Housing Policies in Ghana. A historical overview from 1920-2014

Table of Contents

Abstract

Introduction

Housing provision in Ghana: Major policy Interventions (Pre and Post-Independence)

Housing policies and Interventions between 1957-1966

Housing policies and Interventions between 1966-1969

Housing Policies and Interventions between 1969-1972

Housing policies and interventions between 1972-1979

Housing Policies and Interventions between 1979-2000

Housing Policies and Interventions between 2000 and 2014

Conclusion

References

Abstract

Maslow’s theory of needs puts shelter on a high pedestal and sees it as one of the most fundamental needs of mankind. This view is asserted by Karl Marx when he stated that life involves before anything else eating and drinking, a habitation, clothing and other things (Marx, 1939). The ability of a nation to provide decent housing for its citizenry has been among other things, a barometer considered in assessing its level of development. Globally, housing problems have been attributed to a considerable extent on the affordability of units provided and ease of construction. The housing deficit, affordability of housing units and cost of construction materials are among a myriad of problems that governments of developing countries are forced to grapple with. Most governments attempt controlling these problems through housing policies. In Ghana however the, grave housing deficit of 1,600,000 units (Ghana Statistical Service, 2012), has been influenced by a number of failed attempts at housing provision since independence. In investigating the rapid buildup of the housing deficit, this paper provides a historical account of housing policies and finance interventions made by colonial and post-colonial governments. In doing so, the study concentrates on the review of secondary data. From a historical viewpoint, the paper established that the gross failure of successive housing interventions by various governments contributed significantly towards worsening the housing deficit.

Key Words: Housing, Housing policies, Colonial, Independence, Liberalization

Introduction

Decent housing is central to economic development because of its tendency to improve living standards, confer utility and improve health (Collier & Venables, 2013). In many countries, housing is the most important and capital intensive tangible asset. Housing markets can regenerate economies because of their direct linkage to job creation, wealth distribution, social cohesion and fiscal returns (Lea, 2010). The failure to improve housing markets can hinder economic progress and lead to pervasive poverty (ibid). Successful housing markets are usually influenced by well thought-out housing policies. Their success is not a factor of kneejerk policies targeted at providing short term solutions. Unfortunately, Ghana’s housing policies seem to have contributed little towards developing a vibrant housing market. Most policies were influenced by political ideologies hence their unacceptance by successive governments. Their kneejerk nature reveals their unsustainability and contribution towards worsening the housing deficit. The major housing policy interventions and how unsustainable they were are discussed below.

Housing provision in Ghana: Major policy Interventions (Pre and Post-Independence)

In broad terms, Ghana’s housing policies have been described as fragmented, piece-meal, and not comprehensive enough (NDPC, 2005). Housing is mostly categorized as a social service and regarded as a part of social expenditure in the country’s budget but has many economic connotations (Arku, 2006). Evidence from countries with strong housing markets shows the central role housing policies play in housing market development. Asamoah (1994) describes housing policies as:

The basis upon which plans and programmes for solving national housing problems may be drawn and coordinated. These policies not only outline broad goals and objectives of housing development, but also establish basic relationships between housing and other national, economic, social and physical activities.

Ghana’s housing problem has its roots in the needless experimentation of various housing policies by each government that came to power (ibid). This sad phenomenon, led to the abandonment and improper management of many projects across the country. Housing policies and provision dates back to the colonial era. Interventions made in this regard before independence include those by Governor Gordon Guggisberg in 1920 through the introduction of the dispossessed person’s housing scheme. Under the scheme dispossessed persons whose lands were acquired through government’s power of eminent domain were given building material loans to develop their own houses. By 1933 the scheme which advanced 118 loans at a cost of £9,280 was discontinued because the government thought it was expensive. In 1939 however the government was forced by the Accra earthquake of 22nd June 1939 to resume direct investment in housing. This intervention led to the development of 1,250 two bedroom units in Accra to house civil servants and the security forces. The rents on these units were subsidised and tenants were given the opportunity to acquire them through hire purchase (BRRI, 1970)

Another important intervention was the direct investment of 2.5 million pounds by the Sir Charles Noble Arden-Clarke government via the 1951 development plan, to support slum clearance, housing developments and provide housing loans. They also encouraged the use of local building materials for construction and this influenced the development of the tile and bricks industry. Like many other initiatives, efforts by the colonial government proved incapable of meeting the housing needs of the burgeoning urban population. In most cases, the projects benefited only a small segment of the population (usually the rich), leaving most low-income households to resort to living in dilapidated houses, slums and shacks. After many dormant policy interventions and investments in the housing sector by the colonial administration, the need arose for the newly independent Ghana to adopt stringent measures to arrest the ever deepening housing problems that had plagued the country.

