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

In 2019, Mali had 14 banks and three financial institutions. In the same year, base rates were set between 6.19 percent and seven percent, while maximum debtor rates were between 10 percent and 15 percent. Mali’s housing finance market is still small and underdeveloped. Only 450 mortgages were granted in 2013, equivalent to three percent of all mortgage financing in the West African Economic and Monetary Union (WAEMU) region. Access to mortgage finance is particularly limited compared to similar other WAEMU countries. A survey would be needed to determine the proportion of homes covered by mortgage and non-mortgage loans.[1]

The Banque de l’Habitat du Mali is responsible for supporting Malian households in acquiring housing. Three local banks also grant real estate loans to their customers. Orabank Mali currently offers home loans at interest rates of six percent tax free over a period of 20 years and 7.5 percent tax free for those up to 25 years; the down payment can represent up to 13 percent of the purchase value of the home. The proportion of the monthly mortgage payment to the income of the borrowing household is not fixed and is applied on a case-by-case basis according to the income of each household.[2] Some banks, such as the Banque Nationale du Mali, may grant mortgages at interest rates of up to nine percent, or even between 10 percent and 13 percent for other banks such as Banque Atlantique Mali, BICIM and United Bank for Africa (UBA) Mali. The minimum term of the mortgage loan is set according to the client. The Bank of Africa (BOA) Mali and Orabank Mali grant mortgage loans to individuals according to their transferable portion.

To finance housing, banks use their own funds (internal resources) and funds granted by the Caisse Régionale de Refinancement Hypothécaire (CRRH-UEMOA) as the main source of financing. Increasingly, specialised institutions are making funds available to banks for mortgage refinancing. The mission of CRRH-UEMOA is to provide WAEMU credit institutions that are shareholders with long-term resources for the refinancing of mortgage loans granted to their clients, by mobilising these resources on the Union financial market or with development partners. It intervenes exclusively for the benefit of its shareholders for the refinancing of housing loans that they grant to their clients.[3] Thus, CRRH-UEMOA has made available to Orabank Mali approximately CFA2 billion (US$3 571 428) for 2019/20.[4]

The role of the microfinance sector in housing finance is difficult to assess due to virtually no data. However, the microfinance sector in Mali is a fairly dynamic sector. The total value of outstanding microloans was estimated, in 2019, at around CFA 150 billion (US$267 857 130).[5] The sector had 86 microfinance institutions (MFIs) in 2019, despite the closure of 20 MFIs between March 2017 and March 2018. An analysis by the Central Bank of West African States (BCEAO) in July 2019, based on a sample of 22 MFIs in Mali, reported a little less than two million clients and an outstanding debt of CFA119 billion (US$212 499 990).[6] Another sign of improvement in the sector is that this sample had an aggregate non-performing loan ratio of 6.95 percent, placing the country below the average of 7.37 percent for the eight WAEMU countries.[7]

[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

In 2018, the National Institute of Statistics of Mali (INSTAT) estimated that 43.8 percent of the population (or 8.357 million people) did not earn enough to meet their basic needs and were therefore considered to be living in poverty.

Income and financial access also vary considerably from region to region. This is particularly evident when analysing the divide between rural and urban areas. In Bamako, it is estimated that only 4.1 percent of the city’s population lives below the national poverty line. Bamako also has the lowest Gini coefficient in the country (0.28), while secondary urban centres have the highest coefficient (0.37), highlighting inequalities between urban centres and rural areas.[1] The differences within the country translate into average annual expenditure per household ranging from CFA3.1 million (US$5 536) in Bamako, CFA2.5 million (US$4 464) in the other cities and CFA1.9 million (US$3 393) in rural areas.[2]

However, the level of income is a crucial factor in accessing loans from banks. The monthly mortgage loan repayment amount is determined according to the client’s transferable portion. Article L.123 of the Malian labour code provides that salaries are transferable or seizable, based on the monthly salary[3] and up to a quarter for salaries of CFA20 960 (US$37) to CFA62 880 (US$ 112); a third for a salary of CFA62 881 (US$112) to CFA125 760 (US$225); half for salaries of CFA125 761 (US$225) to CFA251 520 (US$449); and three quarters for salaries above CFA251 521 (US$ 449). The minimum wage was CFA20 960 (US$37) at that time, and increased to CFA40 000 (US$71) from 1 January 2016. The repayment term of these loans can reach 20 to 25 years maximum depending on the different banks.

