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TN AMF-WB Regional Affordable Housing Project Document
TN AMF-WB Regional Affordable Housing Project Document
TN AMF-WB Regional Affordable Housing Project Document
I. STRATEGIC CONTEXT.............................................................................................................6
A..........................................................................................................Regional and sector context
......................................................................................................................................................6
B...........................................................................................................Specific sector background
......................................................................................................................................................7
C..................................................................................Alignment with Transition Fund objectives
......................................................................................................................................................8
II. PROJECT DESCRIPTION.........................................................................................................11
A..........................................................................................................................Project Objective
....................................................................................................................................................11
B......................................................................................................................Project Components
....................................................................................................................................................12
C............................................................................................Key Indicators Linked to Objectives
....................................................................................................................................................15
III. IMPLEMENTATION.................................................................................................................16
A............................................................................................................Partnership Arrangements
....................................................................................................................................................16
B...........................................................................Institutional and Implementation Arrangements
....................................................................................................................................................17
C......................................................................................................Project Budget and Financials
....................................................................................................................................................18
D.............................................................................................Results Framework and Monitoring
....................................................................................................................................................20
ANNEX 1 – DETAILED COUNTRY ACTIVITIES..................................................................................20
RegionalAffordable Housing Project
Proposal Summary
Proposal The proposal aims to support the Transition Fund objectives for the
Outline countries of Egypt, Jordan, Libya, Morocco and Tunisia in the field of
affordable housing and housing finance. With a booming population,
growing urbanization and calls for social reforms in the wake of the
Arab Spring, the region needs to provide enough affordable housing
options for its inhabitants. The project will provide technical assistance
to advance country-led policy and institutional reforms to support (i) a
scaling up in the supply of affordable housing,(ii) an expansion of
affordable housing finance;and (iii) knowledge building and sharing
across the region in the field of affordable housing. The program would
run over a fiveyear period and be implemented at a country level, with
some overarching regional initiatives.
Implementatio The Project will be run as an Arab Monetary Fund - World Bank
n managed and implemented Trust Fund. The WB team implementing the
Arrangements project will cut across sectors covering urban development (SDN) and
financial sector development (FPD). There will also be strong
collaboration with a number of counterparts aside from the national
governments of participating countries. In particular, the Wharton
School of the University of Pennsylvania will be a key partner in
implementing some of the Technical Assistance and capacity building
work.
Fit with The proposal delivers on the Transition Fund's objectives of(i) fostering
transition inclusive economic growth by promoting housing production and
Fund access to housing finance to underserved and young households; (ii) job
Objectives creationthrough the expansion of housing production which has a
proven record as a generator of employment and (iii)enhancing
economic governance and supporting sustainable growth through a
more efficient deployment of fiscal resources in support of growing a
sustainable market-based affordable housing system.
Timeframe The project is expected to run for a 5 year period, allowing sufficient
time to engage in significant change and to have meaningful impact.
This component would aim to share best practices and create some
regional dialogue across the program countries in relation to the above
stated regional themes- mainly through the delivery of regional training
programs, workshops and seminars. In particular, an annual housing
finance training program will be developed and anchoredinthe region in
partnership with the Wharton School of the University of Pennsylvania.
The program will be embedded within a MENA-based academic
institution and will provide executive intensive education in policy
innovations and institutional, financial and managerial aspects of
affordable housing finance, with a MENA focus. It is intended to
become a permanent fixture and self-sustaining program, after initial
technical and financial support is provided during the start-up and
establishment period. This course will be complemented by local
workshops, regional conferences, and creation of an e-platform for
knowledge consolidation and exchange. Translation into local
languages will also be an important aspect that will enable outreach and
engagement by stakeholders. This component will be launched early in
the program to assist with the identification and assessment of existing
initiatives in the region.
Regional Themes: (i) Regional workshops and knowledge sharing.
I. STRATEGIC CONTEXT
Tunisia
20%
Kuwait
18%
16% UAE
14%
12%
Lebanon
10% Jordan
8%
Bahrain
Saudi Arabia
6%
Oman
Algeria
Iran
4%
W BG
Egypt
2%
0%
Source: World Bank mortgage database collated from Central Banks and other national sources.
