Date of Submission to Coordination Unit:
November 6, 2013
A. GENERAL INFORMATION
1. Activity Name
MENA Regional Affordable Housing Project –Tunisia activities
2. Requestor Information
Name: noureddine Kaabi
Title: secretary of state
Organization and Address: Ministry of Development and International Cooperation, Place Pasteur, Tunis
Telephone: +216 71796213
Email: s_etat@mdci.gov.tn
3. Recipient Entity
Title: State Secretary, Charged with Housing, Ministry of
Public Works and Housing.
Name: Chahida Fraj Bouraoui
Organization and Address: Ministry of Public Works, Avenue Habib Chrita, Cité Jardins,1002 Tunis Belvédère
Telephone: +216 71801107
Email: secretairedetat@mehat.gov.tn
Name: Elyes Fakhfakh
Title: Minister of Finance
Organization and Address: Ministry of Finance
Telephone:
Email:
Name: ChedlyAyari
Title: Governor, Central Bank of Tunisia
Organization and Address: Central Bank of Tunisia
Telephone:
Email: gouverneur@bct.gov.tn
4. ISA SC Representative
Name: Mr. Junaid Kamal Ahmad
Title: Sector Director, MNSSD, World Bank
Organization and Address: The World Bank 1818 H Street, N.W. Washington, DC 20433 USA
Telephone: +1 202 458-8470
Email: jahmad@worldbank.org
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Name: Mr. Yisr Barnieh
Title: Financial Markets Division Chief, Arab Monetary
Fund
Organization and Address: Arab Monetary Fund, Corniche Street, P.O. Box 2818, Abu Dhabi, United Arab Emirates.
Telephone: + 971 50 581 1780
Email: financialmarkets@amfad.org.ae
5. Type of Execution (check the applicable box)
√
Type
Country-Execution
Joint Country/ISA-Execution
√
ISA-Execution for Country
Endorsements
Attach written endorsement
from designated ISA
Attach written endorsement
from designated ISA
Attach written endorsement
from designated ISA
Justification
(Provide justification for ISA-Execution)
Due to the regional dimension and approach of
this project, which includes Morocco in addition
to Tunisia, the need for an ISA to execute in
coordination with the national authorities is
essential. In addition, it is intended that the
project would ultimately expand to other
transition countries that opt to join the
initiative at subsequent funding rounds of the
Transition Fund. This would make the ISAexecution even more critical.
The executing ISAs will carry out procurement
and financial management on their respective
activities. They will also coordinate between the
targeted countries of the program. They will
leverage their capacity and experience in
delivering similar affordable housing sector
development and housing finance programs
around the world and specific knowledge and
involvement in the region. The ISAs will also
build on their joint existing Arab Housing
Finance Initiative partnership.
To ensure country ownership, the execution by
the two ISAs will be closely coordinated with the
country activities.
More background is provided below.
ISA-Execution for
Parliaments
Attach written endorsements
from designated Ministry and
ISA
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Overcoming the shortage of quality affordable housing is a challenge and priority across the Middle East/ North
Africa (MENA) region. With a booming population, growing urbanization and calls for social reforms in the wake
of the Arab Spring, countries in the region need to provide enough affordable housing options for their
inhabitants in order to respond to economic and social development objectives. The regional dimension and
shared issues related to the housing sector has prompted the World Bank and Arab Monetary Fund to initiate the
Regional MENA Affordable Housing Project, in which the two institutions intend to support the participating
countries aims in the field of affordable housing and housing finance, and further the Deauville Partnership
objectives for these transition countries, starting with Morocco and Tunisia, and eventually expanding the
program to other countries that opt to join the initiative.
In each of the participating countries, the project’s objective is to support the Government in designing reforms of
programs and policies to promote access to affordable housing for the low to middle income households. The
project will ultimately contribute to improving the living conditions of the populations through integrating
housing development with access to better social and economic prospects, and generating opportunities for
growth and employment in the context of post Arab Spring upheavals.
On the basis of the recommendations of country identification missions, and as confirmed with the two
participating governments, the proposed project (the proposal for MENA Transition Fund support) will provide
technical assistance to advance country-led policy and institutional reforms in three key areas, to support (i) a
scaling up in the production of affordable housing, (ii) an expansion of affordable housing finance and (iii)
knowledge sharing across the region in the field of affordable housing. The program will run over a three-year
period. The activities of the proposals would mainly encompass:
•
•
•
•
•
•
Diagnostic and feasibility studies
Impact evaluations and recalibration studies
Reform roadmaps
Institutional strengthening
Public and private sector training
Regional knowledge exchange activities.
The cooperation between the World Bank and Arab Monetary Fund in the context of the Regional MENA
Affordable Housing Project builds on an initial Memorandum of Understanding between the two institutions that
was signed in April 2012 that established the Arab Housing Finance Initiative (AHFI) – an effort 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. This
cooperation also builds on the success and experience of other cooperation projects between the WBG and AMF
such as the Arab Payment Settlement Initiative (API) and Arab Credit Reporting Initiative (ACRI). The Arab
Monetary Fund and the World Bank intend to scale-up technical assistance and capacity building activities in
support of housing finance already initiated through the Arab Housing Finance Initiative (AHFI).
The regional approach to the Project has been selected as it allows common themes in affordable housing to be
used to form a framework for engagement with each country. This methodological approach to shared country
issues, in addition to common trainings and the use of the same pool of experts enables synergies between
independent country activities, positive spillover effects, knowledge sharing and better regional integration. The
project does not aspire however to create regional standardization, but instead to work in close cooperation with
recipient countries in order to cater a specific mix of activities that will be driven by specific country needs and
priorities, and then to facilitate region-level exchange and capacity building.
Beyond the need for ISA execution in the context of a regional initiative, World Bank and Arab Monetary Fund
implementation of the proposed project is also sought on the following rationale: (i) the institutions’ ability to
provide an array of in-house and external global expertise in the urban, housing finance development area; (ii)
the institutions’ knowledge and unique expertise in delivering similar affordable housing sector development and
housing finance programs around the world and specific knowledge and involvement in the region; (iii) the World
3
Bank and Arab Monetary Fund are perceived as credible and honest brokers able to facilitate efforts by the public
and private sectors to mobilize resources and technical assistance needs for affordable housing; and (iv) the
institutions’ experience facilitating country-led reforms and policy initiatives.
6. Geographic Focus
Individual country (name of country): This request focuses on Tunisia.
Regional or multiple countries (list countries):
√
The Project has a regional scope and will initially include a request for Transition Fund support for activities
concerning Morocco and Tunisia, with the possibility to expand the recipient countries at a later date.
7. Amount Requested (USD)
Amount Requested for direct Project Activities:
(of which Amount Requested for direct ISA-Executed Project Activities):
WB as ISA
AMF as ISA
Amount Requested for ISA Indirect Costs: 1
Total Amount Requested:
USD 2,000,000
(USD 2,000,000)
(USD1,800,000)
(USD 200,000)
USD 110,460
USD 2,110,460
8. Expected Project Start, Closing and Final Disbursement Dates
The project is expected to run for a three-year period, allowing sufficient time to engage in significant change and to
have meaningful impact.
Start Date: 1 January 2014
Closing
31 January 2017
End Disbursement
30 July2017
Date:
Date:
9. Pillar(s) to which Activity Responds
Pillar
Primary
(One only)
Investing in Sustainable Growth.
This could include such topics as
innovation and technology policy,
enhancing the business environment
(including for small and medium-sized
enterprises as well as for local and foreign
investment
promotion), competition
policy, private sector development
strategies, access to finance, addressing
urban congestion and energy intensity.
Inclusive Development and Job
Creation. This could include support of
1
Secondary
Pillar
(All that apply)
Primary
(One only)
Secondary
(All that apply)
Enhancing Economic Governance.
