Affordable Housing Program Development Project

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The housing deficit is estimated to be around 320,000 units for the whole of Senegal and 158,000 for Dakar. This gap increases by 12,000 housing units per year on average. This backlog is a consequence of rapid urbanization and an insufficient supply due to constraints, including (i) limited availability of serviced land and unpredictability of property title attribution, (ii) limited availability of relevant financial products mainly for buyers, and (iii) high construction costs. Therefore, informal settlements persist and account for 25 percent of urban spaces in Senegal and 30 percent of inhabited areas in Dakar. In addition, most Dakar’s inhabitants are housed through rental solutions (about half of the households in 2014), short of accessing and financing homeownership. The situation of the housing stock goes hands in hands with a chronic deficit of urban infrastructure and poor service delivery: 30 percent of households in secondary cities are not connected to the water network, relying on water standpipes; only 36.7 percent of urban households have access to basic sanitation; besides Dakar, only seven urban centers have partial access to a sewage system (Rufisque, Louga, Saint Louis, Kaolack, Thies, and the tourist cities of Saly and Mbour); and most Senegalese cities struggle with waste management on both the collection and disposals ends. Affordability is a key constraint to decent housing in Senegalese cities. The average cost for a “developer” house in Senegal stands at FCFA 52 million, while the cheapest house is close to FCFA 20 million. With current prices, housing units are inaccessible for households earning less than FCFA 460,000 per month (i.e., approximately 95 percent of the population). For those employed in the informal sector, lack of formal income makes it impossible to get a mortgage. This also disproportionally affects women who suffer from wage gaps, and predominantly informal and irregular incomes. The government 100k Affordable Housing Program (AHP) aims at improving access to decent housing in Senegalese cities by an increased supply of and demand for low-cost housing for the underserved populations. The 100k AHP complements the broader Zero Slum Program of the “Senegal Emergence Plan”, which includes projects for slum upgrading and serviced plots. In concrete terms, the 100k AHP ambitions to reduce the price of developers housing to FCFA 12 million for social units and FCFA 15 million for economic units. Following a broad consultation with local actors, public, private, academic, and civil society, the government launched this program in January 2021 with the following pillars: (i) access to land and (ii) access to financial services. More specifically, the 100k AHP focuses on creating a policy, regulatory and institutional environment designed to last. The Proposed Project will support the inception phase of the national program and support the establishment of the critical building blocks at the institutional, operational, administrative, and financial levels, on both the supply and demand sides. This includes (i) the operationalization of the national urban development operator (the SAFRU) as the main actor in the production of secured and serviced land for developers; (ii) the creation of a mortgage market, through the financing of the national partial credit guarantee scheme (FONGIP); (iii) the creation of a rent-to-own market, through the initial capitalization of a public-private investment company (Kajom Capital); and (iv) the support to the firms of the construction value chain through a VC/PE fund.