ASHRAF ESMAELCHIEF EXECUTIVE OFFICER

Bramer Bank - Sep 2013

Mobilising Capital for Housing Finance

Landscape of Housing Finance in Africa

Urbanisation of African economies

Africa’s Middle class needs housing

Opportunities in Property Markets

Affordability – a Key Challenge

Lack of long term finance

Housing supply constrained

Rising costs of building materials

Integrated Approach

Housing Microfinance

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Fast urbanization of Africa3

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Africa is almost as urbanized as China and has as many cities of 1 million people as Europe.

As a result 60% of Africa’s urban population lives in inadequate housing.

• 46 African cities are now larger than one million people

• 2% lived in Cities in 1900 2.0millpp

• 35% lived in cities in 2007 0.4bill pp

• 65% will live in cities in 2050 1.4bill pp

• Every day for the coming fifteen years, Africa’s cities will

have to accommodate an extra 40,000 people

• => 20 million new urban households 2007 - 2050

Urbanisation drives demand for Housing

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Africa is plagued with a chronic inability to meet the widening gap between housing demand and supply for low income groups. The gap is approaching 10 to 1.

Huge Demand Gap of 10 to 1

Region Demand Supply

Sub- Saharan

Africa

• 32 million households in Sub-Saharan Africa are

considered inadequate.

• Under current urbanisation rates , an additional 14

million housing units per annum are required

• 308 million people; 191 million of which

live in inadequate housing.

Kenya • 60% of households are considered ‘inadequate’

housing and are located in slums.

• 150,000 units are required per year

• Less than 30 000 units per year

• The annual deficit is thus more than

120,000 housing units per year

Ghana • Ghana’s annual demand for housing currently

stands at 120,000 housing units per annum

• Current housing supply provides 42,000

units per annum which is only 35% of the

demand

Nigeria • 33.6 million Nigerians living in urban areas (46% of

the urban population) are considered to be living in

inadequate housing

• The annual deficit is 16 million units

• 720,000 units need to be created

annually to meet the demand

• Current supply is however meeting only

3% of this demand

Tanzania • 80% of the entire population is living in unplanned,

informal settlements with poor shelter and few

basic services

• The housing deficit in urban areas is

estimated at 1.2 million units.

Mortgage Finance Penetration still low in

most parts of Africa

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20

18

16

14

12

10

8

6

4

2

0

Mortgages as a percent of GDP

0.070.07 0.16 0.21 0.39 0.50.5 0.51 1.1 1.2 1.3 1.6

2.3 2.32.51

3.94

12 12.2

16.9

19.6

26.4

3% of African population have income

viable for a mortgage

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18.8% of Africa’s population earn below $20 per day.

10.8% of Africa's population earn between $10 – $20

per day.

9.9% of Africa's population earn between $4 – $10 per

day.

Opportunity for housing micro finance and incremental

housing delivery.

According to the UN Habitat (2010) about 40.32% of

Africa's population live in slums.

Source: AfDB (2011)

According to the World Bank,

3% of the population have

income viable for a mortgage

36.5% of Africa's

population earn below

US$ 2 per day

% of Africa's24

population earn

between $2 –$4 per day

$2,00/day<

Access to Financial Services limited in

Africa

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Access to Finance by Households

Financial service access and usage in Selected African countries

Source, IMF, 2011

Mauritius : a different story9

MAURITIUS

<$2,00/day

In 2012, the price of a newly built house is between US$39 750

and US$49 650.

88.9% of Mauritians own their home.

A small percent of the population cannot access MHC and NDHC

loans, event hough they are employed.

The minimum loan for a mortgage was lowered to US$451.46

making access to finance for almost all Mauritians.

4.8 percent of the population live in iron/tin walled houses.

International poverty line; less than 2 percent of the country's

population live below US$60 per month.

10 Informal Sector is 80% of home buyers

Affordable housing is a $30 billion market in Africa. The size of the market commands a huge potential for innovative housing finance players.

Innovations and financial deepening in differentareas of housing finance• Development & Construction finance• Finance for Rental housing• Mortgage finance• Non-collateralized credit /Micro finance

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Real Estate Equity Partnerships

Construction Financing

Rental Housing

Finance

Mortgage Finance

Non Collateralised

Credit for Housing

Integrated Approach for Capacity

Enhancement

Microfinance – Tackling Affordability?12Data from African MFIs reporting to the MIX Market in 2011

Thank You

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Bramer Bank – Sep 2013