Housing Finance in Mauritania

Macroeconomic Overview

Mauritania is a middle-income country located between Sub-Saharan Africa and the Maghreb. It covers an area of ​​over one million square kilometres with a population of about four million and a density of 3.9 people per square kilometre,[1] the lowest density in Africa. The desert covers most of the country. The country has natural resources (iron ore, gold, copper and phosphate) and agricultural resources. Agriculture and livestock breeding are the main economic activities. The dynamism in the mining sector offset the decrease in the agricultural and fishing sectors supporting the country’s growth to 5.9 percent in 2019 from 2.1 percent in 2018.[2]

Urbanisation has grown rapidly due to the rural exodus. Nomadic and rural life is being replaced by a sedentary and urban way of life. In 2019, the urban population was 2.5 million inhabitants out of a total population of approximately 4.5 million inhabitants. Living conditions are deteriorating and precarious housing and slums are on the rise, and are now home to nearly 80 percent of the urban population.[3] Only a quarter of the urban population is connected to electricity, and half to drinking water. Nouakchott had 1.2 million inhabitants in 2019, representing 51 percent of the urban population in contrast to its 15 000 inhabitants at the time of its creation in 1958. In 30 years, the city has seen its population multiply by 18, from 40 000 to over a million inhabitants.[4]

In 2020, the country’s growth is expected to decline with forecasts of between -2 and -6.8 percent due to the global COVID-19 pandemic[5] and lower demand for exports and foreign direct investment (FDI) from Europe and China. This is despite measures taken by the public authorities to maintain economic activity. The country could experience a financing gap and an increase in debt.

Inflation was 2.3 percent in 2019, a slight decrease of 0.7 percentage point compared to 2018. The budget surplus was 0.6 percent of gross domestic product (GDP) in 2019 against 1.5 percent in 2018.[6] The poverty rate fell from 44.5 percent to 33 percent between 2008 and 2014, accompanied by a decline in inequality. Unemployment remains high among young people (18.5 percent in 2017), who represent 60 percent of the population.

 

 

[1] World Bank. The World Bank in Mauritania. Overview. https://www.banquemondiale.org/fr/country/mauritania/overview (Accessed 22 September 2020).

[2] World Bank (2020). Report on the Economic Situation in Mauritania: Strengthening education to promote social cohesion and support economic development. https://reliefweb.int/sites/reliefweb.int/files/resources/Renforcer-l-%C3%89ducation-pour-Favoriser-la-Coh%C3%A9sion-Sociale-et-Soutenir-le-D%C3%A9veloppement-%C3%89conomique-Rapport-sur-la-Situation-%C3%89conomique-en-Mauritanie.pdf (Accessed 24 August 2020). Pg. x.

[3] World Bank. Data. Popultion living in slums (% of urban population. https://donnees.banquemondiale.org/indicator/EN.POP.SLUM.UR.ZS  (Accessed 25 August 2020).

[4] Habitat Worldmap (2017). Mauritania. https://habitat-worldmap.org/pays/afrique/mauritanie/ (Accessed 25 August 2020).

[5] World Bank (2020). Report on the Economic Situation in Mauritania: Strengthening education to promote social cohesion and support economic development. https://reliefweb.int/sites/reliefweb.int/files/resources/Renforcer-l-%C3%89ducation-pour-Favoriser-la-Coh%C3%A9sion-Sociale-et-Soutenir-le-D%C3%A9veloppement-%C3%89conomique-Rapport-sur-la-Situation-%C3%89conomique-en-Mauritanie.pdf (Accessed 24 August 2020). Pg. xi

[6] World Bank. The World Bank in Mauritania. Overview. https://www.banquemondiale.org/fr/country/mauritania/overview (Accessed 24 August 2020).

Access to Finance

Thanks to development finance institutions (DFIs), the banking sector provides access to credit. The arrival of the Canadian company Westbridge Mortgage REIT, specialising in real estate financing, in June 2020 is an opportunity to strengthen the mortgage market and support public authorities in their housing policy, especially for housing intended for international companies (oil and gas).

