Housing Finance in Malawi

Overview

Access to affordable housing in Malawi continues to be a challenge due to high poverty levels. Despite several government efforts to eradicate poverty through policies such as the Malawi Poverty Reduction Strategy Papers and the most recent Malawi Growth and Development Strategies III 2017-2022, the share of Malawians living below the national poverty line only slightly declined from 51.5% in 2016/2017 to 50.7% (representing 9 444 776[1] people) in 2019/2020.[2] A lack of sustainable economic growth and recurrent shocks such as drought and flooding are some of the factors that hindered poverty reduction in the country between 2010 and 2021. Similarly, increased demand for housing caused by a rapid urbanisation rate of 4.1%,[3] continues to put pressure on access to affordable housing. To address this, the government, through the National Planning Commission, launched the Malawi Secondary Cities Plan on 31 May 2022. Through this plan eight new cities are expected to be developed across Malawi. The prospective cities include Karonga, Nkhatabay, Salima/Chipoka, Liwonde, Mangochi/Monkey Bay, Kasungu, Luchenza and Bangula.[4] The secondary cities are intended to divert the rural population from concentrating in the country’s four primary cities while strengthening rural-urban linkages with the pilot secondary cities.

Malawi had an estimated gross domestic product (GDP) per capita of MK664 442 (US$643) in 2021, a slight increase from MK657 856 (US$636) in 2020.[5] The domestic economy showed resilience in 2021 with the real GDP growth rate estimated to have rebounded to 3.9%[6] following the COVID-19 induced slow growth of 0.8 % in 2020[7]. The recovery was in part underpinned by the pick-up in local and cross-border economic activity, given global efforts to make COVID-19 vaccinations more available. In 2022, real economic activity is projected to moderate to 1.7% following a lower-than-anticipated agricultural crop production because of unfavourable weather conditions during the 2021/22 growing season; electricity supply shortages; and the impact of the Russia-Ukraine.[8] The electricity supply shortages are primarily caused by the shutdown of Kapichira Hydro Power Station which supplies about 129.6 megawatts (MW) to the grid and the ending of the contract of the Aggreko independent power producer, which used to supply about 75MW to the grid.[9]

Global and domestic increases in aggregate demand in 2021 triggered a rise in commodity prices, and particularly international oil prices. This resulted in inflation pressures in 2021. The annual average headline inflation of 9.3% in 2021 was higher than the 8.6% for 2020.[10] In addition, price pressures on both food and non-food commodities as the result of the Russia-Ukraine war intensified during the first half of 2022, such that headline inflation increased to an average of 16.3% from 8.8% in the same period in 2021.[11] To contain inflationary pressures, the Reserve Bank of Malawi raised the policy rate by 200 basis points to 14% at its Monetary Policy Committee meeting held in April 2022.[12] Furthermore, to realign the kwacha exchange rate to macroeconomic fundamentals, the Malawi kwacha was depreciated by 25% as at end May 2022.[13] However, the affordable housing market has not been significantly affected by these changes because the prices of most of its main building materials, such as cement and bricks, have not changed significantly.[14]

Between December 2021 and March 2022, Malawi experienced two consecutive tropical storms: Ana and Gombe. Tropical storm Gombe mainly affected the southern region of Malawi, flooding cropland, damaging roads and houses[15] and disrupting livelihoods. The storms caused flooding in 16 districts, which impacted the lives of approximately 1.4 million people and damaged 95 000 hectares of crop land, which could reduce crop production to between 15% and 50% below average,[16] and consequently affecting incomes. Disaster recovery efforts are being undertaken by organisations such as Red Cross Malawi. The efforts include providing building materials for survivors to reconstruct their houses and also building new houses for survivors who totally lost their shelters.[17]

Malawi has a National Disaster Risk Management Policy (DRMP) that presents the aspirations of the government in ensuring that disaster losses and impacts are sustainably reduced. However, the DRMP does not explicitly mention any impacts on affordable housing, nor does it consider green applications for affordable housing. This notwithstanding, a number of non-governmental organisations and development partners provide disaster risk management programme support, such as the construction of flood resilient housing units in disaster prone districts in the southern district of Malawi, supported by the United Nations Development Programme.[18]

[1] Authors calculation using population data from World Development Indicators data for Malawi, 10 September 2022, Lilongwe, Malawi.

