Questions/Answers

Initiative: Program under umbrella of social housing and mortgage finance fund (SHMFF) will assist government of EGYPT to improve performance of housing sector by designing and implementing new programs that will address the gap to provide adequate and affordable housing units for low income households. Objective: Improve affordability for low-income households in Egypt, hence building integrated housing communities with needed services through designing and coordinating policies in affordable housing sector. Challenges: • Informal settlements phenomena; Providing affordable housing units, rationalizing construction and design standards. Thus program succeeded to provide 390K households with subsidized units through mortgage finance amounted to ($2.7 billion). • Enhancing women empowerment, only 5% of women in Egypt own assets according to Women’s Economic Empowerment Study released in 2019, while Program succeeded to achieve gender equality, with 65% acceptance rate to women application. • Digital illiteracy, 69% of Egyptian citizens used SHP automated platforms and tools for the 1st time. Program succeeded to apply automated applications for both application submission and payments collection which considered the first automated housing service provider in Egypt and Africa. • Bridging Financing Gap, encourage Private Banks and Mortgage Finance Companies (MFC) to provide mortgage loans and raise affordability of low-income citizens. program succeeded to increase its cooperation protocols to reach 33 mortgage lenders through launching incentives packages to encourage public, private banks and MFC, providing mortgage finance with an average of ($7K) per beneficiary with subsidized interest rates, funded by Central Bank of Egypt (CBE) and Ministry of Finance (MOF). • Expand Private Sector Participation; Program offered new initiative to expand their participation in building affordable housing for low-income household, almost 200 private and public contractors are now engaged. In addition to private field investigation and checking companies.

The program sets eligibility criteria for subsidizing applicants to ensure reaching low income households. Applying automated process reduced the average turnaround time to seven weeks speeding up subsidy allocation by 87%. Moreover, automation added more control and monitoring on affordable housing system. The program developed procedures manuals to achieve high efficiency and effectiveness rates. In addition, launching an automated complaint system to strengthen citizen engagement, respond for household needs and articulate citizens voice besides their complaints thus improving quality of services products.

• Million affordable units over 283cities within 27governorates (urban and rural) to raise rural areas capabilities with mortgage finance facilities & subsidized interest rate to enhance affordability, using automated applications system and investigation tools to achieve social justice. Out of 1.3million applicants, 65%dealt with banks for 1st time. 80%of beneficiaries are among lowest 40% household, 22%are women and 18%are self-employed, also allocating 5%of units for disabled-citizens. • Directing population growth to cities-borders, protecting agricultural lands from encroachment by increasing public supply of fully-serviced affordable housing in new cities, keeping balance of ecosystem, using eco-friendly building materials, adopting Affordable Housing-GPRS to decrease climate change hazard. Allocating units for emergencies and disasters, as during Covid19-Pandemic. • Separating every four-buildings with green-spaces, equipped with clean water, electricity, gas, solar cells, road networks, and transportation to reduce commuting time. • Providing awareness campaigns. • Recycling solid waste. • Rationalizing water usage through gray water tanks and triple sewage treatment plants. • Smoking is prevented in all public services institutions. • Attracting billions of investments, contributing with 2%to GDP. • Procurement public tenders to ensure transparency. • Generating 3million jobs including small professions. • Cooperating nationally with (CBE-MOF-NUCA-MCIT-Banks-MFCs) plus finalizing (PPP)-initiative agreement to increase private-sector participation. Internationally, with many countries (Indonesia-Tanzania-Yemen and others).

The program is socially sustainable as it targets lowest 40% households providing them with affordable fully finished & serviced housing units, using $1 billion loan from WB funding covering upfront down payment subsidy. In addition to, new subsidized interest rate initiative over 30 years by the CBE& MOF to achieve economic sustainability. Moreover, program is currently working on a new subsidized rental program for newly married couples. It’s environmentally sustainable through adopting green concepts that will help to reduce the impact of construction activities on climate change and rationalize the consumption of energy resources, monitored by Affordable Housing GPRS.

Building million adequate, safe and subsidized affordable units for low-income households with subsidized infrastructure cost ($ 6.6k per/unit) deducted from unit price by 2024; to overcome an acute shortage of affordable housing. Up till now, program succeeded to construct over 537k units, allocated 410k units, and under construction 320k units. Unified eligibility criteria was adopted to ensure system governance and reach targeted low-income households. Periodic income levels review according to last announced Income & Expenditure study, monitored interest rate and down payment subsidies. Investigating applicant’s, I-Score, incomes levels and ownership status before under writing loans. Huge reduction by 87% in application turnaround time (from 11to7 weeks), transforming paperwork systems to automated applications to enhance transparency, and prevent fraud. Addressing the complexity of macroeconomic environment which resulted in high inflation and high interest rates. Hence, so far granting mortgage finance liquidity at a Long-term Subsidized Interest Rate amounted for $2.7 billion for 390K households, with average mortgage loan reached $7k/household. Average LTV absorbing low-income citizens’ savings in down-payment. In addition to granting $433 million upfront down-payment subsidy ranging from $333 to $ 4k according to each beneficiary income level. Therefore, to enhance affordability lowest income groups get highest subsidy.

