Ghana’s Affordable Housing: A New Dawn or a Repeat of Saglemi?

Introduction

Ghana, like many other African countries, faces a significant housing deficit. The government, through various initiatives, has sought to provide affordable housing to its citizens. The Saglemi Housing Project was one such initiative that unfortunately did not meet its objectives. In light of this, the government has launched a new affordable housing project. This article provides an overview of both projects, highlighting the lessons learned from Saglemi and what the new project promises.

The Saglemi Housing Project: A Retrospective

Overview

The Saglemi Housing Project was initiated under previous administrations with the aim of providing affordable housing units to Ghanaians. The government had taken steps to complete various housing projects, including Saglemi, to protect the public purse.

The Downfall of Saglemi

Despite the government’s commitment, the Saglemi Project was plagued with issues that led to its downfall. Key issues included:

1. Project Delays: Significant delays increased costs and led to a loss of public trust. The project, which was initially slated for completion within a specific timeframe, saw numerous extensions that eroded public confidence.
2. Incomplete Infrastructure: The project was criticized for lacking essential infrastructure, making the houses uninhabitable. Basic amenities like roads, electricity, and water were either incomplete or poorly executed.
3. Alleged Corruption and Financial Mismanagement: One of the most significant issues that plagued the Saglemi Project was allegations of corruption and financial mismanagement. Key allegations included:
   • Misappropriation of Funds: It was alleged that funds allocated for the project were misused or diverted for other purposes. This was a significant blow to the project as it led to a lack of funds to complete the construction.
   • Inflated Costs: There were allegations that the costs of construction were inflated, which raised questions about where the additional funds were going.
   • Legal and Contractual Irregularities: There were claims that the contracts for the project were awarded without due process, and in some instances, the terms of the contracts were allegedly altered without proper authorization.

These allegations of corruption were not just damaging to the Saglemi Project; they also eroded public trust in government-led housing initiatives as a whole. The allegations led to legal actions, with key figures associated with the project facing prosecution.

The New Affordable Housing Project: A Fresh Start?

Overview

Announced by the Minister for Works and Housing, Francis Asenso-Boakye, the new affordable housing project is designed to avoid the pitfalls of previous projects like Saglemi.

Key Features

1. Private Sector Involvement: The government is providing land and public infrastructure, but the private sector is responsible for the construction of the houses.
2. Transparency in Pricing: Clear and published pricing for various housing units.
3. Strict Sales Conditions: To ensure fairness and avoid speculation, there are terms and conditions attached to the purchase of these units.

Intended Project Areas

The new housing projects are intended to be located in various parts of the country, including on the outskirts of Accra, such as Pokuase and Adenta.

Affordability in Context: A Comparison to Average Earnings and Private Market Prices in Ghana

While the new project is termed ‘affordable’, it is essential to compare the prices of these housing units with the average earnings of Ghanaians. According to data, the average monthly salary in Ghana is around 1,500 GHS. Considering this, a one-bedroom unit priced at 160,000 GHS would be equivalent to approximately 107 months (almost 9 years) of the average salary.

In relation to the private market, as of July 2023, according to Kuro Africa Analytics, average rent prices have climbed to 7,000 GHS and median prices are at 2,400 GHS. For properties for sale in Ghana, the median and average prices are 2 million GHS and 3.59 million GHS respectively.

When we compare these figures with the prices of the government’s housing units, it appears that the government’s initiative does offer a more affordable alternative to the private market. However, the term ‘affordable’ becomes questionable when these prices are compared to the average earnings of Ghanaians.

Mortgage and High-Interest Rates

One of the significant barriers to homeownership in Ghana is the difficulty in obtaining a mortgage and the high-interest rates associated with it. Key issues include:

1. High-Interest Rates: Mortgage rates in Ghana are among the highest in Africa. High-interest rates make monthly payments unaffordable for the average Ghanaian.
2. Stringent Requirements: Obtaining a mortgage in Ghana often involves a rigorous process with stringent requirements, including a high down payment, which is a barrier for many potential homeowners.
3. Limited Mortgage Financing Options: There are limited institutions offering mortgage financing, and the terms are often not favorable for average income earners.

These mortgage challenges, when combined with the average earnings and current private market prices, further complicate the term ‘affordable’ in the context of the government’s housing initiative.

Conclusion: A New Dawn or a Repeat of Saglemi?

The Saglemi Housing Project serves as a lesson for the Ghanaian government in its quest to provide affordable housing to its citizens. The new affordable housing project appears to be designed to avoid the mistakes of the past, with clear pricing, private sector involvement, and strict conditions for purchase.

However, when the cost of these units is compared to the average earnings in Ghana and the current private market prices, the term ‘affordable’ is put into perspective. It represents a significant step towards addressing the housing deficit in Ghana, but its success will depend on effective implementation and public trust.