[2] Mmana, D. (2021). Report exposes poverty in Malawi. The Times Group. 23 September 2021. https://times.mw/report-exposes-poverty-in-malawi/ (Accessed 13 August 2022).

[3] World Bank. World Development Indicators Malawi. https://datatopics.worldbank.org/world-development-indicators/   (Accessed 10 September 2022).

[4] National Planning Commission of Malawi (2022). Malawi to build eight new cities under new secondary cities plan.  https://npc.mw/2022/06/malawi-to-build-eight-new-cities-under-new-secondary-cities-plan/ (Accessed 10 August 2022).

[5] World Bank. (2021). Data. Malawi. https://data.worldbank.org/country/malawi (Accessed 10 August 2022).

[6] Reserve Bank of Malawi (2022). Statement of the Monetary Policy Committee Third Meeting of 2022. https://www.rbm.mw/MonetaryPolicy/ (Accessed 13 August 2022). Pg. 3.

[7] Reserve Bank of Malawi (2022). Registrar of Financial Institutions, 2020 Annual Report. https://www.rbm.mw/Publications/AnnualReports/ (Accessed 10 September 2022). Pg. 9.

[8] Reserve Bank of Malawi (2022). Statement of the Third Monetary Policy Committee Meeting for 2022. https://www.rbm.mw/MonetaryPolicy/ (Accessed 13 August 2022). Pg. 3.

[9] Makweu, J. (2022). Long Walk to Power All Day. Daily Times. 20 April 2022. https://times.mw/long-walk-to-power-all-day/ (Accessed 2 September 2022).

[10]Reserve Bank of Malawi (2022). June 2022 Monthly Economic Review. https://www.rbm.mw/Publications/EconomicReviews/ (Accessed 11 Sept 2022). Pg. 184.

[11] Authors calculations based on Reserve Bank of Malawi (2022). June 2022 Monthly Economic Review. https://www.rbm.mw/Publications/EconomicReviews/ (Accessed 11 Sept 2022). Pg. 18.

[12] Reserve Bank of Malawi (2022). Statement of the Monetary Policy Committee Second Meeting of 2022. https://www.rbm.mw/MonetaryPolicy/ (Accessed 10 August 2022). Pg. 1.

[13] Reserve Bank of Malawi (2022). Statement of the Monetary Policy Committee Third Meeting of 2022. https://www.rbm.mw/MonetaryPolicy/ (Accessed 13 August 2022). Pg. 4.

[14] Interview with Fred Kamanga, Cement Vendor. 10 September 2022. Lilongwe, Malawi.

[15] Masina, L. (2022). Cyclone Gombe Kills 7, Damages Houses and Roads in Malawi. Voice of America. 14 March 2022. https://www.voanews.com/a/cyclone-gombe-kills-7-damages-houses-and-roads-in-malawi/6484818.html (Accessed 3 September 2022).

[16] ReliefWeb (2022). Malawi Food Security Outlook Update, April 2022. 4 May 2022. https://reliefweb.int/report/malawi/malawi-food-security-outlook-update-april-2022 (Accessed 3 September 2022).

[17] Interview with Disaster Management Officer, Chikwawa Department of Disaster Management. 10 September 2022. Chikwawa, Malawi.

[18] Email correspondence with Gift Maloya, The Initiative for Climate Action and Development. 27 July 2022.

Access to Finance

There are eight commercial banks. Of these, five banks – New Building Society Bank, Standard Bank, National Bank of Malawi, First Discount House Bank and Continental Discount House Bank offer mortgages. The number of mortgages of the five commercial banks dropped from 1 616 in 2020 to 1 040 in 2022, The minimum loan size is MK10 million (US$9 672) to be paid over 240 months.[1] The minimum mortgage rate is 19.9% per annum, which is 6.1% above the reference rate, while the maximum rate is 24.8% per annum (11% above the reference rate).[2] The minimum loan to value ratio on residential mortgages is at 85% of the value of the asset.[3] Non-performing loans of commercial banks increased by 58% to MK161.9 million (US$156 592) between 2021 and 2022.[4]

There are at least 61 microfinance institutions (MFIs) and non-bank financial institutions in the financial system of Malawi.[5] The leading MFIs that offer housing finance include the Center for Community Organisation and Development (CCODE), Select Financial Services, People Development Fund, Epik Finance and Enterprise Development Holdings. The average loan size was MK176 558 (US$171) as of December 2021.[6]

Forty percent of the adult population are using financial institutions and 38.5% of women are banked.[7] A report by the Credit Reference Bureau is used by financial institutions to assess the eligibility of loan applicants. Financial institutions and the Malawi government, through the National Economic Empowerment Fund, provide finance for construction to clients. During the fourth quarter of 2021, commercial banks made advances amounting to MK33 billion (US$31.91 million) to the construction industry.[8]

[1] Interview with National Bank of Malawi official, National Bank of Malawi. 24 August 2021. Lilongwe, Malawi.

