Transcript Urbanization | Africa is the most rapidly growing region in the world

Addressing the
housing challenge in
Sub-Saharan Africa
TRENDS, CHALLENGES AND OPPORTUNITIES
Roland White
Global Lead: City Management and Finance
East African Cities Forum
26 May, 2016
HOUSING IN AFRICA
key facts
2
Estimated urban population
living in slums, 1990-2030
millions
300
Sub-Saharan Africa
250
Africa is the only region in
the world in which the slum
population is projected to
grow
200
150
East Asia & Pacific
100
South Asia
Latin America &
Caribbean
50
Middle East &
North Africa
0
1990
1995
2000
2005
2010
2015
2020
2025
Europe & Central
2030 Asia
World Bank calculations, based on United Nations “World Urbanization Prospects” (2014).
3
Housing investment as a percent of GDP
Housing investment as a % of GDP
Other middle
income
Africa is the most rapidly
urbanizing region in the
world…
But investments in housing
have not kept up with
urbanization and growth.
9.1%
SSA middle
income
6.6%
Other low
income
4.9%
SSA low
income
4.1%
0%
2%
4%
6%
8%
10%
Housing investment, % of GDP
(average 2001-2011)
Dasgupta, Lall & Lozano-Gracia (2014). “Urbanization and Housing Investment”, World Bank.
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Africa suffers a chronic
housing challenge, manifest
in overcrowded, poor-quality
and located dwellings and
low levels of investment
Thinking about this in terms
of quantitative “backlogs” is
of limited value in analysis
and policy-making
GHANA: recent estimates of
new housing need per year
Government of Ghana
101,800
Bank of Ghana
66,500
UN-HABITAT
133,000
Amoa-Mensah
90,000
Mahama and Antwi
130,000
Karley
70,000
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GNI per capita vs. costs of new formal housing
In Africa, it costs 14x to 17x
Cheapest Newly Built House
20,000
100,000
16,000
80,000
12,000
60,000
8,000
40,000
4,000
20,000
Affordability
Range
0
0
Average
Typically formal housing
costs 3x to 5x average
annual incomes…
GNI per capita, US$
Cheapest newly built
house by a formal
developer in 2013 (US$)
Seychelles
Mauritius
South Africa
Botswana
Namibia
Angola
Swaziland
Nigeria
Zambia
Ghana
Lesotho
Cote d'Ivoire
Cameroon
Kenya
Senegal
South Sudan
Zimbabwe
Tanzania
Benin
Burkina Faso
Rwanda
Mali
Uganda
Mozambique
Gambia
Togo
Central…
Ethiopia
Niger
Malawi
Burundi
Rapid urban growth + low
incomes + high costs =
extensive informal housing
GNI per capita,
2012 (US$)
Centre for Affordable Housing Finance (2014). “2014 Yearbook: Housing Finance in Africa”.
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HOUSING IN AFRICA
trend-drivers
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% urban
population
GDP per capita
in the first year with an urban majority
100%
80%
Africa is urbanizing rapidly,
but late and at low incomes
60%
2012
40%
1961
1981
2009
LAC
MENA
EAP
SSA
20%
0%
0
1000
2000
3000
4000
5000
6000
GDP per capita (constant 2005 USD)
8
In SSA only 10%
of total land is
registered
Land tenure, management
and administration systems
drive up costs and disincentivize investment in
housing stock
In Cameroon,
70% of urban
land is held
without title
The average cost to
register property in SSA is
8.3% of the total value
the highest in the world
9
Infrastructure deficits in
Sub-Saharan Africa
SSA Low-Income
Other Low-Income
Improved
water (%)
Infrastructure coverage is
low, and declining as urban
populations grow.
Improved
sanitation (%)
Paved roads
(km/km2)
Mobile density
(lines per thousand)
Generation capacity
(MW/million)
Electricity
coverage (%)
0
50
100
150
200
250
300
350
Foster (2008). “Overhauling the Engine of Growth: Infrastructure in Africa.” World Bank.
