- Access to Finance
- Housing Affordability
- Housing Supply
- Property Market and Housing Sector Opportunities
- Housing Policy and Regulation
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2018 edition, which has up-to-date profiles for 54 African countries.Download yearbook
Economic and Monetary Community of Central Africa (CEMAC)
The Economic and Monetary Community of Central Africa (Communauté Économique et Monétaire de l’Afrique Centrale, CEMAC) is made up of six former French and Spanish colonies in Central Africa – Cameroon, Central African Republic, Chad, Congo Republic, Gabon, and Equatorial Guinea, a former Spanish colony. It was created in 1994 and became operational after the treaty’s ratification in 1999 in N’Djamena, Chad. The main objective of the treaty was to converge and monitor national economic policies, to coordinate sectoral policies and to progressively create a single market. If created, the single market will help promote the entire process of sub-regional integration through the forming of a monetary union, with the Central African CFA franc as a common currency. Discussions regarding forming a monetary union and a single market are still ongoing; It is still unclear if and when the monetary union and the single market will be formed. Despite the potential benefits that the free movement of goods and people across borders will bring to economic growth and social cohesion in the sub-region, the leaders of the countries in the region are not making enough progress towards the creation of a one market and free movement of people. Greater integration and stronger regional institutions are necessary to improve the competitiveness of the region and support growth, according to a recent IMF report on the region. CEMAC has its headquarters in Bangui, the capital of the Central African Republic. There are ongoing plans since 2011 to unify the Douala and Libreville stock exchanges into a unified CEMAC Securities and Stock Exchange. This is proving difficult as although the CEMAC heads of states opted for a regional stock exchange in Libreville in Gabon, the realities of the market are more favourable to the stock exchange of Douala, which was created by the Cameroon government. According to experts, the narrowness of the market does not allow for the existence of two stock exchanges in the region. A recent World Bank study has recommended the merger of the two stock exchanges with headquarters in Douala, Cameroon where there is greater economic activity. This is because in the opinion of financial experts who follow the evolution of the financial market in Central Africa, the existence of the two stock exchanges in the CEMAC region does not allow the construction of a liquid and efficient market for securities in the sub-region. The competition between the two stock exchanges is also not good for the sub-region.
The treaty that specified the legal and institutional arrangements of CEMAC created the following four specialised institutions, each of which is regulated by a separate legal convention than the treaty:
- Central African Economic Union (Union Economique de l’Afrique Central – UEAC) with an Executive Secretariat based in Bangui, Central African Republic. The Customs Union is one of the central pillars of CEMAC. It has established a regime for trade between the countries and with other countries. Trade inside the community has been duty free since 1998.
- The Central African Monetary Union (Union Monétaire de l’Afrique Centrale), specifies the responsibilities of the central bank, Banque des Etats d’Afrique Centrale (BEAC) and the Central African Banking Commission (COBAC). COBAC started functioning in 1993 with headquarters in Libreville, Gabon. It sets regulations and carries out on and off-site supervision of the region’s banks and finance houses. BEAC is a single central bank for the region and there is a single currency (CFA franc) and defined criteria for macroeconomic convergence. It was established in 1972 with headquarters in Yaounde, Cameroon. BEAC regulates the sector through its regional banking commission, COBAC, which shares responsibility with the national Ministries of Finance for licensing new banks and regulating microfinance institutions. There is also a budgetary agreement between the French Treasury (Ministry of Finance) and BEAC with fixed convertibility of the CFA franc and a droit de regard (oversight with veto powers) by the French Treasury.
- The other two institutions are the CEMAC parliament and the court of Justice. The court of Justice, which is in place since 2000, is located in N’Djamena. It assumes a judicial and audit function.
