■i
UNITED NATIONS
ECONOMIC and SOCIAL COUNCIL
Distr.
LIMITED
e/cn. h/hou/85
25 January 1971 Original : ENGLISH
tlUII iu mn1U in MN 111 m m. uh n md in in minim
ECONOMIC COMMISSION FOR AFRICA
West African Su'o-regional Meeting on Specific Aspects of Housing Finance
ESTABLISHMENT AND DEVELOPMENT OF HOUSING BANKS AND THEIR ROLE IN AFRICAN COUNTRIES
e/cw.14/HOU/85
ESTABLISHMENT AND DEVELOPMENT OF HOUSING BANKS AND THEIR ROLE IN AFRICAN COUNTRIES
TABLE OF CONTENTS
Paragraph:
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
Commercial Banks 14
Social Security Schemes 21
Insurance Companies 25
Post Office Savings Banks 44
Establishment and functions of a National Housing
Credit Institution 46-56
Annex I Guarantee (House Purchase) Act Law No. 27 of 1967 in Kenya
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ESTABLISHMENT AND DEVELOPMENT OF HOUSING BANKS AND THEIR ROLE IN AFRICAN 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 UK 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 or Housing and 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, most likely, seed .capital loans on
reasonable" terms, "and' the1 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
institutions. ' ;■.■.■•■■;. ^ ■ ^
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,*6f'course, be applicable in all African countries, but there' are a number of'countries in which' this proposal for'a national institution-'could now be considered and acted upon. Based on the-'following discussions, 'governments of member States on advice given to them by delegates to this 3ub—regional Meeting may wish to review the whole field and sources of housing credit and decide whether conditions in
their own countries are. n.ow. 3uch .'.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 the mobiliza tion of long-term capital for housing, and have been recommended by the
A-dvisory Groups of Experts brought together by UN Headquarters during 1968
and 1969- The following assumptions have been used:!/
\J Economic and Financial Implications of Housing Finance Institutions in
Developing Countries, ditto - unpublished.
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(a) While there is an acute general shortage of capital for most
investment purposes, 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 I. - these requirements are increasing as urbanization continues
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. individuals.
(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 capital, not
rtecessarily external, and managerial experience is required to '_" initiate and sustain new houwing credit institutions. We can
discuss later in this paper the position in regard to the levels of deposits and savings held in Commercial Bank3 in African countries.
Present position on housing credit institutions in Africa
5- Table 1 below gives details of the organizations known to the secre tariat as already carrying out housing credit operations in Africa and shows the terms on which business is conducted:- ; ■ ■ ■ ■■
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Table 1 Details of terms for house mortgage loans
1/
Rate of Interest per annum
Country.- ;: Organization -Period--of- repay ment of:loans ■ Botswana
Central African Republic Ethiopia
Ghana
Kenya
Liberia
Madagascar
Commercial Banks Not known, but pro bably not in ex cess of 5 years
National Development
Bank *
Mortgage Company of Ethiopia
Imperial Savings and Home Ownership Public Association
First Ghana Building Society
Housing Finance Company Kenya Ltd.
East African Building
Society (Housing Bank, suggested)
5-10 years
5 years
16 years
5 to 15 years
15 to 25 years
5 to 15 years
Commercial Banks
(Housing Bank proposed) 1 to 5 years
A Social Welfare Body not named
Madagascar National Bank
Madagascar National- Bank
Up to 20 years
10 ye ar s
5= years
Not known, but probably those prevailing in the Republic of South Africa
&g—10 per cent 8-10 per cent
&§■ per cent plua
1 per cent addi tional on appro val of loan
Up to 7 P®r cent'
9 per cent
8g- per cent
9-10 per cent
9-10 per cent discounted ini tially
3 per cent
5-7 cent
'8' per cent (50
per cent loans for sums in excess of 2-5 million
Madagascar francs) 1/ Source: country monographs and secretariat,
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Table"1 Cont'd.
