Overview
Benin is a French-speaking, relatively flat country in West Africa. It is located in the Gulf of Guinea with Togo, Burkina Faso, Niger and Nigeria as neighbouring countries. The Gini index stands at 37.8 for 2018.[1] In 2021, the population of Benin was estimated at 12 123 198 inhabitants with an annual growth rate of 2.7%. The proportion of the population that is urbanised is 49%. According to World Bank data, this urban population is growing at a rate of 3.9% each year.[2] The unemployment rate is estimated at a low 2% but 38.5% of individuals live below the poverty line. Key development challenges for the country include agricultural and economic diversification and improving access to basic services. Population growth and rapid urbanisation have created environmental problems, including the unsustainable use of natural resources, proliferation of plastic waste and problems with management of household waste, and an increase in floods.
Benin’s economy is highly dependent on the services sector related to commercial re-export activities to landlocked countries and Nigeria. The services sector contributed more than 3.2% of GDP growth in 2021 and 52% of tax revenues.[3] Benin’s economy has been resilient with a GDP growth rate in 2021 estimated at 6.6%[4] compared to 3.8% in 2020 despite the protracted effects of COVID-19. The country was able to count on good performance in the agricultural sector, including the export of three main products, cotton, cashew nuts and shea, which contributed 22.8%[5] to GDP growth. Benin has a diversified economy, which has lessened the effect of the pandemic on its economy.[6] The consumer price inflation rate stood at 1.7% in 2021,[7] below the convergence criteria of the West African Economic and Monetary Union (WAEMU). This declining level of inflation is mainly due to the improvement in food imports.[8]
Benin has adequate water with two major river basins, the Niger and coastal basin, providing water for the country. These water systems support the agricultural sector, in which nearly 70% of Beninese earn a living.[9] The economy is therefore highly dependent on its natural resources. In May 2022, Benin adopted a national climate change adaptation plan,[10] one of the strategic objectives of which is to promote a resilient system for the management and exploitation of natural resources and ecosystems. Two specific objectives have been defined for the infrastructure and urban planning sector: promoting climate-smart forms of urbanisation and developing sustainable cities. In addition, the country also has a National Strategy for Disaster Risk Reduction (2019/30). These plans affect the urban development and sanitation components of the affordable housing sector .
[1] La Banque Mondiale (2021). https://data.worldbank.org/indicator/ SI.POV.GINI ?locations=BJ, (Accessed 2 August 2022)
[2] La Banque Mondiale (2021) https://data.worldbank.org/indicator/ SP.URB.GROW ?locations=BJ
(Accessed 2 August 2022)
[3] Tchounand, R. (2022). Growth: Benin’s economic recovery despite the global situation. 23 April 2022. Ministry of Finance of Benin. https://finances.bj/croissance-la-remontada-economique-du-benin-malgre-la-conjoncture-mondiale/ (Accessed 25 July 022).
[4] La Banque Mondiale. The World Bank in Benin.
https://www.worldbank.org/en/country/benin/overview (Accessed 25 July 2022)
[5] Tchounand, R. (2022). Growth: Benin’s economic recovery despite the global situation. 23 April 2022. Ministry of Finance of Benin. https://finances.bj/croissance-la-remontada-economique-du-benin-malgre-la-conjoncture-mondiale/ (Accessed 25 July 022).
[6] UEMOA (2021). Monitoring the Impacts of COVID-19 in West Africa. August 2021.
[7] La Banque Mondiale (2021). https://data.worldbank.org/indicator/ FP.CPI.TOTL.ZG ?locations=BJ (Accessed 20 August 2021)
[8] Banque Africaine de Développement (2022). Benin Economic Outlook. African Economic Outlook (AEO) 2022. https://www.afdb.org/fr/pays-afrique-de-louest-benin/perspectives-economiques-au-benin (Accessed 27 August 2022)
[9] World Bank Group (2021). Climate Change knowledge portal. Benin. Country Summary. https://climateknowledgeportal.worldbank.org/country/benin (accessed on 2 October 2022).
[10] United Nation for Climate Change (2022). Benin National Climate Change Adaptation Plan. May 2022. https://unfccc.int/sites/default/files/resource/PNA_BENIN_2022_0.pdf (Accessed 2 August 2022)
Access to Finance
Obtaining access to housing finance remains a major concern for all Beninese people. The two options for housing finance are cash equity or a bank loan. The Beninese banking landscape, according to the report of the Central Bank of West African States (BCEAO), included 14 banks and one financial institution in March 2022. In its study on financial inclusion in the WAEMU zone, the BCEAO found that 31.19% of the population over the age of 15 in Benin in 2020 held an account in banks, postal services, national savings banks and Treasury funds.
