Housing Finance
Housing Finance
Business Model Description
Finance access to social housing for low-income social categories by granting them credits on affordable terms through the mortgage refinancing mechanism made available to commercial banks with public support for tax incentives, financing as well as the partnership of international and regional financial institutions.
Expected Impact
Meet housing demand and offer low cost financing to extend real estate financing to low-income communities.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Togo: Maritime
- Togo: Centrale
- Togo: Plateaux
- Togo: Kara
- Togo: Savanes
Sector Classification
Infrastructure
Development need
According to Togo's 2018-2022 NDP, the housing deficit is estimated at 500,000 housing units for the entire country by 2020, while the housing supply will have only increased by 800 units between 2012 and 2020, going from 12,000 in 2012 to 12,800 in 2020. The demand for housing had increased to 144,000 housing units in 2012, and 178,000 housing units in 2020 (1, 2).
Policy priority
Togo's NDP 2018-2022, which highlighted the country's significant housing deficit, aimed at using the housing program to promote sustainable development of the national territory; promoting access to decent and affordable housing for the most vulnerable; building up land or real estate reserves for the production of social housing; using social housing as an economic driver (1).
Gender inequalities and marginalization issues
Women's low access to land ownership limits their access to housing as owners. In 2017, they only owned 21.7% of land/farms in rural areas, compared to 78.3% for men; and 20.4% of plots/houses in urban areas compared to 79.6% for men. Women have 30.9% of the income of informal sector businesses compared to 69.1% for men in 2015; 45.4% compared to 54.6% for men for salaries in the civil service (26).
Investment opportunities. The limitation of the local supply in the face of the housing deficit (500,000 housing units in 2018) constitutes in itself an opportunity to invest in the housing sector (1). Indeed, the housing supply in Togo was only 1,800 in 2019, while the Shelter Afrique project provides for 3,000 and the Government Roadmap 20,000 housing units for 2025 (2, 3).
Key bottlenecks introduction
Bottlenecks include the absence or ineffectiveness of the current land code, giving rise to recurring disputes and making several land areas difficult for the State to recover; the high cost of construction, constantly increasing housing prices; limited access to mortgage credit mainly due to the low incomes of the population (1, 2).
Real Estate
Development need
The achievement of the objective of ensuring housing accessibility for all is still uncertain. Indeed, the rate of access to decent housing is estimated at 47.7% in 2015, with a target of 70% in 2022. Today, everything indicates that this objective is far from being achieved, since the flagship program for the construction of 20,000 homes by 2025 remains to be realized (1, 2).
Policy priority
The “20,000 housing” programme stems from the national desire to set realistic and measurable objectives by offering low- and middle-income households an adequate living environment. The ultimate objective is to improve their living conditions by learning from experiences in the field of collective housing construction in order to meet the needs of the population (21, 22).
Gender inequalities and marginalization issues
Women have little access to real estate credit, receiving on average USD 1,303.35 per credit in 2017 compared to USD 134,422 for men) (26). Women in Togo undertake few projects in the building and construction sector, regardless of the type of work envisaged, design, execution or control (5). Hence the government's decision to award 20% of public contracts to young and female entrepreneurs (6).
Investment opportunities
The urban development plan for the Kpomé-Dalavé site is the support for the implementation of priority project P7 related to construction, and real estate of the Government Roadmap 2020-2025. The program initiated by the government at affordable costs seeks the collaboration of banks to offer financing guarantees (21, 23).
Real Estate
Pipeline Opportunity
Housing Finance
Finance access to social housing for low-income social categories by granting them credits on affordable terms through the mortgage refinancing mechanism made available to commercial banks with public support for tax incentives, financing as well as the partnership of international and regional financial institutions.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
The government had planned forecast expenditures for 2023 for social housing and community facilities of around 50 billion FCFA (USD 83,333,333) while for 2024 and 2025, the projections are estimated at 52 FCFA (USD 86,666,666) and 64 billion FCFA (USD 106,666666) respectively. The planned envelope should be used mainly to carry out the government project to build 20,000 social housing units by 2025.
The amount of each loan should not exceed 20 million CFA francs or USD 33,333.33 as part of the World Bank project for the promotion of affordable housing for households with irregular and modest incomes (26). The total amount of loans could thus reach for the 20,000 social housing units a total amount of USD 666,666,666.
Indicative Return
15% - 20%
The banking product of real estate loans results from the difference between the interest rate of real estate loans (6.5%) and that of refinancing (BEAC key rate at 3.50%, or the interest rate on the marginal lending window at 5.50%) (2). The minimum profit margin would hence be 18.18%.
