Affordable Housing in Developing Countries - The UMES Experience in Ghana

ASC Proceedings of the 41st Annual Conference
University of Cincinnati - Cincinnati, Ohio
April 6 - 9, 2005

Affordable Housing in Developing Countries - The UMES Experience in Ghana

Joseph O. Arumala & Leon L. Copeland, Sr.

Department of Technology

University of Maryland Eastern Shore

Princess Anne, Maryland

The University of Maryland Eastern Shore (UMES) Ghana Construction and Development Project was originally proposed to plan, design, and manage the site development of 14.4 acres of land and the construction of 50 medium-priced homes in Pokuase, Ghana. Currently, the objective is the establishment of an Institute of Affordable Housing at Shai Hills, Ghana. This Institute will promote local building materials research, home mortgage lending opportunities, well-planned real estate development through research, education and advocacy, and the development of low-income durable housing with local materials and building techniques. This paper presents the outcome of an exploratory visit to Ghana by a team from the Construction Management Technology Program and the state of affordable housing in the West African Region.

Key Words: Affordable Housing, low-income durable housing, site development, building materials research, mortgage lending, feasibility plan, business plan

Introduction – Context of Program

A prominent Oncologist, Philanthropist and a native of Ghana donated 14.4 acres of land located at Pokuase, Ghana to University of Maryland Eastern Shore (UMES) to support the Construction Management Technology Program. In response to the gift, the UMES Construction Management Technology program developed a draft Strategic Plan to establish partnerships with local contractors (builders) to construct homes for sale to interested Ghanaians. The project will support the UMES Land Grant Mission and the Construction Management program’s outreach and create a challenging and exciting venture into the global educational and commercialization environment. The Donor also owns 13,000 acres of land in the Shai Hills area that he would like to partner with UMES and other investors to develop for agribusiness and real estate low cost affordable housing. To gain additional knowledge and collect data to strategically advance the planning for these projects, an exploratory visit to Ghana during the summer of 2003 was planned for the construction technology team members to:

Finalize the Strategic Plan for developing the 14.4 acres of land at Pokuase with real estate homes for sale. In addition to generating income to support the Construction Management Technology Endowment another focus was to enhance the intellectual and practical experience of faculty and students in the international construction industry.
Develop a Feasibility Plan for an economically viable and sustainable development project focused on low income and medium income durable housing at the Shai Hills site.

The visionary concept for the land at Shai Hills included an 8000 unit low cost durable housing development.

This paper presents the outcome of an exploratory visit to Ghana by a team from the Construction Management Technology Program and an overview of affordable housing in the West African Region. This paper will be of interest to all construction programs, entities and individuals that are interested in internationalization of their programs, study-abroad programs, the international construction industry and developing affordable durable housing in developing countries.

Global Trends in the Construction Industry

Continuing trends indicate that a large percentage of global construction dollars are expended overseas (Kay, 2001). Owing to the global nature of the world economy, many academic programs including construction programs are beginning to emphasize foreign language and other skills and adopt study-abroad programs that will help graduates in this economy (Kay, 2001, Kruger, 2004). Other skills and knowledge desirable for students to take advantage of international employment and study opportunities include equipment and construction practices, political climate, language and culture (Kiisk, 1998). As Kruger (Kruger, 2004) puts it “Alternative contractual delivery systems, collaborative partnerships, new management initiatives, and global product markets require students to have a broader awareness of construction methods and architectural issues.” Study-Abroad programs have been used effectively to teach these principles to students. The developing countries create special opportunities because current and future needs for rural and urban infrastructure are high (Bodapati and Kay, 1998). This project was scheduled to be implemented in Ghana, an English speaking country so language was no barrier. However, other factors pertaining to projects executed abroad apply. The project supports the UMES Land Grant Mission and the Construction Management program’s outreach and creates a challenging and exciting venture into the global educational and commercialization environment. This project would also create opportunities for our students to work overseas and be involved in the expanding international construction industry especially in the developing countries.

