Housing Finance in Togo

Macroeconomic Overview

Togo in West Africa covers 56 785km2 and shares borders with Benin, Burkina Faso and Ghana. It is classified as a developing country. The annual population growth in 2018 was estimated at 2.4 percent[1] and the population at 7 889 094 inhabitants. Real GDP growth was positive, with an average of 5.2 percent a year over the 2013 to 2016 period, peaking at 6.1 percent in 2014. This was achieved through significant investments in transport infrastructure (a new airport and port terminal in Lomé, and roads) as well as better agricultural productivity, especially the cotton sector revival. The 2019 inflation rate is estimated at 1.7 percent versus 0.9 percent in 2018[2]. The Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) lending rate was 4.5 percent, according to its last report in August 2019.[3]

Togo’s housing sector is yet to cope with increasing population growth in the urban areas; urbanisation is especially strong in Lomé, the capital.

For the past few years, Lomé’s population has grown by 5 percent a year reaching a total of 2 000 000 people[4]. By 2035, the demand for new homes could reach 47 000 units a year as result of population growth and influx of people looking for work[5]. Togo’s urbanisation rate is estimated at 43.4 percent in 2019 which is 5.8 percentage points more than 2011.[6] The Human Development Index score for Togo stands at 0.503 according to the last UNDP report which is below the sub-Saharan Africa average of 0.536.

The Togolese government has started a series of reforms of the land sector, due to demographic pressure. The country’s first land code was adopted in June 2018. In addition, local authorities began the modernisation of cadastral services and land conservation. The objectives are to digitise land titles and reduce time of each registration procedure. As result, Togo has gone from 182nd to the 127th place on the indicator for registering a property in the World Bank Ease of Doing Business 2019 report.[7]

According to the African Development Bank, Togo’s real GDP growth is estimated at 5.0 percent in 2019 and 5.3 percent in 2020, with the political situation back to normal after the 2017 political crisis and sharp fiscal adjustment.[8] During December 2018, Parliamentary elections were held, followed by local elections in June 2019. Those recent political development should allow the government to focus on the Plan National de development (PND) launched in April 2019. This five-year development programme covering 2018-2022 is built around: 1) investment in a logistic hub of excellence and modern business centre with the latest technological innovations; 2) industrial development of value-added and export-oriented products (agribusiness); and 3) strengthening social development.

Social development also means affordable solutions for housing demand. Several projects are in the pipeline, covering housing finance and affordable housing access for ordinary Togolese.

[1] The World Bank. Country profile. https://databank.worldbank.org/views/reports/reportwidget.aspx?Report_Name=CountryProfile&Id=b450fd57&tbar=y&dd=y&inf=n&zm=n&country=TGO (Accessed 2 October 2019).

[2] Site officiel de la République Togolaise. Economie

https://www.republicoftogo.com/Toutes-les-rubriques/Economie/Taux-de-croissance-de-5-1-en-2019 (Accessed 2 October 2019)

[3] Banque Centrale des Etats de l’Afrique de l’Ouest (2019). Taux d’intérêt légal 2019.

https://www.bceao.int/sites/default/files/inline-files/BCEAO%20-%20Taux%20d%27interet%20legal%20-%202019.pdf

(Accessed 2 October 2019).

[4] Galpin, C., Deckon, F., Tchini, P. and Legendre, R. (2019). TOGO Revue du secteur foncier en milieu urbain et péri-urbain Mettre le

marché foncier au service d’un développement efficient et inclusif du Grand Lomé. The World Bank 2019. Pg. 9.

[5] Ibid.

[6] Institut National de la Statistique et des Etudes Démographiques. Perspectives démographiques 2011-2031. (2015).

http://www.stat-togo.org/contenu/pdf/Perspectives-demographiques-final-2016-05.pdf  (Accessed 2 October 2019). Pg. 18.

[7] World Bank. (2019) Doing Business 2019: Training for reform. Economy Profile: Togo. Pg. 19.

