Housing Finance in Benin
Overview
This profile is also available in French here.
To download a pdf version of the full 2020 Benin country profile, click here.
Benin, with its increased population shows demographic projections that illustrate the rapid increase in urbanization. As much as Benin hopes to increase the housing supply by 2022 in large urban areas, the supply isn’t equivalent to the increased demand together with constraints in the housing supply available.
Forecasts indicate that there might be a slight decline in the economic growth because of the 2019 negative impact of the closure of the land borders by Nigeria as well as the negative impacts of the Covid-19 pandemic.
Benin has the second highest extended banking rate in West Africa. In this rate, the adult population is included and illustrates how they too have access to a wider range of banking services. This includes adding the development of digital banking, which makes accessing the products of the bank easier than the traditional way.
The Benin finance system is dominated by the formal banking sector, a sector which provides loans worth the duration of about 20-25 years.
To aid in the housing deficit, there are programs to build decent housing as there are still people living in urban areas that live in informal settlements. The government is also initiating a real estate development program to develop in that market as well.
Despite the persistent land insecurities, bare land sales constitute as a major part of transactions on the market. With improvements like digitalization. Which shows that overtime there might be significant positive changes.
One positive opportunity is the State launching a housing program that aims at building 20 000 low cost houses between 2016 and 2021 [1] which will be able to assist in accommodating the increasing population and provide housing security for most of the population.
[1] Real Estate and Urban Development Company (SIMAU), Project of 20,000 low-cost housing. https://simau.com/projet-logement/ (Accessed 7 September 2020).
Find out more information on the housing finance sector of Benin, including key stakeholders, important policies and housing affordability:
- Macroeconomic Overview
- Access to Finance
- Affordability
- Housing Supply
- Property Markets
- Policy and Regulation
- Opportunities
- Availability of data on housing finance
- COVID-19 response
- Websites
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2020 edition, which has up-to-date profiles for 55 African countries.
Download yearbookBenin
Macroeconomic Overview
Benin is a country in West Africa that covers an area of 114 763 km.[1] The country is located between Togo, Niger and Nigeria. In 2019, the total population of Benin was estimated at 11 801 151 and the population growth rate was estimated at 2.72 percent.[2] Demographic projections in Benin, mainly in urban areas around Cotonou, Porto Novo or Abomey Calavi show rapid urbanization. According to official figures, Benin will have 12 million inhabitants in 2022, 55 percent of whom will be located in the large urban areas.[3] However, housing supply does not follow this dynamic. Over the past 10 years, between 2010 and 2020, the housing demand has been estimated at 320 000 units, while the public offering has produced only 2 000 units for the same period.
Like many African countries, the country’s regional capitals are developing through an anarchic and extensive occupation of land on the periphery. This form of extension poses challenges in terms of access to water, electricity, and other basic social services such as hospitals, schools, etc. This situation has a negative impact on the quality of life of the inhabitants and the viability of housing, particularly in Cotonou and its periphery which is located in a marshy area. Despite this situation, the urbanization rate was estimated at 47.86 percent in 2019 with an annual growth of 3.87 percent.[4]
In 2019, the growth rate of gross domestic product (GDP) was 6.87 percent.[5] The Beninese economy is suffering from the negative impacts of the closure since August 2019 of the land borders by Nigeria. Indeed, trade with this country represents nearly 20 percent of Benin’s GDP. For 2020, with the aftermath of the crisis linked to the global COVID-19 pandemic, forecasts expect economic growth to contract to 2.7 percent.
[1] The World Bank. Country profile.
https://databank.worldbank.org/reports.aspx?source=2&country=BEN (Accessed 11 July 2020).
[2] The World Bank. Country profile.
https://databank.worldbank.org/reports.aspx?source=2&country=BEN (Accessed 11 July 2020).
[3] Achille HOUSSOU (2017). Construction program of 20 000 social and economic housing units in Benin.https://crrhuemoa.org/wp-content/uploads/2017/03/Programme-de-Construction-Logements-sociaux-et-%C3%A9conomiques-au-B%C3%A9nin-Achille-HOUSSOU.pdf (Accessed 12 August 2020).