The region has a population of just over 48 million (as of end of 2015) spread over more than 3 million km2. Half of the population live in Cameroon and 65% are below 25 years of age. The average population growth rate is 2.2%. It had a combined 2015 GDP of US$195 billion. The real GDP growth rate of 1% in 2015 was mainly driven by negative growth in Equatorial Guinea due to cheaper oil prices and low oil and gas production. The other countries grew their GDP thanks to, timber, agriculture exports and construction and services. CEMAC’s per capita average income is higher than the average of Sub-Saharan African countries mainly because of abundant oil resources. Cameroon is the largest economy in the region, with half of the region’s total financial assets and contributes up to 37% of the region’s GDP. The mineral wealth includes deposits of gold, diamond, natural gas, oil, bauxite, aluminium, manganese and uranium. Other export products include natural rubber, tobacco, cocoa, coffee, sugar, tobacco and banana. Due to inadequate private investments, there has been little exploitation of petroleum and other mineral resources, with the exception of oil and timber. Crude petroleum is an important resource for these countries, apart from the Central African Republic: it accounts for 87% of the community’s exports; Equatorial Guinea depends on it for 70% of its GDP; Congo, 65%; Gabon, 20%; Chad, 40%; and Cameroon, less than 10% in 2015. Timber is the community’s second largest export product. There are ongoing efforts in all six countries to diversify their economies into tourism, agro production, financial services, mining and petro chemicals in order to reduce the dependency on oil revenues. The countries in the region are about 52% urbanised. Gabon has the highest level of urbanisation at 87.2%, with 59% of the population living in Libreville and Port Gentil, the political and economic capitals. The rate of urbanisation in the region is 3.1%.
Some parts of the region have been beset with violence, insecurity and political instability, in the last two years. Central African Republic, Chad and Northern Cameroon have been the most affected. CAR is on the road to political and social stability while Chad and Cameroon are handling the insurgencies caused by Boko Haram. The recent efforts at peace and security will ensure sustained growth and investments into the region, hence minimal impact on GDP.
Access to Finance
The formal financial system across CEMAC countries is not well developed. Most of the large banks are foreign-owned and are subsidiaries of foreign banks. Some of the foreign-owned banks are from other African countries such as Nigeria, Togo and South Africa. Recently, banks from Cameroon have also moved into other countries in the region, including Gabon, Congo, Chad and Equatorial Guinea. The CEMAC banking system currently comprises of 47 active commercial banks with Cameroon having the most banks in the region (14), followed by Gabon (9) and Chad (9). Congo has six banks, Equatorial Guinea has five banks, and Central African Republic has four. The number of savings banks in the region remains low. On average, in the six countries, there are three bank branches per 100 000 adults. Bank branches and ATMs are mostly concentrated in the main urban and semi-urban areas. Most of the semi-urban and rural areas are served by Micro Finance Institutions. For example, in the Central African Republic that has the smallest financial sector in the region, bank branches and ATMs are mostly concentrated in only three towns with 71% of total branches located in the capital Bangui. In Chad, access to banking services is practically non-existent outside of urban areas. Very few banks in the CEMAC region provide medium-term and long-term credit. Some of the banks that grant this type of credit are the Gabonese Development Bank, the National Investment Company (in Gabon and Cameroon), Afrilands First Bank (Cameroon), and SOCOFIN in Congo Republic. The state plays an important role in the financial sector. For example, it controls two of the nine banks in Gabon and has a stake in most of the others.
The mortgage finance market is insignificant and inexistent in some countries, and still in its infancy in some like Cameroon, Gabon and Congo. Mortgage finance is mostly granted by government agencies, and government-controlled banks. The people who benefit mostly are government employees. Only a very small percentage (5%) of private sector employees had access to mortgage finance from commercial banks. From 2015, this percentage is most likely going to increase due to ongoing efforts by real estate companies in partnership with local commercial banks to extend end-user financing opportunities to the growing middle class. In some countries like Gabon, the government in an effort to increase access to finance, has supported the setting up of a growth and development fund to support small and medium enterprises and promote private investment. In the Central African Republic, government has committed to support financial sector development and improve access to credit by tabling plans to improve the legal and judiciary system to serve commercial matters, increase bank capital and adopt a micro finance sector development strategy. In Equatorial Guinea, plans are underway to develop nation-wide ATM and credit card networks and the creation of a credit fund and a government debt market. Those in the informal sector and a large percentage of the middle class and lower income groups get housing finance (directly and indirectly) from different forms of MFIs.
