As cities expand and grow in number of residents, they often face numerous urban challenges which surface in tandem with steady demographic and economic growth.

Affordable housing, a key enabler of the sustainable development of cities and nations, is one of them.

One of the most important indicators for socio-economic development is the ability to maintain a home.

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While it may seem a standard objective for everyone to have a home, 40% of Cairo’s population do not have access to affordable housing, and 75% of urban areas across Egypt are unplanned, Informal Settlements Development Fund (ISDF) found.

How can the challenge of adequate housing be addressed nationwide, with an eye towards lower-income households?

One way to address this issue is by providing the more vulnerable communities and populations with the means for affordable housing, which empowers them as homeowners and allows them to retain and dedicate a greater share of earnings towards other necessities like food, healthcare, transportation, and education.

Inter-organizational collaboration targets the affordable housing crunch

Rapid urbanisation is giving rise to development challenges in the form of urban congestion, in turn increasing pressure on the affordability of basic amenities such as water and sanitation and creating a severe housing shortage in cities, which disproportionately impacts the low-cost segment.

Low-cost housing projects have been made less attractive for private realty investors and developers due to high land costs, project approval delays, increasing costs of raw materials, and low profit margins.

Fortunately, this challenge is getting confronted head-on through inter-organizational collaboration that includes the World Bank, the Central Bank of Egypt (CBE), and financial institutions like Mashreq.

In fact, increasing access to housing for low-income households is a key priority for the World Bank’s Country Partnership with Egypt. Among its objectives is a provision to remove barriers to women’s ownership and control of assets, further emphasising the intersectionality of affordable housing – it not only taps on economic empowerment but also financial inclusion and social imbalances.

This guidance stresses the importance of public-private partnerships to attract private rental landlords into the low-income housing sector.

As an example of the initiatives being carried out as part of multi-entity collaboration, in 2021 the CBE initiated a mortgage financing initiative which allocates E£ 100 billion for low- and middle-income citizens to purchase housing units, which the government has channelled into its Mortgage Financial Fund (MFF).

The initiative aims for inclusivity and brings under its umbrella the self-employed, citizens with special needs or disabilities, and pensioners younger than 75 at the time of financing.

Mortgage financing options are key to achieve affordable housing objectives

Mashreq has been working closely with the CBE to support affordable housing initiatives and collaborating with the Egyptian Social Housing Program and the MFF to provide citizens with a larger range of mortgage financing options.

Aligned with CBE objectives, the partnership, which previously provided mortgages only to citizens categorized as low-income, will now also extend its reach to the middle-income category following the World Bank recent announcement of USD 500 million in additional financing to support ongoing efforts to improve the affordability or formal housing for low-income households in Egypt.

This funding expansion will allow for the provision of housing finance to those with a monthly income of between EGP 4,500 and EGP 40,000 .

Mashreq’s expanded mortgage program will allow customers to benefit from financing up to a maximum unit value of EGP 2.5 million, with financing available for up to 80% of unit value for a maximum tenor of 25 years.

Never losing sight of the bigger picture, the main aim of this project is to bring housing supply and demand into equilibrium, thereby controlling and preventing the skyrocketing land price while increasing production volume.

The programme will also scale up the delivery of demand-side subsidies for affordable housing, increasing the number of beneficiaries by 31% and contributing to the government’s target of supporting more than one million homes for low-income households by 2024. A secondary impact of the program will be to encourage more private sector participation in housing construction.

It is crucial that financial institutions welcome all opportunities to participate in initiatives set out by central banks to facilitate financial inclusion and support developing countries in their affordable housing journey.

Banks can play a prominent role in the market to synergise efforts that broaden the housing umbrella for disadvantaged communities alongside the government and other international organisations.

Cross-sectoral collaboration alongside mortgage financing programs that zoom in on affordable housing challenges will continue to bring nations worldwide closer to its social and economic development goals, as well as facilitate the achievement of the United Nations’ Sustainable Development Goals.

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