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.