Excerpt from Africa Housing Finance Yearbook 2015


Namibia is a middle income country in Southern Africa, with the GDP per capita of US$5 719 in 2015. Namibia is one of Sub-Saharan Africa’s most stable countries, as well as one of its most attractive investment destinations.

The country recorded a slight increase in the real GDP growth which strengthened from five percent in 2014 to 5.5 percent in 2015. This steady increase is forecasted to strengthen further over the short to medium term even though statistics by the NSA (2015) indicate that the GDP for the first quarter of 2015 recorded a slow growth of 3.1 percent compared to 5.6 percent registered in the corresponding quarter of 2014. However, the economy portrayed an improvement in agriculture, construction and the utility sectors.

The bulk of Namibia’s imports, including most food products, are sourced from South Africa. As a result, domestic inflation will remain heavily influenced by inflationary trends in South Africa. According to the Bank of Namibia website (2015) the inflation rate for Namibia was recorded at 3.30 percent.

Namibia suffers from relatively high rates

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Excerpt from Africa Housing Finance Yearbook 2015


Namibia is a middle income country in Southern Africa, with the GDP per capita of US$5 719 in 2015. Namibia is one of Sub-Saharan Africa’s most stable countries, as well as one of its most attractive investment destinations.

The country recorded a slight increase in the real GDP growth which strengthened from five percent in 2014 to 5.5 percent in 2015. This steady increase is forecasted to strengthen further over the short to medium term even though statistics by the NSA (2015) indicate that the GDP for the first quarter of 2015 recorded a slow growth of 3.1 percent compared to 5.6 percent registered in the corresponding quarter of 2014. However, the economy portrayed an improvement in agriculture, construction and the utility sectors.

The bulk of Namibia’s imports, including most food products, are sourced from South Africa. As a result, domestic inflation will remain heavily influenced by inflationary trends in South Africa. According to the Bank of Namibia website (2015) the inflation rate for Namibia was recorded at 3.30 percent.

Namibia suffers from relatively high rates of unemployment, and while this has been improving over the past few years, it still stands at 28.1 percent, representing a 2.9 percent increase from the 27.4 percent recorded in 2014. Furthermore, Namibia has a Gini coefficient of 0.59712 making it one of the most unequal societies in the world. In Namibia, the richest 10 percent earn 107 times the income of poorest 10 percent (compared to 16 times in the US). The ratio highlights the fact that Namibia is effectively two economies – one modern with a skilled workforce of around 200 000, and the other based on subsistence farming, employing the majority of the populace who live below the poverty line, currently at 28.7 percent.

Access to Finance

Namibia’s financial banking system, with strong links to South African financial institutions, is mature and efficient. There are 7.5 commercial bank branches per 100 000 adults and 50 ATMs per 100 000 adults in Namibia. Namibia scores high in terms of ‘ease of getting credit’, in 61st place out of 189 countries, although down 11 places from 50th place recorded in 2014.

There are four large commercial banks in Namibia, all privately owned. Three of the banks (Nedbank, Standard Bank and FNB Namibia) are subsidiaries of South African banks; the fourth (Bank Windhoek) is Namibian-owned. EBank, a branchless commercial bank began operations in November 2014 and is Namibian owned. FIDES Bank Namibia, a micro-credit bank and the SME Bank focus on small and medium-sized enterprises. Furthermore, there is Development Bank of Namibia responsible for financing development infrastructure, one savings bank (Nampost), an ABSA Representative Office, 16 insurance companies and 297 microlenders. Namibia’s banks are regulated by the Bank of Namibia (BoN or Central Bank) while insurance companies and microlenders and regulated by the Namibia Financial Institution Supervisory Authority (NAMFISA).

The banking sector recorded an increase in the financial market share growing from 40 percent in 2013 to 42.9 percent in 2014. Traditionally, lending to households and corporations has been a significant part of bank credit and has been increasing, with about 34 percent of the banks’ total assets being in the form of mortgages in 2014.

Banks are well capitalised and highly profitable even though, according to the Economist Intelligence Unit (EIU) (2015), banking institutions are vulnerable to shock in the property market such as rises in in interest rates or fall in house prices. According to NAMFISA (2015) the household debt to disposable income (83.9 compared to 87 in 2014) remains an area of concern especially for law makers despite a low level of NPLs – 1.5 percent of gross loans recorded in 2014 from 1.3 in 2013. The concentration of lending in mortgages heightens the banking sector’s vulnerability to shocks in the property market. Mortgage loans rose by 12.2 percent in December 2014 from 13.0 percent in December 2013 therefore bearing a huge impact on the household debt which increased from 111 percent in December 2013 to 15.0 in December 2014.