Mauritania has 18 banks, including seven Islamic banks and five with majority foreign capital,[1] with a high concentration in the main cities such as Nouakchott and Nouadhibou. Much of the access to finance is handled by microfinance institutions. Twenty-five microfinance institutions are active. The central bank’s key interest rates have remained stable since 2009, maintained at around nine percent and oscillated between 10 percent and 17 percent in April 2019. Banking access is increasing with a rate of over 30 percent including microfinance institutions.[2]

In 2019, banking activity remained dynamic. The stock of net domestic credits stood at UM89.6 billion (US$2.6 billion), an increase of 5.2 percent compared to 2018, partly due to the increase in aid to the economy of 17.5 percent for UM78.8 billion (US$2.1 billion) in 2019 compared to UM67 billion (US$1.8 billion) in 2018. The same is true for microfinance institutions whose net outstanding credit granted reached UM451 million (US$ 12 million) in 2019, an increase of 28 percent compared to 2018. Loans granted by the CAPEC (Caisses Populaires d’Epargne et de Crédit) represented 49 percent of loans from microfinance institutions against 51 percent for other institutions. However, outstanding loans from microfinance institutions represented only one percent of total loans in the financial system. Non-performing loans decreased to 21.7 percent of total loans at the end of 2019, equivalent to a decrease of 22.6 percent compared to 2018.[3]

Difficulties the banking sector faces include a fragmented and informal credit market. Banking activity is exposed to a risk of lack of liquidity with a liquidity/total assets ratio of around 19.6 percent in 2018 against 4.6 percent in 2017. The country does not have a stock market and is struggling to develop a mortgage market or a bank specialising in mortgage loans capable of meeting demand. The number of home loans remains low. Five percent of adults over 15 had a home loan in 2017.[4] Only 8.3 percent in 2014 got a mortgage.[5] The decentralisation of banking activity outside the main urban centres has not made it possible to encourage an increase in the use of banking services. In addition, the country is expected to face a funding gap and increased debt pressure due to the pandemic.[6]

 

 

[1] Central Bank of Mauritania (2019). Annual Report 2019. https://www.bcm.mr/IMG/pdf/rapport_anuel_2019.fr.pdf (Accessed 26 August 2020). Pg. 53.

[2] International Monetary Fund (2018). Islamic Republic of Mauritania: First Review Under the Extended Credit

Facility Arrangement. Press Release and Staff Report. Country Report No. 18/137. May 2018. https://www.imf.org/en/Publications/CR/Issues/2018/05/30/Islamic-Republic-of-Mauritania-First-Review-Under-theExtended-Credit-Facility-Arrangement-45917 Pg.10.

[3] World Bank. The World Bank in Mauritania. Overview. https://www.banquemondiale.org/fr/country/mauritania/overview (Accessed 24 August 2020).

[4] World Bank. Global Findex Database. https://globalfindex.worldbank.org/sites/globalfindex/files/2018-08/Global%20Findex%20Database.xlsx (Accessed 26 August 2020).

[5] World Bank (2015). The little data book on financial inclusion. https://www.unsgsa.org/files/2614/2971/4349/LDB_Financial_Inclusion_2015.pdf (Accessed 26 August 2020). Pg. 103.

[6] World Bank (2020). Report on the Economic Situation in Mauritania: Strengthening education to promote social cohesion and support economic development. https://reliefweb.int/sites/reliefweb.int/files/resources/Renforcer-l-%C3%89ducation-pour-Favoriser-la-Coh%C3%A9sion-Sociale-et-Soutenir-le-D%C3%A9veloppement-%C3%89conomique-Rapport-sur-la-Situation-%C3%89conomique-en-Mauritanie.pdf (Accessed 24 August 2020). Pg. xi.

Affordability

 

The efforts made by state authorities since independence have made ownership the dominant housing tenure. Almost 80 percent of Mauritanian households are said to own their homes.[1] The state has shut down housing programmes for civil servants (less than one percent). Formal housing represents 67.5 percent of real estate; the rest is made up of precarious dwellings such as tents, cabins or huts, barracks and “m’bar”.[2] Such a configuration is partly due to important government housing programmes including the Urban Development Project (UDP). This is an example of slum eradication in favour of an improved urban environment with plots and land titles, and is facilitated by access to housing, access to credit, vocational training and local development.

Housing is a high-cost item in Mauritania. Renting or buying a house, mainly in the city, remains inaccessible for a large part of the population. On average, the average monthly rent for a three-bedroom apartment in downtown Nouakchott is UM239 941 (US$ 6 387).[3] The income pyramid reveals that rent is inaccessible for many Mauritanians as 60 percent of Mauritanians earn less than UM127 720 (US$3 300) a month. This is pushing Mauritanians to move to other residential areas outside the city centre where rent prices can drop to UM50 000 (US$1 330) a month.[4]

Like rents, house purchase prices are high in cities. The cheapest house built by a formal agent costs around UM10 400 000 (US$276 855) and is thus inaccessible for a majority of local households, in a country where the gross national income (GNI) was UM60 826 (US$1 657) in 2019.

