Affordable Housing: A Moral and Economic Imperative for Ghana

This article discusses a five-point plan to improve housing delivery and access in Ghana . It focuses on affordable housing and places more emphasis on home-grown solutions that will require broad stakeholder engagement and public buy-in.  

 
What is affordable?
 
Affordable housing has no universal definition. In the UK it is defined as housing for those whose housing needs are not met by the open market. In Canada , housing is deemed unaffordable if it (i.e. rent, mortgage and utility payments) costs more than 30% of a household's gross income. In Ghana , there is no official definition but a house is deemed affordable if it costs between $20,000 and $30,000. This conceptualization however does not consider rental housing. Neither does it take into consideration people's incomes and ability to pay. For the purpose of this article, affordable housing is defined as housing for which the associated financial costs, including rent and mortgage payments are at a level that does not threaten other basic needs and represents a reasonable proportion of an individual's overall income.  

 
So why focus on housing?
 
Like all forms of housing, affordable housing is a basic human right. It is fundamental to human dignity, physical and mental health and to overall quality of life.   Affordable housing is also an economic imperative. It is a productive investment that can lift millions out of poverty and can generate economic growth both directly and indirectly through backward and forward linkages in the economy.  

 
Leading jurisdictions are taking action.
 
In developed and even some emerging economies, governments have recognized the socio-economic importance of housing. They have made access to adequate, secure and affordable housing a key policy goal. They have created an enabling environment for the development of social and low cost housing and implemented fiscal and land use planning measures to support home ownership. These include subsidies, rent-to-own provisions, first home-buyer schemes, mortgage insurance and smart growth or transit-oriented development.

 
Ghana is lagging behind and needs to act.
 
In Ghana access to housing remains a privilege enjoyed by a few, including wealthy expatriates, ministers of religion, senior government officials, politicians and their hangers-on.   Housing delivery has not kept pace with population growth. Housing quality continues to deteriorate. In urban areas outrageous rents and high housing prices are the norm. This has forced majority of residents to seek accommodation in informal settlements, huts, backyard kiosks, containers, street corners and overcrowded compound houses with little security of tenure. The situation in rural areas is no better. Here, poor housing quality, coupled with lack of basic amenities, such as potable water, sanitation systems and electricity makes most dwellings unfit for human habitation.  

Successive governments have tried to address the housing challenge in Ghana but without success. This is because these initiatives have been narrowly focused, inconsistent and poorly executed. Without the benefit of a coherent national housing policy, government action has tended to address the symptoms rather than the root causes of the housing crisis, which include restricted access to land, high cost of building materials and corrupt land registration processes.   There has also been an over-reliance on foreign companies for project delivery and finance.

 
Instead of mobilizing funds from domestic sources and involving local stakeholders in the search solutions, the focus has often been on foreigners. But with little knowledge of the local terrain and sometimes no prior expertise in housing construction, these foreign companies abandon ship when things don't go their way. A case in point is the recent $1.5 billion STX housing project which failed to materialize. The failure of this project and previous government interventions indicate that solutions to Ghana 's housing woes must be home grown and broad based.   But what options are there for the country to consider and what are the conditions for success?

 
The first step towards addressing the housing challenge is to adopt a coherent national housing policy that will set housing targets, standards, timelines and financing strategies for both rural and urban areas. Such a policy should also include an affordable housing mandate and clearly define the roles and responsibilities of all actors in the housing sector.     

The second step is to address land supply constraints . Restricted access to land in the face of rising demand for housing creates high property prices. To improve access to land, the government must promote land use intensification, reform existing land tenure systems and establish land courts to deal exclusively and expeditiously with land disputes. The government can also establish land banks to facilitate the speedy release and servicing of land.   District and municipal authorities can help in this regard by identifying specific parcels of land or intensification opportunities for development. Instead of being sold to politicians and their cronies, unused public lands can be released or tendered for mass housing projects. Private developers can be invited to submit plans indicating how many dwellings they intend to provide on such land and what proportion they are willing to give back to the government for rental or social housing purposes.  

The third step is to address the high cost of building materials. High cost of conventional building materials is a major contributor to soaring housing costs in Ghana . Heavy dependence on cement and other imported building materials keep prices high and beyond the reach of both builders and housing consumers. To reduce the cost of building materials, many experts have suggested breaking the cement duopoly of Ghacem and Diamond Cement.   But this alone will not work. Changing outdated building codes and mandating the use of local raw materials in building construction will be a good additional step. In Ecuador , sand filled plastic bottles have been used to build low cost houses for urban dwellers. Similar approaches can be adopted in Ghana , together with initiatives that address bo ttlenecks in the construction and building materials supply sector, such as high labour and energy costs and inadequate supply of raw materials.  

 
Regulatory and institutional reform is t he fourth step to addressing Ghana 's housing crisis.  

This is because the regulatory and institutional framework within which land and housing is currently delivered is fragmented, complex, duplicative and inadequate. For instance, while the Ministry of Works and Housing, the Lands Commission, District Assemblies and Traditional Authorities all play a part in housing delivery but their roles and responsibilities are not clearly defined. So are the lines of accountability. Local land use plans exist but are insufficient to guide efficient land allocation. This is further aggravated by the lack of systematic information on land and real estate properties. The result is a corrupt, opaque and bureaucratic land registration system that leads to sprawl, multiple sales of land, insecure title and high transactional costs.   To address these problems the government should provide clear guidelines on land use, develop an efficient system of land titling and administration as well as clear, transparent and consistent land laws. The government should also rationalize existing institutional capacity and enhance coordination among players in the housing sector.

 
The fifth and final step to addressing the housing crisis is to improve financing. Currently, many Ghanaians cannot afford adequate housing on their own because of poverty. At an average cost of $60,000 for instance, the average semi-detached house in Ghana will require 30 times the average annual salary of the ordinary Ghanaian. Though available, access to mortgages is restricted because of outrageous terms of payment, low collateral and savings and lack of credit information. Inadequate finance is not restricted to individuals. Real estate developers also face the same conundrum. High cost of borrowing has forced many developers to self-finance or concentrate on high-end buyers. In order to increase the level of housing investment it is first necessary to increase the level of personal savings and then redirect savings towards housing acquisition. At the same time mechanisms through which communal/collective savings efforts such as “susu” can be harnessed to mobilise and unlock credit, must be pursued.   Another option is to allow employees to use part of their SSNIT contributions as down-payment for houses. For real estate developers, special tax breaks can be given to those who decide to build affordable houses, especially in rural areas. The government should also establish a credit bureau to allow banks and mortgage lenders to assess the credit worthiness individuals and developers, including their ability and willingness to repay debt.

 
Conclusion
Providing adequate and affordable housing to Ghanaians is a moral and economic imperative. Previous government interventions have failed to make a dent in Ghana 's growing housing crisis because they have been narrowly focused and poorly implemented. By concentrating on foreign companies for delivery and finance, these interventions have missed opportunities for home-grown solutions. It is envisaged that the five point plan suggested in this article will inform future actions and generate a national debate on how best to engage Ghanaians in the quest for a sustainable housing policy.

 
 
 
Ernest Opoku-Boateng, PhD
Centre for Environment
University of Toronto
Toronto, Ontario