Housing Finance in Mozambique
Overview
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Mozambique’s soaring urban population has been accompanied by limited affordability of decent housing and an infrastructure deficit for low-income households. To accommodate population growth, approximately two million new housing units are required, with the need increasing at a rate of 2.8% a year. The scale of the need has been exacerbated by recurrent cyclones and severe flooding in coastal areas. Destruction of housing by tropical cyclones Idai and Kenneth has led to an increasing focus on climate-proofing existing and new housing stock, including the use of quality building materials, enhancing roof structures, elevating land in low lying areas and deepening storm water drainage canals. More than 70% of households have no access to basic sanitation or electricity, and approximately one quarter are without running water. The demand for housing is especially growing in resource extracting cities where economic activities are concentrated. Approximately 80% of the urban population or 1.8 million urban households live in overcrowded informal settlements with poor living conditions.
The Northern Province of Cabo Delgado has been conflict-ridden since 2017. Militant attacks have put massive foreign investment and natural gas exploration, which the country depends on, at risk. Southern African Development Community (SADC) states and Rwandan troops have been deployed in an attempt to stabilise the country. Approximately 1.3 million people, including 635 0006 internally displaced persons (IDPs), need of assistance. Tens of thousands of IDPs are living in “structurally damaged homes” or overcrowded emergency resettlement shelters with little sanitation services. A Humanitarian Response Plan identified that the bulk of financing needs are required for food, at a cost of MT8.6 billion (US$136 million), and shelter (new or reconstructed) MT1.7 billion (US$28 million). Displaced persons are expected to be resettled into new villages, which requires government to effectively allocate new land for housing.
[1] Arantes, E. (2019). Poverty rate soared in Mozambique – O País newspaper. 21 October 2019. Club of Mozambique. https://clubofmozambique.com/news/poverty-rate-soared-in-mozambique-o-pais-145005/ (Accessed 1 August 2020).
[2] National Statistics Institute. (2020). http://www.ine.gov.mz (Acessedo 30 July de 2020).
[3] Bank of Mozambique. (2020). Financial Stability Report. 30 June 2020. http://www.bancomoc.mz/fm_pgTab1.aspx?id=379 (Accessed 28 July 2020). Pg.14.
[4] Allen, C. and Johnsen, V. (2008). Mozambique and the constraints of the housing market development and financing. https://housingfinanceafrica.org/app/uploads/Moz_Portuguese.pdf (Accessed 29 July 2020). Pg. 24.
[5] Allen, C. and Johnsen, V. (2008). Mozambique and the constraints of the housing market development and financing. https://housingfinanceafrica.org/app/uploads/Moz_Portuguese.pdf (Accessed 29 July 2020). Pg. 1 and pg. 24.
[6] Fund for Housing Promotion. (2020). Official launch of project Renascer.23 March 2020.https://ffh.gov.mz/noticias-eventos/lancamento-oficial-do-projecto-renascer (Accessed 17 August 2020).
Find out more information on the housing finance sector of Mozambique, including key stakeholders, important policies and housing affordability:
- Overview
- Access to finance
- Affordability
- Housing supply
- Property markets
- Policy and Legislation
- Opportunities
- Availability of data on housing finance
- Urban Informality
- Websites
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2021 edition, which has up-to-date profiles for 55 African countries.
Download yearbookMozambique
Overview
Mozambique’s soaring urban population has been accompanied by limited affordability of decent housing and an infrastructure deficit for low-income households. To accommodate population growth, approximately two million new housing units are required, with the need increasing at a rate of 2.8% a year. The scale of the need has been exacerbated by recurrent cyclones and severe flooding in coastal areas. Destruction of housing by tropical cyclones Idai and Kenneth has led to an increasing focus on climate-proofing existing and new housing stock, including the use of quality building materials, enhancing roof structures, elevating land in low lying areas and deepening storm water drainage canals. More than 70% of households have no access to basic sanitation or electricity, and approximately one quarter are without running water. The demand for housing is especially growing in resource extracting cities where economic activities are concentrated. Approximately 80% of the urban population or 1.8 million urban households live in overcrowded informal settlements with poor living conditions.
