WAEMU: African Solidarity Fund and Regional Housing Refinancing Fund Launch Housing Loan Guarantee Initiative

Tuesday, 21 May 2024 17:02
WAEMU: African Solidarity Fund and Regional Housing Refinancing Fund Launch Housing Loan Guarantee Initiative

(Togo First) - To tackle the significant housing shortage in the West African Economic and Monetary Union (WAEMU), a major initiative was launched in Lomé last week. Known as the "Housing Loan Guarantee" (HLG), the initiative aims to help real estate developers secure loans more easily. The HLG was launched by the African Solidarity Fund (ASF) and the Regional Housing Refinancing Fund of WAEMU (RHRF-WAEMU). The Guarantee benefits from a solid 'investment grade' rating, enhancing its credibility.

"The housing loan guarantee is designed to share credit risks and reduce the net cost of risk while decreasing the consumption of banks' funds. It thus makes housing finance more accessible and sustainable, with positive impacts on economic stability and social development in our region," stated Yedau Ogoundele, CEO of RHRF-WAEMU.

Concretely, the HLG allows WAEMU lenders to obtain guarantees of up to CFA5 billion per entity, with an 80% coverage in case of default. "By activating this 'silent' guarantee, we cover 80% of the risk of each defaulted loan. We will intervene as a first demand for 50%, with institutions having three years to recover the funds before we settle the rest," said Abdourahmane Diallo, CEO of ASF.

"This guarantee offers prospective homeowners more favorable loan conditions and allows banks to optimize their equity while increasing their lending capacity," added Diallo.

With the housing deficit in WAEMU currently at 3.5 million units and an annual need for 251,000 new units to keep up with demographic growth and urbanization, the launch of the HLG addresses a critical need in the region. "To meet these structural challenges, RHRF-WAEMU had to react by offering innovative and adapted solutions," emphasized Ogoundele.

The ASF and RHRF-WAEMU plan to conduct a roadshow across the WAEMU’s eight countries. The roadshow aims to tailor the Guarantee to the needs of WAEMU States.  "We invite all interested banks and DFS to join us in developing their housing loan portfolios. This is an evolving process where we will adapt our offer based on the feedback received," concluded Ogoundele.

Fiacre E. Kakpo

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