This Presentation is based on Housing and Housing Finance Challenges and Initiatives in OIC Member Countries

“There is no legal and practical mechanism to which all countries related to Islamic finance are subject”. – Turkish Deputy Prime Minister Ali Babacan
“The brilliant recent growth and globalization of Islamic finance has led the total size of the global Islamic financial assets to increase to USD 1.5 trillion. Many countries, mainly Bahrain, Indonesia and Malaysia have a large Islamic finance sector while others such as Luxembourg and England are making determined steps to improve these financing instruments” – The World Bank President Dr. Jim Yong Kim

• 57 countries are OIC members out of 193 UN members on a global scene
• The World population crossed 7 Bn in 2012, whereas the population of IDB member Countries was
1.6 Bn in 2009 (23%)
• IDB member Countries need around 8.2 mn new housing units/year. To meet this yearly demand
IDB member countries will need US$ 15.5 Bn/year of investment in the housing sector.*
• The yearly requirement of housing in the Muslim World is growing at 2.83% p.a.
• Sharia-Compliant Housing Finance in Muslin Countries is around 20%, and rest of the financing is Conventional. A lot more is needed to be done to expand its share.
• Urban population of IDB member countries is growing at 2.8% per year as compared to worldwide average growth of 0.5%.
• The total urban population of IDB member Countries was 731 Mn in 2010, representing nearly half of the total population of IDB member countries
• MG to GDP ratio is highest in Malaysia (32%), and lowest in Pakistan and Egypt(below 1%).

• The Muslim world represents 1 of 4 humans on the planet.
• Nearly the same share in a number of countries.
• Represents 1 of 2 poor on the planet.
• An acute challenge of widening demand/supply gap and rising housing backlog … leading to Social Unrest.
• Most of the housing backlog and short supply is in the low-income segment of the population.
• Population growth and urbanization are further compounding the existing huge backlog.
• Rising costs (land, construction, construction materials) are making housing unaffordable for the poor.

• IDB/IRTI* study suggests housing needs of the Muslim World are at 8 mn units, nearly all in the Low-Income Segment. The estimate needs further analysis and breakdown
– MENA 3.2 mn;
– Asia 2.7 mn; and
– Africa/others 2.3 mn.
• Shortage: Egypt 1.5 mn, Iraq 1.0 mn, Morocco 0.6 mn, Saudi Arabia 0.4 mn
• Significant oversupply in upscale or luxury housing only, while low-income segments/ communities remain neglected
• Rapid urbanization is a major issue for low-income housing
• Need for new housing for 8 mn due to population growth is based on 5-5.5/HH and a population growth rate of 2.5%
• Urbanization and population growth further increase the annual housing needs in major metropolitans
• On the other side, supply is 30-40% of new demand, all for the high-income segment.

• ME Countries: Recent civil uprisings in some countries have brought to the surface the social issue of low-income affordable housing
• Many countries in the region have allocated huge funds and have initiated Affordable Housing Projects, which need to be more effective and sufficient.
• Most of these programs are based on State Subsidy, and thus would not be viable and sustainable in the long run.
• Indonesia over the years has developed and implemented a very comprehensive program of State Subsidized Pro-Poor Housing.
• Africa has a unique challenge of Low-Income Housing, with challenges of affordability, housing micro-finance, and slums growing in size.
• Many African countries with large Muslim populations are candidates for Sharia Compatible Housing Finance
• Asia, with Muslim countries like Pakistan, Afghanistan, Indonesia, and Malaysia, are faced with challenges of low-income affordable housing shortage and answers have no match with the issues

• As most of the housing shortage is in the low-income segment, these segments/communities need empowerment through housing finance.
• Nearly 1/5th of the population in the Muslim World is a candidate for HMF.
• Need for Faith- Sharia-Compliant Financing Models.
• Challenges of Rapid Urbanization and growth of low-income communities.
• Institutional Housing Finance is either non-existent or in the infancy stages in most of the Muslim World (Afghanistan and some African Countries).
• Slightly advanced in some others (Malaysia, Turkey, Egypt, Morocco, Indonesia, Pakistan and Saudi Arabia).
• Regulatory Framework needs strengthening.
• Additional challenges include:
– Role and responsibilities of Specialized Housing Finance Institutions (HFIs) and Commercial Banks (CBs).
– Long-Term Liquidity Facility Institutions and Instruments.