The Northern Province of Cabo Delgado has been conflict-ridden since 2017. Militant attacks have put massive foreign investment and natural gas exploration, which the country depends on, at risk. Southern African Development Community (SADC) states and Rwandan troops have been deployed in an attempt to stabilise the country. Approximately 1.3 million people, including 635 0006 internally displaced persons (IDPs), need of assistance. Tens of thousands of IDPs are living in “structurally damaged homes” or overcrowded emergency resettlement shelters with little sanitation services. A Humanitarian Response Plan identified that the bulk of financing needs are required for food, at a cost of MT8.6 billion (US$136 million), and shelter (new or reconstructed) MT1.7 billion (US$28 million). Displaced persons are expected to be resettled into new villages, which requires government to effectively allocate new land for housing.
Mozambique was among the least economic resilient countries in 2020 and this is directly linked to high resource-dependency and lack of economic diversification. In addition to fiscal stimulus packages, a COVID-19 Social Protection Response Plan with a budget of MT15.045 billion (US$237 million) was introduced by government and development partners, to offer social support and cushion the country’s most vulnerable households. An estimated 1.5 million households are expected to receive cash transfers of MT1 500 (US$24). The country’s debt distress, combined with a fiscal deficit amounting to 7% of GDP, continues to constrain the public budget. Mozambique’s 2019 GDP growth rate of 2.3% contracted to half a percent in 2020. The economic contraction is expected to put an additional 850 000 Mozambicans below the international poverty line.
[1] Arantes, E. (2019). Poverty rate soared in Mozambique – O País newspaper. 21 October 2019. Club of Mozambique. https://clubofmozambique.com/news/poverty-rate-soared-in-mozambique-o-pais-145005/ (Accessed 1 August 2020).
[2] National Statistics Institute. (2020). http://www.ine.gov.mz (Acessedo 30 July de 2020).
[3] Bank of Mozambique (2020). Financial Stability Report. 30 June 2020. http://www.bancomoc.mz/fm_pgTab1.aspx?id=379 (Accessed 28 July 2020). Pg. 21.
[4] Allen, C. and Johnsen, V. (2008). Mozambique and the constraints of the housing market development and financing. https://housingfinanceafrica.org/app/uploads/Moz_Portuguese.pdf (Accessed 29 July 2020). Pg. 24.
[5] Allen, C. and Johnsen, V. (2008). Mozambique and the constraints of the housing market development and financing. https://housingfinanceafrica.org/app/uploads/Moz_Portuguese.pdf (Accessed 29 July 2020). Pg. 1 and pg. 24.
[6] UN-Habitat. (2018). Mozambique housing profile.
https://unhabitat.org/sites/default/files/documents/2019-05/housing_profile_mozambique_pt.pdf
(Accessed 26 August 2020). Pg.15.
[7] Fund for Housing Promotion. (2020). Official launch of project Renascer.23 March 2020.https://ffh.gov.mz/noticias-eventos/lancamento-oficial-do-projecto-renascer (Accessed 17 August 2020).
[8]National Statistics Institute (INE). (2020). GDP from a production perspective 2020. http://www.ine.gov.mz/estatisticas/estatisticas-economicas/contas-nacionais/anuais-1/pib-na-optica-de-producao/pib-na-optica-de-producao-2020/at_download/file (Accessed 30 July 2020).
[9] Bank of Mozambique. (2020). Financial Stability Report. 30 June 2020. http://www.bancomoc.mz/fm_pgTab1.aspx?id=379 (Accessed 28 July 2020). Pg.14.
[10] Bank of Mozambique. (2020). Taxa de Juro (interest rates). http://www.bancomoc.mz/fm_pgtab1.aspx?id=105 (Accessed 7 October 2020).
[11] Bank of Mozambique. (2020). Economic outlook and inflation. June 2020.
http://www.bancomoc.mz/fm_pgtab1.aspx?id=105 (Accessed 28 July 2020). Pg.6.
[12]Bank of Mozambique (2020). Economic outlook and inflation. June 2020. http://www.bancomoc.mz/fm_pgtab1.aspx?id=105 Pg. 25.