[2] Interview with Small and Medium Enterprises (SMEs) specialist, National Bank of Malawi plc. 17 August 2022. Lilongwe, Malawi.

[3] Interview with National Bank of Malawi official, National Bank of Malawi. 24 August 2021. Lilongwe, Malawi.

[4] Authors calculation from reports of commercial banks. 24 August 2022. Lilongwe, Malawi.

[5] Reserve Bank of Malawi (2020). The Registrar of Financial Institutions-2020 Annual Report. https://www.rbm.mw/Publications/AnnualReports/ (Accessed 10 August 2022). Pg. 45.

[6] Authors calculation from Reserve Bank of Malawi figures provided by Senior Economist. 24 August 2022. Lilongwe, Malawi.

[7] World Bank (2021). Banking the Unbanked in Malawi. Feature Story. 7 July 2021. https://www.worldbank.org/en/news/feature/2021/07/07/banking-the-unbanked-in-malawi. (Accessed 11 September 2022).

[8] Reserve Bank of Malawi (2022). Financial and Economic Review volume 56-Number 1. https://www.rbm.mw/Publications/EconomicReviews/ (Accessed 25 August 2022). Pg. 42.

Affordability

Demand for affordable housing is escalating year-on-year. The unemployment rate is relatively low in Malawi at 6.6% while the youth unemployment rate is at 8.6%.[1] The share of the workforce in informal employment is approximately 89%.[2] With these employment and unemployment dynamics, the national Gini coefficient is at 0.38.[3] As of May 2022, monthly expenditure on basic needs and services such as water and electricity for a six-person household in the capital city of Lilongwe was MK 272 338 (US$263).[4]

In the main urban centres, 30% of houses are owner-occupied and 60% are rented.[5] The typical cost of unserviced land ranges between MK700 000 (US$677) and MK1 million (US$967). Most of the unserviced land is sold by private land developers that only develop roads for the plots they sell. Other services, such as water and electricity, are sourced by the buyers of the plots from Water Boards and the Electricity Supply Corporation of Malawi (ESCOM). The cost of a newly built permanent house by a private or public developer is between MK12 million (US$11 607) and MK15 million (US$14 508).[6] Monthly rentals in the lower end market in urban centres range between MK10 000 (US$9.7) and MK20 000 (US$19.3).[7] The minimum wage is MK50 000 (US$48.4) and a typical cleaner receives a monthly salary of MK85 000 (US$82.2) in an urban area.[8] Dwellers in the lower end market who receive at least the minimum wage can afford rentals in this market and can afford to build either a traditional or semi-permanent house, which costs less to construct compared to a permanent house.

For the middle income group, the monthly mortgage repayment is approximately MK175 000 (US$169) and for households with low incomes, a typical monthly mortgage repayment is approximately MK35 000 (US$34) for CCODE provided housing.[9] The minimum mortgage size is MK10 million (US$9 672) and the maximum mortgage instalment to income ratio is 35%.[10] The government provides subsidies in the form of an interest rate that is significantly lower (6.5%) than that of commercial banks; and also subsidises cement and iron sheets for low income individuals.[11] These subsidies lower the barriers in accessing finance and open up the housing market to low income populations. MFIs charge different interest rates with huge variations, and they are relatively unaffordable. Select Financial Services, for example, charges approximately 60% interest a year for both business and housing finance loans.[12]

[1] Danish Trade Union Development Agency (2022). Malawi Labour Market Profile 2022/2023. https://www.ulandssekretariatet.dk/wp-content/uploads/2022/03/LMP-Malawi-2022-Final1.pdf (Accessed 12 August 2022). Pg. 16.

[2] Danish Trade Union Development Agency (2022). Malawi Labour Market Profile 2022/2023. https://www.ulandssekretariatet.dk/wp-content/uploads/2022/03/LMP-Malawi-2022-Final1.pdf (Accessed 12 August 2022). Pg. 20.

[3] World Bank (2022). World Development Indicators Malawi. https://datatopics.worldbank.org/world-development-indicators/  (Accessed 10 September 2022).