Investment Timeframe
Medium Term (5–10 years)
The Regional Mortgage Refinancing Fund (CRRH-UEMOA) has made long-term resources available to four banks in Togo to refinance real estate loans. Obtaining long-term resources allows banks to grant medium- or long-term loans involving a long-term return on investment (26).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - Requires Subsidy
Market - Highly Regulated
Capital - Limited Investor Interest
Impact Case
Sustainable Development Need
According to the 2018-2022 NDP, the housing supply is weak with an annual increase of 800 housing units while the needs for the entire country were estimated at 500,000 housing units. These needs are especially pronounced in the Lomé area, which is experiencing strong demographic expansion (1, 2).
The construction of housing is expensive due to the high and increasing costs of construction materials as well as land. Access to decent housing is difficult, if not impossible, for people with low incomes, particularly those working in the informal sector (1, 2).
Finance for housing is difficult to obtain because of the low income of marginalised populations who want to acquire decent housing. Microfinance institutions do not offer loans for real estate (1, 2).
Gender & Marginalisation
The lack of land ownership by women limits their access to housing as owners. They only held 21.7% of land/farms in rural areas in 2015 and 2017 compared to 78.3% for men in 2015 and 2017. Furthermore, plots of land/houses in urban areas were held by women at 20.4% compared to 79.6% for men (26).
Women have lower incomes than men: They received 30.9% of the income generated in 2015 by informal sector businesses compared to 69.1% for men. They also received 45.4% of public service salaries and wages in 2017 compared to 54.6% for men (26).
Women have little access to mortgage credit with on average lower amounts than those obtained by men in Togo in 2017 (USD 1,303.35 for women against USD 134,422 for men) (26).
Expected Development Outcome
Housing construction and financing on a large scale, while ensuring that it is affordable, can help reduce the gap between housing supply and need and enable populations, including the most vulnerable, to access decent housing.
Housing construction and financing on a large scale and at affordable costs will allow people with low incomes, including those working in the informal sector, to improve their living environment and conduct their activities.
Housing construction and financing on a large scale and at affordable costs and supported by credit mechanisms oriented towards the less fortunate will allow people with low incomes to obtain decent housing.
Gender & Marginalisation
Financing housing on affordable terms will allow women in the informal sector to access decent housing by domiciling their income in a bank account.
Financing housing based on attractive schemes for women heads of household will allow them to engage in real estate credit according to their income for decent housing.
Financing social housing could promote vocational training and employment for young girls and boys in promoting real estate credit among less well-off communities.
Primary SDGs addressed
11.1.1 Proportion of urban population living in informal, informal settlements or inadequate housing
36.46% in 2022 (12).
N/A
8.10.2 Proportion of adults (15 years and older) with an account at a bank or other financial institution or with a mobile-money-service provider
80% in 2021 (2).
N/A
5.a.2. Proportion of countries where the legal framework (including customary law) guarantees women’s equal rights to land ownership and/or control
In 2021, the degree to which the legal framework (including customary law) guarantees women's equal rights to land ownership and/or control stood at 4.0 points on a 1-6 scale (12).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Outcome Risks
Low compliance with safety and environmental as well as overall quality standards in housing construction could have a negative impact on the houses and their durability, posing potential risks to people and planet.
A housing construction process, including cement production, that pays little attention to environmental standards can generate emissions of particles and dust that can affect the health of populations living near construction sites and cement plants.
Civil servants and informal sector workers unable to pay their mortgage charges will put the lending banks in difficulty and risk losing the benefit of social housing themselves, causing indebtedness.
Impact Risks
The scale of the housing construction programme may be hampered by the low availability of quality labor, which may slow down its execution to the point of not providing the expected quantities of housing.
Public sector and informal sector employees will only obtain decent housing if they do not lose their job or their activity that guarantees irrevocable domiciliation of their income.
Beneficiaries of housing acquired under the favourable real estate loans will live in decent housing if such housing has been built in accordance with the appropriate specifications.
Impact Classification
What
An increasing and abundant supply of housing financing and construction will offer more opportunities to people with low income to access decent housing.
Who
The companies, banks and financial institutions participating in the financing and construction benefit and can offer decent shelter to people, including the most vulnerable.
Risk
Access to decent housing through mortgage loans by employees can be hampered by the availability of housing that meets the required standards and the inability of borrowers to repay their debt.
Impact Thesis
Meet housing demand and offer low cost financing to extend real estate financing to low-income communities.
Enabling Environment
Policy Environment
Togo's real estate policy is contained in the PND 2018-2022 and the Togo 2025 Government Roadmap. It aims to accelerate the pace of construction of affordable housing. The construction of 20,000 housing units is planned by 2025 (1, 3, 21, 22).