The proportion of Beninese using a mortgage to finance their housing remains limited. This is due to the banks’ restrictive mortgage conditions. ,The amounts granted by banks can range from CFA25 000 000 (US$39 679) to CFA100 000 000 (US$158 717) depending on the needs of the customer, namely: land acquisition, renovation, or new construction. The microfinance sector in Benin is quite dynamic with more than 112 actors identified in 2019. According to a 2022 BCEAO decentralised financial systems (DFS) report, the number of microfinance clients was 3 138 748. However, microfinance plays a negligible role in housing finance, although part of the loans granted to clients is certainly invested in real estate projects. It would be wise for these institutions to study the possibility of financing solutions for the real estate sector.
The pandemic accelerated digitalisation and dematerialisation of public and private service procedures. Financial inclusion via mobile financial services is taking off as a result. Two operators are active in the Beninese market, namely MTN and MOOV. According to the 2020 report of the Regulatory Authority for Electronic Communications and Post of Benin (ARCEP), 6 360 525 users were active in 2021, an increase of 21.08% from 2020. This is the number of subscribers who use mobile financial services. According to the same report, the number of operators who accept electronic currencies also increased to 51% in 2021 against 43% in 2020. The volume of transactions increased to 930 000 000, which equates to approximately 2 500 000 transactions a day. This is a growth of 54.5% compared to 2020 in deposit and withdrawal transactions. This clear increase in mobile financial transactions is linked to the dematerialisation of procedures and to the digitalisation of payment processes. In addition, these mobile transactions lay the foundation for new services to the population, in particular by facilitating access to essential services.
Affordability
Between 2010 and 2020, the housing deficit was estimated at 320 000 units. However, in view of population growth trends, demand is probably stronger in urban areas, in Cotonou and its periphery. It is also in this area that the State is developing most of its social housing projects. For social housing projects, the formula chosen for marketing is lease-to-own with or without initial contribution. The main objective of the “lease accession” rental is to allow leaseholders to become owners by paying the equivalent of rent over a maximum period of 25 years.
According to the Harmonised Household Living Conditions Survey (EHCVM 2019), the overall annual poverty line was estimated at CFA 246 542 (US$391.34).[1] The analysis of Beninese household spending indicates that 38.5% of individuals live below this poverty line. Low income levels make it difficult to access real estate loans from local banking institutions.
[1] Institut National de la Statistique et de la Démographie (2020). Note on Poverty In 2019. July 2020. https://instad.bj/actualites/169-note-sur-la-pauvrete-en-2019 (Accessed 27 August 2022).
Housing Supply
In Benin’s major urban centres, the supply of housing is more informal than formal. Individuals build their own housing using their own funds. The supply of housing is limited. The only major project is the “20 000 housing units”[1] of Oeudo, a public and private partnership, and which includes so-called “social” and “economic” housing. The delivery of the first homes is planned for 2023. The project has progressed well and a first lot of 1 735 homes should be made available to potential buyers by 2023. The acquisition format is in the form of “lease accession ” over a maximum period of 25 years with an interest rate of 3.5%.[2] The project applies to other cities in the interior of the country, namely Parakou and Porto Novo, with respectively 2 500 and 3 000 housing units planned. Work on the Porto Novo site is also being started. Other lots will be awarded by the Société immobilière et d’aménagement urbain (SIMAU), the operational arm of the State responsible for implementing real estate projects. For the social housing part of this project, the state has borne the full costs of servicing the premises as well as the acquisition of the estates. It is therefore a form of subsidy to provide housing for people with modest incomes.
In terms of basic infrastructure, particularly in terms of access to electricity, the government has launched Benin’s Sustainable and Secure Access to Electrical Energy Project (PADSBEE 2019-2025). This aims to connect 75% of domestic, commercial and industrial users to quality electricity by 2025, 50% of which will be in rural areas and 90% in urban areas.[3] Two fifths of Beninese have access to drinking water in rural areas, with strong disparities between regions. In urban areas, the access rate is 76%.[4] Sanitation projects are also underway, especially in urban areas with the Project (PAVICC) which seeks to better consider, among others, climate or social and economic risks in land use planning.
