Unlock Zimbabwe’s ‘Dead Capital’ or Remain Trapped in Poverty: Sharpe

WestProp chief executive Kenneth Sharpe has called for urgent reforms to the country’s mortgage market arguing that unlocking billions of dollars tied up in residential property could provide a major boost to the economy.

Speaking at the sixth edition of the ZimReal Conference, Sharpe said Zimbabwe had vast property wealth but very limited mortgage financing, leaving homeowners “paper rich” while struggling to access cash.

He said mortgage lending accounted for less than 1% of Zimbabwe’s real estate market, describing the situation as a major obstacle to economic growth.

“It’s appalling that today in Zimbabwe we have less than one percent, if I said to you 0.04%  you wouldn’t believe me, but that’s the factual truth, of mortgages against our real estate market,” he said.

Sharpe said Zimbabwe had an estimated US$100bn worth of homes including between US$20bn and US$30bn in Harare but very little mortgage lending was secured against those properties.

He argued that the lack of mortgage financing meant much of the country’s property wealth remained locked up, preventing homeowners from using their assets to access capital.

“So how do we possibly think….we can take the dead capital, which we have, we have dead capital, we’re paper rich, but very poor in the pocket,” he said.

Sharpe warned that failing to unlock this capital could have long-term consequences for poverty and economic development.

“If we cannot take that dead capital and unlock the liquidity that gives access to money to our citizens then we will be locked in debt forever, locked in poverty forever,” he said.

However, he said increased borrowing should be accompanied by responsible lending and financial management.

Sharpe compared Zimbabwe’s mortgage market with Switzerland, where he said mortgage lending was significantly larger relative to the size of the economy.

He also highlighted the broader African mortgage market, arguing that the continent had significant room to expand property-backed lending.

“Africa is about 130 billion dollars of mortgages on a continent with over 10 trillion dollars of assets,” he said.

“This is about trillions of dollars that need to come into this continent in the very short term to stimulate the economic activity of the economies.”

He described the property sector as a potential backbone of wider economic activity, saying greater access to mortgage finance could stimulate construction, investment and household wealth.

Sharpe said the government had a particularly important role to play in creating an environment in which the mortgage market could expand.

“Government has a responsibility, more than all of us do, to make sure that the sector works,” he said.

He said unlocking property finance could potentially have a greater immediate economic impact than relying solely on Zimbabwe’s mineral and agricultural resources.

“There’s nothing else in Zimbabwe, nothing, including the resources in the ground, all the mineral wealth we have, all the agriculture that can deliver as much immediate impact and value as unlocking mortgages from real estate,” he said.

Against this backdrop, Sharpe announced that WestProp had established West Cap Mortgage on the Victoria Falls International Financial Centre platform.

He said the company planned to make the mortgage business operational next year and intended to bring a US$1bn fund onto the platform.

“We want to bring in a billion-dollar fund next year to this platform and we want to offer mortgages not only for WestProp to grow but for the entire sector to grow,” he said.