Housing Finance in Mali

Macroeconomic Overview

Spread over an area of ​​1 248 572km², the Republic of Mali is one of the largest countries in West Africa. In 2020, its population was estimated at 20 509 769 with an annual growth rate of 2.97 percent.[1]

Mali is poorly industrialised with the manufacturing sector struggling to develop. As a result, import requirements are high, leading to an estimated current account deficit of 5.4 percent of gross domestic product (GDP) in 2019. The country’s economy is heavily dependent on gold and cotton, which account for 86 percent of exports, as well as agriculture and trade. The poor diversification of its economy exposes the country to fluctuations in commodity prices and makes it dependent on commodity prices in international markets. In 2019, the country recorded five percent growth, boosted by gold and cotton production, a budget deficit of 3.1 percent of GDP and inflation of 0.4 percent.[2] To support the national economy, the government adopted in March 2019 a Strategic Framework for Economic Recovery and Sustainable Development for the period 2019-2023, and is working on implementing the Public Financial Management Reform Plan (2017-2021).

Following the military coup in 2012, Mali has been through a period of political instability and conflict, including the occupation of the north of the country by armed groups. In this context, extreme poverty increased between 2011 and 2015 by up to 47.2 percent. Since then, thanks to the exceptional agricultural production of the last four years, the rate has fallen slightly but remains high (42.7 percent in 2019).

The government’s efforts to revitalise growth in all sectors of the economy, including housing, were strained by another coup on 18 August 2020, which saw the overthrow of the then President, Ibrahim Boubacar Keïta. The COVID-19 pandemic triggered this year has also destabilised economic recovery efforts. Mali recorded its first case of COVID-19 on 25 March 2020. As of May 5, the country had 612 official cases, including 228 recoveries, 352 under treatment and 32 deaths.

The government has tried to address housing in its attempt to boost the economy. To address the shortage, the Malian government subsidised the construction of 7 000 homes between 2002 and 2012 and decided to continue this housing programme. This strategy, oriented towards public private partnerships, involved the pre-financing by property developers of low-cost housing. Construction finance has, however, given way to end-user finance. It is the transferable portion of the beneficiary that determines the banks’ adherence to financing of real estate projects. In summary, there are few residential housing projects, the costs are high and the beneficiaries are rare, except among Malians living outside the country.

[1] Country Meters. Mali Population. https://countrymeters.info/fr/Mali (Accessed 22 September 2020).

[2] African Development Bank Group (2020). Economic Outlook in Mali. https://www.afdb.org/fr/countries/west-africa/mali/mali-economic-outlook (Accessed 22 September 2020).

Access to Finance

Mali’s banking environment comprises 17 licensed credit institutions, including 14 banks and three bank-like financial institutions. The financial system also includes two pension funds, 11 insurance companies and 126 microfinance institutions. The average lending rate has declined from 10.49% in 2006 to 7.96% in 2020. The base bank rate varies from bank to bank, with the Banque du Mali (BDM SA) offering the lowest rate at 5%. The maximum interest rate on residential mortgages is pegged between 12.5% and 15%.

The BDM SA offers mortgage loans to its customers over a period ranging from three to 15 years. Orabank Mali supports its clients’ real estate projects from CFA3 million (US$5 423) to CFA150 million (US$271 133) over 15 years with an interest rate of 7.75%. For a client to be eligible, he or she must have a mortgage guarantee, take out insurance, have a salary or credible income during the repayment period, hold a contract, have an architect’s plan and submit a cost estimate and description. The Bank of Africa (BOA) and the Banque Atlantique du Mali also offer medium and long-term mortgages (20 years). The amount of the loan is determined according to the client’s transferable portion. This amount can reach 80 to 100% of the value of the property or of the overall construction cost.

In response to COVID-19, BCEAO met the liquidity needs of the banks and lowered the interest rate from 2.5% to 2%. This enabled the banks to maintain and increase client lending. BCEAO authorised microfinance institutions to grant deferrals to their clients affected by the pandemic, for a renewable period of three months, without interest charges, fees, or penalties for late payment.

It is becoming increasingly important to be able to raise resources on the financial market, particularly in the case of housing. Recourse to the Caisse Régionale de Refinancement Hypothécaire (CRRH-UEMOA) is necessary. Indeed, the longterm resources available in the banking system take the form of term deposits and equity. The mission of the CRRH-UEMOA is to provide credit institutions with resources for refinancing mortgage loans, by mobilizing these resources on the WAEMU financial market or from development partners.

