Resolving the Housing Crisis

Recently, the mayor of Addis Ababa appealed to real estate developers to cooperate with his administration in its effort to manage the housing problem of the city which is becoming critical social and economic problem. Actually housing is a national problem in almost all the cities and towns of Ethiopia . As a study published in 2010 indicated, in Addis Ababa alone there was a need for between 350, 000 to 450, 000 housing units over the next 10 years. Coupled with this, the additional demand that has been created over the years makes the housing problem a real burning issue.

The supply of affordable and decent housing for its citizens is one of the government’s obligation .To fulfill this obligation , it needs an appropriate urbanization policy, financing strategy and subsidy programs as well as managing housing standard issues and the right of the poor and the marginalized or the disadvantaged groups, among other things. The legislations and related aspect of the housing delivery aspect are usually governed by comprehensive national and sub national housing policies. Though we have a lot of housing related problems, we still don’t have a comprehensive policy guideline indicating the concrete program and actions that the federal and regional governments and the city administrations are supposed to take to solve the housing problem.

The kind of housing program we had in the urban development policy is almost neglected and its performance has never been evaluated systematically and critically in a responsible manner . Therefore we need to have a focused attention towards developing and implementing a comprehensive housing policy and related issues in order to sustainably manage the mounting housing crisis we are going through.
One of the mechanisms to address the housing problem is to create conducive policy environment complemented by favorable urban development program for the development of commercial housing using real estate developers . Of course, the real estate sub sector is usually perceived skeptically both by the government and by the public. This is due to the absence of real estate law which was left at a draft level, the unsettled taxation controversy , the unguaranteed payments by the clients , lack of the legal obligation for disclosure of the financial status by the real estate businesses for purchasers , lack of or weak control and supervision by the regulatory agencies . Though these problems are usually tabled for discussion on the various forums in the past , tangible and system oriented solutions are not yet provided. Therefore, addressing these problems with serious political commitment on the part of the government at all levels will definitely contribute to manage the housing crisis.

Financing is the other headache. Housing construction with full self financing is impossible even in developed countries . Therefore a financing institution which specialized in the provision and management of housing loans with policy oriented subsidy and /or affordable interest rate is very crucial to enhance home ownership.

The former Housing and Construction Bank is the typical example in this regard. Many housing units in Addis Ababa were successfully financed by this bank. Later on this bank was renamed as Construction and Business Bank and shifted its focus more on business loan than policy oriented housing construction loan . Finally it was merged with the Commercial Bank of Ethiopia and abandoned its purpose totally. It is necessary to reestablish such bank that specializes in the provision of housing loan with the main purpose of enabling citizens to be a house owner and thereby mitigate the housing problem. Part of such financing can also be solicited from external sources like the World Bank and others as policy loans with zero or very minimal interest rate and long repayment period.

In addition, a systematic arrangement to utilize the funds accumulated by insurance companies and pension institutions can be another long term and dependable source of financing . Availing financing to high income earners through the commercial banks is also an option that needs serious consideration.

The urban land administration laws are another hurdles. These laws are very complex , very dynamic , lack clarity and are open for various and unpredictable interpretations by the courts and administrative agencies. In addition, they are not issued based on problems on the ground , feedback from relevant stakeholders and experts and critical policy researches . It is even common to experience the grievances of contractors and architects on the laws. Instead, some of the laws were issued with a manipulation of a hidden political agenda for short term consumptions than long term viable application. To reverse this, redrafting the laws in very simple and clear language based on standardized legal drafting techniques by relevant experts, is needed. In addition, consolidating them and making them available for the public and relevant institutions will help to attract and encourage potential housing developers.

On top of this, private land holders have to be encouraged to invest on their own holdings through various acceptable modalities of legal arrangement. For instance, family members should be allowed to construct residential apartments on the land of their fathers and mothers acquired through inheritance, gifts and in other legal mechanisms and they have to be assured of getting title deed for the part they own. Contracts made to create such arrangements among family members have to be registrable by the notary offices to give confidence for the contracting parties on the transactions. The traditional and rigid understanding about the nature of contracts for the management, ownership and assignment of rights on immovable properties have to be reformed by the notary offices with more innovative, flexible and permissive application of the existing laws.

8th Year • May.16 – Jun.15 2019 • No. 74