Mobilising Capital for Housing Finance

ASHRAF ESMAEL
CHIEF EXECUTIVE OFFICER
Bramer Bank - Sep 2013
2

Landscape of Housing Finance in Africa
 Urbanisation of African economies
 Africa’s Middle class needs housing
 Oppo...
3

Fast urbanization of Africa
4

Urbanisation drives demand for Housing
Africa is almost as urbanized as China and has as many
cities of 1 million peopl...
5

Huge Demand Gap of 10 to 1
Africa is plagued with a chronic inability to meet the widening
gap between housing demand a...
6

Mortgage Finance Penetration still low in
most parts of Africa
Mortgages as a percent of GDP

26.4
19.6

20

18

16.9

...
7

3% of African population have income
viable for a mortgage
According to the World Bank,
18.8% of Africa’s population ea...
8

Access to Financial Services limited in
Africa

Financial service access and usage in Selected African countries

Acces...
MAURITIUS

9

Mauritius : a different story

In 2012, the price of a newly built house is between US$39 750
and US$49 650....
10

Informal Sector is 80% of home buyers
Affordable housing is a $30 billion market in Africa. The size of
the market com...
11

Integrated Approach for Capacity
Enhancement
Real Estate Equity
Partnerships

Construction Financing
Rental Housing
Fi...
12

Microfinance – Tackling Affordability?
Data from African MFIs reporting to the MIX Market in 2011
13

Thank You
Bramer Bank – Sep 2013
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African Union for Housing Finance Conference: A new landscape of housing finance investors 09/12/2013

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African Union for Housing Finance Conference: A new landscape of housing finance investors 09/12/2013, by Ashraf Esmael- CEO Bramer Bank, Mauritius.

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African Union for Housing Finance Conference: A new landscape of housing finance investors 09/12/2013

  1. 1. Mobilising Capital for Housing Finance ASHRAF ESMAEL CHIEF EXECUTIVE OFFICER Bramer Bank - Sep 2013
  2. 2. 2 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
  3. 3. 3 Fast urbanization of Africa
  4. 4. 4 Urbanisation drives demand for Housing 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 • • • • •
  5. 5. 5 Huge Demand Gap of 10 to 1 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. 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 annual deficit is 16 million units the urban population) are considered to be living in • 720,000 units need to be created annually to meet the demand inadequate housing • Current supply is however meeting only 3% of this demand Tanzania • 80% of the entire population is living in unplanned, • The housing deficit in urban areas is informal settlements with poor shelter and few estimated at 1.2 million units. basic services
  6. 6. 6 Mortgage Finance Penetration still low in most parts of Africa Mortgages as a percent of GDP 26.4 19.6 20 18 16.9 16 14 12 12 10 8 6 3.94 4 2 0.07 0 0.07 0.16 0.21 0.39 0.5 0.5 0.5 1 1.1 1.2 1.3 1.6 2.3 2.3 2.51 12.2
  7. 7. 7 3% of African population have income viable for a mortgage According to the World Bank, 18.8% of Africa’s population earn below $20 per day. 3% of the population have income viable for a mortgage 24% of Africa's 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. population earn between $2 –$4 per day < $2,00/day 36.5% of Africa's population earn below US$ 2 per day According to the UN Habitat (2010) about 40.32% of Africa's population live in slums. Source: AfDB (2011)
  8. 8. 8 Access to Financial Services limited in Africa Financial service access and usage in Selected African countries Access to Finance by Households Source, IMF, 2011
  9. 9. MAURITIUS 9 Mauritius : a different story 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. <$2,00/day 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. 10. 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 different areas of housing finance • • • • Development & Construction finance Finance for Rental housing Mortgage finance Non-collateralized credit /Micro finance
  11. 11. 11 Integrated Approach for Capacity Enhancement Real Estate Equity Partnerships Construction Financing Rental Housing Finance Mortgage Finance Non Collateralised Credit for Housing
  12. 12. 12 Microfinance – Tackling Affordability? Data from African MFIs reporting to the MIX Market in 2011
  13. 13. 13 Thank You Bramer Bank – Sep 2013

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