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

118 Walley
• Philippines. The National Economic and Development Authority of
the government of the Philippines found that for every peso spent
on housing activities, an additional 16.61 pesos contributed to the
GDP. One commentator concluded: “More housing investments and
construction mean increases in job generation and sales for allied
industries of the shelter sector” (Uy 2006). This result appears to be
an outlier relative to the other measures shown above.
Social Benefits of Housing Finance
Numerous benefits can be ascribed to improving access to housing
finance and thereby housing. Homeownership has long been promoted as
a way of giving individuals a stake in society and a stake in the economy.
By having a stake that can increase in value, it provides an incentive for
the homeowner to look after the property and also to maintain the neighborhood
in which the house is situated. This theoretically results in lower
crime levels and improved quality of life. Another social benefit that has
been observed arising from homeownership is lower fertility rates. This is
a less intuitive benefit, but if the house is fully owned, parents in emerging
markets where there is no pension system no longer have to rely on
their children in their old age for somewhere to live. Further benefits
include improved health, which comes about because of better and safer
construction and improved sanitation.
The above provides some compelling arguments in favor of housing,
but this list is not exhaustive and the exact magnitude of the economic
benefits will depend on the environment in which policy reform is made.
A financial system that benefits from a developed capital market and an
efficient land allocation system will clearly be in a much better position
to serve housing demand and expand housing output, reaping the benefits
throughout its economy of housing expansion.
Housing Needs
There is a vast black hole in available data relating to housing needs,
housing construction levels, and housing quality in Africa. Few countries
are able to accurately determine how many houses/apartments are built
on an annual basis in either the formal or informal sectors. Despite this,
housing policy is formulated within this knowledge vacuum. Grandiose
plans are announced to build 1 million, 2 million, 5 million houses “over
the next x years.” These plans rarely come to fruition. The reality is that,
for the majority of African countries, new housing production is often