The Ghana Business Report is a 30 minute monthly television report centred on business related themes. The report is televised as a documentary and its aim is to provide “financial literacy, entrepreneurship and business development”. The story “Can Local Developers Bridge the Housing Gap” was commissioned by Channel Two Communications, a communications and media company based in Accra (Ghana). The documentary aired on the 8th of September 2011 and was posted on the website on 19 October 2011.
The following is a summary of the 26 minute report. Thanks to Ken Corsar, MD at Adehyeman Savings & Loans Limited in Ghana, for the tip.
Many African countries are experiencing high levels of urban population growth and rapid urbanisation. Ghana’s capacity to provide housing for the low end market is limited due to a range of factors. Housing in Ghana is a major problem to the point that there is even a deficit for the high end market. Demand far outweighs supply and as a result informal settlements have grown exponentially. House prices are very high ($ 45 000) and the low income groups cannot afford such prices. They therefore find extreme alternatives such as: a two bed room flat occupying 30 people. The shortage of housing is caused by a number of factors – most critically, the lack of a comprehensive housing policy that enables developers to easily access land and capital.
Acquiring land for development is a long process that is frustrating for many developers. There is no law that commands land owners to register their land. Housing programmes that have been put forward seem to fall away when new government officials come into power, hence projects never reach completion.
Many banks are unwilling to give long term loans to individuals or developers because of the considered risks. This is because most of the bank’s capital is funding raised from overseas and as such, many view Ghana as a risky place for investment. Banks have high credit costs which is why house prices are high. Most banks are not seen as playing a role in trying to help decrease the housing deficit.
The banks that are willing to fund housing projects require substantial equity (30%), which many developers and individuals cannot afford. Provision of basic infrastructure such as roads and sewage is passed onto developers. This situation then incurs high costs upon developers. It is impossible for developers to incur all these costs without help from government.
Developers remain hopeful despite the many challenges that they face. The state’s capacity to produce affordable housing is very limited. Since independence, Government has produced only 5% (150 000 from a deficit of 1.6 million) of all housing in Ghana. It is therefore quite evident that the role of the private sector is pivotal.