- 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 Ebola epidemic had the most devastating impact on the state of Guinea. In 2015, the country stood at 0.1 percent growth and a budget deficit of more than seven percent of GDP with major constraints on its capacity to accelerate essential reform to relaunch development and transform the economy structurally. In 2016 growth bounced back to 4.9 percent as a result of political appeasement and good performance in mining and agriculture. The country’s institutional reform plans were structured around the National Economic and Social Development Plan (PNDES) of 2016-20 which focused on governance, transforming the economy, developing human capital and sustainable management of Guinea’s resources.
Reforms are however being implemented at a slower pace as the country’s developments and resources were dominated and channelled to the fight against Ebola. Foreign investment came to a virtual halt and activity in the service sector declined significantly, with the fall in commodity prices further adding to the shock with average growth being above three percent. The economic costs from these shocks include high fiscal costs as the country’s economic position weakened in 2014/2015. The economic forecast in Guinea is cautiously optimistic, in 2016 GDP grew at 5.2 percent, at 1.1 percent in 2014 and 0.1 percent in 2015. Growth was driven by increased mining activity and a resilient agricultural sector.
In attempts to restore economic growth and institutional reputation, the recent successful completion of an Extended Credit Facility program with the International Monetary Fund by the Government of Guinea has the potential to contribute to better macroeconomic management and recovery of the economy. Revenue performance in Guinea reflects a number of policy measures to improve domestic revenue mobilisation coupled with a reduction in expenditure which included the authorities restructuring the central bank guarantees to local and foreign banks in securing commercial loans that reduced budget flexibility and budget risks by locking spending over several years.
The government has requested its partners to increase their funding of infrastructure but the potential financing is expected to be limited. Guinea’s inflation rate stood at 20.2 percent in 2010, 10.6 percent in 2016 and is expected to be 9.7 percent in 2017 as a result of country’s currency depreciation and increasing domestic prices. According to the World Bank and IMF Debt Sustainability Analysis (DSA), Guinea remains assessed as at moderate risk of debt distress.
Poverty in Guinea is above average with rates reported at 35 percent in urban centres in 2012. During the same period, the share of the population living in extreme poverty has grown significantly from 18 percent to 27 percent. The country’s welfare levels are based on asset ownership and income which has declined by more than 30 percent for rural households especially for rural women. In urban areas unemployment doubled from eight percent to 16 percent.
Guinea is a member of West African Economic and Monetary Union (WAEMU) and Conakry is the capital city, where most of the country’s economic activities are centred. The health and economic crisis has affected housing sector investment. The overall leading interest rate in Guinea stood at 15 percent in 1987, reaching its peak at 27 percent in 1992 and settling at 19.3 percent in 2000. The mortgage rate at Ecobank, one of the leading commercial banks in Guinea stands at 16.50 percent. The housing market in Guinea comprises of 70 percent of rental housing in stock with average rental price in the city centre being US$1 000 and US$ 500 outside the centre. According to the Guinea National Institute of Statistics census data, there were 1 471 268 households in 2012. The aftermath of Ebola Virus left households ravished in poverty the government as a result decided to embark on programmes to provide affordable housing to reduce the housing crisis in the city of Conakry. The programmes will be conducted by the National Real Estate Development (SONAPI) of the United States and Property Development Investment S.A together with the Government of Guinea.
Access to Finance
Guinea’s financial system is small and dominated by the banking sector which includes the Central Bank of the Republic of Guinea (BCRG) and the . The country has 13 commercial banks, seven insurance companies and several microfinance institutions, thirteen of which are officially approved. According to the Central Bank of Guinea the thirteen microfinance institutions serve 290 000 customers mainly based in rural areas that carry out agricultural activities. As a result of Guinea’s strong trader market, microfinance institutions finance small microenterprises (SME’s), largely managed by women in small businesses. Outstanding loans amounted to US$15 486 for saving stock of approximately US$8 million.
In 2011, the Central Bank increased the monitoring and regulation of banks and microfinance bodies to boost the financial system so it could meet the growing general need for funding, especially among private firms. The investor base is largely dominated by commercial banks which as of June 2009 held over 80 percent of outstanding securities and by March 2013, Guinea received no sovereign debt rating by any of the three major credit rating agencies.