From 1 January to 10 June 2020, Mali carried out 11 issues of public securities by auction for a total amount of CFA330 billion (US$596.5 million). In November 2020, the government launched a bond issue for CFA100 billion (US$180.7 million) with an interest rate of 6.5%.

In 2021, the number of microfinance institutions (MFIs) is 86, excluding network affiliated banks. A sample of 25 MFIs has 824 service points and 1 282 349 clients. Registered deposits amount to CFA122.05 billion (US$221.4 million) in March 2021, compared to CFA110.26 billion (US$199.3 million) in September 2020. Outstanding loans are estimated at CFA142.37 billion (US$257.3 million) compared to CFA134.71 billion (US$243.5 million) in September 2020, an increase of 5.38%. The amount of overdue loans fell from CFA11.03 billion US$19.3 million) in 2020 to CFA5.58 billion (US$20.9 million) in 2021.

The microfinance network Nyesigiso, offers housing microfinance solutions and mortgages. The maximum amount of these mortgages is CFA20 million (US$36 151) for 15 years. It also offers construction loans of up to CFA3 million (US$5 423) for three years. To apply for a mortgage, one must be employed for at least six months with the same employer and the conditions of the land must be accepted by Nyesigiso and the Mali Mortgage Guarantee Fund (FGHM). The FGHM covers potential losses to financial institutions in the event of default, but also supports access to property for low-income households.

[1] World Bank (2015). Financial Sector Assessment Program. Development Module. June 2015. http://documents1.worldbank.org/curated/pt/794481467989462461/text/105295-FRENCH-P153363-PUBLIC-Mali-FSAPDM-TN-Housing-Finance-French-public.txt (Accessed 12 September 2020).

[2] Telephone interview with Youssouf Dembele, Audit Director, Orabank Mali, 6 September 2020, Bamako, Mali.

[3] Regional mortgage refinancing fund. Missions and activities. http://crrhuemoa.org/mission-et-activites/  (Accessed 13 September 2020).

[4] Telephone interview with Youssouf Dembele, Audit Director, Orabank Mali, 6 September 2020, Bamako, Mali.

[5] BCEAO (2019). Analysis of the state of microfinance in June 2019. https://www.bceao.int/sites/default/files/2019-10/Situation%20de%20la%20microfinance%20%C3%A0%20fin%20juin%202019-VF_0.pdf.

(Accessed 19 September 2020). Pg. 3.

[6] BCEAO (2019). The main indicators of microfinance institutions in WAMU as of 03/31/2019. Pg. 1.

[7] BCEAO (2019). The main indicators of microfinance institutions in WAMU as of 03/31/2019. Pg. 1.

Affordability

 

 

 

 

 

 

 

A major challenge is to make up for the shortfall in the construction of affordable housing. According to the Ministry of Land Affairs, Urban Planning and Housing, 95% of the population of Bamako needs access to housing. The supply of affordable housing from the government and the private sector remains insufficient and self-build represents 75% of the Malian housing stock.

The poverty rate, i.e. the proportion of the population that is unable to spend CFA179 327 (US$357) annually to meet its basic needs, is 41.9% in 2020 compared with 42.3% in 2019. The City of Bamako has the lowest incidence of poverty (3.5%) compared to 24.8% in other cities and 50.6% in rural areas. The Gini coefficient index measured at 38% shows inequality in the distribution of expenditure or income among the different strata of the population. A household in Bamako meets its basic needs with an average expenditure of CFA3.4 million (US$6 146), while a household in other cities spends CFA2.2 million (US$3 977) and in rural areas CFA1.7 million (US$3 073).15 In 2020, the GDP per capita is CFA475 173 (US$859), yet the purchase of affordable housing requires an annual salary of CFA4.7 million (US$8 580). In 2013, 452 credit applications were approved for an average amount of CFA13.3 million (US$24 040) per file.

To access housing through a mortgage loan, a ratio of the monthly payment to the household income is applied on a case-by-case basis according to their income. The Banque Malienne de Solidarité (BMS) sets the transferable portion at 33.3% of the salary, while the current Labour Code specifies a transferable portion of 25% for the lowest incomes and 75% for the highest incomes. The commercial bank Ecobank offers up to 50% of its income. These variable loan conditions make affordable housing inaccessible to a large proportion of households. Thus, the FGHM guarantee is important as well as the government’s social housing construction project.

