BHS, CHAMPION OF BANKS OF HABITAT
To understand the economic model of housing banks, we approached one of the actors in the field. General Director of the Housing Bank of Senegal (BHS), Mamadou Bocar Sy is a graduate of the renowned Center for Economic and Banking Financial Studies (CEFEB), a DES in Banking Management of Paris 1. Working for 30 years the emergence of a strong institutional and technical framework to encourage the participation of financial institutions in support of this sector, Mr Sy is part of the cohort of banking managers who have made Senegal a pole of reference for the financing of the immovable. In this exclusive interview, he answers all the questions, including the particularity of the BHS, one of the few housing banks in the region, to have survived all crises.
When was the Senegal Habitat Bank?
The BHS was created in 1979 and its activities started in 1980. The creation of this institution bears in itself the incentives of the Senegalese government in terms of social housing. Before the creation of the BHS, social housing was essentially financed by state resources and foreign aid. From the oil crisis, resources became scarce, leading to the idea of creating a specialized bank.
From the outset, I must say, the BHS has evolved within the framework of the public-private partnership involving, besides the State, the social welfare actors, the insurance companies, the pension funds, the promoters and the commercial banks. The state has put an initial endowment through a bonus fund to support first-time buyers who have low incomes to buy their homes.
So, from the beginning, the BHS had this very strong social vocation. How has the social capital of the bank evolved since then?
We started from a very low capital of less than one billion FCFA to over 10 billion today by successive incorporation of reserves and from there to 10.5 billion following a capital increase reserved for staff. The capital form remained almost unchanged except for the exit of the IFC in the 2000s and the BCEAO (under the effect of its regulatory evolution) whose shares had been taken over by the State.
The Basel 2 and Basel 3 rules come into force. What are the meanings for a specialized bank like BHS?
At first glance, the meaning is the same for all banks. Since last January, these standards are in motion. This means a better risk management policy of the bank that was previously focused on credit risk. Now all risk families are taken into account, especially information and IT that can sometimes lead to risks that are heavier than credit risk. On the other hand, the complexity of the markets becomes strong. However, these standards are an additional constraint for the BHS because they do not take into account their specificity. We are in housing finance. These are very heavy investments over very long periods of time, which means that there are differences with the traditional banks in terms of risks and the allocation of resources. Unfortunately, we will be looked at the same way, the regulations being applied uniformly to everyone.
Given some of these regulatory constraints and the fact that Habitat banks have gone bankrupt all over Africa, does a specialized bank have a future?
Specialized banks have a future. The role of a housing bank is to finance access to housing. The relative success of the BHS can be explained by the fact that it found an existing ecosystem when it was created. Senegal already had two public real estate developers in addition to private, cement … The state has supported the process by putting in place a favorable policy allowing the builders to access the land. In addition to this system, there was attractive taxation and access to bank financing for promoters and purchasers. Senegal also has many habitat cooperatives.
For example, we are currently assisting the military cooperative in a program to build 4,000 homes. The creation of the BHS helped to bring to market from 2 to 3000 homes per year. Of course things have changed. BHS no longer has the exclusivity of the real estate financing offer even if it still retains a good head start.
The state no longer pays bonus funds since 1989 even if the effects of the bonus continue to apply. This is where we must greet the imagination of the men and women who make the daily life of the BHS. The Habitat Bank has a future in view of the increased demand and dynamism of the players involved in the segment.
What is your growth policy at national and international level?
We started to densify our network. For a quarter century, we had only four agencies, including Dakar, Ziguinchor, Paris and New York. There we have just worked our eighth agency. Our ambition is to be 20 agencies before the end of 2019. We have eight points of sale in the USA. We are returning to France to accompany Senegalese from abroad in the acquisition of their home. It must be said that one-third of our clients are Senegalese from outside.
This customer base generates two thirds of our deposits. We must also pay attention at this level to unskilled promoters who approach this clientele and pledge to build them housing without any guarantee and without going through the notary. I think that the establishment of urban poles provides a solution to this problem because all actors involved in the chain are identified. This especially as the head of state has specifically instructed to grant 30% of housing in these urban centers to Senegalese from abroad.
