Magisterarbeit, 2020
87 Seiten, Note: 1
Contents pages
Acknowledgement
Acronyms
List of tables
List of figures
ABSTRACT
CHAPTER ONE:
1. INTRODUCTION
1.1. Background of The Study
1.2. Statement of The Problem
1.3. Research Questions of The Study
1.4. Objectives of the Study
1.4.1. General Objective
1.4.2. Specific Objectives
1.5. Scope /Delimitation of The Study
1.6. Significance of The Study
1.7. Limitation of The Study
1.8. Organization of The Study
1.9. Definition of Important Terms
CHAPTER TWO
2. REVIEW Of RELATED LITERATURE
Introduction
2.1. Theoretical Literature Review
2.1.1. Housing Concept and Definition
2.1.2. Urban Housing Supply in the Developing world.
2.1.3. Urban Housing Supply for Low income Groups.
2.1.4. Urbanization and urban housing in Ethiopia
2.1.5. Housing Affordability
2.1.6. Urban Housing Policies in Ethiopia
2.1.6.1. Housing Policies implemented in Pre 1991
2.1.6.2. Housing Policies implemented in Post 1991
2.1.7. Integrated Housing Development Program in Addis Ababa
2.1.8. Challenges of Condominium Houses
2.2. Empirical Literature Review
2.2.1. The Housing Problem in Addis Ababa
2.2.2. Urban Housing Problems and Their Root Causes.
CHAPTER THREE
3. METHODOLOGY
3.1. Descriptions of the Study Area:
3.2. Gelan project site:
3.3. Study Design:
3.4. Data sources and Collection Method:
3.5. Sampling Frame and Method:
3.6. Sample Size Determination:
3.7. Data Analysis and Interpretation Method:
CHAPTER FOUR
4. DATA PRESENTATION, ANALYSIS AND INTERPRETATION
Introduction
4.1. Background Information of The Households
4.1.1. Demographic characteristics of the Households
4.2. Assessing the Affordability of Condominium Houses:
4.2.1. Monthly Income of the households
4.2.2. Employment Status of the households
4.2.3. Monthly Expenditure of The Respondents:
4.2.4. Monthly saving of the households
4.2.5. Mode of Owning the House and Payment Modality of Winners
4.2.6. Payment capacity of the respondents
4.2.7. Source of Finance of respondents for the Down Payment
4.2.8. Reasons for not Taking Loan from Banks by the Winners
4.2.9. Affordability of housing cost
4.3. Perception of respondents on external factors:
4.4. Different opinion toward the affordability of condominium house
CHAPTER FIVE
5. CONCLUSION AND RECOMMENDATION
5.1. Conclusion
5.2 Recommendation
References
APPENDICES
AACA - Addis Ababa City Administration
AAHCPO - Addis Ababa Housing Construction Project Office
AAIHD - Addis Ababa Integrated Housing Development
AACBFED - Addis Ababa Bureau of Finance and Economy Development
CAHF - Center for Affordable Housing Finance in Africa
CSA - Central Statics Authority of Ethiopia
EPRDF - Ethiopian People’s Revolutionary Democratic Front
FDRE - Federal Democratic Republic of Ethiopia
GAAIHDP- Grand Addis Ababa Integrated Housing Development Program
GTZ - German Technical Cooperation/ Deutsche Gesellschaft fur Technische Zusammenarbeit/
IHDP - Integrated Housing Development Program
IHDPAA- Integrated Housing Development Program of Addis Ababa
MDGs - Millennium Development Goals
MSEs - Micro and Small Enterprises
MUDHC- Ministry of Urban Development, Housing and Contribution
MWUD - Ministry of Work and Urban Development
NGOs - Non-Governmental Organizations
SPSS - Statistical package for Social Sciences
UN - United Nations
UN - HABITAT- United Nations Human Settlements Programme
WHO - World Health Organisation
Table 3.1: Distribution of sample frame population and sample sizes
Table 4.1. Rate of Responses by Respondents
Table 4.2. Sex and Age Composition of the Households
Table 4.3: House owners and sex of respondents
Table 4.4: Monthly Income of Respondents
Table 4.5: Classification of income groups by AACA for condominium purpose
Table 4.6: Summary of average monthly income, expenditure and savings of household head respondents (condominium unit owners and non condominium unit owners)
Table.4.7: Monthly expenditure categories of House hold respondents
Table 4.8: Monthly Income of Respondent * saving amount in % Crosstabulation
Table.4.9: Regular payment * monthly payment for bank debt Crosstabulation
Table 4.10: Condominium housing price for the year of 2018
Table 4.11: Affordability of Housing cost
Table 4.12: Summery of Frequency Distribution - Overall variables
Figure 3.1: The Map of Addis Ababa city Administration
Figure 4.1: Marital status Vs Household size
Figure 4.2: Educational Status of households in Sex
Figure 4.3: Income Group of Households
Figure 4.4: The Monthly Income of Condominium Unit Owners
Figure 4.5: The income level of condominium unit owner’s vs None condominium unit owner’s household
Figure 4.6: Unit Owners households Income level and their housing unit type
Figure 4.7: Employment status of households
Figure 4.8: Mode of owning the house and payment modality of winners
