TRENDS, CHALLENGES AND OPPORTUNITIES Addressing the housing challenge in Sub-Saharan Africa Roland White Global Lead: City Management and Finance East African Cities Forum 26 May, 2016

2 HOUSING IN AFRICA key facts

Africa is the only region in the world in which the slum population is projected to grow 3 Estimated urban population living in slums, World Bank calculations, based on United Nations “World Urbanization Prospects” (2014).

Africa is the most rapidly urbanizing region in the world… But investments in housing have not kept up with urbanization and growth. 4 Housing investment as a % of GDP Dasgupta, Lall & Lozano-Gracia (2014). “Urbanization and Housing Investment”, World Bank. Housing investment as a percent of GDP

Government of Ghana101,80 0 Bank of Ghana66,500 UN-HABITAT133,00 0 Amoa-Mensah90,000 Mahama and Antwi130,00 0 Karley70,000 Africa suffers a chronic housing challenge, manifest in overcrowded, poor-quality and located dwellings and low levels of investment Thinking about this in terms of quantitative “backlogs” is of limited value in analysis and policy-making 5 GHANA: recent estimates of new housing need per year

Rapid urban growth + low incomes + high costs = extensive informal housing Typically formal housing costs 3x to 5x average annual incomes… In Africa, it costs 14x to 17x 6 GNI per capita vs. costs of new formal housing Centre for Affordable Housing Finance (2014). “2014 Yearbook: Housing Finance in Africa”.

7 HOUSING IN AFRICA trend-drivers

Africa is urbanizing rapidly, but late and at low incomes GDP per capita in the first year with an urban majority 8

In Cameroon, 70% of urban land is held without title Land tenure, management and administration systems drive up costs and dis- incentivize investment in housing stock 9 The average cost to register property in SSA is 8.3% of the total value the highest in the world In SSA only 10% of total land is registered

Infrastructure coverage is low, and declining as urban populations grow. 10 Infrastructure deficits in Sub-Saharan Africa Foster (2008). “Overhauling the Engine of Growth: Infrastructure in Africa.” World Bank.

A bag of cement in Nigeria costs twice that in the USA The formal construction industry is relatively inefficient and costly 11 A warehouse building permit is 4x costlier in SSA than the OECD Second only to South Asia Low-cost formal housing averages: $700/m 2 in SSA $350/m 2 in India $250/m 2 in China

Housing finance products are not available to most SSA urban households 12 UGANDA: incomes and access to housing finance Access to mortgage loans from commercial banks Access to credit from MFIs and savings groups No access to commercial banks, MFIs, or savings groups >1M UGX per month 0.7% 100,000 to 1M UGX per month 37% <100,000 UGX per month 62.3%

And government subsidies for housing have done little to promote wide-scale access 13 CAMEROON: house price-to-income ratio for government social housing

14 RECOMMENDATIONS targeted interventions for an inclusive housing sector

Complementary interventions across the value chain, which address distinct needs of different income groups 15 upper income lower income middle income formal construction affordable informal housing Upgrading informality: Basic infrastructure Incremental & self-construction Leverage existing savings Expanding access to finance: Liquidity & long-term capital Regulatory framework for lending Underwriting Cross-cutting areas: Land administration Planning & building standards Construction sector & materials Rental markets formal finance MFIs no housing finance

Direct provision of formal housing is unaffordable for governments. 16 Rough illustration - simulated cost to bridge the gap with formal housing Calculations based on data from World Bank (2015), UN (2015) and CAHF (2014).

SLUM CONDITIONS No improved water or sanitation Unsound structure Overcrowding No tenure security PARTIAL UPGRADE Basic infrastructure Structure with a foundation or durable walls Perceived tenure security SEMI- FORMAL Improved infrastructure Meets some building codes Self-construction Proxy for tenure FORMAL HOUSING Piped water and sewer connection Meets all building codes Proof of ownership Informality represents a spectrum of shelter locations, conditions, and tenure statuses. Governments need to direct policy and resources at assisting households move incrementally up the housing quality spectrum 17

18 Upgrade existing informal housing  Extend basic infrastructure  Provide tenure security to promote investment  Support incremental and self-build upgrading NAMIBIAIncremental tenure and community upgrading SENEGALConversion of temporary occupancy permits to permanent title deeds KENYA LESOTHO TANZANIA Tenure regularization through bulk surveying and land use planning MAURITANIAProvided serviced plots less than 1km from original house with community infrastructure and microcredit support Recent successes

Improve planning & building regulations  Strengthen public land administration  Improve city planning institutions  Adapt land use and zoning regulations  Incentivize density and infill 19 RWANDAComprehensive land tenure reform Issued land titles with photomapping technology TANZANIASurveyed all communal lands, registered 60% so far, at a cost of $500 per village ETHIOPIAIs building an urban legal cadaster in Addis Ababa which will eventually cover the entire country KENYAStreamlined land administration processes Reduced VAT on land LESOTHOIntroduced land administration authority Reduced wait times and improved application turnaround GHANAComputerized land records Cut time to register property from 169 days to 34 UGANDAReduced property registration times from 227 days to 48 Recent successes

Strengthen the construction sector  Adopt performance-based construction standards  Develop an increasingly skilled labor force  Promote use of cheap local materials 20 Plastic formwork to cast uniform walls and floor slabs Reusable up to 50 times Reduces costs for production time transportation South Africa: industrial construction techniques Moladi formwork. Source: commons.wikimedia.org

Expand housing finance down market  Facilitate the development of the financial sector to expand access to formal mortgage products  Support development of non-mortgage lending products for informal or irregular incomes  Leverage remittances and community-based lending 21 Savings methods among savers, selected economies ADULTS SAVING ANY MONEY IN THE PAST YEAR (%) Demirguc-Kunt & Klapper (2012). “Measuring Financial Inclusion: The Global Findex Database." World Bank.

CONCLUSION Work across the supply and demand sides of the housing delivery process and leverage the private sector to provide housing solutions for all income levels 22 Inclusive housing sector