Housing Finance in Niger

Introduction

The Niger Republic is a landlocked country in the north-western part of Africa. It is bordered by Algeria and Libya to the North, Benin and Nigeria to the south, Burkina Faso and Mali to the west and Chad to the east.  It covers 1 267 000km² with two-thirds of its land mass desert. The population is concentrated in the narrow stripe in the south where the main economic activities are farming and herding. Only 12.3% is arable land and the main cash crops are onion ‘violet de Galmi”, peanuts, sesame and black eyed peas “niebes”.  The country is rich in natural resources;  uranium, petroleum, coal, gold, molybdenum, tin, phosphates, iron ore, gypsum and salt.  Among the natural resources uranium, gold and petroleum are currently exploited and Niger is one of the largest producers of uranium in the world. In spite of its resources, Niger remains one of the least developed countries in the world with the lowest human development index, which, at 0.348 in 2014 ranked last out of 188 countries. The country enjoys a relative political stability with a peaceful presidential and parliamentarian elections in early 2016 but continues to suffer from external threats along its borders; conflicts in Mali and Libya and religious conflicts such as “Boko Haram” in Nigeria.

The real GDP growth rate in 2015 decreased to 3.6% from 7% in 2014. Niger’s economic growth in 2015 was drastically affected by the fall in world prices of uranium, oil, climatic problems, and the conflicts in the neighbouring countries especially the raids from Boko Haram in the Diffa region. The raids have not only paralyzed social and economic activities of the region but have created a state of emergency with internal human displacements and refugees from Chad and Nigeria. The insecurity in the Diffa region due to Boko Haram remains a major economic, social, security and budgetary challenge. However, the country’s economic prospects are quite good mainly because of expected expansion of extractive industries and more investment in agriculture and transportation.  Growth is projected to improve to 5% in 2016.

Niger Republic has a young and growing population, 19.9 million inhabitants in 2015 with 18% living in towns and cities, making the country lightly urbanised compared to other countries in the region.  With a fertility rate of 7.6 children born per woman, one of the highest in the world, the urban population is estimated to double in 12 years and the demand for housing and other urban infrastructures to remain very high.

Access to Finance

Penetration of formal financial services remains very low in Niger as illustrated in 2015 by World Bank financial inclusion data/Global Findex. 6.5% of adults 15 and above have accounts compared to the average of 34.2% in sub-Sahara Africa.  There is one central bank, 11 commercial banks, with branches mostly concentrated in Niamey, the capital and some other big cities, a bank of agriculture (Bagri) established in 2011 with branches in 2015 in Niamey and two other cities, a mortgage bank (Banque d’Habitat), created early 2011 but still not operating, some insurance companies, two pension institutions and some microfinance institutions. The practice of microfinance in the country is steadily growing, with about 15 active Financial Service Providers (FSP).   These 15 FSPs reported to the Mix Market (an online repository of microfinance performance data and analysis) in the second quarter of 2016, and disbursed a total of US$41 million loans to 176 000 borrowers.  These FSPs also held US$29 million in deposits from 336 000 consumers in the country. ASUSU remains the leader of FSPs in Niger with US$27.29 million in disbursed loans, 114 350 active borrowers, US$23.4 million deposits from 250 750 depositors. In 2016 Mix Market data included Assusu S.A., data however it is difficult to estimate the amount used for housing.

Prior to 2000, the government of Niger offered housing finance and government subsidised homes to government employees through a public and private owned credit and loan institution known as Crédit du Niger (CDN) and through a government-owned housing development company called Société Nationale d’Urbanisme et de Construction Immobilière (SONUCI). The SONUCI is still operating but CDN has been liquidated, and in 2011 was replaced by Banque d’Habitat which to date is still not operating.

In 2016 all the commercial banks operating in Niger offer housing loans to employees of formal registered companies and other international governmental and non-governmental organizations. Some of the banks have agreements with the companies and organizations to offer preferential interest rate to the employees. The loans are secured by the employer, or are mutual guarantee loans.   The interest rate is between 6.5% and 9%, and in most cases 10 % down payment is required at a maximum term of 20 years.

