1. INTRODUCTION
1.1 In addition to the efforts by individuals to provide
themselves with shelter houses, the governments have since
1939 been engaged in various mass public housing schemes.
These have been either through the direct central government
participation or through its agencies e.g. States Housing
Corporation, Tema Development Corporation, Social Security
& National Insurance Trust, State Insurance Corporation, Redco
Ghana Limited, etc. the totality of the efforts of these bodies
account for only about 20% of the housing stock. The remaining
80% is produced by the private sector.
1.2 But regrettably, the supply of affordable houses has
now dwindled to its lowest ebb. The current situation is summed
up as follows: "Our housing problem is one of the national
annual need of 400,000 and an accumulated delivery deficit
of 1 million needed to de-crowd urban units. 12.81 an average
annual delivery of 1m units will be needed to provide adequate
housing within the next 20 years as against the current average
annual delivery of 400,000 which yields a performance rate
of 30%."
1.3 Scope of this Paper: A number of reports have already
been written on the housing crisis. These reports show clearly
the causes and possible solutions on a national basis. This
paper is therefore not intended to repeat what is already
know and written, but rather to suggest how members of GREDA
may be assisted to enable them contribute effectively in minimizing
the crisis. Hence, the paper is intended to be very brief.
2. CAUSES/CONTRASINTS
Though it is not my intention to dwell in depth with the
causes for the crisis yet it is appropriate, for purposes
of reminder, at least, to directly refer to some of them.
The major constraints relate to: -
2.1 LAND
With out land, most enterprises cannot take off. So it is
with housing. Due to permminal galloping inflation and other
competing demands, current values of building lands are relatively
very high, both in the urban and rural areas. In addition,
the various termurial systems coupled with the cumbersome
acquisition procedures. Not to mention the ineptitude of schedule
officers etc., all compound to increase the cost of the scarce
available build able land.
2.2 INFRASTRUCTURAL SERVICES
Even given that land is abundant, which it is not, it must
be serviced prior to being built on. The cost of infrastructural
services: roads, drains, water, electricity, telephone. Etc
can be exceedingly high, depending upon the locality, and
its degree of development.
2.3 INPUTS AND INCOMES
Whatever types of inputs one use, they need to be paid for;
be they materials or labor. Currently we are aware that efforts
are being made to popularize the use of "local building materials".
Nevertheless, one cannot fail to make reference to the high
cost of the "traditional" materials timber, cement, roofing
sheets, paints, etc. the wage level, even though productivity
is low, is to also high. Paradoxically, however, the per capital
income is low, visa-vis cost of affordable houses.
2.4 SKILLS AND MANAGEMENT
One of the reasons for low productivity (apart from apathy)
is the relatively low quality of available manpower. This
is not limited to the artisans or technical grades alone,
but also personnel for effective project management.
2.5 GOVERNMENTAL CONTROLS
One can never advocate for a hundred percent free market situation
but the current acute governmental controls in for example:
adhering to a set of building codes and regulations (most
provisions of which are outmoded); limiting the amount of
rent that can be charged in most cases; the promulgation of
the wealth tax (thanks its implementation is suspended) etc
all help to make investment in houses for rental purposes
non-attractive.
2.6 CAPITAL /FINANCE
Landed property, perhaps due to its durability, and its intrinsic
value as the finest form of investment in man is his most
expensive singular property. It requires high initial capital
outlay. And due to most of the reasons noted above, most income
earners cannot afford the cost involved in house acquisition
without assistance. But mortgage financing is virtually non-existent
today. In addition to that, the current average rate in respect
of the mortgage financing is 30% coupled with short repayment
periods of 20-25 years make the available finance very expensive.
For example a loan of ¢2 million attracts a monthly repayment
in the sum of ¢45,000.00 over a period of 20 years. The implications
are obvious. The list of the constraints is limitless.
3. GREDA'S CONTRIBUTION
3.1 Due to the complexities of the problems their solutions
lie in a total frontal attack; from the government and its
agencies, private individuals, and the Real Estate Developers
GREDA.
3.2 As already noted above, an annual delivery of 1m units
will be required to enable the state reach an equilibrium
by 2008AD in its housing delivery effort. The current total
membership of GREDA is 61, (sixty one). Admittedly, the majority
of the firms are relatively new in the industry. Finally in
view of the constraints noted above, GREDA cannot profess
to be currently in the position to meet the target 1m units
per annum. But all things being equal. It should be possible
for each firm to deliver, on the average, 4000 units annually.
With time and experience, this figure could be increased and
even doubled. GREDA should then be able to provide a minimum
of 75% of the annual requirement.
4. ASSISTANCE TO GREDA
4.1 GREDA
is most grateful to the government for the concessions already
granted to the Real Estate Developers not only in the Investment
Code but also on the 1988 & 1989 Fiscal Year Budgets. But
more practical demonstration of governments avowed claim of
commitment in housing the people will be greatly appreciated.
Elimination of the constraints noted above will constitute
such practical demonstration. Specifically, the government
is hereby being urged to direct its attention to the problems
relating to:
4.2 LAND
Enough laws already exist in our statute books to give legal
backing to the State in acquiring land for development. My
suggestion here is the establishment of a Land Development
Corporation whose main function, among others should be to:
acquire land, construct the required infrastructure and sub-divide
the land into building plots for sale to GREDA members. It
should be possible for GREDA to pool its resources together
towards the servicing of such sites, should the green light
be given. As an interim measure, the Lands Commission can
be strengthened to provide such services provided its activities
will not be characterized with poor land management by it
failure (among others) to enforce building convents where
many serviced sites are not developed while bonfire intending
developers cannot obtain plots. At the moment, I believe that
there are many government acquired but unallocated plots dotted
all over the country. The site acquired at Ofankor - a suburb
of Accra is a case in point. A thorough "land availability
survey" can reveal the existence of similar sites in other
parts of the country.
4.3 CAPITAL/FINANCE
·In view of the relatively low per capital income, mortgage
finance should be: regular, reliable, low cost and above all
must have the ability to grow. The current situation is far
from meeting these requirements. The functions and policies
of the financial houses therefore need to be overhauled.
· In the opinion of the writer, a way out is the establishment
of a Housing Fund, to be administered by either a National
Housing Board or one of the development Financial Houses.
In this regard, the Bank for Housing & Construction readily
comes in mind. Both local and international agencies could
be sources for its initial funding. The local sources include:
the central government budgetary allocation through Bank of
Ghana; floating of housing bonds; saving of private companies;
individual saving; pensions and social security fund, Trade
Union Funds; commercial banks be made to set aside specific
percentages of their loan able funds etc.
· International or Donor Agencies include: the United Nations
and its agencies, the World Bank and its agencies, other donor
nation and private international companies. Their assistance
can be in either cash or capital goods.
· With such specially mobilized funds, it should be possible
to grant mortgage loans not only to GREDA members but also
to the general public which forms the market at reasonable
concessionary rates (maximum 20%). The mortgage loan will
then become cheap, regular in supply, reliable and capable
of growth. It is therefore very heartening news to learn that
a "Housing Financing Company" is to be established. It is
the hope of all that it will come to fruition earlier than
planned.
4.4 MANPOWER AND MANAGEMENT
Efforts are being made to upgrade the polytechnics. I am also
aware of the benefits to be derived from the Junior Secondary
School (J.S.S.) system. These aim at improving the skills
of the artisans and technicians. What may be suggested is
to add voice to the call for the establishment of a course
of Project Management at the University of Science and technology,
Kumasi. The benefits that the Building Industry can derive
from such a course are enormous.
Credit: Greda Today
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