Developing Housing Finance in Africa

Transcription

1 Developing Housing Finance in Africa Simon Walley Housing Finance Specialist World bank September 10, 2009

2 Outline Why Housing Finance? How to Expand Housing Finance World Bank activities Challenges 2

3 Challenges to provision of housing Demand for Housing Supply of Housing Availability of financing for end user High interest rates Lack of long term funds Low levels of income Lack of affordable housing Availability of financing for developers Cost of building materials Planning/building regulations Cost of infrastructure Lack of skills/capacity Lack of effective demand Lack of affordable supply

4 Incremental Construction expanding access to housing finance downmarket and increasing the effective demand for housing Cash Purchase High Income Cash Purchase Mortgage Housing Microfinance Microcredit/savings Current Situation Low Income Micro-credit/savings Objective

5 Why Housing Finance? Urban development strategy: cities are also built the way they are financed (avoid slum proliferation) Poverty reduction & social stability: empowerment, retirement, asset building, community strengthening Integral part of the global financial sector liberalization (banks, non banks, bond markets, pension funds, etc.) Housing is a sizeable and durable investment: needed market debt leverage 5

6 How to build inclusive and sustainable HF system? Sound foundations Macroeconomic stability Workable legal system (property titles, foreclosure) Risk management and funding tools Sound financial sector regulations Competing and innovating private lenders Affordable housing (multiple supply constraints) Enabling role of the State Less of direct lender/builder, rather build conducive market environment, catalyst role to expand accessibility 6

7 World Bank s housing finance program Growing scope 30+ countries & ambitious reforms Broad range of policy reforms, new legislation, pilot programs, studies Financed using IBRD loans, IDA credit or grants and trust funds Global, regional, country conferences & training programs HF flagship book published Collaboration with Urban/Slum upgrading/land projects 7

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9 Case Study - Tanzania Has had stability in its banking sector and macroeconomy Undertaken legal reforms with new mortgage law, condominium law, program to formalise land ownership World Bank providing support starting in 2010 by: Creation of a liquidity facility, mortgage market development Housing Microfinance Fund, capacity building for SACCOs Several steps to expand supply of housing 9

10 Mortgage Liquidity Facilities Operating already in Egypt and Jordan under discussion in Nigeria, Uganda and WAMU Provides a solution to maturity mismatch issue and shortage of long term funds First step onto secondary mortgage market without the risks associated with securitisation 10

11 Mortgage Liquidity Facility A low risk institution acting as an intermediary between capital markets and primary mortgage lenders. Grant Loan Funding Funding Borrowers Lender TMRC Investors Mortgage Collateral & Payments Sell with recourse or assign loan & Payments Bonds & Payments

12 Lessons for emerging market from US mortgage meltdown Focus on credit quality of borrower first then on collateral not asset based lending Government guarantees are real money and can be expensive Importance of consumer protection provision of information and prevention of predatory lending Market transparency and accountability originators should have some skin in the game Property markets never grow forever! 12

13 Challenges Further Urbanisation to come Cultural change adapt to city living, smaller houses/multi-family Offering solutions across the income spectrum Developing rental finance, housing microfinance, developer finance Integrating urban policy with financial sector reform Creating capital markets and a source of long term funds Making Progress on Land issues 13

14 International Housing Finance Course Run by Witwatersrand Business School with support from Wharton School, University of Pennsylvania 2-7 November in Johannesburg Aim to build an annual event for sub-saharan Africa 14

15 HOFINET Housing Finance Information Network A portal website for sharing information on housing finance Started a data collection exercise with Hosted and run by Wharton School, University of Pennsylvania with support from World Bank, IFC, FMO Aim to have contributors/editors to the site from all over the world sharing knowledge and best practice 15

16 Housing Finance Policy in Emerging Markets Published in June 2009, after 4 years in preparation 16