Expanding Access to Affordable Housing Finance in Western Africa
Project Development Objective (PDO)
The project aims to assist the regional development bank in facilitating improvements in access to housing finance for lower income households in the West African Economic and Monetary Union (WAEMU) region.
The housing finance system in West African Economic and Monetary Union (WAEMU) countries remains very small, although it has grown appreciably over the past decade. In 2013, interest rates on mortgages fell to 7.44 percent on average across the region, which is comparable to similar low inflation countries such as Morocco. When available, housing loans in WAEMU have a maturity averaging only seven years, much shorter than the economic life of the underlying assets.
The three most significant barriers to housing finance development are a maturity mismatch caused by a lack of (a) term resources, (b) adequate collateral, and (c) access to housing finance for those with lower incomes. The regional development bank (BOAD), the regional central bank (BCEAO), and the regional housing refinance institution (CRRH-UEMOA), have requested support from the FIRST Initiative to address those gaps.
The technical assistance project will include the following activities:
1. Affordable housing finance strategic road map
The strategic road map for housing finance development across the WAEMU region will provide clear institutional responsibilities at both regional and national levels. The road map will also include a common reference framework with recommendations for implementation of stocktaking exercises; low-income housing finance diagnostic and strategic plans; long-term funding assessments and recommendations for new funding products; and legal and regulatory review.
2. Legal and regulatory technical assistance and capacity building
This component will assist in drafting regulations to improve efficiency of collateral, to improve new laws and regulations where appropriate, and to improve training for judiciary on creditors’ rights (OHADA security law) and enforcement.
3. Mortgage asset registry
A review of the registration system for mortgage collateral will be conducted. A mortgage asset registry (MARS) will be a confidential electronic registry of mortgages and modifications to servicing rights and ownership of the loans. Access to updated information on mortgage notes and title deed holdings will help reduce the granting of multiple loans on the same property and fraudulent use of forged documents to obtain finance.
The expected outcomes of the project in the long term are as follows:
1. Inclusion: improved access for underserved households to affordable housing finance
2. Efficiency: better leveraging of public resources to scale-up the effect and create the adequate
conditions for private sector participation in housing finance
3. Depth: mortgage market deepens
4. Stability: long-term sustainability of government support