Housing Finance in Togo
Overview
This profile is also available in French here.
To download a pdf version of the full 2020 Togo country profile, click here.
Togo’s housing sector is yet to cope with increasing population growth in the urban areas (the annual population growth in 2019 was estimated at 2.42 percent and the population at 8 082 366 inhabitants); urbanisation is especially strong in Lomé. 50 percent of the Togolese population is expected to live in urban areas by 2028.
Togo’s economy is dominated by agriculture, which most of the population is involved in. The economic growth of Togo predicted to contract to 1.5 percent in 2020 because of Covid -19 pandemic. The government implemented various measures including interest rate cut by 50 basis points by the central bank as well as supporting families who lost income during the pandemic.
Financial inclusion in Togo remains a challenge regardless the slight increase in the number of the population over 15 years who use formal financial institutions services. The financial services delivery landscape in Togo is dominated by microfinance institutions who spread their reach to the rural and peripheral populations. However, the microfinance institutions do not offer formal home loans to finance housing although it seems beneficiaries use some of the funds offered in real estate projects. Mortgages offered by banks are difficult to obtain and when offered, they come with strict terms like reporting regular income or land securities. However, regional initiatives for a better access to housing finance in WAEMU countries driven by driven by the the CRRH-UEMOA is expected to boost the housing market in the region and Togo as well. The government’s reforms and the one stop shop to accelerate the land registration process and reduce costs of issuing land title are also a step to boost the housing market.
Despite these laudable initiatives, there remain some concerns to be tackled to improve housing affordability that include security of land ownership, access to housing finance, effective planning, and sustainable development of urban areas. Effective water and electricity networks for domestic use are also needed.
Find out more information on the housing finance sector of Togo, including key stakeholders, important policies and housing affordability:
- Macroeconomic Overview
- Access to Finance
- Affordability
- Housing Supply
- Property Markets
- Policy and Regulation
- Opportunities
- Availabity of data on housing finance
- COVID-19 responses
- websites
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2019 edition, which has up-to-date profiles for 55 African countries.
Download yearbookTogo
Macroeconomic Overview
Togo is a West African country with an estimated population of about 8 082 366 in 2019 and an annual growth rate of 2.42 percent. Its neighbouring countries are Ghana, Benin and Burkina Faso. The country is among the smallest African countries, and stretches inland from the coast as a long, thin strip of land covering 56 785km.2 Togo is part of the Economic Community of West African States (ECOWAS), and the West African Economic and Monetary Union (WAEMU).
The social housing sector has a large deficit, caused by the lack of public housing policies over a number of years. The need for housing is constantly increasing in direct correlation with population growth, estimated at 3.72 percent in urban areas with an urban population around 3 414 638 in 2019.[1] According to official forecasts, 50 percent of Togolese population will live in urban areas by 2028.[2]
Togo’s economy is dominated by agriculture, which involves most of its population. Inflation in 2019 was 1.7 percent, up from 0.9 percent in 2018. According to official sources, the economic growth in 2019 was five percent after 4.9 percent in 2018.[3] According to the Togolese government, the gross domestic product (GDP) growth rate in 2020 could contract to 1.5 percent against the initial forecast of 5.5 percent, based on the impacts of the COVID-19 pandemic.[4]
Since the outbreak of the COVID-19 pandemic in Africa, the Central Bank of African States (BCEAO) has published some measures to mitigate the impact of the pandemic on the banking system and the financing of economic activity in the Union. As a first step, BCEAO increased the amount granted each week to banks by CFA340 billion (US$581 892 863) (which now amounts to CFA4 750 billion or US$8 129 385 589) to help relieve the economy. In a second phase, CFA25 billion (US$42 786 239) will be allocated to the West African Development Bank (BOAD) bonus fund. The BOAD will in turn be able to grant more concessional loans at better rates to Member States. These funds will be used to finance urgent investment and capital expenditures in the fight against the pandemic.[5] In Togo, the central bank cut its key interest rate by 50 basis points.[6]
With the objective of supporting its population, the Novissi social assistance project was launched in April 2020 to assist the most disadvantaged against the measures enacted and the health state of emergency decreed by the Head of State on 1 April 1 2020. This programme provides a direct cash transfer to households that have lost some or all their income due to the impact of COVID-19. Those eligible for this programme began to receive a monthly allowance of CFA12 250 for women and CFA10 500 for men.
[1] World Bank. Data. Urban population – Togo. https://data.worldbank.org/indicator/ SP.URB.TOTL ?locations=TG (Accessed 27 August 2020).
[2] Ministry of City, Urban Planning, Housing and Public Health. Sector policy. http://urbanisme.gouv.tg/node/294 (Accessed 27 August 2020).
