The Role of Housing Finance in Making the New Urban Agenda a Reality in Africa
Nairobi, 13 February 2017– During a working meeting held at UN-Habitat headquarters recently, the Centre for Affordable Housing Finance in Africa (CAHF) presented the key findings of its 2016 Yearbook on Housing Finance in Africa. CAHF Executive Director Kecia Rust reiterated the need to consider housing as a public good to ensure that adequate housing is accessible to all income groups, a position that UN-Habitat has long been advocating for through the ‘Housing at the Centre’ approach
Ms. Rust argued that a country’s housing sector plays a crucial role in the overall welfare and well-being of its people. There needs to be increased engagement and collaboration between the public and the private sectors so as to increase interventions and investments in affordable homes such as social housing and innovative finance packages.
Public decision-makers in the driver’s seat
The Housing at the Centre approach advocates for national and municipal decision-makers to step out of their traditional back-seat role regarding housing development and encourages them to take the lead through inclusive finance policies, increased regulations, and stronger public investments on infrastructure.
CAHF’s Yearbook shows that mortgage markets in Africa still face many challenges. Addressing the affordability gap will require that financial institutions be innovative and bold in redesigning their mortgage packages to target low- and middle-income persons. One of the directions that could be explored more widely, for example, is longer amortization periods to reduce monthly payments, which would lighten the burden on borrowers. This is a route that Zambia has adopted through a mortgage programme for middle-income households that offers repayment periods up to 20 years, with a view of increasing it to 30 years in the near future.
To realize the Right to Adequate Housing for All, national and local governments are encouraged to create an enabling environment for investors through simplified regulations for developers to incentivize them to invest more in housing development. Additionally, governments could sharpen practices in the sector by encouraging NGOs and other social movements to fund low-income projects. For instance, Shelter Afrique is launching the 5000 for 5000 Home Competition to reward creative developers who will design a livable and sustainable home with a price tag below USD 5,000 for the end user; the financial institution has committed to fund 5000 units of the winning design across Africa.
Moreover, there is a need for all levels of government to improve monitoring, data collection and reporting so as to fully understand the demand and supply dynamics of the African markets. In this regard, some countries are already making progress: the Kenyan Central Bank, the Tanzania Central Bank and the Nigeria Housing Finance Hub are releasing periodic reports on the performance of major economic indicators including the mortgage sector.
Housing must be seen as a leading economic index as it often leads to higher demand for goods and services. A legislative overhaul must take place: tax policies and imports carry direct consequences on the cost of housing, and the use of locally produced materials can generate wealth and employment opportunities. Improving access to affordable and adequate rental housing solutions is particularly critical for low-income households, though it has overall not been prioritized by urban decision-makers in Africa.
Only by repositioning housing at the centre of urban development and adjusting policies and laws accordingly will we be able to realize the New Urban Agenda’s goal to create cities that are truly for all in Africa and across the world.
The African continent holds some of the world’s fastest growing economies. In 2015, for example, Ethiopia ranked third with a 9.6 per cent GDP growth and Côte d’Ivoire was fifth with 8.4 per cent. Close behind, Tanzania, the Democratic Republic of the Congo, Senegal, Mozambique, and Cameroon all showcased GDP growths at rates higher than 6 per cent. The ever increasing economic growth of these countries, coupled with the growing middle class and rapid urbanisation have led to heightened housing demand, especially for low- and middle-income households. In Sub-Saharan Africa alone for example, more than 200 million people live in slums, representing 59 per cent of the total urban population. A major challenge for African Governments to address in the coming years.