The Department of Accounting and Finance (DAF) in the Faculty of Business Administration and Economics (FBAE) at Notre Dame University-Louaize (NDU) organized on April 19, 2018, a lecture titled, "How Financial Innovation Can Boost Economy," presented by Dr. Riad B. Obegi.
Dr. Obegi presented his innovative banking instrument: the Certificat Hypothécaire Obegi (CHO).
The CHO is the topic of Dr. Obegi`s Ph.D. thesis titled, “Risque et Crédit: Le Certificat Hypothécaire, Une Solution pour Les Pays Emergents,” which is currently in its second printing.
It is a banking instrument in the form of a real-estate guarantee certificate (CHO), which is deposited into a bank. It works just like depositing cash into a bank account, but instead of receiving interest on cash, a fee is earned on a CHO. This guarantee will be used by the bank to borrow more efficiently through the interbank market while using the CHO as collateral.
An independent agency will conduct the necessary due diligence on the properties, evaluate them, and issue standard values against a fee paid by the depositary banks. The independent agency is a key component for the proper functioning of the mechanism. In addition, it will provide all stakeholders (real-estate owners, state, banks, etc.) valuable information that is presently disseminated.
This banking innovation will allow real-estate owners to increase their income, better manage their real- estate assets, and contribute to the economic growth of their countries. Dr. Obegi believes that this real estate “bankarization” can play an important role in boosting economic growth and improving the standard of living in emerging countries. He estimates that the total real estate value in developing countries is close to 20X GDP.
This innovation has the potential for all developing countries. Efforts have already been made in the Middle East, Africa, and South America; meetings were conducted with various official authorities, regulators, and international institutions, such as the World Bank, the IFC, and the Central Bank of West African States (BCEAO) to introduce the concept of CHO.