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
- 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.
- 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.
- 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.
- 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.
- 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.