Housing Finance in Central African Republic

Macroeconomic Overview

The Central African Republic (CAR) is one of the few countries in the world where there has been no public real estate programme undertaken for almost a decade. Similarly, there is no policy initiative to facilitate the construction of social housing by government, as noted by the Directorate General of Housing in 2015.^[1] In an inventory drawn up the same year by the Preparatory Commission for the Bangui National Forum, the housing sector was described in the following terms: “Housing in CAR is experiencing serious difficulties due to accumulated inadequacies, namely the anarchic consumption of urban space, the proliferation of uncontrolled housing, the densification of central neighbourhoods, the insufficient production of housing, the high cost of construction and the absence of a policy for the production of local materials. From 1952 to 1994, only 2 000 dwellings were built, resulting in an estimated deficit of more than 500 000, whereas the real needs are between 10 000 and 15 000 dwellings per year.”^[2]

The real estate market is virtually non-existent due to the lack of operational real-estate developers. This is due to the fragile nature of the economic and political environment of the country. Persistent political instability has plagued the country for several decades, forcing thousands of Internally Displaced Persons (IDPs) to live in temporary camps. These disruptions have created huge social housing needs with an ever-increasing population and the urgent need to rehouse all the IDPs, whose numbers exceed 600 000 according to a United Nations Childrens’ Fund (UNICEF) 2017 estimate.^[3]

Moreover, these protracted internal conflicts have affected the economy, which was already weakened by the country’s isolation and the low economic growth rate, estimated at 2.7 percent in 2018.^[4] The economy is based on agriculture, forestry and diamond mining, which are coveted by all the armed groups in the conflict. Unfortunately, all three of these sectors have been severely affected by the civil war, lack of organisation, and by the long-term humanitarian crisis. Almost all the socioeconomic indicators are in decline due to this persistent unfavourable economic situation. Gross domestic product (GDP) growth, which was 4.3 percent in 2018, fell to 2.97 percent in 2019. CAR ranks 183 out of 211 countries in World Bank Doing Business 2019 report.^[5] The Doing Business Index also declined to 35.57 in 2019 from 36.36 in 2018, bringing the country down to 184 from 183 in 2018. ^[6] Price inflation for consumer staples, which had stabilised at three percent in 2018/19, is now projected at seven percent for 2020. Although CAR recorded a Human Development Index of 0.38 in 2019, up from 0.367 in 2017, the country ranks 188. The gross national product (GNP) forecasts predict a drop of 7.3 points compared to the level before COVID-19.^[7]

In the context of the pandemic, CAR is classified by Global Health Security as one of the least prepared countries to fight the pandemic, with a low index of less than 27 percent of the level of preparedness. Also, the size of the fiscal stimulus in response to COVID-19 is below two percent.^[8] However, measures taken mean that 545 000 people have benefited from humanitarian assistance and 294 000 people have benefited from multi-sectoral assistance out of the 1 120 000 people made aware of the pandemic during campaigns organised by the different actors involved in the fight against COVID-19.^[9]

Geographical isolation increases the cost of building materials, and economic and financial difficulties as well as inter-community conflicts have had a heavy impact on the country’s development and therefore on the improvement of social housing in CAR.

^[1] Krock, F. (2015). Central African Republic: one million housing units to be built following the crisis according to Gabriel Ngouamidou DG Habitat. Corbeau News Centrafrique. 25 January 2015. https://corbeaunews-centrafrique.com/centrafrique-un-million-de-logement-construire-suite-ma-crise-selon-gabriel-ngouamidou-dg-habitat/ (Accessed 27 August 2020).

^[2] Preparatory Commission for the Bangui National Forum (2015). Final Report of the Commission No. 4: Economic and Social Development. (Accessed 27 August 2020). Pgs. 42-43.

^[3] Le Du, D. (2017). Central African Republic: The number of displaced people has increased sharply in recent months. https://peacekeeping.un.org/en (Accessed on 29 August 2020).

^[4] The World Bank (2019). World Bank Open Data. https://data.worldbank.org/indicator/%20NY.GDP.MKTP.KD.ZG%20?locations=CF (Accessed 26 August 2020).