The infrastructure to facilitate mortgage lending is fairly well developed. In terms of the World Bank’s 2015 Doing Business Report, Namibia scores four out of a possible eight on the ‘depth of credit information’ index, as the country has three private credit bureaus that include data on about 64.3 percent of the adult population. Government has issued a bill on the Supervision of Financial Institutions, which includes the licensing and regulations of the credit bureau sector. What is lacking is a collateral registry system unified geographically and by asset type.

Some microlending for housing purposes is on the increase through organisations such as the Shack Dwellers Federation of Namibia (SDFN), a community organisation that aims to improve living conditions of poor Namibians by providing its members with building loans ranging from N$20 000 (US$1 467) to N$ 35 000 (US$2 568). The loans are repayable within a period of 11 years at an interest rate of 0.5 percent per month. The government’s Financial Sector Strategy also includes improved consumer literacy and protection, and local ownership in commercial banks. Pension-based lending for housing is allowed, although concerns have been raised that part of the money is diverted for consumer rather than long-term housing spending. Better enforcement for correct use is needed.

To promote enhanced access to financial services, Namibia launched a Financial Sector Charter (FSC) in May 2009, which will be in effect until 31 December 2019. The FSC is a voluntary code of conduct for the transformation of the Namibian financial industry. Among its objectives are creating greater access to and affordability of financial products and services. There are specific targets regarding lending to formerly disadvantaged members of the population, which should encourage even greater lending by the financial sector. The FSC was followed by a Financial Sector Strategy 2011-2021.

FinScope Namibia 2014 reports that the number of people who are unbanked has decreased from 50 percent in 2007 to 31 percent in 2012, with usage of insurance doubling over the period. Transaction banking and savings also increased by about 30 percent. Use of credit and loans went up by five percent, from 15 percent in 2007 to 20 percent in 2011. The FSC targets anticipate that 74 percent of Namibians will have access to financial service by 2019. In 2012, the FSC developed new legislation to establish a regulatory framework for tier II banks, which will serve as microfinance oriented banks with a special focus on serving the low income segment of society.

The Mass Housing Development Programme (MHDP) was launched and implemented by the Government of the Republic of Namibia in 2013 aimed at increasing investment in the affordable housing sector to increase the production of the housing stock and significantly increase the supply towards meeting the demand for housing in the country. The increase in the housing supply will result in the reduction of the prices for houses in the long run as the economic principle of supply and demand dictates.

Furthermore, in order to ensure that the government can deliver on its affordable housing delivery targets, the Presidency has proposed that the funding model as was proposed in the mass housing Blueprint will be used for the implementation of the Mass Housing Development Initiative including financing modalities tailor-made to resource the sub-programmes. Private developers play a vital role in the housing construction industry and therefore have been encouraged to refrain from charging exorbitant and inflated prices.

The model consists of four major sources of funding, namely:
1) Government grants and subsidies: The government will provide, within its resource capacity, annual grants to households in the income bracket of between N$1 500 (US$11 049) and N$4 900 (US$36 092) per month. To start with, Government subsidies will mainly go towards land development, building input cost mitigation, rural sanitation and programme management. Current Government grants provided under 2013/2016 MTEF for housing projects will be diverted to the mass housing development programme and will serve as a start-up capital to kick start the programme.
2) Public Private Partnerships Significant financial resources will be mobilised through public private partnerships to be entered into between the National Housing Enterprise (NHE) and private sector entities. The partnership model, which is already being pursued by the NHE in its current capital financing operations, entails the mobilisation of funding through turnkey solutions, bridging finance and co-end user financing. Turnkey funding solutions are provided by companies that bring in finances and have the technical capacity to construct, whereas bridging financiers are those that provide funding to enable the roll out of projects and immediately recoup their investment at the completion of such projects. End-user financing is provided by commercial banks that have entered into partnerships with NHE to finance part of the clients, while NHE finances the remainder of the clients. The first phase of the programme is being implemented using conventional building materials (brick and mortar) whereas alternative building materials may be considered in subsequent phases.
3) Debt financing by local and foreign financial institutions. The option of debt financing through conventional way of borrowing will also be pursued in financing part of the programme. In certain instances, borrowing by NHE will require Government support through the provision of a guarantee or other facilitative support.
4) Savings of households involved in SDFN housing schemes: The utilisation of savings of households involved in the Shack Dwellers Federation of Namibia (SDFN) housing saving schemes will also be used to partly fund land servicing and people housing processes component of the programme. An annual budgetary allocation of N$50 million (US$3.68 million) will be made to the Twahangana Fund operating under the auspices of SDFN assisted by Namibian Housing Action Group (NHAG).


