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

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126 Walley Housing Finance Systems The supply of long-term finance for housing purposes is extremely limited at present in most African countries. This section looks at the providers of the housing finance products and also at the possible funding sources for longer-term housing finance. Housing Finance Lenders Lenders come in many forms and sizes across the continent. The traditional banking sector has grown remarkably over recent years, particularly in countries such as Nigeria that, even allowing for the recent crisis, have seen a rapid expansion of banking. Despite this, levels of access to formal financial services remain limited. Even within the subset of those with access to formal services, those who have access to long-term housing finance are even more limited. Commercial banks in much of Africa have focused their efforts on deposit collection, which is then invested into government securities or, in the best-case scenario, lent out to companies at relatively short maturities. Pure retail banking has yet to really take off in many countries in Sub-Saharan Africa, excluding South Africa. Even in South Africa, access to housing finance among the poorer black majority remains extremely limited (see box 4.2 for information about one program in South Africa). Where commercial banks have feared to go in the past, state housing banks have often sought to bridge the gap. Many African countries have experienced state housing banks: these have occurred in Gabon (Compte de Refinancement de l’Habitat du Gabon), Mali (Banque de l’Habitat), Tanzania (Tanzania Housing Bank), Cameroon (Crédit Foncier du Cameroun), and Rwanda (Caisse Hypothécaire du Rwanda). Almost without exception these institutions have failed in their mission to expand access to housing finance. Many have also required large bailouts from the state when they became insolvent. The reasons for the failures are repeated across the institutions and include poor management, political interference, and a perception by borrowers that they are receiving a grant rather than a loan with little consequence if they do not repay. The demand for loans by state housing banks, which are typically given at a below-market rate, by far outstrips their capacity to deliver loans. This leads to some rationing of loans, which creates an opportunity for corruption or political patronage. The other systemic failure of state housing banks is the displacement effect they have on the private sector. By offering loans at below-market rates, it makes it difficult for private lenders
Housing Finance 127 Box 4.2 South Africa: National Urban and Reconstruction Agency (NURCHA) The National Urban and Reconstruction Agency (NURCHA) was established in 1995 in South Africa. It is funded by the South African government in partnership with the Soros Foundation, various overseas donors, and other commercial lenders. It provides bridging finance to contractors and developers involved in the construction of subsidy and affordable housing, community facilities, and infrastructure. NURCHA is specially geared to provide construction finance for contractors or developers who cannot easily access finance from the conventional financial institutions. It can either provide finance directly for those who do not have access to conventional bank lines of credit, or assist in securing bank lines of credit for those more experienced developers. It sets itself the following developmental goals in providing its financing: • Extend the housing market. • Maximize options for the construction and financing of housing and related facilities and infrastructure. • Promote synergy and cooperation between public and private sectors. • Use NURCHA loans to contribute to the emergence of a new generation of successful, black-owned construction companies. Another feature of the initiative can provide assistance from start to finish of a project by assisting developers with project appraisal, cost assessments, getting guarantees, sourcing of building materials, project management, and so on. Source: Author. to compete. So although it may seem a politically attractive way to expand housing finance, the experience has been quite the opposite, with large, inefficient organizations that rapidly accumulate portfolios of nonperforming loans. This situation is by no means unique to Africa, but in the absence of other providers it makes the failures all the more stark. The supply of housing microfinance loans to the informal sector remains limited and typically confined to nongovernmental organizations (NGOs), pilot exercises, and donor-funded institutions. Lenders can be
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lic Disclosure Authorized Public Di
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Financial Sector Development in Afr
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Contents Foreword Acknowledgments E
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Contents vii PART III Safeguarding
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Contents ix 4.4 Size of Mortgage Lo
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xii Foreword In their own way, each
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xiv Acknowledgments led by Stefan N
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xvi Editors and Contributors of Acc
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xviii Editors and Contributors deve
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xx Abbreviations FSB FSD FSDT FSI G
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2 Beck and Maimbo to the bottom of
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4 Beck and Maimbo advocate a “bui
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CHAPTER 1 Microfinance in Africa Al
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Microfinance in Africa 9 Figure 1.1
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Microfinance in Africa 11 A Special
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Microfinance in Africa 13 Figure 1.
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Microfinance in Africa 15 Impedimen
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Microfinance in Africa 17 Figure 1.