^[5]The World Bank (2019). World Bank Open Data. https://data.worldbank.org/country/central-african-republic https://planificateur.a-contresens.net/classement_par_pays/PIB.html (Accessed 5 October 2020).

^[6] World Bank Group (2019). Doing Business 2019. https://www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2019-report_web-version.pdf (Accessed 18 August 2020). Pg. 5.

^[7] WHO (2020). Covid-19 Situation update for WHO African Region – External Situation Report 7 on 15 April 2020. World Health Organization. (Accessed 18 August 2020). Pg. 8.

^[8] OCHA (2020). CAR: Overview of the response to COVID-19. United Nations Office for the Coordination of Humanitarian Affairs. 7 May 2020. https://www.humanitarianresponse.info/en/op%C3%A9rations/central-african-republic/infographic/rca-ocha-apercu-de-la-reponse-la-covid-19-07-mai (Accessed 29 August 2020).

^[9] OCHA (2020). CAR: Overview of the response to COVID-19. United Nations Office for the Coordination of Humanitarian Affairs. 7 May 2020. https://www.humanitarianresponse.info/en/op%C3%A9rations/central-african-republic/infographic/rca-ocha-apercu-de-la-reponse-la-covid-19-07-mai (Accessed 29 August 2020).

 

Access to Finance

In the context of widespread insecurity, only seven out of 16 prefectures are covered by the banking network, which includes only four commercial banks, two postal banks, three insurance companies and three microfinance institutions.

All these financial institutions concentrate their activities in the capital Bangui to the detriment of rural areas. This absence in rural areas is partially filled by non-governmental organisations, including the Danish Refugee Council, the Catholic Relief Service and the International Partnership for Human Development.

Although a member of the Economic and Monetary Community of Central Africa (CEMAC), the financial system is the smallest in the number of financial institutions in the region. Commercial banks are licensed and supervised by the Bank of Central African States (BEAC) and the Central African Banking Commission. The current regional currency is the CFA franc.[1]

The main financial players are Crédit Mutuel de Centrafrique, Union Centrafricaine des Caisses d’Épargne et de Crédit, Société Finance Française de Crédits SA, Caisse Mutuelle des Cifadiennes de Centrafrique and Express Union SA.

In the absence of formal and operational property development institutions, access to finance for decent social housing remains marginal. Similarly, the absence of consulting and advisory agencies and financial support agencies for clients makes access to mortgage loans difficult. This is why the authorities in CAR are keen to open the Banque de l’Habitat en Centrafrique (BHC) and the Agence Centrafricaine de la Promotion de l’Habitat (ACPH) to fill the gap.^[2]

Adding together long-term loans and mortgages, the total number of loans granted by all banks in 2018 is estimated by the BEAC at 27 895. The average interest rate on long-term loans is 14 percent for an average term of 10 years backed by contributions from beneficiaries of varying amounts depending on income. Contributions do not exceed 35 percent of the amount requested. These conditions exclude low income or informal populations, which turn to the informal rental market or to precarious housing.

The slowdown or even the halt in socioeconomic activities due to the pandemic have had a negative impact on the financing of housing. However, it is premature to assess the impacts of the pandemic on the level of credit indebtedness and its impact on housing affordability.

[1] The franc of the African Financial Community (FCFA) has a fixed parity with the euro of CFA656 56 and a US dollar is exchanged at CFA 584 3007.

^[2] Preparatory Commission for the Bangui National Forum (2015). Final Report of the Commission No. 4: Economic and Social Development. (Accessed 27 August 2020). Pgs. 42-43.

Affordability

 

Ede Jorge I Vasquez, Senior Director of the Social, Urban, Rural and Resilience Development Division of the World Bank Group said this year that “in many African countries, only five to 10 percent of the population can afford the cheapest form of formal housing”.^[1] According to economists at the African Development Bank (AfDB), this very low rate is attributable to the high cost of urban housing due to several factors including inadequate land governance policies that encourage speculative acquisitions, poor urban planning that leads to urban sprawl, and the lack of essential infrastructure that has greatly increased the cost of serviced land. In addition to the cost of servicing land, there are other related acquisition costs. As a result, the available serviced land is limited and out of reach of the majority of citizens seeking decent housing.^[2]

