The cost of essential building materials has seen another sharp increase over the past one week, prompting calls for government to develop mechanisms that will keep prices stable.
Cement prices shot up nearly 15 percent from GH¢63 per bag to GH¢72 last week, while a tonne of iron rod has also gone up by GH¢400.
Last week’s hikes mean that cement prices have now risen 90 percent between the start of 2020 and September 2022, from GH¢38 to GH¢72, with iron rod increasing from GH¢4,100 to GH¢6,600 within the same period – further crashing the hopes of many prospective homeowners.
Ghana currently faces a housing deficit of about 1.8 million units, and to prevent the situation from getting out of hand, Dr. Sam Ankrah, President of Africa Investment Group and a development economist, wants the state to adopt strategic steps to stabilise the cost of building materials to boost home ownership.
I want the state to play centre-stage role in the housing market. By this, I am certainly not advocating price control. It is never an option as it leads to scarcity and even higher prices. Price control from economic viewpoint means taking practical steps to ensure that costs remain stable.
The state can influence demand and supply with creative policies that benefit both producers and consumers, he said.
Among the options available to the state, he said, include reducing or temporarily cutting taxes on building materials.
Also, in the short term, he advised the state to encourage importers to purchase their inputs in bulk, for the benefits of economies of scale, or take over the shipping of these imported raw materials as a means of taming costs.
We could also task the Housing Ministry and the Ministry of Trade and Industry, among others, to champion the local manufacture of most of the imported raw materials. This is long overdue, he said.
Dr. Ankrah, a Fellow of the Chartered Institute of Economists-Ghana and an international investment banker, said although he believes allowing free market forces is the tenet of a healthy economy, the state must not look on, as poor consumers get violated by organised industrialists and cartels.
Efforts to get the Cement Manufacturers Association of Ghana for comments on the recent price hikes proved futile.
Promoting decent, affordable housing
Dr. Ankrah said a more practical way to ensure that majority of Ghanaians have a decent place to call home, would be to redirect affordable housing funds into providing basic infrastructure needs in mushrooming communities.
His stance is backed by the fact that recent affordable housing projects have proven futile or too expensive for average Ghanaian families.
Day by day, Ghanaians with meagre incomes are building by themselves in underdeveloped communities. The state can at least meet them halfway, by channelling ‘affordable housing’ funds into providing decent roads, public transport and easy traffic to and from these areas.
So at least, in the interim, families who are striving to secure standard housing structures for themselves must be supported, he noted.
Under this, he said Ghana Water Company could also be supported to set up water depots as it is seen with fuel filling stations in such areas to take the water stress off inhabitants.
The drive toward cheap solar energy could also be prioritised in such areas to motivate individual low-income builders, as part of the affordable housing policy.
In the most likely event that solar cannot be provided for every household in the community, he said a solar-powered mini community complex – with an Internet café, phone/power-bank charging slots, water depot, laundromat with ironing boards, a first respondent community health post and kindergarten could be set up.
Provide phased housing loans
Meanwhile, he said affordable housing could also be pursued by giving phased-loans to workers.
Get an interest-free loan for foundation level, complete and repay; get another loan for lintel-level, complete and repay – and so on, till the roofing level.
He said this approach could be successful in curbing the ballooning housing deficit if strictly monitored to prevent abuse by the powerful, and sharply focused on those who genuinely need it for their immediate families.
Construct competently managed public flats
Additionally, in the medium to long term, he wants government to consider public-private partnerships (PPPs) to build multiple flats for public servants in strategic locations around the country.
These flats, he said, if well-managed by competent hands, would solve multiple issues.
First, it would take at least, 500,000 tenants away from the private home rental market, and this would significantly lead to a drop in rents for non-public workers. Also, these tenants of state flats would have their rents deducted every month, so they can reserve their hitherto 2-5year bulk rents to pursue their own housing projects, instead of paying them to landlords. So far, all affordable housing measures have benefited elites, not the masses.
These measures would show true commitment to the essential housing needs of the people. But it all starts with monitoring the market of building materials and properly regulating it. Looking on unconcerned is a non-starter.
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