Financial Sector Development in Africa: Opportunities ... - World Bank

Housing Finance 113
Figure 4.1
Mortgage Debt as a Percent of GDP
Percent
35
30
25
20
15
10
5
0
South Africa
Namibia
Morocco
Tunisia
Kenya
Senegal
Algeria
Uganda
Cameroon
Nigeria
Country
Source: World Bank mortgage debt database, 2010.
Note: Data are the latest available and vary between 2004 and 2009.
Ghana
Egypt, Arab Rep.
Tanzania
Chad
Central African Republic
Gabon
Guinea
Congo, Rep.
70 percent for the United States and 50 percent for Europe. If you take
out South Africa, the rate falls to 2 percent of GDP. If you then take out
North African countries, the rate for Sub-Saharan Africa falls to under
1 percent of GDP. In those countries where it does exist—such as
Tanzania, Uganda, Ghana, and Nigeria—the number of loans is rarely
more than a few thousand. These loans are also often limited to the
wealthiest segment of the population, who pose the lowest credit risk.
This means that the existing loans are far from subprime and are typically
issued only after extensive documentation requirements, large down payments,
and often additional guarantees from an employer or other forms
of collateral besides the property.
An alternative to mortgage lending that has proved popular in developing
the housing finance system in South America is housing microfinance.
This medium-term financing can allow for much more rapid incremental
construction and some bulk buying of materials. There is extremely limited
information on this form of financing, but other than some initiatives
in South Africa it has yet to develop to any significant scale in Africa. In
part, this reflects the slower development of microfinance more generally
in Africa than in other regions, as well as the continent’s much lower
urban densities. The density of urban areas may have helped accelerate
the development of housing microfinance in the South American context
where lenders are able to benefit from reduced distribution costs.