[4] The World Bank. Country profile.
https://data.worldbank.org/indicator/ SP.URB.TOTL.IN.ZS ?locations=BJ (Accessed 21 August 2020).
https://data.worldbank.org/indicator/ SP.URB.GROW ?locations=BJ
[5] The World Bank. Country profile.
https://databank.worldbank.org/reports.aspx?source=2&country=BEN (Accessed 11 July 2020).
Access to Finance
According to a 2018 Central Bank of West African States (BCEAO) report, Benin has an extended banking rate (TBE) of 68.7 percent just behind Togo with 85.4 percent which ranks first in the West African Economic Monetary Union (UEMOA) ranking.[1] This rate takes into account the share of the adult population that has access to banking services (having a bank account), postal services, national savings banks and the Treasury, and also those who have access to microfinance services. As of 31 December 2019, decentralized finance had 112 players[2] in Benin, whose legal configuration distinguishes three categories namely companies, mutuals and associations.
In the second quarter of 2020, Benin had 3 207 311 clients in the microfinance sector for a healthy loan portfolio of FCFA 407 606 394 (US$ 697 597). The number of service points during this period amounted to 695 points throughout the country.[3]
At the end of May 2020, the Beninese banking landscape had 14 banking establishments made up of 12 subsidiaries, two branches and a financial institution of a banking nature.[4] Digital finance is constantly developing with mobile payment and digital banking. This new trend in finance opens up other alternatives to traditional finance by using new technologies. Two operators share the mobile payment market in the country: MOOV Benin through its MOOV Money service and MTN with its MTN MONEY service. According to the 2019 annual report[5] of the Electronic Communications and Post Regulatory Authority (ARCEP), the network of mobile money distributors experienced a 60.4 percent increase in 2019 and is a real income-generating activity and jobs for the populations.[6] It is an important means of financial inclusion for disadvantaged populations in both urban and rural areas.
The housing finance system in Benin remains dominated by formal banking institutions with the majority of banks offering home loans. The duration of the loans varies from 20 to 25 years depending on the bank. The interest rate also varies depending on the bank and the length of the loan. In the case of the new Inter-African Bank Insurance Company (NSIA BANQUE), the rate applied is 7.9 percent excluding taxes for a maximum term of 20 years. For the Bank of Africa (BOA), the loan term can be up to 25 years. The BOA, in partnership with other shareholders, was behind the creation in 2004 of the Housing Bank of Benin (BHB) which did not have the expected success despite the FCFA 5 billion (US$ 8 557 247) in capital invested into it in 2016. BHB was finally absorbed by the BOA Group in 2018. Real estate products offered by banks are intended only for people with regular income or employment which leaves a good number of Beninese outside the formal housing financing system. In order to circumventing the eligibility criteria, many consumer loans with terms of up to six years, taken out with banks, go towards real estate projects.
[1] Central Bank of West African States (2018). Financial inclusion monitoring indicator in WAEMU from 2008 to 2018.
https://www.bceao.int/sites/default/files/inlinefiles/Tableau%20de%20bord%20de%20l%27inclusion%20financi%C3%A8re%20dans%20l%27UEMOA_2018.pdf (Accessed 1 August 2020). Pg. 1.
[2] Ministry of Economy and Finance (2020). 2019 directory of decentralized financial systems in Benin. https://finances.bj/annuaire-2019-des-systemes-financiers-decentralises-du-benin/ (Accessed 27 August 2020) Pg. 1.
[3] National Agency for the Supervision of Decentralized Financial Systems (ANSSFD) (2020)
https://www.anssfd.org/htdocs/statsfd/?annee=2020&trimestre=trim2 (Accessed 1 August 2020).
[4] Central Bank of West African States, BCEAO. Banking Landscape. https://www.bceao.int/fr/content/paysage-bancaire (Accessed 1 August 2020).
[5]Regulatory Authority for Electronic Communications and the Post, ARCEP. Annual activity report 2019.
https://arcep.bj/wp-content/uploads/2020/04/Rapport-Annuel-2019-ARCEP-BENIN.pdf (Accessed 11 August 2020).
Regulatory Authority for Electronic Communications and the Post, ARCEP. Annual activity report 2019.
https://arcep.bj/wp-content/uploads/2020/04/Rapport-Annuel-2019-ARCEP-BENIN.pdf. (Accessed 31 August 2020). Pg. 57.
