Incremental Housing Micro-Finance & Land

Tenurethe case of KixiCrédito Angola

Panel on Housing Microfinance Policy & PracticeDurban - 12 August 2013

Poverty Index in Post-War Angola[1]

Year Poverty Index

Number of Poor Total Population GDP Growth per capita % Change in Poverty Index

2003 67.70% 10,503,700 15,507,100 2.20% n/a

2004 66.00% 10,539,100 15,956,800 8.20% 1.70%

2005 62.60% 10,275,600 16,419,600 17.20% 3.40%

2006 59.70% 10,081,400 16,895,700 15.30% 2.9%

2007 56.50% 9,820,100 17,385,700 17.50% 3.2%

2008 54.70% 9,784,200 17,889,900 10,40% 1.8%

[1] Centro de Estudos e Investigacao Cientifica (2009), Relatorio Economico de Angola 2008, pg 43

2010 50.20% 9,220,100 18,500,0-0 3.50% 4.5%

0.62

0.51

0.43

0.37

0.35

0.26

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7

Angola

Nigeria

Cameroon

Algeria

Egypt

Norway

GINI Coefficient Comparison of

Extractive Industry States

Angolan Housing Policy

• From the practical point of view, Angola does not yet have a well developed housing policy nor a formalised housing sector programme.

• What exists is a declaration of State political will to resolve the problems associated with the housing supply.

• Public commitments have been made by senior political officials regarding the urgency of ensuring that each citizen has a place to live (the most important being the promise of the head of state – to build 1 million homes by 2012).

Housing Demand Estimates

Programa Nacional de Urbanismo e Habitacao Novo Jornal - 4 Dez 2009)

Year > 1990 2000 2002 2003 2006 2009 2012 2015

Total Population

10,098,727 13,373,161 14,187,587 14,613,214 15,968,000 17,448,942 19,066,930 20,834,949

Housing Stock (units) 1,229,741 1,279,423 1,305,011 1,384,888 1,469,654 1,559,609 1,653,184

Added Demand (units) 107,575 139,336 156,310 211,937 275,240 347,084 428,426

Total Demand (units)

485,267 699,080 754,738 784,021 878,068 982,144 1,097,256 1,224,514

Middle Class

Mortgage

Economically

Active Poor

Potentially Housing MicroFinance Clients

Vulnerable GroupsHeavilly Subsidised Housing

Elite 25%

Banked

60%

Not Banked

15%

Un-Bankable

Potential Market Segment Pyramid

Bankable

Housing Construction Cost Breakdown

MINUA 2005

Cement, 21%Blocks

21%

Timber5%

Roofing 25%

Land 16%

Labour 12%

Demand for Housing & Housing Demand for Housing & Housing CreditCredit

Demand for Housing Finance

Potential Housing Finance ClientsEntrepreneur &

Employee 1%

Salaried Employees

38%

Non-Contract Workers

9%

Micro-Entrepreneur

52%

Economic Sector of Potential Housing Finance Clients

Agriculture1%

Trade53%

Services42%

Manufacturing4%

Supply of Housing FinanceBank7.6%

Employer8.4%

Friend25.0%

Family59.0%

Sources of Housing Finance (DW Study 2009)

Commercial Bank’s Reluctance

Some of the reasons that banks offered to justify their reluctance to offer housing loans were the following:

• The lack of clear land legislation that would allow property to be used as guarantee

• The long loan periods the bank needs to wait to recoup their investments

• The lack of a Government policy on subsidising housing credit

• Lack of title documents by most clients• Lack of a client culture of repayment of debts

How buyers acquire and secure their land

Outra0.0%

Cartao de morador 0.7%

Acordo foi publicado1.5%

Recibo da utilidade publica1.0%

Licença de arrematação

0.2%

Registro Predial0.5%

Direito de Superfície0.5%

Titulo de ocupação precario

5.6%

Testemunhado por tecnico do governo

6.8%

Croquis de Localização7.3%

Recebi uma declaração49.1%

Contrato de compra e venda12.2%

Nenhum documento14.4%

• Declaration of purchase & sale• Contract of sale• Land site survey map• Title or precarious occupation• Title of Surface Rights• Land Registry

• License of occupation

Only 6.8% of the total sample has legalized possession in accordance with current legislation.