In CAR, only 10 percent of land is registered and marketable, making access to land difficult, despite the ever-increasing demand from the population. The challenge to achieving the goal of affordable housing is therefore the complexity of the value chain and especially the price of cement imported mainly from Cameroon at CFA11 500 (US$19.6), which is three times higher than the world average. ^[3]

It is an illusion to talk about housing affordability in CAR when monthly salaries are CFA25 000 (US$42.8). Such an income is totally insufficient to buy a plot of land and build a house on it without state subsidies, and many wage earners take between 10 and 15 years to complete a small ordinary house. As a result,^[4] 90 percent of the population living below the poverty line are unable to own adequate housing. The Director of Technical Services at the Bangui Town Hall, interviewed by Agence France Presse, said that since the sector is not regulated, each owner is free to set his or her own rental price; thus many inhabitants with limited incomes choose to settle on the outskirts of the city or in semi-rural areas.^[5]

Finally, the measures taken by the government in connection with the COVID-19 pandemic (social distancing, prohibition of grouping) have led to the halt of ongoing building sites, an increase in the unemployment rate, particularly in the construction sector and in day jobs, and have highlighted the lack of housing supply. This has led to uncontrolled rent inflation in Bangui.

^[1] Ecofin (2020). The challenge of affordable housing in Africa on the eve of record population growth. 6 January 2020.  https://www.agenceecofin.com/gestion-publique/0601-72461-le-defi-du-logement-abordable-en-afrique-a-la-veille-d-un-record-de-croissance-demographique (Accessed 27 August 2020).

^[2] Ecofin (2020). The challenge of affordable housing in Africa on the eve of record population growth.  6 January 2020. https://www.agenceecofin.com/gestion-publique/0601-72461-le-defi-du-logement-abordable-en-afrique-a-la-veille-d-un-record-de-croissance-demographique (Accessed 27 August 2020).

^[3] Mitchell, J. (2018). Economic housing for all, an imperative in Africa. Jeune Afrique. 2 March 2018. https://www.jeuneafrique.com/538777/economie/le-logement-economique-pour-tous-un-imperatif-en-afrique/ (Accessed 27 August 2020).

^[4] Lafonte, C. (2020). Central African Republic: hard to find housing in Bangui. Agence France Presse. 14 August 2020. https://www.capital.fr/immobilier/centrafrique-dur-de-se-loger-dans-bangui-1344726 (Accessed 27 August 2020).

^[5] Lafonte, C. (August 14, 2020). Central African Republic: hard to find housing in Bangui. Agence France Presse. https://www.capital.fr/immobilier/centrafrique-dur-de-se-loger-dans-bangui-1344726 (Accessed 27 August 2020).

Housing Supply

The supply of formal social housing in CAR is almost non-existent. Furthermore, “housing needs have gone from around 500 000 homes before the 2013 crisis to one million today”, said the Director General of Housing at the Ministry of Housing in an interview.^[1] Despite this, the government through the Ministry in charge of housing and its financial partners, has launched two construction projects totalling 400 housing units. The three sites are the Boy-Rabé district in the City of Bangui, the Kozobilo Boali village and the Sakai region. The first project has been financed since 2011 by CELTEL (based in Kenya) and aims to build 300 housing units which have not yet been delivered.^[2] The second project is financed by the Kingdom of Morocco for 100 housing units but the physical work has not yet started, despite 70 percent of the financing already released.^[3]

Even if the 400 houses have been delivered, they do not meet the urgent needs estimated at 1 970 dwellings, i.e. the number of houses destroyed by the conflict plus the annual needs of the rest of the population. In short, the current housing supply is not meeting the target of at least 10 000 dwellings a year. However, the government has entered into negotiations with a group of United States and United Arab Emirates (UAE) companies, TUE/IIB-DG, for an ambitious programme to build 50 000 social and economic housing units. This programme could substantially improve the supply of housing and the living conditions of the population.[4]

^[1] Krock, F. (2015) Central African Republic: one million housing units to be built following the crisis according to Gabriel Ngouamidou DG Habitat. Corbeau News Centrafrique. 25 January 2015. https://corbeaunews-centrafrique.com/centrafrique-un-million-de-logement-construire-suite-ma-crise-selon-gabriel-ngouamidou-dg-habitat/ . (Accessed 8 August 2020).