√
This could include areas such as
transparency,
anti-corruption
and
accountability policies, asset recovery,
public
financial
management
and
oversight, public sector audit and
evaluation, integrity, procurement reform,
regulatory quality and administrative
simplification, investor and consumer
protection, access to economic data and
information,
management
of
environmental and social impacts,
capacity building for local government and
decentralization, support for the Open
Government Partnership, creation of new
and innovative government agencies
related to new transitional reforms,
reform of public service delivery in the
social and infrastructure sectors, and
sound banking systems.
Competitiveness and Integration.
This could include such topics as logistics,
ISA indirect costs are for grant preparation and administration.
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√
policies for integrating lagging regions,
skills and labor market policies, increasing
youth employability, enhancing female
labor force participation, integrating
people with disabilities, vocational
training, pension reform, improving job
conditions and regulations, financial
inclusion, promoting equitable fiscal
policies and social safety net reform.
√
behind-the-border
regulatory
convergence,
trade
strategy
and
negotiations, planning and facilitation of
cross-border
infrastructure,
and
promoting and facilitating infrastructure
projects, particularly in the areas of urban
infrastructure, transport, trade facilitation
and private sector development.
√
B. STRATEGIC CONTEXT
1. Country and Sector Issues
Tunisia’s Country Context in relation to the Regional Perspective
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. Across the region, the age profile is
young and rural populations are migrating rapidly to expanding cities, increasing the demand for new homes and
public infrastructure. In Tunisia, 54.3% of the population is under 30 years of age, and the level of urbanization is at
67% the total population and increasing at a rate of 1.5% per year. This is equivalent to160,000 people moving to
Tunisian cities each year. Given that housing demand is driven primarily by urban migration and new household
formation, this will cause sustained high demand for new homes, in particular at the lower segment of the market. In
Tunisia, this new demand for housing is estimated at approximately 70,000 units per year.
The chronic shortage of affordable and quality housing was one of the underlying causes of the social unrest and the
resulting political turmoil that has spread across the region during the Arab Spring of 2011. Recent regional studies
indicate that while there is an oversupply of upscale or luxury housing in many markets, there remains a shortage of
more than 3.5 million affordable dwellings across the major markets within MENA, a shortage that disproportionately
affects low-income households. In Tunisia, the number of sold units that are vacant is increasing, estimated at over
300,000 units, which was above 15% of the total housing stock in 2010 2. These units are often high-priced and used as
speculative investment properties of the wealthy as putting money into real estate is perceived as safer than money
markets, in particular post-revolution. Meanwhile, up to 40% of annual housing production, equivalent to around
30,000 units, takes place incrementally in the uncontrolled growth of subdivisions in the informal sector. Formal
supply does not satisfy annual demand and is beyond the affordability limits of most Tunisians, indicating a severe
mismatch between supply and effective household demand. The scale of the housing deficit in the region, which has
prevented access to adequate housing that supports a decent standard of living, is likely to have contributed to
mounting frustration, especially among the region's youth, which pushed them to revolt.
Countries have been making major strides to address the substantial housing needs, however in recent years, these
policies have stagnated, and housing became increasingly inaccessible, squeezing out the poor as well as the middle
class. Since Independence, Tunisia has had a long history of progressive housing policy, innovative programs and built
strong institutions to improve access to housing to its population. Ambitious slum-upgrading programs have helped
to improve informal settlements into prosperous city neighborhoods, increase the supply of housing through public
developers, and provide serviced land at low costs to households for home construction. More recently, there have
been steps to promote private sector participation in housing development, for example through the regulation and
promotion of the real estate sector that took place in Tunisia in the 1990s, following the 1988 National Housing Policy.
Yet, state subsidies have continued to impose a heavy burden on public finances, are no longer effective at reaching
target groups or achieving their goals, while land costs and housing prices have increased dramatically, squeezing out
the access to housing for the poor, the young, as well as the middle class.
Obstructions in the housing supply chain, such as land acquisition, urban zoning, building permits, access to low-cost
2
Housing statistics provided by the Ministry of Public Works and Housing, and Tunisia’s National Institute of Statistics.
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and appropriate construction materials, and developer financing, are preventing an integrated approach to the formal
production of affordable housing. In Tunisia, as in a number of peer MENA countries, access to serviced urban land
with the required titles, permits and registration is a costly and prolonged process. Due to the high cost of land and
construction, formal private developers are not willing or able to build units affordable to the lowest income
households. Inadequate supply of land or affordable housing has left low-income families little option but to build
incrementally on illegal and unserviced subdivisions. The loss in the rule of law that followed the revolution in Tunisia
has exacerbated this phenomenon and uncontrolled development has increased.
Kuwait
16%
UAE
18%
Tunisia
20%
Morocco
Figure 1 - Mortgage debt to GDP
Egypt
Algeria
WBG
2%
Saudi Arabia
4%
Iran
6%
Oman
8%
Bahrain
10%
Lebanon
12%
Jordan
14%
0%
Source: World Bank mortgage database collated from Central Banks and
other national sources.- (most recent data available)
Overall the region’s Housing Finance markets
are undeveloped which also impacts
affordability. Figure 1 sets out the most recent
data in terms of the size of the mortgage
markets in select countries of the region. Even
within the region there are marked disparities,
and even though Tunisia is one of the most
advanced in the MENA region in the
development of a housing finance sector (the
mortgage debt to GDP ratio is 17%), the level
of market penetration is far lower than
developed economies where on average across
the EU the mortgage debt/GDP is over 50 per
cent and reaches over 70 per cent in US and
UK.
Housing – both delivery and financing – acts as visible proof to citizens that governments are moving actively to aid
them in their lives. The Tunisian government is eager to deliver results on these fronts, as it has long recognized the
importance of housing for social stability, economic development and people’s well-being. The industry’s importance
lies also in its potential for economic development through job creation, and addressing unemployment and
underemployment, particularly for people who are poor, low-skilled and otherwise have limited job prospects.
Furthermore, with government increasingly financially constrained, more efficient use of scarce public resources and
active private sector involvement is an essential part of Tunisia’s future strategy to provide additional affordable
housing for its citizens. This requires a housing finance system to be functional for home-buyers and real estate
developers as well as to have efficiently designed public incentive mechanisms to promote affordable housing
production that is accessible to households.
Tunisia Country Context in the Affordable Housing Sector
Home ownership is of enormous cultural importance for Tunisians, with about 80% of households recorded as
owning their home. A series of public policies to assist disadvantaged groups to access adequate housing were
developed following Tunisia’s independence, from 1960 until the early 1990s. These policies were driven by the state
using three main instruments: AFH (the Land Agency for Housing) for the supply of land, SNIT (the National RealEstate Company) for the production of housing, and CNEL (the National Housing Savings Bank) for the distribution of
credit (converted to the Housing Bank –BH, in 1989), and ARRU for the ex-post provision of services in popular
neighborhoods. Until the late 1990s, these policies had been relatively effective and led to a considerable
improvement of the living conditions of poor households by developing a large stock of social housing (1 in 10
households live in SNIT units today), making serviced land plots relatively cheap via AFH (6000 ha since 1973, 35% of
which are small lots for the low-income) and tolerating the development of unregulated neighborhoods where
households own their land, build, albeit without authorization, and where the services were later retrofitted by ARRU.
These policies have resulted in positive results in terms of housing and access to services; however have not been
responsive to the changing market context in which new challenges have emerged. Firstly, the country's main cities
are facing rapid and uncontrolled urban sprawl due to the pressure of urbanization which has made the management
of the city more difficult. Secondly, real estate prices have risen sharply due to rising costs for land, materials, labor
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and speculation on the market. In parallel, land reserves of the State, which were previously used to facilitate
affordability, have greatly diminished and in the last ten years, are primarily reserved for industrial operations. The
increase in housing prices has decreased housing affordability, particularly beyond the limits of many middle and lowincome households. Thirdly, the “old” housing stock (mostly built at the early stages of SNIT and before
Independence) has been degrading and is now at different stages of insalubrity and risk of collapsing. The stock is
mostly occupied by the poor population, usually in a shared ownership arrangement that lacks clear legal status. With
no investments, this stock – depending on its size (not known, but probably large in old cities) – may become
unavailable in the near future.
