# 10. Financing the Demand and Supply of Affordable Housing

El Hadj Ba, African Development Bank

The housing finance market in Africa remains severely underdeveloped. With the exception of South Africa and Namibia, the depth of the housing finance market, as measured by the ratio of outstanding mortgage loans to GDP, is still very low throughout sub-Saharan Africa. Hence, the only alternative for a majority of the population, particularly poor and middle-income households, is to use informal financial sources, such as borrowing from money lenders under usury conditions, or using rotating credit and savings schemes, which can be also very expensive. Uncertainty in the macro-financial environment has also slowed the growth of the housing finance market in several African countries. In recent years, inflationary pressures in countries such as Ethiopia, Ghana, Kenya and Nigeria in particular have often led to double-digit interest rates, which deter investors from engaging in long-term housing finance. This paper aims to illustrate the challenges facing the housing finance sector—lack of long-term finance, low efficiency of mortgage securities, the large share of informal employment, etc. Amongst other issues, it will explore sub-themes such as access to finance by informal sector workers and developers, rent-to-own schemes, the mass scale delivery of housing stock, the role of microfinance, development of mortgage products, etc

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