With a diverse population of approximately 1.4 billion, Africa is the second largest continent in the world consisting of 54 countries and multiple languages. While Africa deals with its fair share of problems, one of the most common issues experienced by its population is housing. Having a habitable roof over their head is still a far-fetched dream for many African households. Lack of affordable housing finances, ever-increasing costs of urban land and construction costs, the weak tenure system, and the prevalence of slum dwellings are the major hurdles obstructing the alleviation of the continent’s housing crisis.
Shortage of significant investments and policy interventions poses an evident threat to Africa’s housing market conditions. Similar to how a nation progresses, as the blooming youth population ends up migrating to urban areas in search of employment and financial freedom, the housing crunch could end up compromising urban health and safety. Densely populated regions containing informal settlements with no essential utilities like access to clean water, sanitation, solid waste management, and health services could also lead to persistent health crises and social frustration apart from economic and housing crises.
Taking limited job creation, slow economic growth, steady population growth, and rapid urbanization into account, the effect of the crisis throughout the continent is more pronounced. For profound economic growth, it is essential to improve the fundamentals of the factor (housing sector in this case). To address the related pressing socio-economic issues, policymakers and advisors are working towards the problem by developing interventions with respect to both supply as well as demand sides.
As evident from developed and developing nations across the globe, the majority of the investors and construction developers across the continent tend to incline towards more profitable projects i.e., rather than building mass housing projects, they prefer high-end commercial or residential projects which potentially guarantee a higher return on the investment. China has been the dominant force in the development of all types of infrastructure in Africa for decades. Despite China’s high degree of penetration into the real estate and construction sector, affordable housing has never been the top priority for Chinese investors. As long as stringent measures are not taken w.r.t. private sector involvement, the system would fail to keep up with the demand.
To address the aforementioned issues, several countries within the continent launched necessary reforms intervening at an administrative level for alleviating the bottleneck, providing incentives to the private sector developers, and simplifying the procedure for registration of land. An example of such an instance is – the government of Côte d’Ivoire regulated reforms to clarify the details of ownership of land, especially in rural and peri-urban areas. Similarly, reforms were put in motion pushing thousands of undocumented immigrants residing in slum dwellings, to register and get the ability to own land. Another advantage of this reform was surveying and registering land parcels that were unaccounted for.
By regulating the land registration and ownership process, Côte d’Ivoire managed to bring down the time taken to register land to under 30 days.
Another example of reform is mortgage refinancing in Egypt. In 2007, Egypt was the first country in the continent that established a mortgage refinancing company. By bringing more liquidity to the mortgaging sector through another market, it allowed originators to produce a larger amount of mortgages. The establishment of such a refinancing company not only reduces the capital cost but also allows the mortgaging firms to extend the loan tenors making them more affordable for the consumers which are essential to meet the housing needs of the continent. Followed by the success of Egypt’s model, countries like Tanzania (2010) and Nigeria (2014) established their own mortgage refinancing companies.
While the scale of rolling out mortgages remains a pressing issue, the reforms making financing more accessible and affordable at attractive interest rates can be considered a silver-lining w.r.t the housing crisis of Africa. Another effort to address the financing and affordability conundrum was made by the Nigerian government taking the public route i.e., The National Housing Fund (NHF) under the Federal Mortgage Bank of Nigeria. Offering subsidized loans at a minimal interest rate, the method does not address the affordability issue in its entirety but has certainly improved the condition of the financing environment.
The government decided to take a direct approach primarily focusing on supply-side interventions to address the issue. By setting a target of constructing 1 million homes annually in conjunction with a Chinese construction firm, efforts to expand the affordable housing stock are already underway.
With the help of the current & upcoming reforms, the affordable housing sector should get a boost across the continent which is crucial for meeting the housing demand currently and in the future. The housing deficit in Africa along with the rapid demographic and urban growth would require a cohesive effort from both public and private sectors and more innovative interventions like home-building programs supported by the government, an efficient regulatory system for land registration, and overall improved accessibility to housing finance.
- Oxford Business Group (2017). Africa looks to solve housing shortage amid growing population [online]. Available at: https://oxfordbusinessgroup.com/analysis/no-place-home-growing-population-continent-looks-solve-its-housing-shortage [Accessed 16 November 2022]
- Think Global Health | Council on Foreign Relations (2020). Africa’s Urban Housing Crisis [online]. Available at: https://www.thinkglobalhealth.org/article/africas-urban-housing-crisis [Accessed 25 November 2022]
- Bah, Eh.M., Faye, I., Geh, Z.F. (2018). The Housing Sector in Africa: Setting the Scene. In: Housing Market Dynamics in Africa. Palgrave Macmillan, London.