[13] National Investment Bank. (2020).
https://www.bni.co.mz/banca-de-desenvolvimento/linha-de-credito-bni-covid19/ (Accessed 29 July 2020).
[14] Letter of Mozambique. (2020). Terrorists attack again in Cabo Delgado. 29 September 2020.
https://cartamz.com/index.php/politica?start=6 (Accessed 3 October 2020).
[15] DW. (2020). Cabo Delgado: Population running from attacks in Mocimboa da Praia. 27 June 2020.
https://www.dw.com/pt-002/cabo-delgado-população-em-fuga-após-novos-ataques-em-moc%C3%ADmboa-da-praia/a-53967475 (Accessed 3 October 2020).
Access to finance
While interest rates were initially reduced at the onset of the pandemic, the country’s Central Bank (Bank of Mozambique) subsequently increased its monetary policy interest rate (MIMO) by 300 percentage points (from 10.3% to 13.3%) for the first time since the MIMO was introduced in 2017. This raised the prime rate to 18.9%, increasing mortgage interest rates and making housing less affordable. The basis for the MIMO increase was inflationary pressures because of a weakening metical – year-on-year inflation increased from 2.7% in June 2020 to 5.5% in June 2021. However, between January and April 2021, despite the negative economic climate, the metical appreciated by 21% against the US dollar.
The financial system is made up of 20 commercial banks dominated by Commercial and Investment Bank (BCI), International Bank of Mozambique (BIM) and Standard Bank, which together hold two thirds of total banking assets and 61% of total banking credit. At 97% almost all bank funding including mortgages is through deposits. Mozambique has nine microfinance providers supervised by the Central Bank. Data on microfinance institutions is sparse, and the extent to which they lend to housing activities generally appears low. Most Mozambicans finance their housing construction activities with personal savings. The Housing Promotion Fund (FFH) programme includes finance for incremental self-construction.
There are 17 mortgage providers and, as of July 2021, MT13.6 billion (US$214.2 million) credit had been extended to the housing sector, accounting for 5% of total banking credit. This is a 2% increase compared to December 2020. Only one in 10 adults reportedly had credit in the first quarter of 2021. In 2021, Banco Unico was officially acquired by one of South Africa’s four major banks to become Nedbank Mozambique. Commercial banks that form the Bankers Association of Mozambique (AMB) typically set their interest rates on housing loans between 20% and 25%. The typical mortgage term, according to the Bank of Mozambique, is 20 years, but banks such as Absa and MozaBanco offer mortgages up to 25 years. MozaBanco offers the maximum loan-to-value ratio on residential mortgages at 90%. Central Bank regulation requires that the amount financed does not exceed 30% of a borrower’s net monthly income. Average wage incomes in Mozambique are under MT7 000 (US$110). This means monthly payments cannot exceed MT2 100 or US$33 – which is insufficient to access formal affordable housing products.
Consumer loans, which overall bear high interest rates, are often diverted to house construction or rehabilitation, contributing to household indebtedness. The pandemic has undoubtedly affected the quality of the banking system’s credit portfolio, and household indebtedness poses a risk for commercial banks exposed to household credit. The ratio of non-performing loans to total loans was 12.6% in June 2020, compared to 10.6% in June 2019. This is above the international benchmark of five percent.
The government recognises the need to overcome banks’ liquidity challenges and mitigate risks for lending down market, through new risk management frameworks and guarantees. The FFH is increasingly looking at unlocking affordable credit to young people and civil servants and exploring blended finance models to increase accessibility of mortgages.
[1] Bank of Mozambique (2020). Banking system. http://www.bancomoc.mz/fm_instituicoes.aspx (Accessed 28 July 2020).
[2] Finscope (2019). Mozambique finscope consumer survey report.
http://finmark.org.za/wp-content/uploads/2020/07/Mozambique_Survey-2020-07-311.pdf. (Accessed 7 July 2020). Pg.30.
[3] Bank of Mozambique (2020). Database for housing financing. http://www.bancomoc.mz/fm_pgLink.aspx?id=222 (Accessed 28 July 2020). Exchange rate at 25 August 2020. US$ 1 = MT70.72, Bank of Mozambique.
