In the last few months of 2020, the issue of housing leapt to the front pages of the newspapers. First was the announcement in August by the Vice President, Dr. Mahamudu Bawumia, of plans to introduce a national rental assistance scheme in President Akufo-Addo’s second term. Then, in late October, the President inaugurated a 204-unit housing estate at Ashaiman, one of the largest towns in Greater Accra. Two weeks later, the Social Security and National Insurance Trust—the state pension fund—opened another estate, comprising 1,027 homes, in Asokore-Mampong, a suburb of Kumasi. These developments came amid a declaration by Ken Ofori-Atta, the finance minister, that the government will make housing a priority during the next four years.
The task is mammoth: according to the Ministry of Works and Housing, Ghana needs 2m new homes now, with housing needs rising with population and urbanisation expansion, increasing incomes, and shrinking household sizes. As building of homes, especially the low-cost or “affordable” type, has failed to keep pace with these changes, the pressure on existing housing has multiplied, exacerbating the problems of overcrowding, deterioration of dwellings, overstretched infrastructure, and urban sprawl. Fifty-seven percent of Ghanaian households live in a “compound house”, where they share facilities like bathrooms, toilets, running water, and electricity with other households. Many compound houses even lack these basic amenities, leaving residents to rely on nearby public facilities.
The grimness of housing conditions is also shown by the fact that almost half of all single-room dwellings are occupied by households with at least three members. Such congestion became a concern during the outbreak of Covid-19, since it made it impracticable for many people to observe public-health guidelines on physical distancing, self-quarantine and isolation intended to contain the spread of the disease. As in other aspects of people’s lives, the pandemic threw into sharp relief the need for better housing to improve the health and wellbeing of the population.
Despite persistent political rhetoric about fixing the housing crisis, the state has largely done a poor job of boosting housing supply or facilitating homeownership. Several public housing projects were started in the past but not completed; some were loudly publicised but never even got off the ground. The recently-completed Asokore-Mampong estate, for example, was begun in 2006 by the state but neglected for more than a decade before its revival by the Social Security and National Insurance Trust in 2018.
Other similar stories abound: a government housing project at Borteyman, in Greater Accra, remains unfinished 15 years after commencement, while a 5,000-unit development at Saglemi, also in Greater Accra, which was supposed to be ready by 2017, has been in limbo for the past four years because of a dispute between the government and the contractor over the scope of work and cost.
The private sector has been doing its best to fill the gap. Most private supply comes from individuals who build their own homes. Self-building allows people to build according to their preferences, lifestyle and budget, but because of insufficient savings, most of them build their houses in dribs and drabs. The average self-built house probably takes a few years to be finished. Moreover, a lot of these houses are built in unplanned settlements or do not conform to building codes, meaning such additions to the housing stock do not necessarily enhance the overall standard of housing or create better living environments.
Housing accompanied by respectable living environments is what private developers typically provide, through their gated communities, apartment complexes, and upscale residences. With new construction sprouting up all over the capital city and its mushrooming neighbourhoods, it is easy to forget the hurdles developers must scale to start a project. Affordable finance is a rare commodity in the country, with bank interest rates ranking among the highest in Africa.
A malfunctioning land market, absence of basic infrastructure in some places, and heavy dependence on imported inputs are among the constraints developers grapple with. These issues have an outsize effect on house prices, which have hit mad heights in most cases. Besides, demand for the homes built is restricted by workers’ low incomes and a poorly developed mortgage market.
The government has intervened freshly through the National Housing and Mortgage Fund (NHMF), which was established in 2018 to address what officials say is “a failure of the housing market.” Using the resources of the fund, the National Housing and Mortgage Finance Initiative (NHMFI) has been introduced to reconcile the supply and demand sides of the market by simultaneously stimulating affordable home-building and affordable mortgages. The Ashaiman estate is a product of the initiative, which is providing subsidised mortgages via partner banks to buyers. A rent-to-own scheme targeting low-income government employees has also been launched as part of the initiative. The goal is to spur the development of 200,000 affordable houses by 2024.
Private developers and investors have generally greeted the government’s intervention with interest but not excitement, as the interviews published in this Special Report reveal. Although they acknowledge the contribution the NHMFI is likely to make, they contend, rightly, that a wider array of policies is needed to fix the root causes of the housing market’s inefficiencies.
The lesson afforded by countries which have achieved high homeownership rates is that the role of government is fundamental to unlocking mass production of affordable decent housing with liberal access to finance to purchase them. It is to be hoped that the current initiative will catalyse reform in other areas to help make homeownership a reality for many, not a few, within a reasonable space of time.