Ghana Housing Crisis

By Frank Q. Antwi-Barfi
Financial Planner
Chicago, IL

National Development Crisis
The Ghana National Housing Policy and Action Plan of 1987-1990 stated clearly and rightfully so, that

"Our housing problem is one of a national development crisis with a current annual need of 70,000 units and an accumulated delivery deficit of 250,000 units needed to decrowd urban units from 10-61 to a household occupancy rate of 7. An average annual delivery of 133,000 units will be needed to provide adequate housing within the next twenty years as against the current annual delivery of 28,000 units which yields a performance rate of 21%."

What actions must Ghana take to solve this housing crisis and to overcome the persistent deficit in housing delivery? Certainly, the solution to this problem is within the bailiwick of Ghana’s seat of Government. Government must mandate sound economic policies in order to redress or redirect the inept economic practices of past regimes.

Need To Rethink Our National Housing Strategy
There is a need to rethink our national housing strategies. Lack of adequate housing to shelter the populace and to prevent homelessness is the essence of poverty. The common theme running through the High Indebted Poor Countries (HIPC) Initiative is SHELTER. The problem of escalating costs of building materials and the ancillary problem of the high import content of building materials used in the country was examined three decades ago. The Bank of Ghana, the monetary manager of Ghana, established that the country could save considerable foreign exchange if the money spent on clinker imports, including rising freight costs, could be reduced by exploiting local resources as substitutes for imported building materials. Indeed, the former Governor of the Bank of Ghana , Dr. Amon Nikoi, commented a decade ago:

"A Central Bank in a developing country cannot remain indifferent to development issues particularly in a country like Ghana where the bulk of the foreign exchange which it is the Bank’s main function to manage, is produced by cocoa (sooner cassava and cashew) farmers and where approximately 70% of the population lives in the rural areas in sub-standard housing."

The Ghana’s past Administrations especially lost many good opportunities to use bricks and clay roofing tiles for some of our major post independence construction programs. Namely, the TEMA TOWNSHIP DEVELOPMENT; AKOSOMBO RESETTLEMENT SCHEME and more recently, the KPONG RESETTLEMENT PROJECT, THE STATE HOUSING CORPORATION’S HOUSING ESTATES and the LOW COST HOUSING SCHEME. In theory, successive governments have always declared their intention to "encourage" the use of bricks and other local materials in building. But their record does not match their rhetoric. The British, our colonial masters, knew better and used clay-roofing tiles for Legon.

The latest example is that of Ft. Lt. J.J. Rawlings. Over a decade ago, the ex-president was wondering why some houses in Ghana have two toilets while the Nima area of Accra had toilet facilities deficiency. Yet, at the end of his tenure, housing and public toilet facilities deficiencies are still prevalent in the 21st century. This is but one of President Rawlings’ failures which provides an opportunity for the new President to correct upon the years of inaction, "do-nothing" and "make-the-wrong-moves" administrations.

$300 Million Foreign Loan for Housing Development
So far this year, the Ministry for Works and Housing has identified $300 million for housing development.

1. $50 million for housing development
2. $100 million for housing from Slovakian Republic
3. $150 million for multi-level housing

The new Government should be cautious and not "put the cart before the horse" by announcing massive housing construction while there is no major local base of building material. Our recent history lesson shows that in the early 1970s about 65% of our housing delivery input were imported, which is a significant drain on our foreign exchange earnings. In the new millennium, we face a dilemma, that indicates that our imported material cost is now estimated at 78% because of our high usage of cement roofing tiles, ceramic/baked clay floor tiles, wall tiles, and cement pavement blocks which are being imported.

With the explosion of construction activities in the last years of President Rawlings’ administration, especially around Accra, it will not take a rocket scientist to figure out how we built a huge foreign exchange debt and devalued our Cedi. Over the past decade, cement consumption in Ghana has increased at an average rate of 11% per annum. Demand is currently estimated at 2.1 million tons and is expected to reach 2.7 million tons by 2005 based on present applications of cement practices. (International Finance Corporation (IFC) sources).