Findings

During the two-week visit in August 4-18, 2003, the following local and national stakeholders were visited and interviewed to gather data concerning building practices, real estate trends, potential constraints and opportunities. The Construction Technology Team visited with government officials including the President of Ghana’s Chief of Staff, the Deputy Minister of Works and Housing, local architects and engineers, real estate developers, local builders, materials suppliers, the Director of Habitat for Humanity Ghana, the Department Chair and Faculty of the Department of Building Construction Kwame Nkrumah University of Science and Technology, Accra Polytechnic, the Deputy Director of Building and Roads Research Institute and Financial and Mortgage institutions. The results and findings of these visits and interviews, along with printed materials collected, confirmed the acute need and high demand for affordable housing in the Greater Accra Region of Ghana.

An overview of the findings indicates that Ghana, like most developing countries, suffers from an acute shortage of decent accommodations for all types of uses; office, retail and especially housing. The inadequacy of residential accommodations cuts across the whole social strata. The situation is more acute in the urban areas of the country where the population growth is 4% compared to the national average of 3% per annum. The annual housing requirement is estimated at between 110,000 and 140,000 units but current production is only about 30,000 units per year (Government of Ghana, 2000). The most vulnerable groups are urban workers in need of rental accommodations and rural people whose homes are mostly constructed of sub-standard materials with little or no proper drainage and waste disposal systems. The constraints militating against the nation’s ability and capability to resolve the housing crisis are many. On the supply end, the factors include:

Lack of access to credit and mortgage loans
High cost of land for building
High cost of building materials and
Lack of regulatory and monitoring systems

On the demand side, the problem is basically affordability in light of the general low level of income of the people and high price inflation levels. The average Ghanaian worker is paid a minimum wage of $1.20 per hour which equals less than $2,500 per year. The average cost of a three bedroom home delivered by major developers is $40,000 which is much beyond the affordability of the average Ghanaian family. Most of the well-known housing developers are catering to the medium to high-income market that includes a large percentage of Ghanaians living abroad or who are returning home to live. The high cost of building materials is mainly due to the fact that most of the materials are imported from Europe and South Africa. Some commendable efforts have been made by local research groups and building companies to reduce this cost by developing building materials from locally available materials with a view to reducing the cost (B&FT News, 2003, The Ghanaian Times, 2003, BRRI-CSIR 2002). However, much still remains to be done to develop local building materials that will enable low-income persons to have access to affordable durable housing.

The team learned that government officials and others, including Habitat for Humanity Ghana, are targeting a selling price of approximately $10,000 as a standard definition of “low cost” or affordable housing”. The government is beginning to create an environment that would promote greater private sector participation in housing delivery particularly affordable housing for the low-income segment of the market. The Ministry of Works and Housing on behalf of the government is attempting to facilitate access to housing finance, serviced land, and cheaper supply of building materials which are largely imported (Government of Ghana, 2000).

Housing finance is now available to potential homeowners only through the Home Finance Company (HFC) and the Bank of Ghana which is just beginning to enter the home financing market. Mortgage terms require the homebuyer to pay one third of the cost as down payment and are charged 12% interest on the dollar loans and 33% on the CEDIS (CD), Ghanaian currency loan (Home Finance Company Ltd., 2003).

Strategic Plan – Professional Knowledge, Skills and Attitudes to be Developed

The knowledge, skills and attitudes to be developed are those needed to fully develop a real estate project in an international setting. These parameters of the program were embedded in the strategic plan. The highlights of the strategic plan are outlined below. It must be emphasized that the homes in this part of the project were designed on purpose to meet the needs of medium-income workers. The gift of the land was made for the specific purpose of benefiting the Construction Management Technology program. Therefore, the purpose of developing the land was to build houses that could be sold to medium-income workers at a profit. The thought here was that revenue generated from selling these homes would increase considerably the money available for the program well beyond the revenue from selling the land. A decision was made by the university that these homes should be developed for medium-income workers on the Pokuase land while the Shai Hills’ land should be developed for low-income workers. On this site (Shai Hills), it was proposed that local building materials should be used to build the homes and the proposed Institute for Affordable Housing would be located here and it would promote local building materials research.