Mortgage financing is still in an embryonic stage due to the low average income of employees in Niger, as well as other constraints, such as the low percentage of the population who are employed. There is no mortgage bank in Niger however all the commercial banks as stated above offer housing loans under certain circumstances such as having a fix employment for an individual seeking loan with the employer as collateral and having a partnership or other agreements for developers or institutions in the housing industry. In most cases the down payment is a minimum of 10%-25% of the loan. The interest rate is between 8% and 10%, at 7 to 20 years.   Apart from banks and other formal enterprises some private but informal housing promoters use their personal funds to build houses for low income and higher income brackets for rentals. Other forms of housing finance include personal savings, remittances and family assistance.

As with the majority of the West African Economic and Monetary Union countries, long-term funding remains a major challenge for Niger’s housing market.  Nevertheless, there are opportunities for developing national and regional mortgage banks and credit bureaux.

Housing Affordability

Access to mortgage finance is limited, and when available, interest rates and loan tenure render the cost of borrowing very high.  As such, the majority of the population cannot afford housing. The smallest mortgage available as of 2016 is FCFA Francs 7.5 million (about US$12 804, which, at an interest rate of 10.5% and repayable over seven to 15 years, would require a monthly repayment of US$ 71 to US$152).  About 7% of the country’s population earn below US$ 100 a month (or US$3.1 a day), which makes even the smallest mortgage unaffordable.   The high cost of borrowing in terms of interest rates also contributes to the low mortgage affordability in the country. Only about 22% of salary workers (representing less than 1% of the entire population), in most cases high-level government officials, and to some extent middle management staff in private companies and international organisations have access to housing finance.

The majority of the population in the urban areas rent their homes. Rental homes are provided primarily by informal housing promoters and SONUCI.  Rents vary according to the quality and location of homes. They range from the equivalent of US$169 to US$3 000 a month for middle and upper income in Niamey. These are modern houses with amenities, two to three bedrooms villas for middle income and luxurious villa with three to five bedrooms, garage, garden and swimming pools in Koira Kano and Plateau. Other forms of rentals include the popularly known ‘rooms’ or ‘room and parlour’ arrangements. These are found all over Niger, especially in the popular streets of the capital, and the average rents are between US$25 and US$100 a month.  At present no company or institution provides rentals on a larger scale, not even SONUCI that used to do so in the past. Additionally, less than 0.1% of the population has access to government subsidies for housing due to the fact that only salaried workers (and particularly government employees) qualify for subsidised houses.

The price of cement in Niger is currently (5 500fcfa) for a 50kg bag of cement, 1 000 fcfa less than last year’s price but still very high compared to (3 000fcfa) in Senegal.

Housing Supply

Housing stock in Niger can be classified into three categories, based on the material used for construction:  construction with mud and straw, and ceilings of wood (maison en terrecuite /banco); construction with mud and plaster with cement, and corrugated iron sheet for the ceiling (maison en semi dur); and construction with cement, concrete and stone, and corrugated iron for the ceiling (maison en dur) modern homes. The average cost of construction of the different categories depends on the geographical location, the size of the land, the plan and the quality of the material used.  The three categories are found all over Niger.  In the capital, housing stock is predominantly constructed with durable materials, cement and concrete.

According to Sahel Dimanche, the public national newspaper, the rate of housing supply is insufficient to meet the demand, as illustrated by different national surveys. Demand is estimated to be 50 000 units per annum, for the whole nation and 6 000 for Niamey, the capital. The economic growth and the rate of urbanisation have accentuated rents and demand for houses in Niamey as well as in other cities.  The absence of mortgage banks in the provision of end-user finance is a major challenge to the development of housing.

