Africa Housing Finance Yearbook 2019
Author: Kgomotso Tolamo KEY FIGURES
Main urban centres Mbabane, Manzini
Exchange rate: 1 US$ = [a] 1 July 2019 14.12 Lilangeni (SZL) 1 PPP$ = [b] 5.11 Lilangeni (SZL) Inflation 2018 [c] | Inflation 2019 [c] 4.8 | 5.6 Population [b] 1 136 191 Population growth rate [b] | Urbanisation rate [b] 1.0% | 1.8% Percentage of the total population below National Poverty Line (2017) [d] 27.8% Unemployment rate (% of total labour force, national estimate) (2017) [d] 26.4% Proportion of the adult population that borrowed formally n/a GDP (Current US$) (2018) [b] US$4 704 million GDP growth rate annual [b] 0.06% GDP per capita (Current US$) (2018) [b] US$4 140 Gini co-efficient (2009) [b] 51.5 HDI global ranking (2017) [d] | HD country index score (2017) [d] 144 | 0.588 Lending interest rate (2017) [b] 10.3% Yield on 2-year government bonds n/a Number of mortgages outstanding n/a Value of residential mortgages outstanding (US$) [f] US$247.8 million Number of mortgage providers [f] | Prevailing mortgage rate [f] 5 | 10% Average mortgage term in years [g] | Downpayment [g] 20 | 10% Ratio of mortgages to GDP 5.6% What form is the deeds registry? [d] Computer - Scanner Total number of residential properties with a title deed n/a Number of houses completed n/a Number of formal private developers/contractors [i] 460 Number of formal estate agents n/a Cost of a standard 50kg bag of cement [j] 70 SZL (US$4.95) Overview Price of the cheapest, newly built house by a formal developer or The Kingdom of Eswatini is a landlocked country covering an area of approximately contractor in an urban area (local currency units) [k] 406 315 SZL Size of cheapest, newly built house by a formal developer or 17 360km, with a population of approximately 1.451 million. According to the contractor in an urban area [k] 53m2 2018 FinScope Consumer Survey, 54 percent of its population was 35 years old Average rental price for this unit in an urban area (local currency or younger and 34 percent had a primary school education or less.1 The Kingdom units) [k] 1 510 SZL of Eswatini is classified as a low middle income country with a gross domestic Number of microfinance loans outstanding [l] 20 261 product (GDP) at market prices of US$3.43 billion.2 The country is predominantly Number of microfinance providers [l] 766 224 316 SZL rural with much of the development confined to its urban centres of Mbabane Number of housing construction loans outstanding n/a Number of providers of construction finance [m] 1 and Manzini. In 2018, 71 percent of the total population lived in rural areas and 29 percent lived in urban areas. Poverty levels have stagnated over the past five World Bank Ease of Doing Business Rank [e] 117 Number of procedures to register property [e] 9 years with 58.9 percent of Swazis living below the national poverty line in 2017. Time (in days) from application to completion for residential units in the main urban city [n] 30 On average, a household comprises four members with an average of two NB: Figures are for 2019 unless stated otherwise. members of the household being income-earning.3 Twenty percent of those Member organisations of the African Union for Housing Finance (AUHF): surveyed in the 2018 FinScope Consumer Survey indicated that they received Swaziland Building Society income from the formal sector; 12 percent from owning micro, small, and medium Eswatini Housing Board enterprises (non-farming); 15 percent from piece jobs; three percent from owning a farming-related business; 24 percent from remittances received from relatives [a] Coinmill [h] The Central Statistical Office [b] World Bank World Development Indicators [i] Construction Industry Council or friends; and five percent noted government grants as their primary source of [c] IMF World Economic Outlook Database [j] Build It Mbabane income.4 [d] UNDP: Human Development Reports [k] Swaziland National Housing Board [e] World Bank Doing Business 2018 [l] Centre for Financial Inclusion [f] Central Bank of Eswatini [m] Eswatini Financial Services Regulatory Authority The Kingdom of Eswatini is economically dependent on South Africa for [g] Standard Bank Eswatini [n] Mbhetse Construction Services 60 percent of its exports and for more than 90 percent of its imports.5 The economy is made up mostly of agriculture and forestry. Mining accounts for delivery of improved socioeconomic impact; implementation of an infrastructure approximately 10 percent of GDP while manufacturing (textiles