In the face of exorbitant mortgage rates crippling the housing market in Africa, Coinbase, a leading cryptocurrency exchange, has spotlighted the potential of blockchain technology to radically transform the situation.
The exchange has specifically highlighted the innovative efforts of Empowa, a decentralized finance (DeFi) platform powered by Cardano (ADA), that aims to tackle the housing affordability crisis in Africa.
Empowa has set an ambitious mission: to enable 1 million African families to become owners of climate-smart homes by 2030. The company is determined to disrupt the current real estate market, which is ridden with high mortgage rates. In Zimbabwe, for instance, the rate stands at an almost prohibitive 45%, according to Empowa. Such high finance costs have perpetuated a vicious cycle of unaffordable housing across the continent.
The Empowa team, in their white paper, have underlined the severity of the issue, stating that low levels of investment, high interest rates, and short finance terms (if finance is even available) have resulted in an extremely high cost of capital. The 2020 Centre for Affordable Housing (CAHF) Annual report states that the mortgage rate in Zambia is 32%, while it’s at least 25% in Guinea, Nigeria, and Zimbabwe.
Coinbase, on May 12, 2023, took to Twitter to shed light on the dire mortgage situation in Mozambique, where rates have surged to 22%. Despite having sufficient income, many locals along the coastline cannot obtain a house loan due to their income being informal rather than salaried. Consequently, many are resorting to hand-built shelters often destroyed by cyclones.
Empowa, in partnership with Casa Real, is leveraging NFTs and blockchain technology to revamp this outdated loan system, making homes more accessible to Mozambicans. Through decentralized funding models and NFT technology, individuals can purchase a home without having to obtain a traditional mortgage. These cyclone-resistant homes in central locations start at a $10K price point and are affordable for low- and middle-income families.
Coinbase’s decision to highlight this issue is likely driven by several factors. Firstly, it aims to raise awareness about the challenges faced by Africans in securing affordable housing. Secondly, as a leading cryptocurrency exchange, Coinbase is demonstrating the potential of blockchain and cryptocurrency technologies to address real-world problems. Thirdly, this move may signal Coinbase’s interest in exploring market expansion opportunities in regions like Mozambique. Lastly, Coinbase’s commitment to corporate social responsibility is evident as it uses its influence to shed light on social issues and promote innovative solutions.