- 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
West African Economic and Monetary Union (UEMOA)
The West African Economic and Monetary Union (Union Economique et Monétaire Ouest Africaine, UEMOA) is a regional organisation of eight West African countries (Benin, Burkina Faso, Cote d’Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo). They share the same money, West African francs (CFA Francs), monetary policies, and French as an official language. The objective of the union is to promote regional economic integration and create a common market. Benin, Cote d’Ivoire, Guinea Bissau, Senegal and Togo are on the coast of West Africa whereas Burkina Faso, Mali and Niger are landlocked countries. The climate ranges from warm and humid on the southern coast to dry and hot in the semi-arid countries. The economy is predominantly agricultural. Cocoa, coffee, timber, cotton, onions, sesame seeds, Arabic gum, and cashew nuts are among the cash crops produced and exported by the union. Cote d’Ivoire, which represents the largest economy of the union, has some manufacturing activities especially in the agro-industries. Niger, Mali, Burkina Faso have mining industries; uranium, gold and petroleum in Niger, gold in Mali and Burkina Faso, phosphate in Togo and iron in Benin. Animal rearing is still in the traditional mode and a huge economic activity if modernized; for milk and dairy product, meat production for local consumption and export, tannery and hide and skin industries. Other activities are artisanal mining of minerals used in construction; artisanal fishing and artisanal food transformation and cosmetics. These activities represent a huge potential to be developed and industrialized.
Prior to 2010, on average, the populations of the coastal countries mostly live in the urban areas, compared to the landlocked countries where the population is primarily rural but today the rate of urbanization of each country of the union is accelerating. The average urban population of the union has practically doubled, from 19.8 percent of the total population in 1975 to 34.3 percent in 2013. In some of the urban centres particularly in Abidjan the annual urbanisation rate is 4.6 percent. The fastest growing urban areas include Abidjan, Dakar, Lome, Cotonou, Bamako, Niamey, Bissau and Ouagadougou. The population of the union is among the fastest growing in the world and so is the rate of urbanization. The urban population has grown from 22.5 in 2000 to 42 millions in 2015 and estimated to be 57.9 millions in 2050. As a result of decentralization and democratisation cities are emerging from rural towns and capital cities are undergoing modernisations with a number of infrastructure projects going on in practically all the member states of the union.
According to the Central Bank of the union, (Banque Centrale Des Etats de l’Afrique de l’Ouest, BCEAO), the economy remained resilient in 2015 despite international uncertainty, due to productivity in the construction and building sector, booming agriculture, a better business climate, and new products in the service industry such as banking and communication due to the supply of energy and telecommunication technology. Real GDP growth rose from 6.5 percent in 2014 to seven percent in 2015 and estimated at 7.4 percent in 2017. The economic growth is expected to continue as a result of good agricultural harvest, execution of some regional and national socio economic infrastructures and improvement in political stability of some of the members’ countries, Cote d’Ivoire and Niger where peaceful elections were organized in 2015 and 2016 however the insecurity in the northern part of Mali and north east of Niger is also of great concern. The union has minimized the average annual inflation rate to one percent in 2015.
Access to Finance
Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO) is a unique central bank for the eight countries and governs the financial institutions across the union. The BCEAO headquarters are in Dakar, Senegal, and each country has a national agency. The formal financial system of the union is developing and the banking network is growing, five new banks were established in 2015 making a total of 137 banks operating in the union by the end of 2015. Majority of the banking activities is concentrated in three or five commercial banks in the majority of the countries. Although the banking rate in the union remains one of the lowest in the world, in the last decade access to banking services, the number of banks and micro finance institutions has increased. According to BCEAO, the banking rate was 14.83 percent in 2014 almost double the rate five years earlier – 7.93 percent in 2011. Although financing entrepreneurial activities and housing remain challenging, many programmes promote the banking system in the union. According to BCEAO, at the end of March 2016 there were 680 micro finance institutions in the union, with 923.1 billion fcfa (US$ 1.6 billion) deposits, compared to 816 billion (US$ 1.4 billion) in 2015; 15.7 million depositors in 2016, compared to 13.8 million in 2015, and 920.9 billion (US$ 1.6 billion) worth of loans in 2016 compared to 796.4 (US$ 1.4 billion) in 2015.
The housing finance market in UEMOA countries is under-developed. Few long-term mortgage vehicles exist and in most cases belong to government. Only a few of the member countries have mortgage banks, among which are Banque de l’habitat du Bénin, created in 2003 with operations starting in 2004; Banque de l’Habitat du Burkina Faso, created and with operations starting in 2005; Banque de l’Habitat de Côte d’Ivoire, created in 1994; Banque de l’Habitat du Mali created in 1996; Banque de l’Habitat du Niger created in 2010 and not yet operating; and Banque de l’Habitat du Senegal (BHS) created and operating since 1979. BHS is the most active of the mortgage banks of the union and represent 50 percent of the demand for mortgages authorized in 2014 and 30 percent of the disbursed loan (60.4 billion fcfa or US$ 101.82 million). The average interest rate in the union is 7.44 percent and Senegal has the lowest rate at 6.81 percent).