[4]Bank of Mozambique (2018). Notice 9/GBM/2018. Loan to guarantee (ltv) and loan to income ratio (DTI). 24 October 2018. http://www.bancomoc.mz/fm_pgtab1.aspx?id=8 (Accessed 28 July 2020). Pg. 7.
[5] MozaBanco: Loan Policy: NG_0121_2015. [6] Interview with Arlindo Langa, Mozabanco, 21 August 2020, Maputo, Mozambique.
[7]UN-Habitat. (2018). Mozambique housing profile.
https://unhabitat.org/sites/default/files/documents/2019-05/housing_profile_mozambique_pt.pdf
(Accessed 26 August 2020). Pg. 62.
[8] KPMG (2019), bank survey 2019
http://www.amb.co.mz/index.php/publicacao/pesquisa-do-sector-bancario/43-pesquisa-do-sector-bancario-novembro-2019/file (Accessed 15 July 2020). Pg. 25.
[9] Bank of Mozambique (2020). Financial Stability Report. 30 June 2020. http://www.bancomoc.mz/fm_pgTab1.aspx?id=379 (Accessed 28 July 2020). Pg.21.
[10]Sebastião, E.(2020). Mozambique: COVID-19 increases unemployment rates in Sofala. 8 May 2020. DW Mozambique: https://www.dw.com/pt-002/mo%C3%A7ambique-covid-19-faz-aumentar-desemprego-em-sofala/a-53373891 (Accessed 26 August 2020).
[11] Interview with Arlindo Langa, Mozabanco, 21 August 2020., Maputo, Mozambique.
Affordability
The gap between affordability levels and housing available on the market limits opportunities for both home ownership and adequate rental housing in urban centres. Only 2% of the adult population receive a salary or wage income and those with informal incomes are far less likely to access finance and banking credit. More than half of the population earn an income less than MT5 000 (US$79) a month and 88% have no access to credit. This puts into perspective the affordability levels of most of the population. Absa’s website requires a minimum loan amount of MT2 million (US$31 506) for mortgages. Considering income and other exclusionary lending terms, a loan of this value excludes most Mozambicans.
COVID-19 had the biggest impact on credit-constrained households. Low-income urban households have disproportionately suffered from income losses. Households rely on cash savings or informal savings groups to finance and build their homes. The overall decline in credit extended to the private sector has also affected housing, while the insurgency in the North has increased the risk of debt default and hampered access to banking services, due to the destruction and closure of banking agencies in the area.
The affordability challenge has led to the development of innovative payment schemes in the affordable housing market. Casa Real introduced a rent-to-buy model that allows clients to rent their homes for MT4 443 (US$70) monthly, for a period of three to five years. This gives prospective homeowners the opportunity to build up a credit history and save for a down payment, increasing the possibility of securing mortgage finance on a one-bedroom starter home with an inside bathroom that can be extended incrementally. Casa Real, through its agreement with Absa, has brought the minimum income requirement for a mortgage down from MT43 800 or US$690 (far above what most households earn) to just MT14 678 (US$228).
The FFH’s Habita Mozambique programme explicitly caters for the income capacity of different market segments. Houses for low, lower middle- and middle-income households are priced at MT634 800 to MT1.2 million (US$10 000 to US$20 000), MT1.5 million to MT2.8 million (US$25 000 to US$45 000) and MT3.1 million to MT4.4 million (US$50 000 to US$70 000), respectively. These values would buy a studio, one, two or three-bedroom home on plots of between 300m2 and 800m2) connected to the requisite infrastructure. Eligibility and income ranges consider the country’s minimum wage levels. For example, low-income households would earn no more than five times the minimum wage (between MT4 443 or US$7034 and MT1.3 million or US$22 000). FFH’s cheapest house is 18m2, priced at MT667 000 (US$10 507). Buyers have the option of paying monthly installments of MT2 800 (US$44), interest free, over 20 years.