Remarkably, women have a higher acceptance rate for loans that reached 65% and up to 22% of total beneficiaries are women. Adopting positive discrimination policies leading to empowering women, strengthening their economic and cultural position, and guarantying equal access to credit facilities, mortgage finance, and ownership. Priority is given to female headed household in the worst housing conditions (widow or widow with kids, divorced or divorced with kids) to obtain affordable housing unit with full property rights, and ensuring that contractual provisions are in place to protect women who financially contribute to the down payment and installments.

The program is targeting low income households, focusing on marginalized groups: Lowest income 40%, over three-fourths of household beneficiaries during the past five years were in the lowest 40% of Egypt’s household earned-income distribution, representing 80% of total beneficiaries. Program allows them living in quality affordable housing, experience less health issues, lower crime and drug usage rates. Women, 22% of total program beneficiaries are female-headed household; policy eliminates any form of discrimination or limit provisions for women to hold unit rights. Accordingly, improving safety, income levels, and more employment opportunities. Increasing their potential contribution to economic growth, enhancing their children health and performance at school. Citizens` with special needs, allocating 5% of total housing units, Guarantying their constitutional right to adequate housing in accordance with national & international standards. This enhanced their psychological and social needs, through integrating them into society, and eliminating any form of discrimination. Self-employed, remarkably 18% of beneficiaries are Self-Employed, for the first time in Egypt this segment is included ensuring that Self-Employed applicants are eligible to apply for housing unit, allowed to receive mortgage finance, enabling them to have more discretionary income to buy health insurance, start new business, etc.

Reach neediest citizens: • In 2014, launching of SHP for low income households. • In 2015, signing $500 million Loan agreement with World Bank (WB) to provide upfront demand side housing subsidy to targeted low income citizens. Bridging finance Gap: • In 2014, signing $1.3billion agreement with CBE to provide subsidized interest rate (5% - 7%) over 20 years to beneficiaries. • In 2019, signing new initiative with MOF to cover interest rate differential between subsidized and market rate to continue offering units at affordable conditions. • In 2020, increasing maximum provided subsidy amount from $2.7k to $4k. • In 2021, signing new initiative with CBE at 3% interest rate over 30 years, which is the lowest ever in Egypt. Shifting towards Green Building: • In 2018, new environmental initiative to extend the program SDG’s targets through implementing basic green architecture and sustainable urban development communities monitored by affordable housing GPRS. Scale up program financing: • In 2020, signing additional finance of $500 million with WB, to increase number of beneficiaries by 31%. Enhancing Monitoring and Evaluating activities: • In 2014, adapted automated application system to eliminate paperwork and accelerate services. • Since 2014 up till now, evaluating program measures yearly through Internal and externally Audit by an Independent Verification Agency (IVA). • In 2017, Improving monitoring and evaluation, through applying automated housing units’ allocation system to provide applicants greater confidence in program’s transparency. keep up with technology and social media: • In 2019, introducing new automated initiative for mortgage finance installments collection through various payment hubs, in cooperation with CBE, to provide faster and easier service. • In 2020, launching platform for social engagement through Facebook Page to publish program updates, communicate directly with households and replying to their inquiries, announcing new calls for applications. YouTube channel to provide illustrative videos.

• Scarcity of land, thus exploiting cities-borders to build new cities connected with all Facilities and Services close to employment centers. • High interest rate, initiative of ($1.3 billion) with CBE to offer subsidized interest rate (5% - 7%) over 20 years, followed by MOF initiative in 2019, covering market differential subsidized interest rate over 20 years. New initiative with CBE in 2021 with 3% interest rate over 30 years. • High construction costs, two loans agreements were signed with WB amounted $1 billion to continue providing necessary upfront down payment subsidy and finance affordable housing to low-income households.

