The impact of housing on upward mobility in Africa

Affordable housing solutions require designs modelled to the culture, climate, economic and governance attributes of specific places and communities, says Mokena Makeka, Principal of advisory group Dalberg.

It is through community that the individual achieves self-actualisation and the collective coheres. Housing is the anchor of the ‘self and collective’ and Africa faces a critical shortage of affordable housing in well-located, and equitably serviced areas for a large number of its citizens.

The Great Acceleration, written by authors John Robert McNeil and Peter Engelke, about the human impact on the environment since 1945, helps us understand the extraordinary developmental pressure on African cities, most of which find their infrastructure capacities exceeded, or which are in various states of dysfunction or underinvestment.

Increasingly unequal economies have produced dual or tiered socio-economic realities, the amplitude of which defies simplistic readings of class dynamics.

Coupling urban imaginaries to ecological, social and economic reality is as important as decoupling urban development from discredited ‘hydrocarbon/open system’ logics. Cities will be the coalface of this change and affordable ‘green’ housing for the youth will play a crucial role.

The population acceleration is predominated by informal sprawl in unregulated urban peripheries in response to housing demand. Much of this organic growth is taking place in small and medium-sized towns; and the impact of housing, or the lack of, to respond to this demand can define the future of cities, and by extension macroeconomic trajectories.

Cities are the primary drivers of economic growth; and the quality and location of housing has long-term consequences for inclusive growth. Migration to cities is driven by the prospect of economic opportunities and the density of diverse labour pools and resultant cultural complexity.

With the productivity gain of economic agglomeration, and social serendipity, urbanisation and per capita income growth tend to evolve in tandem.

Misaligned responses

The provision of affordable housing however remains an unsolved puzzle with many partial solutions. There is a large mismatch in supply-demand of affordable housing; the supply volume is much lower than need, and pricing much higher than what the people can afford.

The result – a large majority of people continue to live in informal (quasi-affordable) housing with poor living conditions. This is a problem that many stakeholders (government, private sector, multilateral organisations etc) have been trying to solve for a while – but a scalable and repeatable model remains elusive.

The fundamental economics remain unviable for private real estate developers, and for the government (arguably the largest player in the market), the return on investment of public funds in social housing is not clear.

The misaligned response to this challenge is often driven by focusing solutions based on a simplistic demand-side segmentation (largely based on income) and not on a holistic and nuanced understanding of the behavioural patterns, needs, and aspirations of consumers and how the impact of affordable housing can play different economic roles.

Housing can serve as a psychological foothold in urban and rural realities, but it can also offer an economic lever and tradeable asset, a stake in local governance, and be a marker of dignity. As such, housing has the potential to be a pressure point in the body-politic, as well as markets.

Affordable housing is often the primary asset or point of financial and cultural security for large swathes of the population, and housing stocks constitute a major component of national economic wealth.

Affordable housing provision therefore has two impact dimensions: the socio-cultural dimension of community, i.e. livelihood, aspiration, identity and dignity, family, neighbourhood; and a secondary dimension of economic wellbeing, i.e. security of tenure, access to a fixed asset portfolio. For most households, purchasing or building a house is the single largest expenditure they will ever make.

On the latter point, the effect of housing in economic mobility is not fully understood; in some markets, rental stock in the affordable housing sector is under-supplied, despite strong demand; and in other instances, there is an undersupply of secure affordable housing that can be leveraged as part of a household’s economic strategy.

Non-tradeable title deeds, for example, are often the barrier preventing those in affordable housing markets from accessing mortgages or other capital. Increasing access to affordable housing therefore requires appropriate policies and regulation, feasible financial instruments and supplying the right product to the market. (See also “Housing can unlock Africa’s private and national wealth” by Illana Melzer – Editor.)

Ultimately, as urbanisation in Africa continues, affordable housing solutions require designs modelled to the culture, climate, economic and governance attributes of specific places and communities. When these products enable belonging, the impacts are both socio-cultural and economic.

Mokena Makeka is Principal of Dalberg, a global advisory group providing an innovative mix of advisory, investment, research, analytics, and
design services.

To read more articles from our special report on affordable housing in Africa, coordinated by AFFORD UK, visit the Housing a Continent webpage.