and food investment plan; and building a culture of excellence.8 processing) represents 30 percent of GDP. Government services constitute approximately 20 percent of the GDP.6 In its Eswatini Economic Outlook for Access to finance 2019, the African Development Bank reported that real GDP contracted by an The Kingdom of Eswatini’s banking landscape is comprised of the Central Bank of estimated 0.5 percent in 2018 after 1.9 percent growth in 2017. However, real Eswatini, four commercial banks and one building society, the Swaziland Building GDP growth is projected to recover to 1.7 percent over the course of 2019 and Society (SBS). Three of the four commercial banks operating in the country are 2.3 percent in 2020. This growth will largely be driven by supply-side subsidiaries of parent South African banks. These banks include Standard Bank, developments.7 First National Bank and Nedbank. The fourth commercial bank is the Eswatini Development and Savings Bank, which is owned by the government. In addition, to stimulate GDP growth, boost local employment and generate higher, sustainable export revenues, the Minister of Finance noted these five priority areas The Kingdom of Eswatini has a dynamic microfinance sector with approximately in his 2019 Budget Speech: the development of a fiscal consolidation plan and 114 microfinance institutions (MFIs) registered with the Eswatini Financial Services arrears funding strategy; improvement of the ease of doing business rankings; Regulatory Authority (EFSRA). In addition, there are 52 registered Savings and 133 Credit Co-Operative Societies (SACCOS) in the country. TransUnion ITC Swaziland (Pty) Ltd is the sole credit bureau registered with the EFSRA.9 Availability of data on housing finance Several of the official sources of information, such as government In the National Financial Inclusion Strategy for Swaziland 2017-2022, the Kingdom websites and representatives of various government departments, either of Eswatini’s Ministry of Finance highlights its financial inclusion strategic vision. The do not collect the data relevant to their departments, have outdated vision is to increase the depth of financial inclusion and grow the percentage of data, or have data that is not publicly available. This results in the need adults with access to two or more formal products from 43 percent to 75 percent. to use secondary sources for information or outdated data that does The strategic vision also includes reducing the number of adults unable to access not reflect the current landscape. This may be influenced by constrained formal products from 27 percent to 15 percent by 2022 through growing mobile financial and human capital resources in government departments. money and remittances; deepening bank reach; getting credit basics right; ensuring Nationally representative surveys are expensive and often require risk management products are available; and enabling alternative channels to serve external financial support to complete. the poor.10
The 2014 FinScope Consumer Survey indicated that 37 percent of the Swazi population that is 18 years or older is financially excluded; they do not have, nor or building their home. With short-term savings, nine percent indicated that they do they use any financial products or services, formal or informal. The FinScope were saving towards buying or building a house. The greatest purpose for savings, survey also notes that consumers generally use a combination of financial products at 56 percent, was for general living expenses, suggesting shortfalls in household and services to meet their financial needs. Only 5.8 percent of adults rely income when measured against household financial needs.18 The greatest driver exclusively on banking services, while 24.3 percent use a combination of formal for household credit, at 31 percent, is general living expenses.19 and informal mechanisms to manage their financial needs (suggesting that their needs are not fully met by the formal sector alone), and 8.6 percent of the adult The unemployment rate in the Kingdom of Eswatini remained unchanged at 26.40 population solely rely on informal mechanisms such as village savings and loan percent in 2017 from 26.40 percent in 2016.20 The minimum wage rate is E531.6 groups to save or borrow money.11 (US$37.63) a month for a domestic worker, E420 (US$29.73) a month for an unskilled worker, and E600 (US$42.47) a month for a skilled worker. The minimum In its Private Sector Credit Report for June 