Affordability
A large majority of the population, mainly located in the large urban areas, do not have access to decent housing. One of the components of the 2016-2021 Government Action Plan (PAG) includes the construction of 20 000 social housing units [1] by 2021 to try to reduce the housing deficit. This program consists of F4-type housing in 14 towns, including 12 960 individual housing units and 7 040 collective housing units.[2]
The sources of financing for housing, in particular mortgage loans, remain accessible only to a tiny part of the population. In these cases, the share of income that can cover home loans can go up to 45 percent with some banks like BOA BENIN for example. For households who cannot afford mortgage loans, self-construction provides an alternative for those households that have the financial means to build their own homes on an incremental basis. Others access rental housing at high costs and not always decent quality.
The peri-urban area of Cotonou, which is undergoing the strongest development, is characterized by great land pressure on available housing and an anarchic development of peripheral areas.
As part of the action against the COVID-19 pandemic, the Beninese government has taken social measures to relieve households through cash donations for the most disadvantaged populations which took place after carrying out a census of the people in dire need.
[1] Presidency of the Republic of Benin. Benin revealed, program of actions. Living environment. http://revealingbenin.com/programme-dactions/programme/cadre-de-vie/ (Accessed 31 August 2020).
[2] Real Estate and Urban Development Company (SIMAU). Project of 20 000 low-cost housing.https://simau.com/projet-logement/ (Accessed 12 August 2020).
Housing Supply
With less than a year from the end of the first term of current President Patrice Talon, who came to power in 2016, the PAG is already taking stock. This ambitious program included the improvement of the living conditions of the population with the construction of 20 000 social housing for an amount of FCFA 347 billion (approximately US$ 600 million). The project got off the ground with the allocation of 3 035 housing units to the Spanish company Pablo and Natalia Holding Group (PNHG). The first housing units are scheduled to be delivered in 2021. The total duration of the project was 18 months, but this completion date will likely be impacted by the pandemic. Other calls for tenders are underway for the allocation of other lots within the framework of this social housing project.
Efforts are also underway to improve access to basic social services such as water and electricity. In 2019, the State signed a contract with the Canadian company Monitora Hydro International Ltd to manage the Beninese Electric Power Company (SBEE). This form of governance seeks to improve the services offered to the entire population with a view to improving the living environment. Access to drinking water, especially in rural areas, is improving. Thanks to the actions contained in the PAG, nearly 70 percent of the population already have access to improved drinking water sources, especially in rural areas.[1]
In parallel with this program, households are by far the main developers of housing to cover their growing needs in urban areas. These dwellings are often intended for rental. These are mostly villas, or apartments in buildings flats for middle and upper income households. According to figures released by the National Institute of Statistics and Economic Analysis (INSAE), the proportion of brick dwellings is 61 percent while 24.6 percent is earthen[2] in the Cotonou region. Progress is needed to provide decent housing for all.
The government of Benin is involved in the housing supply segment through the Société Immobilière et d’Aménagement Urbain (SIMAU). This institution aims to develop the housing and urban development sector in Benin.[3] This company is owned by the State, the West African Development Bank (BOAD), insurance companies and banks. The French real estate group Duval is also a partner to provide technical expertise.
The government is also seeking to promote the production by the private sector of affordable housing through a social housing real estate development program.[4]
In addition, as part of the mitigation of the adverse impacts of COVID-19 on households, the Beninese government has released FCFA 74 billion (US$ 126 million) to support households, businesses, employees and craftsmen. A large part of this amount is, nevertheless, dedicated to companies. Seventy percent of gross wages paid by employers, between April and June 2020, will be reimbursed by the State. However, it is difficult to directly assess the impact of these measures on the housing and construction sector.
[1] Ngounou B. (2020). BENIN: Government promotes rapid expansion of access to water in rural areas. 26 May 2020.Afrik 21. https://www.afrik21.africa/-le-gouvernement-favorise-lextension-rapide-de-lacces-a-leau-en-zone-rurale/ (Accessed 17 August 2020).
[2] National Institute of Statistics and Economic Analysis (INSAE). Synoptic table of socioeconomic indicators.
https://www.insae-bj.org/actualites/173-tableau-synoptique-des-indicateurs-socio-demographiques (Accessed 27 August 2020).