Proposed Strategic Plan – Pokuase Site

Project Currency: US Dollars.
Obtain the boundary survey map and topographic map to form the base map for the project. Develop the Conceptual Land Plan which would determine the ultimate cost of the project. Draw access road, streets, water and power lines on the site map and sub-divide land into 50 (100’ x 100’) plots. About 20% of the land would be set aside for roads and amenities (play ground and tennis/basket ball courts) (Johnson, 2002).
Employ a Project Manager for the last three phases.
The Typical Housing Unit would comprise a three-bedroom house with a living room, a kitchen, and a bath. There would be an option of adding a one-car garage and a Boys Quarter complete with one bedroom, a bath and a kitchen.
Develop a typical plan and elevations for the 3-bedroom house and submit for approval.
Cement block would be the main material for the wall construction. The roof would be built with corrugated roofing sheets or corrugated brick tiles. Aluminum frames and louver blades will be used for the windows. Mosquito netting and burglary proofing would be provided on every window opening.
Estimate the total cost of construction including labor and materials of the approved plan.
The estimated total selling price of the houses at a cost of $60,000 per house would be $3M. The estimated total construction cost at an estimated cost of $40,000 per house was projected to be $2M.
Divide construction of building units into four phases. In Phase One, 5 housing units would be built; In Phase Two, 15 units; In Phase Three, 15 units; and In Phase 4, 15 units.
Build a model home to serve as a showpiece and offices.
Embark on second phase after all Phase One houses have been sold.
It was estimated that Phase One would take 4 months to complete. The 5 housing units in this phase should be built concurrently. The other phase construction periods should be 12 months each.
Secure the property by building a fence and installing a gate at the entrance (optional).
Marketing Strategy-Finances. Advertise the houses on the World Wide Web and particularly on the Internet news for Ghanaians abroad. Also, register the Construction Company with the Home Finance Company (HFC) Ltd. in Accra so that the houses can be recommended to prospective buyers by HFC.
Project Vehicle (optional).
Temporary Office prior to building model unit and storage.
Contract Documents prepared for the homebuyers. Attorney services would be required to draw up contracts.
Establish an Escrow Account.
Down payment Sum is $20, 000, one-third of estimated total cost for each housing unit.
Second payment of $25, 000 would be made when construction begins on the roof construction.
Third and final payment of $15, 000 to be made when the house is handed over to the buyer.
The development of a Business Plan.

The Business Plan would include cost and revenue projections adjusted for inflation in Ghana over the life of the project. A Microsoft Excel spread sheet for cash flow and budgeting will be utilized. Start up cost and funding, liability insurance and the establishment of the UMES affiliated Foundation were issues that have to be addressed before the project could move forward.

The Context of the Project - Major Issues In Real Estate Development In Ghana

The setting for this project is Accra, Ghana. Ghana is located in the West African Coast bordering the Gulf of Guinea between Cote d’Ivoire and Togo, see Figure 1. It has a tropical climate, a population of 20,757,032 and a total area of 239,460 square kilometers (CIA-The World Factbook-Ghana, 2004, Ghana: Its People and Politics, 2003).



Figure 1 The Map of Ghana



The major issues in real estate development in Ghana included:

	The land tenure system
	Marketing
	Mortgage or Home Ownership Financing
	High content of imported building materials with the attendant high cost of the materials.
	High cost of providing services, that is, roads, water and electricity since both road construction equipment and road surfacing materials are imported. The current trend of home ownership in Ghana points to the fact that 80% of houses built or bought are by Ghanaians abroad. This would be a market to tap into to sell the houses to be built in Pokuase. Figures 2 and 3 show typical construction in progress for high and medium income market in Ghana.