Who Sanctions IMF?
Does the IFC have any responsibility or liability for a foreign exchange drained project that impacts negatively on Ghana’s economy? In June 2001, IMF fined Ghana for providing incorrect Poverty Reduction and Growth Facility (PRGF) data. What then is the penalty, if there appears to be a lack of due diligence or maybe a lack of thorough economic impact review of projects by the Africa Projects Development Facility (APDF) that IFC sponsored in HIPC countries? An example of a lack of sufficient economic impact study is the establishment of a cement/concrete roofing tiles factory, Africa Concrete Products (ACP), a case study:

ACP factory in Accra manufactures red colored concrete roofing tiles. This project was financed by loans raised through APDF, a subsidiary of the IFC. In the tropics, heat and rains are very treacherous to building materials, which expand and contract, and crack cement-roofing tiles (elementary physics: co-efficient of Lineal Expansion). In addition, because concrete tile absorbs and holds rainwater, it often increases its weight beyond the original load capacity of the roofing trust and joists. As a result, incidents of sagging roofs and cave-ins are very prevalent. Furthermore, a continuous importation of clinker with hard earned foreign exchange to produce finished goods sold within cedi-market environment is not a measure of high capital growth for Ghana at this stage.

Moreover, the IFC should share the responsibility to refund and/or assume the cost of repairing and replacing the roofs of those that are affected. Else there should be recall of the product and/or a class action lawsuit filed. Such would not be unusual. As stated previously, it was only last June 28th, 2001 that IMF slapped a fine on Ghana for offering an incorrect PRGF data. Likewise, IFC should have known the impact on users of cement roofing tiles. Furthermore, the APDF should have known that the ACP generates foreign exchange burden for Ghana due to the choice of basic raw material, imported clinker. Thus, what is the cost-benefit to Ghana? A bunker housing mentality in order to make the buck; fed with concrete foundation, concrete floor, concrete walls, concrete columns, concrete trusts, concrete joist, concrete slabs, concrete paving blocks, etc.

Another example is a project in the pipeline being developed by Diamond Cement Factory in the lower Volta Region, an Indian owned concern with the nod from IFC. This factory is going to import foreign clinker yet the amortization of the debt will be made with the foreign exchange earned through the backs and sweat of our farmers and our good old gold.

I am 100% for development but development that improves Ghana’s economic growth potential, Ghanaian welfare and further utilizes our abundant natural resources. If Ghana does not change its import habit then Ghana will merely be providing income and employment to foreign producers of clinker and other materials.

The Government should make it a policy to actively promote the search for local substitutes for clinker and encourage alternative material usage by giving tax incentive for any building project which useS 50% less foreign inputs.

A New Era, A New Thinking, New Deal
Before independence, there was plenty of proof available that Ghanaians had used alternative building material (stones, bricks and wood) to build quality churches, schools, homes and civic centers. Now the new builders, sometimes with no help from their architects, are using foreign exchange enhanced materials in construction delivery. The advent of modern building materials technology makes it more promising to look in our own back yard for answers. This new thinking and approach to solving our problems will open Ghana’s rural areas to development and reverse the migration of job seekers to urban areas.

Poverty is lack of shelter. Therefore, when Ghana attains the poverty relief funds from IMF upon full admission to the "HighPC" Initiative Club, the Government should not confine itself to finding the necessary foreign exchange to import more clinker and clay/ceramic tiles for the housing industry. Shelter is paramount to our development: Schools, hospitals, institutional buildings, housing, hotels, etc. However, Ghanaian appetite for foreign building materials is one of the contributing factors, which lead us into "HighPC" status. We must institute a new thinking. In addition to a policy of promoting the use of local materials, The Government should encourage the setting up a quasi-public company (because local equity investment is lacking) to develop various building materials factories to feed the construction boom that lies ahead of us.

The benefits derived from these two initiatives will have a direct impact on many of the "poverty" definitions (presented below). Such initiatives are tantamount to the "New Deal" solutions implemented by the USA President Franklin Roosevelt during the "Great Depression Era", when he jump-started the USA economy. DON’T MAKE BOLD MOVES WITHOUT PLANNING, AND DON’T BE AFRAID TO MAKE BOLD PLANS.

What is poverty?
What is poverty?
Poverty is hunger.
Poverty is lack of shelter.
Poverty is being sick and not being able to see a doctor.
Poverty is not being able to go to school and not knowing how to read.
Poverty is not having a job, is fear for the future, living one day at a time.
Poverty is losing a child to illness brought about by unclean water.
Poverty is powerlessness, lack of representation and freedom.