The World Bank has signed a US $155m agreement with the West African Development Bank (BOAD) to assist the Bank in financing housing in the West African Economic and Monetary Union (WAEMU) region.
The US $155m package consists of an International Development Association (IDA) Scale-up credit of $130m to BOAD. This is the first IDA SUF credit to a regional organization. There is also a US $25m regional IDA grant to the WAEMU.
According to data, 110 million people currently live in the WAEMU region. Furthermore an additional 100m will be born over the next twenty years. Most of these will be urban dwellers, as the area is experiencing rapid urbanization. Benin, Burkina, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo make up the WAEMU region.
This trend is aggravating a large housing deficit as 800,000 new housing units are needed every year to address the shortage. On the other hand WAEMU banks only issue about 15,000 new mortgages per year. These amounts only to a tiny fraction of the estimated needs.
The agreement, through expansion of access to long-term housing finance for households with modest and irregular incomes serves as a workable solution. It is also expected to create job opportunities.
According to World Bank Country Director for West Africa Regional Operations. Rachid Benmessaoud estimates that one dollar of IDA will leverage about 5 dollars of private finance overall. BOAD to CRRH-UEMOA will extend long-term loans to banks and microfinance companies. This in turn will allow the institutions to extend the term of their loans to households with moderate and irregular incomes.
IDA funding into CRRH-UEMOA will facilitate about 50,000 new mortgages. It will also leverage much greater amounts of investment into affordable housing through the bond-raising activity of CRRH-UEMOA. In addition, the project will provide technical assistance to develop the enabling environment to support the construction of cheaper housing.