Central African Republic’s Landscapes of Investment
Introduction:
This country report forms part of The Centre for Affordable Housing Finance’s Investor Programme which aims at addressing key information asymmetries on who, why and how investments are made in the African housing sector. With the intention of identifying and championing increased investment in affordable housing, the report includes insights and analysis into the depth and breadth of investment in the Central African Republic’s housing and housing finance sector. The overall goal of this project is to quantify the breadth of investment activity with respect to housing and housing finance across Africa and to establish a mechanism to track this on an ongoing basis.
This project has collected data and highlights gaps and opportunities in the investment landscape. With the aim of stimulating greater investment in affordable housing and connecting investors with potential investments, the report profiles investors and investment instruments with the greatest impact on the housing finance market within the Central African Republic. Growing financial sector experience and increasingly sophisticated financial instruments are driving investor interest in African real estate. This includes new market opportunities related to a rising urban middle class, an increasingly localized construction material industry and innovations in housing finance such as the emergence of Real Estate Investment Trusts and mortgage liquidity facilities across Africa.
Challenges/Opportunities to Deepening the Investment Landscape in CAR:
The housing industry in the Central African Republic is significantly small (both in size and quality), to adequately meet the country’s annual housing requirement of 500,000 units, in the medium term. The annual housing supply is estimated at less than 1,000 units, most of which (over 90%) has been delivered by humanitarian agencies (Catholic Relief Services and Norwegian Refugee Council), through repair of structures that were destroyed by the civil war in 2013. Regrettably, the paltry average income of US$ 3 per month cannot support households build houses of the right quality and standards, worthy a reduction in the national housing requirement. The National Social Security Fund (Caisse Nationale de Sécurité Sociale) exists, but has the same structural problems (low mobilization capacity, inadequate collections, and weak financial sector). Besides this there are only three insurance companies for the whole country, with a presence almost only in Bangui.
Investment opportunities in the Housing Industry in Central Africa:
The main recommendation is to liberalize the housing and housing finance sectors, to help mobilize sufficient long term funds to address the housing short-falls. Below is the justification: Dominance of the public sector in delivery of housing developments tends to exclude the private sector. The private sector plays a significant role in the entire housing finance delivery. On the financing side, private sector institutions tend to be well-structured in terms of corporate governance framework. They therefore tend to access funding with relative ease from international financial institutions such as the African Development Bank and International Finance Corporate, the critical players in the African housing finance landscape. Additionally, private entities have been seen to champion the delivery of both affordable housing units and affordable finance for the final off-takers.
Conclusion:
Once the economies are liberal enough, World Bank funding (and other social impact investors) should support institutional building of the debt capital markets and the stock exchange, from which a substantial portion of long-term funding can be sourced locally. World Bank funding should also help correct market failures and policy distortions, created by the long periods of Government monopoly, as part of efforts to stabilize the economy and in turn, increase confidence in foreign institutions to commit sizeable investments to the development of a competitive housing and housing finance sectors.