Sub-Saharan Africa
Sub-Saharan Africa
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Small Business and Financial Services
Small Business and Financial Services
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West Africa has an urgent need for affordable housing. More than 60 percent of the population currently lives in substandard housing, and demand is growing, with the region’s current population of 110 million projected to double over the next 20 years. People who live in informal or substandard housing are particularly vulnerable to climate change and to serious illnesses associated with inadequate sanitation.

One key factor contributing to the housing shortage is insufficient financing for affordable mortgages. Local lenders typically offer loans with short tenors of less than eight years and higher interest rates because they are not able to raise sufficient financing in local markets for longer-tenor loans. These more expensive mortgages put safe, affordable housing out of reach for many West Africans.

Solution and Impact

A DFC Euro-denominated loan guaranty supported a cross-border bond transaction to generate funds for mortgage lending to low- and middle-income families and individuals in Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.

Funds raised will help CRRH-UEMOA (Caisse Régionale de Refinancement Hypothécaire de l’UEMOA), a financial institution serving the West African Economic and Monetary Union countries, provide liquidity for long-term mortgage lending to banks across the region. These funds are expected to meet the mortgage finance needs of thousands of low- and middle-income families over a three-year period.

The innovative structure of the transaction involved DFC providing a 20-year, $356 million guaranty of Euro-denominated bonds. In parallel, CRRH-UEMOA raised 36 billion CFA Francs ($65 million equivalent) in a local issuance. This dual structure enabled CRRH-UEMOA to benefit from funding at rates near U.S. Treasury long-term bond rates, and as a result, obtain the long-term financing it was seeking at a comparatively low interest rate.

“The issuer’s credit profile is underpinned by the strong guaranty provided by DFC,” said Christopher Bredholt, Moody’s Vice President and Senior Credit Officer. “The transaction will materially increase capital for home loans to low- and middle-income households in West Africa.”