Experience of Tunisia Housing Policy: Supply-Side Issues
The last census in 2010, recorded the supply of housing at 2.50 million units for 2.19 million households. Although
there is a surplus of housing in absolute terms, many of these vacant units are sold at high prices as investment
properties or secondary homes, and at the other end of the market, much of the supply of housing for low-income
Tunisians is filled by the informal sector which can be substandard, resulting in a qualitative housing deficit.
Of the 70,000 units required each year in Tunisia to respond to new demand, an estimated 40% is built informally.
The informal sector is particularly active in the high-growth cities, such as the Greater Tunis area where only 20
percent of new buildings have a building permit. Informal supply has grown in recent times for several reasons. On
the one hand, the lack of accessible and affordable building plots leads households to resort to non-buildable land
where prices are significantly lower. These lands are usually not serviced and in agricultural areas or zones
inappropriate for urban development (e.g. hazardous or industrial areas). On the other hand, the complexity and cost
of the procedures for obtaining a proper land title and building permits leads many plot-owners to refrain from
formal permission. These developments do have a certain level of tenure security, as the landowners that carry out
clandestine subdivisions sell to private households via a notary title and construction usually meets a number of key
quality standards, including right of way. For these reasons, the Tunisian government has been tolerant of informal
settlements and has chosen to implement a policy of neighborhood upgrading, rather than evictions and resettlement.
In response to the existing and growing number of informal neighborhoods, the National Rehabilitation and
Renovation Agency (ARRU), established in 1981, was made responsible for implementing upgrades of unregulated
residential areas. Activities include coordinating state agencies and local contractors for the installation of street
lighting, roads, and electricity, water and wastewater supply networks. From 1992 until 2012, ARRU intervened in
950 neighborhoods, reaching more than 2 million of Tunisia’s 10.7 million residents, and resulting in almost universal
service coverage (90% and 100% of water and electricity in urban areas). ARRU’s programs continue to remain
relevant today, yet pose a high financial burden on the state as costs for retrofitting significantly exceed the cost of
preparation of vacant land for housing. According to recent figures, it would take about 30 years for ARRU to cover all
existing informal areas, without accounting for new ones.
In terms of public policy on the formal supply of affordable housing, the public real estate developers, which once
dominated the production of housing, now only account for around 2% of annual production, and are struggling to
fulfill their mission. The National Real-Estate Company (SNIT), created in 1957 as an independent state-owned
company, built more than 260,000 units up to 2006 (60% low-income, 35% middle-income, and 5% high-income
housing), with another 20,000 coming from the Social Housing Promotion Company (SPROLS), an agency initially
intended to develop and manage rental housing. In the past decade, rising prices for land and construction has meant
that SNIT and SPROLS must increasingly cross-subsidize, reducing the number of units built for low-income
Tunisians.
In the private sector, real estate development has been growing since the 1988 National Housing Strategy, when the
government adopted new policies and put in place legislation aimed at attracting private developers to produce
affordable housing for low and moderate-income households. The government set the framework for the formation,
registration, and operation of these real estate developers and decreed tax-breaks and other incentives to produce
7
affordable housing. Real estate developers formed an association in 1994 and membership since then has risen to over
2600 today. Private sector housing production increased from an estimated 6,270 units in 2006 to almost 12,000 units
in 2010. Land for these types of housing projects is, in some cases, provided by AFH at both market and below market
rates. However, housing production suitable for lower income families has proven to be extremely weak and, private
developers tend to concentrate exclusively on middle class apartment housing and up-scale residential projects,
reaping high profits, rather than going down market in order to meet a larger segment of housing demand.
Today, the availability and rising cost of land is one of the main issues affecting the affordability of housing. Land can
account for 25% of the final unit cost. Many Tunisian cities face an acute shortage of serviced plots available for
construction, whether to property developers for apartment buildings or individuals for self-construction of homes.
Developers are engaged in a competition to acquire land for sale in major cities, including the AFH, the public land
agency, creating an effect of uncontrolled price escalation beyond the affordability of most. Small developers and
independent households are blocked from purchasing serviced plots and there are no adequate regulatory tools for
the state to effectively intervene in this speculation. Furthermore, the successive steps that allow the production of
formal land – acquisition, transfer of zoning, land development permits, servicing of land, sale - do not work
effectively in Tunisia and fail to meet strong demand. The regulatory procedures are complex, restrictive, costly and
difficult to finance. Thus, the formal creation of a subdivision can take up to 7 to 10 years and is usually not viable for
private developers exacerbating this major bottleneck.
The Public Land Agency (AFH) has had a substantial role in the supply of urban land for residential construction since
its creation in 1973.AFH initially had powers of expropriation, acquisition and servicing of land before on-selling to
developers and eligible households at low cost. In 1980, AFH was recorded as providing 33% of the serviced land
needed nationally for housing. Today this has reduced in most cities as the stock of government land for urban
development has diminished and land, in general, is no longer easily accessible. AFH has ceased using its judicial
powers of expropriation and must compete with private sector to buy land on the private market at much higher
prices than historically. This has hindered its capacity for affordable land production in recent years. Despite crosssubsidization measures, AFH’s land plots still tend to be too large (>150m2) and over-priced to suit low-income
households, and the magnitude of the supply is not sufficient to respond to the demand of those who can qualify for
plots, leaving applicants on AFH’s waiting lists for decades.
The key areas to be addressed in the technical assistance on the supply side are:
 Reviewing and reforming public policy to increase supply of affordable housing that effectively reaches the
disadvantaged populations.
 Streamlining and strengthening the processes and tools available for increasing the production of land for
development.
Experience of Tunisia Housing Policy: Demand-Side Issues
On the demand side, Tunisia has a reasonably well‐developed and growing housing finance sector. Real estate loans to
households and developers increased from TD 2.1 billion in 2003 to more than TD 12 billion in 2013, or about 23% of
the total credit in the economy and 17% of GDP, which is among the highest in the MENA region. The housing finance
market has been growing consistently following the diversification of activities permitted by the Banking Act of 2001.
Today the market is moderately concentrated with five banks accounting for two-thirds of the housing finance sector.
Typical margins between lending and savings rates are fairly moderate for an emerging market (usually2 to 3%),
which may be more a reflection of the regulation on usury rates than competition, but still has facilitated credit
affordability.
The National Housing Bank (BH) still plays a prominent role with 20% of market share. BH enjoys certain privileges in
principle due to catering to more modest market segments than other banks. These privileges include managing
various funds on behalf of the State, the main one being FOPROLOS, and tax exemption for its savings-for-housing core
product. An evaluation recently initiated by the Ministry of Finance on its role in financing the economy through its
state-owned banks will give the opportunity to review the role of BH in the financial sector and the effectiveness of its
8
approach.
The housing finance products available in Tunisia are mainly conventional mortgage loans. Mortgages are either fixed
rate (subsidized loans, savings-for-housing schemes, and mortgages greater than 15 years, as required by regulation);
or indexed to a smoothened average of the daily rates on the money market (TMM), which barely fluctuates. Beside
mortgages, Zitouna Islamic bank launched a Shariah compliant housing finance product in 2010, and ENDA, a
microcredit institution, has offered a microfinance product specifically for housing since 2007.
Despite positive advances in housing finance, there are still major barriers to the expansion and accessibility of
housing finance for Tunisians, leaving a large segment of the low-income population underserved. Two of the critical
obstacles are: (i) the large share of households engaged in informal economic activities, estimated as high as 40% of
the population, which is a category where financial institutions have difficulties in adequately assessing the risk; (ii)
the significant portion of unregistered properties, even in urban areas, as well as the large number of outdated
records (updating procedures are ongoing but at a slow pace). A practice of commitment to a mortgage as soon as a
property integrates formal land registries exists, but banks are reluctant to use it given the cumbersome and
uncertain procedures in this case. Income informality is particularly common in the context of self-construction, the
form of production which is the least expensive and most widespread, accounting for over three-quarters of
construction.