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Microfinance in Africa 19 to physic
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Microfinance in Africa 21 Understan
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Microfinance in Africa 23 Some exam
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Table 1.2 Fanikisha Project Type of
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Microfinance in Africa 27 world reg
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Microfinance in Africa 29 implicitl
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Microfinance in Africa 31 Financial
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Microfinance in Africa 33 situation
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Microfinance in Africa 35 have yet
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Microfinance in Africa 37 9. This i
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Microfinance in Africa 39 Ehrbeck,
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CHAPTER 2 Mobile Financial Services
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Mobile Financial Services in Africa
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Table 2.2 African First- and Second
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Page 97 and 98: Mobile Financial Services in Africa
Page 99 and 100: Table 2A.1 ID and SIM Registration
Page 101 and 102: 79 Guinea Yes http://fr.allafrica.c
Page 103: Togo Yes http://www.mediaf.org/fr/t
Page 106 and 107: 84 Coates and Hofmeister chains. It
Page 108 and 109: 86 Coates and Hofmeister unions in
Page 110 and 111: 88 Coates and Hofmeister trap for t
Page 112 and 113: 90 Coates and Hofmeister Sources of
Page 114 and 115: 92 Coates and Hofmeister Box 3.1 Ca
Page 116 and 117: 94 Coates and Hofmeister farm input
Page 118 and 119: 96 Coates and Hofmeister Technical
Page 120 and 121: 98 Coates and Hofmeister agree to b
Page 122 and 123: 100 Coates and Hofmeister Box 3.3 C
Page 124 and 125: 102 Coates and Hofmeister Attitudes
Page 126 and 127: 104 Coates and Hofmeister developin
Page 128 and 129: 106 Coates and Hofmeister specifica
Page 130 and 131: 108 Coates and Hofmeister ———
Page 133 and 134: CHAPTER 4 Housing Finance Simon Wal
Page 135 and 136: Housing Finance 113 Figure 4.1 Mort
Page 137 and 138: Housing Finance 115 countries, down
Page 139 and 140: Housing Finance 117 • The housing
Page 141 and 142: Housing Finance 119 limited to a fe
Page 143 and 144: Housing Finance 121 housing and inf
Page 145 and 146: Housing Finance 123 borrowed by ext
Page 147: Housing Finance 125 Box 4.1 Afforda
Page 151 and 152: Housing Finance 129 the degree to w
Page 153 and 154: Housing Finance 131 markets is the
Page 155 and 156: Housing Finance 133 are unable to o
Page 157 and 158: Housing Finance 135 greenfield vent
Page 159 and 160: Housing Finance 137 Figure 4.5 Obst
Page 161 and 162: Housing Finance 139 changes in the
Page 163 and 164: Housing Finance 141 • Introduce a
Page 165 and 166: Housing Finance 143 Box 4.6 Progres
Page 167 and 168: Housing Finance 145 of the impact o
Page 169 and 170: Housing Finance 147 funds. Within s
Page 171: Housing Finance 149 Hassler, O., an
Page 175 and 176: CHAPTER 5 The Reform Agenda for Fin
Page 177 and 178: The Reform Agenda for Financial Reg
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PART IV Financial Sector Reform: Ac
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180 Dafe lack access to external in
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182 Dafe having a positive theory o
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184 Dafe In sum, high transaction c
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186 Dafe through the selective allo
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188 Dafe institutions of the indust
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190 Dafe the boundaries of informat
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192 Dafe range of examples of both
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194 Table 6.1 Period Since the end
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196 Dafe state-owned financial inst
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198 Dafe The degree of success, in
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200 Dafe Although the current conse
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202 Dafe The interdependence of the
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204 Dafe in the 1980s and 1990s wer
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206 Dafe Alternative Approaches to
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208 Table 6.2 Approach to explain/
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210 Dafe state-centered, and interd
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212 Dafe particularly important fac
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214 Dafe Table 6.3 (continued) Mana
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216 Dafe activism in the developing
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218 Dafe structures can undermine m
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220 Dafe Conclusion There is strong
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222 Dafe policy is not straightforw
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224 Dafe banks that open agents in
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226 Dafe Bankable Frontier Associat
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228 Dafe Goldsheid, R. 1958. “A S
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230 Dafe ———. 2001. Types of
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