11. The availability of suitable housing finance for low and middle income groups is an
important driver of affordability and a condition for transforming the population's housing needs
into effective demand.Specifically, the region lacks appropriate financial products for lower income
groups – such as housing microfinance, and appropriate mortgages for new housing, as well as upgrading
to bring substandard housing up to par and improve living conditions. The availability oflong-term housing
financemakes housing more affordable by spreading large investment costs overtime, and limits exposure
to volatile payments by the use of fixed interest rates. Without such a system lending remains short term
and translates into prohibitive terms for lower and middle income groups.
14. The project is also in line with the Transition Fund objective of supporting job creation.
Activities supported by the project are expected to promote more efficient use of government resources
and better leverage of private sector capital which will translate into more housing investments. Increased
investment in housinginduces the creation of jobs in housing construction and related sectors through
horizontal and vertical supply chains in the economy. The arguments around the job multiplier effect from
housing construction have been well made. Temporary and permanent employmentis created at a scale of
approximated 3 jobs per home built, this includes jobs in upstream areas such as raw material production,
cement production, timber and aggregates. In addition, there are also impacts on local economies where
the construction jobs are created, and in the service industries linked to housing, such a mortgage lending,
real estate agents and retailers of furniture and appliances.
15. The project will also contribute to the Transition Fund objective of enhancing economic
governance and supporting sustainable growth. The project will support the reform of public service
delivery in a social sector such as housing by promoting the efficiency and targeting of government
implemented housing subsidy and guarantee mechanisms and ensuring a more efficient use of government
funds to combine with private sector investment and free up fiscal resources. The project will also
contribute to the promotion of a sound housing finance system by the development of long term liquidity
and fixed-rate funding for housing finance and improving prudential norms for managing mortgage credit
risk and asset and liability mismatches within the banking sector. This ensures that the financing of the
households that are currently underserved does not follow a sub-prime lending pattern .
F. Project Components
25. The proposal focuses on five priority Transition Fund countries: Egypt, Jordan, Libya, Morocco
and Tunisia. The project will seek engagement with both the private and public sectors. It will work at a
policy level to help foster the right environment for a project while also working with the private sector
towards creating very tangible and concrete results through the delivery of housing and housing finance.
The project will be structured around three main components:
Component 1: Scaling up the Supply of Affordable Housing
26. This component would support advisory services to governments for removal of supply side
barriers to affordable housing. Key challenges and constraints faced by selected countries in the provision
of affordable housing will be investigated under a comprehensive diagnostic framework, which brings
together various inter-related influential factors, including policy, institutions, legal and regulatory setting,
urban planning, infrastructure, land supply, subsidies and construction industry, etc. Also under the
framework, current government policies will be assessed and benchmarked against international best
practices, based on which policy recommendations will be provided. Specific activities may include:
Housing demand analyses.Carrying out housing demand analyses by building income
distributions databases and disaggregating demand by price segments, geographical areas,
etc.Meanwhile, since World experience suggests that home ownership is not a good or feasible
solution for all, particularly for the poorest, these analyses would also look at the potential of
rental solutions for lower income households where appropriate as an alternative to home
ownership as well as constraints that depress the demand for rental housing
Improvement of land management and urban planning practices. Targeted policy measures
may address improving the efficiency of land markets through reform of land tenure regulations,
registration, subdivision and transaction procedures. Introduction of value capture mechanisms for
government investments and improving the setting for private sector participation in land and
housing development will be a way to establish sustainable strategies to increase supply of
serviced urban land for affordable housing.
Strengthening coordination and integration of urban planning andhousing institutions. This
sub-component will work to facilitate better coordination amongst public institutions that play a
role in the housing supply chain. Coordination of land supply, planning infrastructure and housing
provision is a key measure to support the building of cities that are efficient and sustainable. Issues
that will be taken into account include: avoidance of systematically building social housing on the
cheapest land and far way from locations of employment opportunities ; promotion of social mix
in the newly produced neighbourhoods; equipping these neighbourhoods with socio-economic
facilities and to attract businesses; and to provide the residents with satisfying public
transportation, etc.
PPPs for affordable housing delivery. Technical assistance to select governments will be
provided to initiate or improve PPP frameworks for affordable housing delivery. Housing supply
value chains – which start with land acquisition, zoning, infrastructure, site layout, housing design,
construction, and end with the long-term off take financing for households to pay the sales price –
are hard to connect, take time to build, and require a specialized strategy to engage the private
sector via PPPs. This sub-component may include development of simple model procurement
documents, such as bid documents, contract forms, and simple standard “energy efficient” and
environmentally sustainable designs, which could be directly put to use.
