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Housing has become a major bane in the socio-economic development of many countries of which Ghana cannot be rule out. With the countrys population growing from six million seven hundred and twenty six thousand eight hundred and fifteen (6,726,815) in 1960 to twenty three million in 2011 (provisional figures by the Ghana statistical service) nothing much is seen to be done about this phenomena. As a matter of public policy many Governments since Ghana gained independence some fifty four (54) years ago has come out with a lot of policies to help curb this problem. As echoed by Mr. Ohene Sarfo a housing consultant many governments has sought to find the extremely modest way of finding solution to the Ghanas eminent housing deficit. Ghanas housing deficit at present is estimated to be hovering around one million units and will probably double within the next decade according to Mr. Akwete Akita, executive director of HFC Bank Ghana Ltd. (HFC), a mortgage provider. After years of independence the only legacy left in the housing sector is nothing but an abysmal site seen. If we look around the major cities in the country we can see that traders are sleeping in kiosks, others in uncompleted buildings which lack basic human amenities, with some too laying their heads on the streets and will have to suffer to find a place to lay their heads when it rains. Mr Sarfoh explained that the Nkrumah administration, as part of its National Development Plan, first sought to provide housing for Ghanaians by parodying the mass construction of post-WWII European governments that were recovering from the destruction of enemy bombs. "At the same time there was a parallel informal system of production and supply, for people working in the informal sector, he added. Mr Sarfoh, who is currently working with UN

HABITAT Ghana on slum-related issues, provided a detailed history of 50 years of Ghanaian history for reflection. Sensing danger of the eminent problem Dr. Nkrumah came out with two main state bodies to solve Ghanas housing deficit. The two institutions were the state housing corporation and Tema development corporation which was created with the special purpose of creating residential units in the rapidly growing Tema area as part of a major industrialization drive. TDC dealt largely with the acquisition of Tema land, and creating legislation to this effect, for residential construction. While TDC focused on Tema, SHC worked in the regions across Ghana, of which there were nine at the time. Like so much of Nkrumah's industrialization drive, and like those of the Soviets and Communist China, the resources allocated to such ambitions ran dry. Funding for these bodies was progressively reduced over the years. Successive governments after Nkrumahs regime did not show much zeal and interest in these projects which led to cuts in total projects budget. After Nkrumahs government, Dr. Busias government also came out with some policies to solve the nations housing crisis. A new Ministry of Housing was established to improve upon the housing needs of both urban and rural dwellers. The Bank of Ghana set up a loan from which public servants could borrow to build their own houses. Trustees of the Social Security Fund provided capital for the construction of genuine and viable and low cost houses. Contributions of 2.5 percent were made from salaries of between 4,000 and 6,000 and 5 percent from salaries above 6,000 to a Social Security Fund for the construction of low cost houses for people with housing problems. Public officials who lived in accommodations heavily subsidized by government were made to pay 15 percent of their salaries as rent to beef up the fund.

In like manner the NDC government under Mr. Rawlings also resorted to the SSNIT housing scheme as means of providing affordable houses for the citizenry. Under this scheme affordable houses were put up in many regional capitals to help ease the accommodation pressure on the ordinary Ghanaian. However this scheme was not enough to salvage the already polarized housing sector. The failure may be partly due to the high cost of houses and the low income levels in the country which cannot match up to the cost of these buildings and the improper planning on the part of the builders (SSNIT). Kuffours government which rules the country from 2000 to 2008 also came out with the affordable housing scheme to help solve the problem. Houses were put up in many regional and district capitals of in the country but they could not finish before the change of government. Since the NDC government under Professor Mills also took the reins of government in 2008 they have come out with the STX Korea and government of Ghana housing project which is expected to provide 200,000 housing units across the country. But many analyst and construction experts believe that the cost involved in putting up such houses in the country is high and could have been handle by local experts at a cost lower than that of the STX is offering. Aside these initiatives by successive governments in providing affordable houses in Ghana many private entities like commet, regimanuel gray and other firms are also involved in housing provision.


