Saglemi housing saga: the good, the bad, the ugly and the blue

The current state of the Saglemi Housing Project initiated by the John Mahama administration is an epitome of the sheer wickedness the current government is visiting on Ghanaians.

First, it has abandoned hospitals across the country including the UG Medical Centre, then abandoned roads, including cocoa roads, abandoned school blocks and now abandoned housing projects.

Ghana’s housing deficit was

Read full articleestimated at about 1,700,000 units in 2011. This huge deficit partly explains the high Real Estate market prices, high rental costs and huge advance rents.

To clear the deficit, about 100,000 units annually was required for the next 20 years. The current annual supply is between 25,000 and 40,000 units, of which about 95% are supplied by the private informal sector. The rest are provided by estate developers and public housing agencies.

The Good

Then NDC government identified two critical areas of the economy that is bedeviling our country: inadequate housing and inadequate jobs.

In the pursuit of job creation, housing provision was seen as a double-edged sword: to provide housing while creating jobs for people. It was for this reason that H.E. John Dramani Mahama commenced the Saglemi Housing Project.

Parliament approved the US$200m buyers’ credit with a moratorium of 2 years, maturity period of 7 years. It had an interest rate of 12.5% p.a. on the Cedi equivalent of the USD Loan Amount based on USD:CEDI exchange rate fixed at drawdown.

Construtora OAS undertook to execute the project within twenty-four months as a self-financing, commercially viable project at the construction cost of $29,000 for the 2-bedroom and $57,000 for the 3-bedroom of 84m2 and 120m2 3-bedroom respectively.

Ghana Home Loan in a letter dated 28th June, 2012, states, “It has the capacity to provide the necessary resources to fund the 5,000 properties to be constructed under the proposed scheme."

They further stated that “assuming the units are completed within the proposed two- year delivery programme, we will be in the position to disburse funds directly to a stipulated account held by GOG/OAS to offset GOG’s liability."

TDC and SHC were to be responsible for the post-construction management of the estates at a fee, to maintain, secure and keep the place clean and tidy. In particular, it was to act as a catalyst for the revival of the much-needed public sector housing provision.

The Bad

Following the approval of the loan agreement in 2013 and the subsequent signing of the EPC contract between the Ministry of Water Resources, Works and Housing, the project formally commenced.

There was, however, a delay in the physical commencement because equipment and materials for the construction had to be procured and imported into the country.

Phase 1 of the Project had been completed with over 1500 units of housing, paved road network, street lights and water and sewage network waiting for connections to the national grids, which were the responsibilities of the government of Ghana.

Phase 2 had commenced and was at various stages of completion when the NDC government left office in January, 2017. Payments for mobilisation and certified works on both Phases 1 and 2 had been made to the Contractor before the NDC government's term ended.

The NPP government on assumption of power placed an embargo on all ongoing projects including the Saglemi Housing.

While this embargo was in place and not a single unit had been added, reports in the media stated that the Chief Director had approved for the payment of certain amounts of monies to the Contractor without the knowledge of the Minister. The begging questions are:

Was the Minister really unaware of the payments? If so, why did the Minister for Finance authorise payment requests from the Chief Director who has not since been held accountable for subverting procedures and making payments for no work done?

How much was paid before the NPP Government came to power and how much have they paid since they came to power?

What was the basis for the abrogation of the contract and was the Contractor paid the full amount for less than a fifth of the project delivered?

My prayer to the Justices of our land is to ensure the above questions and many more are brought to the fore.

The Ugly

We are made to understand that a number of units in excess of 1000 have been completed. Instead of cutting our losses and fixing the problem, government keeps giving excuses that the houses are not habitable because we do not have water and electricity at the site.

The responsibility of taking water and electricity to the site is that of the government of Ghana under the agreement. How many weeks will it take for Ghana Water Company and ECG to extend their utilities to the site? Or is it one of the cases of let’s abandon it and blame the previous government?

Political parties are voted into power to fix the country, not to tell the citizenry about the problems they already know.

The Blue (Way Forward)

When there is a takeover, whether business or country, not only assets are inherited, but also liabilities. As President Akufo-Addo is taking credit for the Pokuase Interchange whose funding and preparatory works he inherited, he should take responsibility for the Saglemi Project, whatever the challenges may be. The following are three key strategies:

The Akufo-Addo/Bawumia-led Government should direct the immediate extension of water and electricity to the site for connection to the housing units within a reasonable time.

The Akufo-Addo/Bawumia-led Government should also handover the completed units to Ghana Home Loans, as stipulated in the Off-Taker Agreement, to commence immediate sales to the public at market prices through their mortgage system.

The Ministry of Works and Housing should as a matter of urgency set up the National Housing Authority as stipulated in the National Housing Policy and charge the Authority with the responsibility of coming out with a framework for bridging the growing housing gap within a defined time period.