Housing Finance in Gabon

Introduction

Gaining independence in 1960 Gabon is a former French colony; located on the west coast of Africa bordering Equatorial Guinea, Republic of Congo and Cameroon. The country covers an area of 267,667 m² for a total population of 1.803 718 million with a third of them living in the capital city Libreville. The official language is French and Bantou Group language. The life expectancy in the country is 65/67[1] years old. The climate condition of the country is mainly tropical, very hot and humid, with a range of terrestrial typologies including a narrow coastal plain; hilly interior; savannah in the east and south. Gabon is rich in mineral and natural resources which are petroleum, natural gas, diamond, indium, manganese, uranium, gold, timber, iron ore and hydropower.

Gabon is the fifth largest oil producer in Africa, in conjunction with timber and other mineral reserves they form the backbone of the economy. According to the World Bank report, in the past 5 years the oil sector on average has accounted for 80% of exports, 45 of GDP and 60% of budget revenue. As a result of this economic reliance on the oil sector the decline in the price of crude oil has affected the country’s future economic focus and it was forced to cut down its budget provision.

For many years Gabon has maintained a relatively calm political and security situation. During Bongo’s reign, Gabon was considered one of the most stable countries in sub-Saharan Africa however this has been compromised due to the ongoing political conflict between the state leadership and some opposition parties. France has enjoyed a relatively privileged[2] relationships with Gabon, until recently when the country opened up to other foreign companies showing more interest in Gabon’s natural resources and infrastructure development projects.

Access to Finance

Gabon financial sector is made up of the Gabonese Development Bank (BGD) and nine commercial banks. Almost 80% of loans and deposits are highly concentrated with three of the largest banks.[1] BGD’s main role is to lend money to small and medium-sized companies. There is representation of international interests within the sector indicated through the presence of the US bank Citigroup in Gabon. Corporate services are offered by commercial banks however, corporations operating in the country have the freedom to contract credit from abroad[2]. In addition, local credit is available to both local and foreign investors on equal terms. Nevertheless, the country’s main economic actors, such as oil companies are financed from outside the country[3]. Gabon is part of the Economic and Monetary Community of Central Africa (Communauté Économique et Monétaire de l’Afrique Centrale, or CEMAC) and as such utilises the common currency known as the Communaute Financiere Africaine (CFA) Franc, which is tied to the Euro for the purpose of currency stabilisation. Furthermore in compliance with being part of the CEMAC Gabon’s centralised monetary agency is the regional, Bank of Central African States (Banque des Etats d’Afrique Centrale/BEAC) which regulates the banking and Microfinance institutions (MFIs) sectors through the Central African Banking Commission (COBAC).[4]. The country is also home to Central Africa Regional Stock Exchange which was established in 2008.

Gabon’s housing finance program and budget are divided between different state institutions that have the mandate to deliver and execute housing programmes in the country. These institutions are: the Ministry of Housing, the ANGT and the National Real Estate Company a government body created in 1976 with the aim to develop and oversee housing projects. Today the government retains 70% of the stake of the National Estate Company. Additionally, the Gabon National Housing Fund (NHF) created in 1973 and the National Building Society (SNI) created in 1976 by merging the National Housing Corporation and the Gabonese Development of Real Estate and Equipment. In addition, Credit Foncier of Gabon (CREFOGA) was established by the Gabonese government in 1976 as a specialised agency in housing finance. However, the business model of CREFOGA was severely handicapped by unpaid debts which resulted in its liquidation[5]. Another financial government institution is the Guarantee Fund for Housing (Fonds de Garantie pour le Logement, FGL). The FGL has the administrative and financial distribution mandate to deal with housing deficit. The government of Gabon has also established the housing bank, which is commissioned to provide loans at all stages of the housing construction and sale process.

Today, there are a number of financing mechanisms in Gabon that have been identified through the National Infrastructure Master Plan (NIMP) in order to facilitate real estate investment, public-private partnerships and built operation transfer cession as well as fully control private projects. There are also private banks and credit institutions operating in the housing sector with the aim to stimulate and provide finances to real estate developers and new home buyers.