According to the March 2015 First National Bank (FNB) Housing Index, a median housing unit costs N$842 000 (about US$65 154), up from N$774 000 (US$59 923) by a private developer in June 2014, while a small-sized property costs N$280 000 (US$18 563) by a public developer (NHE). In terms of affordability at the current interest rate, households need to earn N$10 500 (US$70 743) to afford a small house and N$38 700 (US$2 989) for a medium house. The average price of a house financed by FNB costs NS$720 000 (about US$65 498). As 93 percent of the population earn less that N$7 000 (US$51 362) a month, the majority of the population cannot afford mortgaged housing in urban centres across the country.

A significant component of this cost is land and services accounting for over half of the cost. The average price per square metre for construction of a house by a government appointed contractor is approximately N$5 000 (US$36 687). In June 2014, the Ministry of Works and Transport compiled a new mass housing price guideline that proposes lower charges per square metre to curb the exorbitant charges made by many companies and middlemen who won tenders. Part of the recommendations was that companies reduce their prices by between 15-30 percent to get the charge to around N$5 000 (US$36 687) per m2 as originally requested.

Despite these interventions, Namibia remains the second only to Dubai, in housing price increase in the world. The status quo has prompted a section of disgruntled youth lead by expelled Swapo Youth leader, Job Amupanda, to form the Affirmative Repositioning Movement aimed at restoring the dignity of Namibian youth through access to serviced and affordable land. ARM threatened to grab land if their demands were not met by 31st July 2015. Government engaged the group a week before the set deadline and together agreed to service 200 000 plots under the Mass Land Servicing Programme (MLSP). This has brought back a sense of calm and hope in the country. However, until such time that such agreement is realised, housing supply remains low and therefore increase the already high demand for housing.

Housing supply

To date, the national housing backlog is estimated at over 100 000 housing units, which is growing at an annual rate of about 3 700 units. According to FinScope Namibia 2011, the majority of Namibians claim they own their housing, although the majority cannot prove this with a title deed. Only 24.3 percent say they bought their home; the majority (62.4 percent) say they built it themselves. A further 11.8 percent inherited their homes. Some 38 percent funded the ownership (purchase or construction) of their housing themselves through savings. An additional 36 percent said that their housing did not cost anything, as they had used found materials to construct the dwelling which suggests a high level of informal housing. 80 percent of households have access to water within their yard and only 52 percent of Namibians have access to some form of toilet.

The main goal of the MHDP Is to construct 185 000 units by 2030 averaging 10 000 units per year. The programme has faced funding challenges which Government is currently addressing. Although the MHDP has produced more than 1 000 units between March 2014 and April 2015, the national backlog remains relatively high in excess of over 100 000 units.

Since 2003, the NHE has built about 450 houses per year for its target market: households earning between N$5 000 (US$366) and N$20 000 (US$1 467) per month Apart from constructing houses, the NHE has also been involved in servicing land in a number of local authority areas, resulting in a total investment in service infrastructure of about N$145 million (about US$10.7 million) between 2006 and 2012. Small NHE houses cost about N$275 000 (about US$20 235), on average inclusive of land cost. NHE loans are offered at a maximum of prime (10.25) minus one percent.

The private sector continues to engage with the demand for affordable housing. To this end, NHE has partnered with FNB Namibia, Standard Bank and Bank Windhoek which partnerships have assisted the institution with the necessary liquidity to develop housing more quickly. As a result of such partnerships, NHE has been able to implement in-house projects in towns such as Eenhana, Swakopmund, Ongwediva, Windhoek, Luderitz and Otjiwarongo to the value of more than N$365 million (about US$26.7). Most of these projects have been completed while others are near completion. In the NGO sector, SDFN and its service NGO, NHAG, are active in 84 cities across Namibia and has since secured 1 621 hectares, providing over 6 000 families with secure tenure and 1 576 of these with toilets, water and electricity.