To promote mortgage activities and access to mortgages a regional mortgage institution, Caisse Regional de Refinancement Hypothecaire-UEMOA (CRRH-UEMOA), was created in 2010 as a result of efforts deployed by the BCEAO, BOAD and Conseil Regional de l’epargne publique et des marches financiers (Crepmf). The mission of the new institution is to promote easy access to long-term financing to commercial banks (its members) to enable them to finance housing loans. The total capital of CRRH–UEMOA is CFA Francs 3 426 million, 60 percent of which belongs to financial institutions of the union, 15 percent to Shelter Afrique and 25 percent to BOAD. The CRRH headquarters are in Lome, Togo. The new regional institution goal is to promote mortgage development urgently needed in the UEMOA countries.
CRRH-UEMOA, as expected, is reinforcing the capacity of commercial banks, unleashing construction activities, fostering housing development, generating investments, employment opportunities and raising incomes, as currently illustrated by the number of members’ banks (shareholders), now 46, its success in the regional stock exchange, and the projects financed.
The governments of all the member states are promoting housing finance further, through different mechanisms. Among these are the establishment of mortgage banks and housing development agencies, and fiscal incentives for private companies and developers. Some commercial banks, members of CRRH are now promoting housing loans to individuals.
In spite of the economic growth of the union, affordability is still a challenge and depends on each country’s economic environment. In most cases the majority of the population who lives with less than US$3.1 a day has little or no capacity to finance their homes. To address these affordability realities, some initiatives are being implemented, among which is the creation of the regional mortgage funds CRRH and other plans to secure funds at competitive prices in the financial markets. The creation of CRRH has facilitated access to financing for its members thus ameliorate banking conditions for mortgage loans.
To boost affordability each member state has a series of housing projects, fiscal incentives to foreign and local investors. There are incentives to promote the local small and medium enterprises among which are the mutual funds for housing in Senegal, allocation of land for free, fiscal incentives and reforms in registration of property.
Apart from individual action to boost affordability the union has adopted common measures among which are the reinforcement of the capacity of the mortgage banks, the promotion of savings for housing and promotion for mortgage guarantee. In spite of the different programmes there is a need to support the private sector to develop affordable housing finance appropriate to the income of the majority in the UEMOA countries.
Housing supply differs from one country to the other but overall it is still dominated by incremental, self-construction and informal entrepreneurs. Some of the upper-middle class use the services of government housing development agencies and to some extent private developers. They live in the residential zone and the very poor live in slums. There is very little data on the stock of houses in the union.
The housing supply is insufficient to meet the demand in all of the UEMOA countries. The population growth rates of the eight countries are among the highest in the world and the rate of urbanisation is growing in all of the members of the union, it is estimated that the population in the union will attain 57.9 million in 2050. To face this challenge, some of the presidents have established ambitious housing programmes as part of their presidential campaigns. Alhassan Ouattara of Cote d’Ivoire has a programme of 50 000 houses for five years at a rate of 10 000 houses a year; Issoufou Mahamadou of Niger has promised more than 40 000 houses all over Niger. Cote d’Ivoire started implementing its programme on 9 January 2012 by laying the foundation of 2 000 social houses in Youpogon and Riveria, among the most popular streets in the capital. Out of the 60 000 units of affordable homes promised by President Alhassan Ouattara of Cote d’Ivoire only 3 000 have been supplied by the end of 2015. The gap between demand and supply of affordable houses persists.
By the end of 2015, as a result of the union’s economic growth, and the support of CRRH, most commercial banks of the union are offering housing loans and private developers have different housing schemes but the gap between the supply and the demand persists.
The governments of the union are focusing their efforts on improving the business environment and sourcing foreign investment to develop urban infrastructure and housing. To this end the UEMOA is initiating a series of investment forums to source diversified investors. The result is illustrated through the different housing programmes under construction in some of the member countries such as Senegal, where mortgage activities are relatively developed compared to other member countries. It is expected that the result of the efforts and the success of CRRH will favour the emergence of mortgage activities and boost housing supply across the union.
Property Market and Housing Sector Opportunities
The UEMOA countries are witnessing some social and economic changes due primarily to the economic boom and political reforms. The economic boom itself is due to economic reforms, and the development of infrastructure such as roads and telecommunication, which facilitate improved access to rural areas. As a result, there is high demand for land and properties. Political reforms such as decentralisation, high demand for land and development of roads is accelerating the urbanisation of villages around the capital and other internal cities. There are different incentives to stimulate local and foreign investors to participate in the development of housing and other urban infrastructures.
Each member state has housing on the priority list of his agenda and the government is promoting public private partnership for housing development and fiscal incentives for businesses. Investment interest from Dangote group to produce cement in Niger and some other countries in the union; the Adoha group a Moroccan group in housing development is now present in Cote d’Ivoire, etc. indicate a growing market.
All the available data on the stock of houses in the union indicates a gap between supply and demand. The different development programmes, such as urban infrastructure, electrification of new cities and rural areas, housing as well as the rate of urbanisation and the population growth rate (both high), are indicators of opportunities for the housing finance and housing development sectors, especially in the low-income bracket.
Housing Policy and Regulation
There have been reforms in land administration, but the registration of properties to obtain full ownership rights – Titre Foncier – remains a challenge in all UEMOA countries. The CRRH-UEMOA has proposed to undertake a regional study of the different regulations concerning full ownership right in all its member countries with a view to proposing a unique document recognised and accepted by all the member states. There is no information regarding the study to date.
The World Bank’s 2016 Doing Business Report indicates that some of the reforms implemented by some member countries are yielding results among which is Cote d’Ivoire but some difficulties persisting. The difficulties encountered will hopefully be addressed by Sheida, the land and registration reform system adopted by the union in 2006 to simplify the process of obtaining full ownership title.