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General News of Friday, 29 February 2008


Akufo-Addo on Affordable Housing


The President of GREDA, Dr Alexander Tweneboah, distinguished members of GREDA, members of the media, ladies and gentlemen, I am honoured to be here today, speaking to this august group, the Ghana Real Estate Developers Association, about a primal issue in the lives of all Ghanaians--housing. Any Ghanaian who picked up the newspaper in recent weeks or spoke to a relative in Accra can tell us what the problems are with housing;

a lot of houses built in water-ways and other unsuitable areas, many Ghanaians in urban areas sleeping on the streets or in places unsuited for human habitation, endless litigation on land with people taking the law into their own hands with some tragic consequences professionals like teachers, nurses and doctors refusing transfers to rural areas due to lack of suitable accomodation the price of cement rises faster     We of the New Patriotic Party believe that what defines a civil society is the number of citizens given a stake in the country’s prosperity. This is why one of the mantras of the New Patriotic Party is to enable a property-owning democracy in Ghana.   Our founding father, the great man, Joseph Boakye Danquah saw it as the patriotic duty of our party “to liberate the energies of the people for the growth of a property-owning democracy in this land, with right to life, freedom and justice, as the principles to which the Government and laws of the land should be dedicated in order specifically to enrich life, property and liberty of each and every citizen.”  Across the globe, owning a house is recognized as a significant component of financial security. Indeed, in many countries, the real estate industry is the cornerstone of the economy.   Today, owning a house is a dream beyond the reach of an overwhelming majority of our citizens. Indeed, even having decent accommodation is beyond the reach of too many of our citizens.   Building this fifth estate requires sincere partnership between government and people for it to succeed. In order to give the most citizens the chance to own property, the government must focus on its basic responsibilities to the citizenry. The government must provide the necessary regulatory framework for private entrepreneurs like you to lead a real estate boom. The government must protect the integrity of the individual’s property rights. And the government must run a sound, free economy with low inflation and low interest rates.   I answer those skeptics with this: if we are indeed committed to fulfilling the basic human needs of food, shelter and clothing, we must succeed in democratizing home ownership.   In my view, Dr Chairman, the only alternative to a property-owning democracy is a property-owning kleptocracy. World history, most notably our own in 51-year-old Ghana, is brimming with examples of socialist states where only a tiny group of elites control the economy, while deceiving the majority with the empty shells of public ownership.    We can all attest to the ultimate deception of those who came into the office preaching left, yet when they finished claiming for themselves everything that was right, there was hardly anything left for the rest of us!   Historically, land has formed the basic building block for wealth creation among nations. This is very consistent with the NPP philosophy of building and sustaining for Ghana a property-owning democracy.  Dr. Chairman, the importance of land as a basic asset for wealth creation is even more pronounced in a developing nation like ours. Ghana has for the last three decades faced a severe national housing deficit.  According to the available evidence there is a housing stock shortage of between 500,000 to 950,000 units in Ghana. We are not the only country in this crisis, but we are deeply affected by it.   In 1800 only 3 percent of the world’s population lived in cities. A century later, it was 10 percent. A decade ago it was predicted that the global population, which was half rural and half urban, would see a reversal with many more people dwelling in urban areas by 2005. This came to pass. This trend will continue, with two-thirds of the world’s people expected to live in urban areas by 2025, and 80 percent of these urban dwellers in developing countries.   Ghana’s urban population explosion presents enormous challenges, straining urban infrastructure, increasing waste, traffic, and homelessness at the major cities and causing brain drain in the migrating areas. Urban population growth in Ghana is very conservatively estimated at about 2.7 percent per year.  This is distributed into 48,000 human settlements; with 44% of the population classified as urban living in the Greater Accra, Ashanti and Western Regions.  Accra has a population estimated at 3 million while Kumasi has a population estimated at 1.2 million and growing.   It has been suggested by the experts that the country needs to produce between 130,000 and 364,000 units per annum in order to be able to stabilize our housing shortage hopefully by the end of my two-terms in office. Unfortunately, current figures put production of housing units at a paltry 40,000 per annum. At this rate, coupled with the rate of growth of our population, our housing situation will only get worse.   This decades-long phenomenon of out-of-control urbanization cannot and should not be allowed to continue. It only results in poverty, unemployment, criminal activity, homelessness and a sanitation crisis which the Zoomlions of today are striving to tackle. But, we cannot merely roar the growing urbanization nightmare away. In order to tackle our housing shortage, we must prioritize the revival and improvement of urban AND rural Ghana. We cannot responsibly deal with the rural-urban migration unless we devise and implement development programmes that bring urbanization to rural Ghana. Thus, rather than allowing the dire socio-economic circumstances to force rural dwellers to move into our city slums, we should take urbanization to them.   Faced with the above situation I wish to throw a challenge to GREDA Members:  to find innovative approaches to deal with the large volume of uncompleted buildings all over the country. These uncompleted buildings are holding up capital and negative effecting our national development. Another challenge is to join government in making homes affordable to the majority of families.

