The Nature of the Housing Affordability Problem in Sub Sahara Africa and Ghana Among Key Workers

Dr. Stephen Agyeman-Yeboah, PhD.

Abstract

There is a large number of mortgage financing institutions in Ghana, all of which have a mandate to provide credit facilities to the lower income groups at lower than market interest rates and long repayment periods. However, many self-builder’s households face series of problems in attempting to access finance with which to resolve their housing needs even though they have regular employment and income. To place the study in context, this volume aims to assess the impact of land tenure and administration systems on the provision of self-build housing by low income households with an argument that homeownership among low-income increases mostly through access to mortgage credits. Drawing on the insights from New Institutional Economies (NIE), the empirical analysis is undertaken in Kumasi, a major city of Ashanti Region, Ghana. The research is designed to triangulate data from a range of sources including questionnaires surveys, focus groups’ discussion and key informant interviews. The starting point is that there are significant problems surrounding affordability and accessibility to home ownership within the housing market. The research considers to what extent the lack of accessibility/affordability is determined simply by low incomes or access to credit or both. To address this problem, the research focuses on the experience of key workers with low but regular verifiable incomes. The study showed that lending to self-builder households generally involves greater risks for lenders, and banks do not like to lend to these developers resulting in financial exclusion among the majority of households. At the same time the study found that the verification of incomes of loan applicants is insufficient and legal security of land tenure is a necessary prerequisite for the sanction of loans. The findings show that majority of the households lack formal title to their lands and building permission certificates to their properties. Further analysis suggested that this is a reflection of costly and lengthy administrative red tape of land institutions and agencies that is associated with acquiring land, developing land, registering and transferring titles and obtaining construction permits. In effect, the findings suggest that majority of households face financial exclusion. This has meant that many aspirations to homeownership have remained unfulfilled.

Keywords:  Housing Affordability Problem, Sub Sahara Africa Housing Issues

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