The government has developed several assistance mechanisms to households who borrow for their housing needs,
but their effectiveness is affected by various flaws. The dispersion of assistance across multiple funds (FOPROLOS,
National Solidarity Fund, etc.), between different departments each with their specific programs, and between the
national and local levels, makes the accurate measurement of the effectiveness of these efforts difficult. The main
mechanism of current government support to facilitate lending to lower-income groups, FOPROLOS, is not performing
well, with a number of weaknesses in its current operational mechanisms.
The Housing Promotion Fund for Salaried Persons (FOPROLOS) was created in 1977 and is the state-subsidized
housing loan for formally employed low-income households to build or purchase housing. It is partly financed through
employer contributions (1% of income).The National Housing Bank (BH) is the exclusive manager of this fund. Loan
rates for mortgages are below market, and range from 2.5 to 5.75%, for three different income eligibility brackets. The
key pitfalls are: (i) the low rate of utilization of the fund - less than a third of the annual allocation of about TD 90
million is actually disbursed, (ii) the recovery rate is very low, at 25% today, a level probably exacerbated by the
socio-political shock of 2011 but preceded it, which results in substantial loss to the State that bears the credit risk,
(iii) FOPROLOS is delivered as a direct housing investment, without any leveraging. The low utilization rate is partially
linked to the lack of housing supply in the targeted segment – especially since the FOPROLOS price and loan ceilings
have not increased with the rising cost of land and construction, but also the fact that the system only serves the
salaried population.
The exclusive use of FOPROLOS by BH is a constraint both for the outreach of the funds and its recovery performance.
It also increases the market distortions created by an implicitly subsidized interest rate (2.5% for the first of the three
brackets of beneficiaries), which also makes it difficult for other lenders targeting this market segment to compete.
Furthermore, loan profiles include several credit risk factors such a very low down payment or 3 year grace periods,
as well as interest rate risk–which is implicitly transferred to the state.
The government is aware of the need to mobilize resources from the financial sector. The existence of a continuous
supply of credit available for low-income households, which also meets the solvency requirements for the stability of
the banking system, is a prerequisite for sustainable coverage of the housing needs of a large part of the population.
Removing barriers that block access to mortgages in these categories will be a key part of the government's housing
strategy.
Another major challenge preventing the availability of affordable housing finance is a lack of long-term funding. The
Tunisian banking system has large and structural liquidity needs. These needs have widened considerably since the
revolution so that the Central Bank has had to intervene directly and extensively in refinancing the banks on the basis
of their credit portfolios. The liquidity gap is of the order of TD 4 to 5 billion, evidenced by a loan-to-deposit ratio of
112% on average (end of 2012), which is higher for major lenders (133% for BH at the end of 2011). Although a large
9
part of the deposits are stable, especially in the case of savings-for-housing accounts that are well-developed in
Tunisia, the need for external funds is important. Furthermore, the demand is not only quantitative in the case of
housing loans: beyond long-term resources; there is a need for fixed-rate resources to balance the assets and
liabilities of this compartment of activity.
The capital market has only provided limited solutions to date. The legal framework for securitization was introduced
in 2001, yet has not been successful (only two operations have been completed to date). This is likely due to the
complexity of the instrument, its cost and the fact that no yield curve exists yet in Tunisia. In 2007, the Central bank of
Tunisia (BCT) introduced minimum requirements for the maturity balance between assets and liabilities in the
mortgage rules, and imposed fixed interest rates for loans over 15 years. Bond issuances, ordinary or subordinated by
the banks, increased suddenly after this regulation, especially in 2009, but their outstanding amount –TD 1.3 billion at
the end of 2012- is a small fraction of the total needs. With little actual funding opportunities, the regulation on fixed
interest rates simply had the effect of reducing the duration of the loans extended by banks, with the exception of BH
where approximately 60% of housing loans are fixed rate.
In total, the refinancing constraint has had a negative impact on the delivery of housing finance to low-income
households, given the lack of significant cushion in their income to stand rate increases on variable rate loans, and the
high amortization installments of relatively short credit maturities.
The key areas to be addressed in the technical assistance program on the demand side are:
 Developing mechanisms to increase access to housing finance, particularly for non-salaried workers and the
low-income.
 Improve the availability of long-term funding for housing finance providers.
2. Alignment with Transition Fund Objectives
The proposal delivers on the Transition Fund’s objectives of (i) fostering inclusive economic growth by promoting
housing production and access to housing finance by underserved and low-income households; (ii) job creation
through 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.
The project supports the objective of the Transition Fund of fostering inclusive economic growth by
promoting access to housing and housing finance by underserved and low-income households. Tunisia is a
demographically young population, with 19 percent of people aged between 15 and 24 years of age in 2010. Improved
availability of affordable housing will help meet the basic needs of citizens in this stage of life. Young households and
low and middle income households are the most limited in financing options, both because of their inability to afford
down payment and also their limited ability to access finance from banks for long term loans. At the same time,
housing is often their biggest life-time expense, accounting for as much as 50% of their expenditure. If housing
products and housing finance can be made more affordable and widely available, that will free-up resources that they
can use for other opportunities, such as starting small businesses. An increase of the housing production on the lower
segments should also help balance the price creating more affordable housing opportunities to the low-income
households. Additionally, a structured mortgage market asserts legal and financial accountability to individuals and
families who might remain in the informal sector, and provides them with the opportunity to acquire solid assets.
This, in turn, encourages medium to long term growth and new jobs for low and middle income workers.
The project is also in line with the Transition Fund objective of supporting job creation. Activities supported by
the project in Tunisia will translate into more housing investments. In Tunisia, youth unemployment is above 30
percent, while the 15-30 year-old age group makes up one third of the active labor force. Investment in housing will in
turn induce the creation of skilled and unskilled jobs in construction and related sectors. The arguments around the
job multiplier effect from housing construction have been well made. A US economic analysis suggests that over 3 jobs
(temporary and permanent) are created per home built. This includes jobs in areas such as raw material production,
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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.
The project will also contribute to the transition fund objective of enhancing economic governance,
supporting sustainable growth. The project will support the reform of public service delivery by promoting the
efficiency and targeting of government implemented housing subsidy mechanisms and ensuring a more
efficient and impactful use of government funds combined with the private sector. This will free up fiscal resources
enabling policies to be put in place for the long-term. The project will also contribute to the promotion of a sound and
sustainable housing finance system by the development of prudent lending practices and consumer protection within
the banking sector. The recent sub-prime crisis is a timely reminder for the need to build sound and secure housing
finance systems.
3. Alignment with Country’s National Strategy
The Regional Affordable Housing Project is a timely response to post-revolution aspirations of Tunisians. In
particular, this includes economic development, job creation and reducing regional inequalities. The government of
Tunisia has prioritized access to housing and is searching for ways to put in place a national housing policy and to
identify clear policy direction for the long term, beyond the achievement of immediate objectives.
The activities outlined in the Project directly align with initiatives selected and prioritized by the government of
Tunisia, many of which are already in the pipeline, and will benefit from additional technical input and
operationalization support to ensure their successful implementation.
These include:

On the supply side: The Tunisian government is already taking steps to review the current set of policies and
develop a long-term strategy for the housing sector. Part of this initiative is a strategic review, and
implementation of new programs to stimulate the sector. The government has identified housing as a key
priority and has taken immediate action to address the qualitative housing deficit by launching two new
programs in 2012, one on the construction of 20 000 social housing units, and the other, on eradication or
renovation of rudimentary housing in rural areas or small towns. These programs, targeted at households
earning between one and five times the minimum wage, (approximately between 300 and 1500 DT / month),
will benefit from budgetary and land resources from the State to deliver assistance to target groups according
to their income. The state is also investigating the use of tax advantages in order to attract private developers
and in both programs, the businesses that are engaged in construction are local, in order to maximize job
creation and employment for Tunisians.