Country , Organization Period of repay
ment of loans Rate of Interest
per annum
Malawi
Mauritius
Morocco
Nigeria
Sierra Leone
Somalia
Sudan
New Building Society not stated
Commonwealth Develop ment Corporation
Government
Local Money Market Caisse Immobiliere et H*>teliere
Western State Housing
Corporation
Nigeria Building Society, Lagos Not known but proba bly from Commerical Banks as Botswana Credito Somale (Govern ment Commercial Bank) Sudan Estates Bank
Up to 20 years
15 year3
15 years
10-15 years
Up to 20 years
5 to 25 years
18 years
years
not stated
7-5" per cent- Free hold
&i per cent Lease
hold
Approx. 8-J per
cent
4 per cent (on low-cost housing) 4—8J per cent on
ordinary loans
li
cent 8-3- per cent5 per cent
3 per cent for low—income groups loan up to £3-2000 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
£S-25,000
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Table 1 Cont'd.
Country Organization . Period of.repay
ment- 'of1- loans Rate of Interest
per annum
Swaziland Swaziland Credit and
"_-■: "Sayings Bank ■ ■' Swaziland Building Society
Tanzania Housing Finance Company '*' '■ of Tanz'ania Ltd.
U«A.r;.. Not named
Uganda •■ ■ ■ ■ Housing Finance
Company of Uganda Ltd.
Zambia First Permanent (1962) Building Society, Lusaka'
Up to 15 years
Up to 15 years
15 tfl 25 years
Up to 15. years
.1.5 to 25 years
Not" stated
6^5- per cent
9 per cent
&§ per cent
5-*6. per cent
8£ per cent
Not stated
6. ., The interest rates shown in the above table are of a very 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 Africau 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 the housing shortage generally, they have' decided that house-mortgage;loans.should be available on the best terms to•
■borrowers. It might show;also that these operations have been taken out of
.the .general field of competition in attracting..capital to .housing. " ■7; ** Wil1 be noted als0 that a Housing Bank has been proposed in the case
uf Liberia and some progress.has been made towards"a Unitad Nations Speical Fund Project in Liberia for.this purpose. In the case of Kenya, a House
Mortgage Bank has been suggested in reports submitted to ^he Government on the grounds that conditions warrant this step .to be taken.8 There are. three financial methods by .which a mortga.se loan can be repaid
;rV+Perl°a °f ^earS at-a-Siven 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 msthods are: . ■
(a) The instalment system? •
(b) The annuity dr flat rate system; " : (c) The endowment system.
When the instalment system is used, the borrower will pay a fixed amount
trom the principal sum each month in addition to the interest due. Themonthly principal instalment is known by dividing-the,amount of the mortgage
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loan by the number of months in the repayment term. The total monthly repay ments (principal plus interest) will decrease, progressively, during the., life of the loani" The annuity or flat rate system deals with fixed equal, repay ments which include both principal and interest. Tables prepared by actuary ies are used to calculate the amount required.to repay the mortgage loan
over the agreed period together with interest at the. agreed rate charged oh . monthly, quarterly, half yearly or annual rest3. Under this system the
monthly repayment remains the same throughout the life .of the loan; 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 is -that which combines work of the lending 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 loan, looking to the proceeds of the policy for repayment o£ the principal sum, 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 in African countries is towards the annuity or flat rate system mainly because this system has been introduced from developed oountries, it would appear that the instalment system is of most advantage, to'"the borrower simily 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 argu ment put; forward for the adoption of the annuity or flat rate system is that it eases the burden of the lending institution but this is not a valid argu
ment 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-mateing provision for his dependents in event of his untimely
death. ...
1.1. Apart from the aspect of personal insurance as shown in the endowment system* there are some African countries which could now take up the larger question of insurance of mortgages by a Central Body. Such a scheme would
entail a fractional addition to the rate of interest charged on mortgage loans and this fraction in cash would be made available to the Central Body under taking mortgage insurance, so' that this body could over a period of time build up a. substantial fund to use in those 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 deal
ing with these functions.