[3] Togolese Republic (2020). Togo on the path to growth. 31 January 2020. https://www.republicoftogo.com/Toutes-les-rubriques/Economie/Le-Togo-sur-le-sentier-de-la-croissance (Accessed 21 August 2020).
[4] Xinhuan News (2020). Covid Togo: GDP growth rate could experience a contraction of 1.5% (Minister of the Economy). 16 May 2020. http://french.xinhuanet.com/afrique/2020-05/17/c_139062817.htm (Accessed 21 August 2020).
[5]Ecofin Agency (2020). BCEAO announces measures to support member states in the context of coronavirus. 22 March 2020. https://www.agenceecofin.com/gouvernance-economique/2203-75026-la-bceao-annonce-des-mesures-pour-appuyer-les-etats-membres-dans-le-contexte-du-coronavirus
[6] Togo First (2020). Covid-19: To help with recovery, the ECO-SWAC lowers its key interest rates. 22 June 2020. https://www.togofirst.com/fr/gouvernance-economique/2606-5816-covid-19-pour-aider-a-la-relance-la-bceao-baisse-ses-taux-directeurs (Accessed August 12, 2020).
Access to Finance
According to the results of FinScope 2016, Togo has moderately low financial inclusion compared to other countries in Sub-Saharan Africa. It ranks 14th in access to financial services among the 21 African countries in which FinScope surveys have been conducted. Between 2014 and 2019, the percentage of Togolese over the age of 15 with a bank account, microfinance or postal services, increased by 24 percentage points, from 50 percent to 74 percent.
The financial services delivery landscape in Togo is dominated by banks and microfinance institutions, also called decentralised financial system (DFS). The DFSs are extremely important service providers in Togo and partly cover the gap caused by the concentration of banks on higher income urban customers. The largest DFS network remains the Togo Cooperative Savings and Credit Units (FUCEC) which in 2018 alone held more than 63 percent of the assets in the DFS sector nationally, representing a balance sheet of CFA125 billion (US$213 931 199).[1] The DFSs contribute to the improvement of financial inclusion in Togo, particularly in accessing financing systems for rural and peripheral populations. They do not offer formal loans to finance housing, however, it seems clear that some of the funds provided are invested by beneficiaries in real estate projects.
Togo has 14 conventional banks, 11 of which are subsidiaries of WAEMU’s largest banking groups. There are three branches and three banking financial institutions. The number of banks is expected to increase with the upcoming opening of the Development Bank of Mali, a subsidiary of the Moroccan Bank of Africa BMCE Group. Mortgages are difficult to obtain although some banks offer them to their customers under strict terms, such as reporting regular income or land securities. Generally, mortgage terms vary between 10 and 15 years and interest rates are between seven percent and 10 percent. However, these rates are negotiable by the customers.
Microfinance institutions do not currently offer loans for housing construction or mortgages.
However, during a seminar organised by the Regional Fund for Mortgage Refinancing (CRRH-UEMOA) in September-October 2019, several themes were developed including guidelines for refinancing housing loans. The evaluation of the financial guarantee solutions for housing loans made by DFSs was also discussed.[2] The CRRH-UEMOA is a regional initiative for a better access to housing finance in WAEMU countries. Nearly 55 commercial banks within the union constitute its shareholding. It provides WAEMU’s credit institutions with access to resources for the refinancing of housing loans. Its role is expected to strengthen to boost the housing market in the sub-region and thus also in Togo.
To meet this objective, the institution increased its share capital by CFA9 144 billion (US$15 657 534 246) to CFA9 589 billion (US$16 419 529 547) at its general meeting in 2019. This capital increase is meant to facilitate access to home loans. As of 31 December 2019, the CRRH-UEMOA had mobilised in eight years of activities a total of CFA 200.3 billion (US$342 465 753) in resources for the refinancing of housing loans made by 35 shareholder banks covering the eight countries of UEMOA.[3]
[1] Togo First (2020). Microfinance ranking in Togo: There is the FUCEC, and the others. 13 March 2020. https://www.togofirst.com/fr/finance/1303-5124-classement-des-microfinances-au-togo-il-y-a-la-fucec-et-les-autres (Accessed 21 August 2020).
[2] L’économiste (2019). Easy Access to Housing in West Africa: CRRH-UEMOA brings together ministers and experts in Lomé. 2 October 2019. https://leconomistebenin.com/2019/10/02/acces-facile-au-logement-en-afrique-de-louestla-crrh-uemoa-reunit-les-ministres-et-experts-a-lome/ (Accessed 12 August 2020).
