Sudan has a limited 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 Sudan is 12 percent, as of September 2016, and requires at least a 50 percent down payment. The cheapest newly built house by a developer recorded by CAHF is US$ 16 000, which is for an 80 square metre unit. Cement prices are higher than the continental average, at US$ 11.00 for a 50-kilogram bag.
With an urbanisation rate of 2.77 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 building and construction sector only makes up 3.4 percent of GDP, while only 311 000 serviced plots were distributed between 1956 and 2007. 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 Sudan can afford.
Find out more information on the housing finance sector of Sudan, 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 2016 edition, which has up-to-date profiles for 51 African countries.Download yearbook
The Republic of the Sudan is located in north-east Africa, and is bordered by seven countries. Comprised of 18 states, its geography is dominated by the Nile and its tributaries. It has a total area of 1 861 484 km2 and an estimated population of 36 million. The urban population is estimated at about one-third (33.8%) of the total population. Sudan’s capital of Khartoum has a population of 5.1 million (2015). Sudan gained independence from British/Egyptian Condominium Rule in 1956. An Islamist military regime has ruled since 1989. Sudan has been embroiled in civil wars during most of the 20th century, and continues to suffer from protracted social and armed conflicts in Southern Kordofan, Darfur, and the Blue Nile states. Sudan was subject to comprehensive U.S sanctions. The U.S. demanded that the Sudan maintain a cessation of hostilities in conflict areas, improve humanitarian access and cooperate on addressing regional conflicts and terrorism. The sanctions were lifted in October 2017.
In 2011, the country lost three-quarters of its oil production due to the secession of South Sudan and continues to face serious economic challenges. The oil sector had driven much of Sudan’s GDP growth since 1999. The country is attempting to develop non-oil sources of revenues, such as gold mining, while carrying out an austerity program to reduce expenditures; the Sudanese currency formally devalued in June 2012 and fuel subsidies were gradually repealled. The percentage of the population living below the poverty line is estimated from 20% to about 45% (46.5% (2009). The GINI index of Sudan is 35.4 (2016) with a global rank of 105. Ongoing conflicts, lack of basic infrastructure in large areas, and reliance on subsistence agriculture (agriculture employs 80% of the workforce) keep much of the population in poverty.
Sudan currently has a GDP per capita of US$ 4 570.3 (2017 estimate) and a GDP growth rate estimated from 3.1% to 4.9% with an industrial production growth rate of 2.5% in 2016. “Sudan’s Government Revenue is forecasted to be 73.16 SDG billion [US$10.87 billion] in December 2017 as reported by International Monetary Fund’s World Economic Outlook.” Sudan produces 75-80% of the world’s total output of gum arabic making it the largest exporter of the product. The country has many mineral resources and an abundance of agricultural land but is also subjected to many environmental challenges and periodic persistent droughts. Khartoum Sudan introduced a new currency, SDG, the Sudanese pound, following South Sudan’s secession, but the value of the currency has fallen since its introduction.
Sudan also faces high inflation. The Central Bureau of Statistics has set inflation at 35.5% in May 2017 as compared to 34.8% in April 2017. The building and construction sector made up 3.2% of the GDP in 2012. The housing price inflation rate has been estimated at 19.5%. There have been concerns raised about corruption with regards to the land distribution that is seen to have negatively affected the delivery of housing. The construction sector “has grown by about 10% per annum since 1999 and has been the fastest growing sector in recent years.” Measures of efficiency with regards to dealing with construction permits is assessed based on obtaining land ownership certificates, planning permission, project clearances, building permits, paying for and obtaining building permits, building inspections, certificates of conformity, water and sewage connections and updating of land registry records. Sudan has deteriorated in global ranking with regards to the ease of doing business (from number 164 in 2016 to 168 in 2017).