Housing Affordability

Gabon’s income per capita is US$19,300, 2016.  However, the country is subject to high income inequality that has left some local community members with no tie to government officials, in extreme poverty. As a result of the decline in oil prices and national budget cuts in 2015, Economic growth of Gabon decreased from 5.6% to 4%[1]. This situation has affected not only the local economy but also community purchasing power. As such the Plan Strategique Gabon Emergent Vision 2025 (PSGE) was launched in 2012, to try and diversify and develop new industries such as transformative industries (agribusiness and wood processing) and infrastructure development/construction by building smart cities that will respond to housing needs based on sustainable development principles. The expected economic growth of the country is 2% in 2017[2]

Gabon has made some considerable improvements of its business environment and is currently ranked 164 out 190 countries globally and stands at 152 on the ease of starting a business[3]. However lately, political instability has affected the business environment in Gabon. Among the key innovations that government has put in place, is reducing the paid – in minimum capital requirement for starting a business (CFA 500,000). Regardless of the fact that, for the last 4 decades Gabon experienced high growth due to oil revenues this did not translate into job creation or poverty alleviation. The latest unemployment rate is above 20.3% with primarily youth and uneducated people affected. According to the World Bank report on Gabon (2016), the high unemployment rate in Gabon is due to a weak education system that is not providing the right skills required for economic growth associated with disparate social legislation.

The 2016 World Bank report on Gabon business overview stressed that Gabon’s poverty rate is very high 30 % of the local population are vulnerable and living with a monthly income of below minimum wage of US$ 225. More so, many local community/residents do not have access to basic services such as safe drinking water, electricity and health care in more than 60 of the regions[4]. Income inequality in Gabon and unemployment remain a major challenge especially among the youth population 46 % of which are under the age of 25[5]

Housing Supply

At present, the majority of major social housing developments are led by the international companies mainly from China and India. The Oxford business group stressed that Gabon is facing a huge backlog of housing demand especially social housing. However, this situation could improve with new government’s financial strategies and through better regulations and facilitating access to land titles.

Since the inauguration of president Aly Bongo Ondimba into office in 2009, the government has ratified the NIMP based on sustainable development principles with a short to long term vision. The plan includes the development of infrastructure strategies across different sectors, these are: transportation, energy, and telecommunication, housing and utility infrastructure[1]. According to the NIMP action 152, the government plans to build 35 000 houses with the aim of significantly increasing housing supply and facilitating access to mixed used housing. The project aims to build and deliver to the country on average 5000 units annually, in order to encourage social diversity, vertical and horizontal densification.

The materialisation of the NIMP housing delivery vision is currently under way in the peripheral area Libreville. One of the projects that have already started is the new urban development project called Angondje Development District located in the west part of the city. Since the beginning of this project, 872 prefabricated houses were completed and at the end of March 2016, 633 houses were allocated to their owners[2]. Another 420 social houses are being constructed by the Chinese company Dacheng Taihe Steel Structure Science and Technology, based Beijing. The project is underway, 320 houses of this project have been completed and delivered. Chinese investment in Gabon is based on Sino-Gabonese friendship and cooperation. The government aims to allocate 5000 registered plots annually with a title deed to identified builders, private developers and housing construction developers. The objective is to facilitate housing market access to public servants such as teachers, health personnel, army etc.

In addition, the SNI is currently working in partnership with a mining company known as Companie Miniere de l’Ogooué to build 2000 houses destined to low income earners in Bikélé, this project will be financed by the Gabon international Bank of Commerce and Industry (Banque Internationale pour le Commerce et l’Industrie) and the Union Bank of Gabon (Union Gabonaise de Banque). The Central African Development Bank based in Congo Brazzaville is also supporting the project. To date two thirds of this project have been completed with key infrastructures such road connections, water and electricity supply remaining.