[8] African Development Bank. Togo Economic Outlook.

https://www.afdb.org/en/countries/west-africa/togo/togo-economic-outlook (Accessed 15 August 2019).

Access to Finance

According to a 2016 Finscope study, 60 percent of Togolese adults have access to financial services.[1] Togo’s banking system consists of 13 banks of which 11 are international bank subsidiaries. Two financial intermediairies also operate in the country. The Regional Mortgage Refinancing Fund or Caisse Régionale de Refinancement Hypothécaire (CRRH) and the Fonds Africain de Garantie des Investissements Privés En Afrique de l’ouest (Fonds GARI). The two local banks, Union Togolaise de Banque (UTB) and Banque Togolaise pour le Commerce et l’Industrie (BTCI), are currently owned by the Togolese state, which is looking to privatise them. The five largest banks hold 75 percent of the market.[2]

Of the Togolese population 23.8 percent was banked in 2018 according to BCEAO reports, meaning many remain unbanked. As per the latest BCEAO reports, Togo counts 227 bank counters and 284 ATMs.[3]

Togolese have different levels of access to financial service depending on whether they live in urban or rural areas. Overall, 18 percent of Togolese adults have access to bank services; in urban areas, 20 percent have access to financial services versus 10 percent in rural areas. Savings and credit products are the main two financial services. According to FinScope Togo 2016, the most common reason for borrowing is to start or expand a business. Housing finance is ranked fourth, after medical or emergency needs. Mortgages are hard to obtain. Only some banks, under strict conditions, including proof of regular income, land titles, and a housing construction plan, offer mortgages. The mortgage duration is usually 10 to 15 years. Interest rates are between 6.5 percent and 10 percent.

Microfinance institutions do not offer construction loans or mortgages. As of 31 March 2019 microfinance institutions had 526 service points for 2 615 380 customers with a total of CFA198 009 million (US$341.30 million) in deposits and outstanding loans value of CFA161 834 million (US$278.95 million).[4]

With approximately 60 percent market share, The Faitière des Unités Coopératives d’Epargne et de Crédit (FUCEC) remains the leading microfinance institution in Togo.[5] Microfinance institutions are still focusing on urban areas and customers with regular incomes. FUCEC does not offer home construction loans.

The Government is playing a key role in improving access to finance. One of its main initiatives, The Fond National de la Finance Inclusive (FNFI) was launched in 2014.The FNFI offers three core credit products targeted at the poor, farmers and youth. In 2018, The FNFI was able to lend more than CFA80 billion (US$278.95 million)[6] to 926 000 registered beneficiaries. The credit repayment rate is estimated at over 95 percent, a strong performance.

Mobile banking is developing fast, with Ecobank Togo the leading company in this sector. In 2019, Orabank also launched a mobile application to digitise its services. The mobile money sector is also growing fast with two service providers Togocel (public), through its T-money service, and Moov (private), through its service called Flooz. The number of users was estimated at 1.68 million in 2018.[7]

Insurance is the least popular financial product in Togo. Only 17 percent of the adult population subcribe to insurance, according to Finscope 2016. Users are frequently formal employees who subscribe mostly to medical or automobile insurance. The sector is dominated by two insurance companies: Saham and Nsia. Insurance used to be seen as a service for people with high income.

[1] FinMark Trust (2016). FinScope consumer survey Togo 2016 presentation. http://finmark.org.za/finscope-consumer-survey-togo-2016-presentation/(Accessed 15 August 2018). Pg. 27.

[2] UNCDF, FinMark Trust, Cenfri (2019). Feuille de route de l’inclusion financière 2019-2023.

http://finmark.org.za/wp-content/uploads/2019/04/Togo_Roadmap_French.pdf (Accessed 16 August 2019). Pg. 53.

[3] Banque Centrale des Etats de l’Afrique de l’Ouest (2019). Note d’information – 4 e trimestre 2018,

https://www.bceao.int/sites/default/files/2019-02/Note%20d%27information%20 %20n%C2%B0%2056%2C%204e%20trimestre%202018.pdf (Accessed 2 October 2019). Pg.13.

