Housing Africa’s Growing Population

1) Africa’s growing population and rapid urbanization

Africa population is around 1.3 billion or 17 percent of the world’s population. It is projected to grow by another 1.1 billion by 2050 to reach 2.4 billion people (UN’s estimates). Associated with this growing population is the rapid urbanization in the continent. By 2050, the urban population is expected to increase by roughly 800 million, according to the African Development Bank (AfDB), to reach between 1.2 – 1.34 billion people (WorldBank), creating a new challenge for Africa. According to UNHABITAT, between 60 and 70 percent of the urban sub-Saharan African households currently live in slums.

A relevant question is how do we “ensure access to adequate, safe and affordable housing and basic services and upgrade slums for all” by 2030, in line with Sustainable Development Goal #11?  The shortage of housing is already acute in Africa, estimated to be more than 51 million units (AfDB).

2) Housing affordability in Africa

The cheapest formal house built by a private developer in Africa is in Nigeria at a cost of approximately $8, 040. This is according to the “2019 Housing Finance in Africa” Yearbook. It is a single bedroom unit designed by the Millard Fuller Foundation. The same report suggests that about 3 out of every 4 urban Nigerians cannot afford this house while only 1 out of every 2 urban Kenyans can. To further aggravate the situation, the price of this house is more than fivefold the 2019’s sub-Saharan Africa GNI per capita of $1,550, as reported by the WorldBank.

In other words, this house is not affordable to millions of low- and middle-income earners: 413 million sub-Saharan Africans live in extreme poverty with earnings of less than $1.90 a day. A further 582 million people earn between  $2  – $20 per day (Brookings). Therefore, about 90 percent of sub-Saharan Africans can not afford a low-cost house (World bank).

3) Barriers to affordable housing

a) Weak enforcement of property rights and difficult access to finance

Weak enforcement of property rights and housing regulations make it difficult to access land (AfDB). For example, it takes almost 6 months on average to obtain a construction permit in sub-Saharan Africa. In addition to the time required for a permit, property registration is costly – on average 8.3 percent of the property value (WorldBank). A single, accurate and reliable registry of land and properties by local banks is non-existent in most sub-Saharan African countries. These stifle private ownership of property, which means a lack of collateral for an increasing number of potential borrowers.
The latter may explain in part why mortgage loans from formal financial institutions are inaccessible to nearly 95 percent of adults in sub-Saharan Africa (WorldBank estimate). Indeed, with the exception of a few countries, the average mortgage rate in Africa is a two-digit number, with a loan tenure of up to 20 years (OBG).

b) Paucity of data, poor urban planning and a reluctant private sector

The paucity of data on the African housing stock contributes to poor urban planning, and thus an inability to effectively account for the growing urban population (UNHABITAT). It also stifles the targeted interventions needed to improve the quality of informal settlements (WorldBank). This in turn discourage private sector involvement. The African Development Bank estimated that to eliminate the housing shortage within 10 years, Africa needs $2 trillion: the role of the private sector is therefore vital.

4) Policy prescriptions and potential ways forward

a) Taking advantage of building technology to reduce construction costs

According to some experts, promoting the production of stabilised soil bricks on a large-scale will contribute to sustainable house constructions that are also affordable to many low- and middle-income households. This is in line with Sustainable Development Goal #11 and #10 on utilising local materials for construction in developing countries.

b) Closing the housing data gap

As suggested above, this will promote better urban planning and targeted interventions for small incremental upgrading. It also has the potential to attract private sector finance and encourage the opening of mortgage refinancing companies.

This article was written by Hugue Nkoutchou

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