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FEATURE STORY November 10, 2021

Making Homes More Affordable in IDA Countries Through Expanded Mortgage Financing


Bargny, Senegal

Vincent Tremeau/The World Bank Group


  • Access to affordable housing is a key component for good development outcomes, reducing poverty at the individual level and contributing to economic growth at the national level.
  • The World Bank Group is deploying a combination of upstream engagement, investment, and advisory activities to expand housing finance markets.
  • The IDA PSW’s support to the IFC is helping to put credit within reach for traditionally disadvantaged groups, like women and micro, small, and medium-sized enterprises. 

Access to affordable housing can have a big impact on a person’s well-being. A safe, secure home can improve health, hygiene, and educational opportunities by ensuring access to clean water, safe toilets, electricity, and a respite from heat and disease-spreading insects. In fact, adequate housing is linked to reduced poverty and increased wealth for individuals and families, and more jobs, economic growth, and social stability for nations, according to research by International Housing Solutions.

Deploying a combination of upstream engagement, investment, and advisory activities, the World Bank Group has been implementing a sequenced and complementary program to expand housing finance markets. Through the International Finance Corporation (IFC) and tools like the International Development Association’s (IDA) Private Sector Window (PSW), the Bank Group is helping to create and strengthen mortgage refinancing companies in emerging markets.

“On average, housing represents 50 percent of household wealth in most developing countries. Strengthening the housing sector and making affordable housing financing solutions available is key for long-term, sustainable development outcomes,” says Samuel Munzele Maimbo, Director, IDA Resource Mobilization and IBRD Corporate Finance, World Bank Group.

Making Mortgage Lending More Affordable

Despite rapid urbanization and an increased demand for affordable housing and housing finance in Tanzania, many lower and middle-income families were forced to spend years living in poor or unfinished houses or renting with little hope of saving enough money to build or buy their own home. To increase access to decent and affordable housing, the government created the Tanzania Mortgage Refinance Company (TMRC). The innovative, IDA-funded Tanzania Housing Finance Project supported the TMRC, allowing it to provide medium and long-term liquidity to mortgage lenders—making it easier for them to give loans to families to improve their existing homes or purchase new ones.

Following on the success of the project, IFC invested in TMRC with the support of the IDA PSW, further boosting affordable mortgage lending to help more people realize their dream of owning a home. These interventions worked together to expand the housing finance market seven-fold, meaning banks could extend mortgage repayment periods, lower interest rates, and ultimately make loans more affordable for Tanzanian families. 

From Substandard Housing to Homeownership

In Kenya and Pakistan, which both suffer from severe affordable housing shortages, the Bank Group is following a similar model. IFC and IDA PSW are supporting the Kenya Mortgage Refinance Company (KMRC) to provide long-term housing finance via primary mortgage lenders, and ultimately reduce the number of Kenyans living in informal settlements. It is expected that 500,000 new formal housing units will be delivered by 2022, helping to create 350,000 jobs. IFC’s support to the Pakistan Mortgage Refinance Company Limited (PMRC) is helping to increase the overall availability of mortgage financing for homeowners. Half of IFC’s investment is supported by the IDA PSW, allowing primary mortgage lenders to offer new mortgages in frontier and traditionally underserved areas, such as Khyber Pakhtunkhwa, and its newly merged districts (Ex-FATA) and Baluchistan.

“By addressing the absence of long-term funding to primary mortgage lenders, IFC is helping to facilitate private sector investments in the sector and contributing to the development of regional capital markets,” explains Federica dal Bono, Private Sector Development and Strategy Expert for the World Bank, who leads the IDA PSW Secretariat. “The IDA PSW’s support to the IFC helps extend that financing into the riskiest markets and to traditionally disadvantaged groups.”

"On average, housing represents 50 percent of household wealth in most developing countries. Strengthening the housing sector and making affordable housing financing solutions available is key for long-term, sustainable development outcomes."
Samuel Munzele Maimbo, Director, IDA Resource Mobilization and IBRD Corporate Finance, World Bank Group
Samuel Munzele Maimbo
Director, IDA Resource Mobilization and IBRD Corporate Finance

Scaling Up Markets to Expand Housing Finance

Building on a decade of support from the Bank Group, the IFC and IDA PSW are helping to facilitate the expansion of Caisse Régionale de Refinancement Hypothécaire (CRRH) in West Africa to scale up an emerging market in bonds that support housing finance. CRRH serves the eight countries of the West Africa Economic and Monetary Union (WAEMU), where mortgage financing for housing was limited and tenors were exceptionally short. IFC’s presence is helping to pioneer long maturity bonds for housing finance, crowding in private sector finance and, over time, establishing the viability of the long maturity housing bond market for the region. The support of the IDA PSW allows IFC to provide the long-term local currency needed at the pricing level of the CRRH bond. CRRH’s longer-term funding via its bond program enables banks to extend the tenor of their mortgage loans, making them more affordable and allowing low and lower-middle income households to buy homes.

Expanding housing finance puts credit within reach for traditionally disadvantaged groups, like women and micro, small, and medium-sized enterprises, and harnesses urbanization to promote economic growth. The Bank Group’s investments are improving the enabling environment, strengthening the critical institutions and tools that underpin housing sectors, and mobilizing medium to long-term capital for key actors in the housing ecosystem. These projects illustrate how private capital, even in less-developed financial markets, can be mobilized successfully through the right public investments.