A World Bank refinancing fund for the promotion of affordable social housing through West African Economic and Monetary Union and commercial banks in Togo, makes it possible to grant real estate loans to the poorest under advantageous conditions in terms of interest and repayment period (11, 26).
Financial Environment
The World Bank’s concessional financing for affordable social housing through the West African Economic and Monetary Union’s Regional Mortgage Refinance Fund and commercial banks in Togo allows banks to provide loans with interest rates of 6.5 percent and repayment terms of up to 25 years (26).
Under the UEMOA Project, the provision of long-term resources by the World Bank to commercial banks allows them to offer their clients affordable mortgage loans capped at around USD 30,000, repayable over 10 to 15 years (28).
The program to build 20,000 affordable housing units in Togo is receiving financing from the AfDB for a total amount of approximately USD 5.167 million. This concessional financing from the AfDB helps reduce the cost of the program (9, 10).
Other incentives relate to the General Tax Code (ACT No. 2018-024 ON THE GENERAL TAX CODE), including the exemption from income tax in Article 53 and the avoidance of double taxation on funds borrowed and then lent (8).
Regulatory Environment
Housing regulations in Togo relate to the residential lease contract. The conditions of access to housing are governed by commercial and financial rules, particularly for the granting of credits (27).
Law No. 2018‐005 of June 2018 on the Land and State Code regulates the property rights of the state and local authorities, individuals and legal entities under private law acquired according to the laws and regulations, buildings and land rights (7).
The government's interest rate policy, set in accordance with central bank rules, allows for the granting of mortgage loans at interest rates close to 6.5% for repayment periods of up to 25 years (2).
The Investment Code (Law No. 2019-005/PR of January 25, 2019) provides for exemptions from duties, taxes and indirect taxes, customs duties and taxes; non-refundable tax credits on direct taxes; and exemptions from property tax (14).
Marketplace Participants
Private Sector
Ecobank Togo, Orabank Togo, Bank of Africa (BOA). Togo, Banque Atlantique Côte d'Ivoire (BACI).
Government
Ministry of Urban Planning, Housing and Land Reform, Ministry of Economy and Finance, Directorate General of Urban Planning and Housing, Town Halls and Local Authorities, departments in charge of housing and land.
Multilaterals
World Bank, African Development Bank (AfDB), UN Habitat, United Nations Development Programme (UNDP).
Non-Profit
Togolese Real Estate Federation (federation of real estate agents), National Chamber of Notaries of Togo, real estate experts, unions and consumer associations.
Public-Private Partnership
The Government has established partnerships for the construction of housing with AfDB, and the financing of the acquisition of housing by employees of the public sector and the informal sector with the financial support of the World Bank and the banks (10, 11).
Target Locations
Togo: Maritime
Togo: Centrale
Togo: Plateaux
Togo: Kara
Togo: Savanes
References
- (1) Togo, Plan National de Développement (PND 2018-2022), https://faolex.fao.org/docs/pdf/Tog184778.pdf
- (2) Annuaire sur le Financement du Logement en Afrique (PND) 2018-2022, https://housingfinanceafrica.org/app/uploads/2023/12/TOGO.pdf
- (3) Togo, Feuille de Route Gouvernementale Togo 2025
- (4) Ministère de l’action sociale, de la promotion de la femme et de l’alphabétisation. Éléments de réponses du Togo au questionnaire relatif aux droits fondamentaux des femmes dans un monde de travail en mutation, août 2019, https://www.ohchr.org/sites/default/files/Documents/Issues/Women/WG/ChangingWorldofWork/MemberStates/Togo/ContributionsduTogo.pdf
- (5) Savoir News. Afrique: Les femmes dans les Bâtiments et Travaux Publics (BTP), une denrée rare, https://www.savoirnews.tg/blog/2021/12/17/afrique-les-femmes-dans-les-batiments-et-travaux-publics-btp-une-denree-rare/
- (6) Savoir News, 20% de marchés publics aux jeunes et aux femmes entrepreneurs: pour un montant de 26,4 milliards de FCFA, https://www.savoirnews.tg/blog/2018/03/30/20-des-marches-publics-aux-jeunes-et-femmes-entrepreneurs-pour-un-montant-264-milliards-de-f-cfa/