Sources to increase inflow of capital to housing
12. Depending on the conditions of individual countries there are several sources of capital for housing some of which remain untapped. Here, reference may be made to the document put before this Meeting entitled "Review of ,
Sources and Methods of Financing for Housing and Urban Development in Africa-1-/
and in particular to page 10 et seq where comments have been made on the eight groups concerned.
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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 document, let us taice 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. . ■ -■ "-
. _._. , ■ ,. Commercial Banks are concerned the following banking statistics
in Table 2 below are relevant: ■ ' •
Table 2 Selected liabilities: deposits and-savings with Ecommericaj Banks (in thousands except Francophone)^/ '
Demand . Time . ■■ ■
Country ■ deposits deposits Date
Dahomey . CFA.4...08-hJ31ions CFA. 0. 34 billions
.167,937-/
Savings
Ghana Ivory
CFA. 37.48 bill'ions Mauritania CFA.2,786
: millions
Niger Rep. CFA.3,304 millions Nigeria N£.107,644
Senegal
Sierra Leone
Togo
Upper Volta
CFA.14-82
billions
SL£.12,260
CFA.6,128 millions CFA.3,08
billions
35,224 CFA.26.29
billions
CFA.609 millions
.CFA.715 millions
CFA.2.18 billions
72,457
N£,79,343
3L.£.15,305-/
CFA.2,045 millions CFA.0.16
billions
. ' May 1970 April 1970 April 1970
April 1970
May 1970
May 1970-
'May .1970 '.
April 1970
April 1970
April 1970
1/ Source: International Financial-Statistics, IMF. August 1970
Monthly Issues of Standard Bank"Review, London 1970^ ^T^TJ^3 ■"?.'Sfti!i??ayc: reported in one figure. ' . ■■
US$1 1 Nigerian £ «= 2.89 US3
1 Leone = 1.^0 US3J
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15- Here, concerning the overall question of inflow of capital to housing, the role of Commerical 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 rest- ■
riated 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 terras considered suitable 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 dictum .of borrowing short-term and lending short-term is still being persued although depositors and savers are increas ing 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'public subscription, whereby
commercial -banks might be pursuaded to invest. The term for maturity mightbe staggered so as to allow of the first bond reaching maturity in five years,
and the second one in fifteen years which is a mean period for using this money in the way suggested. We consider the utilization of these depositsand savings in housing, apart from other investment opportunity, as important.
18. In putting forward these banking statistics in this way it is of course
not known how widely spread amongst the public these moneys are. In some countries the bulk of the moneys may be owned by comparatively few persons.
In addition, it is not icnown how much of these moneys is committed to
accommodate other transactions «ven 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.
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20. We 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 which should be governed by local
conditions. " .
21. The second untapped source of funds for housing concerns Social Security Schemes, whether these be on a voluntary or compulsory payment basis, and
vhether they be governed by legislation.' Statistics are not presently avail able 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 ofr
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. ■
22. The management of these funds is of course an important matter which cannot be divorced into an independent function since the Ministries of Finance in different countries usually have these funds in the portfolio of the Ministers. Experience tends to show that there is perhaps a too olose view taken concerning the- investment of the.proceeds of the funds even allow ing for priorities of development. It is suggested that this aspect could "be discussed more widely in government circles.
23. The size and rate at which a fund of this type can grow is depicted by
National Security Fund irt1 Kenya which was established under Chapter 25& of
the Laws of Kenya as a compulsory social security scheme 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 >e 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 equally serious consideration, particularly where investment income from life insurance premiums is concerned. 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-term nature. Preferably in those investment opportunities which have protection under Trust laws.
26. Here again, we can take'a look at certain conditions revealed in
insurance statistics in some countries-^it wilj. be seen that the coverage
concerning insurance activities, particularly life insurance, is not good in the West African countrios. Therefore, participants to the meeting should make a point of reviewing this matter in their own countries before travell
ing to the meeting.
1/ Secretariat Source.
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27. In Ghana the results of the 1967 financial- year (the last year for which figures are available) show that in the insurance market there were ten non-domestic companies and one domestic company. The activities of the
+ tV TTe by faP thG m°3t BiSnifioant» a3 it employed 60 per cent of the
staff of all eleven companies combined. Furthermore, the total number of
authorized insurance agents was 331.
