and to forge relations with companies such as Ernest & Young for business development, auditing and studies. Through bankers such as HSBC, Al Ahli Bank of Kuwait, Gulf Bank, Al Mawared bank and other partners, the country is securing financing for its major projects.
There is huge potential for development of infrastructure and other services. Accordingly, as the economy progresses, there might be enormous scope for housing and housing financing with a particular emphasis on social housing.