Holistic Solutions to Addis Ababa’s Housing Crisis

Addis Ababa, the dynamic capital city of Ethiopia, is grappling with an unprecedented housing crisis due to rapid population growth and urbanisation. The allure of Addis Ababa as Ethiopia’s political, economic, social and diplomatic hub has attracted a significant influx of people seeking better livelihoods, safe environment and job prospects. This surge in population, along with other factors, has led to a severe housing, transport and unemployment crisis in the city. It’s even transpiring unheard-of crimes in the broad day, while its impact on providing essential services has grown tremendously.

The concentration of economic opportunities in the city, as it serves as a pull factor for migration from other parts of the country, highly contributes to the high demand for housing. Escalating peace and security issues in the regions also push people to move to Addis Ababa for safe havens, further exacerbating the housing crisis.

Indeed the ethnic politics that Ethiopia has been pursuing for several decades now; and the aggravated land disputes nationwide have been causing widespread displacement in the country, with an estimated 100,000 households forcibly evicted from their homes in the newly established Oromia’s Sheger City alone. The new city claims that eviction is mandatory to avoid illegal settlement. However, such displacement has created an enormous demand for additional housing options in Addis Ababa, where many displaced people have sought refuge. The influx of displaced people only worsens the problem.

The failure to plan diversified urban centres and alternative growth poles across the country has led to an imbalanced distribution of economic opportunities and population. The government focuses all its attention on Addis Ababa, while other cities still need help to provide even essential services to their residents. As a result, there is a continuation of a massive influx of people to the town. The city already become overcrowded and overpopulated, and the housing shortage is getting more severe by the day.

There are many reasons why alternative urban centres have yet to develop in Ethiopia. The government has to properly plan and execute the development of multiple growth centres because that’s one of the solutions to reduce the burden on Addis Ababa. Infrastructure development plans need to consider these pressing needs seriously.

Challenges with Government Strategies

Two years ago, the city administration pledged to construct one million houses within five years in collaboration with a South African company. There has yet to be any substantial progress towards this grand goal. Despite the announcements of partnerships with international real estate companies with the capital and technology to deliver the massive project, Addis Ababans dream of owning a house remains in thin air.

The city administration has now devised a new plan, joint venturing with local real estate companies to realise the dream of providing affordable houses to city residents. Though this move has numerous merits, as it encourages domestic private sector engagements, how the government identified the developers must be more transparent. The institutional and policy arrangements to make sure this massive project of delivering about one hundred thousand houses will be successful.

As it is, the housing crisis in Addis Ababa is a complex problem that requires a comprehensive solution. The government must embrace bold policy reforms, and real estate developers have a crucial role to play. The following are vital and grand policy reforms essential to pave the way for sustainable housing solutions in Addis Ababa and beyond.

Dismantling Ethnic Politics and Ethnic Federalism

Since the policy of ethnic politics and ethnic federalism became the rule of the land, the approach has led to forced evictions and unrivalled land disputes, exacerbating throughout the country, causing many people to migrate to Addis Ababa and other urban centres while early preparations to accommodate the influx isn’t in place. This problem has increased the pressure on the housing crisis. For example, the regional Government of Oromia recently forcibly evicted over 100,000 people from their homes to establish Sheger City. The forced evictions have left hundreds of thousands of people homeless and made it even more difficult for people to find affordable houses to rent in Addis Ababa. Since adopting ethnic federalism, there has been frequent and forceful eviction of citizens from numerous states.

Ensuring Private Property Rights

Private land ownership is essential for attracting investment in housing development. People with secure property rights are likelier to invest in their homes and communities. This solution can lead to more sustainable and equitable housing development. It also obligates the government to respect and protect people and their property. A study by the World Bank found that countries with substantial property rights have higher rates of housing investment.

Promoting Diverse Urban Development

Addis Ababa is Ethiopia’s primary urban centre, and it faces many housing, transport and unemployment problems. These problems have created a massive challenge for the city administrators. Promoting diverse urban growth centres as a country can reduce the pressure on Addis Ababa and create more opportunities for people in their localities. For example, the government could invest in developing new urban centres. It’s also possible to redevelop and modernise existing regional towns such as Adama, Bishoftu, Debrebirhan, DireDawa, Jigjiga, Semera, Mekele, Bahirdar, Nekemt, Assosa, Gambela and numerous other towns. Sufficient investment has to be made in these cities so that they offer decent jobs and essential services to their residents. Such approaches would reduce the influx of young people migrating to Addis for better opportunities.

Investing in Public-Private Partnerships (PPPs)

PPPs can be a powerful tool for addressing many public development challenges, such as housing shortages. The government can leverage private sector expertise and resources by partnering with developers to build more affordable houses. Experts advise better policy details and institutional arrangements to be employed ahead of time. Free provision of land by the government would allow private developers to invest the necessary resources in building more houses. Many real estate developers invest considerable money to acquire land, making it difficult to finish their projects on time. PPP can solve this challenge.

Encouraging Local Manufacturing

The cost of housing in Addis Ababa is high, partly because construction inputs, mainly finishing materials, are imported. By encouraging local manufacturing, the government can reduce the cost of housing and make it more affordable for citizens. It also promotes industrialisation and job creation which are key urbanisation drivers. Tax breaks, affordable finances and other incentives to local manufacturers should always be encouraged.

Designing Innovative Financing Schemes

Traditional housing financing schemes are often inaccessible to low- and middle-income households. The cost of mortgage financing is very high in Ethiopia. The country has to design strategies to encourage people to save for houses and also push financial institutions to finance housing at an affordable interest rate. Housing is a basic need, and financial institutions should provide sufficient funding. By designing innovative financing schemes, the government can make homeownership more achievable for the broader population. For example, the government could develop a housing finance scheme that provides low-interest loans to low- and middle-income households. It’s only through such interventions that low-income citizens can buy houses. Homeownership encourages a strong family life, which is very beneficial to society’s long-term stability.

Promoting Modern Urban Lifestyle

Educating citizens on sustainable and modern housing and living practices can improve resource management and reduce strain on housing. Public awareness of saving energy and water at homes and workplaces would save meagre resources to improve housing. Promoting Innovative housing and living styles with houses that have primary and minimal amenities is essential.

Research-Based Housing Technologies

Research-based insights and technologies can help to develop effective housing policies. For example, research has shown that cooperative-developer partnerships can effectively expand affordable housing options and empower communities. The government could use such analysis to develop policies that promote cooperative-developer partnerships. Sufficient investment is necessary to design innovative technologies that help build affordable, eco-friendly houses with locally available materials.


The housing crisis in Addis Ababa necessitates a holistic approach involving the government, private developers and the general public. Critical policy reforms and innovative public-private partnerships can pave the way for sustainable housing solutions. By addressing the root causes of the crisis and heeding insights from various studies, Addis Ababa can envision a future where adequate and affordable housing is accessible to all its residents.

11th Year • August 2023 • No. 120 EBR

Yohannes Mekonen

Is a PhD candidate and a lecturer at Ethiopian Institute of Architecture & Building Construction & City Development (EiABC).

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