Financing Human Settlements in Africa: Appropriate Legislative Frameworks and Innovations in Implementation

This thematic paper, prepared for AMCHUD 5, presents case studies in financing human settlements, with a focus on appropriate legislative frameworks and innovations in implementation. To contextualise the case studies, the paper first examines Africa’s financial landscape, highlighting the evolution of government interventions in the financial sector.

Section 2 reviews the challenges that confront financial systems on the continent, especially in terms of their severely limited reach, and the implications of these challenges for human settlements financing.

Section 3 scopes the financing challenge facing human settlements in the context of rapid urbanisation. In particular, the stark reality of low household incomes and high housing prices is illustrated with available data for a large sample of African countries.

Section 4 defines legal frameworks and presents a scheme for a structured discussion of this topic.

Section 5 starts with a definition of “innovation” and then proceeds to describe the five financing innovations explored in this paper: housing microfinance; mortgage re-financing facilities; the use of pension funds as a source of capital for housing; fiscal incentives to residential property developers; and land-based finance in informal settlements.

Section 6 presents five case studies of financing innovation, drawn from different sub-regions of the continent, and covering the areas of innovation set out in Section 5. The case studies highlight the legislative frameworks currently in force, and suggest appropriate reforms wherever relevant.

The paper closes, in Section 7, with a number of conclusions and recommendations.

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