Establishment and development of housing banks and their role in African countries

\ _Nations COHOMIC nd SOCIAL

OUHCIL

Distr.

LIMITED

2/CN.14/H0U/70

21 May 1970

Original 1 ENGLISH

;| ECONOMIC COMMISSION FOX AFRICA

I- East African Sub-regional Meeting on 1 Specific A3peots of Housing Finance M Kampala, Uganda, 29 June to 4 July 1970

ESICABLISHMENT AND DEVELOPMENT OF HOUSING BANKS AND

THEIR ROLE IN AFRICAN COUNTRIES

TABLE OF CONMJTS

Paragraphs

Introduction 1—3

Background , 4

Present position on housing credit institutions in Africa 5-11 Sources to increase inflow of capital to housing 12-41

Coramerci al Banks 14

Social Security Schemes 21

Insurance Companies 25

Post Office Savings Banks 40

Establishment and functions of a National Housing

Credit Institution 42-52

Annex I Guarantee (House Purchase) Act 1967

Law No. 27 of 196*7 in Kenya

e/cn,14/hou/7O

ESTABLISHMENT AFD DEVELOPMENT OF HOUSING BASICS AND THEIB ROLE IN AFRICA!? COUNTRIES

Introduction

1. The objective of this paper is to examine financial and economic implications to assist in the establishment and development of national savings and credit institutions for housing in member States of the Commis sion in Africa. It has relationship with the proposal recently advanced by an Advisory Group of Housing Finance Experts under UN Headquarters

auspices to establish within the UN system an International Housing Finance

Corporation. ■ . ... . ...

2. National institutions ^which we may refer to as' Housing Banks or House Mortgage Banks ^r Housing arid Building Banks would all have the same

objective, i.e. to "increase the number of dwellings available for acquisi tion by the public. They would need,■ moat likely/ seed capital loans on reasonable, te-rms, and the provision of .technical ,,and managerial, assistance while counterpart African personnel; were under .training. This does not overlook the fact that .several individual institutions on a purely local

level had been established in some of the African countries (see Table 1 following), and that there is a"'small nucleus of people who have been

trained and have gathered experience in the operation of housing credit ins tituti ons.

3- The establishment and development of a national institution which would be the arm of government for co-ordinating matters concerning savings and credit facilities for housing will not, of course, be applicable in all African countries, but there are a rumber of countries in which this proposal for a national institution could now be considered and acted upon. Based on the following discussions, governments cf memser States on advice given-to them' by delegates to this Sub-regional Meeting may wish to review the whole field and sources of housing credit and decide whether conditions in their own countries are now such that a national"institution

would be justified. -..,_. _

Background

4. The present suggestions in this document to establish national housing- credit institutions are meant to be used as a means to assist.in tho

mobilisation of long-term capital for housing, and have been recommended by the Advisory Groups of Experts brought together by TTS Headquarters during 1968 and 1969- The followxng assumptions have been used:-'

(a) While there is an aoute general shortage of capital for most

investment purposess the shortage in the housing sector is more acute. This is largely due to

(i) the large volume of capital required and the fact that

these requirements are increasing as urbanization

. .. continu3s and the estimated annual increase in population in the major African cities is 5 per cent per annum due to this cause alone and not taking into account natural .growth of population;

(ii) the nature" of the capital requirement on a long-term basis

at comparatively low yield which inhibits the attraction to existing financial institutions;

(iii) the limited means presently available of mobilizing

savings from those sources which have traditionally provided the bulk of capital to this sector, i.e. . iiriivi duals.

(b) There is a potential for mobilizing savings from individuals

provided institutional means are established. Experience in member States supports this conclusion as can be seen from Table 1, and the report of the Meeting on Technical and Social Problems of Urbanization with Emphasis on Financing of Housing,

(c) In the majority of cases an injection of seed o^pital,

. . -not necessarily, externalj and managerial experience is required . - ■■ ,.-to initiate and.-sustain new housing credit institutions. We can

\J Economic and Financial Implications of Housing Finance Institutions in

Developing Countries, ditto - unpublished.

e/cn. 14/HOU/7O'

Page 3

discuss-later in- this-;papeT the position in regard to" the levels

°f deposits .and savings held in Commercial..Banks in African

countries. . - ■ . . ■

Present position on housing credit institutions in Africa

5. Table 1 below gives details of the organizations known to the secretariat as already carrying out housing-credit operations in Africa

and shows the terms on which business is conducteds-

Table 1 Details of terms for house mortgage loans - 1/

Country Organization Period of repay ment «of loans

Rate of Interest per annum

Botswana

Central African Republic Ethiopia

Ghana

K enya

Liberia

Commercial Banks

National Development Bank

Mortgage Ccupany of Ethiopia ' **•

Not known but pro bably not in ex cess of 5 years

5—10 years

5 years.