Cement and concrete building materials dominate housing construction, especially in urban areas. While cement is produced locally through four local players, iron is mainly imported. In general, building materials have suffered from widespread inflation due to the consequences of COVID-19 and the international repercussions of Russia’s invasion of Ukraine. For example, the price of a ton of cement increased from CFA72 000 (US$114.28) a ton to CFA80 000 (US$126.97) or even CFA100 000 (US$158.71) a ton in March 2022. These surges led the State to officially set the price per ton of cement in the 12 municipalities of the country in June 2022. Cement is considered a social product.[5]
A building permit is needed for construction. It takes between 25 and 35 days to obtain this document . There are three types of building permits: category A building permits for low-risk buildings, category B building permits for medium-risk buildings, and category C building permits for high-risk buildings. Depending on the category, costs vary: Category A: CFA150 (US$0.24) per square metre excluding all floors; Category B and C: CFA250 (US$0.40).[6]
[1] SIMAU. 20 000 Housing Program. https://simaubenin.com/presentation_projet (Accessed 26 August 2022).
[2] Thantan, M. (2022). Social housing: the government sets the terms of acquisition. 21 April 2022. ORTB. https://ortb.bj/a-la-une/logements-sociaux-criteres-attribution/ (Accessed 11 September 2022).
[3] Ministry of Energy. Benin’s Sustainable and Secure Access to Electricity Project (PADSBEE 2019-2025). https://energie.gouv.bj/page/projet-dacces-durable-et-securise-du-benin-a-lenergie-electrique-padsbee-2019-2025 (Accessed 26 August 2022).
[4] PS-Eau (2020). Country profile Benin.
https://www.pseau.org/outils/ouvrages/ps_eau_lyon_mediterranee_ps_eau_fiche_pays_benin_2020.pdf
(Accessed 26 August 2022).
[5] Republic of Benin (2022). Order fixing the selling price of cement. Ministry of Industry and Commerce. June 2022. https://www.gouv.bj/download/375/arrete-fixation-prix-cession-ciment-vf.pdf (Accessed 26 August 2022). Pg. 2.
[6] Republic of Benin. Public Services site. Building permits. https://service-public.bj/public/services/service/PS00141 (Accessed 26 August 2022).
Property Markets
The residential resale market in Benin is in its infancy and is mainly located around the capital Cotonou and its suburb Calavi. The purchasing power of most of the population explains this situation without forgetting a lack of diversified supply of affordable financing plans. The sale of raw land constitutes most transactions. According to the National Agency for Domain and Land (ANDF), between January and July 2022, the Cotonou Land Property and Mortgage Authority received and processed 214 files. The average processing time for files is three days. There is no segregation based on gender when issuing property titles. Women have equal access to land titles.[1]The costs associated with the transfer of ownership vary according to the value of the property. For a property whose value is less than or equal to CFA10 000 000 (US$15 871.7) the fee is 3%, for a property worth CFA50 000 000 (US$79 358.5), the fee is 5% of the value.
The price of rental and real estate varies according to the zones. In the capital Cotonou, the rent for a five-bedroom villa in the Fifadji district can be negotiated between CFA600 000 (US$952.3), and CFA800 000 (US$1 269.7).
There is a strong pressure on urban areas in the purchase and resale of plots. This generates land insecurity due to double sales.
[1] The National Domain and Land Agency (2022). Table 1: Summary of processing times for property transfer files received in 2022. https://www.andf.bj/index.php/le-foncier-au-benin/statistiques/statistiques-bcdf/item/304-synthese-2022 (Accessed 14 August 2022).
Policy and Legislation
In Benin, the State intervenes mainly at the level of supply through the provision of social housing, such as the current project of 20 000 social housing units. Recent policy and legislative developments have concerned the taxation of property income. The General Tax Code fiscal year 2022 has set the tax on property income at a single rate of 12%. Prior to 2022, there were two rates, 10% for rental income not exceeding CFA3 000 000 (US$4 761.52) and 20% for income above this. This dual rate was subject to fraud as some owners concealed income to pay less tax.[1]
With the help of AFD (Agende française de développement) in particular, policies have been launched that take into account the impact of climate change on cities and the population. One such, PAVICC (Benin Cities Adaptation Project to Climate Change) has several components, grouped under two headings. One is urban planning, that is development of strategic urban planning tools to better deal with climate and socio-economic risks in land use planning; The other is resilient urban investment comprising: developing sustainable essential urban services, including drainage infrastructure, opening up neighbourhoods, securing material assets, and flood zones.[2] The Ministry of the Environment is responsible for climate change management.[3]
[1] Republic of Benin (2022). Single rate of 12% of the tax on property income: what should be remembered? 01 May 2022. https://finances.bj/taux-unique-de-12-de-limpot-sur-les-revenus-fonciers-que-faut-il-retenir/ (Accessed 14 August 2022).