High construction costs and a lack of financing often lead to construction of substandard dwellings, due to the use of poor-quality building materials and lack of compliance to safe building practices. Finding contractors that can offer a competitive cost is often a challenge for housing projects. In some urban centres, total construction costs average MT20 345 (US$320) per m2, with labour costs averaging MT8 138 (US$128). A 50kg bag of cement now costs between MT220 (US$3.5) and MT255 (US$4). The reduction in the price of cement, which came on the back of Chinese investments in a new factory (Dugongo Cimentos) in Maputo province, is encouraging for households building their homes incrementally.
[1] Ministry of Public Infrastructure, Housing and Water Resources. (2019). Habita Housing Program Mozambique. Pg. 6.
[2] O País. Special Suplement. (2015). Real estate opportunities. 30 June 2015. O País.
http://www.betar.pt/upload/pdf/pdf_1437131744.pdf (Accessed 20 June 2020). Pg. 6.
[3] FinScope. (2019). Consumer survey mozambique 2019 report.
https://finmark.org.za/finscope-consumer-survey-mozambique-2019-report-english/ (Accessed 10 August 2020) Pg.20.
[4] Club of Mozambique. (2020). Mozambique: Covid-19 brings minimum wage negotiations to a halt. 17 April 2020. https://clubofmozambique.com/news/mozambique-covid-19-brings-minimum-wage-negotiations-to-a-halt-watch 157992/.(Accessed 17 August 2020).
[5] Government of Mozambique. (2020). Electricity of Mozambique reduces electricity bills in 10 percent to all consumers. https://www.portaldogoverno.gov.mz/por/Imprensa/Noticias/Electricidade-de-Mocambique-reduz-em-10-a-taxa-de-energia-para-todos-os-consumidores (Accessed 17 August 2020).
[6] UN-Habitat. (2018). Mozambique real estate profile.
https://unhabitat.org/sites/default/files/documents/2019-05/housing_profile_mozambique_pt.pdf
(Accessed 26 August 2020). Pg. 15.
[7] Email exchange with Manuel Pereira, Mondego Group SA, 11 August 2020, Maputo, Mozambique.
[8] UN-Habitat. (2018). Mozambique housing profile.
https://unhabitat.org/sites/default/files/documents/2019-05/housing_profile_mozambique_pt.pdf
(Accessed 6 August 2020). Pg. 15.
[9] Government of Mozambique. The Constitution. Article 91.
https://www.portaldogoverno.gov.mz/por/content/download/194/1138/version/2/file/constituicao.pdf (Accessed 17 August 2020).
[10] Arante, E. (2020). Government working on fiscal incentives for housing construction material. 1 October 2019. O País. http://opais.sapo.mz/governo-prepara-incentivos-fiscais-na-importacao-de-material-de-construcao-para-habitacao (Accessed 7 August 2020).
Housing supply
The FFH has plans to construct over 1 500 homes by 2024. These efforts are crucial for driving housing affordability but scaling for greater market transformation remains a challenge. The Habita Mozambique programme has created momentum for closing the housing and infrastructure gap, with a focus on informal settlements and upgrading programmes. As part of the programme, the government will provide plots of between 300m2 and 800m2 with access to roads, water, energy and sanitation, to qualifying households, as well as offer financing and technical assistance to improve self-construction techniques. The programme has delivered an 18m2 studio home on a 300m2 plot worth MT667 000 (US$10 500) The units are constructed with bricks and metal roof sheets and the target market is low income households which cannot access decent housing through the formal market. However, it appears the FFH is owed MT177 million (US$2.8 million) of accumulated debt from housing beneficiaries.
The first affordable mortgage in Mozambique has been developed by Casa Real and Absa Ban and serves as a model for unlocking housing finance opportunities in other markets. Casa Real is a pioneer of affordable and resilient homes in Mozambique and delivered its first 10 pilot houses as part of Inhamizua phase one. Phase two was approved in 2020 and is expected to deliver 80 homes supplied with bulk infrastructure services. The project has created 245 jobs and will deliver a combination of starter and cross-subsidy homes, targeted at low to middle income markets. Furthermore, SDU Beira put out a tender for the construction of 25 000 affordable houses in Maraza, with the intention to develop 50ha of serviced plots by the end of 2021.
