DRC: poverty, banks’ discriminatory policies hamper housing finance

DRC: poverty, banks’ discriminatory policies hamper housing finance

With a staggering poverty rate of 71% and a GDP per capita of 231 USD, an average cheapest newly-built house costing 220 000 USD, and most banks looking down on low income groups, owning a house – let alone buying a land to self-build a house or building it on credit – is a field strictly reserved for the minority rich and the elite in the Democratic Republic of Congo (DRC).

These are the shocking findings from the 2012 Housing Finance report released by the Johannesburg-based Centre for Affordable Housing Finance in Africa (CAHF).

Affordable housing supply within the DRC is still in its early stages of conception, and housing supply is limited to the minority elites, the report says, noting that most banks prefer lending money to the middle and high income earning groups, despite high demand of micro-financing emanating from the low income earners andrural population.

And when there is no money to undertake a proper building project, the report says people use natural materials to build informal houses.

Unemployment is high in this mineral-rich Central Africa nation, especially among the youth, and poverty is rife in the run-down townships where there is no electricity, running water, paved roads, and adequate sanitation. Analysts say decades of dictatorship, economic mismanagement, violation of human rights and lack of freedom of expression, and hunger have forced millions of Congolese into exile, to not only seek fortune, but also escape the increasingly ‘brutal’ and ‘corrupt’ political leadership.

DRC’s property prices, believed to be among the highest on the continent, were also noted by the CAHF Yearbook. “Property prices are high and generally aimed at the high-end market,” it says, deploring the lack of land administration systems in this vast country.

“As a result, where land titling does exist, the price is high (about 800 USD to 1 000 USD per hectare). In Kinshasa, land values are even higher – an estimated 100 000 USD per hectare in well-serviced residential areas.”

Reports from the capital city Kinshasa say the price of land and formally-built houses has increased ten-fold between 2000 and 2012.

Pieces of land in underdeveloped areas – mostly on the outskirts – of the capital Kinshasa are still available for sale, while land for sale in upmarket suburbs is almost non-existent as powerful people close to the regime or businessmen allied to governments have ‘booked’ all the land for fancy building projects or for ‘future use’.

A Congolese woman, Virginia Lutete, who has lived for many years abroad and returned recently to her native Kinshasa hoping to buy a piece of land, was disappointed. “You must be rich to buy a good house nowadays in DRC because property prices are increasing day after day.”

The report says beyond the limited and high-end market, however, a clash between statutory and customary land laws undermines property market developments and achieving legal title.

Housing finance is a strange word to many Congolese, the majority of whom do not even have a bank account. Only about 1% in the DRC out of a population of around 80 million have a formal bank account, research shows.

“Large deposit amounts of between 1 000 USD to 25 000 USD are required to open an account with some of these banks,” CAHF, a division of FinMark Trust, says in its 2012 Yearbook.

“Commercial banks’ lending rates are extremely high (around 43.15%), this means that the great majority of the population cannot afford to access finance,” the report says, reiterating that affordable housing is still relatively undeveloped, and offers significant potential for growth.


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