Imperial Savings and

Home Owneiship Public 16 yeaj?s ...

Association _. „ .„ ►

First Ghana Building ;

Society .,- * + - 5 to 15 years Housing Finance

Company Kenya Ltd.

East African Building

Society (Housing Bank suggested)

15 to 25 years

5 to 15 years Commercial Banks ■

(Housing Bank proposed) 1 to 5 years

Not known, but probably those prevailing in the Republic of South Africa

8^-10 per cent

8-10 per cent

8J- per pent plus

1 per cent addi tional on appro val of loan

Up tn 7- per cent

9 per cent

&g- per aenf

9-10 per cent

9-10 per cent discounted ini tially

1/ Sources country monographs and secretariat.

Table 1 Cont'd.

Country Organization Period nf repay ment of loans

Rate of Interest

per annum

Madagascar

Malawi

Mauri tius

Morocco

Nigeria

oierra Leone

Somalia

Sudan

A Social Welfare Body not named

Madagascar- National Bank

Madagascar National Bank

Up t' 20 years

10 yaars

5 years

New Building Society n%t stated

Commonwealth ment Corporati#n

Government Local Money

Caisse Immobilifcr© et Hotelifere

Up t# 2^ y#a»s

15 15

10-15

Up tt 2"

Western State Housing Corporation

Nigeria Building Society, Lagoa

Not known but proba bly from Commercial Banks as Botswana

Credit© 3cmale (Govern- 5 to 25 years ment Commercial Bank)

Sudan Estates Bank 18 years

3 per cent

5-7 per cent

8 per cent (50

per cent loans for sums in

excess of 2-5 million Madaga

scar francs) 7-J- per cent Free

hold

B^- per cent Lease

hold

Appr«x, &J- per

cent

4 per cent (on low-cost housing)

4—84 per cent nn rrdinary loans.

cent

per cent

5 per »ent

3 per cent f«r lew—income groups loan up to £S-2£C0

Table 1 Cont'd.

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Country Organization Period of repay ment of loans

Hate of Interest

.per annum

Swaziland

Tanzania

U.A.R.

Uganda

Zambia.

Sudan Estates Bank 18 years

not stated

Swaziland Credit and

Savings Bank Up to 15 years Swaziland Building

Society Up tn 15 years

Hrusing Finance Com

pany of Tanzania Ltd. 15 to 25 years Not r.araed Up co 15 years Housing Finance

Company of Uganda Ltd. 15 to 25 years

First Permanent (1962)

Building- Society,

Lusaka Not stated

3 per cent for middle-income groups loan up to £S-7,000

6-9 per cent for high incomes over £S.45O per annum. Loans up to £3.25,000

8-J- per cent

9 per cent

&s per cent

5—6 per cent

&k P©r cent

U*t stated

6. The interest rates shown in the above.table are of a vej^y uneven pattern. If we take the two extremes, we find that they.vary "between

3 per cent and 10 per cent per annum. This might show that in some African countries where the lower rates are applicable, the authorities responsible have taken due regard of the fact that to the. borrowers the matter of

buying a house is a tangible thing and because of th#e housing shortage generally, they have decided that house-mortgage loans should be available on the best terms to borrowers. It mi6ht show also that these operations have been taken out of the general field of competition in attracting capital

to' housing.

7- It will be noted also that a Housing Bank has been proposed in the case of Liberia and some progress has been made towards a United Nations

Special Fund Project'in Liberiafor this purpose. In .the case of Kenya, .a House. Mortgage Bank has been suggested in reports submitted to th'e

Government on the grounds that conditions warrant this step to be taken.

8, There are three financial methods by which a mortgage loan can be

repaid over a period of years at a given rate of interest. It will be necessary in the future to analyse the methods to choose that which is '■ more advantageous to the borrower. The methods are:

(a; The instalment system;

(b) The annuity or flat rate system; . . (c) The endowment system.

When the instalment system is used, the borrower will pay a fixed amount from the principal sum each month in addition to the interest due. The

monthly principal instalment is known by dividing the amount of tire ' "

mortgage loan by the number of months in the repayment term. The total

monthly repayments (principal plus interest) will decrease progressively

during the life of the loan. The annuity or flat rate system deals with fixed equal repayments which include both principal and interest. Tables prepared by actuaries are used to calculate the amount required to repay the mortgage loan over the agreed period together with interest at the agreed rate charged on monthly, quarterly, half yearly or annual rests,.