There are no recent statistics about the number of registered companies in the construction industry but majority of the companies are in roads and other urban infrastructure with very few in the real estate sector.  Those in the real estate sector focus on land acquisition from traditional proprietors and servicing the land into plots. The serviced plots are sold to potential homeowners who build their homes incrementally. The majority of potential homeowners finance these purchases with savings and loans. There are different methods of financing by commercial banks and MFIs, but among MFIs the most popular consists of initial savings over three to five years for land acquisition, after which a loan is granted according to the client’s income and the land title. The loans in most cases are insufficient for building a home; therefore most homeowners build their homes over a period of time.

In the 40 years between 1960 and 2000, the government of Niger financed only 1 236 houses.   Prior to 2000, the government of Niger offered government subsidised homes to government employees only and precisely medium and senior civil servants.  More recently, the government has introduced policies that are intended to induce the private sector to participate in developing housing.  These initiatives include public private partnerships and facilitating access to land for developers. The construction of low income houses such as the Sary- Koubou project, in Niamey financed by government is a good example of recent progress.  The Sary-Koubou project consists of 174 units made up of one to four bedrooms houses. Each unit is constructed on 200m²-400m² of land and the project is located in Niamey. In 2016 the 174 houses of the Sary-Koubou project have all been delivered. Other projects delivered are 100 houses in Dosso by SONUCI (Dosso Sogha) delivered in August 2015, 100 houses “Cite de renaissance” in Niamey, 198 houses by Society Federal Niger development in Niamey, 50 houses by SATU SA in Dosso, 76 houses in Maradi by DB IMMO, 248 houses for the military in Niamey, the acquisition of 88 hectares of land and 1 000 plots of land acquired by the government.  To date the project de la renaissance of 1 000 units of one to four bedroom houses to be constructed all over the nation by SONUCI and its partners are yet to be delivered and so are other public private partnership projects.

According to the ministry in charge of housing, the rate of housing supply is insufficient to meet the demand, in spite of the different incentive policies to encourage the private sector to invest in mass construction of economic and affordable houses. Demand remains high and housing is one of the priorities of the presidential programme of Renaissance 2 that is, the program of President Issoufou Mahamadou who was re-elected in 2016 for a second term. The government has initiated a programme to work with the Chamber of Commerce to encourage local entrepreneurs to take advantage of the incentive policies and invest in mass construction of affordable houses. The government’s goal is to boost supply and satisfy the national need for affordable housing. The new programme “Construction d’une ite de 1 000 logements à Niamey” will start in Niamey with the construction of 1 000 houses with local entrepreneurs in the housing sector.

Property Markets

Property prices have risen steadily over the past decade given an increase in demand for houses (and insufficient supply) due to economic growth and the boom in the civil society activities. Niger has witnessed the influx of non-governmental organizations. Also due to the nascent petroleum industry, and the increase in urbanisation, there is a high demand for property. Rich Nigerien citizens and Nigeriens from the diaspora are buying properties and investing heavily in modernising the stock of residential and commercial properties in the capital and other cities.  The growth in the market is expected to continue due to the growing demand for houses and commercial outlets, coupled with the ambitious programme of the president, known as ‘Niamey Nyala’ or ‘Niamey the cute’, a programme to metamorphose Niger’s capital city Niamey into a modern, attractive city.

According to the World Bank’s 2016 Doing Business Report, Niger ranks 160 out of 189 economies in terms of ease of doing business, 178 in dealing with construction and 126 in terms of registering property. Four procedures are required to register property (less than the six procedures required, on average, across Sub-Saharan Africa), and the process takes 35 days (almost half the Sub-Saharan African average). Niger has maintained property value, 9% for the past three years compared to 11% of 2013, but the cost of registration is still relatively high.

Housing Policy and Regulations

Since the late 1990s, there has been a significant evolution in urban planning and urban management.  The Niger Republic’s National Policy and Regulation on Land (Politique Nationale en Matière d’Habitat) was adopted on 29 December 1998.  The law defines the procedures for housing finance and the approach to promoting housing development. These include creating a national housing fund scheme, creating a national research centre to promote construction materials and technology, and transforming CDN into a housing finance bank.  The National Policy on Habitat advocates for housing loans by commercial banks, and encourages private investments and savings. To date the National Housing Fund Scheme and the National Research Centre have not been  created.

