Key lessons from Ethiopia's lottery based housing system

In Ethiopia, the German aid organisation GIZ successfully advocated this model in the early 2000s and provided technical support to pilot it.

As a result, Ethiopia rolled out one of the largest housing programmes in sub-Saharan Africa. Under the Integrated Housing Development Programme, launched in 2006, about half a million housing units nationwide have been built and transferred to individuals. An estimated two million people have moved in. About a million others have registered for units in the capital city of Addis Ababa alone.

The government heavily subsidises the programme, lowering the price per house.

In 2021 and 2022, I spent six months of doctoral fieldwork researching everyday life for beneficiaries of the programme. In particular, I examined the social fabric of residents who had relocated to new neighbourhoods developed under the housing programme in the Lemi-Kura sub-city, on the outskirts of Addis Ababa.

The fieldwork is part of my PhD project, which examines the change and continuity in relationships among neighbours as their living spaces in Addis Ababa change from single-storey houses to high-rise condominiums.

Based on this research, I have identified some of the problems facing the housing programme.

First, the programme is creating weak and fragmented communities. Most houses are located away from the city centre, where job opportunities are concentrated, which means residents spend more time and money travelling to work, and less time interacting and building relationships with their neighbours. The lottery system used to distribute houses has also dismantled residents' social networks.

Second, not enough condominiums are being built. While about half a million units have been built nationwide, this is insignificant considering the government estimates a need for 5.5 million houses by 2030.

Third, because of challenges of leadership and financing, the programme has delivered a tiny percentage of its promise. The government has stopped taking new registrations. There are already several hundred thousand people on the waiting list from previous registration rounds. Some of them have been on the list for 17 years.

Fourth, price increases in units due to the increasing cost of supplies and corruption are making the units unaffordable for the intended lower- and middle-income residents. Others have called out the poor quality of the houses, suggesting the condos could be slums in the making.

How the programme works

The Integrated Housing Development Programme promotes individual house ownership. It builds standardised housing blocks, ranging from studios to three-bedroom units. These homes are cheaper but smaller than similar units built by private developers. The government officials I interviewed said the programme had built 63 new neighbourhoods in Addis Ababa alone. These consist of blocks of usually five-storey buildings.

To be eligible for registration in the programme, individuals should not already own a house and should be in the low- and middle-income category, although no defined income category is enforced.

Once registered, individuals have to save 10 per cent, 20 per cent or 40 per cent of the price of the units (depending on the housing category they register for) as a down payment.

The remaining percentage is financed through a mortgage from the state-owned Commercial Bank of Ethiopia, with the units used as collateral.

The government subsidises the programme by providing land and covering the costs of programme administration and infrastructure development, such as roads, water, electricity and sewerage lines.

The units are distributed through a lottery system. Individuals who have the down payment are entered into a digital system that generates winners.

While this portrays equity through chance, allegations of corruption and system tampering are common. In July 2022, for instance, Addis Ababa administrators annulled the lottery of 25,000 units and charged officials with corruption.

What's working, and what's not working

My research found that people appreciate the quality of the new houses as many inhabitants used to live in dense, slum-like conditions. They didn't have private facilities. Now, they have a bathroom, kitchen and tap water in their homes. They have more privacy.

However, the long commute to job sites, the exclusion of tenants from neighbourhood committee leadership, and limited financial and political spaces for local committees has reduced opportunities for activities that promote social cohesion. Additionally, the lottery-based distribution of houses has dismantled residents' social networks, and many expressed feeling lonely and isolated.

What needs to be done

Public housing projects are critical to solving the housing crisis in the global south. However, they need to be part of a healthy and socially inclusive process of urbanism.

In Ethiopia's case, this would mean redeveloping slums without randomly distributing current residents through a lottery system and offering the option of relocating community members into neighbourhoods of their choice - or considering group relocation so that people can move while retaining the support system in their neighbours.

Also enabling residents to decide on neighbourhood matters through duly elected and empowered local committees and promoting employment opportunities in and around social housing neighbourhoods.