[3] L’économiste (2019). Easy Access to Housing in West Africa: CRRH-UEMOA brings together ministers and experts in Lomé. 2 October 2019. https://leconomistebenin.com/2019/10/02/acces-facile-au-logement-en-afrique-de-louestla-crrh-uemoa-reunit-les-ministres-et-experts-a-lome/ (Accessed 12 August 2020).
Affordability
Housing is a concern in the main urban areas of Lomé with its unplanned urbanisation. The city is developing in the outlying areas without essential services such as schools, health centres, water or electricity.
The minimum area of land for the construction of a house is 150m2 and the cost of building a single ground floor house is between CFA7 million and CFA8 million (US$13 691).[1]
In recent years, the cost of cement, an essential material in the construction of a house, has decreased, thanks to the competition between players in the sector. The price of cement per ton (20 bags of 50kg per bag) is between CFA78 000 (US$133.49) and CFA80 000 (US$136.91) despite the official price set by the state of CFA81 000 (US$138.62). The price of cement is expected to fall further in 2021 with the arrival on the market of a new player, the West African Coast Cement Plant. This trend is expected to reduce the cost of building construction. The Nigerian Dangote Group also announced the construction of a factory in the country. All these investments show the confidence of economic operators in the construction sector.
In general, building your own home is imperative for every citizen in Togo and is a sign of self-fulfilment and accomplishment. This obsession with real estate partly explains land speculation, the number of unfinished houses, and the anarchic creation of neighbourhoods in flood-covered areas as seen in some parts of the capital. The guaranteed interprofessional minimum wage in Togo is CFA35 000 (US$59.90), which does not allow the average citizen to buy land, build their own housing, or even afford decent rental housing.
Most banks offer mortgages, but the majority of the population does not have access to this type of housing financing because of the rigidity of the conditions of these loans, provision of a land title and building permits. At the level of the Togolese Bank Union, for example, guarantees include death insurance, a medical report if the amount is greater than or equal to CFA5 000 000 (US$8 561) and fire and water damage insurance. The repayment period is 10 years. Documents to be supplied are the quotation, the land title, the construction plan, the architect’s report or the building permit.[2]
The issue of housing during the pandemic period has been difficult, especially for the homeless in the capital. The government’s accompanying measures did not directly impact the housing sector. Some marginal initiatives of non-governmental organisations (NGOs) have relieved a tiny fraction of these people. Kpadomeviwo-Togo, an NGO working to protect street children, has sheltered some people in rented accommodation.[3]
[1] Architect Etsrivi Abel ADJAVOU, Lomé-Togo, (0022890704939).
[2] Togolese Bank Union. Funding Real Estate Credit. https://www.utb.tg/article/235 (Accessed 19 August 2020).
[3]Helloasso (2020). Urgence Sanitaire Epidémie Coronas virus au Togo. https://www.helloasso.com/associations/association-kpadomeviwo-du-togo/collectes/urgence-sanitaire-epidemie-coronavirus-au-togo-1 (Accessed 30 August 2020).
Housing Supply
In Togo, in the capital Lomé and most other cities, the majority of houses are informal. The number of rural and urban houses is not quantifiable. The average size of a household in rural areas is about eight people compared to four in the urban areas. The country has two housing delivery systems, including properties and rentals.
For formal housing, the government has started a programme to build 1 000 social housing units mainly for state officials.[1] This is the Mokpokpo city located in the southwestern suburb of Lomé. The project consists of 540 houses on an area of 12.5 hectares including 420 low-rise villas and 120 apartments under construction around Greater Lomé, 15km from the city centre. The operationalising of the programme was entrusted to two international operators, the Société Ivoirienne de Promotion Immobilière and Moroccan Shelter 2000. Some banks such as Orabank and the International Bank for Africa are participating in the project by offering officials a financing plan through real estate loans over 15 to 20 years.
[1] Togolese Republic (2016). How to buy a house in Mokpokpo City. 15 January 2016. https://www.republicoftogo.com/Toutes-les-rubriques/Social/Comment-acheter-sa-maison-a-la-Cite-Mokpokpo (Accessed 30 August 2020).
Property Markets
In Togo, 75 percent of urban households live in collective housing. Access to the property remains reserved for a limited section of the population. The cities in Togo have 52 percent of residents living in rental accommodation.
Through a ministerial decree, the Ministry of Economy and Finance reduced the cost of property transfer operations to CFA35 000 (US$59.93). Prior to this measure, the costs were 9.3 percent of the value of the land in 2017, and 6.3 percent in 2018.[1] There are very few studies on the Togolese real estate sector and price fluctuations in the market.
