African cities are among the fastest growing in the world, leading to rising demand for urban housing. Housing policies promoted by international organisations such as the World Bank since the 1980s have stimulated housing markets to address this demand. As a result, many of Africa’s major cities are being transformed by investment in urban real estate. But many also face a shortage of affordable housing for low-income residents. In Ghana’s capital Accra, for example, there is an estimated deficit of 300,000 housing units. This is despite a construction boom in the city centre. Over 300 acres (about 120 hectares) of state-owned land have been privatised and redeveloped since the 1990s. The explanation lies in the mismatch between costs in the formal housing market and incomes in the informal economy. In Accra, an estimated 74% of the workforce works in the informal economy. Informal workers typically have very low and unstable incomes and can’t access housing finance. Most of the city’s residents are locked out from formal housing markets: 58% live in informally built housing, with 65% of households occupying a single room.
Prior to the 1980s, state-owned enterprises and informal self-builders dominated housing production in Accra. After Ghana adopted neoliberal structural adjustment policies in the 1980s, the government pursued a market-based approach to housing. It privatised public housing and redefined the role of the state as “enabling” private sector investment. It did this through incentives such as tax breaks for developers. This policy shift increased the role of commercial real estate developers in housing production. Suburban gated estates proliferated in Accra. But the expansion of the real estate sector was limited by conflicts over ownership of land. Customary land tenure, where land is communal property that is controlled by traditional leaders and family heads, is widespread in Ghana. Disputes are common, and this has deterred real estate investment. The privatisation of state-owned land had the desired effect of unleashing a construction boom in central Accra. Bungalows were demolished and replaced with gated estates of townhouses and blocks of luxury apartments. But it also worsened housing inequalities in the city. The new properties are typically marketed from upwards of US$80,000 and are far beyond the means of most Ghanaians. Wealthy individuals often buy these properties as rental investments and lease them to the employees of global corporations. Many of these projects focus on subsidised home ownership, rather than social rents. This means they are unlikely to be affordable to low-income groups. For the urban poor, therefore, informality is likely to remain the norm for the foreseeable future.