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First-Hand Look at Home Building Challenges in Ghana
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Tom Stephani with builders in Accra, Ghana | By Tom Stephani, Custom Construction Concepts
Custom builder Tom Stephani, president of Custom Construction Concepts in Crystal Lake, Ill., and an instructor for The NAHB University of Housing, recently taught two Certified Graduate Builder (CGB) designation courses to real estate professionals in the West African country of Ghana. While there, he also assessed the construction and development challenges facing Ghana.
The following are his observations on the state of housing there and the builders' eagerness to learn:
In early September, I had the opportunity teach builders in Accra, Ghana, about project management and scheduling in order to help them improve their business processes during a brief visit as part of NAHB’s international education program.
The builders, members of GREDA, the Ghana Real Estate Developers Association, were smart, professional and eager to learn. They recognize that builders in the U.S. have well-developed processes and systems to manage and grow their businesses, and they wanted to learn more about them.
My Thought on the Obstacles Facing New-Home Construction in Accra
While I was in Ghana teaching builders, I learned a little about the housing industry in Accra after talking with them as well as touring three housing developments in the Accra area — a small, high-end, mixed-use project in Accra; an “affordable” development on the outskirts of the city; and a master planned “suburban” community featuring several price points that was about 20 kilometers from Accra.
What the builders told me is that homeownership is extremely important to Ghanaians. And while most Ghanaians pay cash for their homes — and that most keep their homes for life and many other keep them in their family for generations — builders have to overcome fundamental obstacles that make it difficult to do business.
These include:
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An Inability to Obtain Clear Title to Land
The primary challenge facing builders and developers in Accra is their inability to obtain clear title to property, primarily because no formal process exists for surveying or legally and accurately describing land — other than simplified metes and bounds descriptions. This also may be a problem throughout the country.
With no clear title process in place, builders and developers also often face property ownership challenges — usually from family members, tribal chiefs and the Ghanaian government — that often take the courts a long time to resolve.
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Insufficient Mortgage Markets
Ghana also has a very weak primary mortgage market and no secondary mortgage market. The HFC Bank Limited of Ghana, which I was told is either controlled or owned by the Ghanaian government, is the country’s only financial institution that actively provides mortgages.
Construction loans also are very difficult to obtain because it is difficult securitize loans in Accra. They are also very expensive.
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Many Construction Materials Are Imported
Houses and commercial buildings are general built slab-on-grade using concrete block. Milled lumber and plywood sheathing are used to build the roof structures, with the roofs constructed of metal or asphalt.
In addition, most building materials are imported, with much of it coming from China.
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Affordable Housing Is Difficult to Deliver
There are many low income areas in Accra and poverty runs deep, but affordable housing is difficult to build and deliver because new-home construction generally costs more than most people in Accra can afford. The lowest price for new construction that I found in Accra was $26,000.
And, even though new single-family homes are expensive, apartments are rare in Accra and the city has no laws governing condominiums.
Other challenges to Accra’s new-home industry include:
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Trade contractors have only marginal skills.
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Appraisers, called surveyors in Accra, are not licensed.
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Accra has no MLS listing. Real estate agents hold their own listings.
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Accra has no house numbering system.
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Accra has no public transportation.
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Accra has few paved roads.
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Accra has no central sewer or water system. Water tanks serve as the city’s primary supply — and backup — for fresh water.
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Accra has no storm water system. Storm water flows through open culverts.
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Electricity is very expensive and residents purchase their electricity with pre-paid cards. Many high-end homes and buildings use back-up generators.
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Security is a significant issue in Accra. All the communities I was in were walled and all had security guards.
All my observations are based on a very brief visit to Accra and only a few discussions with several builders and other local experts. They should not be considered representative of the state of housing in Accra or Ghana.
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New construction in Accra is primarily built slab-on-grade using concrete block. Most of the constuction materials are imported, much of it from China. |
Ghanaian Builders Thirst for Knowledge
I visited Ghana in September to teach two day-long CGB courses as part of NAHB’s International Education program. All seminars in the program are fee-based and planned to meet the specific objectives of each participating group by NAHB staff members, who also coordinate sponsorship and logistics.
The GREDA builders specifically wanted to improve their project management and scheduling skills. In addition to the two CGR courses, I also presented “How America Builds,” a course I had written. They wanted to know as much about our processes and business systems as they could learn.
The builders had a very good command of English and several were educated in either the United Kingdom or America.
Many students, however, arrived late for my first class on project management. Their tardiness was not because of me, the material or the subject matter. Rather, as I found out, it was simply a matter of culture.
I taught them scheduling on the second day, and the discussions during the course were very lively.
My course on “How America Builds” was well received and prompted many discussions about the similarities and differences between building in Ghana and the U.S.
My trip to Ghana was sponsored by the World Bank and facilitated by the International Finance Corporation.
My contact there was Bill Donovan, of Frankfort School of Finance and Management. I also met and discussed the builders’ financial programs with Dr. Sally Merrill, a mortgage finance specialist for the Urban Institute headquartered in Washington, D.C., and who was there to evaluate the Ghanaian mortgage program for State Secretariat for Economic Affairs (SECO), a Swiss-based donor organization.
The courses I taught received a very favorable review from the students — 4.7 on a 5.0 scale — as part of a World Bank post-session survey of the participants.
Similar opportunities are also available to delegations of international members who visit the U.S. through NAHB’s Visiting Delegation Program.
For more information on international educational opportunities, e-mail Susanna Connaughton, NAHB executive director of international affairs, or call her at 800-368-5242 x8415.
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