Providing innovative services: - Long Term Subsidized Mortgage Finance Liquidity Facility at 3% interest rate and an upfront down payment subsidy ranging from $ 333 to $ 4K changing according to income level. - Appling first Affordable Housing Green Pyramid Ratification System (GPRS) for affordable housing to reduce health hazards, and contribute in mitigating and adapting to climate change throughout new communities. - Appling the first housing automated application system for affordable housing in Egypt and Africa. - Targeting new cities to reconstruct cities-borders areas and create new urban cities, ensuring their well distribution over 283 cities within 27 governorates.

The program is inland tailored and a product of the Egyptian planning and management. It has been completely formulated by Egyptian thoughts to suit the needs of the Egyptian low-income families. The program shared its experiences, and thoughts with more than one country.

Adapting technological strategy to accelerate provision of services, saving time and effort using new technology and automated operations. Thus eliminating paperwork and accelerate subsidies and mortgage applications. Services have grown exponentially in handling cases (from 300 to 90,000 cases/annually), as well as reducing turnaround time from eleven to seven weeks. - Households submit online application. - Automatically Units allocation according to priorities. - Announcing Screening Results and Online Grievances. - Applicants requests and complaints can be submitted online. - Electronic collection of down payment is currently proceeding. - Facebook page and YouTube channel were created to assist applicants’ inquiries.

• Iraq, February 2021, Ministry of Housing representatives had attended a regional workshop in Egypt, organized by UN settlement program, titled “Activating the strategy of housing reconstruction and developing housing sector”, Egyptian success story of affordable housing was presented. • December 2020, Pakistan Housing Authority in cooperation with WB, requested sharing Egyptian Housing experience, fundamentals of operational, monitoring systems, and IT system. • Uzbekistan is currently implementing SHP inspired by Egyptian SHP starting December 2020. • Yemen, in response to their request, a delegation was invited (October 2020), to share knowledge of program’s most important features and developments. • September 2020, program was communicated to FHS in Senegal, to illustrate operational and organizational working system, twining agreement was hindered because of Covid-19 pandemic. • During 10th World Urban Forum held in February 2020, Ministry of Housing in Zimbabwe articulated their willingness to learn from Egyptian program. • Workshop “State Support for Housing Finance” was held in 2018, with Afghanistan, resulted in cooperation between SHP and AHP, to design an affordable housing model to start new housing project. • In 2016, there were exchange-visits between Egyptian delegation and Saudi Arabia to transfer engineering and technical expertise through training courses and workshops of building projects on land.

initiative is already adopted to other context

Land: Free serviced lands areas connected to basic infrastructure from New Urban Communities Authority (NUCA). Finance: In 2015, WB first $500 million loan to subsidize low-income households and in 2020 additional finance loan of $ 500 million, to increase targeted low-income households by 31%. Liquidity Facility: CBE offered $1.34 billion initiative to subsidize mortgage interest rate differential from 18% to (5% & 7%). Followed by MOF initiative to continue offering subsidized mortgage interest rate differential. Human resource: Over 1000 professional and clerical efficient employees participated to manage subsidy operation, beside three million skilled and unskilled workers to construct housing units.

Financial: Diversified funding sources amounted for $10 billion to construct new units, thus reducing burden of constructing housing units on the State Budget. Moreover, subsidizing down payment are guaranteed by WB loans and subsidized interest rate are secured by CBE and MOF agreement to pay market differential rates. Institutional: SHP targets building million affordable housing units for low-income households, with continuous technical support from WB to improve subsidy mechanism; Collaborating with stakeholders, applying automated systems to accelerate mortgage finance applications. Enhancing financial inclusion through mortgage banks/companies using automated payment mechanism. Moreover, strengthening citizen engagement via automated complain system.

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Independent Verification Agency (IVA) assigned by the World Bank to measure the impact of reforms implemented thus: -Management meetings held to determine if changes took-place in; control, procedures, factors affected SHP (regulations, legal matters, changes in structure or operations). -On site reporting, auditors examine systems’; ability to record, process data (downloading system reports, site visits). -Auditors request files, documentation from internal auditors to ensure systematic coverage of operation, run data, assist beneficiaries’ reports. -External auditors deliver Final Report detailing the audit findings. If found discrepancies in reporting or non-compliance of rules and regulations, auditor recommend immediate rectification.

Program consists of four Components including 12 indicators: -Strengthening Governance and Institutional Set Up of Housing Sector: • IAD establishment, operation, to providing assurance service. • Interest rate subsidy, to ensure SHP sustainability. • legislation adoption for installment sales. • Green standards into SHP. • Serve beneficiaries efficiently -Enhancing Transparency and Accountability: • Establishing M&E system, “Multi-Year Plan, Annual Targets” • Effective respond to citizen complaints. • Mechanism for monitoring occupancy. -Improving Access to Affordable Housing: • Number of Subsidized new housing unit/year. • Number of Subsidized rental unit/year. • Number of Housing units developed by private-sector. -Promoting Well-located Social Housing. • Units located within 60 minutes or less to employment center.