10
Low-cost formal housing averages:
• $700/m2 in SSA
• $350/m2 in India
• $250/m2 in China
The formal construction
industry is relatively
inefficient and costly
A bag of cement in
Nigeria costs twice
that in the USA
A warehouse building permit is
4x costlier in SSA than the OECD
Second only to South Asia
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UGANDA: incomes and
access to housing finance
>1M
UGX per month
0.7%
Housing finance products are
not available to most SSA
urban households
100,000 to 1M
UGX per month
37%
<100,000
UGX per month
62.3%
Access to mortgage loans from
commercial banks
Access to credit from
MFIs and savings groups
No access to
commercial banks,
MFIs, or savings
groups
12
CAMEROON: house price-to-income ratio
for government social housing
And government subsidies
for housing have done little
to promote wide-scale
access
Price (USD)
Average house price
Price-toincome ratio
60
Price-to-income ratio
$60,000
$50,000
50
49
44
$40,000
40
$33,472
$30,001
$30,000
30
$20,000
20
$10,000
10
$680
$0
0
Annual income
Yaoundé
(Olembe)
Douala
(Mbanga-Bakoko)
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RECOMMENDATIONS
targeted interventions for an inclusive housing sector
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upper
income
Complementary
interventions across
the value chain, which
address distinct needs
of different income
groups
formal
finance
MFIs
no housing
finance
middle
income
formal
construction
affordable
informal
housing
Expanding access to finance:
Liquidity & long-term capital
Regulatory framework for lending
Underwriting
Cross-cutting areas:
Land administration
Planning & building standards
Construction sector & materials
Rental markets
lower income
Upgrading informality:
Basic infrastructure
Incremental & self-construction
Leverage existing savings
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Rough illustration - simulated
cost to bridge the gap with
formal housing
Ghana
Angola
Benin
Burkina Faso
Direct provision of formal
housing is unaffordable for
governments.
Burundi
Cameroon
Central African Rep.
Niger
Senegal
Tanzania
Togo
Zambia
0%
100%
200%
300%
400%
500%
Percent of GDP (2014)
Calculations based on data from World Bank (2015), UN (2015) and CAHF (2014).
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Informality represents a
spectrum of shelter locations,
conditions, and tenure
statuses.
SLUM
CONDITIONS
• No improved water
or sanitation
Governments need to direct
policy and resources at
assisting households move
incrementally up the housing
quality spectrum
• Unsound structure
• Overcrowding
• No tenure security
PARTIAL
UPGRADE
• Basic infrastructure
• Structure with a
foundation or
durable walls
• Perceived tenure
security
SEMIFORMAL
FORMAL
HOUSING
• Improved
infrastructure
• Piped water and
sewer connection
• Meets some
building codes
• Meets all building
codes
• Self-construction
• Proof of ownership
• Proxy for tenure
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Upgrade existing
informal housing
» Extend basic infrastructure
» Provide tenure security to
promote investment
» Support incremental and
self-build upgrading
Recent successes
NAMIBIA
Incremental tenure and community upgrading
SENEGAL
Conversion of temporary occupancy permits to
permanent title deeds
KENYA
LESOTHO
TANZANIA
MAURITANIA
Tenure regularization through bulk surveying and
land use planning
Provided serviced plots less than 1km from original
house with community infrastructure and
microcredit support
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Recent successes
Improve planning &
building regulations
» Strengthen public land
administration
» Improve city planning
institutions
» Adapt land use and
zoning regulations
» Incentivize density and
infill
RWANDA
TANZANIA
ETHIOPIA
KENYA
LESOTHO
GHANA
UGANDA
Comprehensive land tenure reform
Issued land titles with photomapping technology
Surveyed all communal lands, registered 60% so far,
at a cost of $500 per village
Is building an urban legal cadaster in Addis Ababa which will
eventually cover the entire country
Streamlined land administration processes
Reduced VAT on land
Introduced land administration authority
Reduced wait times and improved application turnaround
Computerized land records
Cut time to register property from 169 days to 34
Reduced property registration times from 227 days to 48
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Strengthen the
construction sector
South Africa: industrial
construction techniques
• Plastic formwork to cast uniform walls and floor slabs
• Reusable up to 50 times
» Adopt performance-based
construction standards
» Develop an increasingly
skilled labor force
» Promote use of cheap local
materials
• Reduces costs for production time transportation
Moladi formwork. Source: commons.wikimedia.org
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Expand housing
finance down market
» Facilitate the development
of the financial sector to
expand access to formal
mortgage products
» Support development of
non-mortgage lending
products for informal or
irregular incomes
» Leverage remittances and
community-based lending
Savings methods among savers,
selected economies
ADULTS SAVING ANY MONEY
IN THE PAST YEAR (%)
Demirguc-Kunt & Klapper (2012). “Measuring Financial Inclusion: The Global Findex Database." World Bank.
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CONCLUSION
Work across the supply and
demand sides of the housing
delivery process and
leverage the private sector to
provide housing solutions for
all income levels
Inclusive housing
sector
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