Access to Finance
The World Bank ranks the Sudan at number 170 in terms of the ease of getting credit. Data is not readily available with regards to credit registries and banks/financial institutions. The performance of the banking system, that is the Central Bank of Sudan (from now on referred to as CBoS), as well as other operating banks and non-bank financial institutions can however be assessed by consulting the CBoS balance sheet and the performance of ancillary companies and units which assist the CBoS in implementing its different policies and programs. These include the performance of Microfinance Unit, Credit and Information Scoring Agency (CIASA), and Electronic Banking Services company (EBS).
The CBoS, bank policies aim at attracting more national savings to provide the financial resources required for fuelling economic activities. Thus, the CBoS intends to remove restrictions on opening new bank branches and towards simplifying the procedures for opening current, saving and investment accounts and opening branches in all 18 states and expanding e-banking services. The adoption of these policies led to the significant increase in bank deposits (from SDG 39.9 million or US$5.9 million in 2012 to SDG 44.5 million or US$6.6 million in 2013), an increase in ATMs (from 865 machines in 2012 to 903 in 2013), and an increase in ATM cards by 225%. There was also a 3.7% increase in bank branches from 629 in 2012 to 652 in 2013. According to the IMF, as of 2016 there are two non-governmental specialised banks, 29 operating banks including one government owned commercial bank, two government owned specialised banks, 23 private commercial banks, one investment bank, and two branches of foreign banks.”
Microloans have been suspended since 2014 because of a CBoS declaration which prohibits all banks and financial agencies from providing funding for various activities, including land and real estate development but excluding funding to social housing (al iskaan al shabi) and economic housing (al iskan al igtisadi) based on the parameters defined by the National Fund for Housing (from now on referred to as Al Sandoog Al Gomi lil Iskaan or Al Sandoog). The moratorium on lending for real estate has negatively affected urban development and the added tax on the resources of the Al Sandoog has reduced its ability to absorb the negative effects of the policy. This has threatened to disrupt the achievements and progress of Al Sandoog.”
There is a system of granting ownership of residential units based on a “mortgage pledge” where the money is lent with the property as security for the loan. The repayment term depends on the individual regulations of the bank in question. The mortgage interest rate varies from 0-12% per year. Down payments vary from 0-50% of the price of the residential unit. The loan is granted on condition that the repayments do not exceed 33% of the income of the applicant. There are other government and private agencies that provide housing support, such as the Investment for Social Grants Agency (al jihaaz al istismari lil damaan al ijtimai) which have their own unique repayment process, repayment period and guarantees as security for the loans. However, the property will remain in the ownership of the lending agency until the repayment is completed.
Khartoum continues to see exorbitant real estate prices: “These days land prices in central Khartoum vary from half a million to a million U.S. Dollars for up to 1,000 square meters. Studies attribute these prices to government policies such as land privatisation, high demand, a soaring inflation rate and the weakness of the Sudanese Pound.” In the period 1997 to 2006, “prices of housing, water and electricity grew almost twice as fast as the prices of tradable goods, specifically food, clothing and consumer goods.” Prices in Khartoum increased dramatically in the period around 2009. Current building costs per square meter vary from SDG1200 to SDG3000 depending on construction type. A load bearing structure with “agid” (jack arch structure) roof with basic finishes would cost about SDG 1200 ($178) per square meter. A reinforced concrete frame building with high quality finishes would cost an estimated SDG3000 ($446) per square meter and higher. One estimate of large scale building costs may be derived from Al Jawhara Al Awda Residential Development, a project self-funded by the Al Sandoog, which provided 1216 apartments in 76 buildings for $100 Million (SDG672 870 016) inclusive of the costs of services to the project.
This is excessive when considered in the light of salaries, which “vary between SDG400 [$59] and SDG1,500 [$223] per month.” The period of time needed to raise the capital funds to build a house range from 20 to 83 years depending on the type of house being considered and interest rates, assuming a savings rate of 25% of income. Another source states the cost of building a modest house – without land – would equal the gross salary of a civil servant for a decade.
