Growth Housing finance Land administration chain Dr. Monika Hjeds Löfmark National Housing Credit Guarantee Board, Sweden WUF 2010

Short introduction –Growth and development Formal and informal methods of finance –Mortgages –Savings –Micro finance –Community loans –Remittances The land administration chain –Connecting the issues of land, security of tenure and housing finance Outline of presentation

Introduction Growth and capital –Physical –Human –Social Growth and institutions –Formal –Informal Growth and actions –Local knowledge and institutions are crucial –Do not invent the wheel twice –Gradual changes –Formal Institutional Improvements –Broad actions Growth, urbanization and housing –Housing and housing finance

Formal mortgages Volatile macro economy Lack of (long term) capital Lack of financial infrastructure Legal system, housing market reg., credit bureau, valuations Credit risk Collaterals and income –How to include households with low and moderate income? –How to create a better infrastructure, secured ledning environment, adequate funding sources, legal systems, regulations, long term funding, insurance products etc.?

Formal Mortgages, % of GDP

Savings Most common financial method Prepare housholds for regular payments Increase sustainability Larger autonomy for the savers Saving clubs, mobile bankers Connected with micro finance loan and community loan High levels of inflation discourages savings –How to formalize savings without high cost for the households?

Microfinance Small loans, short repayment period No formal collateral Suits gradual building and improvments Reaches low and moderate income housholds Non transparent, high interest rates, and often little knowlege of formal proceedures –How to scale them up? MFI up, banks down –How make them more sophisticated/ formal/less expensive?

Interest rates, MF

Community loans/savings Loans for groups Promotes social development and increases social capital, Reaches the (well organized) poor Infrastructure, land, housing Growing in importance –How to scale them up? –How to increase their political impact? –How to connect with formal solutions, private actors?

Remittances Immigrants and foreign workers invest in their home countries Huge amounts, significant part of GDP Little political impact Seldom used as income and collateral –How to create more/better data? –How to include them into the formal systems?

Remittances, % of GDP, 2007

Guarantees May correct for market failures Allocate risks Link formal and formal markets Demonstration projects Use carefully, must give incentive to responsible behaviour

Land governance and housing finance Property rights and introduction of titling processes –Pros and cons Security of tenure – gradual process –If tenure is informal, security may depend on length, size of occupation, community strength, support from NGOs etc. –Tenure upgrading can be linked with housing loans –Innovative tenure and innovative loans –Provision of temporary occupation rights /leases, long term leases and connect with finance –Simplified registration that can be upgraded –Strategic planning, planning standards according to poor households Ex: Registration/taxation in Ghana

Land administration chain

BKN, the National Housing Credit Guarantee Board and Lantmäteriet - the Swedish mapping, cadastral and land registration authority Launched at a seminar in Stockholm in June 2008 Improving Slum conditions through Innovative Financing. (by FIG,UN-HABITAT, Lantmäteriet and BKN) Educational program –Lantmäteriet discusses and presents issues concerning good land governance, registration, GIS etc –BKN focus on housing finance in informal markets. We are particularly interested in the role of guarantees and how guarantees may work to connect informal and formal markets.

Conclusion Build social, human and physical capital Build and develop institutions Link formal and informal institutions (ex. Fin.) Gradual and broad changes Local initiatives/actions are crucial Cooperation and inspiration

Remittances, billion US dollar 2008