Namibia has a developed 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 Namibia is 10.5 percent, as of September 2016, and requires at least a five percent down payment. The cheapest newly built house by a developer recorded by CAHF is US$ 40 788, which is for a 60 square metre unit. Cement prices are lower than the continental average, at US$ 6.15 for a 50-kilogram bag.
With an urbanisation rate of 4.43 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. The scarcity of available serviced land is both slowing down the process of housing delivery and pushing up the prices of serviced land, and is the key challenge facing the housing sector. 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 Namibia can afford.
Find out more information on the housing finance sector of Namibia, 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 2017 edition, which has up-to-date profiles for 54 African countries.Download yearbook
Namibia is a middle income country in Southern Africa, with a GDP per capita of US$ 4 427.9 in 2016 according to the IMF’s World Economic Outlook. Namibia has been one of Sub-Saharan Africa’s most politically stable countries since its independence in 1990, and this has aided it in becoming one of the most attractive investment destinations in the region.
The real GDP growth in Namibia was estimated at 1.0 percent in 2016, down from 5.3 percent in 2015, and is projected to increase to 2.5 percent in 2017 and 3.7 percent in 2018 according to the African Economic Outlook.
The bulk of Namibia’s imports, including most food products, are sourced from South Africa. As a result, continued uncertainties in the South African economy is likely to increase exchange rate volatility further, with consequential effects on inflation. The annual average inflation rate was recorded at 6.7 percent in the second quarter of 2016, compared to 3.0 percent in the same period of 2015 according to the Namibia Statistics Agency (NSA) 2016 Second Quarter report.
The high unemployment rate in Namibia has not seen any improvement in the last few years. As of 2016, Namibia’s unemployment rate increased to 34 percent of the working population from 28.1 percent in 2014, according to the Namibia Statistics Agency. The Namibia Labour Force Survey 2016 Report, published in June of 2017, states the number of employed people in Namibia were 676 885, while 349 383 people were unemployed of a total of 1 026 268 in the labour force. This shows that from 2014, the employed population decreased by 32 010 persons. Namibia is comprised primarily of two economies, one modern with a skilled workforce and the other based on subsistence farming. The Namibia Statistics Agency accredited the 6.1 basis point increase in the unemployment figure mainly to a prolonged drought that has gripped Namibia since 2015. It further outlined how unemployment was particularly high among those living in rural areas, at 39.2 percent compared to 30.3 percent in urban areas.
Access to Finance
Namibia has a mature and efficient banking system. There are 12.8 commercial bank branches per 100 000 adults and 54.73 automated teller machines per 100 000 adults in Namibia (2015, WDI). Namibia scores high in terms of ‘ease of getting credit’, ranking in 62nd place out of 189 countries in 2017, down three places from 2015 according to the World Bank’s 2017 Doing Business Indicators Report.
There are ten licensed commercial banks in Namibia, several of which are privately owned. Three of the banks (Nedbank, Standard Bank and FNB Namibia) are subsidiaries of South African banks. FNB Namibia successfully concluded negotiations to acquire 100% of EBank, a branchless commercial bank in 2016. Bank BIC Namibia Limited was established in July 2015 and started its bank activity in May 2016, it is a subsidiary of Angolan Bank Banco BIC. ATLANTICO Namibia Integrated is a global financial institution, based in Angola and Portugal that is licensed and supervised by the Bank of Namibia. Letshego Bank Namibia Limited is a subsidiary of a Letshego Holdings Limited, the Africa-focused micro-lender from Botswana. The bank was granted a full commercial banking license for its subsidiary in Namibia in 2016. Bank Windhoek is a Namibian-owned bank.
FIDES Bank Namibia, a micro-credit bank focused on small and medium-sized enterprises, has been purchased by Trustco Bank Namibia. There is the Development Bank of Namibia which is responsible for financing development infrastructure, one savings bank (Nampost), an ABSA Representative Office and 32 insurance companies according to the Namibia Financial Institution Supervisory Authority (NAMFISA). Namibia’s banks are regulated by the Bank of Namibia (BoN or Central Bank) while insurance companies and microlenders are regulated by NAMFISA.