[4] Centre for Social Concern (2022). Urban Basic Needs Data. https://www.cfscmafr.org/urban-bnb-data/ (Accessed 10 August 2022).

[5] Interview with Zilire Luka, Center for Community Organisation and Development. 12 August 2022. Lilongwe, Malawi.

[6] Interview with Zilire Luka, Center for Community Organisation and Development. 12 August 2022. Lilongwe, Malawi.

[7] Interview with Zilire Luka, Center for Community Organisation and Development. 12 August 2022. Lilongwe, Malawi.

[8] Interview with Managing Director, Allice Enterprise and General Dealers. 14 August 2022. Lilongwe, Malawi.

[9] Interview with Zilire Luka, Center for Community Organisation and Development. 23 August 2021. Lilongwe, Malawi.

[10] Interview with National Bank of Malawi official. 24 August 2021. Lilongwe, Malawi.

[11] Interview with officials at the Ministry of Lands, Housing and Urban Development. 18 August 2022, Lilongwe, Malawi.

[12] Interview with official from a microfinance institution, 17 September 2022, Lilongwe, Malawi.

Housing Supply

The country’s population is estimated to have grown by 2.6% to 19.6 million in 2021 from 19.1 million in 2020.[1] About 82% of the population live in rural areas and 18% in urban areas[2] where the majority engages in subsistence farming and do not have access to affordable housing. Approximately 12% of the urban population are concentrated in four major cities―Blantyre, Lilongwe, Mzuzu and Zomba.[3]

The government intervenes in the market on both the supply and demand side. Through its agencies – the Malawi Housing Corporation (MHC) and the Ministry of Land, Housing, and Urban Development (MoLHUD) – the state builds houses and provides land for house construction through public private partnership arrangements. The MHC plans to construct 25 000 houses a year for the next 10 years.[4] These houses will be built on plot sizes of 450m.² There are more than 100 000 applicants for MHC houses, compared to the current stock of 6 446.[5] By March 2022, MHC had completed the construction of an additional 240 houses and flats across the country. These structures are ready for occupation.[6] The MoLHUD has constructed 18 houses for people with disabilities.[7]

CCODE, a local non-governmental organisation builds low cost houses for low income earners residing in cities. These houses are built for members of Village Savings and Loan Associations (VSLAs). The VSLAs have 5 000 members and 4 000 of these are looking for rental housing against a stock of approximately 1 500 houses constructed by CCODE.[8]

Private companies such as Small Farm Cities are also investing in Malawi’s affordable housing sector. The company is developing two-bedroom homes of approximately six by seven metres surrounded by agricultural assets, such as fishponds and greenhouses, in a compound that is on at least a four acre piece of land. Small Farm Cities buys land and secures it with a title deed. They use assets such as fishponds, small houses and greenhouses to create wealth through rentals and sales of agricultural commodities. The company is developing a prototype Small Farm City in Mpingu in the outskirts of Lilongwe city. The project has three two-bedroom permanent structure houses which are 42m² in size, and each costing approximately MK3 618 646 (US$3 500). These houses will be sold and buyers are automatically entitled to a package containing a greenhouse and a fishpond. The idea is to ensure the buyer of the house can use income generated from fish and horticultural products and the greenhouse to repay the mortgage.[9]

Houses are classified, based on construction materials of the roof and wall, as traditional, semi-permanent and permanent. In urban centres, permanent and semi-permanent houses are common. Permanent structures have a roof made of iron sheets, concrete, and walls made of burnt bricks and stones. Semi-permanent structures have an iron sheet roof and sundried bricks or burnt brick with a thatched roof.  In informal settlements, back yard rental is common among landlords, and 20% of landlords are women.[10] Rental rates range between MK15 000 (US$14.51) and MK20 000 (US$19.34).[11] The tenants and the landlord use a shared water tap in the compound and, in some instances, dwellers use communal water taps.[12] To improve housing conditions in informal settlements, with funding from the World Bank, Lilongwe City Council is also implementing the Lilongwe Water and Sanitation Project. The project primarily involves installing water pipes and constructing 50 000 ventilated improved pit latrines. The council has also paved all roads in all 27 wards of Lilongwe.[13]

Approximately 80% of private developers pay for infrastructure and road costs to attract buyers. In informal settlements, 90% of materials used are produced locally. This includes mud, bricks and frames. In contrast, permanent houses use 60% to 70% imported materials such as cement, ceiling, tiles, and iron sheets.[14] The supply chain of these materials will likely be impacted by lack of foreign exchange and the 25% devaluation of the Malawi kwacha implemented in May 2022.