[3] Government of the Republic of Benin. Implementation of the PAG: Minister TONATO presents SIMAU to Beninese companies. July 19, 2019. https://www.gouv.bj/actualite/301/mise-en-%C5%93uvre-du-pag-le-ministre-tonato-presente-la-simau-aux-entreprises-oises/ (Accessed 26 August 2020).
[4] Presidency of the Republic of Benin, Benin revealed, living environment action program. http://revealingbenin.com/programme-dactions/programme/cadre-de-vie/ (Accessed 31 August 2020).
Property Markets
The real estate market remains poorly structured in Benin despite the strong demand for housing resulting from the rapid urbanization of large cities and the increasing demographic and economic growth that the country has experienced in recent years. The sale of bare land constitutes the major part of transactions on the market despite the great insecurity of land that persists. Recent improvements made by the government aim to improve the situation. Among them, we can cite the setting up in April 2020 of a digital platform “E notary” which makes it possible to register a land transfer online and to obtain a new land title in 72 hours. The online cadastre platform[1] provides access to a number of services, including the possibility of verifying ownership of a plot or extracting the cadastral plan of a plot. This platform makes it possible to carry out the following main operations: the lifting of mortgage statements of buildings, the transfer of properties online, the submission of grievances and complaints related to a land, the assessment of the possibility of making a transfer of ownership. We must also add to this the online registration of the digital cadastre of the main cities such as Cotonou and Porto Novo.
Since 2018, nearly 47 000 land title files have been digitized, which corresponds to approximately 18 percent of the territory. According to the ‘Doing Business 2020’ report on Benin, the time limit for registering a property is 120 days at an estimated cost of 3.4 percent of the property’s value.[2]
As part of improving the business climate, the dynamics of reforms currently underway in Benin also affect land. Reforms have also been carried out by the Agence Nationale du Domaine et du Foncier (ANDF) to secure transactions. The reduction in property transaction fees and the establishment of the Land Compensation Fund are effective. The effectiveness of the Land Compensation Fund is a major step forward in the management of land-related complaints in Benin.
The rental segment is dominated by transactions carried out mostly by informal real estate agents. In Cotonou, in the “Haie Vive” district, one of the residential areas, the monthly rent for a 3-bedroom villa is FCFA 500 000 (US$ 856) minimum. The rental market is governed by Law No. 2018-12 of July 2, 2018[3] on the legal regime of the lease for domestic residential use in Benin and which sets the authorized thresholds for monthly and annual rents, deposits to be paid and sets the fees paid to real estate agents. This law sets a number of rules and defines the conditions for exercising the profession of real estate agents. To date, there are no exact statistics on the number of real estate agents operating in the Beninese market. However, they are organized within the Association des Agents Immobiliers du Bénin (ANAIB).
[1] Cadastre of Benin. https://services.andf.bj/ (Accessed 12 August 2020).
[2] Doing Business 2020. Economy Profil Bénin. https://www.doingbusiness.org/en/reports/global-reports/doing-business-2020 (Accessed 24 september 2020). Pg. 20.
[3] General Secretariat of the Government. https://sgg.gouv.bj/doc/loi-2018-12/ (Accessed 21 August 2020).
Policy and Regulation
Decree No. 99-313 of 22 June, 1999 organized the performance of the real estate sector. In 2005, the housing policy of Benin defined the framework of the housing policy and the financing of housing. In 2007, Law 2007-03 January organized rural land tenure. Decree No. 2009-693 of 31 December, 2009 approved the framework-letter for land reform in Benin. Decree No. 2010-329 of 19 July, 2010 approved the declaration of land policy in Benin. Law 2013-01 of 13 August, 2013 represents the current land code of Benin, the first of its kind in Benin which organizes land ownership rights. In 2015, Decree No. 2015-010 created the National Land and Estate Agency, which develops and manages the land register of Benin. Law No. 2018-12 of 2 July, 2018 governs the rental market.
In terms of financial legislation, a uniform law regulating the Credit Reference Bureau improves information on credits and more generally the business environment in Benin and in the other WAMU countries.