Since 1992, the government of Mali has initiated certain reforms to facilitate access to housing through the creation of the Mali Mortgage Guarantee Fund (FGHM SA). The FGHM SA is a financial institution whose mission is to promote accessibility to housing by facilitating access to bank financing. Among these reforms are the mortgage guarantee, which consists of covering banks against the risk of default by customers receiving mortgage loans. The loans eligible for the FGHM SA guarantee relate to land acquisitions, acquisitions of new construction, completion, rehabilitation or renovation of houses, real estate programmes, and construction of commercial buildings. The fund also covers the guarantee of social housing, specially designed to support the implementing of social housing programmes by the state.

[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

Studies carried out in 2015 in the housing sector in Mali show a deficit of around 440 000 housing units. This translated into an estimated annual deficit of 82 500 units a year, with 51 100 for urban households and 31 400 for rural households.

The number of formal residential units completed, with plans submitted and approved, and certificate of occupancy issued in 2020 is 5 000 social housing units.[1] The Office Malien de l’Habitat intends to allocate more than 5 900 social housing units. Residential production by the private sector is not included. The production of social housing is currently concentrated in N’Tabacoro, with 1 552 housing units, whose acquisition began in 2015.[2] These units are not fully subsidised by the state and beneficiaries must provide a fixed amount according to their financial capacity and the category of units concerned.

Overall, the 2019/20 national budget allocated 5.9 percent of total spending to housing and public amenities, a significant increase from 2.8 percent of the 2018/19 budget.[3] Despite the state’s social housing provision programmes, self-build remains the main source of housing. A 2011 study conducted by Shelter Afrique on the Malian real estate sector estimated that this represented 75 percent of the country’s housing stock.[4]

The rental market is more developed in Bamako. It is an attractive city for expats and visitors looking for an unfurnished apartment or a cheap furnished apartment during their stay. To meet a growing rental demand, developers are setting up various apartment rental programmes in Bamako. There are also renovated buildings with adequate accommodation. The typical rental price of the cheapest newly built house from a promoter or official contractor in Bamako is CFA250 000 (US$446). The rental price for a 100m² apartment is CFA50 000 to CFA100 000 (from US$89 to US$179) a month, and an average four to five room villa of 200m² is from CFA200 000 to CFA300 000 (from US$357 to US$536).

The cost of construction labour per square meter for the cheapest newly built house is CFA130 000 (US$232). The cost of the standard 50kg bag of cement is CFA4 500 (US$8).[5]

[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 housing sector has been neglected and has declined, particularly for home ownership for to low income households. The allocation of social housing is subject to criteria. First, the applicant must be registered with a banking institution. Anyone with an account with the different banks can apply, subject to an income below the set threshold. Then, the applicant (self-employed or Malian living abroad) must pay the Office Malien de l’Habitat /Mali Housing Agency (OMH) a personal contribution varying significantly according to the type of accommodation, as well as a three-month deposit.

Non-salaried subscribers who opt for social housing in Mali of the F3 A and F3 B type, must pay a guarantee of CFA132 660 (US$237) and a contribution amounting to CFA234 000 (US$418). For economy type F4 housing, applicants must pay a deposit of CFA282 000 (US$503). In addition, housing is allocated to beneficiaries over a period of 25 years.

The price of the cheapest newly built house by a promoter or official contractor in an urban area is CFA12 500 000 (US$22 316) of type F3.[1]  The typical annual rent per square meter for residential accommodation in Bamako is CFA500 000 (US$893).

The so-called “private” real estate sector is the most opaque sector in Mali. Just to visit a house, people have to pay between CFA2 000 (US$4) and CFA3 000 (US$5) to the “coxeur”. If the house is suitable, the future tenant will have to pay the intermediary real estate agency a deposit corresponding to three months of rental costs as a deposit and two months in advance. Others ask for two months deposit and two months’ rent in advance.

According to the World Bank Doing Business 2020 report, Mali is in 26th place on the ease of obtaining building permits, a slight change from last year.[2]

[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

The rent of residential houses is regulated by two decrees.