Another housing project currently underway in Gabon is the development of 3133 houses in Estuaire, the project was initially planned for completion at the end of 2016, but only 2048 houses have been completed so far. The government of Gabon is also committed to facilitate the establishment of housing cooperatives through public funding that will be financing housing credit at 0% and a maximum of 30-40 % of buyer’s credit. At the same time, the government planned to divert housing bonuses usually paid to public servants to the finance housing cooperative.

The National Agency for Public Works of Gabon is also involved in redevelopment and revitalisation projects in certain areas around Libreville. One such project is the revitalisation of the port Mole area with the aim to transform the area into a centre of urban life. This project involves the refurbishment of the marina area with public and recreation centre space, commercial and leisure space, restaurants and hotels. Most of redevelopment projects will also have a consequence on housing demand in the area or its surrounds, for people desiring to live in close proximity to job opportunities. Hence, within the Mole precinct, the government is planning to develop major roads/boulevards along which mixed used buildings will be developed to accommodate residential and commercial markets.[3]

However, in the last two years most of Gabon’s housing development projects have suffered financial setbacks due to the drop of oil prices which have forced the government to reallocated funds to more prioritised projects. In addition to economic challenges, political unrest that followed the presidential election of 2016, has affected the country’s effort to diversify its economy and attract new investment. However, since January 2017, the situation has calmed down due to national reconciliation talks organised by the elected president.

Housing development programs are currently taking place under Action 153 of the National Infrastructure Master Plan (2011) called Restructuring and slum upgrading. This program will involve restructuring and relocation of residents from precarious neighbourhoods to new urban centres with suitable accommodation and social infrastructure. This approach will promote access to land and social facilities as well as social services to local residents. This new development is supposed to take into account all different categories of social life and income.

Property Markets

In spite of rapid growth of urban population that the country has experienced in the last decade 89 %[1], Gabon’s real estate market has remained underdeveloped and characterised by high-end sales and expatriate rentals as key drivers followed by demands for social housing[2]. However, much of housing development, property demand and infrastructure development in the country has been driven by the hosting of the 2012 and 2015 Nations African football tournament despite the growing challenge/needs for social housing for poor communities and low-income earners.

Hauts de Gué-Gué, La Sablière and Batterie IV are amongst the successful developments located around Libreville. Demand for high quality residential property is also on the rise due to competition demands between private and corporate occupiers with the consequence of rental price increases[3]. In addition, there is an increasing demand for retail and office buildings in the country, with state institutions and international institutions being the target user.[4]

The average rental rates in Gabon are as follows, in and around the capital city of Libreville:

• Apartment (1bedroom) in City centre US$ 32
• Apartment (1 bedroom) outside city centre US$ 57
• Apartment (3bedroom) in city centre US$ 08
• Apartment (3bedroom) outside city centre US$ 32

The government of Gabon announced in 2012, the implementation and construction of 5000 houses to take place in Esterias 30 km north of Libreville which will be financed by the Gabon government through Gabonese Development Bank (Banque Gabonaise de Development).

In order to keep up with housing delivery program, the government, is engaged in a number of reforms to try and stimulate the housing sector. Among these reforms are; alleviation of administrative and regulatory obstacles that were hampering social housing delivery projects.

Institutional reforms are also taking place in the housing sector which include the creation of new specialised housing agencies; the establishment of several new institutions such as the National Agency for Urban Planning; Topographical Works and Land Registry called (Agence National de l’Urbanisme, des Travaux Toppographique et du Cadastre, ANUTTC) with the mission to plan and oversee all land and real estate development projects, maintain and extend the national land registry, facilitate the purchase and transfer of property units.

Hence, Gabon’s priority is to increase the house stock as stressed in the NIMP launched in June 2012. The budget for the housing development projects identified in the master plan for the period between 2011 and 2016 is estimated at US$ 2.66 billion; part of this money will come from the public sector, the private and foreign investment.

