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Homes are where the heart is

Article - March 28, 2012
Ghana needs to produce 100,000 new homes every year for the next ten years - but is confident it can achieve the task
ALBAN SUMANI BAGBIN, FORMER MINISTER OF WATER RESOURCES, WORKS AND HOUSING

Though Ghana has been making progress in its development of roads and the trades market, the struggle to stimulate the housing sector remains. However, former Minister of Water Resources, Works and Housing Alban Sumani Bagbin believes that with the growing middle class and increasing purchasing power, Ghana is becoming a more attractive region, and the goal is within reach.

When talking with the former minister, it becomes apparent that developing Ghana’s housing sector is a crucial step in meeting many other needs of the country. Discussing the urgency of proposed changes, Mr Bagbin said, “If you see how many people live in Ghana, it’s very sad, many are simply looking for a place to sleep... there is an urgent need for us to make a bold intervention.” In order to execute this form of intervention and fill the housing gap, it was established that Ghana will need to produce at least 100,000 new homes every year for the next ten years – unquestionably a big ask. However, with waves of capital influx, the governmental consensus is that this is most certainly achieveable.

 

“We could produce a lot more of our own building materials. At present we use about 20 percent of local materials… We need to develop the capacity of the private sector to be able to produce locally for the housing industry.”

Alban Sumani Bagbin, former Minister of Water resources, Works and housing

It’s important to recognize that until about 20 years ago, the real estate market was dominated by the state. Once it was liberalized in the 1990s, HFC Bank helped create a mortgage market. This market was shaken by the Cedi’s instability in 1996, but it has since recovered steadily. The growth of the private sector since has supported the expansion of the middle class – but there is certainly room for further growth.

The growing middle class is a crucial development, in that it means an increased purchasing power. The younger generation is starting to realize capital gains and thus the residential and commercial market is starting to expand. However, Ghana has been burnt before with faulty plans (STX Korea, for example, which pulled out of an agreement after failing to meet terms), so it is proceeding with caution.

The country is working hard to improve on not only its housing sector, but also its electricity, roads and transportation, and its water and sanitation. Those involved in the ministry believe that the improvement of the housing sector will positively affect progress in many other sectors. However, for that to happen Ghana must first expand its indigenous private construction sector, with less building material being imported and more being sourced or created locally. Mr Bagbin says: “We could produce a lot more of our own building materials. At present we use about 20 percent of local materials… We need to develop the capacity of the private sector to be able to produce locally for the housing industry, however, together with the Ministry of Environment Science and Technology, we have put in place a 5-year plan where we intend to move from 20 percent to 60 percent.”
 
Meanwhile, improvements to Ghana’s roads and transport systems are being made. The progress in road construction has signaled the hastened flow of goods and services. Improvements to housing will, in turn, help with improvements to water and sanitation. This will yield invaluable benefits to the agriculture sector, which uses approximately 60-70 % of all water in the country. As the bulk of the employment market (formal and informal) is based around agriculture, it is critical to keep a consistent water flow to the farmers in order to sustain the sector, and more importantly, to feed the country.

Naturally, Ghana is keen to attract investment, but also needs to ensure that local workers will benefit. 90 percent of the workforce for any given project should be Ghanaian, according to the Ghana Investment Promotion Centre, though foreign personnel are allowed in specialised areas, in order to facilitate technological transfer.
Mr Bagbin continues: “I think investment is key, and even though we have been getting a lot of support, there is still a gap that we have to fill… We are partnering with both local and foreign private sectors because the government opted for PPP and there is a secretariat at the Ministry of Finance. Because the market is good we are receiving, daily, a set of offers for joint partnership (Foreign-Ghanaian Partnership). Almost on daily basis we get MOUs proposing some interventions… we are looking at them properly and referring them to the PPP secretariat to advise us not only on the technical but also on the financial proposals. But our focus is how to make available to middle income housing units for the people… And so we are trying to build the capacity of the state housing companies to make available low to middle income housing units for the people. So that those lower down the ladder would also get shelter over their heads.”

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