Housing Finance in Eritrea


For the French version of this country profile, click here.

To download a pdf version of the full 2018 Eritrea country profile, click here.

Eritrea lies along the horn of Africa, bordering Ethiopia, Djibouti and Somalia, and had an estimated population of 5.91 million in 2017. With an inflation rate of 9 percent, Eritrea remains one of the poorest countries in the world with an uneven economic performance due to unpredictable weather, economic sanctions, low commodity prices and a weak business environment. Despite these challenges, Eritrea has an impressive healthcare system, with a low prevalence of HIV/AIDS and malaria.

The property market in Eritrea is challenging. According to the World Bank’s 2017 Doing Business Report, registering property in Eritrea requires 11 procedures, takes 78 days and costs 9.1 percent of the property value. Furthermore, the majority of title or deeds records in the country are in paper format and there is no electronic database for checking for encumbrances (liens, mortgages, restrictions and the like). There are no publicly available official statistics tracking the number of transactions at the immovable property registration agency.

Eritrea’s financial system is also considered underdeveloped, with a limited supply of financial services which fall far short of demand. Banking sector assets are equivalent to just 18.4 percent of the Gross Domestic Product (GDP). According to the World Bank’s 2018 Doing Business Report, in the “ease of getting credit” category, Eritrea was ranked 186th out of 190 countries. Notwithstanding some positive developments, access to traditional financial services has remains difficult. As a result, the share of the population that is banked remains low.

The availability of adequate and affordable social housing continues to be a key challenge in Eritrea. Although over half of urban and rural residents own their houses, it is unclear whether these assets are formally registered, of whether they could be used to mobilize finance. While the government’s current housing delivery rate is not clear, recent reports suggest that most ongoing developments are intended for the medium to high end of the property market.

The Land Proclamation and Legal Notice 31/1997 serves as the country’s post- independence land law, vesting exclusive land ownership rights to the state. Under this policy, the sale, transfer and mortgaging of land is prohibited, and citizens only have usufruct rights over land. This legislation has created significant obstacles for the housing industry, with one of the main challenges being in creating a housing delivery system that is unable to speedily respond to the demand for housing has far exceeded supply. Other factors such as poor governance, mismanagement and a lack of clarity within institutional structures has further compounded the country’s housing shortage.

Analysts agree that Eritrea’s medium-term growth prospects are favourable due to growth in the mining sector, the commodity price recovery, and plans to scale up energy supply. In addition, the National Indicative Development Plan 2014-2020 foresees the allocation of substantial resources and investment to increase the supply and quality of the country’s human capital in the broadest sense and within competitive standards. The need for affordable housing delivery also implies significant opportunities for both the public and private sectors in the delivery of housing and housing finance systems.

Find out more information on the housing finance sector of Eritrea, including key stakeholders, important policies and housing affordability:

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.

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