In 2012, the Public Private Partnership Act was adopted. This relates to the development of urban infrastructure, especially housing, where long-term financing is crucial. The goal of the Act is to promote private interest in the development of housing and other urban infrastructure.

In terms of urban planning and land administration, the Land Administration Law (la Loi d’Orientation sur l’Urbanisme et l’Aménagement Foncier, or LOUAF) was adopted in March 2008.  LOUAF deals with customary property rights and decentralisation. The adoption of LOAUF has contributed to the clarification of responsibilities between the central authority and communal authorities. This in turn facilitated the registration of properties in rural areas. Prior to implementation, it was impossible to register rural land or properties. There are no recent statistics on the number of registered properties. Research is needed to measure implementation and evaluate the impact on the decentralised communities and on the development of housing and housing finance in Niger and other UEMOA countries.

There are different ownership rights (for example, full and temporary rights, as well as customary rights).  Although there has been reform in land administration, the registration of properties to obtain full ownership rights of land and property – land and property titles, or Titre Foncier – remains a challenge. The difficulties encountered will hopefully be addressed by Sheida, the reform system adopted by the UEMOA countries in 2006 to simplify the process of obtaining full ownership title. The reform has reduced significantly the cost of registration, and has eliminated unnecessary bureaucratic authorisations.  The outcome of the reform can be measured in terms of the number of land titles awarded before and after the introduction of Sheida: 150 before and 1 000 after. There are no recent statistics and there is an urgent need to update these figures and evaluate the impact of Sheida.

Sheida, LOUAF and the new investment code will certainly contribute to accelerating the development of housing and housing finance in Niger.

Niger has adopted a law (law NO 2013-28 of June 2013) laying down the foundation of urban planning and urban management since 2013. The decree to implement the law (2014/555) was signed last year and this is a major reform in urban regulation. It is expected that the decree 2014-555 dated 31^st of July 2014 to enforce the law, will facilitate the implementation of projects of upgrading slums and contribute to making urbanisation a tool for economic and social development.

Housing Sector Opportunities

Niger offers great opportunities for housing and mortgage products, for the following reasons:  a huge deficit in affordable and adequate houses, the uranium exploitation, the exploitation of petroleum in spite of recent drop in global demand, construction of a second cement factory by Dangote, authorized since 2015, the ambitious political program of President Issoufou Mahamadou re-elected in 2016 and a significant increase in the income of middle class Nigeriens.  Niger is very rich in mineral resources especially resources such as limestone and gypsum used in making cement.  In spite of the abundance of resources, there is only one company that manufacture cement in Niger “Societe Nigerienne de Cimenterie, SNC”.  Although SNC has a very good product but its production cannot meet local consumption the country therefore has to import to satisfy its needs.  Niger being a landlocked country pays a relatively high cost for logistics. Cement production can be very costly in terms of energy consumption, that is probably why the industry was not developed, but the rate of urbanisation, the government program for housing and the development of energy and infrastructures favour the development of cement industry. Apart from Dangote there are other foreign investors interested in the production of cement in Niger some of them are in the process of obtaining their authorization among which are ADOHA group, a Moroccan group and one of the big producers in northern Africa. The development of cement industries will definitely contribute to local supply of cement, generate employment, revenues for the government, make cement price competitive and accelerate the development of urban infrastructures and housing.

The Niger market also offers potential for other urban infrastructure investment. There is a need for long-term financing to develop affordable houses for the majority of people in Niger, and higher income properties for the minorities and expatriates. The ambitious government programme to transform the capital city of Niamey into a modern city also bodes well for increased investment. The reform in land management, registration of properties and fiscal advantages offered by the government of Niger Republic to formal private enterprises are incentives for promoting a dynamic housing development business and housing finance.