Casa Minha has also been active in enhancing the urban transformation landscape for middle to upper middle-income markets. Its model is fundamentally based on upgrading settlements with quality modular and incremental homes in Maputo. However, the developer had to halt its activities in 2020/21 due to ongoing challenges with the local municipality.
Although most rental housing in Maputo is constructed with durable building materials, some “makeshift” rental dwellings are in deplorable condition, with almost no connection to basic services. Maputo’s rental market is 80% informal, characterised by informal estate agents, unregistered landlords and the absence of formal, written leases. In the port city of Beira (Mozambique’s third largest city), dwellings are largely located in areas prone to flooding and severe weather. In Beira, an estimated MT27.6 billion (US$435 million) of investment is needed for housing, MT14.2 billion (US$225 million) for transport infrastructure, and MT38 million (US$599 000), for solid waste management.
African Union for Housing Finance member, Genius Investments, signed a Memorandum of Understanding with FFH to develop affordable housing on 25 acres of land belonging to Aeroportos de Moçambique (ADM), in Maputo. The houses will be built for employees and the public in the medium and medium to low market segment. It is also involved in the construction of affordable housing in Manica Province.
The Ministry of Public Works, Housing and Water Resources (MOPHRH), through the National Urban Development and Decentralization Project is being supported with MT7.4 billion (US$117 million) World Bank funding, to develop urban infrastructure, mobility and basic services across municipalities. Beira has spearheaded the development of a 2035 masterplan that consists of urban development projects and expansion strategies, including for flood-proof residential areas.
[1] National Statistics Institute (2019). Official results of the IV general population census. 29 April 2019.
http://www.ine.gov.mz/iv-rgph-2017/mocambique/apresentacao-resultados-do-censo-2017-1/at_download/file (Accessed 17 August 2020). Pg. 54.
[2] Government of Mozambique. (2020). Ministry of Housing demands transparency in the selling of the Zintava project houses. https://www.portaldogoverno.gov.mz/por/Imprensa/Noticias/Machatine-exige-transparencia-na-venda-de-imoveis-em-ZINTAVA (Accessed 17 August 2020)
[3] Fund for Housing Promotion. https://www.ffh.gov.mz/ (Accessed 17 August 2020)
[4] Ministry of Public Infrastructure, Housing and Water Resources. (2019). Habita Housing Program Mozambique. Pg. 20 and pg. 38.
[5]Fund for Housing Promotion. (2020). Official launch of the Renascer Housing Program. 23 March 2020. https://ffh.gov.mz/noticias-eventos/lancamento-oficial-do-projecto-renascer
(Accessed 17 August 2020).
[6] Interview with Marcos Matandalasse, Fund for Housing Promotion, 18 August 2020, Maputo, Mozambique.
[7] Matias, E. (2020). Mozambique: housing for the low income segment. 12 March 2020. DW Mozambique. https://www.dw.com/pt-002/mo%C3%A7ambique-casa-pr%C3%B3pria-para-cidad%C3%A3os-de-baixa-renda/a-52741255 (Accessed 17 August 2020).
[8] Interview with Marcos Matandalasse, Fund for Housing Promotion, 18 August 2020, Maputo, Mozambique.
[9] Noticias newspaper. (2019). Launch of the project to build 25 thousand houses for young population. 12 December 2019. https://jornalnoticias.co.mz/index.php/beira/95005-arranca-construcao-de-25-mil-casas-para-jovens-na-cidade-da-beira (Accessed 17 June 2020).
[10] Nkhonjera, M. (2020). Affordable and climate resilient building: A case study of Casa Real in Beira, Mozambique. Case Study 17. Centre for Affordable Housing Finance.
Property markets
The 2017 census shows that there are 4.8 million formal residential dwellings nationally – 94% of households own their residences and 6% live in rental housing. The proportion of rental occupants is much higher in the capital city (23% or 54 000 households), largely owned by small-scale landlords. In recent years, and there are growing gentrification pressures in Maputo’s urban spaces.
