SSA Countries have experienced stable economic growth averaging 7% over the past decade. In the context of relative high and stable economic growth, SSA Countries key challenge is to make its growth more inclusive, sustainable and able to reduce poverty and inequality. However, despite the rapid growth as measured by official statistics, direct indicators of social welfare for the broader population, such as poverty levels, have shown little improvement. Furthermore, the region is experiencing a relative higher employment crisis and poverty. Each year several people are estimated to enter the labor market, but only a few are able to find formal jobs . It is clear that globally reducing poverty and promoting equity through shared prosperity is important macro-economic objectives. The widening income gap between the rich and poor has highlighted the need to find alternative solutions and to construct suitable policies to reduce poverty and narrow the income gap. This important objective is actual within the Sub Saharan African (SSA) developing countries context where poverty and inequality are more important than in other part of the world.
Housing is a key component of urban development and poverty reduction. Improved housing is not only a desirable goal in its own right, but it can also contribute to economic growth, social development, improved governance and then poverty reduction. Housing construction and upgrading for example are major sources of employment, particularly for the unskilled poor. Additionally, failure to deal with housing issues can lead to the continued growth of slums and poorly serviced informal settlements on the urban periphery. Already, between 75% and 99% of urban residents in many SSA cities live in squalid slums of ramshackle housing. Housing is often the most important asset in a household’s portfolios. While housing is a durable consumption good, it is also an illiquid and risky equity investment for which realized or unrealized capital gains or losses affect the household’s financial portfolio; as an asset, housing can generate wealth effects. Updating earlier work, Case, Quigley and Shiller (2013) find large effects of housing wealth on household consumption in the United States during a 37-year period 1977–2012, an effect consistently larger than the wealth effect of stock ownership. Lustig and Van Nieuwerburgh (2004) find that housing collateral relieves household borrowing constraints and thus facilitates consumption risk sharing. Adelino, Schoar, and Severino (2013) show that, separate from these channels and aggregate demand effects, housing collateral also facilitates the creation of new businesses and self-employment in the United States. Home ownership may also affect portfolio choices through a wealth effect of home equity and a risk effect (since home ownership is a risky investment, which may lead to a reshuffling of a household’s financial assets). Evidence from the United States and France suggests that the relative importance of each effect may vary (Chetty and Szeidl 2012; Fougère and Poulhes 2012).
The efforts of SSA governments, international donors and banking and financial institutions have barely impacted the need for new and improved housing and for essential urban services, particularly for low and moderate income families like in other part of the world. Housing financial asset demand is generally higher than the supply. Most Africans continue to build housing incrementally through the unregulated informal sector as their financial circumstances permit. With the exception of South Africa, formal sector housing programs have mostly targeted middle and upper income families in SSA.
Unlocking the residential housing market through the development of the housing finance market can provide a wide range of income opportunities through the construction sector and related industries, as evidenced in Colombia and India. Research from Colombia indicates that 5 additional jobs are added for every US$10,000 spent on housing construction. In India, for each housing unit, 1.5 direct and 8 indirect jobs are created and in South Africa, 5.62 jobs for every housing unit, with a further 2.48 indirect jobs created. As a result of current urbanization trends Nigeria's housing demand is expanding rapidly. It is estimated that up to 700,000 house units in different market segments are needed annually to keep up with demand. Currently production is below 100,000, resulting in an overall accumulated deficit of approximately 17 million units, as of 2013. There are also many social benefits associated with improved housing and home-ownership, not least of which is giving homeowners a true stake in their community.
