Wealth in Africa: Home ownership looming crisis
By Emmanuel Allottey
Africa has been subjected to many misconceptions about wealth and prosperity. An infamous misconception is that Africans live on trees, however misconceived these assumptions are there is some hidden truth behind it. Home ownership in Africa is the lowest across all the continents in the world.
Land and property rights and the systems to protect and nurture its growth is at infancy stages in many nations in Africa, a disappointing feat that buttresses misconceptions about the continent. Today’s youth are growing up faced with the harsh reality of the true cost of home ownership in Africa as they work towards growing their personal wealth.
Property ownership is the most significant measure of wealth accumulation. Africa’s youth face an uphill battle to wealth and property accumulation with higher rates of unemployment, underemployment and limited economic opportunity. Africa has the largest concentration of young people in the world at 200million and this number is forecasted to increase 42% by 2030, according to the United Nations report. The rapid growth in population will place a demand on the property market creating a further gap of housing deficits across many African nations.
UN Habitat estimates that by 2030, sub Saharan Africa will have more people living in urban than rural areas. Rural to Urban migration, a common plight facing African nations is a contributing factor to increased demand for houses. Rapid population increase in cities leads to shortage of housing and inflates the prices of property leading to further unaffordability.
This cycle can be addressed by deliberate action by governments to increase the supply of affordable housing. The International Finance Corporation (IFC) and Chinese multinational construction and engineering company, CITIC Construction have launched a $300 million investment platform, CITICC (Africa) Holding Limited, to develop affordable housing in multiple African countries. The platform will partner with local housing developers and provide long-term capital to develop 30,000 homes over next five years.
African governments have identified this looming housing crises and have introduced housing schemes and programmes to support first time home ownership. Some initiatives include waiving transfer duty tax for first time buyers, providing housing subsidy for homeowners with earnings in a certain income bracket, others include providing affordable accommodation targeted to the youth within a certain age group. These initiatives require support from all stakeholders including Financial Institutions, Property developers to improve affordability and wealth accumulation in Africa.