Support to developers. These programs will aim to increase developer capacity and knowledge
that they can deliver high quality products that appeal to home buyers at lower costs. Low-cost
home design, new building technologies and energy efficiency will contribute to these solutions.
The sub-component would also work on developer finance issues and the efficiency and
effectiveness of government incentives, for both built-to sell and rental tenure models,to address
affordability on the supply side, and balance the contribution and risks taken on by the state and
private partner.
Support to owner-driven construction. This component would cover twomain areas: (i)
developing customized housing loans– in terms of amounts, maturity, security,etc. to self-
construction and consideration of other financing mechanisms, for example, community financing
(where soft loans are provided to enable communities to purchase land that they occupy or new
land and to construct and facilitate home improvement); (ii) ensuring minimum quality standards –
including access to infrastructure, in particular through enhancing the capacity of local builders
and artisans and proposing and testing business models (e.g. partnerships with lenders,
certification of builders, borrowers’ training and protection).
Upgrading policies to regularize informal settlements and rehabilitate old quarters.
Technical assistance will be provided to selected governments to create the necessary incentives to
integrate the informal into the formal market and regularize this dynamic sector to formally
contribute to housing deliver. Approaches in this aspect of the program will be determined by the
local legal, economic and social characteristics that explicitly keep squatter and informal
communities out of the formal sector. Policy measures to improve tenure security, housing quality
and access to basic services are usually adopted but they prove to be more effective in the long
term. Rapid growth of the informal sector requires more practical planning, which could
copeinstantly with issues caused the large inflow of population into cites every day. Technical
assistance will be provided to find suitable policy tools in this respect, such aslaying out the street
grids and street rights of way, keeping people out of the hazardous slopes and flood plains, and
making sure some public green space is set aside. Solutions may also include the regularization
and rehabilitation of dilapidated housing in historic urban centers, where mechanisms for
sustainable maintenance and home upgrading are required to regenerate these areas, and promote
their potential for tourism and local economic development.
H. Partnership Arrangements
33. The Project is being prepared and will be implemented jointly by the World Bank and Arab
Monetary Fund. The World Bank (WB) and Arab Monetary Fund (AMF) intend to scale-up technical
assistance and capacity building activities in support of housing and housing finance already initiated
through Arab Housing Finance Initiative (AHFI)1through this proposed joint project. The Arab Housing
Finance Initiative Secretariat (“AHFI Secretariat”), which was established within the AMF, will coordinate
1
On April 2012, the AMF and the World Bank signed an MOU for the Arab Housing Finance Initiative (AHFI)
to expand cooperation between the two organizations in the sphere of housing finance. AHFI was established as
a central source of knowledge and best practice on housing finance for the Arab World, as well as for
dissemination of such knowledge and practices, in part by way of provision of housing finance technical
assistance in the region. The first joint World Bank and Arab Monetary Fund undertaking under the AHFI took
place in Jordan at the end of 2012 with a technical assistance mission for the Central Bank of Jordan to undertake
a strategic assessment of the Jordan Mortgage Refinance Company (JMRC).
work between the WB and the AMF under this project and offer a platform of public and private
stakeholder participation and dissemination of best practices. This cooperation builds on the success and
experience of other cooperation projects between the WB and AMF such as the Arab Payment Settlement
Initiative (API) and Arab Credit Reporting Initiative (ACRI).
34. The project will be implemented in partnership with the MENA Urban team. The group
provides advisory services formulationof housing and urban policies and operationalapproaches to urban
development, institutionalstrengthening of urban and land planning capability. Over the years, the urban
strategy has gradually moved towards interventions to extend accessof underserved groups through (a)
improving the design of subsidies and using public finance to leverage greater private sector involvement
in affordable housing; (b) promoting the development and improvement of the basic infrastructure that
supports housing; and (c) supporting the policy and institutional framework for housing production,
including land titling and urban planning. The group also has rich experience in urban upgrading and
regularization of informal settlements.