Housing policies and Interventions between 1957-1966

The exit of the colonial rulers in 1957 saw Osagyefo Dr. Kwame Nkrumah assuming the role of Prime Minister of the country. In an attempt to continue the interventions made in housing provision, the Nkrumah led government proposed the construction of 6,700 housing units in the 1959-1964 development plan. Two Hundred (200) of the units were targeted at middle-income households, 1,500 for low-income households and the remaining 5,000 units for labourers (GoG, 1959). Clearly, Nkrumah through this policy sought to level the lob-sided nature of the housing sector by encouraging less privileged households to own homes. He also introduced the Roof Loans Scheme to grant loans to public servants. An allocation of 2 million pounds was made for this however only 2,517 out of a proposed 6,700 roof loan beneficiaries was realized due to mismanagement and inefficiencies (Nelson and Ayeh, 2009).

The increasing housing problems despite the strict implementation of the 1959-1964 development plan influenced the government of the day to propose the construction of 60,000 new housing units in its new development plan which was scheduled to span between 1964-1970 (GoG,1964). The government committed 44.5 million pounds with 31.3 million targeted at investment in commercial housing and 13.2 million for low-income housing. Several institutions including the State Housing Corporation (SHC), Ghana National Housing Corporation (GNHC), First Ghana Building Society (FGBS) and the Tema Development Corporation (TDC) were tasked with the responsibility of implementing government’s housing policies. The institutions were however unable to meet their scheduled targets (despite the provision of about 80% of funds needed) with the major housing corporations (TDC and SHC) jointly developing only 11,752 units between 1959 to 1966 (Konadu-Agyemang, 2001). Housing provision by the housing corporations therefore stood at about 20% of total expected delivery in 1966. Evidently, the implementation of the housing policies instituted by the Osagyefo Dr. Kwame Nkrumah government had some major flaws hence an abysmal implementation which was far below expectation.

Housing policies and Interventions between 1966-1969

The overthrow of the Nkrumah government brought housing development by the mandated institutions to a standstill as the 1960 constitution and its associated development plans were abrogated. General Ankrah, who was the head of the new government (National Liberation Council-NLC) did not lead the proposal of any housing policy but rather suspended the activities of the TDC and other housing corporations for eight months during which period a committee was instituted to probe the activities of the corporations and submit its findings and recommendations for implementation. Six months after the submission of the report requested by the government, TDC and other allied housing agencies were given the mandate to conclude the outstanding works on developments that were not completed in the previous era (Acquah, 2001). The NLC‘s proposition to develop 2,000 new units annually through TDC and SHC failed due to lack of funds and only 1,000 uncompleted units were completed by the government before its overthrow (Nelson & Ayeh, 2009). In this era therefore, the government did not build new residential units neither did it provide any funds to the various housing corporations for construction. Housing delivery through government and its allied agencies was therefore delayed for the three and half years that the NLC was in power. This delay associated with the lack of adequate funding had negative repercussions on the development of more housing units and the finalization of the first phase of housing developments by the TDC, SHC and the GNHC (Acquah, 2001). Consequently, the little interventions in the housing sector shown by the General Ankrah government coupled with other failures saw their overthrow and the induction of a new government led by Dr. Kofi Abrefi Busia.

Housing Policies and Interventions between 1969-1972

Realizing the problems of direct government investment in housing and its inability to arrest the worsening housing situation, the Dr. Busia led government adopted the open and free market policy which sought to encourage private sector participation in housing delivery. In doing so, the government among other strategies established the Bank for Housing and Construction (BHC) to finance development projects on moderate terms than what the commercial banking institutions were offering on the open market (Owusu, 2005). In the case of Tema, TDC was required to sell the houses built during the first era to tenants at an interest of 2%, with a repayment period of 25 years as a strategy to recapitalize the corporation since the government was withdrawing from direct financing of housing. Secondly, TDC was tasked to make serviced lands available to catalyse private sector investment in housing.

This strategy did not achieve the desired results partly because BHC failed to provide the needed development financing to the private sector for housing investment (Acquah, 2001). In furtherance, the private sector failed to respond positively to government’s private sector empowerment strategy because of the lack of incentives from the government, low income levels and high property rents (ibid). As a result of these setbacks, the government was forced to intervene in direct investment and construction through its allied agencies. Government’s housing agencies were however unable to finish the scheduled constructions before the government was overthrown. The interventions made within this era therefore proved incapable of meeting the housing needs of the Ghanaian populace especially because of the failure of the BHC.

Housing policies and interventions between 1972-1979

The governments of the Supreme Military Council (SMC I and SMC II) led predominantly by General I. K. Acheampong who held onto the reins of power between 1972 to 1979, adopted the centralization and liberalisation policy towards housing but with an improved strategy which allowed the private sector to play an instrumental role in housing provision. This strategy mandated the central government to refinance public corporations including TDC and SHC to construct all the infrastructure and facilities needed to house public and civil servants while liberalising the housing market by allowing the state housing corporations to lease land to the private sector to build houses for the remaining working class.