A total of 61.3% of the sample bought their land on the informal market.

Increasing Tenure Insecurity for the Poor• The poor often occupy valuable inner-city urban real-estate.• Urban Plans involve Forced Removals of the Poor from the

Urban Centre and the creation of township-style settlments on the perifery on low-valued land.

• Expropriation of the poor’s assets deepens poverty.

Demand for Land & Increasing Conflict

0

50

100

150

200

250

300

350

Nu

mb

er

of

Art

icle

s o

n L

an

d

& T

en

ure

Secu

rity

per

Year

Independent Media

37 16 2 23 48 81 87 143 171

State PressServices

7 7 8 27 36 23 25 66 148

Total Number ofArticles

44 23 10 50 84 104 112 209 319

2001 2002 2003 2004 2005 2006 2007 2008 2009

DW Media Monitoring Project

2001-2009

Planned Supply of Housing

68.50%

8%11.50% 12%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Public Sector Private Sector Cooperatives Self-Help

Distribution of One Million Houses by Sector

Potential for Housing MicrofinancePotential for Housing Microfinance

Housing microfinance attempts to fill the gap between government subsidy programs and the traditional sector by adapting the principles of microenterprise finance

GovernmentPrograms

NGOs

GovernmentPrograms

NGOsNo access to formal

housing

MortgageBanks

MortgageBanks

ConsumerLenders

ConsumerLenders

CooperativesCooperatives

High Income

Low Income Demand for Housing FinanceDemand for Housing Finance

Niche for Microfinance

Advantages of Microfinance in an Insecure Tenure Environment

• Repayment risks are reduced by shorter loan-terms and smaller amounts

• Opportunities of a large unserved market of normally ‘unbanked and unbankable’ customers

• Allows microfinance institution to work with majority of people who lack full title

• Does not require access to long term sources of funding

• Promotes the financing of traditional forms incremental housing

Micro-Credit• More than 15,000 clients,

62% of them women, currently are receiving loans through a network of over 1000 solidarity groups and 17 branches in 14 of Angola’s 18 provinces . Loaning over $30 million this year (2012).

• Angola’s first non-bank Micro-Finance Institution KixiCredito has been launched to serve poor clients who do not have access to commercial banks.

KixiCredito

KixiCasaKixiCasa is a re-launch KixiCrédito's housing product offering clients loans for improving their houses or building phased up-gradable houses over several loan cycles.

HabiTerra - land management and housingCLIFFHOMELESS INTERNATIONAL

HabiTerra land management and

housing• HabiTerra provides urban development services linked

to low-cost housing delivery, including:• Participatory urban planning (peri-urban and

neighbourhood level)• Urban land layouts: green fields (expansion zones) and

brown fields (upgrading)• Land control through urban cadastres & land registries• Provision of secure land rights in legal and socially

legitimate terms

CLIFFHOMELESS INTERNATIONAL

HabiTerra responds to an immense and largely untapped market for services is the owner built and low-cost housing sector which is provisioned to meet 68% of the Angolan Government’s ambitious 1 million house programme.

HabiTerra land management and

housing

CLIFFHOMELESS INTERNATIONAL

Findings & Conclusions• The public sector responsible for the legal regulation

of citizen’s property rights is very bureaucratic. • The process for the concession of land title to real

estate developers is slow and expensive.• There too many overlaps between the various State

actors in relation to the administration and attribution of property rights

• Private real estate developers largely shy away from providing low-income housing, in spite of having a large market and huge demand for this type of product.

• Real estate developers are drawn to the lucrative, high-end of the market.

• Most investors in social housing are only looking to make their profits from Government subsidies.

Recommendations

• New sources of investment capital for housing may be mobilised from non-state sources such as pension funds and private investment funds.

• Social investors can provide guarantees to commercial banks that can be used to mitigate their risks and encourage them to unblock commercial loans to housing finance and

Microfinance Institutions. • Angola needs more investors with courage to

find sustainable market solutions for social housing and real-estate development.

Thank you