According to a market study by the National Association of Realtors of Togo, prices in 2018 ranged from CFA1 000m2 (US$1.72 m2) to CFA6 000m2 (US$10.34m2) for an apartment in Lomé. For a parcel with a land title, prices range from CFA36 000m2 (US$62.05m2) to CFA480 000m2 (US$827.37m2). Without land title, prices range from CFA30 000m2 (US$51.71m2) to CFA40 000m2 (US$ 68.94 m2). These prices have had to increase due to the high demand and development of road infrastructure that made some urban areas more accessible.
[1] Togolese Republic (2018). The government reduces the price of property transfer to 35,000 FCFA. 11 December 2018. https://www.republiquetogolaise.com/gouvernance-economique/1112-2616-foncier-le-gouvernement-reduit-le-cout-du-transfert-de-propriete-a-35-000-fcfa (Accessed 30 August 2020).
Policy and Regulation
After the promulgation of Law No. 2018-005 on the Land and Domanial Code by parliament in June 2018, some measures have been taken to implement this law. Some initiatives are underway at the Togolese Revenue Office level. One example is the launch of the e-foncier platform[1] in January 2020. The objective of the platform is to enable surveyors and notaries to safely conduct land formalities regardless of their geographical location and to accelerate the process of collecting information and taxes. This tax is applied on both build and unbuilt properties. Around 50 percent of the income from this property tax goes to local authorities to meet their needs. Local governance has been undergoing a revival in the country since 2019 with local elections, and this tax could increase the funds available to improve living conditions in large urban centres.
In the first quarter of 2020, reforms were also implemented for building permits. A one-stop shop has been set up. To accelerate the land registration process and reduce the cost of issuing land title, this one-stop shop brings together all the services involved. The deadline to obtain a building permit has been reduced from 90 days to 10 days in one year. The cost of water connecting is now free with a reduction of delays by up to five days through the national company La Togolaise des Eaux. There have been no financial reforms specific to the housing sector. In addition, the role of the state is limited at present in providing housing. The only project currently involving the state is that of the city Mokpokpo.
[1] Togolese Office of Revenues (2020). Official launch of the e-foncier online platform.
https://www.otr.tg/index.php/fr/858-lancement-officiel-de-la-plateforme-en-ligne-e-foncier.html
Opportunities
The urban growth offers certain opportunities for real estate developers in Togo. However, they must present offers that address several variables including land security, limited household incomes, the cost and quality of materials, the geographical location of the housing, and access to water and electricity.
At present, the offers on the market do not correspond to the financial possibilities of households. It seems essential that the state becomes increasingly involved in social housing projects for the benefit of people with limited incomes. Land security must also be strengthened with the effective application of the new texts. Local banks are called on to provide more flexible conditions for accessing housing finance to provide the necessary funds for large-scale projects to accelerate housing construction.
Availabity of data on housing finance
Access to data remains a challenge in Togo for housing finance or mortgage statistics. At the national level, recent data from official sources are often not available. There is no database for formal real estate agents. However, a procedure of identification is underway through the Togolese Federation of Real Estate.
Regular updates on the Togolese banking sector are available on the BCEAO website. DFS information is not accessible and up to date.
Information on land titles and mortgages, laws and tax information is available through the Togolese Revenue Office website. Data on COVID-19 was available on the dedicated official website, on time.
COVID-19 responses
BCEAO increased the amount granted each week to banks by CFA340 billion (US$581 892 863) (which now amounts to CFA4 750 billion or US$8 129 385 589), to help relieve the economy.
In a second phase, CFA25 billion (US$42 786 239) will be allocated to the BOAD bonus fund.
The Togolese government put in place a series of measures from 16 March 2020. These included:
- Suspension for two weeks from Friday 20 March 2020 of all air links from high-risk countries;
- Mandatory 14-day self-isolation for anyone arriving in Togo and staying in a high-risk country;
- Prohibition of any gathering of more than 100 people throughout the country for one month, starting Thursday 19 March 2020 at midnight;
- Launch of Novissi, a cash transfer programme for the most vulnerable population;
- Free water and electricity for social units for three months;
- The central bank cutting its key interest rates by 50 basis points; and
- A curfew with the closure of some cities.
To make the information available, a government website was created to communicate information about the disease in the country.
websites
Directorate of Land Registry, Land Conservation and Registration http://www.dadc.gouv.tg/
Central Bank of West African States https://www.bceao.int/
Corona virus in TOGO https://covid19.gouv.tg/
Novissi – Universal Solidarity Income Program https://novissi.gouv.tg/
Togolese Office of Revenue https://www.otr.tg/index.php/fr/
Official website of the Republic of Togo https://www.republicoftogo.com/
Ministry of Economy and Finance https://finances.gouv.tg
Ministry of City, Planning and Housing and Public Health https://urbanisme.gouv.tg/
National Fund for Inclusive Finance https://fnfi.tg/
National Institute of Statistics and Economic and Demographic Studies https://inseed.tg/