[4] Banque Centrale des Etats de l’Afrique de l’Ouest (2019). Situation de la microfinance dans l’ UMOA au 31 Mars 2019 – Juillet 2019,

https://www.bceao.int/sites/default/files/2019-07/Situation%20de%20la%20microfinance%20%C3%A0%20fin%20mars%202019.pdf (Accessed 2 August 2019).

[5] UNCDF, FinMark Trust, Cenfri (2019). Feuille de route de l’inclusion financière 2019-2023.

http://finmark.org.za/wp-content/uploads/2019/04/Togo_Roadmap_French.pdf (Accessed 16 August 2019). Pg. 13.

[6]Television Togolaise

http://tvt.tg/bilan-annuel-secretariat-detat-charge-du-secteur-informel-finance-inclusive/  (Accessed 25 August 2019).

[7] UNCDF, FinMark Trust, Cenfri (2019). Feuille de route de l’inclusion financière 2019-2023. Pg. 20.

Affordability

In a country where owning a property is a sign of social success, housing affordability is a key issue for the government.  Concerns to be tackled to improve housing affordability include security of land ownership, access to housing finance, effective planning and sustainable development of urban areas. Effective water and electricity networks for domestic use are also needed.

The minimum land parcel size is 150m2 for a residential property. The cheapest newly built house is estimated at CFA7 million (US$12 065). This cost is prohibitive for ordinary Togolese as the minimum salary in Togo is CFA35 000 (US$60.32). The monthly cost would be CFA83 824 (US$144.44) using standard mortgage terms to buy a CFA7 million house. Commercial banks offering mortgage credit ask for land title or a certain percentage of savings. Land prices do not follow clear rules or policy and depend largely on area and owner’s expectation.

Cement prices are stable due to government control but cost slightly more than in neighbouring countries. A 50kg bag of cement costs CFA4 000 (US$6.89) in Lomé while in Cotonou, Benin, the same bag will cost approximately CFA3 400 (US$5.86). The market for essential house building materials is developing fast but prices put them out of reach of most of the population. Cement blocks are used to build most houses in urban areas: clay blocks, informally produced, are still common in rural areas.

Housing Supply

The ambitious PND programme developed by the Togolese authorities aims to deeply transform the local economy. The programme is targeting GDP growth of 7.6 percent a year, the creation of 500 000 jobs or a GINI index measuring economic inequality of 0.357 in 2022. These goals, if successful, should have positive impact on the housing sector.

Another thrust of the PND is related to social development and inclusion. This includes several projects for housing access for people with low incomes. For example, the development of 400 to 1 200 villas and apartments in various areas, including Lama Attéda (Kara region), Kponvémé – Dalavé-Tonoukouti, and Dalavé-Tonoukouti.The total cost of the project is around CFA33 125 million (US$57 097 302). Projects related to urban development cover 10 secondary cities, Aného, Tsévié, Tabligbo, Amlamé, Badou, Bassar, Mango, Kanté, Tchamba and Pagouda, at a total estimated cost of CFA56 360 530 000 (US$97 148 203). Financing these investments is planned to be done by a yet-to-be-finalised private public partnership (PPP).

However, some housing projects are already in progress, but they are still expensive for citizens. Cité MonkpoKpo, launched by the government and being built by a real estate company from Ivory Coast, Societé Ivoiriene de Promotion Immobiliaire (SIPIM) has been under development since 2016, with the first houses being delivered in 2019. The project was developed in Adidogome in the north western part of Lomé, 30 minutes’ drive from central Lomé. Since 1961 only 16, mostly private, housing projects have been initated in Togo.[1]

Another project called Wellcity is being developed in Adeticopé in the northern outskirts of Lomé. The project is supported by banks, including Coris. On a total area of 55ha, the Renaissance Residence, a project of the Caisse Nationale de Securité Sociale (CNSS, the Togo National Social Security Fund) has 394 villas classified as Chic, Executive, Luxurios, Privilège, and 205 apartments. It has a commercial centre and includes offices, shops and apartment hotels. Construction has started, with the first villas to be delivered in 2020.

