Housing Finance in Somalia


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The Federal Republic of Somalia comprises the regions of Puntland, Somaliland, and South-Central Somalia, covering an area of 637 657 square kilometers. There are 20 urban centers in the country, including the capital Mogadishu. In the past three decades, Somalia has undergone civil strife, recurrent drought and famine, and violent conflicts. The formation of the Federal Government of Somalia in 2012 established the first permanent government since 1991, and parliamentary and presidential elections were held in December 2016 and February 2017 respectively. The country’s political situation however remains challenging.

With an estimated GDP of US$17.47 million in the financial year 2017/18, Somalia is one of the poorest economies in the world. The main sources of economic growth include a fledgling agriculture sector, grants, donor support, remittances, and foreign direct investment, mostly by the Somali diaspora. Livestock rearing is the backbone of the economy and accounts for 80 percent of foreign exchange receipts and 60 percent of the population’s source of livelihood. Before 1991 Somalia had a basic financial system comprising the Central Bank of Somalia and three commercial banks. In the next decade, Somalia was suspended from accessing global financial markets and did not have functioning banks. In the last decade however, the banking system has been revitalized. Only three percent of the population is banked, as there are no fixed income markets in Somalia and no formal credit facilities. Seventy percent of the population however has access to mobile services and access to financial services is mainly based on mobile platforms. The use of mobile money to transfer incoming international remittances domestically reflects the strong links that exist between mobile network operators and money transfer businesses. There are few mortgages in Somalia, although and access to finance by households is improving through the growing microfinance sector.

The price of the cheapest newly built house built by a developer in Somalia is US$70 000 with double storey houses costing approximately US$130 000. This would be affordable to almost zero percent of the Somali population. The high rate of urbanization has led to many urban dwellers, especially women-headed households, the poor, and internally displaced persons (IDPs), living in insecure and unhygienic conditions. Housing strategies in the country therefore need to address the population growth, deficit of adequate housing for the current population, the urban poor, IDPs, and refugee returnees.

The return of peace and the formation of a federal government has brought stability to the economy, meaning that the area is safe for long-term investment. To support Somalia’s flourishing entrepreneurs, the African Development Bank (AfDB), IMF, World Bank, United Nations (UN) and bilateral partners are supporting reforms. These reforms include access to finance, sector regulation and better financial intermediation. The commitment to establishing formal finance institutions and to operationalize the Central Bank of Somalia is improving the investment environment. Somalia’s Vision 2030 aims to achieve economic prosperity and social well-being for the people of Somaliland, aiming towards the establishment of peace, stability, and democratic institutions. Investing in economic infrastructure such as roads, railways, ports and communication would also realize more opportunities for social and physical development, including the development of the housing sector.

Find out more information on the housing finance sector of Somalia, 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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