According to the Namibia Statistics Agency GDP Quarter 1 report, the financial intermediation sector was estimated to have recorded a slow growth of 0.1 percent in real value added during the first quarter of 2017 as compared to the 3.6 percent recorded during the corresponding quarter of 2016. The slow growth was mainly due to a decline in the banking subsector, which recorded a decline of 0.8 percent during the period as compared to the growth of 5.3 percent recorded during the same quarter of 2016. The decline in real value added can be attributed to an increase in bank charges. The insurance subsector recorded a slow growth of 0.9 percent in real value added in the first quarter of 2017 as compared to 1.7 percent recorded during the same quarter of 2016.
Commercial banks in Namibia are generally regarded as well-capitalised and profitable. Although the banks appear to be healthy, they are nevertheless exposed to risks such as the credit risk arising from household mortgages. According to the Bank of Namibia’s Financial Stability Report the ratio of household debt to disposable income was virtually unchanged at 84.6 percent in 2016, compared to 84.7 percent in 2015, underpinned by a slowdown in mortgage lending and instalment credit to households. The concentration of lending in mortgages heightens the banking sector’s vulnerability to shocks in the property market. Growth in mortgage lending, which represents the largest portion of total loans advanced to households, slowed to 9.5 percent at the end of 2016, from 12.5 percent in 2015. As a proportion of disposable income, mortgage loans remained more or less the same at 48.6 percent in December 2016, from 48.5 percent in December 2015 (Bank of Namibia). Therefore bearing an impact on household indebtedness which slowed to 9.3 percent during December 2016, from a double-digit growth rate of 12.5 percent in December 2015.
The infrastructure to facilitate mortgage lending is fairly well developed. In terms of the World Bank’s 2017 Doing Business Report, Namibia scores seven out of a possible eight on the ‘depth of credit information’ index, as the country now has four private credit bureaus. In 2016, according to the Doing Business Report, Namibia improved access to credit information by guaranteeing by law borrowers’ right to inspect their own data.
Microlending for housing purposes is on the rise through organisations such as the Shack Dwellers Federation of Namibia (SDFN), a community organisation that aims to improve living conditions of poor Namibians by providing its members with building loans ranging from N$30 000 (US$ 2 200.22) to N$ 45 000 (US$ 3 300.33) with the average being N$35 000 (US$ 2 566.92). The loans are repayable within a period of 11 years at an annual interest rate of about six percent. Five percent is what the Federation charges monthly.
The Mass Housing Development Programme (MHDP) was launched and implemented by the Government of the Republic of Namibia in 2013. The programme is aimed at increasing investment in the affordable housing sector. Furthermore, the Presidency has proposed that the funding model in the mass housing Blueprint will be used for the implementation of the Mass Housing Development
The Minister of Urban and Rural Development instructed the NHE in May 2015 to halt construction being carried out through the Mass Housing Programme. Part of the cause for the withdrawal of the project was that it failed to make a dent in the housing backlog after only 1 468 houses out of the planned 10 000 units were completed during the first phase. Another was lack of funding.
The suspension was lifted in February 2016. The total number of houses that had been commenced but yet to be completed in February 2016 stood at 3 181.
While some structural transformation has taken place and poverty has significantly declined, the majority of Namibians are still employed in low paid jobs dominated by primary agriculture. This has led to a proliferation of informal settlements in the major towns and urban centres, largely resulting from low access to serviced land and low incomes among unskilled and semi-skilled immigrants. About 74 percent of Namibian households cannot afford conventional housing as access to credit remains difficult according to the African Economic outlook. The “Getting Credit” section of the World Bank’s Doing Business 2017 Report ranks Namibia at 62 out of 189 countries. The government estimates that 74 percent of Namibians particularly in the low and middle-income brackets cannot afford conventional housing. This is evident in that towards the end of 2016 nationwide, the average price per square meter was N$560 in December 2016 and, according to the 2017 FNB Namibia report it decreased to N$471 per square meter in March 2017.