The proposed Project will provide technical assistance that will assist the government to review and make
improvements on efficient subsidy allocation and mechanisms to mobilize land, which will help the
government maximize the reach and impact of these initiatives.

On the demand side: Tunisia is currently undergoing a major review of the financial sector, particularly
state-owned banks, as part of an initiative of the Ministry of Finance and Central Bank to strengthen the
resilience of the sector, develop capital markets, and stimulate economic growth. The reform of the
microfinance law and development of a legislative and regulatory framework for Islamic finance – a first law
regarding Sukuks was recently passed- are two other initiatives that Tunisia are pursuing to develop
alternative funding mechanisms and increase financial inclusion of underserved markets.
Supporting these reforms with development of prudent mechanisms to make housing finance accessible to
low-income households based on sound lending principles, as well as the development of long-term funding
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mechanisms will contribute to Tunisia’s national priorities of strengthening macroeconomic stability,
providing a durable collateral for lending, and a means of financial access for previously excluded groups.
C. PROJECT DESCRIPTION
1. Project Objective
Project development objectives. The objective of the proposed project is to support the Government of Tunisia in
designing reforms of programs and policies to promote access to affordable housing for the low to middle income
households.
The objective will be achieved by supporting the government in (i) the evaluation of their existing programs for
affordable housing, (ii) designing the key policies that will be catalytic and transformational in improving the supply
of affordable housing and the availability of affordable housing finance, and (iii) cross-regional knowledge sharing and
expertise strengthening in the area of affordable housing and housing finance.
The project will ultimately contribute to improving the living conditions of the populations through integrating
housing development with access to better social and economic prospects, and generating opportunities for growth
and employment in the context of post Arab Spring upheavals.
2. Project Components
The Project will provide technical assistance to advance country-led policy and institutional reforms in three key
areas, to support (i) (component 1) a scaling up in the production of affordable housing, (ii) (component 2) an
expansion of affordable housing finance and (iii) (component 3) knowledge sharing across the region in the field of
affordable housing. The program will initially run over a three-year period and be implemented at a country level,
with some overarching regional initiatives.
The project will support country level interventions through technical assistance and advisory work, but will also aim
to build a regional dimension to affordable housing and housing finance. Each component includes a number of
country level deliverables, but there will also be over-arching themes, which represent areas of commonality across
the participating countries. Component 3 in particular will help provide the means and tools for knowledge sharing
through training, events and workshops.
Component 1: Scaling up Production of Affordable Housing (1.1 million) –
This component is implemented by the World Bank
This sub-component supports advisory services to governments for removal of supply side barriers to affordable
housing. There are two sub-components: (i) evaluation of government housing programs and recommendations for
reform and (ii) redesign of land supply tools.
Sub-Component 1.1. Evaluation of the effectiveness of government programs and recommendations for
reforms(USD 0.5million)
Objectives
Activities
This subcomponent aims to evaluate the effectiveness of Tunisia’s current government policy
to address supply and demand challenges in the provision of affordable housing and to define
reforms that enable more targeted and effective programs. A preliminary step is to provide
rigorous evidence on the gap between the demand and supply of affordable housing as well
as the underlying constraints in both the formal and informal sector.
i.
Demand and supply analysis for affordable housing
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This activity will analyze the demand profile and the characteristics of supply. The analysis
will include:
a. Characteristics of demand profile, such as income and spatial distribution.
b. Identification and technical definition of supply variables such as housing types,
tenure, target areas, geographical regions, and information collection methods.
c. Aggregation of market information, including prices of land, turnkey real estate
redevelopments and self-construction costs.
d. Special case study of heritage buildings to evaluate its specific characteristics:
(e.g. the stock size, the degree of degradation, current occupation, challenges for
the change of ownership, including land issues and ownership by foreigners).
e. Action plan for the Observatory of Property and Land to maintain accurate
housing market information.
f. Inventory sources of housing price data and recommendations on the price
index calculation method, and system for regular reporting.
ii.
Evaluation of the effectiveness of government programs
This activity will provide the Ministry of Finance and the Ministry of Public Works and
Housing with a comprehensive view of all subsidies being applied to the housing sector,
within or outside the state budget, to provide information on the economic cost of current
policies and serve as an instrument to support policy reform. This activity will consist of two
key steps:
a. Quantification of aid: an exhaustive inventory of grants and subsidies will be
made, including nature, origin and standardized measure of the value
(depending on the most appropriate method). This will be consolidated into a
virtual budget.
b. Targeting and impact study: an analysis of the distribution of assistance among
different categories of beneficiaries (income segments, geographically, formal/
informal sector etc.) and a cost-benefit assessment.
iii.
Recommendations for government policies.
Based on the market analysis and evaluation of subsidy use, this activity will make
recommendations to government for the reform of government policy in order to better
address underserved households and improve the efficiency and targeting of subsidies. This
activity will address the following issues:
a. Defining the target population segments for government policy.
b. Identifying suitable real estate products for different target populations, taking into
account the particular geographical context (housing costs) and urban issues
(location, access to services etc.). Recommendations for new mechanisms to improve
affordable housing delivery to the target population segments identified. These
recommendations will focus on regulatory incentives and/or functional
enhancements to increase the diversity of developers and the supply of affordable
housing, (e.g. single window operations to facilitate administration and project
management, simplification of procedures for tendering public operators etc.)
c. Recommendations for better articulation of housing policies with strategic urban
planning (including the socio-economic policies for promoting social mix in the
newly produced neighborhoods, financing the socio-economic facilities needed and
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Implementation
the trunk infrastructure if affordable land is far from existing networks of public
utilities).
d. Technical specifications for the reform of current programs of assistance, including
institutional structure for implementation.
This sub-component will be implemented by the World Bank together with an Operational
team led by the Department of Housing, within the Ministry of Public Works and Housing
working in close collaboration with the Observatory of Property and Land, the Ministry of
Finance, the Central Bank of Tunisia and the National Institute for Statistics.
Sub-Component 1.2. Review of tools for land supply and recommendations of reform(USD0.4million)
Objectives
The aim is to develop knowledge of the main sticking points in the production of land for
residential development and conduct studies into alternative policy options to facilitate land
production. There will be two key activities in this sub-component.
i.
Assessment and reform of tools for land supply
This activity will include the following:
a.
b.
c.
d.
ii.
Assessment of the current regulatory controls and urban planning tools that are
in place to manage urban land production.
Review of international experience in increasing land supply, particularly more
flexible administrative procedures that adapts to the high population pressure
on cities.
Development of simplified procedures for urban land management in Tunisia,
based on assessment of current systems, the review of international experience
and the key priorities of making land supply more affordable, efficient and
integrated with urban development.
Review AFH’s mission, role in land supply, operating model, financial plan,
priorities and activities moving forward. Provide recommendations on capacity
building for AFH to increase its efficiency and effectiveness in land production.
Strengthening the role of private sector in land supply
The expected demand increase for the production of developed land cannot be met by public
operators alone, whose capacities have reached their limits, and requires the participation of
the private sector, both large developers and also on small landowners. This activity will
focus on the role of the private sector in land development, beyond a public-private
partnership framework and consist of:
a.
b.
Analysis of constraints on the private sector in the development of land,
including case studies:
i. An evaluation study of the El Matar operation, a pilot in Sousse which
attempted a public-private partnership for the development of 150ha of
land, involving more than 400 owners.
ii. Standard subdivision and development operations.
Recommended simplifications of the regulatory framework applicable to land
development operations (e.g. process of subdivision, rules applying to the sale of
serviced lots, consolidation, technical support to land-owners, integration with
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c.
Implementation
urban planning) to facilitate private sector participation.
Creation of incentives and technical support for small private landowners to
mobilize their parcels for development and/or consolidate their parcels to
respond to demand.
This sub-component will be implemented by the World Bank together with an Operational
Team led by the Department of Planning in collaboration with the Department of Housing,
Ministry of State Domains and AFH. Private developers will be closely associated with the
second activity to strengthen their role in land production.