[1] National Institute of Statistics of Mali (2019). EMOP-2018/2019 annual results. Pg. 75.

[2] National Institute of Statistics of Mali (2019). EMOP-2018/2019 annual results. Pg. 22.

[3] Maliactu.net (2016). Mali: “What does the labor code say” about transferable or seizable portions of wages. 25 April 2016. https://maliactu.net/mali-que-dit-le-code-du-travail-a-propos-des-quotites-cessibles-ou-saisissables-du-salaire/ (Accessed 4 October 2020).

Housing Supply

In 2015, the housing need was estimated at about 440 000. To fill this gap, the total annual housing requirement is 82 500, of which 51 100 should be delivered in urban areas and 31 400 in rural areas.

The Ministry of Land Affairs, Urban Planning and Housing has initiated an impressive housing development program, the PTI. The PTI has enabled the construction of 5 928 social housing units over the period 2019/21. In 2019, the West African Development Bank (BOAD) made an amount of CFA25 billion (US$45.2 million) available to the State, for the partial financing of the project. This allowed for the development of 1 085 site and service stands and social and economic housing units.

The available social housing units of 2-rooms(F2), three rooms (F3), and four rooms (F4) are intended for households (salaried or not) with a low or average income. Non-salaried persons wishing to access F3 units must pay a deposit of CFA132 660 (US$240) and a deposit of CFA234,000 (US$423). For the bigger F4 economic housing units, the applicants must pay a deposit of CFA282 000 (US$510) and CFA250 000 (US$452) as a personal contribution. The housing units are allocated without interest over a period of 25 years.

Within the framework of the PTI, the infrastructure sector mobilised CFA772.3 billion (US$1.4 billion), i.e. 45.4% of the overall budget. The majority of the infrastructure budget was allocated to roads with an allocation of CFA347 542 billion (US$628.2 million) or 63.87% of the budget. The “Buildings and Equipment” item represents a budget of CFA169 998 billion (US$307.3 million) or 31.24% of infrastructure expenditure by the government. Urban Planning and Housing” and “Transport and Storage” were allocated 2.1% and 0.2% of the budget. However, “Urban Planning and Housing” represents only 0.98% of the ITP. The provision of basic infrastructure by developers increases the cost of housing construction. In addition, the price of a 50kg cement bag has increased to CFA5 500 (US$10) in 2021 from CFA4 500 (US$8) in 2020. Supply is constrained by the need to fund and provide infrastructure and by the increased costs of building materials.

[1] Interview with Mamadou Coulibaly, Former Chairman of the Real Estate Programs Commission of the Association of Real Estate Developers of Mali (APIM). Interview conducted on 6 September 2020, Linkedln.

[2] Se Loger Au Mali (2020). Social Housing in Mali. https://selogeraumali.com/immobilier-au-mali/logements-sociaux-au-mali/ (Accessed 4 October 2020).

[3] Ministry of Finance (2019). State Budget 2019. Pg. 42.

[4] CAHF (2018). Housing Finance in Africa 2018, Mali country profile. Centre for Affordable Housing Finance. Pg. 185.

[5] Interview with Mamadou Coulibaly, Former Chairman of the Real Estate Programs Commission of the Association of Real Estate Developers of Mali (APIM), 10 September 2020, Linkedln.

Property Markets

The property market is marked by a social housing financing context that is weakened by the State’s inability to mobilise the necessary funds and by the financial market’s reluctance to participate in financing for affordable housing. COVID-19 has exacerbated this problem. The health crisis linked to COVID-19 has undermined economic activity, and the building sector has not been spared.

Land tenure is divided into two main systems: the formal system, based on written law, established by the State, and then the customary systems. Ordinance No. 00-027/P-RM of 22 March 2000 on the Land Tenure Code (CDF) is the main law on land tenure, making land tenure a fundamental principle of land management.

A comprehensive land register does not currently exist. Disputes over ownership are frequent and take several years to resolve in the courts. In terms of access to land, women face a precarious status under customary law, which does not recognise their right to own the land they cultivate. Moreover, 20.5% of individuals living in a female-headed household are poor.20 This means that access to housing is particularly difficult for women-headed households.