35. The project will be implemented in coordination and collaboration with IFC’s housing
finance advisory services and housing investment groups. IFC’s housing finance advisory services
promotes lending standards geared to sound and best international practices through its tools and capacity
building expertise. IFC has developed and implemented the Global Mortgage Toolkit and the Housing
Microfinance Mortgage Toolkit to help lenders hone current operations or establish new operations in
housing finance. IFC’s Financial Markets group provides debt and equity to banks, microfinance
institutions, specialized mortgage companies and liquidity facilities including the Egyptian Mortgage
Refinance Company (EMRC). IFC is also currently looking at investments in greenfield Islamic housing
finance companies in Morocco, Tunisia and Egypt. IFC’s Manufacturing, Agriculture and Services (MAS)
investment team is responsible for investments in affordable housing developers. In recent years IFC have
developed an initiative for a 1,260 unit affordable green housing project in Upper Egypt, which is now in
the project development stage.
36. The project will partner with the International Housing Finance Program of the Zell/Lurie
Real Estate Centre of the Wharton School for the delivery of the annual regional Housing Finance
Executive training program. The Zell/Lurie Real Estate Centre of the Wharton School is the world’s
leading international educational institution in providing high level training to policy makers on housing
and housing finance issues. The Program was established in 1985 to foster excellence in housing policy
and housing finance education, research, and technical advisory services, with a specific focus on
developing and emerging market economies. The WB together with the Wharton School will build on the
successes and experience in holding numerous training courses and knowledge events including a now
firmly established African Housing Finance course hosted by the University of Cape Town, and a highly
successful course held in Uzbekistan for the Central Asian region. The course helps support ongoing work
in a number of client countries looking to implement policy reform and expand housing finance markets
further down-market.
37. The project will be implemented in coordination with complementary donor projects to take
advantage of synergies between different donor-funded activities. During project preparation for a
target country, the team undertakes consultations with donors active in the housing and housing finance
sector in the target countries to coordinate efforts and better identify the Project's value-add. Opportunities
to leverage results between this project and other initiatives will be sought. Possible partners may
includeAFD, AfDB, Islamic Development Bank, USAID, DFID, EBRD and GIZ, as well as the World
Bank Institute that has been active in South-to-South knowledge exchange. For example, in Egypt, the
Development Partners Group, which is a thematic group on Urban Development (DPG-UD) has been
working to coordinate, harmonize and integrate all urban development projects and initiatives supported by
donor organizations. Similar groups working on housing finance and affordable housing initiatives can
also be formed within the target countries. Where the Bank lacks expertise, it will recruit consultants or
form new partnerships to address these gaps and ensure strong implementation.
This project budget is the total amount requested for the initial target countries, Morocco and Tunisia.
Component 3: Regional
knowledge building and sharing. $400,000 $400,000
21
1.
Inadequate capacity of some implementing Substantial This risk is mitigated by the assurances / endorsement which will
entities and the bureaucratic hurdles especially in countries be obtained from country counterparts that they are committed to
where there are fluid environments and continuous changes implementation of project deliverables. The Project will also work
in government officials may affect the speed and quality of on providing capacity to the implementing entities, and develop a
implementation of activities under the trust fund. clear institutional framework for execution.
Shortage and inexperience of internal staff resources or poor Low The team will leverage internal resources within the World Bank’s
performance of external consultants engaged by the team Urban Team, World Bank’s Global Capital Market Practice –
could result low quality work. This might result in Housing finance Group- and AMF Financial Markets Division.
reputational risk for the World bank and AMF. The procurement of external parties would be carried out through
an open competitive process to attract the best available resources,
which would then be closely monitored by the World Bank and
AMF team to ensure high quality deliverables.
There is risk that counterpart public and private institutions Moderate The project will provide hands-on advisory services to clients by
may not have the capacity to absorb technical assistance. providing resident advisors, training programs, capacity building
programs, toolkits, and other tools.
Some of sectoral constraints will not be addressed by the Substantial The five focus Governments have demonstrated their commitment
trust funded activities such as macroeconomic and regulating to macroeconomic stability, as well as, governance and
policy uncertainties, access to land, and corruption. transparency reforms. Authorities are expected to mitigate these
risks with further reforms.
The need for coordination between World Bank and AMF Low The World Bank and AMF plan to maintain strong working
can affect speed of delivery of technical assistance. relationship on the ground level through using joint WB-AMF
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