According to the December 2016 First National Bank Namibia (FNB) Housing Price Index 2016, the median house price for 2016 was N$850 000 (about US$ 62 339.58), up from N$800 000 (about US$ 58 672.54) by a private developer in 2015.
The annual median house price for Namibia has been increasing by a percentage of six percent per year. Central Namibia prices have eased for detached property due to increased supply of sectional title units. Accordingly, properties remain unsold for an average of 19 weeks according to FNB Namibia. Looking forward, house prices are expected to remain depressed as the economy gradually recovers from fiscal consolidation, rising interest rates, high inflation and rising unemployment.
The National Housing Enterprise, a state-owned company mandated to provide housing solutions in order to alleviate the national housing need, faces a backlog estimated at about 110 000 and growing at an annual rate of 3 700 units according to the Central Bank of Namibia. The NHE’s waiting list increased from 76 800 in 2016 to a recorded 84 940 as of mid-2017.
According to FinScope Namibia 2011, the majority of Namibians claim they own their housing, although the majority cannot prove this with a title deed. Only 24.3 percent say they bought their home; the majority (62.4 percent) say they built it themselves. A further 11.8 percent inherited their homes. Some 38 percent funded the ownership (purchase or construction) of their housing themselves through savings. An additional 36 percent said that their housing did not cost anything, as they had used materials they found to construct the dwelling which suggests a high level of informal housing. Approximately 80 percent of people have access to water within their yard, 52 percent have access to piped water into their dwelling or yard and 25 percent have access to a public tap.
Since 2003, the NHE has built about 450 houses per year for its target market: households earning between N$5 000 (US$ 366.70) and N$20 000 (US$ 1466.81) per month. Apart from constructing houses, the NHE has also been involved in servicing land in a number of local authority areas, resulting in a total investment in service infrastructure of about N$145 million (about US$ 10 634 398.60) between 2006 and 2012. Small NHE houses cost about N$275 000 (about US$ 20 168.69), on average inclusive of land cost. NHE loans are offered at a maximum of prime (10.25) minus one percent.
The Otjomuise project is implemented by the NHE and the City of Windhoek. Its purpose is to help meet the dire need for adequate housing to reduce the number of people still living in shack dwellings and forms part of the Namibian Mass Housing Programme. Igen Africa has been appointed project manager and is partnering with the South African division of Calgro M3 and Namibian Contractor, Afrikuumba, in a joint entity named CalkuumBA. The project amounts to approximately NAD1 billion (about US$ 73 340 680.00). This three-year project, which started in 2014, is intended to provide 2 542 units during phase one and two. Thereafter, a planned phase three is anticipated to produce 12 000 units, according to Bigen Africa.
The Harambee Prosperity Plan was launched on the 5th of April 2016. The Government plans to build 20 000 houses, service a minimum of 26 000 plots and build 50 000 rural toilets in the next four years. Namibia’s president, Hage Geingob, during his State of the Nation Address in the National Assembly in early 2017 provided an update on the Harambee Prosperity Plan, highlighting that 7 754 plots had been serviced countrywide, exceeding the annual target of 6 000. He also added that 5 554 houses were completed countrywide in the first year of Harambee and thus exceeding the target of 5 000.