In April 2019, a program for the physical and digital archiving of land documents and the development of a cadastral system resulted in 217 000 land titles being inventoried and 185 000 digitised. It should be noted that only 36% of the population in Bamako has a property title.21 The 2011 Land Law strengthens the security of tenure by facilitating the registration process. The regulatory framework for the housing sector has led to an increase in the number of local property developers and the number of cooperatives.

The transfer prices and royalties for urban and rural land in the State’s private real estate domain for residential use are set by the State. Prices are currently higher in central Bamako. The cost per square metre of unserviced land for residential use in Bamako is on average CFA62 500 (US$113) per square metre, with some disparities.

Rent is the largest expenditure among non-food items. Total expenditure on rents amounts to CFA134.7 billion (US$343.5 million) in Bamako, or 33% of national expenditure on rents, and CFA55 billion (US$99.4 million) in other cities. The cost of renting a 100m2 apartment is CFA50 000 to 100 000 (US$89 to US$179) per month and that of a four to five-room villa of 200m2 is on average CFA200 000 to 300 000 (US$357 to US$536). The construction labour cost per square metre for the cheapest house is CFA130 000 (US$232).

The World Bank’s Doing Business 2020 report ranks Mali 140th for property registration, which takes five procedures and 29 days to complete at a cost of 11.1% of the property value. The land administration quality index of 8 out of 30 is still low. The same report ranks Mali 133rd for the ease of obtaining building permits with 14 procedures in 124 days. The cost of building permits represents 9.35 of property value.

[1] Interview with Mamadou Coulibaly, Former Chairman of the Real Estate Programs Commission of the Association of Real Estate Developers of Mali (APIM), 6 September 2020, Linkedln.

[2] World Bank (2020). Doing Business 2020. Mali Economy Profile. https://francais.doingbusiness.org/fr/rankings?region=sub-saharan-africa (Accessed 4 October 2020).

Policy and Regulation

In 2015, Mali adopted its national housing strategy. The main objective of the strategy is to improve living conditions throughout the country by promoting access to decent housing for the low and middle-income population. To achieve this objective, the government created the Office Malien de l’Habitat (OMH) in 1996. The OMH is the main mediator between the various stakeholders in the housing sector. It is also responsible for providing serviced land, promoting the use of local building materials, and participates in the technical and financial arrangements of government social housing programmes as a shareholder in the BHM and the FGHM. In March 2015, the government signed a framework agreement with 19 national and international real estate operators through the Association of Real Estate Developers of Mali (APIM) and the Professional Association of Banks and Financial Institutions of Mali (APBEF). OMH subsidises interest rates on mortgage loans for eligible applicants, mostly members of housing cooperatives.

The regulatory framework for Mali’s housing sector includes a condominium law, a property development law and a housing finance law. Mali’s constitution and legislation ensure that the right to housing is respected. In terms of legislation, constraints have been overcome with the drafting of the land and property code, laws on the rehabilitation of informal settlements, laws on real estate and land development, laws on the advantages granted to real estate developers, laws on the urban planning code and the construction code

The provisions of Decree No. 130 PGRM of 27 August 1967 on the terms and conditions for setting rents for built-up buildings and Decree No. 146/PG-RM of 27 September 1967 on the regulation of rents for residential premises are intended to govern relations between lessors and lessees.

[1] Mamadou, D. (2015). Symposium 2015 – Shelter Afrique: Affordable rental housing in Mali. Pgs. 8-10.

Opportunities

The demand for housing, which was estimated at 440 000 in 2015, including 240 000 housing units in Bamako, is becoming increasingly pressing. The volume of housing loans has increased and the average lending rates on loans have continuously decreased. The government is demonstrating its commitment to improving the housing sector through a national strategy for access to decent housing. The regulatory framework for housing is the clearest in the WAEMU and has led to an increase in the number of real estate developers and housing cooperatives operating in the country. The Doing Business report ranks Mali 148 in 2020, in terms of the ease of doing business. To support the Government’s efforts and fill the housing need, the private sector has a role to play in affordable housing. With better organisation, the Malian diaspora could also mobilise funds for housing.

