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Outrage: ‘Coordinated housing reform is crucial for cities in Africa to work’

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In unplanned urban growth and informal settlements where the quality of life is low and land use is highly inefficient, effective policy is essential

A $3.5 billion social housing project developed on the outskirts of Angola’s capital, Luanda, offers apartments starting at $120,000 in a country where per-capita incomes are just over $4,000. It’s indicative of a wider crisis in urban development in many African cities. 

Across the developing world, the pace of urbanisation has outstripped the ability of governments to provide decent and affordable housing for low-income residents. Urban growth has proceeded through unplanned, sprawling informal settlements where quality of life is low and land use is often highly inefficient. With cities in Africa set to triple in size by 2050, coordinated policy to increase housing supply is essential.

‘Where housing has been delivered, it is often beyond the reach of low-income residents, and poorly suited to the needs of poorer communities’

The response of policymakers to housing shortages in many African cities has been to launch large-scale ‘affordable’ housing programmes on underdeveloped land in peripheral areas. These programmes are anything but. They have often proved prohibitively expensive, failing to deliver anything near the scale of housing investment needed to meet rapidly expanding urban populations. Where housing has been delivered, it is often beyond the reach of low-income residents, poorly suited to the needs of poorer communities and, crucially, located in inaccessible areas disconnected from the economic and social fabric of the city. In many cases, the majority of slum dwellers who are rehoused in peripheral mass-housing developments choose to move back to better-located slums that provide easier access to employment and social networks.

Effectively addressing housing shortages means that, alongside innovations in housing design, African cities need legal and financial reforms to make formal housing markets work for low-income residents. Current regulations on land use – often based on inappropriate colonial regulations – impose unnecessarily stringent requirements that limit the potential for affordable housing provision. In Dar es Salaam, for example, the legal minimum plot size for a house is 375m2, completely pricing low-income inhabitants out of formal sector housing. This is compared with Philadelphia in the US, where at a similar stage of development minimum plot sizes were only 28m2. As a result, 90 per cent of the city lives in informal housing. Reforming these regulations can bring urban households into the formal sector and drive the growth of private-sector housing development.

Underdeveloped mortgage markets are also pricing out low-income residents. Typical terms of ‘affordable’ mortgages offered by banks in many African cities have interest rates of 22 per cent and a term length of only 10 years in an effort to minimise the risk of lending to low-income households. Under these schemes, households would have to pay back up to 30 per cent of their loan in the first year. Unsurprisingly, only 3 per cent of African households have mortgages. In the UK, building societies emerged in the 19th century as informal savings groups that were able to offer lower interest rates to low-income groups than conventional banks by tapping into local social networks to screen risk and specialising in low-risk, long-term mortgages. To address high inflation in African cities that can quickly erode the value of deposits and loans, inflation-indexed loans can prove instrumental in spurring the development of mortgage markets.

‘In Ethiopia, the Integrated Housing Development Programme has delivered over 200,000 new housing units between 2005 and 2015, resettling residents from inner-city slums’

Underlying these financial reforms is the need for land registration to establish secure, legally enforceable and marketable land rights. In many African cities, urban land is gridlocked between a web of competing ownership claims and overlapping tenure systems. Only if land rights are secure will property owners be able and willing to invest in developing on their land. And only if these rights are legally enforceable and marketable will developers buy land for development, and financial institutions accept these assets as collateral for a functional mortgage market.

Of course, there are exceptions to the failure of large-scale publicly provided housing. In Ethiopia, the Integrated Housing Development Programme has delivered over 200,000 new housing units between 2005 and 2015, resettling residents from inner-city slums in condominium housing blocks outside the city centre. Working with private companies to provide the low-cost construction for mass, publicly designed four-to-five-storey apartment blocks on government-acquired land, and running a lottery to allocate this housing, this programme has been a success in many respects. In addition to increasing housing supply for slum dwellers, it has created more than 176,000 jobs in construction and related services, and it expected to fully recover costs in the long run from home and ground-floor shop unit purchases. An intelligent combination of public vision and private efficiency has driven this achievement. However, programmes such as this require a distinct context of rapid economic growth to expand government revenues, large-scale government land ownership, and credible contract enforcement not currently shared by most African cities.

Alex sandton3

Alex sandton3

Source: Johnny Miller

Megalithic housing blocks intended to house the locals in Johannesburg’s former township of Alexandra

Where traditional approaches have failed, architects are also pioneering innovative housing solutions to fit low-income budgets across the developing world. One such innovation which has proved highly successful in expanding access to affordable housing in Chile is ‘incremental building’, where incomplete but liveable houses are provided to individuals. Incremental building, spearheaded by the Chilean architect, and 2016 Pritzker Prize laureate, Alejandro Aravena, is based on two key principles: first, that limited public funding constrains the delivery of fully finished housing en masse, and second, that low-income residents often invest in their homes in an incremental way, adding new parts and extensions as they earn the income to do so. Providing the core foundations for houses without, for example, internal walls, significantly reduces the up-front capital costs of housing investment, making housing provision for low-income households more sustainable. At the same time, giving households greater freedom over the layout of their homes improves ability of these schemes to meet their housing needs.

‘Instead of working against the preferences and practices of low-income residents, incremental approaches harness them to create liveable neighbourhoods’

This principle of incremental improvement has enabled many past housing programmes to be highly cost-effective, providing land, core infrastructure and planning for new neighbourhoods, and allowing households to improve and ‘complete’ their housing over time. In Sri Lanka, an incremental ‘Million Houses Programme’ achieved a tenfold increase in the number of low-income families reached over traditional approaches to large-scale housing development. Reduced construction costs associated with an incremental approach also allows governments to focus on providing housing in better locations, more suited to the needs of low-income residents. Where World Bank programmes have provided low-income residents with core infrastructure and housing foundations on well-connected lands, these have unlocked massive private investment. For every $1 invested in these ‘sites and services’ programmes in Dakar, Senegal, households invested $8.2. Instead of working against the preferences and practices of low-income residents, incremental approaches harness them to create planned, formalised and liveable neighbourhoods.

For the majority of African cities, coordinated reforms are what is needed to address the interrelated constraints to both public and private housing provision. The impetus for such reform must come from within. Synthesising the knowledge of various communities involved in urban development – policymakers, architects, engineers, economists – can equip those in power with the evidence and expertise to achieve this. Coordinated policy is needed to ensure future urban development follows a different script.