^[2] Krock, F. (2015) Central African Republic: one million housing units to be built following the crisis according to Gabriel Ngouamidou DG Habitat. Corbeau News Centrafrique. 25 January 2015. https://corbeaunews-centrafrique.com/centrafrique-un-million-de-logement-construire-suite-ma-crise-selon-gabriel-ngouamidou-dg-habitat/ (Accessed 28 August 2020).

^[3] Andala, B. (2017) Central African Republic: the 100 social housing units on the Sakai boeing site will soon be habitable. Corbeau News Centrafrique. 12 March 2017. https://corbeaunews-centrafrique.com/centrafrique-les-100-logements-sociaux-du-site-de-sakai-boing-bientot-habitables/ (Accessed 8 August 2020).

[4] Krock, F. (2015). Central African Republic: one million housing units to be built following the crisis according to Gabriel Ngouamidou DG Habitat. Corbeau News Centrafrique. 25 January 2015. https://corbeaunews-centrafrique.com/centrafrique-un-million-de-logement-construire-suite-ma-crise-selon-gabriel-ngouamidou-dg-habitat/ (Accessed 28 August 2020).

Property Markets

 

The formal property market in CAR is non-existent as no public, semi-public or private property operator produces or markets housing. Before 1980, three social housing construction programmes, namely SICA I, II, III, had produced 2 000 dwellings. Since 1983 after the only social housing construction company, the Société Nationale de l’Habitat, was dissolved, no structure has been created to replace it. Indeed,^[1] attempts to render the ACPH operational, including Law No. 09.001 of 16 January 2009, have not been successful.

The land tenure system is governed by the 1964 Land Code, which stipulates that property ownership is gained only when the recipient obtains a land title, for which legal procedures are lengthy (more than 75 days). As a result, the real estate sector is characterised by informal housing, which is growing in an unplanned manner, without land management, without regulation of building standards and without a land title. Recurrent problems about land sold without land title are the subject of social tension in Bangui, and of disputes and litigation in the courts, particularly in the Bimbo district and the 7th arrondissement. In addition, acquisition of plots of land is lengthened by the slowness of the procedures and the corruption of the Land Registry Service, which has been criticised by the Ministry in charge of housing.^[2]

Between 1899 and 2012 (113 years), only 8 579 land titles were issued, meaning that an annual average of 76 land titles or one title every five days was issued.

The rental market is also under pressure. The rent for a room which was CFA10 000 (US$17.1) in 2013 increased to between CFA15 000 (US$25.6) and CFA25 000 (US$42.8) a month in 2019 depending on the district in Bangui.^[3] Similarly, a house that was rented for CFA120 000 (USD205.4) a month costs two to three times more in the more secure city centre of Bangui. This rental speculation can also be explained by the huge influx of personnel from the United Nations (UN) peacekeeping missions and international organisations, which have a higher purchasing power.

^[1] Krock F. (2015) Central African Republic: one million housing units to be built following the crisis according to Gabriel Ngouamidou DG Habitat. Corbeau News Centrafrique. 25 January 2015. https://corbeaunews-centrafrique.com/centrafrique-un-million-de-logement-construire-suite-ma-crise-selon-gabriel-ngouamidou-dg-habitat/ (Accessed 28 August 2020).

^[2] Themona, H. (2017). Central Africa: The Ministry of Urban Planning, Housing and Urban Development has the wind in its sails. Corbeau News Centrafrique. 25 April 2017. https://corbeaunews-centrafrique.com/centrafrique-le-ministere-de-lurbanisme-de-lhabitat-et-du-logement-le-vent-en-poupe/ (Accessed 28 August 2020).

^[3] Lafonte, C. (2020). Central African Republic: hard to find housing in Bangui. Agence France Presse. 14 August 2020. https://www.capital.fr/immobilier/centrafrique-dur-de-se-loger-dans-bangui-1344726 (Accessed 27 August 2020).

