A brief history of housing in Ghana

Since Ghana gained independence 50 years ago housing issues have been dominated by the government sector, Housing Consultant Ohene Sarfoh told The Statesman in an interview.

Mr Sarfoh explained that the Nkrumah administration, as part of its 1960-65 National Development Plan, first sought to provide housing for Ghanaians by parodying the mass construction of post-WWII European governments that were recovering from the destruction of enemy bombs.

"At the same time there was a parallel informal system of production and supply, for people working in the informal sector,” he added. Mr Sarfoh, who is currently working with UNHABITAT Ghana on slum-related issues, provided a detailed history of 50 years of Ghanaian history for reflection.

It was during Nkrumah's time that two main state bodies were formed to address housing issues: the State Housing Corporation and the Tema Development Corporation, which was created with the special purpose of creating residential units in the rapidly growing Tema area as part of a major industrialisation drive.

TDC dealt largely with the acquisition of Tema land, and creating legislation to this effect, for residential construction.

While TDC focused on Tema, SHC worked in the regions across Ghana, of which there were nine at the time.

Like so much of Nkrumah's industrialisation drive, and like those of the Soviets and Communist China, the resources allocated to such ambitions ran dry. “Funding for these bodies was progressively reduced over the years,” Mr Sarfoh said.

“The intentions stated in those days were never realised.”

Instead, a 50-year legacy has developed that has left Ghana with a veritable housing crisis. In the city markets we can see vendors sleeping in their kiosks, children living on the streets, and entire communities living in decrepit shacks with no amenities as the city sprawls ever-wider and the wealthy few who can afford houses enjoy access to the heart of urban comfort. “We are creating a city for the rich,” Mr Sarfoh noted.

He added that housing development has never been considered a critical area in Ghana’s development framework, and that the history of housing in this nation is a series of fragmented policies rather than a holistic, comprehensive vision to deal with the complexities of housing a nation.

According to Mr Sarfoh, much of Ghana’s housing problem is rooted in dependency on the international community: the United Nations and various Breton Woods institutes, most notably the World Bank, going back to Nkrumah’s ill-fated development plans.

The imported Roof Loan Scheme, which gave government support to individual funding up to the roof, lasted until the 1970s, by which point the massive tide of migration to the cities had begun, especially Accra and Tema. Some of these migrants amassed some wealth, acquired a little land, built compound housing, and rented out flats while living in the same compound with their tenants.

This period is consistent with the tendency of renters to rent from people who have only slightly more money than themselves: rich rent from rich and poor from slightly less poor.

This tendency was observed in the UN Human Settlements Programme publication 'Rental Housing: an essential option for the urban poor in developing countries.’

The 1970s, however, brought a period of very poor economic performance for Ghana and much of the developing world, especially oil importers, due largely to the energy crisis, OPEC, and oil shocks. This extended recession brought price controls and sporadic building from worried developers.

It was at this point that various individuals built houses around areas like Kaneshie, where they could access markets and amenities. Such individualised, unplanned building collectively created new communities like Kwashieman and Abeka in Accra.

The result was disjointed growth and urban sprawl. “It is a trend that continues,” according to Mr Sarfoh.

The financial crisis also escalated the costs of housing: land, labour, technical services (such as design, architecture, and engineering), cost of financing, and materials. This was a time when even wealthy industrialised nations were facing interest rates above 20 percent.

“Up to 1979 there was a rent policy” which capped rent prices in order to create affordable housing, but it had the unintended consequence of dissuading developers from creating rental units, and made rental accommodation more difficult to locate.

It was that same year that Old Fadama was first settled in Accra by people from the north of Ghana, giving birth to a new phenomenon in Ghana: the slum. The financial crisis peaked in the 1980s, at which point, in 1983, Ghana, like so many other developing nations, signed on to the infamous Structural Adjustment Programmes, also known as Austerity Programmes, of the World Bank in order to secure much needed cash flow.

The SAPs required Ghana to participate in trade liberalisation initiatives, which opened its market to imported building materials and necessitated the loosening of rent controls.

The opening of the market forced Ghanaians to rent accommodation at commercial rental prices on an open market. The prices were so high that some developers came up with a cheaper option: converting closets, toilets and other small spaces into rental units.

The imported building materials managed to compromise the markets for local materials despite their higher prices. They were perceived to be of higher quality because they were built by European, not African, labour, the cost of which was considerably higher.

