State of Housing Microfinance in Africa

Centre for Affordable Housing Finance in Africa

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Date Published 2013
Primary Author Michael Kihato
Other Authors
Theme Housing Microfinance


This paper investigates the progress being made by housing microfinance (HMF) on the continent. The Center for Affordable Housing Finance (CAHF) together with its partners has long been involved in studying, understanding and lobbying for the sector. We firmly believe that it represents a critical ingredient to solving the problem of housing on the continent, because it works with how the majority of the continent’s people are housed; that is incrementally and through processes of self-­- build. There have been some notable and encouraging advances in the industry with a steady trickle of new commercial entrants into HMF. Banks, microfinance banks and general microfinance lenders are introducing it, in various shades, as a product within their lending portfolios. Some continue to expand this offering to more and more countries. New commercial entrants are a sign that HMF is still seen as a viable commercial lending operation. Meanwhile the lending activities of less commercially orientated organisations such as housing cooperatives and the NGO sector continues to grow in recognition of the demand and need among lower income earners. The activities of these organisations offer an important contribution to HMF practice in their willingness to take on higher risks, as well as engage with downstream processes such as the house building process itself. They serve as an important repository of knowledge and lessons in this new industry. Further, more and more funding is coming on-­-stream in the form of grants, loans, equity, as well as technical support, as the sector increasingly becomes an important investment destination. Yet, true large scale lending in HMF is yet to happen, and demand is still largely unmet. The potential for the industry still remains, largely untapped. There is no denying that there are challenges. There has been a decline in some commercial lending activities. It is important that the reasons for this are determined. The constant need for engagement with the state on critical issues around land administration, management and provision of infrastructure remains. Indeed government policies are still largely at best ignorant, or at worst openly hostile to incremental housing processes. The pragmatic responses by lenders on the continent around this issue have been useful studies in truly adapting and working with what circumstances dictate. These challenges will remain hurdles that need to be overcome, given that HMF is essentially about the housing process, and these elements are intricately tied to it. Finally, practitioners across the continent are increasingly coming together to address these problems as a collective and an encouraging sign is that the industry is becoming more coherent and forceful as it pushes its own unique agenda. There are some important caveats to this paper. HMF in francophone Africa has not been covered and could have possibly offered many more useful lessons on practice. Furthermore, the practices provided here have been obtained in the face of what is usually difficult to-­-come-­-by information on different HMF lending products. It is thus by no means exhaustive.

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