Under this system the monthly repayment remains the aame throughout the life cf the lean; the allocation to interest contained in the monthly repayment will decrease and the allocation to principal will increase as the mortgage loan is reduced. Persons seeking a mortgage loan under this system must be made to understand that the monthly repayments initially are largely the interest element. The endowment system js that which combines w«rk of the landing institution and a life insurance company.

Borrowers take out an endowment policy with the insurance company whereby the lending institution accepts payments of interest only on the l«an,

looking t» the proceeds of the policy for repayment of the principal sum,.

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mortgaged as additional security, in one lump payment at the end of the agreed term or on the prior death of the borrower.

9- Although the trend m African countries is towards the annuity or flat rate system mainly because this system has been introduced from

developed countries, it would appear that the instalment system ig» of most

advantage to the borrower simply because the accumulated interest is less

than that of the annuity system. This is a very important point to the

individual who is struggling to establish himself~as a stable member of

society. The argument put forward for the adoption of the annuity or flat

rate system is-irh-at it eases the-"burden--of-the lending institution but this

is not a valid argument in present days of machine accounting.

10. The endowment system although not much practiced in African countries where life assurance is'not common, has a big advantage from the point of view of the borrower making provision for his dependents in event of his

untimely de,ath-

11- Apart from the aspect of personal insurance as shown in .the endowment system, there are some African countries which cruld now take up the larger

question cf insurance of mortgages by a Central Body. Such a soheme would

enta.il a fractional addition, to the rate of interest charged on mortgage loans and this fraction m uasn would be made available to the Central Body undertaking mortgage insurance, so that this body cculd over a period of time build1 up'a substantial fund to use in tho'se cases'where insurance was to be applied for any reason. This is envisaged to be one of the functions of a national housing credit institution;, and can be taken up

later in the paper when dealing with these functions.

Sources to increase inflow of capital to mousing

12. Depending on the c-nditions of individual countries there are.several . sources of,capital for housing some of which remain untapped. Here, reference reference may be mada to the document pufbefore this Meeting entitled

"Review of Sources and Methods of-Financing for Housing and Urban Develop- ...

ment in Africa"-/and m particular to page 10 et seq where comments.have

1/ E/CN.I4/HOU/64"

been made on the eight groups concerned.

13. The groups which remain untapped are Commercial Banks, social security schemes, and the insurance companies, particularly where these carry out life insurance. Following on the comments made in the above quoted docu ment, let us take a further look on the statistics available sofar as

funds are concerned since part of the functions of a national bank would

be to persuade these groups to invest in housing.

14. Sofar as Commercial Banks are concerned the following banking statis

tics in Table 2 "below are relevant!

Table 2

elected liabilities; deposits and savings with Commercial

™ Banks at 3O.9.1969~l7

Demand deposits New Cedis 152,639,000

17

Country

Ghana

Ivory Coast CFA. Francs28.31 billions

Malawi Mauritania

a/

6,169,000

CFA

Niger Replic CFA

Nigeria £S

Senegal CFA

Sierra Leone Leone

Togo CFA

Upper Volta CFA Zambia

Dahomey

Time deposits Savings A/c_

N# 28,987,000 11$ 64,919,000

CFA 17»75billions

8,149,000

2,970 millions, CFA 561 millions 2,381 millions CFA 719 millions

£N 53,795,000 CFA 1.76 billions

Le.14,798,000 CFA 1?649 millions

CFA 0.23 billion 71,764,000

14.92 billions 12,307-000 4;731 mi Hi ons

2.40 Millions

8$ 44,406,000

Kwacha 117,983,000 CFA 3.34 billions

K. 60,407,000 CFA 0.29 billions

y

^{Sou re e} International Financial Statistics, IMF, February 1970..

Monthly Issues of Standard Bank Review., Londown 1969-1970.

Time Deposits and Savings reported in one.

246*85 Francs C?A « UStf 1 in 1968. Actually 277-71 Francs CFJU US$1 New Cedis (N#) 0. 98$

1 kalawi £ = 2.40 u 1 Nigerian £ = 2.89 1 Leone = 1,20 US-i»

1 Kwacha = 1.40 US:i

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Page 9

15* Here, concerning, the overall question of inflow of capital to housing, the role of Commercial Banks in African countries and the use of local money shown under the headings in Table 2 need to be considered by the Government of member States. The majority of African Governments have instituted measures for exchange control which, apart from special cases, have restricted foreign exchange dealings to the Central Banks. This has insulated to a great extent the local market from foreign markets whereby the use of these moneys may be made on conditions and terms considered suitably locally. For example the assumption that rates of interest in the capital markets of developed foreign countries may settle between 9 to 10 per cent may not need to influence unduly the rates of interest agreed for local transactions in

local currencies.