The Malian cement market is mostly supplied by imports (71%), mostly from Senegal. Faced with the growing demand for cement and the local production deficit, Ciments et Matériaux du Mali (CMM) built a grinding center in 2019, with an annual capacity of 800 000 tonnes, on the Diago site, 35km from Bamako.

The housing deficit in Africa can be seen as both a challenge and an opportunity for developing economic activity and creating millions of jobs. Studies show that the development of affordable housing generates employment, both through construction and through spending on amenities linked to housing. Despite COVID-19 and the security and political instability in Mali, there is resilience in the housing sector and its financing. More investment in the affordable housing sector would allow Malians to improve their living conditions.

[1] Invest in Mali. Construction program of 1 100 housing units in Bamako, Mali. https://www.investmali.com/fr/projets/programme-de-construction-de-1100-logements-bamako-mali (Accessed 5 October 2020).

[2] World Bank (2020). Doing Business 2020. Key data: Sub-Saharan Africa. https://francais.doingbusiness.org/content/dam/doingBusiness/pdf/db2020/DB20-FS-SSA—french.pdf (Accessed 4 October 2020). Pg. 3.

Availability of data on housing finance

The National Institute of Statistics (INSTAT) collects, produces, analyse sand disseminates information on the Malian economy and society. INSTAT has conducted four General Population and Housing Censuses (RGPH) in 1976, 1987, 1998, and 2009. The fifth RGPH is scheduled for the end of 2021. The Modular and Permanent Household Survey (EMOP) implemented by INSTAT provides information on housing but not on its financing. The EMOP is conducted annually in four rounds. These INSTAT reports are available online. The BCEAO provides information on bank financing conditions for housing in WAEMU countries.

Data should however be collected more regularly on housing to be used by the housing finance market as a basis for sound policy formulation. The lack of reliable, detailed, and up-to-date data on the housing market is a constraint for financing.

Urban Informality

The rapid urbanisation rate of 4.75% with an annual population growth rate of 2.97% and the lack of urban development have resulted in very large housing deficits, which hampers Mali’s efforts to achieve its development objectives. The government is pursuing a program to build 50 000 social housing units. However, the demand for affordable housing by low- and middle-income households remains high, and housing supplies are not filling the gap.

The proportion of informal employment in the non-agricultural sectors is 98.3%. In urban areas, 23.3% of the population live in slums, informal settlements, or inadequate housing. One of Mali’s goals is to achieve the Sustainable Development Goal “Make cities and human settlements inclusive, safe, resilient and sustainable” (SDG 11). With regard to access to basic services, 85.2% of households have access to drinking water and 70.8% have electricity. The proportion of households with access to drinking water improved over the period 2006/20 from 78.7% in 2006 to 85.2% in 2020. Depending on their area of residence, 81.9% of poor urban households have access to water in 2020 compared to 76.8% in rural areas. Handwashing with soap and water is one of the recommended barrier measures to control COVID-19. In Mali, 43.3% of the population using safely managed sanitation services, including handwashing facilities with soap and water. In terms of hygiene, 92.5% of households use “flush/pit/latrine” types of toilets in 2020 compared to 76.7% in 2001.27 There has therefore been improvement in sanitation

The State and the community have a responsibility to ensure good quality housing. However, 16.1% of households resort to private waste collection. The public collection is used by only 3.1% of households, and 57% of households dispose of wastewater by dumping it in the street or yard. Inadequate planning of basic infrastructure and services is a real obstacle to the provision of adequate housing conditions in Mali.

[1] African Development Bank (2020). Africa Economic Outlook 2020. In the Context of COVID – 19 (Accessed 4 October 2020).

Websites

Caisse Régionale de Refinancement Hypothécaire (CRRH-UEMOA)
http://crrhuemoa.org/
Mali Mortgage Guarantee Fund (FGHM SA) http://www.fghm-sa.com/
Banque Malienne de Solidarité (BMS SA) https://bms-sa.ml/
Banque du Mali (BDM SA) https://www.bdm-sa.com/
Bank of Africa, Mali https://www.boamali.com/particuliers/prets/pret-ma-maison/
Office Malien de l’Habitat (OMH) https://omh-mali.net/omh/en/
National Institute of Statistics (INSTAT) https://instat-mali.org/fr
Orabank Mali https://www.orabank.net/fr/filiale/mali
Lodging in Mali https://selogeraumali.com/
Bamako Real Estate https://www.bamako-immobilier.com/