[1] National Statistics Office (2015). General Census of Population and Housing (RGPH) 2013.

http://www.ons.mr/images/RGPH2013/Chapitre11_Habitat_fr.pdf (Accessed 26 August 2020).

[2] ILO (2017). Study of sectors: Earthen construction materials and solar equipment. International Labour Organization: Country Office for Algeria, Libya, Morocco, Tunisia and Mauritania. https://www.ilo.org/wcmsp5/groups/public/—africa/—ro-abidjan/—ilo-algiers/documents/genericdocument/wcms_558530.pdf. (Accessed 27 August 2020). Pg. 22.

[3] Numbeo. Cost of Living in Mauritania. https://fr.numbeo.com/co%C3%BBt-de-la-vie/pays/Mauritanie (Accessed 26 August 2020).

[4] Numbeo. Cost of Living in Mauritania. https://fr.numbeo.com/co%C3%BBt-de-la-vie/pays/Mauritanie (Accessed 26 August 2020).

Housing Supply

Housing regulations have not really changed since 1975. At that time, policies offered government employees the opportunity to purchase their property individually to reduce the demand for social housing and encouraged developers to invest in private development.

The repeated droughts between 1977 and 1984 reduced the nomadic population, increased sedentary rural and urban populations, and intensified the phenomenon of rural exodus. Combined with a strong population growth, especially in Nouakchott where the rate is around eight percent a year,[1] the demand is 10 000 housing units a year. Specifically, according to an inventory carried out in 2009 by the Ministry of Housing, Urbanism and Territorial Development, the gap between demand and supply of housing is 233 percent. Housing construction is 3 000 housing units a year.

The state is the main guarantor of real estate in the country. It set up the microcredit system for low-cost housing under the UDP, which produced 5 900 homes in Nouakchott and Nouadhibou over the period 1998-2008.[2] The merger of the Société de construction et de gestion immobilière (SOCOGIM) and the National Land Development Agency into a company called the National Society for Land Development, Housing Development and Property Management (ISKAN) in 2010 contributed to the construction of around 4 900 housing units through a programme to restructure precarious neighbourhoods in Nouadhibou, launched in 2001, and the rehousing of 2 500 households as part of the extension and modernisation project of the town of Kaédi, started in 2009. Following the same logic, the extension and modernisation project of the town of Rosso, launched in 2009, is setting up 11 000 lots intended for housing. In Chami, the construction of a city of 50 housing units is planned.[3] The 100 housing project, funded by Qatar since 2017, for the municipalities of Jadir Al-Mahkan has been suspended due to political problems.[4]

Residential housing is dominated by the construction of buildings intended to be occupied by wealthy owners or rented by expatriates, particularly in the urban commune of Tevragh Zeina in the suburb of Nouakchott. Informal housing is made up of “kébbés” and “gazra”. The “kébbés” are informal settlements resulting from the urban explosion and peri-urbanisation in Nouakchott. The “gazra” are made up of former “kébbés” legalised by the authorities that can still be found in urban areas. This is the result of spontaneous settlement. They are still present and similar constructions are emerging.

[1] Habitat Worldmap (2017). Mauritania. https://habitat-worldmap.org/pays/afrique/mauritanie/ (Accessed 27 August 2020).

[2] GRET (2012). Twize, 10 years of social development in Mauritania.22 May 2012. https://www.gret.org/2012/05/twize-10-ans-de-developpement-social-urbain-en-mauritanie/ (Accessed 22 September 2020).

[3] ISKAN (2017). Restructuring program for precarious neighborhoods in Nouadhibou. http://iskan.gov.mr/index.php/realises/ National Society for Land Development, Housing Development and Property Management (Accessed 28 August 2020).

[4] Middle East Monitor (2017). Mauritania suspends housing projects funded by Qatar.

https://www.middleeastmonitor.com/20170705-mauritania-suspends-housing-projects-funded-by-qatar/  (Accessed 28 August 2020).