The provisions of Decree No. 130/ PG-RM of 29 August 1967, which set ceiling rents for built buildings, aimed to end the arbitrary fixing of the amount of the rent by the owners by setting the ceiling rent at four percent a year of the cost of construction of the building as depreciation, and two percent a year of the cost of construction of the building, and a margin of five percent a year for projected maintenance. A service provision tax is added to these. The setting up a permanent rent setting commission is planned. In addition, any owner of a building built for rent must, within one month before the rental, send to the Ministry, namely the Chairman of the rent setting commission, the documents necessary for the rental determination.

The provisions of Decree No. 146/PG-RM of 27 September 1967 regulating rents for residential premises in Mali are intended to govern relations between landlords and tenants. It defines the obligations of the lessor and the tenant and specifies that the ceiling rent must in no case exceed 11 percent a year of the value of the building. However, on a technical level, the assessment of the rent ceiling poses problems. It is specified that the scales used as a basis for the assessment of the rent must be revised on 1 January of each year. Developed in 1967, the assessment scales for the ceiling rent seems to have been revised only once in 1990 by the National Department of Urban Planning and submitted to the Department of Equipment and Housing for advice.

In the rental sector, the taxation relates to the tax on property income, representing 15 percent of the amount of rent for hard and semi-hard buildings and 10 percent for mud buildings. The registration fee represents three percent of the amount of the rent.[1]

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

Opportunities

Faced with a structural deficit in the real estate sector, housing needs in Mali are exacerbated by the increase in the population, which has resulted in the development of precarious neighbourhoods devoid of basic urban services. The housing deficit mainly covers the needs expressed by civil servants (44.5 percent), the diaspora (45.5 percent) and the self-employed (10 percent).

For low income people, subsidising the rental sector will have several benefits including improving housing conditions, stabilising rent costs and clarifying the relationship between landlords and tenants. The Ministry of Urban Planning and Housing of Mali initiated a programme of housing development to revitalise this sector for all populations. Over the 2014-2015 period, the OMH recorded nearly 20 000 social housing units as well as the completion of servicing works for 1 552 government housing units, and 1 000 housing units co-financed by Mali and the Islamic Development Bank.[1]

However, the security, health and political crisis risks slow down the state in relation to its various programmes. Measures to support the economy, especially for small businesses, may be insufficient to mitigate the impact of the crisis. Thus, in 2020, the Doing Business report ranked Mali 148 in the world for its index of making it easier to do business.[2]

Despite the considerable risks to which the country is exposed, Mali could benefit from increased construction of affordable housing in the medium and long term since the housing sector is a priority sector for the government.

[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

INSTAT is the official source of information that collects data on the environment, population, health, education, human development, transport and telecommunications, foreign trade, production and macroeconomic aggregates. However, INSTAT has not published any reports in 2020. In general, statistics on housing finance are difficult to obtain or even virtually non-existent.

Major banks, such as Banque Atlantic du Mali, BOA Mali, Orabank Mali and UBA Mali offer relevant information on the banking sector and non-bank financial institutions in the country. However, due to the time available, some information was difficult to go through.

COVID-19 response

In Mali, the first cases of COVID-19 were reported on 25 March 2020. The government opted for an action plan to prevent and fight COVID-19 to the amount of CFA34.12 billion (US$61 119 250), including CFA20 billion (US$35 952 500) financed by the national budget. The authorities have also announced a set of fiscal, social and economic measures, the overall cost of which is estimated at CFA500 billion (US$898 812 500).

This grant aims to support businesses (especially small and medium-sized enterprises) by facilitating access to loans through an allocation of CFA20 billion (US$35 952 500) to the private sector guarantee fund and by reducing the constraints of cash, i.e. CFA100 billion (US$179 762 500) for the repayment of the domestic debt and CFA43.6 billion (US$79 095 500) for tax remissions as well as postponements of tax payment deadlines and customs duties. These measures also provide for the creation of a special fund of CFA100 billion (US$179 762 500) to support the most vulnerable households, strengthen price controls to prevent abuse, and for the free distribution of 56 000 tonnes of cereals and 16 000 tonnes of animal feed.[1]

 

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

Websites

Financial Afrik https://www.financialafrik.com

Bank of Africa Mali https://www.boamali.com/particuliers/prets/pret-ma-maison/

Orabank Mali https://www.orabank.net/fr/filiale/mali

FGHM SA http://www.fghm-sa.com/

Accommodation in Mali https://selogeraumali.com/

Bamako Immo https://www.bamako-immobilier.com/