A new Debt Sustainability Analysis indicates that Guinea continues to face a moderate risk of external debt distress. Authorities remain committed to ensuring that debt remains at sustainable levels. In Guinea interest rate decisions are taken by the Central bank of Guinea (CRG). The lending interest rate stood at 17.26 percent from 2006 until 2017 at 12.5 percent, reaching an all- time high of 22.25 percent in January of 2007 and a record low of nine percent in December. The deposit interest rate is 6,69 percent and loans to the private sector of GNF 4 365.20 billion (US$ 486.7 million) by 2009.
The financial sector’s contribution to the economy remains marginal. Moreover, the weak competitiveness of the country’s economy is largely due to inadequate access to financing since the banking sector is mainly concentrated on short term credits. Some existing sub-regional financial institutions are trying to set up in Guinea, this should be encouraged by reforms that are essential for the banking sector’s development. To this end, the Guinean Government in partnership with independent financing institution, Project Development International, S.A. envisaging initiating reforms in the banking and housing sectors to facilitate access to bank and real estate credit in addition to establishing a mortgage bank to allow for loans to be extended to home buyers.
According to the Doing business World Bank data, access to credit in Guinea was improved through amendments to the OHADA Uniform Act on secured transactions that broaden the range of assets that can be used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. In Guinea 2.4 percent of adults in 2011 borrowed from a financial institution and 2.0 percent in 2014. The purpose of the loans were mainly centered on medical access and education all in alignment with the socio-economic and health state of the country at the time. Data available on mortgage finance is limited and information on the accessibility of credit available, credit registry and credit bureau coverage of adults in Guinea remains unavailable.
There is no credit bureau coverage in Guinea, this is largely for the reason that only five percent of adults in Guinea have bank accounts or access to credit. Microfinance activities are regulated by the Central Bank of Guinea (CRG) and in 2009 CRG gross loan portfolio stood at US$ 7.58 million with the number of active borrowers sitting at 63 410 and in 2012 the bank provided US$ 11.93 million worth of loans with 98 420 active borrowers. The percentage of non-performing loans stood at 5.9 percent in 2010 to 6.5 percent in 2015. In Guinea, banks that provide credit include the Rural Credit of Guinea, OraBank, Ecobank and the Central Bank of Guinea, all of which provide both mortgage and home improvement loans. The institutions process of loan disbursements are structured in a three-step process whereby installments are based on the progress of work for the acquisition of apartment or house. Other efforts to bridge mortgage finance inadequacies in Guinea include the project by the China Dreal Group (CGD) together with FiBank. At the end of 2015, CDG created a real estate loan foundation with US$ 25 million at a low interest rate of two percent and periods of up to 30 years. This foundation was however set up to support middle income household acquire up-market houses developed by the group.
According the Global Findex in Guinea four percent of adults are formally banked with an account at a formal financial institution and two percent have credit from regulated institution with one outstanding loan. There are 53 percent of enterprises with an account at a formal financial institution and five percent have outstanding loans.
Economic recovery will be a long process in Guinea as government adjusts from the surge of international aid received following the Ebola related emergency. Ebola stalled promising economic growth in 2014/15 and impeded several projects. Guinea suffers from chronic electricity shortage; poor roads; rail lines and bridges and the lack of access to clean water.
The main challenges for the country are youth unemployment, worsening urban poverty which has increased from 23.5 percent in 2002 to 30.5 percent in 2007 and 35.4 percent in 2012. The country faces shortage of basic public services, including education, health care, security and decent housing.
Guinea’s urban growth is the result of its natural population growth, the rural exodus and the transformation of the outskirts of the country’s towns and cities. Imbalances in the urban structure of towns and cities have increased, confirming the predominant role of the capital city and economic centers. The estimated population in Conakry amounted to 15.7 percent of the national population. The housing market in Guinea comprises of 70 percent of rental housing in stock with average rental price in the city centre being US$ 1 000 and US$ 500 outside the centre. According to the Guinea National Institute of Statistics census data, in 2012 there were 1 471 268 households.
