World Bank warns of a looming urban housing crisis

Africa could have as many as 1.2 billion urban dwellers by 2050 and 4.5 million new residents in informal settlements each year and most of them will not afford basic formal housing or access mortgage loans, a new report by World Bank has projected. The report dubbed, ‘Stocktaking of the Housing Sector in Sub-Saharan Africa’ notes that the continent faces a major housing crisis due to rapid urbanization and a growing slum population. “Adequate quality housing is critically important for economic growth and social inclusion,” said Mamta Murthi, the World Bank Group’s Acting Vice President for Africa. He said African governments need to join hands with the private sector to facilitate investments in housing by expanding access to and improving the quality of existing stock, while at the same time making it easier for people to access land and housing finance. The report looks at emerging trends across the region and identifies opportunities in rapidly growing cities and notes that the recognition of informal housing as the only option available to a large majority of Africans signals a need for new approaches to housing policy. African countries are advised in the report, to seek new, targeted approaches to affordable housing if they are to take advantage of the demographic shift to make their cities inclusive, spur economic growth and expand job opportunities. “In many African countries, only the upper 5 to 10 percent of the population can afford the cheapest form of formal housing,” said Ede Jorge Ijjasz Vasquez, Senior Director for the World Bank Group’s Social, Urban, Rural and Resilience Global Practice. As a result, 90 percent of Africans live in informal housing, where living conditions are often substandard, unsafe and without basic services like water, electricity and sanitation, Vasquez added. During his recent visit to East Africa, Pope Francis visited Kangemi, one of Kenya’s slums located on the outskirts of Nairobi; he lashed out at authorities for neglecting the poor. Now the new World Bank report demonstrates that targeted interventions in the informal market can bring rapid improvements in the quality of existing housing stock in a number of African countries. Costly undertakings The report notes that while many governments in Africa have been directly providing housing to meet the demands of growing urban populations, these programs are extremely costly to and out of reach for the urban poor, and have not significantly increased the amount of affordable housing. As a recommendation, governments are advised to change tact and deploy their scarce resources to target informal housing in low-income areas and households, upgrade infrastructure, improve land administration and planning regulations, and expand access to finance through microfinance loans, credit groups and credit cooperatives. “Apart from the immediate and obvious benefits of adequate housing, a well-functioning housing sector leads to economic growth that can improve livelihoods, create jobs and expand the market for goods and services,” says Jonas Parby, World Bank Urban Specialist and one of the authors of the report. Only 5 percent of adults in Sub-Saharan obtained a loan from a formal financial institution in 2015 which is only half the rate of other developing regions such as South Asia or East Asia and the Pacific. The report says that for every house built, five forms of jobs are created and that while investment in formal housing in Africa is low compared to every other region, a more strategic approach to the housing sector will encourage private investment. One of the worrisome findings of the report is that while slum populations in other regions are declining, Africa’s is growing and that if current trends continue, the majority of people living in slums will be in African cities, making the need for adequate, affordable housing more urgent than ever before. Such revelations require the private sector to join hands with the overwhelmed governments and that incentives that promote private investors could go along away to help the situation. Rwanda’s case The World Bank’s new report says what a 2012 City of Kigali state of housing survey found; that the city’s current population will more than triple with over 5.3 million people by 2040, from the current less than 1.5 million dwellers. It’s a development that will present or is already presenting the city with immense urban housing pressure and a growing number of pockets of informal dwelling units in a city whose population growth averaged 5.7 percent between 2005 and 2010. Out of Kigali’s existing housing stock of 223,000 Dwelling units in 2011, only 42,710 of them were in good condition, 71,487 units were upgradable while the rest, some 108,903 units were found to be not only overcrowded but also of low-quality. They needed to be replaced. The annual supply for new dwellings by Kigali’s formal housing developers is estimated to be between 800 to 1,000 units per year, with a unit costing a minimum of US$25,000, which is close to Rwf20 million under the current exchange rates. For Kigali, the biggest challenge is a mismatched supply where the private formal developers are concentrating on the high income earners whose combined demand requires just 28,965 dwelling units by 2022. The larger market segment of the city’s low income earners is left unsupplied; they require 306,474 dwelling units by 2022 but their current projected formal supply is just 20,404 units annually resulting in a supply gap of 294,899 units.

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World Bank warns of a looming urban housing crisis