Other projects are in progress, such as Cite des Anges[2] in Lankouvi , another project on the outskirts of Lomé. The project consists of a set of 162 housing units on plots between 300 m² to 1 000m² in size, and 40 apartments, each with a living area of 70m.²

Between 2015 and 2017, the government built 540 social housing units.

Generally, people used to build their houses themselves after spending some time in rental houses.

According to the Questionnaire Unifiée des Indicateurs de Base du Bien être, (QUIBB TOGO 2015), more households own their homes in rural than in urban areas. Five out of ten households (48.7 percent) own their homes in rural areas compared to 18.1 percent in urban areas.[3]

[1] Galpin, C., Deckon, F., Tchini, P. and Legendre, R. (2019). TOGO Revue du secteur foncier en milieu urbain et péri-urbain Mettre le

marché foncier au service d’un développement efficient et inclusif du Grand Lomé. The World Bank 2019.  Pg. 53.

[2] CCI Patrimoine Group. CCI news.

https://ccipatrimoine.com/ccinews/residence-la-cite-des-anges-lome-togo/ (Accessed 21 August 2019).

[3] Institut National de la Statistique et des Etudes Economiques. Questionnaire Unifié des Indicateurs du Bien Être. QUIBB TOGO 2015, (April 2016). Pg. 43.

Property Markets

Togo’s real estate market is embryonic. However, attempts are being made to regulate the sector. On 10 May 2019, the Fédération Togolaise de L’immobilier, which brings together real estate professionals and housing brokers, was created. The objective is to organise the sector, train people, create a National Order of Real Estate Agents, and help Togolese access affordable housing.

In Togo, land ownership is vested in the local communities. It is easy to buy land without title but thoses transactions are unsecure.

The government is also taking the lead with major reforms to improve the sector. For example, registration fees, stamp duties and land transfer duties are now set at CFA35 000 (US$60.32). Previously these fees and taxes accounted for 4 percent of the land value.

The government has also established a digital database for almost all land titles. This database allows a quick search in 24 hours of property titles. Nearly all existing land titles have been scanned since 1 June 2018.[1]From the same source, it is also possible to check transferred land titles or mortgages signed. An office exclusively dedicated to property transfers has been created.[2]

In the Doing Business 2019 Report, Togo scores a 9.5 on the land administration index, an increase of 3.5 points above the 2018 score. Togo is now ranked 127nd for the Registering Property indicator, scoring 54.88 points, which is above the average score of 52.62 in Sub-Saharan Africa. To register a property, it takes 84 days on average through five procedures at an estimated cost of 5.9 percent of the property value. To get a construction permit in Togo it takes 163 days with 11 procedures to complete.

A rental market exists around main urban areas of Lomé, Aneho, Sokode, Kara, Dapaong and Kpalime and the landlords are mostly private individuals renting single units. These landords build and rent out houses. Rental prices do not follow a defined rule. This situation leads to strong speculation in the rental market. Often the landlord asks the tenant for one year’s rent in advance. According to a 2010 study, the cities of Togo have 52 percent of rental tenants.[3]

Estate agents exist but most are informal and without a professional background related to the real estate market. Some formal agents do operate in Togo, such as Confortis International SA, 2M Immobilier, IGOE immobilier or Elom & Kekeli. Since 2015, Elom & Kekeli has been sponsoring an annual real estate and housing fair in Togo, called, “FESTIMMO: Salon de l’habitat et de l’Immobilier.” The 2019 event was held from 10-12 May and attracted 10 124 visitors during the three days.

According to a market study from Togolese housing brokers Association Nationale des Agents immobiliers du TOGO (ANAIT), in 2018, an apartment in Lomé cost between CFA1 000/m² (US$1.72/m²) and CFA6 000/m²(US$10.34/m²). For a plot with land title, apartments fetch between CFA36 000/m² (US$62.05/m²) and CFA480 000/m² (US$827.37/m²). Without a land title, they command between CFA30 000/m² (US$51.71) and CFA40 000/m² (US$68.94/m²). Those prices highly depend on distance from central Lomé.

