Mozambique -Housing Investment Landscapes
Introduction:
This country report forms part of The Centre for Affordable Housing Finance’s Investor Programme which aims at reducing 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 Mozambique’s housing and housing finance sector. The overall goal of this project is to quantify the breadth of investment activity in 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. To stimulate greater investment in affordable housing and connect investors with potential investments, the report profiles investors and investment instruments with the greatest impact on the housing finance market within the Southern Africa Development Community (SADC). 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 localised construction material industry and innovations in housing finance such as the emergence of Real Estate Investment Trusts (REITs) and mortgage liquidity facilities across Africa. However, the chronic lack of rigorous data on housing sector financing infrastructure presents a key barrier to this growth. This is particularly true for the housing sector as stimulating targeted investments relies on highly differentiated data that illustrates market segmentation. In providing market intelligence that makes the case for investment in under-served markets (segmenting and quantifying the demand side; and scoping, understanding, and tracking the supply side), we can support a better policy environment and increased private sector activity in affordable housing markets. In this way, we catalyse scale interventions.
Local institutional investors:
Capital markets:
Mozambique’s reputation in international capital markets is strained due to its default status. The country is negotiating a restructuring of its bonds, aiming for much longer maturities with the hope that the impending development of natural-gas will help to shore up its finances.
DFI investment in finance and housing:
At least $838 million in DFI funding for financial sector support has been extended since 2008. Only two World Bank debt-funded projects with a combined budget of $80 million had line items specifically earmarked for services and housing for the poor. The two allocations totaled US$11.1 million and were part of a broader Municipal Development Program in Maputo
Private equity:
Private equity investment in Mozambique, especially in housing, has been sparse. Two DFIs, namely Swedfund from Sweden and SIFEM from Switzerland, invested in the AfricInvest Fund II in 2014. AfricInvest is a Private Equity fund based in Tunisia. It subsequently invested in Banco Mais, a Bank in Mozambique. Geocapital, another private equity fund, also participated in the transaction. Geocapital is an investment company with a significant shareholder from Portugal and two from Macau. Banco Mais had previously been called Banco Tchuma. AfricInvest and Geocapital acquired 38 and 45 percent of Banco Tchuma, respectively, and renamed it Banco Mais (Banco Moçambicano de Apoio aos Investmentos) with a view to positioning it as leading SME lender. Banco Mais markets home loans on its website but it does not report its mortgage book balances in its annual reports.
The Breadth and Depth of Housing and Housing Finance Products:
Access to finance in Mozambique is limited; more than 90 percent of the population does not have a bank account and only 3 percent of the population has access to credit. The five biggest banks control 87 percent of the market. Rates are high but trending downwards. The Central Bank lowered its benchmark rate by 150 bps or 1.5 percentage points to 16.5 percent in April 2018 and the country’s prime lending rate in May 2018 was 23.50 percent, down from 27.25 percent in January 2018.17
Conclusion:
Mozambique has also recently engaged with other Lusophone countries in the region (Angola and Cape Verde) to share lessons learned and best practices. This is a logical collaboration as these formerly Portuguese countries share common traditions and do not have the legacy of Anglo-Saxon institutions such as building societies.