Public Real Estate Company

The Public Real Estate Company, known in French as Société Immobilière Publique and commonly abbreviated SIP, was a state-owned Burundian real-estate organization created by Decree No. 100/69 on 7 May 1979. It was established after the Burundian state ended its earlier practice of providing free housing to civil servants. SIP’s initial role was to develop serviced plots and construct housing for senior civil servants and managers, rather than to serve the entire population or all categories of public employees. During its early operating model, SIP sold many homes to civil servants through long-term installment arrangements, generally extending over 15 years. The state supported this system by paying the interest on first-home loans taken by eligible executives and agents and by contributing 20% of the capital, subject to a stated ceiling of 3,600,000 Burundian francs. Payroll deductions were intended to provide a regular repayment mechanism. In practice, delays in transferring withheld payments to SIP created cash-flow problems. The company sometimes had to borrow to continue construction programs and could itself fall behind on loan payments. A Coopers & Lybrand report prepared in July 1984 identified weaknesses in SIP’s financial management and recommended a computerized accounting system that would allow management to compare financial forecasts under alternative scenarios. The report illustrates the tension between SIP’s public-policy function and its financial operating requirements: the company was expected to provide housing under subsidized conditions while relying on repayment flows that were not always predictable. Burundi’s housing policy changed significantly in 1986 when the country entered a Structural Adjustment Program associated with tighter public-budget controls. Subsidies for house prices and interest rates were ended. The state’s role shifted toward endorsing and guaranteeing mortgage loans with terms of up to 20 years, rather than directly absorbing the principal and interest costs of housing finance. In 1989, the Urban Housing Promotion Fund, or Fonds de Promotion de l’Habitat Urbain (FPHU), was created as a joint venture to support urban-housing policy. FPHU provided financing to SIP and to ECOSAT, an institution focused on social construction and land development. Following a 1991 reform, SIP continued to develop land and construct housing for senior and middle-ranking managers. ECOSAT was assigned a stronger focus on lower-income public- and private-sector employees. Both organizations faced constraints caused by limited land reserves, and their operations progressed intermittently. By 2017, SIP reportedly had very limited human, technical, and financial resources and was mainly producing serviced plots for relatively better-off customers. Over the preceding two decades it had produced 4,340 serviced plots in Bujumbura and several other urban centers, a modest output relative to Burundi’s urban-growth needs. SIP was among the state-owned companies recommended for possible privatization during a five-year review discussed in Burundi’s National Assembly in July 2014. The discussion also emphasized the need to protect the assets of companies awaiting possible privatization. By 2017, SIP and ECOSAT were described as experiencing serious financial difficulties. The organization ceased to exist as a separate institution after Burundi created the Office Burundais de l’Urbanisme, de l’Habitat et de la Construction (OBUHA) by Decree No. 100/079 of 24 May 2019. OBUHA merged SIP with ECOSAT, the National Laboratory for Building and Public Works, the Municipal Technical Services Authority, the General Directorate of Building, and the General Directorate of Urban Planning and Housing. SIP is therefore best understood as a former public housing and serviced-land institution whose functions were absorbed into a broader state urban-development body.

Public Real Estate Company, or Société Immobilière Publique (SIP), was established in Burundi under Decree No. 100/69 of 7 May 1979. Its creation followed the state’s withdrawal from a policy of free housing for civil servants. SIP was designed to replace that direct provision with a public real-estate model based on developing serviced land and constructing homes, especially for senior civil servants and managers. The original housing-finance system combined company construction activity with substantial public support. Eligible executives and agents could receive first-home loans whose interest was fully subsidized by the state. The state also covered 20% of the capital, subject to a ceiling reported at 3,600,000 Burundian francs. Homes were commonly sold through 15-year installment plans, and repayments were withheld from employees’ salaries. However, the mechanism did not always deliver funds to SIP promptly. Delays in forwarding payroll deductions weakened the company’s cash position, forcing it to borrow for construction and occasionally delaying its own debt payments. A Coopers & Lybrand report from July 1984 examined SIP’s financial-management problems. It recommended computerizing the accounting function so that management could evaluate financial projections under different assumptions. This recommendation reflected the company’s need to manage a subsidized housing portfolio while maintaining sufficient liquidity for new construction. Housing policy was revised in 1986 after Burundi entered a Structural Adjustment Program subject to stricter budgetary controls associated with the Bretton Woods institutions. Direct subsidies for house prices and interest rates were discontinued. The state instead provided endorsement and guarantees for mortgage loans of up to 20 years. This reduced the direct fiscal support available to SIP’s customers and altered the financial conditions under which the company operated. In 1989, the Urban Housing Promotion Fund, or Fonds de Promotion de l’Habitat Urbain (FPHU), was created as a joint venture to help implement urban-housing policy. FPHU provided credit to SIP and to ECOSAT, the institution known as Encadrement des Constructions Sociales et Aménagement des Terrains. A 1991 reform clarified the division of responsibilities between the two organizations. SIP continued to develop land and construct housing for senior and middle managers, while ECOSAT concentrated on land development and housing for lower-income employees in both the public and private sectors. The two organizations were constrained by a shortage of land reserves, causing their activities to proceed unevenly. SIP’s work was also affected by limited resources and changing public-finance conditions. By 2017, it was reported to have very few human, technical, or financial resources and to be primarily producing serviced plots for better-off people. Over the preceding 20 years it had produced 4,340 serviced plots in Bujumbura and a small number of other urban centers. That volume was considered low compared with the pace of urban growth in Burundi. SIP was included in a group of Burundian state companies recommended for privatization during a five-year review discussed by the National Assembly in July 2014. The minister responsible for good governance and privatization also highlighted the need to protect the companies’ assets while privatization measures remained pending. SIP and ECOSAT were later described as experiencing serious financial difficulties. The company’s institutional history ended in 2019. Decree No. 100/079 of 24 May 2019 created the Office Burundais de l’Urbanisme, de l’Habitat et de la Construction (OBUHA). The new body merged SIP with ECOSAT, the National Laboratory for Building and Public Works, the Municipal Technical Services Authority, the General Directorate of Building, and the General Directorate of Urban Planning and Housing. SIP consequently became part of a consolidated public urban-development structure rather than continuing as a separate company.