Housing Policy and Regulations

Gabon’s current economic policy and regulation focus is driven with the objective to transform the country into an “emerging” economy[1]. This approach seeks to improve investment in other sectors to move away from oil dependency. The country 1998 investment code elaborated in accordance with CEMAC’s investment regulations provides equal right to foreign and local companies operating in Gabon[2]. However, a certain number of strategic business sectors such as mining, forestry and petroleum are organised under a specific investment code based on customs and tax incentives[3]. In order to increase transparency in its recourse and mining industry, the country is in the process of introducing a new mining and petroleum code. Gabon has to also adhere to the Organisation for the Harmonisation of Business law in Africa (OHADA) which allows foreign investors to choose without restraint from a wide range of legal business structures such as private limited liability company or public limited liability company.

Gabon constitution of 1991 which has been amended several times, acknowledges the right to housing for every Gabonese citizen in it Article 1 in these terms:

• Paragraph 10 “Everyone Gabonese has the right to property. No one maybe deprived of his/her property except for public necessity, legally recognised, required on condition of prior and just compensation; however, property expropriations incurred in the public interest, for failure or lack of development, and properties registered, are governed by law.”
• Paragraph 11“all of Gabon has the right to freely choose his domicile or residence anywhere in the country and to engage in all activities, subject to respect for public order and law.”

Gabon does not have a clear land policy, the closest form of land policy dates back to 1911 which still forms part of the land legislation[4]. Most land belongs to the state and there is no cadastral plan in some parts of the country aside from Libreville. The country also suffers from a lack of a proper system of transfer of title deed/land ownership, which affects poor communities as without proper land/property ownership they lack collateral to access credit. To overcome this situation, the NIMP, under Action 146 plans to reinforce the legal framework for the construction and housing sector. This plan aims to create a legal framework and incentive in order to facilitate access to private property development and construction activities by defining and putting in place clear rules and regulations. This new regulation focuses on a law for real estate development, decree on operations conditions of the property development business, a decree on the conditions of access to the property development business and the renewal of professional developer card and a convention relating to benefits granted to developers for the completion of social housing.

Housing Sector Opportunities

Gabon offers many business and financial opportunities for investors regardless of its small population. The country has one of the highest GDP per capita in Africa which is an advantage for investment in the country. In the last decades it has attracted and continues to attract French retailers such as Carrefour super markets and Casino. There is also a new shopping center called Grand Marche soon to be completed on a 7 hectare land parcel. The Grand Marche project is financed by the Swiss group Webcor at the value of roughly US$ 49 million and the construction is conducted by the same company in Libreville.

Up until recent years Gabon has enjoyed a relatively stable economic relationship with its former colonial power. However, due to changes in the global economic arena, Gabon has broadened its economic and diplomatic partners to other emerging powers form Asia and Africa who have the ability to bring the country money and expertise to boost the country’s economy away from oil dependencies.

In 2012, Gabon also introduced a new system of ‘guichet unique’ with the aim to simplify the procedure of land purchase and reduced the time to acquire a title deed from the initial 10 years to 180 days, and reduced administrative steps from 134 to seven.

In addition to the Angondje District Development project, there are also other similar projects in the pipeline with the same approach and addressing the same issues with the same standards. These projects are Nkoltang located on the Route national 1 situated 5 km east of Nkok, this project is yet to begin. The other urban district project in the pipeline is the Lambarene situated in the river transport hub and the aim of this project is the construction of 1000 units.

Gabon has shown signs of commitment to finance housing projects though alleviation of regulations and financing housing projects. This is a good indicator for the housing and property sector to grow further. Private investment in development project is also expected to increase gradually for the next 20 years due to political will and government commitment to make the country an “emerging’ economy”[1]. However, one of the biggest challenges remains the affordability and accessibility to housing/social housing for low income earners/poor unemployed communities. The policies in place do not clarify the strategies that will be utilised in order to improve access to adequate and safe shelter for all Gabonese.

The government strategy to boost the property market and housing sector is beginning to show positive signs by attracting foreign investment. There are a number of foreign companies that are already operating in social housing developments projects as noted by BHG’s Ondounda that “there is great potential in housing as there are a lot of real estate developers and construction companies seeking to promote and develop their activities in Gabon which include local small and medium-sized enterprises as well as foreign companies that have recognised the opportunities presented by the Emerging Gabon Strategy”.