2018 to June 2019, the Central Bank wage was revised in 2011.21 Assuming that up to 25 percent of a person’s income of Eswatini notes that outstanding loans related to housing amounted to can be used for housing, an individual earning a minimum wage would not be able E3 500 000 000 (US$24 773 270) as at June 2019.12 The main mortgage to purchase a residential property through a mortgage. Standard Bank requires dispersing financial services providers include Standard Bank, First National Bank a mortgage applicant to earn a minimum monthly net salary of E5 000 (FNB), Nedbank, Swaziland Building Society and Swazi Bank. Mortgage terms are (US$353.90). The maximum loan term across all the lenders is approximately generally 20 years, with Standard Bank offering mortgages for a 25-year period 25 years. The SBS offers mortgages slightly below the prime rate at eight percent. and FNB offering 100 percent mortgages. The prime interest rate is 10 percent, with the actual interest rate applied on a mortgage dependent on the applicant’s Housing supply personal credit score. Housing delivery on behalf of the government of the Kingdom of Eswatini is delegated to the SNHB, a public enterprise set up in terms of the Swaziland General requirements when applying for a mortgage include, among others, National Housing Board Act No. 3 of 1988 with the core mandate of providing submitting proof of residence, a deed of sale and a confirmation letter from the affordable housing for low and middle income Swazi citizens.22 chief’s kraal declaring a right to occupy land if it is on Swazi National Land.13 Under the Institutional Housing Project, the SNHB was appointed by the The SBS offers construction loans for residential and commercial properties. government to implement a phased housing programme for civil servants. Under Applicants are required to submit a building plan approved by the City Council this programme, the SNHB is required to raise finance, and construct and manage or written consent from the Ministry of Housing and the local municipal council the housing units to be leased to the government. Phase one of the programme as well as a copy of the supervising architect or projects manager’s professional is divided into two stages. The first stage involves the construction of units for fees and approval from the Eswatini Environmental Authority. Applicants are also three government agencies, namely the Royal Swaziland Police (132 housing units), required to submit proof of income. This can be in the form of a current payslip, His Majesty’s Correctional Services (160 housing units), and the Swaziland National a current lease agreement in cases where income is rental based, audited financial Fire and Emergency Service (72 housing units). Phase two of the programme statements, cash flow projections or a six months bank statement for registered involves developing a total of 236 housing units, ranging from two to three companies.14 bedroom semi-detached housing units. A total of 196 housing units are allocated to Ministry of Health employees, while 40 are allocated to Swaziland Civil Aviation Loans dispersed by the SBS must be covered under the Mortgage Protection Authority employees.23 Policy and House-Owner’s Insurance. In the event that the borrower’s insurer cancels such a policy, the SBS reserves the right to force insure the loan to protect Property markets its interests. The SBS is also a registered corporate insurance agent for Swaziland The SNHB manages and leases residential estates in Matsapha and Mbabane. The Royal Insurance Corporation in terms of the Insurance Act No. 7 of 2005.15 The Matsapha Estate comprises two developments that can accommodate 580 Swaziland National Housing Board (SNHB) is mandated to provide housing loan households. The cheapest housing unit is located in the Matsapha Old Mobeni finance to Swazis wishing to develop their own properties. The SNHB is currently Estate development; the unit has two bedrooms, a shared bathroom, kitchen and investigating what resources and processes would enable it to meet this living room. The monthly rental for this unit is E1 510 (US$106.88). The estate is mandate.16 conveniently located between Mbabane and Manzini. The six estates across Mbabane accommodate 505 households. The cheapest housing unit is in the Old Affordability Mobeni Estate development; the unit has two bedrooms, a shared bathroom, Although secure tenure may be precarious on Swazi National Land, 93 percent kitchen and living room. The