Housing Finance in Togo
Overview
This profile is also available in French here.
To download a pdf version of the full 2021 Togo country profile, click here.
The crisis induced by COVID-19 has caused a significant slowdown in the growth of the Togolese economy, although this slowdown was less than expected. The country saw an estimated growth of 1.8% in 2020, against initial forecasts of 0.8%. The shock of COVID-19 was essentially cushioned by the significant public expenditure incurred by the government in response to the pandemic, in particular through various social programmes such including the Novissi cash transfer programme of emergencies for the people most affected by the movement restriction measures and the curfew. COVID-19 patients were covered fully in terms of health care and measures were introduced to provide free public services such as water and electricity for certain social groups. According to the Togolese authorities, these large and unexpected expenses, combined with a significant drop in budget revenues, contributed to widening the budget deficit to more than 6.9% of gross domestic product (GDP) in 2020.
Despite these efforts, the pandemic seems to have undermined the significant progress made in recent years in the fight against poverty through the significant investments made in basic social services and economic infrastructure. While the results of the harmonised survey on household living conditions (EHCVM) estimated the incidence of poverty at around 45.5% in 2018/19 (compared to 55.1% in 2015), this incidence is expected to increase slightly in 2020 because of COVID-19. Inflation has also increased to 1.3% in 2020, compared to 0.7% in 2019.
The Ministry of Town Planning, Housing, and Land Reform estimates that more than half of the Togolese population will live in cities by 2028, with an urbanisation growth rate of 3.7%. To respond partly to the challenges posed by this rapid urbanisation and the access to housing linked to it, the Togolese government has provided in its five-year action plan called “Roadmap 2020- 2025”, a construction project of 20 000 social housing units.
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
- 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 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
Access to finance in Togo is still limited. According to data from the Central Bank of West African States (BCEAO), of which Togo is a member, the banking landscape in Togo the end of 2020 comprised 14 banks and three financial institutions. This landscape has remained stable over the past five years. At the end of 2020, there were 1 178 587 open bank accounts in these banks, corresponding to a rate of use of banking services of about 20%, 260 branches, offices, and points of sale, and 240 ATMs. All these indicators have been rising steadily since 2017. The banks in Togo represent 7.3% of the market share of the West African Economic Monetary Union (UEMOA), just ahead of Niger (4.2%) and Guinea-Bissau (0.7%). The main banking products offered by these establishments are short or medium-term loans, i.e., CFA1 553 billion (US$2.81 billion) at the end of 2020.
The decentralised financial system in Togo had 77 microfinance institutions (funds affiliated to networks not included) as of 31 March 2021, with 521 points of service, serving 3 231 378 clients. The total amount of deposits made is CFA247 670 million (US$447.68million) against a total amount of CFA183 542 million (US$331.76 million) of outstanding loans, with a deterioration rate of the portfolio of 7.3%.
Initiatives to offer financial services via cell phone have significantly strengthened financial inclusion in Togo, especially thanks to COVID-19, which has seen the easing of conditions for access to electronic wallets. As a result, Togo had five digital financial service providers at the end of 2020, two of which were linked to the country’s only two mobile operators. Moreover, with a rate of 91.7%, in 2019, Togo is the country in the WAEMU zone whose activity rate of electronic money service points are the highest and have been constantly increasing over the last five years.
Of the 14 banks and bank branches in Togo, offer real estate or comparable loans to individuals under similar conditions. The interest rates offered on home loans vary between 7.75% and 12%, with maturities of up to 25 years, for the Ma Maison loan from the Bank of Africa (BOA). However, only people with substantial and regular income have access to home loans.