16, These exchange control measures have resulted in an increasing high level of deposits and savings in local currencies in "banks which appear to be under-invested and in some countries the demand for short- term finance has been reduced dramatically, particularly in those

countries where conditions governing the issue of trading licences have been changed. But even in these cases, the conservative old-time diotum of borrowing short-term and lending short-term is still being persued although depositors and savers are increasing and the number of borrowers for commercial purposes is reducing. It might therefore seem- that with the increasing level of deposits and savings over a long period and allowing for normal withdrawals, there must be a second and" lower level below which-deposits and savings in the conditions outlined above, will not fall. This implies that a proportion of these deposits and savings, although they are widely spread, should be used for longer term housing

finance.

17. One method to induce investment in housing and presently being

arranged in Botswana, is that of Government bonds for publio subscription, whereby commercial banks might be pursuaded to invest. The term for

maturity might be staggered so as to aUow of the first bond reaching

maturity in five years, and the second one in fifteen years which is a ;

"i .' ■' "" "■... , ■ ■ ■ -■ ■ -

mean period for using this money.in the way suggested. We consider the utilization of these deposits and savings in housing, apart fr^m other investment opportunity, as important.

18, iii putting forward these banking statistics in this way it is

of course not known How widely spread amongst the public thes-e moneys are.

In some countries the bulk of the moneys may he owned by comparatively few persons. In addition, it is not known how much of these moneys

os committed to accommodate other transactions even those of governments.

These are matters for consideration by governments as already suggested.

19» Another aspect affecting the use of such moneys is the question, of housing provided by employers. It is felt that employers in all cases should be encouraged to provide housing for employees, not only by exchange control measures are restricted as to the external use of profits. There are two ready-made alternatives for them, one is to plough"back profits into the business and the other is to provide housing for the employees either for rent or purchase.

20, >:'Wdr'see a definite role for a housing credit bank in its dealings

with the Commercial Banks in the way suggested, and in assisting to establish equilibrium in the matter of interest rates whioh should be governed by■local conditions.

21. The seconduntappedsource of funds for housing concerns

Social Security Schemesy Whether these be on a voluntary or oompillsary payment basis, and whether they be governed by legislation. Statistics

are not presently available on the number of funds established, the number of participants, and the value of the funds .at any given time.

The investment of the proceeds of these funds must preferably be of

a long-term nature and credit facilities for housing is in this

category. Again, the question of interest to" be paid on any such investment is purely a matter for local decision since again, it is local currency.

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22. The management of ;the.&e-.fuads. is. Of course an important matter which qannot bei divorosd -ante .an ..independent function since the Ministries of Finance, in.d5.lferent.c0untri.es usually have these funds in the portfolio of the Mnisters.. Experience tends, to show that, there.

is perhaps a too close view, taken concerning the investment of, the.. ..

proceeds of the funds even allowing for priorities of development.. ..

It is suggested that this aspect could "be discussed more widely in government, circles. : . ■' ■ "; ". ■ r • ■

23. The size and rate at 'which a fund of this type can grow is depicted by National Security Fund in Kenya which was established under Chapter 258

of the Laws of Kenya as a compulsory social "security soheme for persons

between'the ages of 16 and 60 years. At present about K£15 millions

subscribed to the Fund are invested in Trustee investment. In this particular case, if and when a National Housing Bank is established it would be necessary for the bank to be given Trustee status,

24. It is anticipated that much more information concerning these

Funds will be made available to the meeting through the country monographs and that a recommendation may be made concerning investment in housing.

25* Tapping of funds "for housing from Insurance Companies needs eciually serious-consideralii on, particularly where investment income from life insurance premiums is cbnoerned. There is no doubt that some funds from insurance companies are being invested in house mortgages

but the bulk of this is in luxury housing. The investment from life

insurance premiums is again necessarily of a long—germ nature. Preferably in those investment opportunities which have protection under Trust laws.

26, Hereagain, we can take a look at Certain conditions revealed

in insurance .statistics-^ in some countries'and in particular'in Kenya,

Uganda and Tanzania ■ ' ■ ■ '■■

1/ East African Statistics 1967? East African Statistical Department.

Secretariat sources".