UMES Land, Pokuase

The Pokuase land is a rolling site with a relatively steep slope. At the high end, the land is 120 feet wide and at the bottom it is 590 feet long. Facing North, the land is 2205 feet long to the left and 1825feet to the right. It slopes from the north to the south, see attached plan, (Plate 1). The difference in elevation between the highest point and the lowest point is approximately 30 feet. The land presents special challenges for development because of its rolling topography. See Plate 1 and Figures 4 and 5 for some information on the land.
Access to the land from the paved trunk road is by an earth road which is currently under construction to upgrade it to a paved road.
The land is situated at Pokuase, in Greater Accra Region of the Republic of Ghana. It is located about 2.5 miles (4km) from Pokuase Town, when moving towards Nsawam section of the Accra- Kumasi trunk road. It is about 1.5 miles (2km) off the road. Pokuase is about 12.5 miles (20km) from Accra.
The land occupies a total of 14.4 acres (5,975 hectares), and slopes gently in a North East to South West direction. The vegetation is savanna grassland, interspersed with a few trees. The land is immediately adjacent to ACP (African Concrete Products) residential development, one of the best residential communities in Accra. A tarred road and electricity from ACP are close to the edge of the property.
A boundary survey map and a topographic map of the land were of first importance. These would form the base map that would be used for land planning purposes. The streets, walkways, and sub-division of the land into individual plots would be done after the base map had been developed.
Approximately 50 houses were proposed to be built on this land. Each house would comprise of 3-bedrooms, a living room, a kitchen and a bath.



Strategies/Methods

To achieve the goals of the project, the following strategies were planned:

Start-Up Cost Estimates

The items needed for the project start-up and their estimated costs were identified. These estimates were based on the fact that a model home would be built first. This construction period would allow time for the project to be showcased and for aggressive marketing of the houses. Items considered in this category included: cost of model house and furnishings, site preparation, site office and storage space, roads within development, land survey and site plan, building plans and cost estimates, marketing consultant, attorney fees, supervision and management.


Educational Collaboration Opportunities

The team met with representatives of the following institutions and the collaboration opportunities identified were as follows:
Kwame Nkrumah University of Science and Technology (KNUST), Kumasi, Department of Building Construction, Faculty of Environmental and Development Studies.

The Building Construction program at KNUST is a 4-year program leading to the Bachelor of Science in Building Technology (B.Sc. Building Technology). Areas identified for possible collaboration were: UMES could assist the department to procure and train faculty/students in the use of an industry estimating software like primavera, the development of low-income housing with local materials and building techniques. UMES could collaborate with faculty at KNUST to establish an Institute of Low Cost Housing in the proposed UMES Shai Hills Educational Center, and UMES could assist KNUST in securing a grant for faculty development. There was little faculty development activities in the Department of Building Construction at KNUST. UMES could help to expand this by securing a grant from an appropriate funding agency and to look into the possibility of collaborating on running a workshop to train local engineers, architects, contractors and masons on the best practices on the use of engineered bricks in the Ghana building industry.

Accra Polytechnic

There may be opportunities for collaboration with respect to the UMES effort to study, improve and implement low cost housing development methods with Accra Polytechnic.
c. National Youth Council Youth Leadership Training Institute (Afienya).

According to the Principal of the Institute, specific needs of the school were lack of adequate funding, facilities and staff. UMES could assist the Leadership Training Institute in sourcing funds to develop and expand its activities.