Sub-Component 1.3- Feasibility study of suburbanization (USD 0.2 million)
Objectives
Activities
The Tunisian authorities are investigating the development of satellite towns around large
cities for primarily residential use, to respond to demand for low-cost land and the inability
to accommodate new populations in existing urban centers. This activity will provide
guidance to the government regarding the feasibility of pursuing this approach.
a. A feasibility study that will analyze the issues, constraints, risks and impacts of
promoting satellite towns in Tunisia in comparison to alternatives (e.g.
extension of the existing town limits).
b.
Implementation
Analysis of this policy within the framework of urban planning that takes into
account the links between residential space, the labor market and urban
services (schools, health centers, community spaces, etc.).
This sub-component will be implemented by the World Bank together with an Operational
Team led by the Department of Planning in collaboration with the Department of Housing,
Ministry of State Domains and AFH. Private developers will be closely associated with the
fifth activity to strengthen their role in land production.
Component 2: Expanding Access to Affordable Housing Finance ($0.7 million)
This component will be implemented by the World Bank
Access to housing cannot increase if adequate financial resources are not available to making potential demand
effective. Access to credit, particularly for low-income households is of primary importance to support production via
self-construction, which is by far the dominant mode of housing production in Tunisia and will have a large impact on
improving the quality and supply of housing for low-income Tunisians. This component will provide assistance to
broaden access to affordable housing finance through the design of policy reforms of the regulatory framework,
development of tools supporting the market deepening, and capacity building with conditions that ensure financial
stability and therefore, the sustainability of development.
Sub-Component 2.1. Increasing access to housing finance to low income and informal income households.
(USD 0.4 million).
Objectives
The objective of this sub-component is to support government policies to improve the
availability of housing finance, particularly for underserved, yet creditworthy, households in
the informal sector. The following activities will help to prepare the deepening of market
conditions by defining key incentive for lenders and a risk management framework. The aim
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is to multiply the impact of state aid by leveraging the resources of private lenders, while
avoiding imprudent lending and over indebtedness that could threaten financial stability.
Activities
i.
Feasibility study of a guarantee mechanism for loans to informal and low
income sector households (USD 0.3million).
The Ministry of Public Works and Housing has proposed the creation of a mechanism to
guarantee loans to households in the informal sector, as Morocco has successfully developed
(FOGARIM). Such an instrument have a significant incentivizing effect on lending, but can
also be counter-productive, by generating moral hazard risks that will undermine the
sustainable market expansion and results in high fiscal costs. Therefore, the design and
conditions of intervention of such mechanism should carefully be studied. The feasibility will
include the following aspects:
a.
b.
c.
d.
e.
f.
ii.
Defining the criteria for enforcing the guarantee and risk sharing options
between banks, the state and borrowers.
Quantitative evaluation of the risks covered by the fund, leading to the
determination of the required economic capital and calibration of the actuarial
premiums to be charged to users.
Identify the sources of information to draw references to income category and
by region, which provides a benchmark for banks to cross-check the statements
made by loan applicants
Determination of the conditions of sustainability of the fund, to ensure the
confidence of market players and protect public finance.
Institutional structure: choices of institutional set-up, legal nature of the
institution, prudential rules, supervision and mentoring requirements.
Recommendations to the government on whether and how to proceed with
establishing the fund.
Definition of prudential lending standards for low and informal income (USD
0.1 million).
Informal customer presents specific risks to banks participating in this sector. Capacity will
need to be built to assess and manage these risks. This activity will include development of a
prudent lending policy “handbook”, in coordination of the Central Bank, and the
dissemination of relevant foreign experiences that emerged from the global financial crisis of
2008-2009. Examples of such standards and practices, which will be customized to the
Tunisian market include prior savings requirements the verification of stated incomes;
estimation of fixed living expenses; checking the level of debt or demand additional
guarantees; flexibility in the rates of reimbursement to reflect the irregularity of income;
potential of partnership models with micro-finance institutions.
This component is an essential complement to the creation of a guarantee fund. It is a
safeguard against the relaxing of standards that can be caused by a risk transfer mechanism,
and will be integrated to the eligibility criteria to the guarantee fund.
Implementation
This sub-component will be implemented by the World Bank together with the Central Bank,
Ministry of Finance and private and public financial institutions as required.
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Sub-Component 2.2. Development of long-term finance for housing (USD 0.3 million).
Objectives
The sub-component is to support government policies and tools that aim to strengthen the
role of the capital market to provide long-term resources, prerequisite condition for
sustainable housing finance market development. Three activities are planned in this subcomponent.
Activities
i.
Review of prudential norms for assets / liabilities management (USD 0.1
million).
This sub-component will provide technical assistance to the Central bank to enhance the
rules or guidelines prudential system for asset / liability matching.
ii.
Feasibility study for establishing of a mortgage refinancing structure (USD 0.2
million).
Securitization failed to win the support of the market in Tunisia so there is currently no
instrument that would provide lenders the long-term funding they need or investors with a
long-term investment vehicle adapted to their needs. The Ministry of Finance is interested in
evaluating the potential of a mortgage refinancing vehicle, i.e. a mechanism to centralize the
financing needs of lenders, provide refinancing loans and issue bonds on the market. Such an
instrument has been implemented in many countries where a securitization framework was
considered too sophisticated for the level of development of these markets- but is not a
model that is appropriate in all contexts. The feasibility study will:
a.
b.
c.
d.
Implementation
Assess international experience in implementing a mortgage refinancing facility.
e.g Algeria, Egypt, Jordan , and Palestine for the MENA region.
Consider its relevance to the needs of lenders and investors in Tunisia.
Determine the regulatory (including the availability of a critical mass of eligible
registered titles), financial and institutional conditions necessary for the success
of such a mechanism in Tunisia.
Assess regulatory and operational options for issuance of Islamic securities by
such mechanism.
This component will be implemented by the World Bank working in collaboration with
counterparts in the Ministry of Finance and the Central Bank of Tunisia.
Component 3: Affordable Housing and Housing Finance Capacity Building Knowledge sharing (USD 0.2
million)
This component will be implemented by the Arab Monetary Fund
This component aims to strengthen the capacity for formulating and implementing affordable housing policy, to
create regional dialogue on common challenges in the housing sector, and exchange of best practices, mainly through
the delivery of training programs, workshops and seminars. The objective is to promote further policy integration at
the regional level, and to set up systems and sources of information that will ensure strong local governance,
resilience, and sustained progress in the housing sector beyond the project end-date.
Sub-Component 3.1. Strengthening technical capacity in affordable housing sector (USD 0.13 million).
Objectives
The objective of this sub-component is to provide Tunisian decision-makers and industry
professionals with access to specialized training to develop the skills needed to formulate
17
and implement effective housing policies and improve their knowledge of international
experience in housing affordable. This axis also will promote regional trade on the relevant
national experiences. In this context, training programs, workshops, seminars and
conferences will allow Tunisian actors to strengthen local capacity to meet the dynamic
challenges of the sector.This sub-component will consist of both regional and locally-based
capacity-building activities:
Activities
i.
Regional housing finance training
The project will co-finance the cost of training and travel of Tunisian candidates each year to
participate in a regional training on housing finance. This is an annual program in
partnership with the Wharton School of the University of Pennsylvania, to be anchored in a
university in the sub – region, on an ongoing and self-sustaining basis. The program will
provide intensive training on innovations in housing finance policies with particular
emphasis on the MENA region.
ii.
Sector Specific Training Programs and Seminars
Periodic workshops and seminars held locally in Tunisia or internationally, to respond to
sector specific requests when the need arises over the course of project implementation.
Implementation
The Arab Monetary Fund will lead the implementation the regional housing finance subcomponent. It will establish the MENA Regional Housing Finance Executive Education
Program in partnership with the Zell Lurie Real Estate Center of the Wharton School of the
University of Pennsylvania and the World Bank. The program will be anchored in a university
in the sub-region. Partnerships will be explored with the World Bank Institute for the
development and delivery of trainings on the fundamentals of the housing sector.
Live translation of lectures and translation of presentation material in French and Arabic
would be made available to participants.
