Weak links in the DRC housing value chain
Low income people pay more for their housing and don’t have access to finance that could improve their quality of life. New research shows how a fractured value chain leads to higher prices and fewer options.
For most people in DRC, housing is a process
Philomene rents a small house in Mbanza Ngungu in the Democratic Republic of Congo.  She lives with her husband, 2 children and younger brother. She earns $570 per month as a doctor, which is significantly more than the minimum wage of $5 per day. Like most renters in DRC, Philomene dreams of owning her own home but even with her good salary and her husband’s income from his informal business, they will not be able to afford the $40,000 cost of the cheapest home built by a developer in the DRC. So, like 70% of their compatriots they are building their own. And for good reason; research shows that improved homes have important health benefits that save time off work and off school. Having purchased a piece of land outside of the town, they are slowly building their future home. It’s not easy though; having just poured the foundation they are already out of money and will have to save more before work can continue. Meanwhile, every month they pay their rent.
For people like Philomene, housing is a process that takes years to complete. Financing could speed up that process, but in DRC this is unattainable by all but the very top earners. A new study by ELAN RDC, a DFID funded market development program, shows why. Read the report here: Executive summary (English) or Full report (French).
Lack of finance for housing
The DRC is one of the most financially excluded countries in the world. Only 26% of the adult population have any type of financial account (including agent and mobile finance), and a mere 15% have an account with a financial institution. 15% have access to digital financial services. These are well below the sub-Saharan Africa average and 1/5 the access to finance that Kenyans enjoy.
Credit is similarly tight in DRC. Only 1/3 of the population has borrowed any money in the past year, mostly from family and friends. Of that, only a tiny percentage, 0.5%, is borrowed for housing. And rates for housing loans are high at 24%, although not nearly as high as the rates for microfinance loans which run 30-60% per year. That is the type of loan that would be available to Philomene should she decide to borrow to speed the construction of her new home.
Materials cost more for the poor
Building materials are the biggest part of construction budgets for low income households; labor is relatively cheap. Brick, cement and metal (for reinforcement and roofing) make up the bulk. Prices for these items are the highest in the region due to lack of local supply and high importation costs, combined with poor transportation networks and the high cost of petrol. The price of a sack of cement in DRC is more than double the average in Africa:
Price of a 50kg sack of cement, 2015
Also, materials cost more for the lowest income households since they buy in smaller quantities and often live off the main roads.
DRC is a huge country, the second largest in Africa. Roads in DRC are limited to a few major centers and are in poor condition. Combined with the high price of petrol, frequently blocked roads and informal tolls, the cost of transportation drives up the price of construction materials to triple prices paid near ports or borders
This holds true for nearly everything Philomene would need to buy to build her home because most construction materials are imported. Only 1/7 of DRC’s cement needs are met with local production. Likewise, iron and steel produced locally represent only 8% of the quantity imported, despite DRC exporting large quantities of ore.
Poor quality materials also add to building costs. For example, rather than transport prefabricated blocks from a factory, cement blocks are often made on-site without proper oversight of the mixture. Locally sourced sand saves money, but may contain impurities leading to decreased strength. More of these sub-standard blocks must be purchased to make up for the poor quality.
A way forward
There are ways to help Philomene and the millions like her achieve their dream of home ownership. Affordable housing developments would be ideal for a salaried worker, but these are decades in the making and are in extremely short supply in Africa. Rather, financing that helps speed up the process and better production of local materials could help.
Currently there are no dedicated funds for incremental housing lending in DRC. If Philomene had access to a $7500 loan at 24% interest for 5 years, she could complete her home to a level that would allow her to move in. Existing funds to promote financial inclusion, like the Microfinance Promotion Fund supported by the United Nations, World Bank, Germany, Sweden and many others, could develop a dedicated line to support housing lending at longer terms and more reasonable rates than are currently available. Technical assistance facilities like Financial Sector Deepening could help financial institutions ensure best practices are followed.
Addressing the high cost and low quality of materials requires information and innovation. Fluctuating prices make it difficult for self-builders to know when and where to buy materials at low cost. Local products are needed that are as good or better than the alternatives, and lower cost. Fortunately, examples of these types of solutions exist. Technology has helped many industries, especially agriculture, track market prices for the benefit of low-income farmers. Similarly, an app called iBuild has been developed that allows self-builders to use their phones to track prices of construction materials near them, find out where to get the best deals, find local masons, and even apply for financing. To address local production, Kwilu Briques uses local clay to make bricks and agricultural waste to fuel their kilns. Theirs is a high-tech operation but according to CEO Christophe Cote, they can also help local people make their own local bricks better, and at much lower cost.
Access to housing loans, market information and local materials would help Philomene’s family, and millions of Congolese like them, live healthier, more productive lives. To learn more, access the full report by the Affordable Housing Institute here.
 Philomene is a composite of one hundred people interviewed during a market study led by the author in DRC.
 République Démocratique du Congo : Analyse de la Chaîne de Valeur de la Construction de Logements, forthcoming.
 Global Findex 2017
 Investir dans l’Industrie en République Démocratique du Congo, Cahier Sectoriel, ANAPI, 2016