28. The Insurance Act, 1965 (Act 288) prohibited non-domestic insurers from
insuring Ghanaian lives. This measure was amended by N.L.C. Decree No. 181
which allowed all domestic and non-domestic insurers to participate in this field. Furthermore, under Legislative Instrument No. 558 of the same year, the minimum paid-up capital required for companies issuing life insurance was reduced. This measure no doubt encouraged indigenous entrepreneurs to enter, this field of business in order to generate more the spirit of savings
and to increase insurance fund investment in the country.29. Life assurance'occupies an important place in insurance activities as a whole. At the beginning of 1967, the number of life assurance policies was 12,411, for a total value of Nj*i8.7 million. During the year, insuran.se
companies issued 2,739 policies worth"N^.5 million. At the end of the year,the number of policies and the total of assured amounts, excluding expired and cancelled policies, were 12,564 and N021.3 million respectively.
Wi -7 Gr??S revenue from life assurance premiums had increased in 1967 from N01.7 million in December 1966 to Nj*2 million in Deoamber 1967, while claims
incurred decreased by 8 per cent from N^5O9,OO7 to N^468,972..
31. Funds of life assurance companies increased from NCf3.11 million at the beginning of 1967, to Nj*4.4 million at the close of 1967, an increase of 41
per cent. On the other hand, funds of companies dealing in all otherbranches of insurance decreased by 5 per cent from N03.85 million to N2f3.66 million. The total accumulated funds of all companies at the end of 1967
were NJZ8.1 million. •■ ■ '
32. In accordance with the provisions of Insurance Regulations, 1966
(L.I.497), all registered insurers are required to deposit in trust with the
Bank of Ghana, Ghana Government Securities, with a minimum value of Nj^1009000m the case of a domestic insurer or, N^200,000 for a non-domestic. For thia
reason, there were, as of 31 December 1967, N0'1 ,520,000 in Treasury Bills andLoans. . ■
33. During 1967, a Legislative Instrument (L.I.555) was enacted to amend
previous provisions relating to the investment cf insurance company funds-
Under the new provisions, half of companies' funds must be invested in Ghana government Securities and the- remainder in securities approved by the
Commissioner. The investments made in 1967 were as follows:
Government Securities .Treasury- Bills ( . . .
:Treasury Loans
Ghana Government Stocks.
Development Bonds
Other Securities
National Investment Bank: Shares M»r.tgages
Investment properties Policy Loans
Bank' . . . Miscellaneous
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Page 11
4,176,736 2,917,923 1,697,000 6,412
3^,000 3,927,078 140,742 24,679 1,975,854 129.781
8,798,071-
6,228,134
15,026,205
34. It should be noted that this total is greater than the total funds held by all companies at the end of 1967,- which suggests that the oempaniea
had called upon other resources. '
35* The ,t«tal of. .the accumulated funds held by-all companies at the eiid-.
of 1967).which had reached N^8.1 million, gives some idea of the role played
by insurance companies in the area of national savings, mobilization. .■ Com-- pared to the. total of. term and savings deposits with commerical banks over
the same period (N^78.1 million), it represents slightly more than TO per'
cent, whereas, in relation to the total of demand, fixed term and savings deposits, it represents only 4 per cent. . -. :
36. In Liberia there is no national insurance, company, but there are ■ agencies and branches of foreign companies.' • The major part of premium
monies is invested overseas.
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37* In Mauritania there is no national insurance company. Life insurance is written by one foreign company only and the work appears to be confined, to .the personnel of the raining companies (NIFERMA). Policies written in 1968
oovered 6.6 millions CFA but the reserves are practically non-existent because
of payments by the Company in 1965.
&• In Sierra Leone there is little information on the subject of insurance
companies and in particular life insurance companies. In 1969 there were 13 insurance companies operating and the majority were carrying out life,
insurance work. Two of _these companies were working exclusively in life business.
39- In 1967 the total premium monies of all the companies amounted to Leones 1.11 millions but it appeared that the investment made locally
amounted to Leones 195,000.
