Housing Investment Chronicles: the case of Senegal

In Senegal, access to affordable housing is a major concern for the population as well as for the public authorities. The housing deficit is estimated at 300 000 in the whole country , almost half of them in Dakar.

In addition,recent data compiled by the Center for Affordable Housing Finance in Africa  (CAHF) in 2018 show that the costs of building the cheapest homes remain out of reach for a large part of the country’s population. This suggests that solving the problem of access to affordable housing would be difficult without the appropriate cost-cutting and financing mechanisms for low-income households.

It is in this context that the CAHF has launched a study to help design and implement housing finance solutions that consider the realities of low-income households.

The aim of the study was to establish the housing investment profile for low-income households in Senegal: In fact, it was a process of collecting and analyzing the relevant data to understand how these households invest in their homes and the constraints they face throughout the process. The specific objectives are organized around the following five thematic axes:

  1. The socio-economic characteristics of low-income households;
  2. The occupancy status and housing characteristics;
  3. The decision and motivations for investing in housing;
  4. The process of investing in housing (acquisition and securing the land, construction, etc.);
  5. The funding used as well as the main barriers to accessing housing finance.

For the purpose of this study, a survey was conducted in the Dakar region from 21 June 2019 to 14 July 2019, on a random sample of 690 households (areas known to be the place of residence of high-income households    were excluded from the survey field).

Overall, the results suggest that low-income households in the Dakar region are majority homeowners (53 percent). Tenants represent 43 percent, and other occupancy statutes (housed free and subletting) 4 percent. Among tenants, the majority (68%) reported that they had housing investment plans.

However, analysis of the owner’s profile shows that only half have obtained their home as a result of an investment (purchase or construction), the other half as a result of an inheritance or donation.

And among those who invested in their homes, financing was in most cases on equity: only 10 percent received bank financing for the purchase or construction of their home.

Given the importance of home ownership to tenants, it is important to put in place measures that can facilitate investment in housing. The analysis of housing investment approaches, as presented in the study report, suggests that, among other things, there should be:

  • Strengthen the capacity of real estate developers to offer a more diverse range of housing and especially at more affordable prices. Households that chose to build rather than buy a home said they did so out of concern for their economy (66%) or because it was difficult for them to find on the market a “home adapted to their needs” (30%).
  • Simplify the procedures for obtaining land title and building permits. Most landowners have only provisional titles for their land or no title at all, and 46% of those who build do so without a building permit. This situation automatically makes them ineligible for the real estate loans offered by the local banks.
  • Find effective solutions to improve quality and lower the cost of building materials on the market. Because the cost of building materials and the cost of labor are largely at the top of the list of challenges encountered during the construction process.
  • Develop appropriate housing finance products for households working in the informal sector. These households are the majority among low-income households and are automatically ineligible for the housing loans currently offered, since virtually all banks require applicants to be employees as a condition of access to these loans.

The full report is available in French.

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