Material costs account for two-thirds of house costs with the remaining third allocated for labour. It is believed that the high construction costs are due to increasing government tariffs on materials, as duties can sometimes reach 100%, with value added tax another 17% and services an estimated 1% on top of that. Additional contributors include the price of hiring construction machines and labour costs impacted by the secession of Southern Sudan. Before 2011, most labourers were Southern Sudanese and their disappearance from the market has created a shortage and triggered wage rises.
One ton of steel currently costs at SDG16500/$2452 (previously SDG13000) and a ton of cement costs SDG 2300/$341 (previously SDG2000). This recent increase has also impacted other building material increases. Lack of exchange rate stability between the SGD and the US dollar is perceived to be the reason for these increases. The same source states that the cost of a lorry of bricks (4000 pieces) has increased from SDG3200/$476 which has led to an increase in costs of building sand to SDG2800/$416 for a lorry load which was previously SDG2100. This environment has led to recent decline in buying power of building materials. A bag of cement (50kg) costs SDG74 (US$11); the cost of concrete is SDG185 (US$27.5) per cubic meter; the cost of sand is SDG151 (US$22.4) per cubic meter. Sudan has witnessed an increase in national cement production which covers local need and produces excess for export.
Only 311 000 serviced plots had been distributed nationally between the period 1956 and 2007 which is considered a major housing program in the Sudan. Only 43% of those plots had been developed. Core-house units are built through various government programmes but it is also evident that this incremental option does not address the high demand for housing. Informality was estimated at 60% in 1990. Al Sandoog Al Gomi lil Iskaan, the National Fund for Housing, is a government agency which delivers social housing (sakn shabi) and economic housing (sakn igtisadi). Both products target low-income groups and are low density located on the periphery of Khartoum. Al Sandoog has the following track record:
- The applicants for social housing rose from 6 372 (2003) to 17 966 (2015), peaking at 34 963 in 2011.
- 70 603 families have been housed in social and economic housing; economic housing is a total of 30% of all Social Housing delivered.
Al Sandoog also supports housing for those employed by the Khartoum Local Government and those employed under the auspices of the Trade Unions (sakn fiawi) in the Region (wilaya). Each [building is] four storeys high, each apartment is 120 square meters.” Prices start at $56 147 [SDG377 796] with a monthly repayment of $834 [SDG5608] for a period of 48 months. The website does list difficulty in recovery of rental costs of investment housing which implies that the financial model depends on support from the rentals recovered through this category.
“Al Sandoog has so far provided 76 000 residential units for low income families. Sustainable urban planning demands social integration and the strategic use of resources to achieve the aims of the [Khartoum] province.” Al Sandoog has provided social housing (sakn shabi) to 40 000 beneficiaries (government workers) since 2008 through 2015. Some of the factors that have influenced housing strategies in the Khartoum Province are firstly, the city is expanding at a great rate (40km in some directions) which has led to vertical development becoming an inevitable solution. Also, apparently 40% of workers in Khartoum work in the construction sector.
Al Sandoog implements projects to certain specifications and hands over ownership in three to twelve years depending on the income levels of the beneficiaries. Towards the building of Social Housing, the Fund implements the following:
- Establishing and supporting factories and workshops for building materials,
- Involvement in all engineering services related to the building of the various types of housing,
- Purchasing and importing building materials,
- Geology and quarrying services.
