Developer-built, mortgage-financed affordable housing is likely to remain unaffordable for most households in many African countries. Nevertheless, efforts to support affordable housing are still, in the main, directed at increasing access to developer-built, mortgage financed housing on the continent. The two tend to go hand in hand; no mortgage lender is going to offer a long-term loan to finance a structure built by a local builder using lowest cost materials. And anyone who purchases a developer-built unit is going to have to have mortgage finance¹. Because sources of long-term finance are constrained and interest rates are high, the standard strategy is to create a mortgage refinance facility or company (MRC). We have a R(wanda)MRC, a T(anzania)MRC, a N(igeria)MRC and soon will have a U(ganda)MRC. These facilities may well deepen capital markets and generate a few thousand mortgages every year at slightly lower interest rates. But they are unlikely to shift the dial on affordable housing.

Of course, we already have affordable housing. Just not the kind we (or mortgage lenders) like. It is mainly rental and mainly self-built. We tend to call this slum housing, but the truth is it is not the housing part that creates the slum. In fact, available survey data indicates that most of this housing is constructed from durable materials. Rather than the dwelling itself creating the slum conditions, it is the lack of services and infrastructure. For example, in Nigeria, 80% of urban households live in dwellings made of durable materials (roof, wall and floor materials) but without access to a flush toilet or piped drinking water (see Figure 1 below).

Figure 1: Access to services, construction material durability and overcrowding in urban areas

Curiously, this simple fact can be over-looked in affordable housing discussions. Few grapple with the very binding constraints that limit affordability of both households who earn very little and the state which has limited fiscal space for subsidies. Fewer still engage with the affordable and very responsive supply chains that create the housing that does exist, albeit not in our likeness or to our liking.

Perhaps we have not quite reached the depths to which affordable, developer built housing can sink – prices can perhaps come down if we lower the spec and reduce the size. But formally developed housing, particularly multi-story housing, is expensive and will probably remain expensive. Rather than hoping for a housing cost revolution and / or subsidies that can create affordability at scale, we may have to wait for a productivity revolution that will enable rising incomes before African cities can afford shiny, newly-built apartment buildings.

In the meantime, best we look at supporting and strengthening other affordable housing development processes.

Beyond, or beneath, the top structure, a critical way to support the quality of housing delivered by informal supply chains is through investment in infrastructure and grids. These are also expensive but are, quite literally, the foundations on which future housing will be built. Infrastructure, and not top structure, should be the focus of all investment and / or subsidy by the state and its donor partners.

That is not to say that top structures will take care of themselves. Household landlords who provide affordable housing may not be very good at design or architecture. While professional sign-off might be required as part of a formal planning approval process, many cities lack the capacity to enforce building regulations and by-laws, and few households take the trouble to comply. Household developers may lack information on building materials or sources of finance. They may also not be able to manage the construction process and may need help with tenant and property management. A potential solution is an extra-governmental locally based housing support centre that provides affordable, accessible professional services as well as advice and information to support construction. Modelled on agricultural extension services that are common in rural areas, they might encourage compliance with sensible construction guidelines and could go a long way in enabling better quality build that remains affordable².

In some countries the building blocks of affordable housing are mud bricks dug out of same earth on which the unit is built. These ‘affordable’ top structures are 10-to-20-year durable, are probably not mortgageable and will be rented out. But their lifespan aligns well with development trajectories. By the time units need to be redeveloped, incomes will (hopefully) have risen. In 10 to 20 years, the unit will be demolished. The bricks will return to the earth to make way for a 100-year durable, multi-storey shiny new building containing apartments that working people can afford to purchase (with a mortgage). In the meantime, donors could direct their efforts to making more of them safer and serviced.

Notes:

¹ Or not, as it turns out. Anecdotally, developers report that units are often purchased by households living in the diaspora or by expats.

² Of course, they may not. But the only way to figure that out is to try, and fail fast.

Note: Cover image taken in Mukuru, Nairobi (March 2022)