monthly rental for this unit is E1 510 (US$106.88). of the adults who live on rural land consider themselves to have full ownership of The development is in Msunduza, Mbabane.24 the housing unit they live in, while four percent consider themselves to be tenants. As it relates to urban land, 47 percent of those surveyed in the FinScope The sales portfolio of the SNHB consists of properties developed by the SNHB, Consumer Survey in 2014 indicated that they are tenants, while 40 percent some of which are in Woodlands, Nkhanini, Mhobodleni and Thembelisha.25 The indicated that they had full ownership of the housing unit they occupy.17 Mhobodleni township development has 18 plots which are each 400 square metres, and the units range from one to three bedrooms. The cheapest housing In 2014, only eight percent of adults surveyed indicated that they invested in unit in the development is a one bedroom and one bathroom 52.83 square metre property, while four percent indicated that they invested in improving, extending, unit, with a sale price of E406 315 (US$28 759.29).26
134 Africa Housing Finance Yearbook 2019
ESWATINI
Annual income profile for rural and urban households based on consumption (PPP$) PPP$40 001 – PPP$10 000 000 PPP$33 148 Population: 1 136 191 PPP$23 001 – PPP$40 000
PPP$12 001 – PPP$23 000 Urbanisation rate: 1.75% PPP$8 001 – PPP$12 000 PPP$24 369 PPP$5 001 – PPP$8 000 Cost of cheapest 406 315 SZL newly built house: PPP$79 514 PPP$3 601 – PPP$5 000 PPP$2 401 – PPP$3 600 Urban households that could afford this 36.22% PPP$1 601 – PPP$2 400 house with finance: PPP$801 – PPP$1 600 1 PPP$: 5.11 Lilangeni Source https://www.cgidd.com/C-GIDD, 2019 On average, the cost of construction labour per square metre is reported as E1 Ministry is mandated to co-ordinate and facilitate urban development as well as 900 (US$134.48), while the cost of construction for a basic residential property provide housing throughout the country through effective physical planning, is E1 200 (US$84.94) per square metre. The construction period is noted as 30 housing research and development, and land administration. Despite the provision to 60 working days depending on the complexity of the site and the services of housing being noted in its mandate, its core objectives do not detail the available and required.27 construction or delivery of affordable housing. This task is delegated to the SNHB. The Eswatini Deeds Registry is situated under the Ministry of Natural Resources The Constitution of the Kingdom of Swaziland formally recognises a dual land and Energy. It was established under Section 3 of the Deeds Registry Act No. 37 tenure system. The King holds more than half of the land, called Swazi Nation of 1968 and was situated in Pretoria, South Africa, until 25 June 1973.28 The Deeds Land, “in trust” for the Swazi people. The remainder is privately owned Title Deed Registry publishes quarterly performance reports. For the period April to June Land. In 2013 a draft Land Bill was introduced. While steps had been taken to 2019, the Deeds Registry reported 296 deed transfers and 224 mortgage bond finalise both the draft Land Policy and the draft Land Bill, neither had been passed registrations. On average, Mbabane accounted for 25 percent of all deed transfers by the time Parliament was dissolved in June 2018 for the national elections and 35 percent of mortgage bonds registered between April to June 2019.29 scheduled for September 2018.35 Comparatively, for the period January to March 2019, the Deeds Registry reported 286 deed transfers and 261 mortgage bond registrations. On average, Mbabane The Human Settlements Authority Act of 1988 as amended in 1992 (Act No. 13 accounted for 25 percent of all deed transfers and 35 percent of mortgage bonds of 1992) outlines the functions and objectives of the Human Settlements Authority. registered between January to March 2019.30 Its functions and objectives are the following: There is currently no legislation governing real estate agents in the Kingdom of n To assist the government in formulating policy relating to human settlements Eswatini. However, the government is drafting the Estate Agents Registration, as well as to assist with upholding and giving effect to such policy; Licensing and Professional Indemnity Regulation Act, which is aimed at safeguarding n To ensure the orderly development of existing and future urban and rural the interests of estate agents and setting industry standards in the real estate