Success of affordable housing lies in low cost of construction

Housing tax and lottery are the latest introductions into the affordable housing debate as government unravel the bits and pieces of the affordable housing plan. Many, like myself, are still skeptical about this plan not because it cannot achieve the requisite houses but whether it will benefit the intended people. Affordable housing programme that has been undertaken in certain African countries has been rarely affordable to the common person. The trajectory our plan has taken is an indication that we haven’t learnt or attempted to from the challenges of our predecessor countries.

Ethiopia’s flagship social housing programme is considered the largest social housing project in Africa and one of the most ambitious in the developing world. Since 2006, the Ethiopian government through Integrated Housing Development Programme has been building affordable homes financed by public money and boosted by the fact that all land in Ethiopia is State-owned. About 250,00 houses have been realised in the last decade. Those who can afford make down payment and then proceed to the schemes mortgage repayment terms provided by State-owned bank. The poorest are however encouraged to register for the lottery system which allocates units as they became available.

The challenges of the Ethiopian affordable housing programme are what we must learn from. The lottery system doesn’t allocate according to need and take too long, up to a decade wait, consequently those in dire need of housing don’t get priority. Poorest people cannot afford the programme because of the struggle to pay deposit and those who do are unable to service their mortgage repayment. Many have been forced to rent out their units and seek cheaper accommodation elsewhere. In fact, in the face of fiscal reality, the government in 2013 changed its focus and introduced a scheme aimed at the middle class who can pay up to 40 per cent deposit.

Looking at another country, Angola, in the run up to 2008 elections, President Jose Eduardo dos Santos made an election promise to build one million social housing in four years. And up came the Nova Cidade de Kilamba (New City of Kilamba) ‘social housing’ project. Built at reported cost of $3.5billion by the Chinese company CITIC, it was supposed to reduce the Angolan housing shortage by housing about 500,000 people. However, Angolan trophy city is a “ghost’ town. The housing units cost between $120,000 to $200,000, way beyond the reach of common citizen. While the ordinary Angolans celebrated the noble idea of social housing, they have witnessed exorbitant speculation of prices that has ensured exclusion of the very people this project was supposedly aimed. In Cameroon, the World Bank reports that the government’s social housing scheme is out of reach to 80 per cent of the population.

The first debate on affordable housing in Africa must begin on how to reduce the cost of construction; whether State or privately built. Cost of cement in Africa is about three times the cost in the rest of world. This is not a conjecture,if our current cost of construction is not reduced, we cannot achieve affordable housing for the poor even if the State is the building them. And yet, like the countries mentioned above, we have not laid emphasis on this despite in our case, like Angola, the government won’t undertake the construction of the houses. Why can’t the government have discussions with local manufacturers of construction materials to supply materials for affordable housing project. We are set for launch of first batch of affordable housing project with these ever-soaring construction costs and let us not delude ourselves that we have free land hence housing prices will reduce. Remember all land in Ethiopia is State-owned and that hasn’t eliminated the challenge of constructing affordable houses.

The lottery system if adopted must consider the challenges Ethiopia is facing. Our housing tax is bespoke, I still don’t understand why I should mandatorily contribute to a house fund for a house I may not even need. It should be optional. There are challenges to achieving affordable housing for all in Africa but the biggest is reduction of the cost of construction – and we are no exemption. Till then, I remain skeptical! The failure of this government-led project is unprecedented; one we must carefully avoid here if we are to achieve our affordable housing agenda.