We recently visited Malawi and took part in the AUHF’s (African Union for Housing Finance) Seminar on housing finance in Malawi, this seminar was held in partnership with AUHF member, Select Africa Malawi. We also took part in Reall’s (Real Equity for All), Stakeholder Group Meeting, which took place between 11 – 14 April 2016, in Nkopola.
During the AUHF seminar, CAHF’s executive director, Kecia Rust, presented some key housing and housing finance facts and figures specifically for Malawi. A quick Google search for ‘Lilongwe housing’ reveals some interesting housing types, some built more formally, with bricks, mortar and titled roofs, and others which appear to be temporary, built with mud and grass. As one of the poorest countries in Africa, ranking 173 out of 188 countries on the Human Development Index, housing affordability in Malawi is especially challenging. Conventional housing development and financing approaches simply will not address even a fraction of the need.
Kecia also presented CAHF’s newly developed mortgage and housing affordability calculator. Using this calculator we can see that the cheapest newly built house in Malawi, built by a private developer, was US $14 000—this data was drawn from CAHF’s 2015 Yearbook on Housing Finance in Africa. At current lending rates (31 percent over 15 years, with a 20 percent deposit), a household would have to pay about US$ 303 per month (or US$ 57, 443 over the term) for this loan. Only 1.1 percent of the urban population can afford this, because urban households earn, on average, only nine percent of what would be needed. If we reduced the cost to US$ 10, 000, the number of urban households which can afford such a house doubles.
Along with CAHF’s presentation, Select Africa Malawi and Habitat for Humanity Malawi (HFHM), also presented on the challenges and opportunities of their work in Malawi. The seminar was also attended by representatives from Standard Bank Malawi, Lilongwe City Council, and both ministries of health and education.
James Kajamu, CEO of Select Africa Malawi gave a presentation on Select’s operations. Select functions as a microlender, with specific attention to housing microloans. Currently, about 90 percent of its lending is towards housing related activities. Short term loans are generally repayable at a rate of about 44.5 percent per annum, home improvement loans are repayable over a 12 month period, and incremental housing loans are repayable over a 48 month period. Monthly instalments, interest charged and the cash repaid on Select loans is generally half what is charged for a conventional mortgage.
Amosi Kalawe presented on Habitat for Humanity Malawi’s (HFHM) work, and its partnership with Select Africa Malawi. Through this partnership, HFHM provides housing support services (HSS) to clients who have received incremental housing loans from Select. In an effort to improve the quality of building materials and housing, HFHM offers technical support services and housing support services where qualified/trained building professions assist families with the building process. Thirty percent of the housing support services offered by HFHM are towards finishes (such as tiling, painting, decorations etc.), while 24 percent go towards roofing, and 14 and 11 percent go towards the construction of foundations and land acquisition respectfully.
Hastings Mumba from the Lilongwe City Council reported that HFHM and the Lilongwe City Council have developed and maintained a good working relationship. The City reduces land costs which HFHM uses for the construction of housing that is within the correctly zoned areas and built according to the city’s building standards. The City has also zoned specific areas for HFHM to construct houses and preapproved housing plans to speed up the construction process.
Hastings also told us about the constraints in the policy environment, titling in particular, for example, Malawi’s Land Registration Act requires properties to have an approved permanent top structure before title is granted. It costs roughly MKW 240 000 (US$ 335,24), equivalent to the salary of a graduate, to get a title deed; this title deed must be processed by a registered land surveyor and approved by the surveyor general—there is only one surveyor general in Malawi. This will hopefully be addressed through both the National Housing Policy and the Urban Policy, which are currently in draft format. The new Urban Policy recognises micro-finance as a key issue in housing development. Malawi’s Microfinance Act is also in place but needs to be more deeply entrenched in the policy environment.
As previously mentioned, while in Malawi we also attended and took part in Reall’s stakeholder group meeting, and Kecia presented on ‘Addressing the Challenges of Housing Finance in Africa’.
This Stakeholder meeting takes place bi-annually, and once a year it is hosted in country by one of the members of the Network of Development Enterprises, this year it was hosted by Enterprise Development Holdings (EDH) in Malawi. Thirteen of Reall’s Network of Development Enterprises attended the event—Development Enterprises are organisations that share Reall’s vision for providing affordable and decent housing to the urban poor. The aim of this particular event was to provide stakeholders with the opportunity to share best practices, lessons learnt and highlight opportunities within the environment in which they work.
The host organisation Enterprise Development Holdings (EDH), represented by Siku Nkhoma, presented on its partnership with Reall. This partnerships aims to both solve the housing crisis and also enable better socio-economic opportunities in Malawi. EDH, and its subsidiary companies, deliver and manage low-income social rental units, provide housing finance, acquire and service land, and produce affordable, environmentally friendly bricks.
Some of the other presenters included, Olivia van Rooyen, director of Kuyasa Fund, a non-profit social development organisation, specialising in microfinance. Olivia presented on their work to promote saving among low income earners, and provide micro loans for incremental home improvements. Samuel Odia, from the Millard Fuller Center in Nigeria, presented on its partnership with Reall, DFID and SIDA which has allowed for the development of several housing projects including a 400 unit incremental housing development called Grandluvu Estate in Abuja.
This is some of the housing we drove past while traveling from Lilongwe to Nkopola.