Property markets

According to the World Bank’s 2015 Doing Business Report, Namibia ranks 61st out of 189 countries for ease of registering a property, a significant rise of 117 places from 2014’s ranking of 178. On average the eight procedures involved in registering a property take 52 days and cost 13.8 percent of the property value. In mitigating risks associated with quality, Namibia made transferring property more difficult by requiring a building compliance certificate before conveyancing can go ahead. The limited availability of serviced land is mainly due to a lengthy and outdated approval process for proclamation, surveying, subdivision and registration of land. According to the Presidency (2013), the various cumbersome procedures applicable in the process of acquiring a property in Namibia do have a bearing on escalating property prices of the limited housing stock available. The Government in 2015 resolved to amend such processes in accordance with the agreement reached with the Affirmative Repositioning Movement to fast track land delivery.

The scarcity of available serviced land is both slowing down the process of housing delivery and pushing up the prices of serviced land, and is the key challenge facing the housing sector. Land prices saw an increase of 109 percent month-on-month in May 2014 and averaged N$122 000 (US$8 998 for a 300m² serviced stand and is therefore likely to add inflationary price pressure to new housing delivery further down the line. Land auctioning, the main technique used by local authorities to dispose of land until recently, is yet another contributing factor to the rising property prices.

Policy and regulation

According to the Presidency (2015) the Vision of the Namibian Government is to eradicate poverty in its entirety by, among others, providing affordable housing to all Namibians in line with Vision 2030 through increased investment in the housing portfolio and in the process eliminate all shacks that are prevalent in various regions and local authority areas in Namibia.

Within the context of the 4th National Development Plan (NDP4), Government undertakes to have a “robust and effective housing delivery programme where affordability is the key feature of the programme”, a concept that has seen the initiation of the MHDP as well as the MLSP. If these programmes are implemented effectively, Government may attain its objective of housing 60 percent of its population by the end of NDP4 (2016/17). It is likely that extension on deadlines may be sanctioned given unexpected delays experienced especially in the implementation of the MHDP.
In 2013, a National Housing Technical Committee was also established to develop a mass housing development strategy. Spanning a number of government departments, the committee submitted its proposal to the Ministry of Regional and Local Government, Housing and Rural Development in March 2013. A member of the group, the NHE highlighted limited access to affordable, serviced land, the inflexibility in the current land tenure system, legislative and policy constraints that slow delivery and a rapidly appreciating property market as some of the challenges. The proposed plan sets out a differentiated funding model to cater for different economic and social segments of the Namibian population, drawing on government, private sector and household financial resources. A N$2.9 billion (US$212 million) budget was earmarked for allocation to the Ministry of Regional, Local Government, Housing and Rural Development to cater for the servicing of land and improved sanitary standards in urban, peri-urban and rural areas. The programme has been characterised by funding challenges which Government is addressing by assessing local and foreign markets for potential institutions to provide affordable funding to the programme.


Over the past two years, Government has showed renewed interest in addressing the housing needs of the country by allocating more resources into the housing portfolio. The MLSP is expected to contribute to the enhancement of the affordability capacity of many Namibians as the cost of servicing this land will be subsidized by Government (100 percent). This will impact positively on the end prices of houses. The MHDP and the MLSP will in no doubt have a positive impact on the social well-being of most Namibians.

Regarding alternative building methods, a trial by NHE in which land was offered to alternative building technology developers to showcase their products proved that this building method does not necessarily offer cheap products as prices were generally the same and in some instance more expensive. The only advantage that could be drawn from ABTs is the time frame for delivery of houses which is faster compared to traditional building methods. Therefore, construction using traditional brick and mortar may dominate the housing market in the foreseeable future.

Not much has changed regarding the status of commercial banks as they remain overexposed to mortgages, which remains an ongoing concern in the economy. Therefore, there have been calls to provide greater opportunities for fundraising through securitisation, for example. This could increase the number of investment instruments and deepen the financial sector, as well as enable local authorities to raise the funds necessary for urban infrastructure development and thus increase the housing provision.
The recognised successes of the Shack Dwellers Federation of Namibia through its group savings and lending methods, incremental approaches to housing and use of land laws such as the Flexible Land Tenure System suggest a high potential for housing microfinance.




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