Housing Development Program (HDP) in Ethiopia 11December 2017 Belay File

1. Introduction Ethiopia’s Economic growth is accompanied by rapid rate of urbanization of about 5.3%. Rapid urbanization rate has posed several socio-economic challenges and housing is one of these. Housing shortage in Addis Ababa is one of the major concerns for the government. Current shortage is estimated to be 1.2 Million units, increasing by 100,000 units each year (MUDH, 2017)

Cont’d The Government is responding with ambitious plan for building a large number of housing units. Currently 140,000 housing units are under construction and 430,000 more is planned in the second GTP. Housing development program is based on key principles and objectives that guide its implementation since PASDEP (2006 -2010):

2. Key Objectives of the IHDP Reduce Urban poverty through job creation Enhance/ develop saving culture Enhance the capacity of construction industry Renew/Upgrade slum areas Ensure fair wealth creation and distribution to the low and middle income residents (Housing for low-income households and ensuring security) Ensure proper handling of urban land based on plan.

3. The Strategy of Housing development Housing Development as an instrument of urban economic growth (Local economic development) Integrated Approach to Housing Development Job Creation & Poverty Reduction Developing Private Sector Developing competitive construction industry Linking with slum reduction Mobilizing savings & creation of wealth through home ownership Linking with finance sector development Creation of better functioning housing markets Promotion of affordable houses: Low-cost and labor intensive technology, cost-saving designs and construction methods, economical land use & use of local materials Mobilization of All Actors: Private Sector, Housing Cooperatives and Government.

Cont’d Role of the Government Provision of serviced land and Infrastructure Capacity building Technology (low cost) Facilitating finance Coordination. Role of the Private Sector 100% construction of the houses by private sector.

4. Guiding Principles of HDP a. Alleviating poverty and creating wide job opportunities, b. Ensuring planned and economical use of limited urban land, Encouraging the construction of affordable and standardized housing, Encouraging the participation of development oriented investors, Ensuring equity and transparency in the housing development, and Reducing and eventually controlling illegal settlement and construction.

5.Housing Provision Modalities Various housing delivery mechanisms of which 4 is carried out with government support Government’s Support is based on the income level of residents: Low income Housing (10/90) Target group- Low income people with monthly income of Birr 1200 Expected to save 10% of the price of the house in 3 years and 90% is bank long term loan Government support- Land, infrastructure including internal design, tax free construction materials, etc.. 30% of the constructed houses shall be drawn for women in advance during the lottery drawing program

Cont’d 20% and 5% of the constructed houses shall be drawn for government employees and physically disabled persons respectively and they shall also take part in the remaining lottery drawing program. Residents displaced through urban renewal get priority if they opt for payment of compensation as an alternative if they can afford the price of the house Design-G+2

Modalities (Cont’d) B). Condominium Housing (20/80) Beneficiaries: Lower Middle to Middle income group Expected to save 20% of the price of the house in 5 years and 80% is Bank long term loan Government Support: The same as above except exclusion of internal electrical and sanitary facilities Design G+4- G+12 Allotment of the houses is the same with 10/90

Modalities Cont’d C) 40/60 Housing Program (saving Housing program) Target Group – People with upper Middle income Expected to save 40% of the price of the house in 5 years and 60% is Bank long term loan. Gov’t Support: Same with the above but infrastructure provision is only up to the construction site. Design: G+9 – G+18 Commercial space included(up to 20%) to compensate for infrastructure cost 20% of the constructed houses shall be drawn for government employees

D) Housing Cooperatives (100/0) Modalities cont’d D) Housing Cooperatives (100/0) Any resident may organize him/her self on the basis of his/her income and acquaintance (working place, residential etc..) and construct a house. Beneficiaries: People with above Middle income (AA) Individuals are required to cover full price of the house initial installments Government support: Land, infrastructure up to construction site, design, tax free construction materials.

E) Housing Provision by Real Estate Modalities cont’d E) Housing Provision by Real Estate Target Group- People with high income F) Housing Provision by Individuals For Own and for rent G) Housing Provision through Public private partnership Gov’t provides land Investor – Avails finance, knowledge and technology

6. Achievements to date (MUDH 2017) Total of over 385 thousand houses have been constructed and under construction. Over 237 thousand housing units have been transferred to beneficiaries. 846 thousand jobs are created. 2000 contractors participated in the program

Achievements Cont’d Housing program has created strong linkages with MSEs and local industries through Demand. About 11, 691 MSEs participated, as sub-contracting firms and received capacity building (skill training and MFI loans) Extended Value chains has led to strong job performance of the program. Housing and Cobblestone Programs have contributed strongly towards industrial growth and jobs in Ethiopia over the last decade.

7. Challenges in Implementing the Policies Shortage of Housing Finance (Key Challenge) Inadequate Infrastructure Supply Shortage of Construction materials Scarcity of open land in the inner City

Challenges Cont’d Limited Capacity in executing urban designs, and neighborhood designs in short period of time Low construction project management capacity Poor housing administration (Key Challenge) Affordability issue

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