As regards urban centers, there is much talk of the new city of Diamniadio. What has been the contribution of the BHS in this project?
We, we believed from the start. The launch of the urban poles policy corresponded to the 35 years of the bank. We had organized on occasion a symposium entitled “Urban Poles: Issues and Perspectives” under the presidency of the Head of State. The ambition of the policy of the Head of State in housing is to build 10,000 homes per year, or 50,000 after five years. You see the leap from the 2000 to 3000 housing units a year that were built up to that point? The urban hub of Diamniadio, which will be followed by Lac Rose and the other urban centers, is a major breakthrough. This is 900 hectares which are thus allocated to the sector.
The property tax base is given free of charge to the developers who participate in the servicing. Taxation is attractive. Notaries have accepted following a meeting with the BHS and property developers to make a flat fee for the registration fees of certain types of housing. We ourselves have agreed to make rates of 6 to 6.5% for social housing. We launched the “Pack 35” corresponding to our anniversary and consisting of asking for no personal contribution for any real estate credit not exceeding 35 million FCFA for maturities of 25 years. Still being the urban pole of Diamniadio, we are today the first bank to set up a fund of 30 billion CFA francs for developers who are on the site. We are now preparing to finance the acquirers.
In fact, the urban hub of Diamniadio allowed us to solve our problem of strategic positioning by multiplying our activities by four. The State has also taken steps to help us mobilize resources through AFD, IFC, BOAD and CRRH-UEMOA. We believe that the best way to ensure the sustainability of the bank is to move towards external growth that will be supported by two subsidiaries. The first will facilitate the transfer of resources from our diaspora by relying on new technologies with the help of money transfer specialists. Our US subsidiary, which already has a money transfer platform, will play a major role in this project.
The other axis concerns the densification of our network. We are in Touba, we are opening up to Ourossogui and Matam, in the cities of origin of most of our immigrants. We will soon open in Tambacounda and Kedougou. Our second subsidiary, BHS Développement, will provide assistance and advice and play the role of a holding company in the Habitat banks of the sub-region. After 38 years of existence, it’s time to export our knowledge in the sub-region. The subsidiary will also manage litigation and better manage the claims awarded.
Your job is based on mortgages. How do you manage risk in a Senegalese context where titled sites are rare?
We are one of the UEMOA countries where the land organization is the most advanced. But, despite this, land titles are still weak. Until now we had the private land titles, we also had the leases of the State which have the same legal value as the first ones. In addition to this, the President of the Republic has just taken a revolutionary step by asking for free conversion of all precarious land titles into private and definitive land titles. The application decree has just been released and it is now applicable. It is a measure that allows banks that held claims on the economic agents concerned to have the guarantee. In addition, many economic agents will have a basis for getting into debt. This is beneficial for all economic agents.
In concrete terms, what should a Senegalese diaspora do to buy a home in Diamniadio?
We will have to get closer to our bank and open an account. The bank issues you a booking contract and assists you in choosing a housing compatible with your income. We have a platform that allows for credit simulations and has the power to grant credit. We are preparing to launch open days at Diamniadio in partnership with the promoters. Customers can get information on the spot and leave with their credit. We will launch similar actions with our compatriots from abroad.
In conclusion, I would say BHS soon on the stock market?
We are already very active in the financial market through our investments. We are especially on a revolutionary project, the diasporas bonds that we develop with the BRVM. The idea is to see how to mobilize the savings of the diaspora with the support of the BRVM to make it an investment product that will serve to guarantee the real estate loans that the same diaspora will contract. The BHS goes via these accompanying instruments to be the bank of all Senegalese and not only officials and employees. In 38 years, we have developed an expertise and a fine knowledge of our customers. Hence the forthcoming establishment of a training center, the BHS Management School, which will contribute to the training and sharing of experience. The scheme will be complemented by a BHS foundation that will look after health, education and culture.