Finding affordable means of financing housing in Ghana has been major problem successive governments have been facing. From the colonial era to post colonial era successive governments have sought to introduce schemes and measures that they think would help solved this problem. In a paper

presented by Mr. Asare Akuffo managing director of HFC bank (2006) at the world bank and IFC housing conference he opine a number of financing strategies that Ghana has sought to finance its housing problem. One such initiative is the setting up of the State Housing Corporation (SHC) in 1955. housing finance to Ghanaian workers. In December, 2009 the government of Ghana announced an agreement with STX engineering construction of South Korea to put 200,000 housing units at a total cost $ 10 billion. The off taker agreement in the deal stipulates that STX will hold 90% of the entire shares in the company to be incorporated in Ghana whiles HFC Bank which represents the Government of Ghana will hold the remaining 10% stake. The agreement among other things also stipulates that;


was provided with long-term funding by Government to construct and provide

The government of Ghana will purchase 45% of the 200,000 housing units to be constructed. The government also undertakes to issue a government of Ghana guarantee to STX engineering that is sufficient enough to help it secure loans from financiers for the 45% take off of the 200,000 housing units. In relation to this the government is also prepared to waive its The government of Ghana shall provide the entire necessary

infrastructure including lands that are needed for the smooth take off of the project.

The state shall also provide tax waivers for all materials that are imported into the country for the benefit of the project.

The off taker agreement includes the construction of first trench of 30,000 housing units for the security services at a cost of $ 1,525,433,468.00. From these figures each housing unit is going to cost about $50,874 which is on the higher side looking at the income levels in the country. It is estimated that the house price to annual income ratio in Ghana is 12 times in comparison to 4

times in developed economies. Looking at this statistics putting up a house with an estimated cost of over $50,000 is not affordable in Ghanaian terms. As such many people have expressed their displeasure with the whole deal while others are also strongly in support of it. The above clauses and many more imbedded in the agreement has led to many people taking on the government about the credibility and the transparency of the entire agreement. One such school of thought is the IMANI Ghana (a policy think tank). The centre has argued that the free market does not necessarily prioritize the benefits of private gain over the public interest. What its proponents seek to argue is that in economic matters where the allocation of resources is at stake the market tends to lead to superior outcomes for all concerned, public as well as private. They also contend that for the market to work properly, however, it is important for the roles of the private and public sectors to be complimentary and properly appreciated by all parties. In the particular instance of the STX-Ghana deal what we have is a muddled mixture of value propositions in which neither the unique strengths of the public contribution nor that of the private sector are clear. This however does not mean that they oppose to the deal entirely but are against basic fundamental issues and the secret nature in which the entire deal is been operated by the government. Another group that also oppose to the deal is Danquah Institute which many thought owe allegiance to the New Patriotic Party (NPP). The Danquah Institute described the deal between the government of Ghana and the STX Group as very bad one reminiscent of the bad old days of naive and greedy African politicians. The Danquah Institute further stressed that, even before the production begins for Ghanas new found oil wealth, it is being scandalously mortgaged for a deal that should go to Ghanaian companies at about half the price and that, the deal is arguably a most unpatriotic piece of agreement even by the standards of a corrupt and undemocratic government. The centre also

seems to be against the guarantee section of the agreement. They argue that using Ghanas share of the oil as a security to guarantee for such security is not in the best interest of Ghanaians and that future generation will have to suffer the consequence of the actions and inactions of present generation and that the entire deal should be abolished. The Ghana real estate developers association (GREDA) initially had objected to the prepositions of the deal. The association stated that they are extremely disturbed by the nature of the whole $ 10 billion STX deal, calling for its cancellation, since in its present state the agreement will be damaging to Ghana. While we commend the government interventions to significantly tackle the huge housing deficit in Ghana by supporting by the construction of 200,000 units in 5 years to reduce the estimated I million housing deficit, the agreement is shrouded in ambiguity and does not offer value for me GREDA said. It could be seen from the above comments by GREDA, IMANI, and Danquah institute that here must be something wrong with the deal. This includes the irrevocable waiver of the sovereign guarantee and the tax exemption given to the company. Another issue also has to do with the cost of the buildings to be constructed. They all agree in their analysis that if the agreement is contracted between the state and the local construction companies the cost could be lower than that looking at the prices at which buildings are been for sale by such companies. Also the incentives given embedded in the agreement such as tax waiver and the states involvement in securing guarantee for loans to undertake the entire project. This is so because if local firms are given that opportunity as the one given to the Korean firm they could do better project by putting up buildings that are of lower cost as compared to that of STX.