[2] French Development Agency (AFD) (2022). AFD Group Results for 2021: Prioritizing the SDGs. 09 June 2022.
https://www.afd.fr/fr/carte-des-projets/adapter-les-villes-du-benin-aux-changements-climatiques-pavicc(consulted) (Accessed 14 August 2022).
[3] World Bank (2021). Climate Change knowledge portal. Benin. Country Summary. https://climateknowledgeportal.worldbank.org/country/benin (Accessed 2 October 2022).
Opportunities
With the growth of its population and the strong pressure on large cities, the need for housing is increasingly important in Benin. Through its 20 000 housing project launched in 2020, the Beninese government is trying to provide the beginning of a solution. Recently the State has announced the construction of a clinker production plant with a capacity of 1 500 000 tons a year, a development that could favor the housing sector. Clinker is the main raw material that goes into the manufacture of cement, an essential building material.
The private sector participates little in the supply of housing, the method of financing this housing being inaccessible to most of the Beninese population. Lenders should explore more flexible ways to allow access to real estate loans. On an informal level, individuals construct their own housing.
Soaring cement prices could present opportunities for replacement with cheaper alternatives. For the moment housebuilders have few alternatives to cement or concrete. Those that exist remain in the embryonic stage. One alternative is to gradually replace cement and sand with coconut fibers or banana stalks to improve thermal conductivity.[1]
[1] Alekoudou, R. (2020). Towards the promotion of local building materials in Benin. 24 September 2020. MIODJOU. https://miodjou.com/2020/09/24/vers-la-valorisation-des-materiaux-locaux-de-construction-au-benin/ (Accessed 14 August 2022)
Availability of Data on Housing Finance
Some statistics on property transfers are regularly published on the website of the National Agency for Domain and Land (ANDF). Availability of data is generally limited, however, and assessments of the housing deficit are not regular.
The BCEAO does publish financial data compiled from banks, financial institutions and decentralised financial systems, but the shares of the real estate market are not disaggregated.
Updated information for 2021 or 2022 has not been published on the website of the National Agency for Decentralised Financial Systems (ANSFD), an institution under the supervision of the Ministry of Finance of Benin.
The National Institute of Statistics and Demography (INSTAD) remains the main and most reliable source of information on socio-demographic and economic data.
ARCEP’s dependably regular annual report makes it possible to monitor the evolution of digital finance and to understand its impact on financial inclusion.
Green Applications for Affordable Housing
There are no so-called “ecological” building standards in Benin. Decree No. 2014-205 of 13 March 2014 simply regulates the issuance of building permits. However, some initiatives in developing ecological building materials are to be noted, for instance, the company Nature Brique is the first ceramic plant established in Benin.[1] The terracotta brick manufacturing plant started operations in 2011. The bricks are made from vacuum-extruded clay, dried and baked between 850° and 950°. Terracotta bricks are one-third of the weight of cinder blocks. Terracotta brick has features such as good thermal and acoustic insulation. However, this technology struggles to convince people, who still prefer cement bricks.
The production of electrical energy in Benin is essentially of fossil fuel origin. According to the data of the report on Sustainable Development in Benin 2022, the sources of electric energy production are: natural gas 75.7%, oil 23.6% and solar 0.7%. The electrification rate in Benin was 41.4% according to World Bank data. This figure remains below the subregion’s average of 48.3%.[2] [3] However, the Beninese government plans to reach, by 2025, a national rate of electricity coverage of 75% of the country, including 50% in rural areas and 90% in urban areas. In July 2022, the government approved a new electricity access policy that significantly reduces the costs of connecting to the electricity grid from CFA85 000 (US$134.90) to CFA25 000 (US$39.67). In addition, green energy is increasingly being developed by government initiatives through solar power plants.
For off-grid electrification, the Beninese authorities benefit from the support of the Millennium Challenge Account (MCA BENIN) to improve access to electricity in rural areas.
[1] Nature Brique. Terracotta brick. AMK Engineering. https://www.amkbtp.com/produit/594a91133218f1110008f70c#:~:text=NATURE%20BRIQUE%20est%20la%20premi%C3%A8re,de%20briques%20en%20terre%20cuite (Accessed 27 August 2022).
[2] UN Sustainable Development Solutions Network (2022)., Sustainable Development Report for Benin 2022. July 2022. https://irp.cdn-website.com/be6d1d56/files/uploaded/220712%20BENIN_SDR2022.pdf (Accessed 11 September 2022). Pg. 34.
[3] World Bank (2020). https://donnees.banquemondiale.org/indicator/EG.ELC.ACCS.ZS?locations=BJ, (Accessed 11 September 2022).
Websites
