Abstract
AbstractThe chapter focuses on the underlying factors explaining high construction costs in Africa and possible solutions for lowering costs. A value chain analysis shows that the rising prices of building materials, large shares of imports, and inefficiencies in the construction process are the main factors that lead to the high costs of housing construction in Africa. The chapter emphasizes the need to consider the broader development objectives in the choice of solutions aimed at lowering construction costs, in order to increase housing affordability in Africa. Taking an industrial approach, using labor-intensive technologies including local technologies, improving efficiency and reducing waste, producing building materials locally, densifying, and increasing the availability of skills are viable avenues for reducing construction costs and increasing housing supply.
Highlights
Demand for affordable housing among low- and middle-income households across Africa is high and unmet
The World Bank’s 2015 Doing Business Report shows that obtaining a construction permit involves at least 10 steps in Namibia and 27 in Republic of Guinea. The time it takes to navigate all the steps varies from 77 days in Rwanda to 448 days in Zimbabwe, while the costs vary from 0.3 percent of the property value in Botswana to 30.8 percent of the value in Madagascar
The rise in local private-sector production of cement in various countries following the opening of the cement market confirms, at some extent, the observation that high imports as well as monopolistic behaviors contribute to high construction costs
Summary
Demand for affordable housing among low- and middle-income households across Africa is high and unmet. Fueled by the continent’s rapid urbanization rate and large housing deficits, this demand is projected to grow tremendously in the coming decades. This presents both a huge opportunity and a challenge for the construction industry. As formal housing built by real estate developers remains out of reach for the majority of households, self-built housing is the pre-. Lack of affordable serviced land, and difficulties in acquiring both an official land title and a construction permit result in the majority of homes being informal. This chapter analyzes the drivers of high construction costs in Africa and provides recommendations for lowering these costs and possible pathways for transforming the sector
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