Dialogue forms an important part of developing Africa’s housing finance sector; considering the multifarious issues that need to be overcome to make housing finance markets work, it is essential that experiences are shared, that organisations work together, and that the private sector and public sector speak to each other. At the 7th Global Housing Finance Conference, hosted biannually by the World Bank and AUHF member, the International Finance Corporation (IFC), stakeholders from across the world assembled to discuss how to increase access to adequate and affordable housing.
The AUHF Chairperson, Oscar Mgaya, of Tanzania Mortgage Refinance Company (TMRC), and AUHF Board member, Charles Inyagete, of the Nigeria Mortgage Refinance Company (NMRC), as well asShelter Afrique’s James Mugerwa, attended the conference and participated in a panel discussion on the first day, together with the AUHF Secretariat, Kecia Rust. They represented the AUHF, together with Board member Reginald Motswaiso, of Botswana Housing Corporation (BHC), and Ethel Matenge-Sebesho, of Home Finance Africa Guarantors Reinsurance (HGFARe). They handed out copies of theDurban Declaration, spoke about the work of the AUHF and informed African organisations present of the benefits of being a member of the AUHF.
During and between sessions, African organisations shared their experiences, while hearing from stakeholders from other continents. What was noticeable was that Africa shares many of the issues faced in other continents: problems with foreclosures in Romania, access issues relating to lending standards in America, urban sprawl in Colombia, shallow bond markets in India, and the lack of standardisation of mortgage products across Europe, among other issues that were raised.
Looming over the conference was the current economic slowdown in emerging markets, creating instability that exacerbates these problems. Considering this context, Drs. Hoek-Smit, of the University of Pennsylvania, said she was worried that there would be increased pressure on governments to shoot from the hip—introducing subsidies and schemes that are inefficient, that were unlikely to produce the desired results and that would end up constructing houses that do not meet the target market. Still, the conference showed how many stakeholders are introducing measures that are innovative, carefully thought through and appropriate.
In Indonesia, they have decided—after interrogating the options—that interest rate subsidies are too expensive, and that a mortgage refinancing facility is more cost-effective and appropriate for the country.Club De Rentas, in Mexico, is offering an innovative product that allows small-scale landlords to put their properties into a fund that manages them on their behalf, guaranteeing income and reducing risk. In the West African Economic and Monetary Union (UEMOA), Caisse Régionale de Refinancement Hypothécaire de l’UEMOA (CRRH-UEMOA) is refinancing mortgages and issuing bonds, contributing to the growth of mortgage markets in eight countries that have historically been dominated by governments.
With all these efforts to make housing finance work, the question we must ask through what framework should we target our interventions? Hoek-Smit argued that we should start viewing the value chain as an incentive chain. Hoek-Smit stated that without the correct incentives, there will be little coordination and action to increase access to housing. For example, local governments have little incentive to have low-income houses built, as revenue from property taxes is higher with high-income housing. Banks are also under serious constraints, from the inability to engage with informal tenures to the burden of strict liquidity requirements, and are hesitant to lend for housing. It is only through carefully tailored incentives that appropriate and adequate housing can be financed and developed.
In Africa, it is the role of stakeholders, through the AUHF and other platforms, to come together to see what incentives are the most efficient and effective in increasing funds for housing. From the collective experience, these organisations have an understanding of where the blockages are. And it is only by communicating with different sectors that incentives can be designed to overcome the blockages. This dialogue will continue at the 32nd AUHF Annual Conference, where various stakeholders will come together to discuss what is needed to efficiently mobilise more funds for housing.