A whopping 1.6 billion people worldwide lack adequate housing, according to independent statistics, while the World Bank says only 3% of the global population has an income sufficient to support a mortgage.
The affordability factor, which is regularly tackled at various housing summits, has been cited as the fundamental problem facing the continent’s housing sector, alongside poor legal mechanisms.
In Africa, only 36.5% of the 1.1 billion population earn less than US$2 per day and cannot afford any mortgage, and 24% earn between US$2 and $4 per day and build incrementally using cash.
Ruth Odera, of Habitat for Humanity, made these shocking revelations at a housing finance summit hosted in South Africa.
“No financial products exist for this market segment,” Kenya-born Odera said regretfully. “This is an underserved market that needs well-designed products and services supported by housing support services to improve their capacity to invest in housing,” Odera told delegates.
“Low income households need both financial and non-financial shelter solutions that meet their needs, preferences and capacities,” she noted.
The funds may be used for, among others, home improvements for mainly repairs, home upgrades, extensions and connections to utilities such as water, sewage, electricity or solar power.
This list also includes home completion loans for finishing partially built houses and new home build loans for building completely new houses.
Furthermore, Odera urged financial service providers to provide affordable financial services and appropriate financial services, which include repayments that conform to income streams and cycles.
“Housing support services providers also need to provide advice by artisans or contractors on home improvement on sources of quality materials and construction technical assistance, designs that conform to contexts, assistance in securing land tenure and plan approvals and assistance in obtaining finance, among others.”