Students and Faculty involvement in the UMES Ghana Construction Project

The success of the project would depend largely on the level of supervision and oversight provided during the planning and implementation phases of the project. UMES would be required to commit a full-time faculty during the academic year (60-75% release time). Students and faculty would be exposed to many aspects of international business and construction practices. Students would participate in the site development of the land, including land use, establishing elevations and levels for the houses, roads and facilities; planning and design of the housing units; planning and scheduling of the construction process; estimating the cost of the houses and the total cost of the project. Peculiar business practices in Ghana would be highlighted. Arrangements for some of the students to visit and be involved in the construction project in Ghana if the logistics and cost can be worked out would be looked into. Faculty members would incorporate different parts of the project into the following courses: Soils in Construction, Construction Surveying, Site Development, Planning and Scheduling, Quantity Surveying, Estimating, Project Management and Construction Methods with special emphases on international business practices. The main constraints of involving Faculty and students in executing these activities in Ghana were the cost of travel to Ghana, accommodation cost, cost of meals and cost of local travel.

Marketing Plan and Business Strategies

A marketing plan and business strategies to plan, design, build and sell the houses were proposed. These included strategic, marketing and payment plans and contractual obligations between the home buyers and UMES.

Total Projected Budget and Estimated Revenue

The total projected budget for the project including start-up cost, cost of building the home units, streets/roads, an amenity center, site preparation, supervision and management and student and faculty involvement was calculated. The total Project Budget was about $2.6M. The estimated total revenue was about $3.0M. The estimated profit of $400,000 was just about the same as that of selling the land without any development done on it. To sell the land without further development will defeat the spirit and goal for which the gift was made. The non-monetary benefit to the University and the Construction Management Technology program would be many. This information including the strategic plan enabled the university administration to make an intelligent decision on whether the project was feasible or not. The overall cost, the difficulty in hiring a reliable local project manager, local issues of site security involving the storage of building materials on the construction site, the start-up cost, international risks, low earnings from the project, and also at that time, the university had no approved administrative structure in place to handle this type of project overseas led the university administration to consider the project as proposed not cost-effective. The university is currently looking at other options of developing the land. The university is however still very interested in further exploring the educational and research collaborations presented by the project. The university is committed to the establishment of an Affordable Housing Institute in Ghana and to further explore a low-cost housing initiative with Kwame Nkrumah University of Science and Technology (KNUST), and other potential partners such as other Ghanaian Universities, Accra Polytechnic, The Ministry of Works and Housing, Capital Alliance and private entities interested in affordable housing development in Ghana.

Shai Hills Land

The team also visited the land in Shai Hills. Eight thousand (8000) low-income houses have been earmarked to be built beginning at the boundary of the land on the Accra-Alao road. The following were the recommended steps to be undertaken:

The Business Plan/Strategic Plan should be developed for the construction of the affordable houses as soon as possible.
This Business Plan/Strategic Plan proposal should be submitted to Capital Alliance, a lending institution to seek private funding for low-interest mortgages and funding for construction and development.
Portions of the Habitat for Humanity Ghana model should be adapted for this project.
Pre-qualification and selection of prospective homebuyers should be undertaken in conjunction with employers.
The houses should be constructed with following specifications:

The plots would be 80 feet by 100 feet.

The houses would include one-bedroom (with the provision for expansion to two-bedroom), a kitchen and a bath.

The total cost of construction would not be more than $10,000.

Attempts should be made to use locally produced materials like bricks, compressed earth blocks, bamboo panels and other local materials for the houses in order to reduce cost.



The Uniqueness of the Project
There were many features that made the project unique. The real estate project was to be developed overseas with different culture, building code (Republic of Ghana, 1996), climate and construction practices. The business climate, the logistics of mobilizing and embarking on a construction activity in Ghana, issues of project management and construction posed unique challenges.


Project Evaluations and Perceptions

The uniqueness and challenges of this project provided great opportunities for all parties involved in it to revaluate their priorities and determine how best to execute it to the benefit of all. The project was certainly in-line with the mission of the university to internationalize some of its programs through the Office of International Programs. This project expedited the formation of the Hawk Corporation, a for-profit organization that will enable the university to handle the administrative and financial aspects of projects of this nature. The construction program had to look at the logistics of successfully running the project in Ghana, the impact of faculty and student involvement and address other issues like release time for the directors of the program.


