Continued from Friday 27, November 2020 issue
Results of housing delivery from the Private Sector in Ghana:
From 1982 to 1989, funding and infrastructure grants to state housing institutions were withdrawn and rent controls on both public and private sector housing were implemented. During the same period, the Home Finance Company (HFC) was established in 1991. The onus of housing delivery shifted to the private sector. However, HFC was unable to deliver low- cost housing or rental units for the general population. It was perhaps naive for the government of the time, to think that, this will be the case. Interestingly, leaving housing delivery to a firm which is profit oriented without any government intervention and planning regulations was not a wise decision. Nevertheless, on a fairer basis, planning regulations could help ensure mixed housing development by private companies.
Between 1993 and 2013, there has been less involvement of the Ghanaian government in housing projects. That said, the Social Security and National Insurance Trust (SSNIT) has developed some rental properties, in the regional capitals in Ghana. It is estimated that, about 3000 acres of land were acquired in 2001in Accra, Brekuso, Kuntanase, Asokore- Mampong, Wa and Amanfrom for the provision of affordable housing units for the poor working class. But these housing projects have been abandoned as various governments over the years have not had the political will and power to follow through with these housing projects.
Results of Ghana’s housing policy towards the poor:
According to Boamah (2014), the provision of houses for the poor and working class has not been significant in meeting their housing needs. Access and affordability has been challenging.
The State housing institutions have not been e?ective conduits for housing development in the country. The SHC was only able to deliver 38% and 13 % of its targeted output under the 1959-64 and 1967-69 housing policies respectively (Tipple, 1987).
Also, the TDC was in arrears of over 20,000 housing units by 2000. The SHC delivered a total of about 20,773 housing units, 8,417 of which are in Accra since its inception in 1955
(Karley, 2008). The SHC therefore delivered on average 415 housing units per annum for over half of a century of operations. The housing corporations and agencies received more than a proportionate amount of the housing budget but despite these huge investments they consistently failed to meet their targets and delivered less than 6 % of the national housing need (Konadu-Agyeman, 2001).
Boamah (2014), indicates that, “the bulk of the housing stock in Ghana is delivered by the undercapitalized individual households through the “Do-it-Yourself” (DIY) ?nancing process. The DIY ?nancing medium delivers housing incrementally”. Housing supply is mostly done by households rather than real estate developers or government (Bank of Ghana, 2007). The bulk of a?ordable housing supply in Ghana is through informal ways of incrementally developing and building houses (CHF, 2004). The informal sector delivers 30,000 housing units annually whilst the formal sector produces only 2,500 units at its peak (Aku?o, 2006). It is the little e?orts of individual small scale housing ?nanciers that drives housing development in the country (Konadu-Agyemang, 2001). The government policy interventions failed to reach the low income targeted groups. As pointed out by Stren (1990), the State sponsored housing programs are notoriously prone to leakages – where the rich and the powerful rely on their in?uence and positions and take control of housing units meant for the poor. Most of the low income households end up as tenants in the housing units that were earmarked for them due to the corruption in the allocation of the public housing units.
Despite the implementation of several housing policies and programs in the country, increases in housing stock have lagged behind population growth and there is a degradation of the existing housing stock. About 2% of the Ghanaian population rely on shift dwelling units such as kiosks, tents, cargo containers, and attachment to shops for shelter (GSS, 2002). Overcrowding, decaying properties, haphazard development, poor drainage, poorly designed structures, declining quality and inadequate access to services characterise much of the housing stock in the country; Bank of Ghana (2007); Karley (2008);
Obeng-Odoom and Amedzro (2011). The problem confronts almost all the cities and towns in Ghana. For instance, Oppong and Adarkwa (2008) observe that, the housing units in
Abakam in the Central Region of Ghana are structurally unstable. Ko?e and Nabila (2004) and Adjei and Kyei (2013) associate the high disease prevalence in rural Ghana to structurally defective housing and inadequate sanitation and drainage facilities. Boamah (2012) observes that, the deteriorating government housing units in the O?nso South Municipality could have led to the poor performance of school children in the municipality.
The magnitude of the housing problem in Ghana is huge. The housing problems in the country are characterised by both a backlog in the provision of formal housing and the resultant sprawl of informal settlements (Karley, 2008).