The private sector continues to engage with the demand for affordable housing. To this end, Ohorongo Cement, FNB Foundation and Pupkewitz Foundation partnered with the Shack Dwellers Federation of Namibia for the construction of houses for low-income families in early 2016. By pledging NAD 3 million (about US$ 220 022.04) to SDFN and National Housing Action Group in March 2016. In Tsandi, building materials were purchased and construction was completed by September 2016. The First Lady of Namibia, Madame Monica Geingos, in early March 2017 launched 53 new homes at Tsandi. As of March 2017 the progress of the projects was as follows: Otavi in Otjozondjupa; 70 percent of the houses completed, Omaruru in Erongo; currently manufacturing bricks and building of 26 houses was put on hold due to the severe drought and lack of water, Tsumeb in Oshikoto; land clearing and planning of 33 houses and brickmaking is in progress.
The housing backlog in the town of Rundu is around 30 000 units. A new suburb is being planned with 600 modern housing units and townhouses, with 100 of the houses to be completed by the end of 2017, on an 82-hectare plot in an area between the Trans-Caprivi Highway and the Rundu-Nkurenkuru road. This is the first suburb to be developed by local investors. The 600 units will comprise two bedroom houses with a garage and some without a garage, as well as three bedroom houses with garages and some without. The house prices will range between N$500 000 and N$900 000 (US$ 36 670.34 – US$ 66 006.61). This is a private-public partnership project with the Rundu Town Council and Armstrong Constructions and Properties.
Helao Nafidi Town Council in early 2017 availed N$11 million (about US$ 80 6747.48) for the construction of its first 70 houses for low-income earners. This follows the construction of about six houses under the Build Together Programme in 2012. The houses will be constructed at Ohangwena and at extensions 1 and 2 at Engela and Omafa. The two-bedroom houses under construction are estimated to value between N$180 000 and N$190 000 (US$ 13 201.32 – US$ 13 934.73).
In July 2017 Trustco Properties launched a development in Ondangwa named Ombala Estate, offering affordable two-bedroom and one-bathroom homes. Plot and plan options are available on erven starting from 310 square metres and at a starting price of N$689 000 (about US$ 50 531.73) which includes the transfer and conveyancing costs. First-time buyers are encouraged to purchase their new homes at Ombala Estate, with no deposit required for pre-approved clients. The Ondangwa land was purchased by Trustco Properties in 2011 with the sole aim of alleviating the housing crisis. This development spans 130 103 m2.
According to the World Bank’s 2017 Doing Business Report, Namibia ranks 174th out of 189 countries for ease of registering a property, a drop from 2015’s ranking of 173 but the same place as 2016. On average the eight procedures involved in registering a property take 52 days and cost 13.8 percent of the property value. In mitigating risks associated with quality, Namibia made transferring property more difficult in 2016 by requiring a building compliance certificate before conveyancing can go ahead. The limited availability of serviced land is mainly due to a lengthy and outdated approval process for proclamation, surveying, subdivision and registration of land according to the Presidency (2013). The various procedures of acquiring a property in Namibia have a bearing on escalating property prices of the limited housing stock available.
When calculating the cost of transfer and registration of full title residential property in 2017, a house that costs N$800 000 (about US$ 58 672.54) will be N$14 420 (about US$ 1 057.57), which is 1.8 percent of the purchase price. However, for sectional title of the same property the price transfer and registration will cost 1.6 percent of the purchase price according to calculations on Namibia Real Estate website supplied by Sauls Jacobs & Co. law firm.
Housing Policy and Regulations
According to the Presidency (2015) the Vision of the Namibian Government is to eradicate poverty in its entirety by, among others, providing affordable housing to all Namibians in line with Vision 2030.
The National Development Plan (NDP) was adopted as a medium term plan developed after the launch of Vision 2030. All the national development plans starting from the first (NDP1) to the last aim to implement programmes and plans to achieve the goals of Vision 2030. The Namibian government created more than 112 000 jobs under the fourth National Development Plan over four years, exceeding its target of 90 000 jobs, according to the Deputy Minister of Economic Planning as of mid-2017.