Opportunities
A housing program aimed at building 20 000 low-cost housing units in five years (2016-2021) was launched by the State. Its first phase concerns the servicing of land and the construction of 12 049 housing units, including 10 849 in Ouèdo, 250 in Porto-Novo and 500 in Parakou. The second phase will consist of the construction of the remaining housing units distributed in the 11 other cities of the country.[1] This project represents a real opportunity for local and international investors to invest in a viable project that has state support. The government seems to have learned from the failure of previous social housing projects. The current project is in the form of a public-private partnership.
The development of a middle class in the country, the growth of the population in urban areas, the lack of quality housing remain interesting indicators which show that the housing market in Benin remains attractive. Recent improvements to the land sector through the ANDF are helping to better secure transactions.
[1] Real Estate and Urban Development Company (SIMAU), Project of 20,000 low-cost housing. https://simau.com/projet-logement/ (Accessed 7 september 2020).
Availability of data on housing finance
The availability of data on the housing market in Benin remains a major difficulty. There are no regular studies on housing needs or rental availability. The real estate market remains largely informal which makes it impossible to have up-to-date and reliable information on the sector despite its dynamism.
INSAE remains the main and reliable source of information on demographic and economic data.
The official website of the government of Benin provides information on the measures taken to fight COVID-19.
ARCEP’s annual report is detailed and provides an understanding of the dynamics of the evolution of digital payments in Benin and its impact on the lives of populations.
COVID-19 response
Benin has been impacted by the socioeconomic consequences linked to the global COVID-19 pandemic. General confinement has not been imposed in view of the economic situation of the population.
The Central Bank of West African States (BCEAO) has taken measures to contain the adverse impacts of the pandemic, with the establishment through the banking system, of an adapted framework to support companies affected by the consequences of the pandemic and which are experiencing difficulties in repaying the loans granted to them. The BCEAO called on the banks to grant the appropriate extensions of deadlines, in particular to small and medium-sized enterprises (SMEs) and industries (SMIs). The central bank has also initiated negotiations with companies issuing electronic money to reduce transaction costs and encouraged populations to make greater use of digital means of payment in order to limit contacts and travel. From April 2020, the BCEAO lowered its key rate to 2.50 percent.[1]
To cope with the consequences of COVID-19, the Beninese authorities announced a series of social measures through a FCFA 74.12 billion (US$ 126 647 270) funded program.[2] This program includes a subsidy of FCFA 5.7 billion (US$ 9 760 273) applied to water and electricity tariffs for the entire population. Another component of this program concerns support for the
informal sector with a financing of FCFA 4.9 billion (US$ 8,386,103) intended for more than 55 000 people through a vast identification plan for small artisans and other actors in the informal sector. The private sector will receive a support estimated at FCFA 63.38 billion (US$ 108 471 675) intended to cover salaries, commercial rents or to ensure the reimbursement of VAT.
[1] The Central Bank of West African States (BCEAO) (2020). Press release of the meeting of the Monetary Policy Committee of June 22, 2020: the BCEAO cuts its key rates. https://www.bceao.int/fr/communique-presse/communique-de-presse-de-la-reunion-du-comite-de-politique-monetaire-u22juin#:~:text=Depuis%20le%20mois%20d’avril,n%C3%A9fastes%20de%20la%20crise%20sanitaire. (Accessed 26 August 2020).
[2] Official website of the Government of the Republic of Benin – News.
https://www.gouv.bj/actualite/708/mesures-sociales-liees-pandemie-coronavirus—-pres-74–12-milliards-prevus/ (Accessed 21 August 2020).
Websites
Government of the Republic of Benin https://www.gouv.bj
Ministry of Economy and Finance https://finances.bj/
Ministry of Living Environment and Sustainable Development: https://www.cadredevie.bj/
National Estate and Land Agency: https://www.andf.bj/
National Estate and Land Agency / E-Notary Platform: https://www.enotaire.andf.bj/
National Agency for the Supervision of Decentralized Financial Systems: https://www.anssfd.org/
Benin Government Action Program Revealed: http://revealingbenin.com/
Real Estate and Urban Development Company: https://simaubenin.com/
Cadastre of Benin: https://cadastre.bj/
Online building permit application: https://permisdeconstruire.gouv.bj/