settlements; market. There is also no established real estate agency affairs board or council at n To establish a finance mechanism for ensuring the supply and maintenance present. In September 2018 local real estate agents met to deliberate the of approved shelter and infrastructure throughout the Kingdom of Eswatini, formation of Eswatini Realtors Association, but the association is yet to be which shall include a system of revenue recovery; registered.31 n To prepare appropriate standards for the provision of land, shelter and infrastructure by both private and public developers; It takes 21 days to register a property in the Kingdom of Eswatini, much less than n To regulate real estate transactions including the standardisation of lease the Sub-Saharan Africa average of 53.9 days. Nine procedures are required, and agreements, rent control and sale of land and buildings; and the overall process is estimated to cost approximately 7.1 percent of the property n To encourage and support research in appropriate methods of providing value.32 The procedures include the preparation of the deed of sale and transfer shelter and infrastructure.36 cost statement. In addition, the purchaser is required to obtain a rates clearance certificate, a certificate of payment of dues from the town council, a tax clearance Opportunities from the tax authority, and a land board exemption certificate.33 There is great opportunity to either partner with, or invest in, institutions like the SNHB and the SBS. These two institutions have an intricate understanding of the Policy and legislation housing needs and demands of the Kingdom of Eswatini. In addition, the Seven key policy and legislation documents guide how land and real estate is institutions are well-positioned to navigate the economic and political terrain. treated in the Kingdom of Eswatini, namely the Housing Policy, the Physical Planning Policy, the Sectional Titles Act of 2003, the Human Settlements Authority Act of Even though the SNHB is mandated to provide housing finance it is unable to do 1988 as amended in 1992 (Act No. 13 of 1992), the Crown Lands Disposal so due to financial constraints. There are various ways in which investors could Regulations of 2003, Vesting of Land in Kings Order (1973) and the Crown Lands support this function, specifically for housing developed for civil servants who have Disposal Act No. 13 of 1911.34 The Sectional Titles Act of 2003 is still awaiting long-term stable incomes. approval from the King. The Kingdom of Eswatini has a high number of MFIs and SACCOS, as well as great The Kingdom of Eswatini’s Ministry of Housing and Urban Development has three participation in these sectors, specifically by those residing in rural areas. There is primary functions, namely physical planning, land administration and housing. The potential to use MFIs and SACCOS to finance incremental housing. 135 Websites Central Bank of Eswatini https://www.centralbank.org.sz Eswatini Deeds Registry http://www.gov.sz/images/Deeds Eswatini Property Review http://www.barcodecreative.net/assets Eswatini Financial Services Regulatory Authority http://www.fsra.co.sz Swaziland Building Society https://www.sbs.co.sz Swaziland National Housing Board https://www.snhb.co.sz Southern African Development Community http://www.sadc-dfrc.org Standard Bank Eswatini https://www.standardbank.co.sz African Union for Housing Finance http://www.auhf.co.za African Development Bank https://www.afdb.org 1 FinMark Trust (2018). FinScope Consumer Survey Highlights Eswatini 2018. Pg. 5. Unpublished. 21 Minimum Wage (2019). Swaziland Minimum Wage, Labor Law, and Employment Data Sheet Swaziland 2 FinMark Trust (2017). FinScope Micro, Small and Medium Enterprise Survey Eswatini 2017 Report. Minimum Wage Rate 2019. https://www.minimum-wage.org/international/swaziland (Accessed 28 August http://www.finmark.org.za/wp-content/uploads/2018/06/FinScope_MSME_Report_Eswatini_2017.pdf 2019). (Accessed 22 August 2019). Pg. 10. 22 Southern African Development Community, Development Finance Sector Resource Centre (n.d.). DFI 3 FinMark Trust (2018). FinScope Consumer Survey Highlights Eswatini 2018. Pg. 5. Unpublished. Swaziland: Page 2 of 2. http://www.sadc-dfrc.org/dfi-swaziland/page/0/1 (Accessed 8 August 2019). 4 Ibid. 23 Swaziland National Housing Board (n.d.). The Institutional Housing Project. 