By Evans Essienyi, AHI West Africa Associate
Last week I asked the question: Is the ‘clean and clear title’ and freehold as understood in the global North truly a prerequisite for a good affordable housing ecosystem? And what are the ways in which more complex forms of tenure can be developed and financed?
NO. Neither a freehold nor a clean and clear title is a necessary requisite for a good affordable housing ecosystem. In my view, the two components of the affordable housing ecosystem – microloan for incremental building and large scale investment by developers in affordable housing is not impeded in any way by the absence of freehold or a clean title.
Microloans for households for incremental building do not require the land as security for the loan. Micro lenders employ strategies such as regular visits, site inspection, and group lending to secure their loans. This means loans can be made to low-income people for home improvements and new constructions in the face of communal land ownership with minimal risk to the lender.
Investments in large scale developments are not subject to increased risks as a result of communal land ownership. In most Sub-saharan countries, long term leases for large tracts of land for development can be obtained for 99 years; this about twice the life span of most housing projects. The 99-year leases are also renewable.
Also, large scale affordable housing developers can negotiate Joint Venture (JV) partnerships with communal land owners for the land to serve as a contribution from the land owners in return for an equity stake in housing development. This arrangement has the potential of increasing the success and sustainability of the housing project.
It is clear that a clean and clear title is not a necessary requisite for a good affordable housing ecosystem in the global south.
Evans Essienyi is a building technologist and real estate developer experienced in structuring low income housing projects, designing affordable houses, financing options and project development in developing countries, especially Ghana. In the USA, he was elected a Legatum Fellow at MIT, dedicated to creating innovative, sustainable, for-profit enterprises that promote prosperity in low-income countries.