IMANI Ghana further elaborated that there have been an administrative affairs of the deal and conceded that the parliament has also betray the confidence repose in them. This is because per their analysis after construction cost per room is almost $10,000 which makes it unaffordable and the preserved of the rich which far ahead of the reach of the ordinary Ghanaian who find it difficult to find a place to lay his/her head. Notwithstanding these arguments by the above school of thought, there are some who are also in favour of the deal and are offering counter arguments and explanations to buttress their point. Most of these people are government appointees and cronies of the government. One of such people is the honourable minister of water works and housing Mr. Alban Sumani Bagbin who in a statement sought to opine that the deal is the best housing project ever to be undertaken in the country and that it is not only going to build houses but will also create employment for majority of Ghanaians and will have a local content that will specifically handled by the local firms in the country. The $10 billion initiative if successful is supposed to make a substantial dent in Ghanas housing deficit, which the government believes stands at 1 million. By these assertions the STX-GOG arrangement if successful should make a giant contribution to reducing the housing deficit. Assuming that the housing deficit corresponds well with the population growth of the country then the project should represent a 10% to 20% reduction in housing deficit by 2015. The ministers overall assertion has been on the issue of local content and cost of putting up the buildings. In one such statement he said that Among all these laudable interventions, the current Housing Project as proposed by STX Engineering and Construction Ghana Ltd is the largest and single most ambitious one, involving 200,000 housing units of which government is committed to taking 90,000 housing units 30,000 for the nations Security Services and 60,000 for Public Sector Workers. The remaining 110,000 housing units are meant for the general public available through the housing

market. The cost of the building materials and the services for constructing the 30,000 housing units together with the on-site infrastructure such as roads, water, electricity and facilities such as schools, shopping malls, health centres, etc and the insurance is valued 1.5billion US dollars. The rate of interest is 2% FLAT. The first repayment will fall due after the 30,000 housing units have been PROVIDED. The remaining balance will be paid by installments in the next 15years after the first payment. More importantly, there is a grant component of 36.93% which translates to about US$480m. The focus in this whole program is to make available safe, decent and affordable housing units for the low-to-middle income workers of the country. Another person who also disagree with the first school of thought is Mr. Agyenim Boateng (deputy minister of information) he also said in statement that the project according to the agreement is meant for development of holistic communities, and not just housing units, the project will construct Green Satellite communities with roads, schools, clinics, shopping malls and other amenities for the same amount. For instance, the 30,000 affordable houses for the security services all over the Ghana at the cost of $1.5billion is a value for money. I am therefore at a loss why quasi-political organizations such as Danquah Institute and GREDA have chosen to indulge in simplistic analysis of dividing the US$1.5billion project cost by 30.000 houses to arrive at a $60,000 per unit figure which is not supported by facts on the ground. It can be seen from the above statements that the government in its power is also doing everything possible to justify what it intends doing. The project though looks good and attractive on paper; there is much inherent issues in agreement that needs special attention. For instance the prices of the buildings when completed are on the higher side in real money terms. Because in a country where income levels are low putting up a house that is going to cost about$50,000 to $100,000 is not affordable in actual sense. Justifying that a plot of land could be sold as high as $50,000 in

some parts of Accra is enough reason for the government to enter into such agreement.

Ghana as a developing low income country faces a deeper challenge of accommodation provision. It is therefore refreshing to hear that the government is entering into an agreement with the private sector to provide affordable housing units. But the contract entered should enrich both parties involved in the agreement. Finding the most affordable and convenient means of financing housing units in the country is what the country should look at. At present the deal between the state and STX engineering is embedded with a lot of loopholes that needs to be addressed. For instance granting tax exemptions to the Korean firm is a clear indication of some of the state policies that goes against indigene Ghanaian businesses. This is because such an intensive could lead to STX getting a competitive advantage over the local firms in fairly competitive market. In fact the agreement is shrouded in a way that facilitates the business of STX but not the interest of Ghanaians. This is because if the government is going to provide tax exemptions, free land and infrastructure how come the Ghanaian government is also to pay an astonishing $10 billion for the entire project. In global world governments entered into social contracts with its people and as such any project entered into should be in the supreme interest of the citizenry. But the STX deal as a matter of fact is more of one party (STX) gaining whiles the government seems to be entirely forgotten about its social contract with Ghanaians. This is so because if it is really housing problem that the government will want to tackle why didnt they consider the continuation of

similar one initiated by the past administration which is left in the mercy of the weather. Finally the government can provide some of the above incentives to a consortium of local firms to undertake this project which can even bring the cost pretty down.


Franklin Cujoe a look at STX deal IMANI GHANA /repaymentscheduleofstxdeal/ joint venture agreement/ stx Ghana ltd and GOG blog 57:statement-by-hon-alban-sk-bagbin-the-minister-of-water-resources-worksand-housing-on-the-stx-housing-project-at-a-press-conference-held-in-accraon-tuesday-july-27-2010&catid=80:meet-the-press&Itemid=227