Policy and Regulation

CAR followed UN Housing recommendations when, in 2009,  it created the Ministry of Housing in charge of the promotion and construction of affordable housing, now called the Ministry of Urban Planning, the City and Housing. In 2012, a technical committee and an inter-ministerial committee were set up to harmonise the various laws of the departments working on land tenure. These included the Food and Agricultural Organization’s (FAO’s) Voluntary Guidelines for Responsible Governance of Land Tenure, the African Union’s Framework and Guidelines on Land Tenure Policies, and the Central African Forest Commission Guidelines.

In 2015, a second Poverty Reduction Strategy Paper (PRSP 2) and a new land tenure code were drawn up. Important reforms on land governance were proposed. Little progress has been made except for the following actions undertaken by the government:

• The creation of the Central African Agency for the Promotion of Housing;
• Campaigns to promote local building materials;
• The development of projects for the construction of decent social housing with 10 000 homes built and the free transfer of serviced plots to beneficiaries; and
• The rehabilitation of the Boyali Brickworks with Chinese partners.^[1]

There is no, however, no legal framework setting building standards and rent thresholds in the cities.[2] To this end, a bill was introduced in parliament to be debated at the end of 2019. Even if the law has been promulgated, the difficulty lies in its application. Research in 2020 showed that the Central African state is not providing housing. There is no public housing project underway. The government’s effort is focussed on creating a favourable framework for private housing.^[3]

^[1] Krock. F. (2015) Central African Republic: one million housing units to be built following the crisis according to Gabriel Ngouamidou DG Habitat. Corbeau News Centrafrique. 25 January 2015. https://corbeaunews-centrafrique. com/centrafrique-un-million-de-logement-construire-suite-ma-crise-selon-gabriel-ngouamidou-dg-habitat/ (Accessed 27 August 2020).

[2] Krock, F. (2015) Central African Republic: one million housing units to be built following the crisis according to Gabriel Ngouamidou DG Habitat. Corbeau News Centrafrique. 25 January 2015. https://corbeaunews-com/centrafrique-un-million-de-logement-construire-suite-ma-crise-selon-gabriel-ngouamidou-dg-habitat/ (Accessed 28 August 2020).

^[3] Lafonte, C. (2020). Central African Republic: hard to find housing in Bangui. Agence France Presse. 14 August 2020. https://www.capital.fr/immobilier/centrafrique-dur-de-se-loger-dans-bangui-1344726 (Accessed 27 August 2020).

Opportunities

The government’s objective is to produce 10 000 housing units a year, and “even if this sector is still in its infancy, the weakness of the supply could augur well for the future.”^[1]

Moreover, the operationalisation of the BHC and ACPH, supported by the Preparatory Commission for the Bangui National Forum in 2015, offers an opportunity to investors and property developers. ^[2]

Investment opportunities in the housing sector as a whole, and for social and economic housing, are numerous in view of the enormous housing deficit. Natural resources (wood and diamonds) are considerable. The young population is poorly housed. Housing remains one of the priorities of government with several social housing construction programmes planned.^[3] In addition, the rehousing of displaced persons requires the construction of economic housing with the support of technical and financial partners. In 2016, the URD Group, funded by French Development Aid, was recruited to carry out a feasibility study for the Ministry of Housing, Social Housing and Urban Development. A project to rehouse IDPs was set up at the M’Poko reception site in Bangui but it is currently being closed.^[4]

^[1] Mckenson-Kenguéléwa, H. (2016). Central African Republic: real estate, a growing market that can pay big dividends. CEO Africa. 16 June 2016. https://www.ceoafrique.com/single-post/centrafrique-limmobilier-un-marche-en-devenir-qui-peut-rapporter-gros CEO (Accessed 27 August 2020).

^[2] Preparatory Commission for the Bangui National Forum (2015). Final Report of the Commission No. 4: Economic and Social Development. (Accessed on 27 August 2020). Pgs. 42-43.

^[3] Themona, H. (2017). Central Africa: The Ministry of Urban Planning, Housing and Urban Development has the wind in its sails. Corbeau News Centrafrique. 25 April 2017. https://corbeaunews-centrafrique.com/centrafrique-le-ministere-de-lurbanisme-de-lhabitat-et-du-logement-le-vent-en-poupe/. (Consulted on 28 August 2020)

^[4] URD Group (2016). Support mission to the MUHL. https://www.urd.org/fr/projet/mission-dappui-aupres-du-ministere-de-lhabitat-en-rca/ (Accessed on 28 August 2020).

