Delegates in Abidjan urge African governments to stimulate long-term mortgage
Seeks comprehensive credit reference system
No fewer than 12 commitments were made recently in the Cote d’Ivoire capital, Abidjan, where more than 29 countries including Nigeria met to shape the development of housing finance across the African continent.
The forum – 34th Annual General Meeting African Union for Housing Finance (AUHF) produced an ‘Abidjan declaration’ that called on governments at the regional, national, state or provincial, and local levels to actively support the vision for adequate, decent and affordable housing for all across the continent, by instituting measures that stimulate long-term finance on affordable housing as an investment target.
Africa is an environment marked by stark mismatches between housing demand and supply in the affordable housing submarkets, which manifest in housing backlogs that force the majority of low and middle income dwellers into substandard and informal dwelling conditions; but which also offers insights into innovation as low and middle income residents seek to meet their own housing needs independently outside of the traditional housing delivery channels, and through incremental housing construction.
It is estimated that half of global population growth between now and 2050 will occur in Africa, with an estimated additional 1.3 billion people. At the same time, growing rates of urbanization are shifting the population of the continent from one that has been predominantly rural to one that is increasingly urban. It is expected that by 2035, about half of the Africa’s population will be living in urban areas.
Specifically, the AUHF delegates appreciated the critical function played by housing in the economy, as its own sector and through its contribution to social and economic growth and development of primary, secondary and tertiary sectors; and the opportunities presented by this fact. While acknowledging inherent opportunities emerging through innovations in technology, communication and financing and payment systems and their potential for revolutionizing the affordable housing sector; they recommended the automation of deeds registries.
They said governments should strengthen property and collateral registration and foreclosure mechanisms, improving transaction time frames, and to ensure the transparency of the collateral registry through free access to record-level data. Other demands on governments include ONE: To use incentives to encourage innovation in both mortgage and non-mortgage lending for housing that explicitly targets lower income earners including youth and women in the affordable housing sector.
TWO: To insist, through regulation, on credit information-‐sharing and the development of an effective and comprehensive credit reference system that covers all financially active consumers and stimulates market transparency. THREE: To assert the critical role that macro-economic policy and financial regulation play in realising effective housing markets. Measures that reduce policy interest rates, lower maturity premiums and credit risk premiums, and leverage the utilization of collateral value will all stimulate investment and the availability of affordable housing finance. They are fundamentally driven by macro-economic policy and should be a priority of Central Banks.
The three day talks also encouraged and urged international development finance institutions and other development agencies specifically, target affordable housing with capital that is patient with time, promoting blended finance arrangements that manage risk sustainably, and explicitly pursue innovation that shifts investor focus towards affordable housing.
•Provide targeted technical assistance: operational development and support towards effective public-private partnerships, as well as the development of viable social enterprises and commercial undertakings that explicitly target affordable housing.
•Engage with and develop financing interventions for the full housing delivery value chain, providing support for sector development and promoting effective linkages between public, private and NGO sectors along each link in the chain from land through to infrastructure, housing construction, and financing.
•Invest in strong data and market analytics systems, active market tracking and longitudinal analyses that support a growing understanding of the housing financing dependencies, and which track market growth and progress.
• Recognise and support in their broader efforts, a diversity of housing financing mechanisms not limited to mortgage finance for end users but also including housing micro finance, rent‐to-own schemes, homeownership savings plans, homeowner led construction and other end user finance products, the critical need for construction finance, affordability supports and risk management interventions, and capital market development in support of affordable housing, and
•To support efforts to integrate the growing and expanding youthful population of Africa in the affordable housing discourse as a way to breaking the generational housing challenges in Africa.
AUHF pledged to engage with respective governments at the regional, national and sub-national level on both macro and micro-economic issues, including interest rates, tax and monetary policy, and housing and land policies as they influence the growth and performance of housing markets.
In it, the Union committed themselves to actively engage governments and regional bodies in the pursuit of policy, regulatory, and other interventions that support tthe growth of affordable housing markets; promote best practice in the affordable housing industry ; actively seek projects and investments.
b) develop products and services that engage with the particular needs and capacities of youth and women, recognising also the important opportunity that the housing sector itself may offer for their professional development as participants in the housing sector, for example, as small-‐scale landlords, contractors or labourers;
c)think more carefully about risk and how we price for this in the microfinance and mortgage sectors, engaging in our pricing and underwriting mechanisms with the characteristics of low-‐ income households, youth and women, how they earn their income and how they manage their housing investments;
d)uphold ethical business practices, championing sustainable impact together with financial return. In the delivery of products and services to our clients we are committed to sound and effective consumer education to support their sustainable entry into the property market;
e) work effectively in the development of strategic partnerships with each other, our governments, and the wider housing sector in our cities, countries and regions; and
f)tracking these commitments with clearly defined key performance indicators, to which we will each contribute, and will report back on these at our next AGM.
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