27• . In Botswana there are no insurance companies locally established in the market. The market is provided! for "by agencies" of foreign firms,

"but regulations for insurance purposes' were passed "by the. National Assembly at the beginning of I969. fhe Botswana Abstract of Statistics

does not contain such information, although it could be provided

for the future.

28. In Kenya the insurance market is very active and life insurance .•>.-.

business.has a very important place in that market. In 1967 companies,

had written 26,902 policies involving K£25.9 millions for which the

net premiums were a little over E£ 4 millions showing an increase

over 1966 23-5 per cent. Unfortunately the statistios do not reveal which

of these polieies were on a non-profit basis and which were on a with

profit basis. The secjtt* - has requested the East African Statistios

Office to see whether it will be possible to show the difference in future years. I^om the point of view of premium income available

this is important in the event that block sums of money may be invested in housing,credit-facilities through the National Housing Credit .

Institutions. . : > ■ ;

29. Of total assets in Kenya of K£ 27)912,069, there was 25 per.oent held in mortgages and loans," 37 peV cent in government and . local

government securities, 10 per cent in stocks and shares and 11.8 per cent in real estate, oatfh in hand and at bank was nearly 10 per cent.

All these items showed an appreciation by way of percentage over I966.

Thus, in reference to paragraphs above dealing with Commercial Banks

about K£2.75 became part of the ZS$O millions held in deposits and

savings in the Commercial Banks towards the end of 1967, It should be

noted here (although-omitted from:Sable '2) Kenya Government and secretariat sources placed K£ll2 millions asbeing in deposits and, savings in

Commercial Banks at the end of I969.

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Page 13

30, In-Madagascar the insurance market in 1967 was being operated

"by nine, foreign companies. At the end of 1967 money figures had risen

to FMG 59.4 millions (278 BiG » 1US^). In_the second half of 1963

regulations were made "by government with object of these companies using their investment income in the economy of Madagascar.

31, In Malawi, at the end of 1968 there were 34 insurance companies and 7 agencies operating in the insurance market, of which 10 were

writing life business and the sums assured in life business ha^

reached to M£ 3.6 millions comprising 1*550 polioies. All these life

policies had been taken out after the independence of Malawi in I964.

32. In Somalia the activities of insurance companies appears

small and'there are no.statistics available. The.country monograph for Somalia for the meeting may provide additional information.

33. In Swaziland the information available on the activities of

insurance companies is limited. There are three South African Companies which have their offices in Swaziland and 8 other South African Companies

are represented by Agents. All these firms t ■ carry out life insurance

business. At present there is no regulation in insurance buBiness?

and premium moneys are remitted to South Africa.

34• ' In Tanzania, those, companies which operate in Kenya and Uganda, also operate,in this country* In 19^7 oompanies had written nearly 3,000 policies,-assuring T£3»7 millions for which the net premiums were

T£1.48 millions. On the other hand, during 19^5 and 1966 over 8,000

policies were issued in each year assuring over T£7 millions in each year, and yet the net ^premiums for three y~ars .show only a small percentage

decline in 1967. ' .

35* Of. the total assets in Tanzania of T£ 5,56lL,O6O? there was 24 per

oent held in mortgages and loans? 30 per cent in government and local government securities, 3 per cent in real estate, while cash in hand and at Bank was 17 per cent. All these items excepting real estate showed an appreciation by way of percentage over I966 and cash in hand and at bank

practically doubled. .._■

36. In Uganda the life insurance market is predominent in 1967- Companies; had' written nearly 14,000 poiiciea assuring TO.

for which^henet pr^emiuins were:"'almost U£2 millions with a remarkable increase of 23.7 per cent over 1965 arid 1966;

37. Of. the total ..assets in Uganda = of U £7,475,641, there was 33 per oent held in mortgages of loans, 19 per cent in government and local government securities, 12 per cent in real estate and oash,in hand and at 'bank was 11 per oent. All these items showed a remarkable

appreciation by way of percentage:over 1966, percentages ranging between

21 and"9T P©r centi ■ - ....■:■■

38. In repBot of the three countries Kenya, Uganda and Tanzania

mainly covered by statistics,-at the end of 1967 , . ■■"tfiere va^_ . .; ; investment income available of K£l,5 millions, U£376,715 and ,T£249,713 .,., respectively. All these figures showed an increase in investment income over the years 1965 and 1966.

39. i:. One important conclusion can be drawn from the preceding paragraphs regarding life,insurance activities, this is^that their activities

constituted a good and efficient m^eans of mobilizing lcoal savings for investment in housing on a.long-term basis. Inducing investment

will fall into the functions of .any national housing credit institution.

