The Republic of Djibouti faces a heterogeneous housing market where few households have access to bank credit that would allow them to purchase their housing, and where the production of formal affordable housing is mainly ensured by the public sector.
The Djibouti affordable housing financing project (P176772) has the ultimate objective of improving the affordable housing ecosystem as a whole for the benefit of the most vulnerable populations, through three targeted interventions:
- Develop access to financing for affordable housing for low-income households through a mortgage guarantee mechanism;
- Promote subsidized home savings products for low-income households so that they can afford to make a mortgage deposit or purchase building materials to access decent housing.
- Consolidate and support SMEs and private sector players across the construction sector value chain to increase private sector participation in the affordable housing market.
The activities of component 1 will therefore consist of the establishment of a partial guarantee window for affordable housing loans which will be hosted by the Djibouti Guarantee Fund (FOGAD). This guarantee fund will accommodate a new mortgage window which will thus facilitate loans granted by participating financial institutions (PFIs) such as the commercial banks of Djibouti to low-income populations so that they can acquire quality housing in the long term and increase the contribution of the private sector to the affordable housing construction supply chain. This will be done through the capitalization of the Fund, the strengthening of its institutional capacities, the definition of eligibility criteria, pledging and realization of the guarantee, and the signing of agreements between the Government, FOGAD and financial institutions.
FOGAD is a specialized financial institution, endowed with legal personality as well as management autonomy in accordance with article 9 of law No. 119/AN/11/6th L. Created in the form of a limited company in 2016 and housed at the Ministry of Finance, this institution is 100% owned by the State. Its mission is to contribute to the development and promotion of a private sector and a network of modern very small and medium-sized enterprises and industries (TPME/TPMI), capable of promoting the economic and social development of Djibouti.
In order to comply with the Environmental and Social Framework (CES) of the World Bank, in particular with environmental and social standard no. 9 (NES no. 9) of the CES, FOGAD, responsible for the implementation of component 1 of the project in Djibouti, is required to develop an Environmental and Social Management System (ESMS), which is the subject of this document.
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