Government in partnership with the private sector must seek to decongest the major cities with bold, sustainable, deliberate geo-development policies that will revitalize our rural areas and make it unnecessary for our youth to migrate to urban ares in search of non-existent jobs. In our cities, we must address the issues of:  land as dead capital, land rights, access, equity, indiscipline in the land markets, unplanned development and affordability.   Thankfully, the Land Administration Project (LAP), which was launched in October 2003 and expected to cover between 15 and 25 years, is a demonstration of the state’s refreshing commitment to secure these property rights and to free-up the "hidden architecture" of Ghana’s economy – land as convertible asset.   The current reforms include the reorganization and consolidation of the existing public sector land agencies into one body. Also, it includes the Survey Department, the Lands Evaluation Board, the Land Title Registry and the existing Lands Commission secretariat. It is worth mentioning that just this February; a draft bill on the new Lands Commission was presented to Cabinet for approval prior to tabling before Parliament for passage.   Even the legendary backlog of land cases before the law courts are receiving serious attention. Here in Accra, the imposing new building under construction at the Supreme Court complex, once completed will host the Investment Related Land Court. Its jurisdiction will be national, like the Commercial Court. It is important that we develop the concept of land courts to accelerate the rate at which land cases are disposed of by the courts.   Land litigation, especially in some parts of Accra, places a huge burden on the resources of the estate developers. My promise to you today is that as President of the Republic, God willing, I will continue what I started at the Attorney-General’s office, giving serious attention to land and its related industries. The success of your business, ladies and gentlemen of GREDA, fortunately, is conterminous to the success of my party’s vision of realizing a property-owning democracy. Together, we can put an end to the era of buying litigation instead of land.     I, as Attorney-General, in September 2002, encouraged Peruvian Economist Dr Hernando de Soto, the founder of Institute of Liberty and Democracy and former US President Bill Clinton,  patron of "Foundation for the Building of Capital of the Poor," to launch the foundation here in Ghana to assist our efforts to make our lands convertible to assets.     The cost of construction materials, from cement and iron rods to furnishings, continues to make home-ownership almost exclusive to Ghanaians in the Diaspora and the very rich.  This requires a structured partnership among government, industry operators and researchers to make the concept of affordable housing the norm for estate developers.   The NPP believes in minimum taxation as a necessary incentive for accelerated growth in any industry. The NPP is ready to act on your concerns for the mutual goal of establishing a property-owning democracy in Ghana. This will require a cohesive partnership between government and estate developers.   We can only democratize home-ownership in Ghana if we can institute a mortgage culture. The government has a duty of maintaining a macro-economic environment for cheaper mortgage loans. And the financial institutions, which provide mortgage financing, must be motivated to lend to estate developers at rates that can in turn encourage developers to take the lead in the provision of affordable housing.     The irony is that the building industry is enjoying a boom in spite of all the problems of cost and land disputes. This should indicate to us the great potential of Ghana’s building industry once we commit to getting the fundamentals right.  We may be in this present quagmire as a result of policy flaws in the past, lack of appropriate investments by public and private sectors, as well as some cultural factors. In order to transcend these past mistakes, we must build appropriate public–private partnership. There must be an efficient division of labour between the State and private sector to be able to achieve optimum housing production and delivery.   In the above regard, let me propose some strategies for addressing the problem:   · Accelerate implementation of the current land administration reforms. This is necessary to secure the foundation for efficient, well-functioning, cost-effective and sustainable land governance in the country. This will help restore public and investor confidence in the records and reduce the indiscipline in the land market and associated problems.   · Close the housing stock deficit. We can do this through massive support for the private sector to increase the production of houses, including support for research and development of local sources and forms of building materials. This will help reduce costs and make affordable housing truly affordable.   · Reorganize the legal and fiscal regime affecting housing delivery, including provision of appropriate tax breaks and incentives.   · Facilitate the creation of a vibrant and sustainable mortgage market. Without a well-functioning mortgage market the dream of owning a home will continue to be nothing more than a mirage for a substantial number of our compatriots.   · Overhaul our land use planning systems and capabilities. Planning precedes development and by overhauling the system, we can be sure that it includes robust enforcement of laws and planning schemes.   · Standardize our sub-standard practices of title registration and land documentation. If citizens are to exercise their rights to land ownership, they must be able to prove their ownership. There are many parts of our cities, towns and villages where due to one reason or the other buildings do not have documented and registered titles.   · Implement national system of unique identification numbers for each landed property. The current system, in which the same property has four different names depending upon the public sector agency you are dealing with, is an obstacle to our goal of land use reform.   · Redouble efforts to increase the income levels of the citizenry. It is only by moving into a middle-income status that citizens will be able to take advantage of available mortgage and other instruments for home ownership.   · Lastly, Grant tax exemptions and other incentives, such as land backs, to developers who build in certain parts of the country. This is part of the grand design of spreading urbanization beyond the traditional centers of urban activity. Developers may never need encouragement to build in plush areas such as East Legon or Cantonments. So we must focus tax law reforms for the housing industry on providing affordable housing to low income families who cannot benefit from the many newly constructed homes in our urban areas.   · By the same token, we can reenergize the home-buying market by providing an incentive in the form of a tax credit to home buyers.  