It may be noted also that the larger part of activity in the life

insurance field is confined to the urban areas. Although not falling strictly in tbe 'purview of this sub-regional"'meeting perhaps a recommendation

oould'W made that activities 'should be carried' out at the same' time,

in the rural areas.

40. The- operations of-Post. Office-Savings. Banks remain, fairly .. .., ...

stable. There is also a possibility in this field of inducing ..

investment,i.n housing,whe*e. the level of sayings has been maintained over a number of ..years. Assets of these banks invested in

foreign countries at low rates of interest'might profitably

be realized and re-invested in the countries of origin. _ ^ ^ 41, ■ JAll..=the details in ,the preceding pages, lead to the main- consi- ...

deration, i.e. establishment and functions of a national housing credit. ...

institution.

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Page 15

Establishment and, functions of a iTatione,!.Hou3ingJ3recat Institution

42. Any decision to establish a national housing credit institution in any of the African countries can "be seen as a logic s.1 stsp towards providing

adequate arrangements for tho future in the devrslcpmont of house mortgage work and for the benefit of the people. Present arrangements and machinery for .providing housing credit facilities are in some countries adequate for the

moment. In other countries good progress and expansion has "been made which merits serious consideration to establish national housing credit institutions- On the other hand? in other countries there is nc machinery at present to deal with house mortgage operations and this is a further consideration for the governments of those countries. All things of this nature hava small beginn ings and satisfactory arrangements of a simple typo.with small staff can be made, There is no necessity in tho preliminary stoges to have a top heavy organiza tion which will spend more money on overheads then it can afford in relation to its actual operations.

43» Tho objective of a national housing credit institution would be to act as the focal point for the initial receipt, eo--ordination and use of capital to be channelled into mortgage operations by a distribution of capital to the mortgage institutions engaged in nortge^e work. It would a3.no hove tho duty of dealing en behalf of government with international institutions already engaged or which will become engagod in mortgage wo:ok5 e.g. the African

Development Bank and thy proposed International Fencing finance- Corporation,

44- In addition, it would have the duty of encouraging investment of capital in housing from all local sources including tho30 sho-wn in ~cho preceding pages of this document- This duty however might not include collection of savings from individual members of the public at lerrge become this ooa be done as

it presently existing housing credit institutions cf a more local character-.

45. Rxrther duties of a national housing credit institution would include arrangements to provide secondary mortgages (although this is a function which requires special care and attention), the insurance of

mortgages on the lines shown in paragraph 11 above, and in the future the marketing of mortgages within national "boundaries. Again this latter

function requires special cars and attention and needs the encouragement cf

governments whereby a guarantee system for land-holding as opposed to land-owning bearing in mind the complexity of land tenure in some countries.

46.. To reiterate in one respect, the main part of this document discusses in some detail sources from which capital might be expected to flow to housing, and the national housing credit institution, on behalf cf government, would be expected to have negotiations and dealings with all the authorities and

organizations concerned. It would then channel these funds to house mortgage institutions on the basis of need according to their operational activities at any particular time.

47, In collaboration with the Mnistry responsible for housing, the Ministry of Finance and the Central Bank of the country concerned, a national credit housing institution would be able to bring influence to bear on the operational activities of the institutions engaged in mortgage work so as to ensure that these activities and facilities were extended to members of the public in tho Tower income groups end would bs able to promote

adequate development of mortgage work at costs which people cuuld afford.

48. A national housing credit institution would assist in the formulation of public issues of development bonds from which housing could take a

proportionate share of the resulting investment through the bonds according to the requirements cf capital for housing based on the government's housing programme and indication of needs put forward by house mortgage institutions-

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Page IT

49- Where governments o? member States have established or will wish to establish a system of guarantee such as that oontained in the Guarantee (House Purchase)Act 1967 of Kenya, the national housing credit institution might be the administering authority for such an Act subject to the general directions of the Minister in whose portfolio the Act has been enacted. This legislation of the Government of Kenya appears at Annex I.

50. Finally, insofar as functions are concerned, the national housing

credit institution would be responsible for maintaining liaison in co-operation with house mortgage institutions on a national basis to pass on knowledge

and experience in relation to government's housing programme and conditions for the development of mortgage work generally. The national housing

credit institutions would undertake to provide consultative machinery with the collaboration of the other institutions engaged in the work. This would be particularly important in stabilizing the types of loans to be granted, the standards of housing which might be accepted for mortgage loans, and the rates of interests which rrghtl\e agreed for these purposes with particular emphasis on restructuring these rates for the benefit of the lower income groups of the population.