Al Sandoog has also promoted alternative building materials and techniques aiming towards passive thermal control and light-weight roofs. In line with the government policy of privatisation (khaskhasa), the Fund implements its projects by appointing private contractors. Social Housing is funded by beneficiaries’ installment payments, with the difference between operating costs and resident repayments is subsidised by Al Sandoog. Three types of products are provided:
- Social housing (al sakn shabi)
- Economic housing (al sakn igtisadi)
- Luxury housing (al sakn al fakhir)
The first category, which is identified as being the Al Sandoog’s core programme, also has three sub-categories:
- Social housing as part of the housing strategy/plan (al khuta al iskaniya)
- Social housing exempted/outside of the strategy/plan
- Improved social housing
For the first sub-category, applicants must apply to Local Committees (lajnaa shabiya), which often takes 3 months. Upon approval, the applicant must pay the deposit/down payment. The second sub-category has a similar but faster process. The third category differs in the size, number of rooms and other specifications. So-called “economic housing” accessible to anyone with any income level has the benefit of being immediately available for purchase, in good locations, and easier procedures. The minimum specifications are as follows – with variations in building materials and methods):
- room + kitchen + traditional toilet + boundary wall
- 2 rooms + kitchen + toilet + boundary wall
The government’s site and service programme delivered 300 014 plots from 1959-2005, but the failure of the state to provide basic services resulted in a decline in the development of these sites, such that more than 51% of these plots are not built. The predominance of this model has had serious negative repercussions including sprawl, low density, high infrastructure expense, ruralisation of the peripheries, increased land values, increased housing demand and increased city management costs. It has also led to growing agriculture land speculation. It is argued that the sale of vacant land and old evacuated government facilities in the city centre to affluent and influential pro-regime buyers deprives the vast majority from their right to such sites and widens the gap between rich and poor. Peripheral expansion has made everyday life difficult and increased vulnerability. It is estimated that 50% of neighbourhoods in Khartoum originated informally due to an influx of people from other parts of the country.
Most land in the Sudan is State owned. Registering property in the Sudan has a total of six procedures and takes up to 14 days at a cost of 2.5% of the land value. There are two processes for land registration, determined by whether the land is purchased from the Ministry of Planning or not. The process for the latter depends on the type of ownership of the land. Generally, non-registered land is in one of these two categories: Pre-1970 land is freehold; after 1970 is leasehold and the Planning Ministry determines duration and type of lease.
Housing Policy and Regulations
The history of government housing programmes can be summarised into four national strategies over the years, and are referred to as the First, Second, Third and Forth Housing Strategies. These strategies are aligned to government development and financial programmes during the same periods. Government housing and social housing funding was stopped completely in the 1980s. To address this issue and the declining economy, the government decided to make use of its extensive land resources in “site and service” schemes and self-build projects. This became known as the Third Housing Strategy. The negative consequences of “site and service” led to the termination of the third housing strategy in 2005 and the launch of the Fourth Housing Strategy in 2007, which was underpinned by the Khartoum Structure Plan (2007-2027).
Neighbourhoods in Khartoum are categorised as “classes” based on the incomes of residents and this is then used to determine coverage, materials, methods of construction and provision of infrastructure and services (according to the Site and Services Housing Policy). Since independence in 1956, Khartoum has been directed by five master plans, two of these plans were developed by C A Doxiadis, a world-renowned architect and town planner of the day. Recommended plot sizes and densities for the Khartoum Metropolitan Region in the Doxiadis Plan 1960-1990 were as follows:
- 500m2 in 1st class areas with a net population density target of 80 persons/hectare
- 400m2 in 2nd class zones with a net population density of 95 persons/hectare
- 200m2 in 3rd class areas with a net population density of 190 persons/hectare
Housing Sector Opportunities
During the 80s the government focused on “sites and service” which perpetuated the sprawl evident today. The socio-political dynamics created by this situation could be considered as an opportunity. Peripheral areas show that different groups of people, coming from different parts of the country build differently – demonstrating a wealth of local experience and heritage that needs to be considered in future housing plans. However, the “class” classification of neighbourhoods, still being used by professionals and laypeople alike, is highly problematic as it creates stigma around traditional neighbourhoods, material and methods.
Spatial transitions and urban renewal need to consider the creation of more just spaces and contribute to the correction of the historical distortion of the urban fabric. While ownership remains an important component of the housing market, not everyone can afford to own. Many people living and working in Khartoum consider their rural contexts as their real, permanent address and their presence in the city is perceived as being temporary. Well-located rental housing could be considered for a range of densities, configurations and affordability levels. The combination of housing and job opportunities could be explored. Instead of failed attempts to fulfil demand quotas, government role could rather be re-directed towards building institutions capable of implementing projects, at scale.