Addis Ababa’s Housing Problem, Its Remedies

A chronic housing shortage is one of the grimiest realities in Addis Ababa. The problem is manifested in squatter settlements, living in squalid and overcrowded conditions without regard for health and safety, long commutes, abject poverty, and exorbitant rent with minimum rights for tenants. The capital has vast slums. The inner-city, which covers 12Pct of the land, of which 70Pct is comprised of government- owned mud houses, is home to 40Pct of the population, according to the Central Statistical Agency.Even though one should have a roof over his or her head as a matter of basic need, owning a house is becoming a distant dream in the uncontrolled and fragmented market – renting is very expensive, less secure and entails few rights and poverty has made access to decent housing elusive for urban dwellers.
With a housing deficit of more than 400,000 and an urbanisation rate of 4.1Pct, the demand for housing is growing at an alarming rate. Fulfilling current housing needs, replacing the existing dilapidated houses and supplying homes for a growing urban population is a daunting task.
The policy responses to tackle this problem have been slum clearance and regeneration, relocation of slum dwellers, development on the fringes of the capital in the form of condominiums, real estate development, and homes built by housing associations. These policy measures have inflicted much pain on those relocated because their social and economic ties have been cut and they’re are subject to long commuting, accompanied by enormous pressure on farmers in the areas surrounding Addis Ababa, where some condominiums are being built.
The capital is not only relocating its inner-city slums to new areas but this expansion is ruining the greenery that once existed on the fringes of the city. This process is rapidly transforming the lives of farmers who settled at the frontiers of Addis. The inconvenience of well-planned, gradual changes is bearable, but rapid, large-scale transformation leaves a lasting emotional and economic scar. The expansion of the city has made service delivery difficult. Transportation is at a breaking point, utilities and other service provisions are not keeping their pace.
I see two major problems contributing to this dynamic: urbanisation and housing policy. Addis Ababa is 14 times larger than Mekelle, Ethiopia’s second biggest city by population. This raises serious questions about why the capital is flourishing while the growth of other cities is less robust. The recent expansion of the capital is due to a surge in rural-urban migration, partly attributable to the government’s development policies, which have been largely geared towards the capital over the past decade.
Addis Ababa is the centre of everything: good education, employment opportunities, infrastructure and cultural activities. This has become a pull factor from all over the country because other cities aren’t being developed at the same rate. Unless more cities are made attractive through job creation, service deliveries, infrastructure and other provisions, the massive influx of people from rural areas to the capital will be unstoppable. This will put enormous strain on the capital.
The other issue is related to housing policy. Event though the regeneration and development has enabled the government to build 170,000 houses over the past twelve years, the chasm between supply and demand is getting wider, as the supply is sluggish and crippled by complex problems. The registration made for various housing schemes a couple of years ago revealed that there were about one million home-seekers, which is more than twice the number registered twelve years ago.
The major pitfall of the housing policy is that it was developed based on a mistaken belief that creating access to home ownership was possible for everyone and the state should be the major provider of housing. This is neither practical nor the best way of tackling the housing shortage. For example, one of the major housing packages, the Integrated Housing Development Programme, has created access to housing for about 17Pct of home seekers. Sadly, contrary to its intention, most beneficiaries of this scheme have been middle-income households, as houses are not affordable for many.
The state has created a burden beyond its capacity, as low cost housing development is its exclusive domain and they are a monopoly supplier of land. For example, the then Ministry of Urban Development, Housing and Construction’s annual report published in November 2014, indicates that 80Pct of housing needs will be met under the 20/80 and 10/90 housing schemes. The remaining 20Pct will be met by real estate developers, housing cooperatives and 40/60 developers. However, experience demonstrates that real estate developers build exclusively for the ‘haves’, as the prices of houses are beyond the reaches of even the high earners and their housing supply is less than 5Pct.
Although the housing problem is glaringly visible, other policy alternatives are not being considered. There is no room for the liberalisation of land; a lack of investment in the rental sector; small-scale housing development, which have the potential of creating access for housing; and no policy options to house the quarter of the urban poor who live below the poverty line.
The current policy will not be able to fulfil the housing demand and is a very straitjacket approach to solving housing needs. The few ‘haves’ will be living in mansions and bungalows, middle income households will be living in blocks, and the majority will have to linger without decent housing.
The role of housing policy should be to expand options, reduce costs, and increase delivery. Expanding options will enable people to have access to the type of housing scheme suitable for their needs and circumstances. This shouldn’t necessarily be home ownership. There are part-ownership, rental and protected tenancy with pre-set rent, affordable accommodations for students, and housing for the elderly and the disabled.
Unless an enabling environment is created for private investment for various housing schemes, the chasm between demand and supply will grow wider.
One area that has been given less attention is creating a vibrant rental sector. We need to have a sound rental sector developmental strategy in order to stimulate investment in this area. Lowering the sector’s barriers to entry will attract small-scale investors.
For instance, without the exorbitant profit margin of developers and sky-rocketing land prices, the purchasing and rental costs will be far lower than the current level. If small plots of land are supplied to a large number of small-scale developers free with strict conditions, such as pre-set house prices or rent, there is a possibility of increasing supply, shortening the delivery period and lowering house prices and rent.
The state is the sole supplier of land and the provision of housing land has never matched demand. This has driven the price of land up to a point that is beyond the reach of the majority. Increasing the supply of land at an affordable price for house building should be high on the agenda. This requires a mechanism of predicting housing land demand so that supply will be able to match demand.