Moroccan fund provides affordable housing for low income families

26/11/2006

A security fund for low income persons is providing Moroccans with opportunities to buy homes. Traders, street vendors and craft workers stand to benefit the most.

By Sarah Touahri for Magharebia in Rabat – 26/11/06

[File] Building sites are springing up all over Morocco so that citizens can live in dignified conditions.

A security fund for people on low and irregular incomes -- FOGARIM -- has enabled 1,000 applicants to take out low-interest loans to buy homes since its inception earlier this year, the director for real estate development at the Ministry of Housing and Urban Development, Moulay Cherif Tahiri, said. A total of $117m has been borrowed so far.

According to Tahiri, FOGARIM enables people with low ability to save to take out bank loans to buy or build social housing. Civil servants and employee of companies affiliated with the National Security Fund (CNSS) will benefit from the fund, as well as persons with some form of paid employment and who are not home-owners.

Loans of up to $23,500 over 25 years will be granted at interest rates of 6.5% to 8.5%.

Tahiri said FOGARIM provides impetus to banks to simplify financing for social housing. "Although they have traditionally been resistant to the idea of dealing with customers with irregular incomes, banks are now moving in a new direction by opening up to a new clientele. The involvement of the banking industry is stimulating the housing sector," he said.

Tahiri added that the fund is a prime example of public-private partnerships. Several banks have already begun advertising and granting real estate loans under FOGARIM.

"Banks are playing an increasingly important role in financing the [real estate] sector and can finance up to the full cost of a home. They are complying with the FOGARIM scheme, the project of the century," Khalid Alioua, chief executive of the Credit Immobilier et Hotelier (CIH), said.

The government has pledged to create over 10,000 new homes during the first year, and their current goal is to build over 50,000 homes in total.

According to figures from the Ministry of Housing, the scheme’s main beneficiaries are traders (41%), followed by street vendors (23%), craft workers (16%), taxi drivers (4.2%), maids (3.7%) and labourers (3.3%).

Amina El Ouardani, a dressmaker currently living in a shantytown in Rabat, said that adverts for the scheme have finally made her think about buying a proper home. The bank which she contacted quoted the following terms: for 140,000 dirhams ($16,500), the price of the home, she would need to pay 1101.28 dirhams ($130) a month for 25 years. "It’s a lot of money for me, but with the help of my husband, we’re going to be able to live in decent conditions," she said.

FOGARIM replaces the salary assessment certificate, which used to be granted by the local authorities after a sworn statement was made by the applicant.

The fund was launched in 2004 but only became operational this year.