[1]  World Bank. Data. Malawi. https://data.worldbank.org/country/MW (Accessed 16 Sept 2022).

[2] World Bank. Data. Rural population (% of total population) – Malawi. https://data.worldbank.org/indicator/SP.RUR.TOTL.ZS?locations=MW (Accessed 10 September 2022).

[3] National Statistical Office (2018). 2018 Malawi Population and Housing Census Main Report.

http://www.nsomalawi.mw/index.php?option=com_content&view=article&id=226:2018-malawi-population-and-housing-census&catid=8:reports&Itemid=6 (Accessed 10 August 2022). Pg. 11.

[4] Malawi Housing Corporation (2022). Visit by the Minister. 16 June 2022. https://mncs.mw/mhc/news/a-visit-by-the-minister-of-lands-housing-and-urban-development/ (Accessed 14 August 2022).

[5] Malawi Housing Corporation (2022). Visit by the Minister. 16 June 2022. https://mncs.mw/mhc/news/a-visit-by-the-minister-of-lands-housing-and-urban-development/ (Accessed 14 August 2022).

[6] Malawi Housing Corporation (2022). Estates.20 June 2022. https://mncs.mw/mhc/featured-service/rental-properties/  (Accessed 11 September 2022).

[7] Kawale S. (2022). Ministerial Statement in Parliament on the Progress of Constructing Houses for People with Albinism. (Accessed 8 August 2022). Unpublished.

[8] Interview with Zilire Luka, Center for Community Organisation and Development. 12 August 2022. Lilongwe, Malawi.

[9] Interview with Jonathan, Small Farm Cities. 3 September 2022. Lilongwe, Malawi.

[10] Interview with Zilire Luka, Center for Community Organisation and Development. 12 August 2022. Lilongwe, Malawi.

[11] Interview with Happiness Zidana, Center for Community Organisation and Development. 30 August 2022, Lilongwe, Malawi.

[12] Interview with Happiness Zidana, Center for Community Organisation and Development. 30 August 2022. Lilongwe, Malawi.

[13] Interview with Zilire Luka, Center for Community Organisation and Development. 12 August 2022. Lilongwe, Malawi.

[14] Interview with Zilire Luka, Center for Community Organisation and Development. 12 August 2022. Lilongwe, Malawi.

Property Markets

Malawi has both formal and informal estate agents. Formal estate agents are regulated by the Surveyors Institute of Malawi (SIM). At least 80 000 properties are registered for property rate payments in Lilongwe city.[1] Currently, the lands and deeds registries in the MoLHUD) are paper based.[2] The MoLHUD is developing the Land Information Management System which it will roll out by January 2023. The digital platform will keep records of owners of every piece of land in Malawi and will ease land application processes and help the government collect revenues from ground rentals. To meet the increasing demand for residential and commercial plots in the city of Lilongwe, the MoLHUD has also started preparing detailed layout plans to create residential and commercial plots.[3]

The MHC is also in the process of upgrading its Property Management System (PMS) for more automation and integration. The automated and integrated PMS will greatly improve the corporation’s efficiency in its operations and interface with clients and other stakeholders.[4] It takes 47 days to register a property in Malawi with a registration cost of approximately 1.6% of the total value of the property.[5]

[1] Interview with Lilongwe City Assembly official. 15 August 2022. Lilongwe, Malawi.

[2] African Development Bank (2020). Speeding up the Devolution of District Land Registries for Increased Land Registration Titling and Improved Agriculture productivity. COMW Policy Brief No. 1/2020. Unpublished. Pg. 5.

[3] Kawale, S. (2022) Creation of Residential and Commercial Plots by Ministry of Lands: Ministerial Statement presented in Parliament. Unpublished. (Accessed 12 August 2022).

[4] Phiri, A. (2022) Land registration digital platform ready in 2023. Nation Newspaper. (Accessed 27 July 2022).

[5] World Bank (2020). Doing Business. Economy Profile ­– Malawi. https://www.doingbusiness.org/en/data/exploreeconomies/malawi (Accessed 28 August 2021). Pg. 4.

