Barima’s Beefs III. The housing crisis: what will it be – homes or loans?

In an interview last week, the Minister of Works and Housing, Samuel Atta Akyea, announced that, according to a report from the Ghana Institution of Surveyors (GhIS), US$114 million had been embezzled from the Saglemi housing project under the Mahama government.

The project, located on the Accra-Aflao road, was designed to provide affordable housing to 5,000 Ghanaians through mortgages provided by Ghana Home Loans, which later became GHL Bank.

The news of the missing money came on the back of increasingly loud grumbling among citizens in urban areas about the high rents and two-year advances to be paid before one can secure accommodation. Citizens, especially young Ghanaians, have complained that the costs of finding decent housing are back-breaking and push them into debt early on in life.

The property owner’s perspective

Many have called on the government to enforce a law that makes the collection of two-year advances illegal. However, the matter is not so clear-cut, because of the differing opinions of other stakeholders, such as property owners and the political parties.

For one thing property owners across Ghana complain that without a two-year advance, they will be unable to make much profit from the venture and maintain the property at the same time.

This is in addition to complaints that the high cost of building in Ghana leads inexorably to high rents.

Party proposals

The two major parties – the New Patriotic Party and the National Democratic Congress – have included in their 2020 manifestos the actions they would take to solve the housing problem in the country.

The NPP has pledged to establish a National Rental Assistance Scheme (NRAS), a measure meant to provide low-interest loans to eligible Ghanaians to enable them to pay off rent advances. Reforms of the Rent Control Department have also been promised.

In addition, an NPP government will establish a national housing scheme to increase threefold the number of houses being built annually. This effort will be helped along by setting up two institutions – the Ghana Housing Authority and the National Housing and Mortgage Finance Company.

Some members of the public, especially young people on social media, have not been very receptive to the notion of the NRAS, however, decrying it as an intervention that does not get to the root of the problem and will plunge young people into yet more debt.

just tell them to stop charging 2 years advance rent. idgi. what's this debt mongering https://t.co/ablw6meAfb

— anna-maria the hopeful romantic (@heyannamaria) October 14, 2020

https://twitter.com/stephietuts/status/1316366763953717249?s=21

The NDC has similarly pledged to launch an aggressive social housing plan that will provide at least 20,000 houses across the country.

It has also pledged to start a National Mortgage Assistance Scheme and also, interestingly, to start a “low-interest rent advance scheme”, which has similarities to the NPP’s NRAS.

There has been little serious discussion of the NDC’s proposals, however.

What the public is saying

Suggestions from members of the public have ranged from calls on the government to enforce the Rent Act, as a way of curbing the collection of two years of advance rent, to proposals that the government build many more affordable homes than are available at present.

https://twitter.com/naashikaaa/status/1316373126066982914?s=21

Whereas the government can provide (truly) affordable accommodation to eligible Ghanaians?
No sense, just waste of money and vibes. https://t.co/vMki1yX2Zg

— Your Guy (@kobby_mcodoi) October 14, 2020

The way forward

The government has made modest efforts, but these are not enough. It must move with speed to resolve this matter and absolve its own efforts of any attempts to dabble in corruption, as evidenced by the NDC record in cutting out the Saglemi rot.

If officials take the affordable housing route, lessons can be learned from the Singaporean model (and, locally, from the housing scheme for Volta River Project workers in Akosombo) to make such a scheme work for the long haul and not fall into disrepair, as has become the norm for certain government interventions.

A compromise could also be worked on between property owners and the government to ensure that the burden on citizens eases but property owners remain satisfied with their profit margins. Encouraging local production of building materials and providing incentives to property developers (this second point is the subject of an NPP pledge) would also bring down the cost of developing property and ultimately lower retail prices for housing.

The fact is, decent and affordable housing is essential for citizens’ welfare and it is imperative that public servants do not bumble around with the issue.

Deo volente!

Barima Peprah-Agyemang

Barima Peprah-Agyemang writes for this blog in between meeting assignment deadlines at Ashesi University and reading all sorts of books. He resides in the beautiful city of Sunyani.
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