COVID-19 response

According to the World Health Organization (WHO), the first reported case of COVID-19 was registered on 14 March 2020. In early August 2020, 4 700 cases were reported, including 1 784 recoveries and 61 deaths, or 1.3 percent of reported cases.^[1] In view of the fragility of the Central African health system, the country is generally well protected.

At the end of April 2020, a national emergency response plan supported by the United Nations Multidimensional Integrated Stabilization Mission in the Central African Republic (MINUSCA) provided testing, and barrier measures were put in place to contain the epidemic. ^[2]

In CAR, the main negative socioeconomic impacts include soaring prices of consumer goods, rents and construction materials, increased unemployment due to the halt in construction, increased poverty and falling prices of raw materials.^[3] In spite of this, there has been no reduction in commercial bank interest rates and no subsidies or protection has been given to tenants.

^[1] WHO (2020) UNMISCA Briefing Note. World Health Organization. https://www.afro.who.int/fr/publications/covid-19-en-rca-rapports-de-situation (Accessed 30 August 2020).

^[2] WHO (2020) UNMISCA Briefing Note. World Health Organization. https://www.afro.who.int/fr/publications/covid-19-en-rca-rapports-de-situation (Accessed 30 August 2020).

^[3] AfDB (2020). Economic Outlook 2020 Supplement amid COVID-19. African Development Bank. https://afdb.org/en/documents/african-economic-outlook-2020-supplement (Accessed 29 August 2020).

Availability on data on housing finance

In CAR, as in many Central African countries, it is difficult to obtain reliable primary data from public administrations. Three people, including the adviser to the Minister of Urban Planning, Cities and Housing and two consultants, were contacted by email and telephone, but all declined the request for an interview, arguing that the data to be collected is sensitive and the task impossible in the current context.

Therefore, the authors used the documentary resources provided by CAHF and especially internet research to write this profile as travel within the country was not allowed with the COVID-19 pandemic. Journalistic articles published on the internet, thematic studies, censuses and externally funded national studies were used as the main resources.

Finally, among the challenges related to the collection of statistical data are the difficulties in gaining access to the public administration, the reluctance of banks to give information on mortgage loans, the absence of reliable statistics on land transactions, and the non-publication, non-existence or refusal to share information or provide data.

Additional Sources

The Economist, Economic Intelligence Unit (2015). Country Report: Central African Republic. 16 August 2015.

Government of Central African Republic (2008). Ministry of Public Buildings Reconstruction, Urban Development and Housing. Lettre de Politique Nationale de Développement du Secteur de l’Habitat en République Centrafricaine. Bangui, 2008.

Government of Central African Republic (2008). Ministry of Public Buildings Reconstruction, Urban Development and Housing. Résumé du rapport de stratégie nationale de l’habitat. Bangui, 2008.

Government of Central African Republic (2009). Ministry of Finance and Budget. Stratégie Nationale pour la Finance Inclusive en RCA. Bangui, 2009.

Government of Central African Republic (2011). Poverty Reduction Strategy Paper 2 2011-2015: Reducing Extreme Poverty. Bangui, 2011.

IMF (2014). Request for disbursement under the Rapid Credit Facility and cancellation of the Extended credit Facility Arrangement- Staff Report. Press Release; and Statement by the Executive Director for the Central African Republic. 1 May 2015.

UNHRC and Norwegian Refugee Council (2014). Displacement and Housing, Land and Property Rights in the Central African Republic. December 2014.

USAID (2010). Property Rights and Resource Governance: Central African Republic. USAID Country Profile.

World Bank (2016). Doing Business 2017: Central African Republic Country Profile.

 

websites

African Development Bank https: //www.afdb.org

MINUSCA https: //www.minusca.unmissions.org

Bank of Central African States https://www.beac.int

Doing Business https://www.doingbusiness.org

UN Habitat https: //www.unhabitat.org

World Bank https://www.worldbank.org

United Nations High Commissioner for Refugees https://www.unhcr.org/fr/