Togo is home to the Caisse Régionale de Refinancement Hypothécaire (CRRH) of the WAEMU, a financial institution whose mission is to mobilise long-term resources to refinance commercial banks of the union and enable them to offer housing loans or mortgages for households. Since its creation in 2010, CRRH has mobilised more than CFA150 billion (US$316 million) in bond finance for the benefit of its members. CRRH is also the executing agency for components 1 and 2 (i.e., US$130 million or approximately CFA72 billion) of the Regional Affordable Housing Financing Project (PFLA) in WAEMU. This project aims to facilitate household access to finance both through the formal banking system and decentralised financial systems. CRRH also benefited in March 2020 from the financing of €15 million (CFA9.83 billion, or US$17.77 million) from the African Development Bank (AfDB).
The microfinance sector does not generally offer home loans to individuals because of the short-term nature of the resources to which it has access to issue loans. However, the Coopérative d’Epargne et de Crédit des Artisans (CECA) of Togo signed a refinancing agreement with the CRRH in July 2021 to facilitate access to mortgage loans for low income or irregular household members of the CECA. This agreement was realised thanks to the PFLA in the WAEMU, financed by the World Bank, in force since 2018. With this agreement, the CECA Togo will be able to offer its customers real estate loans at a competitive interest rate over 10 years, for an amount of up to CFA15 million (US$27 113).
[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
A 2018 study by the National Institute of Statistics and Economic and Demographic Studies (INSEED) estimated the proportion of businesses in the informal sector in Togo at over 93% of the economy, primarily made up of individual businesses. Incomes are, therefore, low. Moreover, in the formal sector, the minimum monthly wage has been CFA35 000 (US$63) for a decade, while inflation has increased in recent years. Likewise, the average per capita income is US$617 (CFA341 346) per year. At the same time, the cost of the cheapest housing built (on a 75m2 plot with 40m2 of floor space) by a real estate developer is around CFA13 700 000 (US$24 763). This represents more than 40 times the average annual income per capita. Under these conditions, access to affordable housing excludes most Togolese and remains a challenge for the government.
The Togolese government’s stated intention by 2025 is to provide 20 000 social housing units to its population. But it could be compromised given that the land belongs to individuals, and the state has to acquire the land to implement its projects. In addition, there is currently no housing subsidy policy, either for access to finance or other components of access to housing or to compensate for the low level of household income.
[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
Although the demand for new housing is estimated to be high, the housing supply in Togo is dominated by self-built housing. In total, it is estimated that more than 20 000 homes have been built since 2005. The affordable housing segment is the one that has the most challenges in terms of housing supply, given the low income of the population. In the absence of an industrial supply of affordable housing, households rely on themselves to acquire a piece of land and gradually build their house. However, the government has put in place instruments aimed at promoting the construction of housing, especially for households with low and modest incomes. These include introducing a Centre for Housing and Construction (CCL), which promotes the recovery and use of local construction materials with a view to reducing construction costs. The Special Housing Development Fund (FSDH) is intended to support real estate developers with projects comprising at least 10 housing units intended for low and middle-income people, as well as organisations active in researching construction materials, and development companies. The government has also launched several initiatives to build affordable housing, particularly that of the Cité Mokpokpo (a project of 1 000 housing units and apartments), which is almost complete and where the housing units built have practically all been sold. Currently, two other housing construction projects are being implemented: on the one hand, the 594 housing units of the Renaissance Residence, entirely financed by the National Social Security Fund (CNSS) of Togo and, on the other hand, the 234 housing units of the Cité Les Mimosas, financed by the developer SIPIM-ABRI 2000. In addition, the oldest developments, such as Wellcity, launched in 2016 (1 000 housing units) of the Comfortis Group and the Cité des Anges (120 housing units), are still under construction. However, these projects represent only a partial response to the demand for housing in the city of Lomé alone. In fact, the demand just for housing for the cities of Lomé and Kara is estimated at 25 000 by 2020.
To make up for the shortfall in the supply of affordable housing, the Togolese government, in its 2020-2025 Roadmap, has included a project to build 20 000 social housing units by 2025. It has also started realising this project by signing a partnership agreement with Shelter Afrique in March 2021 for the construction of 3 000 housing units in the capital Lomé. In the same vein, the government has passed a decree to reserve an area of 1 177ha for its social housing construction programme, entailing the provision of land and production of housing.