In the face of so many market factors driving prices ever-higher, the government of the day implemented numerous housing reforms based on the conception that economic development is driven by cities, so that’s where the focus lay.

The Accra District Rehabilitation Program, for example, was committed to upgrading infrastructure in Nima and Maamobi, and building a major highway in 1986.

Under the new market-oriented approach, TDC and SHC were revamped into limited liability corporate entities, as was the Architectural Engineering Services Corporation. Mortgages that had been state-administered were bought up, under housing finance reform, by the new Home Finance Company, essentially a secondary mortgage generator.

Other reforms focused on sporadic slum upgrades, with the introduction of new infrastructure, and land reform that required official registry of all lands. Toward the end of that decade, the Social Security National Insurance Trust expanded on its existing program to build housing for its staff. In 1988 SSNIT began a significant investment in housing at ‘social’ and not market prices, providing a lower rental option for the general public.

Toward the end of that decade, the United Nations Development Program and World Bank supported a new housing sector reform plan, policy, and strategy, subject to further assessment studies that were not approved until 1990.

These studies revealed interesting opportunities for the use of local materials, which led to the 1992 use of micro-concrete roofing tiles (MCRT), which has the potential to usurp foreign inputs and the production of the local concrete monopoly.

By this point imports had so overwhelmed the sector that using local materials was considered a radical concept. Appropriate technology was also developed to allow the proliferation of handheld tools with low costs, which allowed smaller scale housing entrepreneurs to enter the supply side of the housing market. By the turn of the millennium it was clear that the SAPs had not had the desired economic impact. Inflation and interest rates soared with a significant impact on the housing industry.

The cost of financing houses became so great, with the interest rate approaching 60 percent and inflation over 50 percent, that even established real estate developers could not afford to finance new projects.

Developers were left with little choice but to find richer buyers, and they followed the money trail overseas to the Diaspora. In the late 90s real estate dealers embarked on a government paid world tour, attending exhibitions in New York, London and other wealthy world capitals, to pitch the Ghanaian urban housing markets to non-resident Ghanaians.

Due to the considerable spending power of NRGs relative to their back-home counterparts, foreign mortgages further drove up the price of housing. Their interest also intensified the trend toward imported building materials despite the availability of high quality local materials at a much lower cost. Local production of housing materials virtually collapsed.

It was in 1999 that Ghana’s financial crisis hit its peak. That year SSNIT, unable to continue operating its social rental units at a loss and realising that even its reduced rents were higher than most Ghanaians could afford, began the process of divesting many of its real estate assets.

By this time there was virtually no housing being produced for local demand. In 2001 a new party took over the role of governing and made new pronouncements on housing. Like all others before them, they looked internationally for housing funds, but according to Mr Sarfoh, none materialised at that time.

Ghana’s participation in the Highly Indebted Poor Country debt relief program of the World Bank allowed for some funds to be made available for housing. Since that time, Government has received 10 million Euros in support from a Belgium bank for the development of infrastructure for a new affordable housing project near Amasaman.

As reported by The Statesman today (see front page), the cost of housing has soared out of control to the point that in this developing country even a senior government employee would have trouble finding an affordable house. Only very wealthy Ghanaians, Diasporans, and the international community in Ghana (diplomats and employees of multinational corporations) can afford to buy a house in the urban core.

Even the outskirts of town have become intolerably expensive for most hopeful homeowners, leaving newcomers to the city in a catch-22 situation. The overcrowded slums continue to grow and nothing seems to stop the tide of migrants moving to the city in the hopes of find jobs.

“Shack developers” opportunistically build houses in slums and charge rental fees for under-equipped lacklustre shacks, and some landlords are breaking decades-old rules by charging two to three years rent upfront.

Ghana’s housing history is a bleak one, but the situation is not hopeless. “We have the capability to adequately care for our local market,” Mr Sarfoh insists, saying that high-priority, innovative, holistic, and integrated policy that accounts for more than just the symptoms of these problems is the key to a new era of affordable, equitable housing.

All this week The Statesman will explore the multiple, complex, related issues of housing and rental prices, the urban poor, squatters, infrastructure, and urban sprawl.

Stay tuned for more interviews and exploration of land reform, government initiatives, the rent option, first-time prospective buyers, financing and mortgages, build-it-yourselfers, and more.