Senegal: A different approach to housing

In a bid to address the housing shortfall in Senegal, particularly at the lower end of the spectrum, the government is turning to expanding incentives for private developers and improving access to land outside of Dakar. Efforts to shift the focus of urban density away from Dakar, along with a stronger and more attractive regulatory framework may help to alleviate some of the strains on the sector in the long term.

Senegal’s real estate market faces two concerns: housing prices in Dakar are escalating rapidly, while at the same time, the country also faces a shortage of social housing facilities as demand continues to grow, particularly in the Dakar region.

The capital covers only 0.3% of the national territory but accounts for 25% of the 12.5m population and is home to more than 80% of industrial and economic activity. The city is growing at a rate of 150,000 to 200,000 inhabitants per year, according to World Bank estimates, putting enormous pressure on social housing programmes. Rising prices, meanwhile, are attributed to limited space, growth of the middle class and an influx of salaried foreign residents, as well as insufficient regulation of market prices.

The shortage of social housing facilities is of particular significance to the state as national elections approach in 2012. Several programmes already in place are working to improve the situation, including the National Society for Moderate-Cost Housing (Société Nationale des Habitations à Loyer Modéré, SNHLM), established in 1987 to promote social housing projects, and associated initiatives such as “One Family, One Roof” and the Plan Jaxaay, established in 2005 to relocate flood victims.

However, the government recognises that progress has not been able to fully meet growing demand for affordable housing and in a new step, Néné Ly Soumaré, the housing director at the Ministry of Housing, Construction and Hydraulics, announced that the government would begin to make land available to public and private developers at no cost to encourage sector growth and reduce escalating housing costs. The announcement was made on the occasion of the 43rd annual meeting of the Housing Network of the French-Speaking World (Réseau Habitat et Francophonie) held in Libreville in May, which brought together developers and housing specialists to discuss how to meet social housing shortages. The government plans to continue existing incentives including tax exemptions for developers per unit constructed and the extension of credit to civil servants looking to purchase social housing units.

Furthermore, in June, the president of the BHS, Mamadou Bocar Sy, stated that the bank would advocate for and support the development of communities in the country’s interior to ease congestion in Dakar and provide additional housing opportunities. Sy told local media that there is little room for expansion in Dakar and called upon the government and its private sector partners to invest in infrastructure and real estate development in the interior. A lack of sufficient road infrastructure has been identified as one of the primary obstacles to economic decentralisation.

APIX’s general director, Aminata Niane, stated at a June press conference that auto route feasibility studies conducted by the Ministry of Finance and the Economy indicated that the Senegalese economy foregoes more than CFA120bn ($264.9m) per year due to insufficient road networks and to traffic congestion in and around Dakar.

As a result, projects like the Dakar-Diamniadio Toll Highway, jointly run by the Investment and Public Works Promotion Agency (Agence pour la Promotion des Investissements et des Grands Travaux, APIX) and French company Eiffage, are being prioritised in the hopes of encouraging a broader multiplier effect, significantly easing cross-country transportation and facilitating the development of regional municipalities.

Finally, in an effort to improve sector coordination, President Abdoulaye Wade called in a March ministerial meeting for the creation of a Commission for Social Housing. Citing insufficient progress by organisations such as SNHLM and associated initiatives, the new commission is intended to evaluate these organisations’ policies and activities. However, insufficient funding is a persistent problem for public sector firms, and private developers continue to be sought out to provide much-needed stimulus to the sector.

As Senegal’s housing challenges persist, operators are calling for new approaches. Economic decentralisation and infrastructure development are emerging as government and private sector priorities in the effort to improve the real estate market, but will require both improved regulation and increased funding to be successful.