All land in Mozambique is owned by the government. The MozLand project was established to regularise land use-right titles (Land Use and Benefit Rights – DUAT), as well as strengthen institutional capacity, across the country. This programme is ongoing and is expected to hand out a total of 5 million DUATs, with an explicit emphasis on women-headed households. However, the capacity of the Ministry of Land and Environment to effectively implement this programme and maintain and upgrade the Land Information Management System is limited. Access to land and locating land for large-scale housing projects is a key obstacle in urban areas.
Informal estate agents and informal rental agreements are common in rental markets. The high informality often results in precarious contracts and no legal framework protecting tenants. Rental prices are strongly linked to location and proximity to services and infrastructure. In the capital, a conventional house (with an inside bathroom and toilet) could cost between MT3 500 (US$55) and MT50 000 (US$788) a month. Casa Minha’s lowest rental is MT25 000 (US$394) for a 65m2 house. The same house will cost at least MT4.1 million (US$65 000) to purchase in 2022. The cheapest newly built house on the market was a (26m2) US$10 000 or MT634 800 incremental house built by Casa Real in Beira.
[1]Ministry of Public Infrastructure, Housing and Water Resources. (2019). Habita Housing Program. Pg. 20.
[2] Email exchange with Calvino Bingo, Ministry of Industry and Commerce -BAU, 21 August 2020, Maputo, Mozambique
[3] Law 19/97 of 1 October. Land. https://www.sheltercluster.org/sites/default/files/docs/lei_terras_mocambique.pdf. (Accessed 7 July 2020). Article 3. Pg. 2.
[4] Mozambique Realestate Magazine. (2020). COVID-19 Impact on Realestate.
https://realestate.co.mz/download/131265/ (Accessed 1 August 2020). Pg. 6.
Policy and Legislation
Mozambique’s housing policy was approved in 2011 and focusses on the delivery of adequate housing and the required financial support to low-income families, land use planning and provision of basic infrastructure. The 2030 National Housing Strategy builds on the housing policy with explicit emphasis to contribute to achieving sustainable development goal (SDG) 11, and a focus on improving institutional coordination, housing promotion and inclusive financing. It also integrates housing into the country’s broader development agenda. Although a strategy for rental housing exists, a regulatory framework governing and supporting the rental market is absent. The state, through the FFH, is responsible for implementing the Habita programme, through the delivery of new housing, support for self-construction, provision of serviced plots, and affordable credit to targeted income segments
The National Financial Inclusion Strategy (2016-2022) sets out the country’s plans to expand financial services, digitise payment systems, and reduce service delivery costs in rural and peri-urban areas. The strategy also has an explicit focus on housing finance. A new Land Policy and Law will replace the country’s framework governing the land administration system, by 2022 and is expected to improve the efficiency of land administration institutions as well as support the land information management system. The General Regulation for Urban Buildings (REGEU) is also under review.
[1] Clubofmozambique. (2020). NGO says Mozambican social housing policy is elitist. 3 July 2020. https://clubofmozambique.com/news/ngo-says-mozambican-social-housing-policy-is-elitist-164715/. (Accessed 17 August 2020).
[2] Fund for Housing Promotion. (2020). Olimpic Vila II. 20 August 2018. https://www.ffh.gov.mz/projectos-e-novidades/projectos-disponiveis/vila-olimpica-ii. (Accessed 17 August 2020).
[3] Massarongo, F. (2013). Why commercial banks do not reduce the interest rates in line with the Central Bank rates? Reflecções. https://www.iese.ac.mz/lib/publication/livros/des2013/IESE_Des2013_6.BanComTaxRef.pdf. (Accessed 25 August 2020). Pg. 1.
[4] Allen, C. and Johnsen, V. (2008). The constraints for the development of and access to finance for the housing market in Mozambique. https://housingfinanceafrica.org/app/uploads/Moz_Portuguese.pdf (Accessed 29 July 2020). Pg. 35.
[5] TTA, Attorneys. (2019). New Building Registry Act. January 2019.
https://www.plmj.com/xms/files/v1_antigos_anteriores_a_abr2019/newsletters/2019/janeiro/Novo_Codigo_de_Registo_Predial_de_Mocambique.pdf (Accessed 28 July 2020). Pg. 1.