Togo has undertaken in recent years, with the support of development partners such as the World Bank and the European Union, a vast development programme for the city of Lomé. Such programmes have helped improve roads and sanitation and connected the periphery’s dormitory towns to the city center: the urban public transport system has been strengthened through the establishment of several bus lines by the Lomé Transport Company. The government has also created the National Agency for Sanitation and Public Sanitation to improve the supply of sanitation services in the city of Lomé, with definite impacts since its creation in 2013.
[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
The real estate market in Togo is dominated by the production and sale of residential land. This is mainly carried out by private actors, with uniformity of land production, especially in Lomé where the standard plot is 20m frontage and 30m.
deep, i.e., 600m2 In such a context, prices are determined by the law of supply and demand. In addition, the standard 600m2 plot can be cut into smaller lots (two, three, or four) to meet specific demands and facilitate access to land for those with modest incomes. Thus, it is estimated that, on average, 35 000 plot plans are issued each year. However, this market operates in an environment where land tenure insecurity is pervasive.
Amongst Togo’s most important efforts to reform the land market in recent years was the launch of a national cadastre. Managed by the Direction du Cadastre et de la Conservation Foncière (DCCF), the cadastre of Togo makes it possible to gradually set up a complete national register of land properties to secure transactions on land and on built properties. In July 2021, there were a total of 57 300 land titles in the cadastre, of which 4 679 were issued in 2020. Only 687 land titles had been mortgaged as of 31 July 2021. The total number of land properties assessed for property taxes in the main urban centres was 24 612 in 2020. The simplification of procedures for registering land properties, the reduction in the cost of establishing the land title, and the establishment by Decree 2019-033 / PR of a Single Land Registry (GFU) have stimulated applications for registration of land properties, a guarantee of better land tenure security. Togo has also undertaken significant reforms in reducing delays in the transfer of property, obtaining building permits, and several other indicators of a favorable business environment. All these efforts ranked Togo first country in Africa in 2020 and fifteenth overall in terms of business creation in the Doing Business 2020
report.
The time needed to complete a land transaction has been reduced to 10 days on average and now costs only CFA35 000 (US$63), against 4% of the value of the property previously. Furthermore, almost all the cadastral maps of the city of Lomé are digitised, thus ensuring easier verification. In addition, an independent body for handling land complaints has been set up to reassure complainants. Likewise, the procedures and the cost of a building permit in Togo have been significantly reduced. An online platform has also been set up to facilitate the application and monitoring of the issuance of building permits online.
The real estate market in Togo includes many market participants who act as intermediaries between homeowners and potential tenants. A number of these are quite large organisations that offer their services directly online for a fee at the conclusion of each rental agreement. Some of them have grouped together under the National Association of Real Estate Promoters of Togo (ANIT), while others prefer to operate independently.
In Togo, more than 27% of households are tenants. The rental segment, therefore, represents an opportunity for investors. However, as the rental supply of housing is lower than demand, speculation ensues, constraining the availability of this type of housing. This includes, among other things, conditions imposed by landlords, such as the obligation to pay up to 12 months rent upfront and arbitrarily fixed water and electricity deposits.
[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
Togo has maintained certain diligence in reforming the land and housing sector. After the vote on the Land Code (Law 2018-002 of June 2018), which better regulates, among other things, land transactions and related issues, the country has shown its willingness to continue strengthening the business environment in transactions related to land and housing. In addition, the country in 2020, with the support of the Infrastructure and Urban Development Project (PIDU) financed by the World Bank, started preparing a Town Planning and Construction Code. It should set the rules for development and urban planning and land use, as well as construction in Togo. Similarly, since 2017, the Togolese government has enriched the regulatory framework relating to urban development and construction. At the same time, the FSDH, created in 1988, is intended to support investment in the housing sector.
