Financing Low Income Housing in Africa Appropriate models for Africa

Transcription

1 1 Financing Low Income Housing in Africa Appropriate models for Africa Kecia Rust Wednesday, 6 June 2012 Financing Low Cost Housing in Africa: Meeting the Challenges Shelter Afrique 2012 Symposium 6 June 2012, Kigali, Rwanda 2!!!

2 3 Photo: Matthew Charles-Taylor Dimitros, 2007, Nigeria Photo: biasharacity.com, Kampala, Uganda Photo: biasharacity.com, Nairobi, Kenya Photo: pictures/housing.html Photo: Google Earth photo in Kampala, Uganda Photo: Nachu house, Nairobi, Kenya Africa s growth acceleration resulted from more than a resource boom. Arguably more important were government actions to end political conflicts, improve macroeconomic conditions, and create better business climates, which enabled growth to accelerate broadly across countries and sectors. McKinsey (2010) Lions on the move: The progress and potential of African economies 4 Source: FitchRatings 2011 Sub-Saharan Africa is changing. The region s resilience to the global financial crisis of demonstrates this. It experienced a slowdown in growth to 2.8 per cent in 2009, before staging a robust recovery to 5 per cent in The only other two regions that experienced a slowdown in growth, rather than a recession, were developing Asia, and the Middle East and North Africa. This is a commendable performance. FitchRatings (2011) Sub-Saharan Africa. Outlook and Challenges: Special Report. First published in World Economics 12(2) in July THE CONTRADICTION OF AFRICAN ECONOMIES

3 5 * ) ( $!! $!%ABCDEFGBH" ' & % $ # +,-./010" 23010" 45160" 7080/9" 70:;9-9:." 7,<07+9=:5" " 1925;90" ;/01>0".,:-3"0?;9@0" :201>0" -01<0190" -35"207+90" <07+90" <97+0+/5" Source: UN-Habitat (2005) Financing Urban Shelter. Global Report on Human Settlements. THE CONTRADICTION OF AFRICAN ECONOMIES!)#"%& #$%& #"%& #$%&%'()'*$($"(+,-( 6 ')#"%& '"#"%& ()#"%& '"#"%& ()#*%& ('#$%& ("#"%& )#"%& "#"%&,-./0&123456& & :-3-55-& ;.<4=46& >?<@6& AB6<C6& D-/=B6<6&,?<?E6F& 1FE?346& GE6<C6& H68?3--<& IE@J/& K06<6& 74E?346& ;6<L6<46& '#)%& '#+%& '#!%& '#"%& (#'%& (#"%& "#)%& "#+%& "#+%& "#+%& "#'%& "#(%& "#(%& "#(%& "#(%& "#"%& H06C& K69-<& H?</36F&123456<&A?J.9F45& K.4<?6& H-<E-#&A?JM& Source: World Bank data, provided by Simon Walley THE CONTRADICTION OF AFRICAN ECONOMIES

4 7 8 According to the World Bank, only 3% of the population in Africa has an income sufficient to support a mortgage 18.8% earn above US$20 per day In most cases, subsidies don t bridge affordability to buy a new house. In others, they cause new affordability challenges. 10.8% earn US$10 - $20 per day 9% earn US$4 - $10 per day 24% earn US$2 - $4 per day 36.5% of Africa s population earn less than US$ 2,00 per day. This is the international poverty line. Source: AfDB Report on the middle class, 2011 CHALLENGES FACING FINANCIERS & INVESTORS

5 9!!!!!!!!!!!!!!!! CHALLENGES FACING FINANCIERS & INVESTORS 10 Number of days to Register a Property: World Bank Doing Business Survey (2011) Source: World Bank Doing Business Survey, CHALLENGES FACING FINANCIERS & INVESTORS

6 11!!!!!!!!!!!!!!!! CHALLENGES FACING FINANCIERS & INVESTORS 12

7 #! + * ) ( ' & % $ #,-./0." " Source: AfDB Report on the middle class, 2011 B28.U/4"62.55"VW$XW&Y" 13002>"62.55"VW&XW$!Y" " C34>7"" E=3/>."@355.=" F4./0."?848" G-.932./0" HIJ38K3." C34>73." 1.23" G>/>4.2" L8I>"0MNO837>" P>58IJ8" E.:;3." Q/482." G8=IJ"QR736." S>/T." EJ./." Q24>73." H4TKI" "?=/353." the potential market size for mortgage loans in Africa can be estimated at around 6 million loans. This could represents $300 billion of mortgage loans, or 18 per cent of Africa s total GDP (12% excluding South Africa). Source: S Walley, World Bank 14 6*3"%'()'#4+&(3(*1/'41'789'#4334(1/'0$&(.1'$*&5' #(!!!! #!!!!! '(!!!! '!!!!! (!!!! 6*3"%'()'#4+&(3(*1/'$:'+("1;&:' A-C?3.3+/B"QK)R"5-..-3/S" 1CT>7"G3??3*7?B" '#! '!! &! %! $! #! #$%&'()'*+,-%'$(&&(.%&/'0(&*12%'341%5' )*+,-.+/0" 1/23.+" *7" " " 9*+/0+" A+0+2+BC+?" A3,+56-DE7" F323" A+.+*-" FE/-B-+" G7/-/" GE?H-/+"I+B3" A+.-" F+/,+/-+" )7/72+." 8J+/+" )3E;J"1L?-C+" A3?3CC3" M2NO;" P7/N+" M;J-3O-+" Housing microfinance has been developing into a significant product line and delivery approach with a real track record in Malawi, Uganda, Zambia, Tanzania, Kenya, South Africa, Angola, Ghana and elsewhere. Source: MixMarket,

8 6-)7%(+,(7.%#8%&'9(3%:$;(5/)'(.+/&%(0<!=2(5-+:3($)3%( +!!! &!!! *!!! %!!! )!!! $!!! (!!! #!!! '!!!,-./0/12" A<8;2Q"/6"0"C<9.0L"J2R2L<P29" 42560" 7089-:8;" E25-5" 3-F29"" G05=05-0" 3-F29-0" H0./-0" HA050",0./-0" IF05J0" K105J0" 70L01-" '$ '# '! & % $ # #$%&'(&)*%(+,(#(,+-"#$(.+/&%(0"12(+-#34%(5#-&( Source: Responses to an question, July & August According to the World Bank, only 3% of the population in Africa has an income sufficient to support a mortgage 18.8% earn above US$20 per day % earn US$10 - $20 per day 9% earn US$4 - $10 per day 24% earn US$2 - $4 per day 36.5% of Africa s population earn less than US$ 2,00 per day. This is the international poverty line. Source: AfDB Report on the middle class, 2011

9 17 Bring mortgages down-market by making houses cheaper. Build in opportunities for housing microfinance. Finance rental housing Subsidise where the market cannot go 36.5% of Africa s population earn less than US$ 2,00 per day. This is the international poverty line. 18.8% earn above US$20 per day 10.8% earn US$10 - $20 per day 9% earn US$4 - $10 per day 24% earn US$2 - $4 per day Source: AfDB Report on the middle class, prop right land dev. finance infrastr. services constr. industry end-user finance Development of cadastral systems & registries, access to secure tenure (need not be ownership) Estate agency, conveyancing, information systems / stands for sale, integrated developments Infrastructure investments & delivery; long term financing Equity investment; integrated financing Products appropriate to borrower composition / more lenders with capacity, include incremental housing approaches and finance Accelerate housing supply / Delivery of building materials / small scale contractors / large scale developers/ diversified industry

10 19 Thank you! Kecia Rust