- (7) Togo, Code foncier et domanial, https://www.droit-afrique.com/uploads/Togo-Code-2018-foncier.pdf,Loi n°2018‐005 du 14 juin 2018
- (8) Journal officiel, LOI N° 2018-024, https://jo.gouv.tg/sites/default/files/JO/JOS_20_11_2018-63E%20ANNEE%20N%C2%B0%2023%20TER.pdf,PORTANT CODE GENERAL DES IMPÔTS
- (9) Ministère de l’économie et des finances, Le Togo et la BAD signent ce jour deux accords de financement d’une part du Projet d’accompagnement des jeunes hommes et femmes entrepreneurs sur les chaines de valeur créatrices d’emplois, https://finances.gouv.tg/
- (10) African Development Bank Togo : la Banque africaine de développement va apporter plus de 5,13 millions de dollars pour les études de faisabilité du projet de 20 000 logements à coût abordable ttps://www.afdb.org/fr/news-and-events/
- (11) Groupe de la Banque Mondiale, Le groupe de la Banque mondiale soutient l’accès au financement de l’habitat social en Afrique de l’ouest, https://www.banquemondiale.org/fr/news/press-release/2017/10/13/world-bank-group-supports-access-to-affordable-housing-finance-in-west-africa
- (12) United Nations Department of Economic and Social Affairs Statistics Division, Country Profiles, https://unstats.un.org/sdgs/
- (13) Economic and Social Council Report of the Inter-Agency and Expert Group on Sustainable Development Goals, https://documents.un.org/doc/undoc/gen/n16/045/25/pdf/n1604525.pdf
- (14) Togo, Loi n°2019-005/PR du 25 janvier 2019 portant Code des Investissements en République Togolaise, https://commerce.gouv.tg/wp-content/uploads/2020/09/CODE-DES-INVEST-TOGO-compressed-compressed-compressed.pdf
- (21) Ministère de l'Urbanisme, de l'Habitat et de la Reforme, Foncière Construction de 20 000 logements décents à coûts abordables: le Plan d’Aménagement urbain du site de Kpomé-Dalavé validé, https://urbanisme.gouv.tg/construction-de-20-000-logements-decents-a-couts-abordables-le-plan-damenagement-urbain-du-site-de-kpome-dalave-valide/
- (22) Togo First, Togo: le projet de construction de 20.000 logements sociaux franchit un important palier, https://www.togofirst.com/fr/gouvernance-economique/0711-12848-togo-le-projet-de-construction-de-20-000-logements-sociaux-franchit-un-important-palier#:~:text=Notons%20que%20le%20projet%20de,(environ%203%20milliards%20FCFA)
- (23) Togo, Boom immobilier et défis du logement à Lomé: le Fest’Immo au cœur des débats, https://www.orabank.net/fr/filiale/togo/actualites/orabank-togo-partenaire-officiel-du-salon-de-limmobilier-festimmo
- (24) African Lease, Togo, https://www.africanlease.com/african-lease-togo/
- (25) Bank of Africa, https://www.boatogo.com/particuliers/prets/pret-tous-a-lecole/
- (26) Rapport de l’auditeur sur les états financiers des composantes mises en œuvre par la Caisse de régionale de refinancement hypothécaire de l’UEMOA (CRRH-UIMOA), Projet de Banque Mondiale/UEMOA pour la Promotion du Logement Abordable, https://documents1.worldbank.org/curated/en/099103023135516442/pdf/P1616580c17a53065087a20b13c92f3b979.pdf
- (27) Ministère de l'Urbanisme, de l'Habitat et de la Reforme Foncière, Le modèle de contrat de bail d’habitation: un cadrage du bail d’habitation qui inspire d’autres nations, https://urbanisme.gouv.tg/le-modele-de-contrat-de-bail-dhabitation-un-cadrage-du-bail-dhabitation-qui-inspire-dautres-nations/
- (28) Des prêts hypothécaires pour se loger en Afrique de l’Ouest, https://www.banquemondiale.org/fr/news/feature/2023/11/07/mortgage-loans-provide-access-to-affordable-housing-in-west-africa
- (29) Ministère de l'Urbanisme, de l'Habitat et de la Reforme FoncièreRenouvellement de l’habitat dans le grand Lomé: l’Etat togolais signe un protocole d’accord avec la société de promotion immobilière PNHG pour la construction de 200 logements collectifs, https://urbanisme.gouv.tg
- (30) Togo. Politique de logements sociaux https://www.republicoftogo.com/toutes-les-rubriques/societe/politique-de-logements-sociaux
- (31) Togo first, Le Togo prévoit près de 167 milliards FCFA pour les logements sociaux entre 2023 et 2025, https://www.togofirst.com/fr/gouvernance-economique/2607-10390-le-togo-prevoit-pres-de-167-milliards-fcfa-pour-les-logements-sociaux-entre-2023-et-2025#:~:text=Dans%20le%20d%C3%A9tail%2C%20les%20d%C3%A9penses,52%20et%2064%20milliards%20FCFA.