· Designing tax credits for properties in designated areas · Expanding tax credits and other incentives for developers of community service facilities · Developing a housing bond facility accessible to certain criteria of estate development · Applying tax exemptions to developers that build a certain percentage of affordable housing

Yet, we should not lose sight of the fact that to many, many families the dream of home-ownership may be genuinely beyond them. Their dream is for a simple, decent, affordable home in a safe environment. Indeed, our goal of providing decent housing will only be met by the construction of large numbers of rental units by government in partnership with the private sector.

Indeed, as I speak, the NPP Manifesto Committee is developing a Comprehensive Housing Policy that will build on the progress made in this area since 2001.

For example, we are seriously considering an Affordable Housing Trust Fund to be accessed by real estate developers for the purpose of increasing the stock of affordable housing.

In order to sustain it and make the programme benefit more and more of our people, all participants must agree on producing financially viable projects with revenues covering costs.

Dr Chairman, I will end my remarks by saying that a lot of work has been done by your membership and the government. But, a lot more needs to be done. I look forward to working with you to make real estate one of the major pillars. I look forward to making availability of decent housing to our citizens the norm rather than the exception.

I look forward to a Ghana with planned neighbourhoods rather than unregulated and chaotic neighbourhoods. If a free society cannot provide decent accommodation for the many who are poor, it cannot prevent the spreading of container accommodation in the neighbourhoods of the few who are rich.

Thank you

May God bless us all

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