51- 1+ ip urged that thr meeting give serious consideration to the establish ment of national housing credit institutions in those oountries where condi tion;: oxo rips and that a recommendation to this effect may be made In the final Report of the Meeting. Such steps to be taken in any member States would entail enabling legislation. For this purpose a careful study would have to be made of the present banking legislation in order to ensure that the national institution would not be encumbered with prohibitive measures

entrenched in its own law or through other relative laws.

52. If, after taking into account local conditions and needs, governments of member States accept in principle that such actions are desirable

and necessary then preparatory work can be put in hand at an early date.

Governments would no doub.t wish to have advice and assistance on a technical subject of this nature. For this purpose advice and assistance will be

forthcoming from che United Nations Economic Commission for Africa whioh will collaborate with United Nations Headquarters and the United Nations Development Programme with a view to providing suoh advice and assistance not only for the preparatory work but also in the actual establishment

of the national institution and it3.ranning in the initial stages in conjunc tion with counterpart personnel and facilities provided by the governments concerned.

E/CN.14/HUU/7O

Annex I

AHUEX I

Kenya Gazette Supplement No. 93 (Acts No. 13)

Nairobi, 30th "November, 1967

GUARANTY (HOUSE RJRGEASE) ACT 1967 No."27 of 1967

Date of Assent : 26th November 1967 Date of Commencement : 30th November 1967

An Act of Parliament to empower local authorities and the Government to

guarantee the repayment of parts of advances made by building societies.

ENACTED by the Parliament of Kenya, as follows: Short title.

1. ThisAct nay be cited as the Guarantee (House Purchase) Act 1967.

2. In this Act, excep'iT where the context Interpretation,

o therwi se re qui re s t-

"advance" means an advance made or to be made by a building

society to a person for the purpose of purchasing a house;

"building society" means a building society within the meaning of the Building Societies Act and any other body which the Minister may, with the agreement of the Treasury, by no/tice in

the Gazette, declare to be a building society for the purposes

Of this Act; ■■; ' ■"-..,

"excess advance" means that part of an advance which exceeds 65 per cent but does not exceed 90 per cent of the value of the property in respect of whioh the advance is made, together

with tho interest payable on that part of the advance;

"local authority" means the Nairobi City Council or any other

local authority which the Minister may, with the agreement of

the Minister for the time being responsible for local government,

by notice in the Gazette, declare to be a local authority for

the purposes of this act;

"purchase" in relation to a house, means the purchase of the

house and the land, appurtenant to it, or the purchase of

land and the erection of the house on it, or the erection

of the house on land;

'Value" in relation to property, means the sum at which the

property is valued in a valuation made or approved by a

valuer employed or authorized for the purpose by the Government, or the cost of the purchase (including the land) if that is less.

Local authority may submit scheme to guarantee

excess

advances.

3* A local authority may prepare and submit to the Minister for his approval a scheme for the looal authority and the

Government jointly to guarantee the repayment of excess advancea made or to be made by a building society to citizens of Kenya for. the purpose of enabling them to purchase houses within

.its area of jurisdiction.

Minister

may approve

scheme.

4- Where a scheme is submitted "fco the Minister, under section

3 of this Act, and he is satisfied:

(a) that a guarantee will extend only to two-thirds

of the excess advance incurred and two-thirds of any expense incurred in protecting, preserv ing or realising the security; and

(b) that a guarantee may be given only in a case

when the advance, does not .exceed five thousand four hundred pounds, .

he may, with the agreement of the Treasury and of the Minister for the time being responsible for local government approve

the scheme, with or without modifications.

Power to

guarantee

5* Where the hinister has approved a. scheme under Section 4

of this Act, the. local authority and the Government may enter

into guarantees in accordance with the scheme, in such form

as the Minister may think fit. ■■'"'■

E/CN.U/HOU/70

Annex I Page 3

Liability 6. Where a local authority and the government have under entered into a guarantee under Section 5 of this Act :

guarantee

(a) the government's liability under the guarantee shall be one-half of the amount the repayment of which is jointly guaranteed by the local authority and the Government, and

the local authority's liability shall

be one-half of the same amount.

(b) the government's liability under the

guarantee shall cease altogether when

the principal sum owing in respect of

the property has been reduced to the amount

equivalent to one-half of the value of

the property as assessed at the time the advance was made.

