Lessons in cutting living costs

ROBBIE COREY-BOULET AND BABACAR DIONE
Last updated 11:38 14/02/2014
Macky Sall
JOE PENNEY/ Reuters
SENEGAL PRESIDENT: Macky Sall.

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A new law mandating across-the-board rent reductions in Senegal is a double blessing for real estate agent Abdul Aziz Sylla.

Along with paying 14 per cent less each month for his family's three-bedroom Dakar apartment, the 36-year-old has been busy brokering deals on behalf of clients flush with newfound purchasing power - and cashing in on a flurry of commissions.  

''Everyone is happy about this,'' Sylla said this week while standing outside his subdivided villa in Dakar's Liberte 6 neighbourhood, where he also markets property.

''Apartments that were just a little bit too expensive, people can suddenly afford them.''  

Two years after successfully running on a campaign to lower living costs, President Macky Sall has received wide praise for the law from residents frustrated with the city's pricey housing stock.

Critics of the rent reduction, however, note that it can distort the market, potentially discouraging the construction of new property or the leasing of existing housing.

''Critics say that it encourages a black market in rent-controlled units and leads to market inefficiencies,'' said Robert Tashima, Africa regional editor for Oxford Business Group, which publishes reports on international economic and business issues.  

There are several new housing units currently being constructed in Dakar, indicating that builders have not yet been put off by the reduction, which has been debated for years.  

Enforcement will be tricky, and could determine whether the measure becomes a model for other regional governments,  

''It goes without saying that the key to this legislation is enforcement, which has long been an Achilles' heel for other rent control and tenancy rights ordinances elsewhere in Africa,'' Tashima said.

Landlords will be able to increase rents once current leaseholders leave. Also a black market could emerge where sub-letters pay higher rents.

Some landlords have openly said they will defy the law, though those who refuse to comply face up to six months in prison and fines of up to US$3100 (NZ$3800).

''I can't apply this measure. The state doesn't know all the work we've done to construct our houses,'' said Diarra Sarr, who manages property in the HLM neighbourhood.

''The government cannot impose these lower rents on us. If they want to lower rent, they need to construct social housing for the population.''  

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While rents have climbed throughout West Africa over the past 20 years, Dakar's increase has been especially dramatic as Senegal cemented its reputation as the most stable country in an unstable region, attracting organisations seeking to move their regional staff from bases in politically turbulent Ivory Coast.  

High-end buyers from countries like Nigeria have also increasingly seen Dakar, located on a peninsula that is Africa's westernmost point, as ''a reliable market'' for second homes, Tashima said.  

Today, rental housing in Dakar's downtown Plateau district can be double that found in the central business district of Abidjan, Ivory Coast's commercial capital, and often rivals prices seen in large European cities, he said.  

The prices got so high that in 2010 Senegal's National Assembly launched an investigation. The new law, enacted last month, is scaled to benefit low-income renters most:

Those paying less than 150,000 West African francs (NZ$380) in rent each month receive reductions of 29 per cent. For apartments with rents between 150,000 francs (NZ$380) and 500,000 francs (NZ$1270), the reduction is 14 per cent, and for units priced at more than 500,000 francs (NZ$1270) the reduction is four per cent.  

Just over half of Dakar's roughly one million residents are renters, according to Senegal's national statistics agency. The law does not apply to business property.  

Dakar resident Cherif Gassama said the move was politically shrewd, as living costs were a top concern for Senegalese.

After getting married last June, the 32-year-old spent six months scouring the city for a new apartment, finally hitting on a fourth-floor walk-up priced three times higher than the unit he leased when he moved to Dakar a decade ago.  

Under the new law, his monthly rent decreased from around US$300 (NZ$360) to about US$255 (NZ$301), freeing up money he expects to spend on gasoline and staple foods like rice.  

''To be frank, this is the first thing that Macky Sall has done to help us,'' said Gassama, who described himself as a long-time Sall supporter.  

His wife, Rokhaya Diagne, agreed.

''When he was first elected two years ago, he was not so focused on fixing things,'' she said of Sall.

''He was more focused on corruption cases from the past. Now that he's actually trying to fix things people are changing their minds about him, for the better.''  

But like other Dakar residents, she urged Sall to consider similar measures to lower food and energy costs.

''He can't just do this,'' she said.

''He needs to do more. This is just a first step for him.''

- AP

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