IVA report ensured that SHP is responsive for effective demand, making use of vertical solutions for housing, preventing people from occupying hazard areas, ensuring adequate use of public space and protect privacy. All resources used for implementation are adequate with an Occupancy Rate reaching 93.77%. Appropriate affordable housing units’ sites are connected to transportations network, basic infrastructure, surrounded by health and education services. Housing units’ locations are within Governorates and Cities-Borders facilitates, within commuting time to workplaces not exceeding 60 minutes. During covid-19 pandemic, an automated interactive C-Services website “https://cservices.shmff.gov.eg/” was introduced to compensate for customer services centers closure, providing a new facility to respond quickly to requests and answering quarries, such as “submitting / completing the required documents”, amending applicants’ data. Introduction of New rental scheme for citizens who can’t afford ownership, finalization of a new (PPP) initiative agreement to increase private sector participation on December 2020. In addition to mobilizing three new units “Media & Public Relations, Environmental, Grievance & Complain units” to cover citizens’ needs as indicated in 2020 evaluation.

In 2014 SHP was launched for low income households in coordination with governmental institutions and signing agreements protocols with: -MHUUC: Proposing, planning, launching SHP and supervising its implementation, in order to provide affordable housing units for low-income households. -NUCA: governmental entity under affiliated to MHUUC, providing free serviced infrastructure land areas, and assisting in designing and building affordable housing units on SHP expenses. (Total finished units reached 537K, under construction 320K, and 143K Planned to build). -Post Office: Using the well spread offices for TORs distribution, and down payment deposit collection. -MCIT: Establishing automated system, to assist applicants, reduce costs, and save time & efforts; Portal was built with an online application, online payments, and online status inquiry to shorten turnaround and ease work load. -CBE: Approved a subsidized credit mortgage finance liquidity facility to Egyptian banks and mortgage finance companies amounting to $ 1.34 billion to subsidize mortgage finance, to bridge gap between market and subsidized interest rate to facilitate affordable housing ownership. -MOF: Stepped in to subsidized interest rate to keep the Program sustainable and affordable for low-income citizens with the depletion of CBE initiative.

• MHUUC, Proposing, planning, supervising SHP development and implementation. • Continuous technical assistance collaboration with the WB technical teams, and evaluating (SHP) through disbursement-linked Indicators to achieve success measures. (IVA) yearly assessment to ensure goals achievement. • Engagement of (CBE) to subsidized credit mortgage finance liquidity facility for Egyptian Banks, Mortgage Finance Companies to bridge the gap between market and offered interest rate subsidizing affordable housing ownership. • MOF partnership to subsidized interest rate to keep the Program sustainable and affordable for low-income households, with the depletion of the (CBE) initiative. • (NUCA) Provides free serviced lands, assisted in designing and building units. Total number of finished units reached 537K, under construction reached 320K, and 143K units Planned to be built. • Collaboration with 33 private and public financing entities (banks/companies), providing finance with 4.5% profit margin for low-income household with lower than 1% default rate. • (MCIT) supported the Program with automated systems to assist applicants, reduce costs, save time & efforts, using portal for online application, online payments, online status inquiry to shorten turnaround time and ease work load. • (HBNRC) designed Affordable Housing (GPRS) for Green initiative and is cooperating with (SHP) in implementing, and evaluating this initiative.

Shifting from supply to demand side subsidies is key lesson learned over the past few years, which enhanced efficiency, transparency and subsidy targeting to the lower income groups. Reducing down-payment requirement for low-income households. Subsidies are set to increase with decreasing income levels, and are linked to a maximum affordable mortgage loan by a financial institution. Automation was implemented to facilitate services provision, through an automated system for recording and verifying citizen's documents, services have grown exponentially in handling from 300 to 90,000 cases annually, and reducing turnaround time to seven weeks, thus accelerated the submission process and made allocations more transparent. Moreover, studying the actual demand as a more efficient approach for resource allocation, to shorten demand latency, fulfill low-income household demand, enhance the performance of the program and improve supply chain efficiency. Shifting towards green buildings concept, to prioritize citizens’ health and well-being through launching a new initiative to build green affordable housing units certified by Affordable Housing GPRS by 2024. Applying efficient design which lower construction costs through using Eco-Friendly building materials, separating buildings by green spaces to increase adequate light and ventilation system. Using solar heaters and cells for lightning shared public areas reducing utility bills.