May 2 (Bloomberg) -- South Sudan’s Cabinet approved the establishment of a $200 million mortgage lender through a public-private partnership to help address a shortage of homes, Housing Minister Jemma Nunu Kumba said.
The proposed company, to be known as Housing Finance Bank, will be 49 percent owned by foreign investors, with 31 going to domestic financiers and the rest to the government, Kumba said in a phone interview on April 30 from the capital, Juba. About 90 percent of South Sudanese live in grass-thatched houses, according to the ministry.
“We have done a situation analysis and we found that housing is scarce and the few houses available are very unaffordable,” Kumba said. The lender must raise $30 million to receive central bank approval to start operations, she said.
South Sudan is forecast to be the world’s fastest-growing economy this year, with the International Monetary Fund forecasting gross domestic product will expand 32.1 percent after contracting 53 percent in 2012. The East African nation this month resumed oil production, ending a 15-month shutdown after a dispute with neighboring Sudan over transport and processing fees. It pumped 350,000 barrels of crude per day before output was halted.
An enabling law for the mortgage industry has yet to be drafted and passed by parliament, and the establishment of the lender may take as long as a year, Kumba said.
“We’ll make sure it materializes in the shortest possible time,” she said.
The government envisages the lender offering housing loans at interest rates of 10 percent to 15 percent, Kumba said. Two foreign venture-capital companies have expressed interest in investing, she said, without identifying them.
Banks that operate in South Sudan include Kenya Commercial Bank Ltd., CfC Stanbic Holdings Ltd. and Equity Bank Ltd.
South Sudan seceded from Sudan in July 2011 after a referendum on independence, the culmination of a 2005 peace agreement intended to end a two-decade civil war. The south kept three-quarters of the formerly united country’s oil output of about 490,000 barrels a day.
Gross domestic product per capita in South Sudan is estimated at $1,859, according to World Bank data, placing the country ahead of other sub-Saharan African nations including Nigeria, Ghana and Kenya.
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