Policy and Legislation

The 2016 MHC Amended Act gives the corporation authority to raise funds for house construction through loans and public private partnerships, as well as to construct and purchase commercial buildings, among others.[1]

The National Construction Industry Council (NCIC) is mandated by the Act of Parliament 1996 to regulate, develop and promote construction industry. The NCIC offers training to developers and contractors. The council has approximately 1 516 registered members.[2] It takes at least two years for a client to be allocated land for purchase from the government, and even longer to find a government house to buy or rent. For private sector housing, clients can complete these transactions within a month.[3]

New land laws were passed in Parliament in June 2022, which will implement the National Land Policy of 2002: the Land Amendment Act, Land Survey Act, Physical Planning Act, Registered Land Act, Land Acquisition and Compensation Act, and the Customary Land Act. The Land Act seeks among other things to provide for the development of freehold titles within two years of the commencement of this Act, and to prohibit the granting of land to persons who are not citizens of Malawi unless they meet conditions of being investors.[4] Section 8 of the amended Land Act also transfers ownership of land from the presidency (an individual and office in the government) to the state (the people or the public). This provision is supported by the customary Land Act which provides for privatisation of customary land and creates a new way of holding land known as the customary estate.[5] To own customary estate means land that is held under a specific traditional area will be legally registered. The landholders will be issued with a certificate called the certificate of customary estate. The amended Land Law also has a provision to protect farmland from being put to other uses. The law stipulates that those who wish to convert agriculture land to residential and commercial use must surrender 50% of the land to the government on government approval.[6]

Less than 15% of land in Malawi is registered in the name of women.[7] The Customary Land Act of 2016 included the provision that of the six members in the land committee, three shall be women to address the gender issues.[8] There are some programmes being implemented to support women’s access to land in Malawi. The Integrated Land and Resource Governance (ILRG) programme is working with the Land Reform Implementation Unit at the MoLHUD to ensure that women and other marginalised groups participate in land registration and governance.[9] ILRG will support the documentation of up to 18 group village headpersons, and about 5 000 to 10 000 parcels in the Traditional Land Management Area, Mwansambo in Nkhotakota District. Approximately 45 000 people will benefit from gender-responsive customary land documentation with the issuance of land certificates.[10]

[1] Malawi Housing Corporation (2022). Visit by the Minister. 16 June 2022. https://mncs.mw/mhc/news/a-visit-by-the-minister-of-lands-housing-and-urban-development/ (Accessed 14 August 2022).

[2] National Construction Industry Council (2022). Active registrations. https://ncic.mw/reg/active-registrations/ (Accessed 11 August 2022).

[3] Interview with Zilire Luka, Center for Community Organisation and Development. 23 August 2021. Lilongwe, Malawi.

[4] Chitete S. (2022). What’s in the land laws amendments.4 June 2022. Malawi Nation. https://mwnation.com/whats-in-the-land-laws-amendments%EF%BF%BC/ (Accessed 12 August 2022).

[5] Chawanya, G. (2021). Who owns the land in Malawi. Daily Times. 28 April 2021.. https://times.mw/who-owns-the-land-in-malawi/ (Accessed 14 August 2022).

[6] Matchika, P. (2022). Agricultural real estate: Newly amended land laws and the mega farms pricinciple. Unpublished.

[7] Chikhwenda, E., Kasowanjete, B., Kambewa, P. and Chaweza, R. (2019). Presentation: Land governance in Malawi. 3 September 2019. https://slidetodoc.com/land-governance-in-malawi-edward-chikhwenda-bester-kasowanjete/ (Accessed 15 August 2022). Pg. 32.

[8] Chikhwenda, E., Kasowanjete, B., Kambewa, P. and Chaweza, R. (2019). Presentation: Land governance in Malawi. 3 September 2019. https://slidetodoc.com/land-governance-in-malawi-edward-chikhwenda-bester-kasowanjete/ (Accessed 15 August 2022). Pg. 32.

[9] USAID (2022). Gender and Land in Traditional Authority Mwansambo in Malawi: Gender Assessment Report.

https://www.land-links.org/document/gender-and-land-in-traditional-authority-mwansambo-in-malawi-gender-assessment-report/ (Accessed 15 August 2022).

[10] USAID (2021). Supporting Gender Integration in Customary Land Documentation in Malawi. https://www.land-links.org/wp-content/uploads/2021/12/ILRG_Malawi_Fact-Sheet_final.pdf (Accessed 15 August 2022).