• 2019

  Merged into OBUHA

  [1]Public Real Estate Companyen.wikipedia.org

  OBUHA was created by decree on 24 May 2019 through the merger of SIP and five other public urban-development institutions.

• 2014

  Recommended for privatization review

  [1]Public Real Estate Companyen.wikipedia.org

  SIP was included among state-owned companies recommended for privatization during a National Assembly discussion.

• 1991

  Housing roles divided between SIP and ECOSAT

  [1]Public Real Estate Companyen.wikipedia.org

  A reform left SIP responsible for senior and middle managers while assigning ECOSAT a focus on lower-income public- and private-sector employees.

• 1989

  Urban Housing Promotion Fund created

  [1]Public Real Estate Companyen.wikipedia.org

  The Urban Housing Promotion Fund was established as a joint venture to provide financing for SIP, ECOSAT, and urban-housing operations.

• 1986

  Housing subsidies ended

  [1]Public Real Estate Companyen.wikipedia.org

  Burundi revised its housing policy under a Structural Adjustment Program, ending subsidies for house prices and interest rates and shifting toward state-backed mortgage guarantees.

• 1984

  Financial-management review

  [1]Public Real Estate Companyen.wikipedia.org

  A Coopers & Lybrand report examined SIP’s financial-management weaknesses and recommended computerized accounting and scenario-based financial forecasting.

• 1979

  SIP established by decree

  [1]Public Real Estate Companyen.wikipedia.org

  Burundi created the Public Real Estate Company under Decree No. 100/69 of 7 May 1979 to develop serviced plots and housing after the state ended free housing for civil servants.

A state-owned housing and urban-land-development institution focused primarily on providing serviced plots and homes for senior and middle-ranking civil servants and public-sector managers.

• Land development

  Serviced residential plots

  SIP’s principal later-stage activity was the preparation and sale of serviced residential plots, particularly in Bujumbura and some other Burundian urban centers. Serviced plots were intended to provide land with the basic urban-development preparation needed for residential construction. By 2017, this activity was reportedly directed mainly toward better-off customers because of the company’s constrained resources and limited land reserves.

• Residential construction · 1979

  Civil-servant housing

  SIP developed and built homes for civil servants, with an initial emphasis on senior public officials and managers. Homes were commonly sold through long-term installment plans, historically supported by state interest subsidies and partial capital contributions. After housing-policy reforms, the direct subsidies were removed and the state’s role shifted toward mortgage endorsement and guarantees.

• Real-estate development · 1989

  Housing and real-estate investment operations

  Through its cooperation with the Urban Housing Promotion Fund, SIP participated in housing operations and real-estate investment financed through public urban-housing mechanisms. Its scope centered on land development and residential construction rather than a broad commercial property portfolio.

• 2019

  Institutional merger into OBUHAM&A

  Background

  Burundi consolidated several public bodies responsible for urban planning, housing, construction, municipal services, and public works.

  Action taken

  Decree No. 100/079 of 24 May 2019 merged SIP with ECOSAT and five other institutions to create OBUHA.

  Aftermath

  SIP no longer operated as a separate institution and its functions were absorbed into the new public urban-development office.

  Source

• 1991

  Division of housing responsibilities with ECOSATStrategy

  Background

  Burundi reformed its public housing framework and sought to distinguish the target groups served by SIP and ECOSAT.

  Action taken

  SIP retained responsibility for land development and housing for senior and middle managers, while ECOSAT focused on lower-income public- and private-sector employees.

  Aftermath

  The two institutions maintained separate target segments, although limited land reserves caused their activities to proceed intermittently.

  Source

• 1986

  Adaptation to the end of direct housing subsidiesStrategy

  Background

  Burundi’s entry into a Structural Adjustment Program brought tighter public-budget controls and ended subsidies for housing prices and interest rates.

  Action taken

  The housing-finance framework shifted from direct state subsidy toward state endorsement and guarantees for mortgage loans with terms of up to 20 years.

  Aftermath

  SIP operated in a less heavily subsidized environment, changing the financial conditions for both the company and its civil-servant customers.

  Source

1. 1Public Real Estate Companyen.wikipedia.org