In mid-2017, NDP5 was launched. Speaking at its launch the Namibian president said housing, especially affordable housing, remains a major developmental challenge in the country. The unplanned increase in informal settlements in towns and cities were highlighted as posing challenges to the administration of these cities and towns and that it furthermore compromises the safety and health of communities. During NDP5, the country will explore alternative and innovative methods of providing housing and land to the majority of the people of Namibia. Namibia will also employ a number of specific strategies aimed at strengthening sustainable land management.
The National Housing Policy guides all actions taken by the Directorate of Housing. The Housing Policy identifies the need to develop a National Shelter Strategy and to implement a National Housing Programme. It further guarantees the right to a house, especially for the formerly disadvantaged groups of the society.
The Agricultural (Commercial) Land Reform Act of 1995 provides for government acquisition of Agricultural land for purposes of land reform and redistribution. The National Resettlement Policy of 2001 and the Affirmative Action Loan Scheme are designed to resettle landless households on land acquired under the Agricultural Commercial Land Reform Act of 1995. The Affirmative Action Loan Scheme, which is managed by the Agricultural Bank of Namibia, was designed to provide support in the form of 25-year subsidised loans to resettle well-established communal farmers in formerly all-white commercial farming areas.
The Communal Land Reform Act 5 of 2002 regulates the powers of traditional authorities over communal land and establishes 12 regional communal Land Boards that control the allocation of customary land rights by the traditional authorities. The Land Boards grant, record, and cancel land rights in consultation with the traditional authorities.
The National Housing Development Act, No 28 of 2000 establishes a National Housing Advisory Committee (NHAC) that is responsible for the establishment of a Housing Revolving Fund by local authority councils and regional councils. The Local Authorities Act, No 23 of 1992 was enacted with the vision of empowering local authority councils to contribute towards the improvement of the inhabitants within their geographical reach. Section 57 to 62 of the Act deals with Housing Schemes.
The National Housing Enterprise Act, No. 5 of 1993 (NHE) is a state owned enterprise governed under the auspices of the Ministry of Regional and Local Government, Housing and Rural Development (MRLGHD). NHE is tasked to provide financial assistance by the delivery of affordable housing and credit facilities in the form of housing loans to low- and middle- income households.
The Namibia Financial Institutions Supervisory Authority Act was put in place to establish an Authority to exercise supervision over the business of financial institutions and over financial services. The Namibia Estate Agents Act of 1976 was established to provide for the establishment of an Estate Agency Affairs Board for the control of activities of estate agents in the public interest. The Pension Fund Act of 1956 makes provision for registered pension funds to be used as a guarantee.
The Sectional Titles Act, Act No 2 of 2009, came into operation in December 2014. The Act does away with limitations and shortcomings that restricted development, access to land and property. It also enables potential buyers to obtain finance from banks much easier. The Deeds Registry Act 47 of 1937 (amended) and the Registration of Deeds in Rehoboth Act 93 of 1976 (amended), provide for registration of all freehold titles at central registries maintained in Windhoek and Rehoboth.
Housing Sector Opportunities
Growth in the Namibian housing sector is primarily limited by financial support for low income groups as well as limited capacity to meet the demand for land and housing development. The NHE recognises the need for a more comprehensive and integrated development approach in order to address the impediments to developing affordable housing in Namibia.
Regarding alternative building methods (ABT), a trial by NHE in which land was offered to alternative building technology developers to showcase their products proved that this building method does not necessarily offer cheap products as prices were generally the same and in some instance more expensive. The only advantage that could be drawn from ABTs is the time frame for delivery of houses which is faster compared to traditional building methods. Therefore, construction using traditional brick and mortar may dominate the housing market in the foreseeable future.
There have been calls to provide greater opportunities for fundraising through securitisation as this could increase the number of investment instruments and deepen the financial sector, as well as enable local authorities to raise the funds necessary for urban infrastructure development and thus increase the housing provision.
The recognised successes of the Shack Dwellers Federation of Namibia through its group savings and lending methods, incremental approaches to housing and use of land laws such as the Flexible Land Tenure System suggest a high potential for housing microfinance.