As mentioned above, the project will co-finance training costs and travel expenses for a
number of participants from Tunisia each year. The Ministry of Economy and Finance will be
responsible for proposing the eligibility criteria for applicants, as well as their selection
procedures and assessment in consultation with the teams of the World Bank and the Arab
Monetary Fund.
Sector-specific training programs and seminars will be managed by the project Steering
Committee, which will respond to proposals based on their relevance and available
resources.
Sub-Component 3.2. Regional Knowledge-Sharing (USD 0.07 million)
Objectives
To improve knowledge-sharing and exchange across sectors, and throughout the region in
housing policy innovation and advancement. It must be stressed that some themes included
in country specific programs are in fact of common interest to several countries, and hence
would usefully be included in experience sharing and information exchanges at the regional
level, in particular: credit support to informal sector or low income households; evaluation
and decision making tool for housing subsidies; or prudent lending policies towards
18
vulnerable categories.
Activities
i.
Biennial MENA regional conference on affordable housing topics
This subcomponent will finance biennial regional conferences (two conferences
during the life of the project) on the issue of affordable housing. The conferences
would seek to strengthen the awareness of the economic, social and cultural
importance of the sector, and to facilitate exchange in the sub -region on innovations
in affordable housing policy makers to respond more effectively to the challenges of
the sector in their respective countries. The conference will also target the local real
estate market participants, foreign and local investors, financial institutions,
development agencies and private developers- who will benefit from updates on
government policies in the sector and possibly leverage private and international
donor funding around the topic.
ii.
HOFINET MENA- Online affordable housing and housing finance knowledge
platform and resource center for the MENA region
The Housing Finance Information Network- a non-profit organization affiliated with
the Wharton School of the University of Pennsylvania- consolidates global housing
sector information, standardized data, news and legal documents and makes it
available in the public domain on a web portal. It covers more than 125 countries
and works with regional and country partners to collect and update the information.
http://hofinet.org.
a.
The project will sponsor local consultants in participating countries to work
with HOFINET on the collection of data and relevant housing information, which
will be displayed on individual country pages.
b.
Hofinet will be supported to develop and maintain a regional MENA section of
the portal that will show comparative data, information on affordable housing
programs and projects, relevant studies, laws, news and will maintain a blog for
regional discussions and knowledge exchange.
c.
The project will put in place systems for regular content updates and a
sustainable business model so that it can continue beyond the program enddate.
d.
Implementation
The platform will leverage existing housing sector information sharing
initiatives such the Housing Finance in Africa Year Book by the Center for
Affordable Housing Finance in Africa (sponsored by Finmark Trust).
The location and themes of the regional conference will be decided by the Arab Monetary
Fund and the World Bank, in coordination with the Steering Committees of participating
countries in the regional affordable housing program.
The online platform will be managed by the Arab Monetary Fund in collaboration with the
Wharton School of the University of Pennsylvania.
3. Key Indicators Linked to Objectives
Key indicators for measuring the results of the project in Tunisia include:
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(i) Design of reforms of programs and policies for affordable housing supply which are endorsed by the counterparts
and that feed into government policy and program reformulation and reforms. Project outputs, submitted to the
clients for such utilization, will cover areas such as:
-
Evaluation of effectiveness of government programs and subsidy policy and proposed recalibration;
Technical studies and policy reports on land supply.
(ii) Design of reforms of programs and policies for affordable housing finance which are endorsed by the
counterparts and that feed into formulation of policy and programs for improved access to housing finance by the low
income population. Project outputs, submitted to the clients for such utilization, will cover areas such as:
-
Feasibility study of a guarantee mechanism to increase access to housing finance to low income and informal
income groups;
Mortgage Lending standards for low income and informal income groups;
Feasibility study of a mortgage refinancing structure as a means to promote long term finance for housing;
Action plan to improve regulatory setting for long term lending.
(iii) Improved capacity of Tunisian policy makers for formulating and implementing affordable housing and housing
finance policy through the capacity building and knowledge sharing initiatives supported by the Project.
Section F (Results Framework and Monitoring) identifies the project’s key indicators and progress measures of
intermediate results.
The ISAs will be in charge of the monitoring and evaluation (M&E) system.
D. IMPLEMENTATION
1. Partnership Arrangements (if applicable)
This project will benefit from several established partnership arrangements and will seek to form further
collaboration agreements. The partnerships that have already been prepared include:
-
On April 2012, the AMF and the World Bank signed a Memorandum of Understanding 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 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). The Arab Housing Finance Initiative
Secretariat (“AHFI Secretariat”), which was established within the AMF, will coordinate work between the
WB and the AMF and offer a platform of public and private stakeholder participation and dissemination of
housing finance best practices. This cooperation builds on the success and experience of other cooperation
projects between the WBG and AMF such as the Arab Payment Settlement Initiative (API) and Arab Credit
Reporting Initiative (ACRI). The Arab Monetary Fund and the World Bank intend to scale-up technical
assistance and capacity building activities in support of housing finance already initiated through Arab
Housing Finance Initiative (AHFI).
-
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
20
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 on-going work in a number of client countries looking to
implement policy reform and expand housing finance markets further down-market.
-
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 is now in the project development stage. Specifically, envisioned areas of project-level
cooperation with IFC investment and advisory services are:
1.
2.
3.
Support for the lenders in defining and operationalizing prudent lending policies and procedures to
the borrowers with informal income sources. This activity is linked to the Project work under
Component 2.1.
Support of the market stakeholders for operationalizing the Islamic finance framework. This activity
will define operational options to issue Islamic securities under the new law. In particular, the
following aspects will be examined in consultation with competent Shariah Boards: legal, accounting
and tax aspects; the creation of dedicated vehicles for underlying assets; potential of investor
demand; fiduciary principles. This activity is linked to the Project work under Component 2.2
Note that operational aspects of the cooperation between the World Bank and IFC may be discussed
and agreed on with the parties at a later date on the ad-hoc basis and do not alter the overall Project
substantive or operational framework.
2. Coordination with Country-led Mechanism/Donor Implemented Activities
The project will be implemented in coordination with complementary donor projects to take advantage of synergies
between different donor-funded activities. In preparation the key donor-implemented activities were identified.
There are two key points of coordination and collaboration that has been identified and will be an important aspect of
project implementation:
o
The French Development Agency (AFD): The Tunisian government has signed a partnership agreement
with AFD in July 2013 for 1.5 million Euros. Two of the four activities focus on technical assistance in the
housing sector. These components consist of supporting the Department of Housing to define its political
strategy, and secondly to help ARRU to review its business model. Regarding the first part, the content of this
activity is not defined so far and it will be essential to ensure that this activity is coordinated with the
technical assistance conducted by the World Bank, or complementary, and to avoid duplication. Concerning
the second component, it will be useful activity integrates strategic directions for public policy to be proposed
as part of the technical assistance of the World Bank. AFD (with EBRD and EIB) is also financing and
supporting an ARRU program for retrofitting of services in over 100 neighborhoods in the next 4 year period.
This work will address the infrastructure shortfalls in the poorest neighborhoods.
o
German Development Agency (GIZ): GIZ is supporting the reform of the microfinance sector and providing
technical support to the government of Tunisia to set up regulatory, licensing and supervisory procedures. As
customers of microfinance institutions tend to be low-income households that are excluded from formal
housing finance, there are synergies that will be explored between the development of the sub-component on
improving access for affordable housing finance and the establishment of a housing microfinance sector.
21
3. Institutional and Implementation Arrangements
The project will be joint World Bank and Arab Monetary Fund executed for the countries. All procurement activities,
financial management, disbursement monitoring and evaluation will be executed by the World Bank and Arab
Monetary Fund for their respective activities and according to their own procedures and guidelines. This is in line
with the two institutions practices for regional approaches and TA projects with regional dimension. The country will
be responsible for local coordination. The World Bank and Monetary Fund will ensure coordination of the regional
dimension. The two recipient transition countries (Morocco and Tunisia) agree and are comfortable with this
procedure.