Since the local elections of 30 June 2019, Togo has implemented its territorial administration and decentralisation reform, establishing municipalities and electing mayors. Furthermore, the laws require municipalities with more than 5 000 inhabitants to have an Urban Development Master Plan (SDAU), a legal requirement which the PIDU Project financed by the World Bank is supporting seven cities in Togo to implement. Also, an SDAU for Grand Lomé was drawn up with financial support from the French Development Agency (AFD) but is still awaiting adoption.
Finally, Togo plans to pass a decree regulating deposits, rental guarantees, and residential leases.
[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
Togo is today a land of opportunity for implementing serious affordable housing policies and programmes. The country has been ranked consecutively in recent years among the 10 most reforming countries in the world in terms of improving the business climate.
The indicators in this area have improved regularly, pointing to the creation of a favorable environment for potential investors. Togo has also equipped itself with serious habitat policy instruments such as a strategic framework for the urbanisation of the country, as well as the legal and regulatory instruments that go with it. Togo has included the provision of affordable housing for many of its citizens among the 46 priority projects of its 2020-2025 Roadmap. However, the programme proposals have not yet been formulated. Real estate developers should be able to support the government in proposing tangible projects.
Finally, Togo has been a politically stable country for several years now, stability which was marked by it being dropped in March 2020 from the list of Fragile or the Conflict States established by the World Bank. All these elements make Togo fertile ground for sustainable investments in the affordable housing sector.
However, significant challenges remain for potential investors to take full advantage of these opportunities. Some of these challenges concern the implementation of urban planning tools (SDAU, Urban Strategy for large urban centers, etc.) and the scarcity of developed land.
Availabity of data on housing finance
Data on housing and its financing in Togo are generally difficult to access. Except for data on access to finance, most of which are available in publications and on the BCEAO website, obtaining data is difficult. Studies on the housing sector are scarce. The most recent such study available is produced by the BC EAO, and it contains interesting indicators by WAEMU country. But this study date s from 2014 and seems outdated. At the same time, commercial banks that offer housing finance products are reluctant to share even aggregated data on their customers. On the other hand, real estate developers are generally open to sharing
their data, seeing it as an opportunity to advertise themselves. As for government agencies, some are open to sharing data, while others talk about the data is too sensitive to share.
Urban Informality
Among its housing and habitat problems, Togo faces poorly controlled urbanisation and urban governance, a scarcity of decent housing, defective urbanisation finance and housing finance that is difficult to access, and unsuitable land production and management.
In 2020, 42% of the Togolese population was urbanised, according to INSEED data, and more than half of this urban population (54.3%) was found in slums around Grand-Lomé, whose extension creates new challenges in terms of the supply of services such as urban mobility, access to drinking water and sanitation. According to data from the 2018/19 EHCVM, household size is on average 3.8 people in urban areas. And although significant efforts have been made by the authorities, especially during the COVID-19 pandemic, to meet the demand for services, these needs remain significant. The improvement of the urban road network through several specific programmes has only met one such need. Thus, access to drinking water measured by connection to the Togolaise des Eaux (TdE) network is only available to barely seven out of 10 city dwellers, despite the significant drop in connection costs and the multiplication of service points. In Grand Lomé, six in 10
households use private refuse collection services, while more than one in 10 still use illegal dumps. Likewise, less than half of the inhabitants of greater Lomé (45.6%) have access to flush toilets linked to a septic tank.
websites
Caisse Regional de Refinancement Hipothecaire de l’UEMOA (CRRH-UEMOA)
http://crrhuemoa.org/
Information portal on the building permits in Togo. https://construireautogo.gouv.tg/index.php?id=1
Renaissance Residence Program of the CNSS Togo https://www.r-renaissance.tg Togo Credit Information Bureau https://uemoa.creditinfo.com/
Confortis Group Wellcity programme https://wellcity.tg
Confortis International SA http://www.confortis.org/