40. There is no legislation or regulations covering the utilization.of local resources mobilized by the activities of these companies, but it is under stood that some control measures are envisaged.
41. All the insurance companies operating in Sierra Leone are branches or agencies of foreign companies. Their role in the mobilization of savings and in the development of the companies appears negligible.
42. In Togo,life insurance which began to develop after independence doos not appear to have made great progress. Of six agencies of foreign companies operating in 1960, two only were in activity in 1969- Regulations control ling insurance activities were made in the middle of 1969, and these regula tions stipulated that activities should be closely connected with the
Togolese Development .Bank.
43- One important conclusion can be drawn from the..preceding paragraphs
regarding life insurance activities, this is that their activities constituted.
a good and efficient means of mobilizing local savings for investment" in housing on a long-term basi/% Inducing investment will fall into the func tions 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 the purview of this sub- regional meeting perhaps a recommendation could be made that activities.
should be carried out at the same time in the rural areas.
44. The operations of Post Office Savings Banks remain fairly stable. There is also a,-possibility in this field of inducing investment in housing where the level of savings 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.
45* All the details in the preceding pages lead to the main consideration, i.e. establishment and functions of a national housing credit institution.
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Establishment and functions of a National Housing Credit Institution
tf +^y deoi3io1? t0 establish a national housing credit institution in any
of the African countries c.an be seen as a logical step towards providing adequate arrangements for the future in the development of house mortgage
Z for providing housing credit facilities are in some countries adequate for ■, " t*eWfit of the People. Present arrangements and machinery
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 no 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
wi r3malT TS1 beS™f ™$ satisfactory arrangements of a^imple ype
staLrtoV T" ^'made- There is "° necessity in the preliminary '
h!!f \T I6 a I hSaVy organization «hich will spend more money on over
heads then it can. afford in relation to its actual operations.
II'thf?onalJe.niVt f a "a*iOnal housi"e credit institution would be to act as the focal point for the initial receipt, co-ordination and use of capital
ILL , 3\XT: m°rtgage °Perati°»s ^ a distribution of capital ?o dutv of fgie-ln "VtT, 6neaged ln m°rtgage WOA- « ™«ld also have the
duty of dealing on behalf of government with international institutions already engaged o.r which will become engaged in mortgage work! e.g. the
^Tl0PmSntBank -d th 1 It'f Housing ^
S'housinff^r'!1*/0^11 haVS ^ dUty °f enc°^aging investment of capital in housing from aU local sources including those shown in the preceding pages or this document. This duty however might not include coUoction of
^ITTs it'e^enfb"1 ™**\Ot the ^°<« ^rge becoL thi an b "
character! y SX1Stlng houslnS cred" institutions of a more local
49-
Further duties of a national housing credit institution would include
herT °rTife ^^ ^^T (lthh thi is alunct on
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these;activities*and facilities were extended to members of the public in the lower income groups and would be able to promote adequate development of
mortgage work: at costs which people could afford.
y
52. A national housing credit institution would assist in the formulation of public issues of development bond's from which housing could take a pro portionate share of the resulting investment through the bonds according to. the requirements of capital for housing based on the government's housing programme and indication of needs put forward by house mortgage institutions.
53. Where governments of member States have established or will wish to establish a system of guarantee such as that contained 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.54. Finally, insofar.as functions ar;e 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. Tnis 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 might be agreed for these purposes with particular emphasis on restructuring these rates for the benefit of the lower income
groups of the population. ' ,
55.' It is urged that the- meeting give serious consideration to the establish ment of national housing credit institutions in those countries where condi
tions are ripe 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.
5.6. 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 doubt wish to have advice .and assistance on a technical subject of this nature. For this purpose advice and assistance will be forth coming from the United Nations Economic Commission for Africa which will collaborate with United Nations Headquarters and th'e United Nations Develop ment Programme with a view to providing such advice and assistance not only for the preparatory work' but also in the actual establishment of the national institution and its running in the initial stages in conjunction with counter part personnel and facilities provided by the governments concerned.