The microfinance sector is developing in all countries in response to difficulties associated with accessing credit through traditional banking channels. There are now over 800 microfinance institutions in the region, with Cameroon having the most, followed by Chad, Congo, Central African Republic, Gabon and Equatorial Guinea respectively. The micro finance sector is just emerging in Gabon with few regulated and registered Micro Finance Institutions covering only a small segment of the population. However, a substantial number of unregulated and unregistered MFIs are said to be operating in the country. In Chad, the MFI sector still plays a marginal role in the financial system and is virtually unregulated. Government has taken steps to regulate and improve access by putting in place a new micro finance strategy. Links with the traditional, formal banking sector are weak and the consolidation of micro lenders is not sufficient to allow for meaningful regulation and oversight, or the development of strong links with the banking sector. However, BEAC, through COBAC, has developed a strategy for controlling the informal financial sector. COBAC, jointly with the Ministries of Finance of all six countries, now regulates the MFI sector in all six countries. There is an urgent need to develop mortgage finance products that address the needs of the growing middle class and lower income groups who have no access to formal housing finance. There are ongoing efforts by both government and private sector interests to provide and extend access to end-user financing to the rapidly expanding middle class in these countries. Access to credit has also been improved through amendments to the Organisation for the Harmonization of Business Law in Africa known through its French acronym OHADA Uniform Act on Secured Transactions that broadens the range of assets that can be used as collateral (including future assets), extend the security interest to the proceeds of the original asset, and introduce the possibility of out-of-court enforcement.
In the formal sector, the state is the largest employer, offering an average monthly salary of about 175 000 CFA francs (US$300). In Equatorial Guinea, it is 250000 CFA francs (US$429). Though rapidly growing, the formal private sector is still very small. Most people are involved in the informal sector with a high percentage of people living under the national poverty line. These people cannot afford to finance their homes through existing banking funding instruments. Construction costs in the urban and semi-urban areas are high and increasing. It costs about 10 million CFA francs (US$17 065) to build a standard three bedroom house in the main urban areas. This is mainly because of the high costs of inputs such as cement, sand, plates, iron, finishings and decorations. These costs were expected to decrease as new property developers come into the market with a business model that favours large scale procurement of inputs and with the capacity to influence and better manage input costs. In Cameroon, the government has set up local production facilities for some of the inputs to help bring down the cost. It has also set up an agency to develop and promote the use of local materials for construction. There are also private sector investors who have set up factories to manufacture and distribute building materials, which will potentially reduce input costs. These materials are exported to other CEMAC countries like Gabon, Congo Republic and Equatorial Guinea. In the rural areas, the construction costs are lower as most of the houses built are of a semi-standard and sub-standard, with local materials such as sun-dried bricks made from clay. Rental costs in the urban and semi-urban centres are also high. It costs on average about 150 000 CFA francs (US$300) a month to rent a three bedroom house in the main urban areas in Cameroon. In the smaller towns, it is generally about 40% cheaper. This is not the case in N’djamena and Libreville, however, which are the second and third most expensive cities in Africa for expatriates, as demand for accommodation far exceeds supply. It costs up to US$6 500 to US$8 500 a month for a standard three bedroom apartment in these cities. In Brazzaville in the Congo, it may cost up to US$ 1500 for a standard three bedroom apartment. The government and the private sector are currently exploring and putting in place mechanisms to increase the number of affordable housing units that enter these markets each year, through ownership or rental, and also to ensure that middle class people and those in the lower income groups get access to affordable housing finance.
The number of new housing units that enter the market annually for rental and purchase for ownership is insufficient to meet the demands of the increasingly urbanised population in all CEMAC countries and the growing middle and upper class population. The growing economy has swelled a middle class that needs to be housed. A third of the Gabonese population lives in the capital Libreville, and a quarter of the Congolese population in the capital Brazzaville, both cities with huge housing backlogs. The demand for housing has increased without a subsequent increase in supply. The discovery of oil in Equatorial Guinea, and new economic sectors that have opened up such as financial services, mining, telecommunications, retail, construction, energy, agro processing has seen the influx of expatriates, migrant workers, and skilled diaspora populations returning to their countries, thus accentuating the demand for housing. This increasing mismatch between demand and supply for housing continues to push up house prices both for ownership and rental in all the countries in the region. Prices in Cameroon are stable.