Conclusion

The report of an exploratory visit to Ghana by a team from the University of Maryland Eastern Shore was presented in this paper. The objective of the visit was to prepare a feasibility plan for the development of a 14.4-acre piece of land in Pokuase, Ghana. During the two-week visit, the team visited and interviewed several local and national stakeholders in the building industry in Ghana including construction companies, government officials, architects, and institutions of higher learning to gather data concerning building practices, real estate trends, potential constraints and opportunities. An overview of the findings indicates that Ghana, like most developing countries, suffers from an acute shortage of decent accommodations for all types of uses; office, retail and especially housing. The feasibility study produced indicated that the project will not be cost-effective considering in particular the business risks involved in the proposal, the cost of faculty and student involvement and potential supervision and management problems inherent in projects of this nature. However, the university is still committed to the educational and research collaboration with institutions in Ghana and the establishment of an Institute of Affordable Housing at Shai Hills, Ghana. This Institute will promote local building materials research, home mortgage lending opportunities, well-planned real estate development through research, education and advocacy, and the development of low-income durable housing with local materials and building techniques.


Acknowledgements

The authors wish to thank the University of Maryland Eastern Shore’s Office of International Programs for providing the funds for the visit to Ghana and the Donor of the land for the generous gift of the land to the Construction Management Technology Program.


References

B&FT News (2003). Isopanel Brings Innovation into Construction, page 5, August 11-16, 2003, B&FT News.

Bodapati, S. N. and Kay, D. H., International Construction Employment: Challenges and Opportunities for Construction Graduates, ASC Proceedings of the 34^th Annual Conference, Central Connecticut State University, New Britian, Connecticut, April 15-18, 1998, pp 145-152.

BRRI-CSIR (2002). Commerbrief-highlighting (Building and Road Research Institute) BRRI-(Council for Scientific and Industrial Research) CSIR Commercial Activities, Vol. 2 No. 2, Dec. 2002.

CIA-The World Fact Book-Ghana at http://www.cia.gov/cia/publications/factbook/geos/gh/html.

Ghana: Its People and Politics (2003), C-SPAN Abroad Videotape 177954 Part 1 of 1, Date 09/02/2003 Length 2:32.

Government of Ghana (2000), Ministry of Works and Housing, Sector Handout, January 2000.

Home Finance Company Ltd. (2003) – Home Purchase Mortgage.

Johnson, D. E. (2002) ‘Residential Land Development” 2^nd edition, ASCE Press, 2002.

Kay, D. H., “A Survey of the Foreign Language Preparedness of Construction Students”, ASC International Proceedings of the 37^th Annual Conference, University of Denver, Denver, Colorado, April 4-7, 2001, pp 21-29.

Kiisk, L. M., “Cultural Shock: Preparing Students for Globalization of the Construction Industry”, ASC Proceedings of the 34^th Annual Conference, Central Connecticut State University, New Britain, Connecticut, April 15-18, 1998, pp 281-290.

Kramer S. W., “The Evolution of a Faculty-Led Study Abroad Class for Construction Management Students” ASC Proceedings of the 40th Annual Conference Brigham Young University - Provo, Utah April 8 - 10, 2004.

Republic of Ghana (1996), National Building Regulations, 1996, L.I. 1630.

The Ghanaian Times (2003). “Bamboo to Save the Timber Industry”, page 15, The Ghanaian Times, Monday August 18, 2003.

Figure 4: Road Leading to Pokuase Land

	The plots would be 80 feet by 100 feet.
	The houses would include one-bedroom (with the provision for expansion to two-bedroom), a kitchen and a bath.
	The total cost of construction would not be more than $10,000.
	Attempts should be made to use locally produced materials like bricks, compressed earth blocks, bamboo panels and other local materials for the houses in order to reduce cost.