[6] The President Office. (2020). The President speech on the hearing to the law of land review. 16 July 2020.
https://www.presidencia.gov.mz/por/Media/Files/100-Discurso-sobre-Politica-Nacional-de-Terras-1707020 (Accessed 30 July 2020). Pg. 6 and 8.
Opportunities
The affordable housing shortage in Mozambique is an opportunity to fill a critical market gap. Current challenges include access to affordable finance, land and infrastructure management, construction costs, unsustainable self-construction techniques, and climate change risks. The government’s active implementation of the Habita programme could create an attractive environment for investment across the housing ecosystem. The frequency of extreme weather events and associated financial risks means there is a growing investment need for resilient housing. The integration of green building technologies and materials is also an untapped market opportunity that can revolutionise housing construction in Mozambique.
Lack of affordable end-user finance products provides room for developers such as Casa Real, which is seeking funding to support rent-to-own schemes, to scale delivery. Scope exists to provide more low-cost options for buying housing and supporting incremental construction activities, which includes affordable mortgages and housing microfinance products. Importantly, replicating Casa Real’s model beyond Beira would require an enabling environment and strong partnerships between affordable housing developers and local governments. The new land laws will be vital for providing households with tenure security and improved access to secured loans (mortgages). The review of REGEU could support government’s efforts to adopt more widespread sustainable building practices, particularly for self-construction.
Availability of data on housing finance
The National Institute of Statistics publishes regular macroeconomic data, population, and housing census data, as well as sectoral reports. The Bank of Mozambique disseminates economic and financial indicators, including interest rates and credit statistics by sector. Information shared by the MOPHRH includes legislation and national plans, as well as updates on average prices of civil infrastructure projects, while the FFH publishes its ongoing and completed housing construction projects.
Commercial banks collect data on mortgage terms, the Confederation of Economic Associations on construction, and the International Federation of Surveyors geospatial analyses. This data largely needs to be sourced directly from these institutions. FSD Mozambique publishes the latest financial inclusion data. Private housing developers are a useful part of the data ecosystem, providing housing construction data, at a project level.
Some key reports are outdated or not disseminated regularly, and data is generally not disaggregated enough to capture trends in the residential property market or housing construction sector. Mozambique’s data landscape could benefit from a centralised database that collectively draws from the MOPHRH and private housing and construction activities.
Urban Informality
Mozambique’s population of 31.2 million is expanding at an annual growth rate of 3%, with over a third residing in urban areas. An estimated 77% of urban residents live in slums, informal settlements or inadequate housing – equivalent to 1.8 million urban households. The country’s urbanisation rate (4.4%) is higher than that of the Southern African region. This has affected the delivery of basic municipal services.
In Beira, 70% of households live in informal, poorly built, dwellings. It takes 60 days and six procedures to register a residential property, and with a land administration system that is limited in its cover of urban areas. Owner-occupied homes are often built on land without the consent of city regulators.
Over half (63%) of urban households have access to piped water, while only 29% of all households have access to basic sanitation services. As Habita Mozambique is progressively implemented, service delivery may improve significantly. The programme has specific goals to provide urban areas with accessible housing and basic infrastructure.
[1]Bank of Mozambique (2020). Economic outlook and inflation. June 2020. http://www.bancomoc.mz/fm_pgtab1.aspx?id=105 Pg. 25.
Websites
Bankers Association of Mozambique www.amb.co.mz
Bank of Mozambique www.bancomoc.mz
Club of Mozambique www.clubofmozambique.com
Confederation of Economic Associations www.cta.org.mz
Financial Sector Deepening Mozambique www.fsdmoc.com
Housing Promotion Fund www.ffh.gov.mz
International Federation of Surveyors www.fig.net
Ministry of Land and Environment www.mta.gov.mz
Ministry of Public Works, Water Resources and Housing www.mophrh.gov.mz
National Statistics Institute www.ine.gov.mz
National Investment Bank www.bni.co.mz
UN Habitat Mozambique www.unhabitat.org
Genius Investment, Ida https://www.ggroups.info/
Casa Real https://www.casareal.co.mz/