Property Markets

The majority of the population live in rural areas and on partially registered or unregistered land in urban areas. Based on the latest information available,[1] 80 percent of heads of household own their homes. In rural areas, owners represent 96 percent compared to 65 percent in urban areas. Renters are more common in Dakhlett Nouadhibou (38 percent) and Nouakchott (32 percent). The size of households is the same regardless of the area of ​​residence (six people per household).[2]

There is a cadastre website that provides details on registration services such as regulations, procedures and fees for transfer of ownership, as well as other relevant information to the public. It facilitates access to cadastral information and streamlines legal procedures, including the transfer of title deeds. A computerised system has been set up by the Ministry of Economy to create more transparency in the land allocation process. The cadastre keeps information on title deeds. Homeowners must have a notarised sales contract and certificate of ownership.

The real estate market in Nouakchott offers housing possibilities of varying quality (apartment buildings, luxury villas) at negotiable prices. In the residential area of ​​Tevragh Zeina, for example, the housing is of high standard with large stands and wide streets. Real estate agencies provide intermediation in the purchase, sale, rental and rent-to-own of both housing and land. However, informal housing is widespread in the outskirts of the capital.

Despite the reform efforts of the authorities, its strategic geographical position and its numerous natural resources, the real estate market suffers from a lack of confidence on the part of investors. In 2016, 27 075 official deeds were registered and 27 075 property titles recorded. The rental agreements listed were 38 574. Provisional title deeds amounted to 500 000. In the Doing Business reports, over the period 2017-2020, the country went from 160th to 152nd. Registration of proceedings is 4.5 percent of the property’s value, requiring 49 days and four proceedings.[3]

[1] National Statistics Office (2015). General Census of Population and Housing (RGPH) 2013.http://www.ons.mr/images/RGPH2013/Chapitre11_Habitat_fr.pdf Pg. 1.

[2]National Statistics Office (2015). General Census of Population and Housing (RGPH) 2013.

http://www.ons.mr/images/RGPH2013/Chapitre11_Habitat_fr.pdf. Pg. 9.

[3] World Bank (2020). Doing Business 2020. Economy Profile of Mauritania.

https://www.doingbusiness.org/content/dam/doingBusiness/country/m/mauritania/MRT.pdf (Accessed 28 August 2020).

Policy and Regulation

In Mauritania, the state is the main actor in town planning policy because it is the sole owner of the land. Using a public private partnership model, it intervenes in the provision of free housing or the sale of subsidised or non-subsidised housing or plots through ISKAN. The state also provides non-housing benefits to civil servants, relocates people, and facilitates the granting of housing credit. Its actions have also been related to the privatisation, transfer or sale of the public housing stock to occupying tenants.

In recent years, the policy and regulatory framework for the housing sector has been improved. The right of ownership is clearly delimited and protected: “any right of ownership which does not relate directly to a natural or legal person and which does not result from a legally protected development is non-existent”.[1] The traditional ownership by tribes has been abolished. The state appropriated the land by dispossessing the tribes which had based their right to the land on custom. This process ended in 1983.

To become an owner, it is necessary to obtain an authorisation to occupy the land by a hakem (an official personality). This permit is often considered as a property right, but it has no definitive legal value. It is issued against the price of land and the cost of demarcation. From that moment, the beneficiary has two years to build (according to town planning rules) before being able to claim the final title to the property.

The 1991 Constitution recognises, in its preamble, the intangible guarantee of the right to property. The policy frameworks and regulations governing the housing sector are:

• The Land Code (ordinance 83-127 of June 5, 1983) specifies in its first article that “the land belongs to the nation and any Mauritanian, without discrimination of any kind, may, by complying with the law, become its owner, in part” and adds in its second article that “the State recognises and guarantees private land ownership which must, in accordance with Sharia law, contribute to the economic and social development of the country”.
• Law No. 99-031 (July 20, 1990), amended by Law No. 2005-08 of January 30, 2005 and its implementing texts establishes real estate development in the country.
• The Constitution (1991) specifies in article 15 that the right to property is guaranteed. However, the law can limit the scope of the exercise of private property if the demands of the economy and social development so require.
• The Action Plan of the Poverty Reduction Strategy Paper III (PRSP 2011-2015), supported by the World Bank and the International Monetary Fund (IMF), aims to improve living conditions by making affordable housing available and by building urban infrastructure.