The current stock of housing units is produced mainly through incremental self-construction, and less so by government agencies, and private developers. This dynamic is changing with an increasing number of new developers entering the market. The poor live in sub-standard accommodation, often on land that is not well-serviced with poor infrastructure like access to regular and clean water, electricity and sewage disposal facilities. With the newly set up cement factories in Cameroon in 2015 that also aim to service these markets, the costs of cement has stayed the same, which may help to increase supply of new affordable housing units. It is hoped that when the second phase of the Dangote cement plant in Douala, Cameroon becomes operational, it will help to bring down the cost of cement. There is an increasing number of local housing companies and developers from the USA, Canada, China and South Africa who are going into these markets using a BOT (Build, Operate and Transfer) model. There are also ongoing efforts by some governments to increase housing supply. For example the government of Cameroon, through partnerships with private developers, set up a project to provide over 100 000 new units over a five year period, half of these units are already in the market.
International oil and construction companies like Total and ExxonMobil are driving the demand for high quality residential units in Malabo and Bata, Equatorial Guinea. There has been a great deal of new home building in Malabo II and reserved government residential areas in the east of the city. Many government ministries have been relocated to Malabo II as well as headquarters of public and international organisations. Mainly expatriates live in these new areas as they are expensive and not affordable to the average middle class person. The central Klemat area in N’djamena, which is near the presidential palace, is also an important residential district with new developments. Again, it is mostly for the expatriate community and not affordable to middle class people. In Gabon, Congo and Central African Republic, the new housing developments are driven by demand for high quality housing by expatriate communities. The pressure on prices in Gabon is accentuated by competition between individuals and corporate occupiers seeking to use residential properties as offices. There are few large-scale development activities to provide housing for middle-income people in these countries, except for Cameroon and Gabon. There is the construction of a large number of social housing in Gabon with Libreville’s northern suburb of Angondje being designated by government as a key area for social housing developments. This situation has improved with the recent interest and activity of new developers in the region.
Property Market and Housing Sector Opportunities
Despite the slow growth in 2015, economic reforms, the strong demand for natural resources from emerging economies such as China, India, Brazil, Russia, and developed economies like the USA and the EU, a growing middle class, increasingly urbanised populations, a huge housing backlog, and a large diaspora seeking to invest in real estate,huge opportunities exist for residential high end and middle/low income housing in all areas of the value chain – real estate development, construction, finance and real estate management services. There are also huge opportunities for retail, commercial and industrial real estate in the urban and semi-urban areas. The prospects for the property market are very good. To realise this huge potential, , governments in the various CEMAC countries, private investors and other stakeholders are continuously looking to ways to increase supply and make housing affordable to the middle and lower income groups. This has already been done in Cameroon with existing partnerships between government and the private sector. Some global property development companies are taking advantage of existing opportunities in this sector in the region. Through local subsidiaries and partnerships, they are building new housing development units for middle to high income end-users. An example is Options for Homes GTA Canada, which through its local subsidiary (Options for Homes Cameroon) is building housing units in Cameroon with the objective of building 10 000 units per over a five year period. Companies like SCIHM2GE have set up in Equatorial Guinea and is involved in real estate property investment, development and management.
Housing Policy and Regulation
Governments in the CEMAC countries were slow in putting in place reforms that would address the constraints in this sector. The main constraints are in the areas of land ownership and property registration (getting land title certificates), access to serviced land, construction and development, and the availability of finance and access to credit. According to the World Bank’s 2016 Doing Business Report, when compared to the 2015 report most of the countries in the region have made some progress on ease of doing business, issuing construction permits and access to credit, g getting credit and registering property. The Republic of Congo, Gabon and Chad made transferring property less costly by lowering the property transfer tax rate. Gabon made dealing with construction permits more complicated by increasing the time required to obtain a building permit. It also made paying taxes more costly for companies by reducing the depreciation rates for some fixed assets. Cameroon improved its credit information system by passing regulation that provides for the establishment and operation of a credit registry database. Cameroon made dealing with construction permits more complex by introducing inspection and notification requirements. Government also made it easier by decentralising the process of obtaining building permits and by introducing strict time limits for processing the application and issuing the certificate of conformity. This will improve access to credit. Governments should continue to introduce reforms on land administration, construction, property registration and access to housing finance. The government of Cameroon has taken a step to provide sovereign guarantees to private developers. Because of the potential role that MFIs could play, reforms and policies should also focus on tapping into that potential.