5 FinMark Trust (2017). FinScope Micro, Small and Medium Enterprise Survey Eswatini 2017 Report. http://www.snhb.co.sz/index.php?option=com_content&view=article&id=223&Itemid=65 (Accessed http://www.finmark.org.za/wp-content/uploads/2018/06/FinScope_MSME_Report_Eswatini_2017.pdf 6 August 2019). (Accessed 22 August 2019). Pg. 4. 24 Swaziland National Housing Board (n.d.). Rental Estates. 6 The World Bank Group (2016). International Bank for Reconstruction and Development Project Appraisal http://www.snhb.co.sz/index.php?option=com_content&view=article&id=202&Itemid=128 (Accessed Document on a Proposed Loan in the Amount of SDR18.25 Million (US$25.0 Million Equivalent) to the 6 August 2019). Kingdom of Swaziland for an Improving Public Sector Performance Project. Pg. 1. 25 African Union for Housing Finance (n.d.). AUHF Member Profile: Swaziland National Housing Board. 7 African Development Bank (2019). eSwatini Economic Outlook. http://www.auhf.co.za/wordpress/assets/Swaziland-National-Housing-Board.pdf (Accessed 16 August 2019). https://www.afdb.org/en/countries/southern-africa/eswatini/eswatini-economic-outlook (Accessed 23 August Pg. 2. 2019). 26 Email correspondence with Siphesihle Jele, Swaziland National Housing Board, 21 August 2019. 8 Rijkenberg. N. (2019). Kingdom of Eswatini Budget Speech 2019. 27 Telephonic interview with John Nyalunga, Mbhetse Construction Services, 18 August 2019, Johannesburg, http://www.sra.org.sz/documents/1551337162.pdf (Accessed 23 August 2019). Pg. 6. South Africa. 9 Eswatini Financial Services Regulatory Authority (2019). Financial Services Directory. 28 Ministry of Natural Resources and Energy (n.d.). Deeds. http://www.gov.sz/index.php/ministries- http://www.fsra.co.sz/directory/index.php (Accessed 16 August 2019). departments/ministry-of-natural-resources/deeds (Accessed 1 September 2019). 10 Ministry of Finance (2017). National Financial Inclusion Strategy for Swaziland 2017-2022. https://www.afi- 29 Eswatini Deeds Registry (2019). Deeds Registry Performance Report for Quarter April-June 2019. global.org/sites/default/files/inlinefiles/National%20Financial%20Inclusion%20Strategy%20Swaziland%20Final.pdf http://www.gov.sz/images/Deeds_-_performance_report_3rd_quarter_ending_June_2019.pdf (Accessed (Accessed 25 August 2019). Pg. 14. 17 August 2019). 11 Finmark Trust (2014). Presentation: FinScope Consumer Survey Swaziland 2014. Launch Findings. 30 Eswatini Deeds Registry (2019). Deeds Registry Performance Report for Quarter ending March 2019. 5 February 2015. Finmark Trust. Pg. 11. 31 Eswatini Property Review (2018). Local Real Estate Agents Form Association. 12 Central Bank of Eswatini (2019). Central Bank of Eswatini Monthly Statistical Release June-July 2019. http://www.barcodecreative.net/assets/files/Eswatini%20Property%20Review%20Vol%201%20Issue%203%20- https://www.centralbank.org.sz/monetarypolicy/statistics/June-July2019.pdf (Accessed 16 August 2019). %20Digital%20Issue_36pgs%20(R).pdf (Accessed 17 August 2019). Pg. 14. 13 Standard Bank Eswatini (2019). Urban Home Loan. 32 World Bank (2019). Doing Business 2019. Economy Profile Eswatini. https://www.standardbank.co.sz/swaziland/personal/Borrowing/Urban-home-loan (Accessed 23 August 2019). https://www.doingbusiness.org/content/dam/doingBusiness/country/s/swaziland/SWZ.pdf (Accessed 14 Swaziland Building Society (2019). Building Loans (Residential and Commercial). 29 August 2019). Pg. 21. https://www.sbs.co.sz/index.php/homeloans. (Accessed 23 August 2019). 33 World Bank (2019). Doing Business 2019. Economy Profile Eswatini. Pg. 22. 15 Ibid. 34 The Government of the Kingdom of Eswatini (n.d.). Ministry of Housing and Urban Development. 16 Swaziland National Housing Board. (2019). About SNHB. http://www.gov.sz/index.php/ministries-departments/ministry-of-housing-a-urban-development (Accessed http://www.snhb.co.sz/index.php?option=com_content&view=article&id=170&Itemid=61 (Accessed 8 August 2019). 23 August 2019). 35 Amnesty International (2018). “They Don’t See us as People” – Security of Tenure and Forced Evictions in 17 Finmark Trust (2014). Presentation: FinScope Consumer Survey Swaziland 2014. Launch Findings. Eswatini. https://www.amnesty.org/download/Documents/AFR5587852018ENGLISH.PDF (Accessed 5 February 2015. Finmark Trust. Pg. 11. 29 August 2019). Pg. 5. 18 Finmark Trust (2014). Pg. 50. 36 Parliament of Eswatini (1992). The Human Settlements Authority Act, 1988 as Amended In 1992 (Act No. 13 19 Finmark Trust (2014). Pg. 54. of 1992). Pg. 2. 20 Trading Economics (2017). Swaziland Unemployment Rate. https://tradingeconomics.com/swaziland/unemployment-rate (Accessed 1 September 2019). 136