## HOUSING AFRICA’S GROWING POPULATION

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**Canonical URL:** [HOUSING AFRICA’S GROWING POPULATION](https://www.imf.org/-/media/files/publications/fandd/article/2024/12/rust.pdf)

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### Informality dominates urban housing
- Informality characterizes Africa’s cities: job seekers, migrants, and young people cluster in creative, chaotic hubs marked by traffic congestion, street trading, and informal housing.
- More houses are built by informal than formal builders.
- More lending for, and investing in, housing happens informally (hand to hand, rotating savings and credit associations, cooperatives, remittances) than through regulated channels.
- Informal processes are described as ultimately inefficient and expensive, opaque and exploitative, yet nimble, responsive, with few barriers to entry, and expressive of the priorities, needs, and capacities of the majority of people across the continent.

### Importance of housing for urban development
- Adequate and affordable housing is a key driver of urban growth because it directly affects where and how people live, work, and access services.
- When housing is carefully planned and integrated into city infrastructure, it can:
  - Support efficient urban development.
  - Manage and leverage opportunities of increased population density.
  - Stimulate local economic growth.
- Policy challenge: leverage informal market adaptability rather than constraining it with a presumption that formal systems alone are preferable.

### Technological opportunities and applications
- Digital platforms, mobile technology, data analytics, and smart city systems can bridge informal housing activity and structured governance processes.
- Specific technological uses and impacts cited:
  - Land Tenure Regularization (Rwanda, 2013): demarcation, land adjudication, digitization, and registration of all parcels of land; electronic certificate system (“e-Title”) for quick and cheap access to title certificates on the National Land Authority’s official website.
  - Blockchain:
    - Can create decentralized property registries or enforceable digital contracts that bypass cumbersome bureaucracy.
    - Used by mortgage lenders in a number of countries to record liens on properties outside the formal cadastral system.
    - Tested in informal settlements, including in KUMASI, GHANA, where a single ledger of land holdings was produced and paper-based evidence was converted into a digital format.
    - E-lending and rent-to-buy models benefit from blockchain reducing the cost of transactions and validating data truthfulness.
    - Example: a housing developer in MOZAMBIQUE found that using this technology made homes accessible to 80 percent of the population; previously accessible to only 3 percent of the population under the existing mortgage model.
  - Credit underwriting:
    - Technology can better quantify risk and establish opportunities for return.
    - DJIBOUTI government guarantee fund includes a provision of up to DF 10 million ($56,000) for “precarious households” that earn between $450 and $1,518 a year.
  - Geographic information systems, drones, and satellite imagery:
    - Can map the informal economy and provide real-time data on informal settlements, markets, and economic activities, aiding city planners’ responses.
    - The Centre for Housing Affordability in Africa will explore these policies and practices with the Lincoln Institute for Land Policy in KENYA in the coming year.
  - Mobile apps:
    - In NIGERIA, mobile apps allow informal builders and small-scale developers to access larger markets, facilitate fast market participation, enable engagement in formalized trade and distribution systems, and create user track records that support lenders’ credit decisions.

### Analysis and policy implications
- Policymakers, regulators, and the private sector should:
  - Better understand the drivers of informality to leverage informal markets effectively.
  - Target housing investments correctly to the right market segments, using insights from informal practices and technological tools.
  - Build sustainable housing markets that are accessible to and used by all residents of the city.
- Technology should be used to connect the adaptive flexibility of the informal economy with the structured governance needed for sustainable urban growth, rather than to supplant or unduly constrain informal activity.

*Article draws on the recently published 15th edition of Housing Finance in Africa: A Review of Africa’s Housing Finance Markets.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2024/12/rust.pdf_