[1] Direction du cadastre, de la conservation Foncière et de l’Enregistrement.

http://www.dadc.gouv.tg/index.php/direction/actualites-communiques/91-statistiques-du-scannage-des-titres-fonciers.html (Accessed  24 August 2019).

[2]Direction du cadastre, de la conservation Foncière et de l’Enregistrement

http://www.dadc.gouv.tg/  (Accessed 29 August 2019).

[3] Galpin, C., Deckon, F., Tchini, P., Legendre, R. (2019) ‘TOGO Revue du secteur foncier en milieu urbain et péri-urbain Mettre le

marché foncier au service d’un développement efficient et inclusif du Grand Lomé. The World Bank 2019. Pg. 21.

Policy and Regulation

Local authorities are updating current policies and laws which were enacted in the 1950s and 1970s. On 14 June 2018, a new land code Loi n°2018‐005 du 14 juin 2018 portant Code foncieret domanial was approved by the Parliament. The new law aims to better secure land rights, and resist speculation, expropriation or selling off rural land. In July 2019, the Office Togolais des Recettes (OTR) announced the reintroduction of property taxes, starting August 2019.

In 2017, property taxes were estimated at 0.04 percent of GDP, low compared to other countries in West Africa.

Some international institutions support the Togolese state in land reforms. Kadaster, the Dutch Land Registry Office, has drawn up a roadmap for the reform of the cadastre and land registry for the period 2018/20. The Millennium Challenge Corporation continue to support land reform in Togo. In February 2019, this US programme donated US$35 000 000 for the same purpose.[1]

[1] ^{Aoui ,F. (2019). Promotion des TIC et réforme du foncier : Le Millennium Challenge Corporation alloue 35 millions de dollars au Togo.} 14 February 2019. Togopresse. https://togopresse.tg/promotion-des-tic-et-reforme-du-foncier-au-togo-le-millennium-challenge-corporation-alloue-35-millions-de-dollars/ (Accessed 29 August 2019).

Opportunities

Few government-supported projects are being implemented in the housing sector. However, various agreements have been signed or are being discussed with private operators to build affordable houses. This includes Chinese company Poly Group China delivering 10 000 houses and German company TKW building affordable houses with concrete technology. Those initiatives will not be sufficient to cater for Togo’s housing need. Newcomers could benefit from increasing housing demand. The challenge is to offer housing solutions that people can afford.

Ongoing economic and fiscal reforms by the government will likely improve the business environment and attract foreign investment in the country. Financing affordable houses is also an opportunity for private investors as the market is still open.

Availabity of data on housing finance

Access to data is a significant challenge in Togo especially on housing finance or mortgage statistics. At a national level, up-to-date data from officials sources is lacking. For example, information from the Fonds Spécial pour le Developpement de l’Habitat (FSDH), which is a special fund for housing development set up by the government, is difficult to access. No existing database for formal real estate agents exists. Furthermore it is difficult to track mortgage statistics from local banks on a single database. The national statistics institution website is not regulary updated. Information on household structure in the country is available, and information on strategic development plans for government departments are available on the official website of the Republic of Togo. The OTR website is almost up-to-date with information on land title and mortgages, laws and tax information. Regular updates about the Togo banking sector are available on the BCEAO website.

websites

Direction du cadastre, de la conservation Foncière et de l’Enregistrement http://www.dadc.gouv.tg/

Office togolais des Recettes https://www.otr.tg/index.php/fr/

Institut National de la statistique et des Etudes Economiques et Démographiques http://www.stat-togo.org

Fond National pour la Finance Inclusive https://fnfi.tg/

Site officiel de la république du TOGO https://www.republicoftogo.com/

Ministère de l’économie et des finances https://finances.gouv.tg

Ministère de la ville, de l’urbanisme et de l’habitat et de la salubrité publique https://urbanisme.gouv.tg/