Mortgage Lessons from Other Jurisdictions: Insights for Ghana and Africa

Introduction

The development of a robust mortgage market is crucial for economic growth and access to housing in Ghana and Africa. Lessons from countries like Nigeria and South Africa offer insights into policy frameworks, financing mechanisms, and challenges that can shape Ghana’s mortgage sector. These lessons can help address housing deficits, enhance financial inclusion, and improve accessibility to affordable housing across the continent.

Lessons from Nigeria

1. Policy and Regulation

Nigeria’s mortgage market is regulated by the Central Bank of Nigeria (CBN) and the Federal Mortgage Bank of Nigeria (FMBN). These institutions have created frameworks to improve mortgage accessibility, including the National Housing Fund (NHF), which pools resources to provide low-interest loans to contributors. Ghana can learn from this by:

• Establishing stronger government-backed institutions to regulate and support the mortgage sector.
• Introducing mandatory housing contribution schemes for workers to increase the pool of funds available for housing loans.

2. Challenges in Implementation

Despite policies, Nigeria's mortgage penetration remains low due to factors such as:

• High interest rates (ranging from 15% to 25%).
• Poor land titling and registration processes.
• Limited access to long-term funding. Ghana faces similar challenges, particularly with land registration. Adopting digital land registers and simplifying the legal processes for land acquisition can reduce these bottlenecks.

3. Affordable Housing

Nigeria’s partnerships with private developers have led to some progress in affordable housing projects. Ghana can:

• Foster public-private partnerships (PPPs) to encourage large-scale housing developments.
• Incentivize developers with tax breaks or reduced import duties on construction materials.

Lessons from South Africa

1. Access to Long-Term Funding

South Africa’s mortgage market benefits from deep capital markets, allowing lenders to offer long-term financing. The government-backed National Housing Finance Corporation (NHFC) plays a key role in supporting affordable housing initiatives. Ghana can emulate this by:

• Strengthening its financial markets to attract long-term investments.
• Encouraging pension funds and insurance companies to invest in housing projects.

2. Government Interventions

The South African government provides subsidies through programs like the Finance Linked Individual Subsidy Programme (FLISP), which helps low-income earners access housing loans. For Ghana:

• Subsidy programs targeted at first-time homebuyers could be implemented.
• Policies to reduce the cost of construction materials and improve affordability for low-income groups can be explored.

3. Land Use and Planning

South Africa has advanced urban planning and land-use policies that support housing development. Ghana could:

• Improve urban planning to ensure that land is adequately zoned for residential use.
• Create policies that support mixed-use developments to reduce urban sprawl.

Key Takeaways for Ghana and Africa

1. Land Titling and Registration Streamlining the process of land registration is critical. Digitalization and transparency in land administration can reduce disputes and enhance mortgage market efficiency.
2. Interest Rate Management High-interest rates are a barrier to mortgage accessibility in many African countries. Policies to stabilize inflation and provide government-backed interest rate subsidies can improve affordability.
3. Public-Private Partnerships (PPPs): Collaborations between governments and private developers are essential for large-scale housing delivery. PPPs can address the gap between demand and supply in the housing market.
4. Innovative Financing Solutions Adopting innovative models like micro-mortgages and rent-to-own schemes can help low-income earners. Financial literacy campaigns can also educate the public on mortgage options.
5. Regional Integration African countries can benefit from sharing best practices and creating regional housing finance institutions. Cross-border investments can enhance housing development across the continent.

Conclusion

Ghana and other African countries have the opportunity to build resilient mortgage systems by learning from Nigeria’s regulatory efforts and South Africa’s advanced housing finance mechanisms. Addressing challenges such as high interest rates, limited funding, and poor land administration will require coordinated efforts from governments, private sector players, and international partners. By implementing these lessons, Ghana can pave the way for sustainable housing solutions, improving the quality of life for its citizens and contributing to economic growth across Africa.

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Emmanuel Amoabeng Gyebi

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