The approach focusses on:

1) Adopting and implementing a national housing strategy;

2) A significant increase in the number of dwellings;

3) The promotion of real estate development, with a view to providing a diversified supply of housing at an affordable cost to households;

4) The continuation and extension of the low-cost housing programme Twize in the main urban areas; and

5) The establishment of a housing finance system that takes into account the needs of households, as well as those real estate developers.

[1] Official Journal of the Islamic Republic of Mauritania (1983). Ordinance 83-127 of June 5, 1983 relating to the reorganization of land and property. http://www.droit-afrique.com/upload/doc/mauritanie/Mauritanie-Ordonnance-1983-127-reorganisation-fonciere-et-domaniale.pdf (Accessed 30 September 2020). Pg. 1.

 

Opportunities

Thanks to the series of reforms undertaken in the country, and with the support of the Strategy for Accelerated Growth and Shared Prosperity, the state has set itself the objective of placing Mauritania in 83rd place in the Doing Business ranking by focusing on areas with strong potential for improvement, such as the payment of taxes, cross-border trade and the granting of building permits.

Mauritania remains an attractive country because of its mineral resources. The absence of regulations limiting FDI is an advantage for real estate investors. A Higher Council for the Improvement of the Business Climate has been set up to strengthen the attractiveness of FDI.[1]

Opportunities for developing housing finance exist. The increase in the number of banks in the country could facilitate access to credit for households and increase housing finance. Commercial banks could also restore refinancing and guarantee mechanisms and create new products such as housing savings plans, long-term mortgages and renegotiable mortgage products.

The development of the real estate sector should be built on facilitating access to housing loans and easing loan conditions. These mechanisms should be aligned with the recommendations of the World Bank, which propose to establish a loan collection company and/or a mortgage management company; a mortgage refinancing fund; and a mortgage loan guarantee fund.[2] The country’s rapid population growth, especially in cities like Nouakchott, means it has a young population that can provide a workforce.[3] With the rural exodus, the demand for housing is intensifying.

[1] Decree of 20 February 2019 establishing attributions, composition and functioning of the Higher Council for the Improvement of the Business Climate in Mauritania. (Accessed 28 August 2020).

[2] World Bank (2013). Mauritania – Country partnership strategy for the period FY2014-2016 (English). http://documents.worldbank.org/curated/en/294641468056337844/Mauritania-Country-partnership-strategy-for-the-period-FY2014-2016 (Accessed 28 August 2020).

[3] Habitat Worldmap (2017). Mauritania. https://habitat-worldmap.org/pays/afrique/mauritanie/. (Accessed 27 August 2020).

Availability of data on housing finance

Apart from DFIs such as the World Bank and the IMF, the statistics used come from the National Statistics Office, the Central Bank of Mauritania and the Ministries. This data is obtained through censuses, surveys, or by using documents from the public or private sectors.

However, the availability of updated data is a problem. There is a lack of data and statistics on mortgages (number of mortgage providers, number of non-performing classified mortgages), construction costs and labour.

COVID-19 response

The pandemic has affected economic, political and social activities. The country has taken the following measures: closing the country’s land, air and sea borders; restricting interregional mobility within the country; introducing a curfew; suspending training and educational establishments, closing restaurants; and banning gatherings in all 12 regions of the country.

Several measures have been implemented by public authorities to contain the negative effects, in particular the creation of the Special Fund for Social Solidarity and the Fight against the Coronavirus.

The Central Bank of Mauritania has also taken a series of measures, including lowering its key interest rate from 6.5 percent to five percent, lowering the loan facility rates from nine percent to 6.5 percent, the reserve requirement rate from seven percent to five percent, and reducing deposit facility rates, fixed at the policy rate and subtracted from five percent, i.e. zero percent.[1] These measures covered economic activity as a whole but rarely made specific distinctions about different sectors, including that of housing. No specific measures have been taken about evictions or slums.

[1] Making Finance Work for Africa (2020). Responses of the African financial sector to the COVID-19 crisis – Mauritania. 22 July 2020. https://www.mfw4a.org/fr/news/reponses-du-secteur-financier-africain-la-crise-du-covid-19-mauritanie (Accessed 30 August 2020).

 

Websites

Central Bank of Mauritania https://www.bcm.mr/

National Statistics Office http://www.ons.mr/

Official Journal of the Islamic Republic of Mauritania http://www.droit-afrique.com/

National Society for Land Development, Housing Development and Management http://iskan.gov.mr/