Opportunities

Opportunities in the affordable housing sector include urban sanitation. There is scope for investment in waste collection and toilet service provision in the informal sector in urban centres. In the informal sector, up to 30 people living in one compound can use one toilet, providing scope for private toilets in such areas.[1]

Interested investors or institutions can join projects such as the National Slum Upgrading, to be implemented by CCODE in collaboration with MoLHUD.[2]  Investors can also adopt the Small Farm Cities model being piloted in the city of Lilongwe and replicate them in other cities, targeting middle income fresh university graduates and small families.

Housing finance in Malawi is highly underdeveloped, especially for lower income borrowers, and there are few informal mechanisms to fill the housing finance gap. The two key constraints to wider provision of housing finance are the requirement for collateral by formal institutions, and the affordable repayment level and loan period that limits the potential size of the loan. This creates opportunities in the housing finance sector to provide financial products suitable for low income people.

Opportunities also exist in supplying green building materials. Following the prohibition of the use of burnt bricks by the sustainable construction materials regulations of 2018, developed by the NCIC, a market for environmentally friendly construction materials and technologies such as cement bricks was created. Investors can venture into this market as demand for green materials is high.

The launch of the Malawi Secondary Cities Plan also offers an opportunity for affordable housing developments. The ultimate outcome of the secondary cities is enhanced welfare of urban dwellers including low and middle income individuals. The identified towns and districts to be upgraded into secondary cities offer opportunities for proper planning and investment in affordable housing before they are congested with unplanned informal settlements.

[1]Interview with Zilire Luka, Center for Community Organisaton and Development. 12 August 2022. Lilongwe, Malawi.

[2] Interview with Happiness Zidana, Center for Community Organisation and Development. 11 September 2022. Lilongwe, Malawi.

Availability of Data on Housing Finance

The main organisations that collect and share data on housing finance are the Reserve Bank of Malawi, commercial banks and the National Statistics Office of Malawi. These institutions publish data such as investments in real estate, loans extended to real estate, mortgage interest rates, population and employment statistics. These institutions publicly share this data through online and printed reports. The data is available on a quarterly and annual basis. Other institutions that provide data on the housing sector include the NCIC, MoLHUD, MHC, private developers, city councils, and SIM, among others. The National Statistics Office and commercial banks collect data disaggregated by gender. Affordable housing data or projects in response to climate disasters are available at district councils in the Disaster Management Offices.

In the case of unpublished data, especially from government institutions, data is accessible by directly approaching directors or managers of various departments. Public officials are generally willing to share required data once they understand its use and utility.

Green Applications for Affordable Housing

Malawi has green building standards guided by the Use of Sustainable Construction Materials Regulations established in 2018 and enforced by the NCIC. Analysis shows that the brick industry alone consumes approximately 850 000 metric tonnes of fuelwood a year. At this rate of fuelwood consumption, the entire country will be deforested within 25 to 30 years only from the brick industry.[1]  To help control deforestation, these regulations in part prohibit the use of traditional fire cured bricks.[2]

Habitat for Humanity is constructing low cost green houses for low income households in Zomba and Phalombe districts.[3] Both MHC[4] and MLHUD[5] are constructing houses using green materials such as cement bricks. cement bricks are an important substitute for burnt bricks, which have a negative environmental impact. All donor projects now use cement bricks to comply with the law.[6] The first buildings to be EDGE certified[7] in Malawi are in Mbiri and Tsogolo Halls of residence at Kamuzu College of Health Sciences at Lilongwe Campus. This student housing is constructed by Old Mutual Malawi, and serves to demonstrate the financial viability and sustainability of the green building concept.[8] It is Old Mutual Malawi’s first student housing project, started in 2020.[9]

As of 2020, only 18% of the country’s total population had access to electricity and approximately 98% of electricity is generated by hydroelectric power stations.[10] Electricity services are supplied by ESCOM, a government agency. In an urban setting, individuals in both formal and informal settlements pay approximately MK350 000 (US$339) for new electricity connection fees.[11] Off-grid sources of energy such as mini-grids and solar energy contribute approximately 6% percent to national energy access.[12] Water services are provided by Water Boards in different regions, which are also government agencies. The fees for water services depends on the distance of the water user from the main water pipe. A water user who is 100 metres away from the main water pipe pays approximately MK100 000 ($97) to get connected.[13] The proportion of the urban population with access to clean water (piped source) is at 64.9%,[14] while the proportion of urban population with access to sanitation stands at 65.5%.[15] Waste management is a big challenge in urban centres. Only 22% of waste is collected in Lilongwe city[16].