Original : ENGLISH

ECONOMIC COMMISSION FOR AFRICA

Expert Group Meeting on Education and Training for Development in Africa Addis Ababa, 7-12 December 1970

FOR. RURAL TEACHERS IN CAMEROON I A NEW TYPE OF TRAINING COLLEGE

The need for correlation between, on the one hand, the content and the structure of primary education, and, on the other hand, economic

-■'■''-'■■ .

development retirements^ has already been dealt with in this issue of the bulletin. The next issue will dg&l with this question again, but will bring*into focus its purely rural aspects, A link between those broad objectives is provided by this report whioh describes a pilot project

whereby an entire education system is to be converted according to specific

development goals, '

When the Cameroon Government decided to create the MIR-'in Yaounde - with technical help from UlffiSOO and financial help from UNICEF and the United Nations Development Programme -» three specific objectives were established s a general reform of the content and methods of primary education, in-service training for primary-school teachers and the basic training of a new type of teacher, one who would prepare both

children and adults for a better integration into the social and economic life of their village and their country, /

i/, Scole Normale d1Instituteyrs a Vocation Rurale (Rurally Oriented Primary Teacher-Training Institute),

M7O-2766

Page 2

/

Insofar as the reform of sHrtictuite,; content and methods is concerned, the guiding principle victs Ho provide an eduoaiion. with a truly rural ;

orientation. While the reform avoids the temptation to establish short-cut solutions - a primary'schooling essentially different from that provided in heavily-populated areas, or geared specifically to agricultural pursuits -

it does not hesitate to abandon the encyclopedic tradition (instruction

"based entirely upon texts and rote learning) in favour of methods conducive

to the development of initiative, judgement, the ability to undertake actions

■based upon observation and refle-ctiorrj~ih- shorty conducive to the "self-help"

mentality. Furthermore, the study of fundamental means of expression

(French, basic set mathematics and drawing) will be rooted in the local

milieu : in order to eventually improve his living conditions, the child

must first understand his immediate cultural, physical,, economic and social

environment. . ;

Teachers will also have^to be supplied with new teaching materials

adapted to their own capacities and to the needs of their pupils. For this, official instructions are much less important than are the basic tools required if the new educational objectives are,to be translated into daily classroom practice. The ENIE has, for that very reason, already produced - at the first-grade level - textbooks, cuurse outlines and lesson pl-vT.s, ^nd ~ Viier individual and group teaching aids. The experimental use of this material will also lead to a better, definition of the methods and the

timing involved in teaching the new curricula and to a thorough testing of the

overall reform prior to its widespread application-, Printed lesson plans

(those for reading, writing and mathematics are already in use) give the teacher precise instructions for each lesson and are so designed as to compel

him constantly to bear in mind the relationship between the objectives set

forth and the means used to reach them. Lesson plans thus serve not only as a tool for teaching but as a means for training teachers themselves.

Eventually, they would be less rigidly applied and would make room for

individual initiative and creativity.

In-servi6e training is imperative not only for teachers (many of whom are currently under-qualified) but for supervisors and other administrative

personnel who will be the instrumentalities for the nascent reform.

In-service training has three aspects i cultural promotion, training in the new curricula and methods, and the fustering of community development aptitudes

and "know-how". A preparatory period (1968-70) will "be devoted to the

provision of necessary buildings and equipment, the training of a permanent staff and the perfection of the curricula and methods to be used for

in-service training. Simultaneously, a vast information campaign will be launched in order to explain - to educational administrators, teachers

and the general public as well - what is meant by "rurally-oriented" primary

education. From 1970 "to 1978, each school district will be involved in the implementation of the programme (through 3-9 week courses), and four

regional in-service training centres will enrol 280 teachers quarterly while a pool of assistant instructors will replace them in their classrooms.,

Finally, with a view to producing "a new type of teacher", the ENIR en- xols 70 secondary school graduates per year - including some 15 young

women - for a three-year period of training. The ENIR curriculum is still experimental because the content of primary education is itself

undergoing reform. The candidate-teachers receive training in the techniques required Cot community development and also, training in the adaptations and adjustments necessary for rural teaching. About half of their schedule is

thus devoted to practical exercises, with classroom lessons as a supplement.

What makes this pilot project original is, in fact, this studied intermingling of the several roles envisaged for the new kind of rural education and the delicate co-ordination required for the phasing of its implementation throughout the country. Authorities nevertheless believe that the main difficulties to be overcome will be of a psychological nature*

"if the goal of providing a specifically rural kind of education is to be achieved, the first step must be to effect a veritable conversion in the minds of all those concerned - not only the pupils, but also the teachers themselves11

Reproduced from "Prospects in Education, UNESCO, Paris, Quarterly Bulletin,

No»l, 1969, PP. 63-65.