Gov to ‘cough up’ $39m to complete affordable housing units

Minister for Water Resources Works & Housing, Alban Kingsford Sumana Bagbin says Ghana needs $39m to complete existing affordable housing units.

The Minister of Water  Resources Works and Housing, Alban Sumana Bagbin, has hinted that the government will need an additional US$39 million to complete the existing Affordable Housing Units which was initiated by the immediate past government in 2003.
Mr. Bagbin, who was speaking at a press briefing in Accra yesterday to highlight on the achievements and challenges of his ministry from 2009 to date, said the funding would come from the government treasury, since the previous source of funding wasn’t sustainable.‘The financing was not secured because at that time the government was relying on the Highly Indebted Poor Countries (HIPC) Fund for the project. They were able to get two tranches from the HIPC support – GH¢20 million each, that is a total of GH¢40 million, and when that dried up, they went for a SSNIT loan of GH¢30 million, bringing the total amount to GH¢70 million. That is what took them to some stages of development, around 60%.

‘So, when this government took over, we had to look for money to be able to continue with that project. It has not been easy to get the financiers to continue with an uncompleted project. Every financier wants to start his or her project, and complete it and get a plaque, and so we are compelled to using the Government of Ghana (GOG) funds. We need an additional US$39 million facility to complete those works,’ said Mr. Bagbin.

The sector minister said the additional funding had become necessary to complete the existing project, because of the huge housing deficit confronting the country, in addition to other structures on the Job 600 edifice for Members of Parliament.

Housing deficit of Ghana
The country currently needs an additional 1.57 million housing units to address its growing human population, which stands at 24 million, with a further 1.19 housing units by 2020.

‘The physical count has shown that we are now in a deficit of 1.57 million housing units. So we need 2.76 million in 2020, and that is something critical we need to do,’ said Mr. Bagbin in a perky voice.

The annual cost of meeting the housing deficit for this country, according to the sector minister, is between US$2.6 billion to US$3.6 billion for the next 10 years.

He noted that if the country was able to meet the cost, the problem of housing deficit will be a thing of the past. This, he said, needed to be done through the creation of 101,000 direct jobs and 200,000 indirect jobs every year by the sector ministry.

He, however, called on the private sector to join the government in addressing the housing deficit bedeviling the country.

According to Mr. Bagbin, even though the Affordable Housing Project was initiated in 2003, the then government commissioned it in September 2005 at Aboteman, and further went on to break the ground in February 2006.

The project currently covers five regional capitals, namely Koforidua, Kumasi, Accra, Tamale and Wa, but the sector minister said plans were far afoot to extend the project to Cape Coast, Ho, Takoradi, Sunyani and Bolgatanga.

He told journalists that the project, which was initially projected to cover 5,000 housing units, now stands at 4,720, when the sector ministry took count of it.

Some of the houses, he noted, were 80% completed, but was quick to add that ‘even before completion, the previous government (referring to the New Patriotic Party) gave out about 719 to some institutions and individuals.

The National Democratic Congress (NDC), he said, had also given out about 100 houses to support the military in addressing its housing crisis.

Currently, 90% of the housing stock in the country is provided by the private sector, with 10% provided by the public sector.

Income spent on rent
Touching on the amount of money spent on renting a house, the sector minister noted that in spite of the huge cry over rent charges in the country, studies conducted by the Ghana Housing Profile indicates that Ghanaians spend 19% of their monthly income on rent, instead of the international standard of 35%.

He said available estimates show that households in urban areas can afford up to $18,000 as capital cost in buying houses.

Continuing, the sector minister, who doubles as a Member of Parliament for Nadowli West, said about 60% of the houses in the country cannot be termed ‘real houses,’ since most people were currently sleeping in kiosks and under garages.

‘The Ghana Housing Profile has shown that up to about 60% of the houses that we are supposedly living in cannot be termed real houses. They are not houses at all, not even shelters, and I don’t want to refer to them as shanties, but some people even are living under garages, and some are sleeping in kiosks,’ he said.

He urged Ghanaians to invest heavily in housing and water, since the prevailing conditions were nothing to write home about.

‘We need to start thinking on our priorities. We need to start spending on housing than on our mobile phones. We need to spend more on water than on beautification of ourselves. That is very important,’ he said.

Among the various housing projects being pursued by the government under the National Housing Program include STX & C – 200,000 housing units, Ital Construct – 12,000 housing units, Swiftforms – 20,000, Agu Resources – 10,000 housing units, VN’s and Sethi’s – 5,000 housing units and Sethi Realty – 5,000 housing units.

Re-introduction of subsidies to GREDA
To further boost the development of housing units in the country, Mr. Bagbin also announced the re-introduction of subsidies and or incentives to the Ghana Real Estates Development Association (GREDA)

They include a tax moratorium of 5 years exemption from import duties on materials, equipment and suppliers, and exemption from rent and property rates on site structures.

According to the sector minister, those incentives were being enjoyed by GREDA in the 1990s, but due to abuses the government was left with no option than to cancel those privileges.

‘GREDA was inaugurated to help in the housing deficit units in the country, and we introduced those incentives to serve that purpose. But, there was abuse that led to the retraction of those incentives. But, now the government is re-introducing those incentives,’ he said, to the admiration of some members of GREDA present at the press briefing.