[1] Clean Tech Malawi (2022) Feasibility of Cleaner Brick Production Technology in Malawi. http://cleantechmalawi.com/UploadedDoc/DownloadDoc/Feasibility_of_Cleaner_Brick_Production_Technology_in_Malawi.pdf (Accessed 3 September 2022).

[2] National Construction Industry Council (2022). Use of Sustainable Construction Materials Regulations. https://ncic.mw/2018/06/18/use-sustainable-construction-materials-regulations/ (Accessed 11 September 2022).

[3] Habitat for Humanity Malawi (2022). 200 Homes Malawi https://www.habitatforhumanity.org.uk/blog/2022/01/photos-of-home-malawi/ (Accessed 17 August 2022).

[4] Mughogho, L. (2017) Malawi Housing Corporation Switches to Cement Bricks. https://malawi24.com/2017/03/23/malawi-housing-corporation-switches-cement-bricks/ (Accessed 17 August 2022).

[5] Mhone, B. (2022). Another promise Delivered as Chakwera Hands Over MPS Staff Houses. Shire Times. 17 July 2022. https://shiretimes.com/another-promise-delivered-as-chakwera-hands-over-security-houses/ (Accessed 17 August 2022).

[6] Interview with George Banda, Afri Invest Suppliers, 11 September 2022, Lilongwe, Malawi

[7] EDGE is an International Finance Corporation certification system aimed to make buildings more environmentally friendly by being more resource efficient.

[8] Old Mutual Investment Malawi (2022). Old Mutual Investment group pioneers green building approach as its student hostel becomes the first building in Malawi to receive IFC’s edge certification. https://www.oldmutual.co.mw/about-us/news/old-mutual-investment-group-pioneers-green-building-approach-as-its-student-hostel-becomes-the-first-building-in-malawi-to-receive-ifcs-edge-certification/ (Accessed 21 August 2022).

[9] Public Private Partnership Commission of Malawi (2020) Groundbreaking student accommodation.  https://www.pppc.mw/news/groundbreaking-student-accommodation (Accessed 11 September 2022)

[10] Interview with Deputy Director in the Department of Energy, Ministry of Natural Resources. 10 August 2022. Lilongwe, Malawi.

[11] Interview with Happiness Zidana, Center for Community Organisation and Development. 30 August 2022. Lilongwe, Malawi.

[12] Interview with Deputy Director in the Department of Energy, Ministry of Natural Resources. 10 August 2022. Lilongwe, Malawi.

[13] Interview with Happiness Zidana, Center for Community Organisation and Development. 30 August 2022. Lilongwe, Malawi.

[14] National Statistics Office (2020). The Fifth Integrated Household Survey (Ihs5) 2020 Report. https://microdata.worldbank.org/index.php/catalog/3818 (Accessed 28 August 2022). Pg. 143.

[15] National Statistics Office (2020). The Fifth Integrated Household Survey (Ihs5) 2020 Report. https://microdata.worldbank.org/index.php/catalog/3818 (Accessed 28 August 2022). Pg. 145.

[16] Interview with Happiness Zidana, Center for Community Organisation and Development. 30 August 2022. Lilongwe, Malawi.

Websites

Blantyre City Council http://bccmw.com/

Centre for Community Organisation and Development http://www.ccodemw.org/

Department of Lands in the City of Blantyre http://www.lands.gov.mw/

First Discount House Bank https://www.fdh.co.mw/index.php/rates-tariffs/bank-interest-rates

Habitat for Humanity https://www.habitat.org/where-we-build/malawi

Malawi Housing Corporation https://www.mhcmw.org/

Microfinance Network of Malawi https://www.mamn.mw/

National Bank of Malawi https://natbank.co.mw/index.php/interest-rates

Reserve Bank of Malawi https://www.rbm.mw/

Sulsdec https://www.sulsdec-mw.com/ http://www.sulsdec-mw.com/

Standard Bank of Malawi https://www.standardbank.co.mw/

New Building Society Bank https://nbs.mw/

Continental Discount House Bank: https://www.cdh-malawi.com/

Continental Discount House Investment Bank: https://www.cdh-malawi.com

Clean Tech Malawi http://www.cleantechmalawi.com/

National Planning Commission of Malawi https://npc.mw/

Small Farm Cities https://www.smallfarmcities.com/