The provision of housing in Guinea is characterised by Public-Private Partnerships (PPP) between Government and private developer’s projects. The government has signed agreements with a number of foreign companies for the construction of 120 000 social housing comprising of 768 apartments and 384 social housing units. In 2011, the mining company Rio Tinto developed a project to build 320 social housing units. It negotiated and signed 15 memoranda of understanding and three contracts in real estate development.
In 2015 government initiatives to improve housing conditions has been seen in a project to build houses for teachers. In an agreed partnership with the Federation Syndicale Professionnelle De L’Education (FSPE), the teacher’s union in Guinea, and La Confederation Nationale des Travailleurs de Guinee (CNTG), the National Confederation of Guinea Workers. The construction of housing units are anticipated to start in 2016 and run through 2025 at an estimated US$ 2 875 billion. The programme is part of a larger effort by the Government to alleviate the serious housing shortage nationwide.
According to Doing Business, Guinea is making steady progress when it comes to improving the business environment regarding real estate. In 2010 the cost of registering property was lowered; in 2013 Guinea made obtaining a building permit less expensive; in 2014 the country made transferring property easier by reducing the property transfer and, in 2015, the registration of property was made easier. Guinea improved its Doing Business registering property ranking from 143 in 2016 to 140 in 2017- it now costs 8.5 percent of the total cost of the property to register a warehouse, involving six procedures and takes 44 days.
The formal land laws and policy in Guinea recognise customary land rights. However there remains a mismatch between statutory policies and customary practices, most of Guinea’s land is unregistered and governed by customary law whereby rights to land are vulnerable to transfer by the state or privatization. The formal market in Guinea is largely restricted to urban areas and is inaccessible to poor and low-income migrants in the city center. The 1992 Guinea Land Code (Code Foncier et Domanial) affirms state ownership of vacant land and recognises the private ownership of land. Land rights are secure through purchase, inheritance, lease, loan, borrowing, sharecropping and appropriation.
The average rental price in the city center is US$1 000 and US$ 500 outside the city center. Prices in new up-market development on the district of Kipé, on the north coast of the capital are placed at US$2 000 per square meter and can then be rented for US$2 000 per month. There is a small pool of local real estate agents in the country, the sector is largely dominated by foreign developers such as the American Homebuilders of West Africa which offers various residential housing models with the average cost of a 250m², two-bedroom house set at US$31 999 (GNF 28 million).
Housing Policy and Regulations
The 1992 Guinea Land Code (Code Foncier et Domanial) sets the agenda for land, and land ownership in Guinea. It outlines the general principles and laws towards property rights, ownership and tenure. The Land Code advises that land must be registered as to enable owners to exercise their rights over the property. However, the implementation of these rules has been limited, in 2011 the government in efforts of improving this, provided computer hardware and training at the National Government Property Directorate including Land Registry and database software to computerise the land registry.
In Guinea the conditions governing the exercise of microfinance institutions (MFIs) are defined in a legal framework adopted by the Republic of Guinea. Authorities have taken initiatives to promote the sector and map out a national strategy for micro-finance in the country. The National Micro-Finance Board set out to create a GNF 130 billion (US$14 million) fund to support activities initiated by the youth and women.
Housing Sector Opportunities
The most dynamic sectors in Guinea are agriculture and mining. The government recognises the need for adequate housing and has placed efforts in the form of social housing projects that are executed through Public-Private Partnerships (PPP) however the affordable housing bracket has not been catered to as yet. There are a number of reforms that the country could undertake that would catalyse economic growth which would likely increase housing affordability. For example, increasing finance tools available for low-income earners to enable increased access to land and property in urban areas. The recent establishment of private funding solutions by various developers suggests that there is a shift in the traditional practice of funding providing a variety of funding tools for low-income earners. The banks in Guinea have been instrumental in increasing domestic revenue – a sign that the financial sector is better equipped to expand access to finance. The country has a low-inflation and according to the IMF, debt remains at a sustainable rate, providing a comprehensive environment for future investments.