The local coordination in Tunisia will be undertaken at two levels: i) project a Steering Committee; and ii) Operational
Teams responsible for the execution of each sub-component of the local program.
The project Steering Committee will convene at least twice a year, and will be responsible for the overall, coordination
and addressing important matters affecting the progress of the local program. It will be led by the Ministry of
Development and International cooperation and will comprise key public and private-sector stakeholders and will
assure local appropriation, enable regular monitoring and accountability checks throughout project implementation.
The detailed composition of the Steering Committee is as follows:
o
o
o
o
o
o
o
o
o
o
Ministry of Public Works and Housing;
Ministry of Finance;
Ministry of State Domains (Ministère des Domaines de l’Etat);
The Central Bank (BCT);
The Housing Bank (BH);
The National Agency of Urban Redevelopment (ARRU);
The National Housing Developer (SNIT);
The National Institute for Statistics;
Financial institutions (banks and microfinance institutions);
Private developers.
Operational Teams. Each subcomponent will be implemented in coordination with an operational team, led by the
most relevant stakeholder and composed of all parties that have a role as laid out in each sub-component in the
project description section of the proposal. The Operational Teams will work with the ISA for the scheduling of
activities, drafting terms of reference, monitoring the work progress and performance of consultants and address any
day-to-day operational issues as they arise in the implementation of the project. Operational Teams will report to the
Steering Committee.
4. Monitoring and Evaluation of Results
The ISAs will be responsible for the overall monitoring and evaluation of the project with the support of the project
Steering Committee. It will coordinate with the Operational Teams to establish the baselines, control the quality of the
work of the different consultants, and will follow up on the targets and monitor the achievement of the objectives.
E. PROJECT BUDGETING AND FINANCING
5. Project Financing (including ISA Direct Costs3)
Cost by Component
Transition Fund
(USD)
3
Country
Co-
Other CoFinancing
ISA direct costs are those costs related to the ISA’s direct provision of technical assistance within the project.
22
Total
(USD)
Financing
(USD)
World
AMF
Bank
Component 1: Scaling-up the production of affordable housing
Sub-component 1.1:Evaluation of the
effectiveness of government programs and
$500,000
recommendations for reforms
Sub-component 1.2: Review of tools for
land supply and recommendations of
$400,000
reform
Sub-component 1.3. Feasibility Study of
$200,000
Suburbanization.
Sub-Total Component 1: $1,100,000
Component 2: Expanding access to affordable housing finance
Sub-component 2.1: Increasing access to
housing finance to low income and
$400,000
informal income households.
$500,000
$400,000
$200,000
$1,100,000
$400,000
Sub-component 2.2: Development of long$300,000
term finance for housing.
Sub-Total Component 2:
$700,000
Component 3: Regional Capacity Building and Knowledge Sharing
Sub-component 3.1: Building Technical
Capacity in Affordable Housing Sector.
$130,000
Sub-component 3.2: MENA regional
integration and knowledge-sharing.
Sub-Total Component 3:
Total Project Cost:
(USD)
$300,000
$700,000
$130,000
-
$ 70,000
$ 70,000
-
$200,000
$200,000
$1,800,000
$200,000
$2,000,000
The above costs are estimates at this stage. The Terms of Reference (TORs) of the different studies and consultants
services will be tailored, with agreement of the Government, to the available funds under the Transition Fund
financing.
6. Budget Breakdown of Indirect Costs Requested (USD)
Description
For grant preparation and administration:
Staff time
Travel
Consultants
Total Indirect Costs
4
World Bank4
AMF
Amount (USD)
40,460
10,000
30,000
15,000
5,000
10,000
$55,460
$15,000
$30,000
$80,460
$30,000
$110,460
Includes USD 60,000 preparation cost and USD 20,460 grant administration cost
23
F. Results Framework and Monitoring
Project Development Objective (PDO): The objective of the proposed project is to support the Government of Tunisia in designing reforms of programs and policies to
promote access to affordable housing for the low to middle income households.
The objective will be achieved by supporting the government in (i) the evaluation of their existing programs for affordable housing, (ii) designing the key policies that will
be catalytic and transformational in improving the supply of affordable housing and the availability of affordable housing finance, and (iii) cross-regional knowledge sharing
and expertise strengthening in the area of affordable housing and housing finance.
Cumulative Target Values**
PDO Level Results Indicators*
Indicator 1
Counterparts endorse project
recommendations in designing
or modifying relevant housing
policies and programs.
Unit of
Measure
Number of
recommendati
ons endorsed
by key
stakeholders
that feed into
housing policy
and program
formulation.
Base
line
0
YR 1
YR 2
YR3
2
4
6
24
Frequenc
y
Biannually
Data Source/
Methodology
Endorsement
as reported by
the Ministry
of Public
Works and
Housing and
the Ministry
of Finance.
Responsibilit
y for Data
Collection
World Bank
Description
(indicator
definition
etc.)
Policies and
programs may
include
government
strategy, policy
guidance, laws
and
regulations,
and donor
sponsored
government
operations.
Indicator 2
Counterparts endorse project
recommendations for improved
access to affordable housing
finance for the low and informal
income population.
Number of
recommendati
ons endorsed
by key
stakeholders
that feed into
formulation of
policy and
programs for
improved
access to
housing
finance by the
low income
population
0
1
2
No. of
participants in
workshops or
trainings
0
6
20
3
Biannually
Endorsement
as reported by
the Ministry
of Public
Works and
Housing,
Central Bank,
and the
Ministry of
Finance.
Biannually
Training,
conferences
and
workshops
reports and
beneficiary
surveys.
World Bank
Indicator 3
Improved capacity of Tunisian
policy makers for formulating
and implementing affordable
housing and housing finance
policy through the capacity
building and knowledge sharing
initiatives supported by the
Project.
30
Arab
Monetary
Fund
INTERMEDIATE RESULTS
Intermediate Result (Component One): Scaling-up the production of affordable housing.
Sub-component 1.1: Evaluation of the effectiveness of government programs and recommendations for reforms
Sub-component 1.2: Review of tools for land supply and recommendations of reform
Sub-component 1.3: Feasibility study of suburbanization.
Intermediate Result indicator:
Market analysis of supply and
demand, evaluation of
effectiveness of government
Number of
reports
completed.
0
1
2
3
25
Bi-annually
Reports and
studies
produced.
World Bank
.
programs and
recommendations.
Intermediate Result indicator:
Number of
0
1
2
3
Bi-annually
Reports and
Technical analysis, feasibility
reports
studies
studies and policy support for
completed.
produced.
increasing supply of urban land
for residential development
(including the feasibility study
on suburbanization).
Intermediate Result (Component Two): Expanding access to affordable housing finance.
Sub-component 2.1: Increasing access to housing finance for low and informal income households.
Sub-component 2.2: Development of long-term finance for housing.
Intermediate Result indicator:
Number of
0
1
2
2
Bi-annually
Reports and
Feasibility report guarantee
reports
studies
mechanism to increase access
completed
produced.
to housing finance to low
income and informal income
groups and development of
lending standards
Intermediate Result indicator:
Number of
0
1
2
2
Bi-annually
Reports and
Feasibility reports to develop
reports
studies
long term financeand action
completed
produced.
plan to improve regulatory
setting.
Intermediate Result (Component Three): Regional affordable housing technical capacity building and knowledge sharing.
Sub-component 3.1: Building Technical Capacity in Affordable Housing Sector.
World Bank
World Bank
World Bank
Sub-component 3.2: MENA regional integration and knowledge sharing.
Intermediate Result indicator:
Workshops and trainings
undertaken on affordable
housing finance and policy.
# events
0
2
4
6
Annually
Training,
conference
and
workshop
participant
surveys
Intermediate Result indicator:
Content on an e-platform to
consolidate housing data,
information.
Percentage of
progress
0
25%
50%
100%
Annually
Progress
report
26
Arab
Monetary
Fund
Arab
Monetary
Fund
27