Finance and Housing in Ghana:
Access to a?ordable and sustainable housing funds is extremely essential for the provision of adequate shelter for the citizens of a country. Buckley (1996) observes that, in the developing world, housing ?nance is in extremely short supply. Housing ?nance is mostly done through informal processes in Ghana. Housing supply in Ghana will continuously lag behind demand so long as housing finance and development is largely done through informal processes. Ghana will not be able to provide adequate housing if the housing ?nance markets remains underdeveloped. Availability of funds is a major challenge to a?ordable housing delivery in Ghana.
The lack of formal housing finance market has retarded housing development in the country considerably, as home builders have had to invest gradually out of their income. Hettne (1990) observes that, the State cannot meet the housing demand needed by Ghanaians. It is therefore important that, housing policies focus on developing a market-led housing ?nance system in the country.
This will ensure sustained ?ow of funds to prospective housing developers and the availability of long-term mortgages to individual home buyers.
Housing Finance for Informal Sector and Low-Income Households:
Adequate provision of housing cannot be attained if the housing ?nance needs of the informal sector and low-income households are not catered for. The informal sector employs 47.8 percent of the currently employed population in the country (Ghana Statistical Service, 2008). The large size of the Ghanaian informal sector requires that the country’s housing policy focuses on strategies that will address the housing needs of households that rely on the informal sector for a living.
But as Ferguson (1999) observes, the characteristics of the traditional mortgage market do not suit the circumstances of the low and middle-income households. Low-income earners may be ineligible for mortgage finance from the formal finance institutions (Kinyungu, 2004). The low and middle-income, and informal sector households are incapable of satisfying the underwriting requirements of lenders (Boamah, 2011). The banking institutions often times, demand that, collateral be restricted to certi?able earnings of prospective borrowers (Karley, 2002).
Boamah (2009), notes that, the banks in Ghana require prospective mortgagors to be formally employed and have regular monthly income in order for lending to take place.
The income of the informal sector households fluctuate with the general fluctuations in the Ghanaian economy. Therefore, the low-income and the informal sector households may be excluded from the mortgage market by the lenders requirements.
The informal sector and low income households may not be able to actively participate in the country’s mortgage market. Housing for the low income groups is rarely addressed by the private sector (developers and ?nanciers).
There is therefore the need for some form of State intervention to address the housing and housing finance needs of the low income households. It is important for Ghana to develop a housing ?nance scheme that will ensure the availability of housing funds to all groups of people and the working poor.
Recommendations:
- Ghana must therefore, create the appropriate conditions necessary for the development of the housing sector and consequently enabling environment that can contribute meaningfully to socio-economic development.
- A clearly de?ned and result-oriented housing policy is required if Ghana is to attain an accelerated development of the country’s housing sector and deliver housing on a sustainable basis for Ghanaians.
- The formulation and implementation of housing policies must be made a national priority. There must be the political will and commitment by the government to the development of the housing sector.
- The housing policy must create room for both the public and private sectors to meaningfully interact to contribute to housing provision in the country. It must focus the government’s intervention on the creation of the enabling environment and regulations of the housing sector whilst allowing the private sector to lead the ?nancing and the development of housing industry in Ghana.
- The State must exercise its supervisory responsibility over the housing sector but state regulation should not be likened to state control. The state must not monopolize housing delivery nor seek to control the private sector in the delivery and ?nancing of housing projects.
- The housing policy must create a?ordable, e?cient and sustainable housing ?nance regimes; to adequately deal with the poor conditions and efforts to increase existing housing stock; improve the housing environment; strengthen planning controls, enforcement and increased focus on sustained housing research.
Conclusion:
In this piece, one has sort to take a critical look at the housing industry in Ghana by examining its beginnings from the colonial period to the current situation in the country.
From the analysis, houses provided to Ghanaians by various governments have fallen short of the housing needs of Ghanaians.
It was also realized in the study that, finance has been a major problem for ordinary Ghanaians to acquire their own homes. Thus, Peter Reinhart argues that “the whole affordable housing thing needs a whole fresh look”. While Annu Mangat points out that “people tend to think of affordable housing as a problem that uniquely affects the poor. However, in the last five years we are seeing this problem has spread to the working class people who are priced of the market”. And Fernando Ferrer points out that, “we need to address the root causes of poverty by creating more affordable housing….” Thus, we need to create the environment that strengthens the private sector in housing delivery in the country. And finally the government must have the political will and the power to support the housing industry in Ghana in meeting the housing needs of the poor working class.
(BA, MA, MAIBA, MAGID)
Ottawa
The views expressed in this article are the author’s own and do not necessarily reflect The Chronicle’s stance.
The post Housing and the Ghanaian economy: some critical analyses By Kordson Kwasi Ayrakwa appeared first on The Chronicle Online.
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