Figure 4.9: Source of Finance of respondents for the Down Payment
Figure 4.10: Reasons for failing to take loan from Banks
This study has been conducted in Addis Ababa city of Akaki Kality sub city administration, Gelan condominium site with the general objective of assessing condominium houses affordability. It also attempted to identify the factors which affected the low income households for affording the condominium house and as well as to assess whether the condominium housing project benefits this targeted groups. Among other condominium sites Gelan site was chosen purposively. The study used mixing qualitative and quantitative methods and used primary and secondary data sources. To select the target population a researcher used simple random and purposive sampling technique. The required information collected from one 194 households living in studio and one bed room and analyzed using descriptive statistics and SPSS 20.6 version. The data generated to meet these objectives were collected via household survey, in-depth interviews and by reviewing different secondary documents.
The study found that, majority of the residents of the condominium in the study area can afford the cost of condominium house because they were getting high income per month. However, the households with low income could not afford the price of condominium house. Furthermore, in the study area, condominium housing beneficiaries were not those who were classified as low and middle income categories rather households with higher income categories were benefited more. Majority of the housing units are owned by non targeted groups. The study also showed that, the intended objectives of condominium housing programs to provide 30 percent of the housing unit for female headed households has been well applied in to the study area. Additionally, the study revealed that, external factors such as poor investigation of the real problems on the ground, weak institutional evaluation and monitoring system of the program, the unparticipatory of the program and corruption practices was the main challenging factors that affects the households to benefited from the program.
Based on the finding the researcher suggests the following to minimize the current problems of housing in the city through, giving special attention to control rural to urban migration, facilitating a comprehensive national housing policy by providing different subsidy mechanisms, establishing governmental housing banks that particularly work on the provision of low cost houses, encouraging the saving culture of the society, expanding the construction of rented houses, legislating and enforcing laws on the price of condo houses and increasing the participation of the city’s residents on evaluation of the program.
Key words: Gelan, Affordability, Condominium, Low income, Housing, Households
At first glance, it might seem unusual that a subject, such as housing would constitute an issue of human rights. However, a closer look at international and national laws, as well as at the significance of a secure place to live in human dignity, physical and mental health and overall quality of life, begin to reveal some of the human rights implications of housing. Adequate housing is universally viewed as one of the most basic human needs. From this fact, international human rights law recognized that everyone has the right to an adequate standard of living, including adequate housing on the Universal Declaration of Human Rights and of the International Covenant on Economic, Social and Cultural Rights also declares the same right (UN-HABITAT, 2011).
Though, The African Commission on Human and Peoples’ Rights charter makes no specific mention of the right to adequate housing. Additionally, on the 1995 Constitution of the Federal Democratic Republic of Ethiopia (FDRE), the right to housing has not been expressed clearly. However, the right can be derived from the provision of article 41 of the constitution. While it imposes the obligation to allocate ever-increasing resources to provide social services, which include housing services, it gives the right to equal access to such services to every Ethiopian nation on article 90.
More or less, different laws recognize that housing is one of the most essential material needs of humankind. Despite the law, the need for housing is not balanced with its supply in developing countries. The problem is in worse condition due to high growth of rural-urban migration and natural increase at an enormous scale-resulting in overcrowding, squalor and life-threatening in a sanitary condition. As a result, in developing countries of the world, governments attempt to reduce or eliminate the imbalance either by intervening in parts of the housing market or by remedying the weaknesses of existing policies or both (Tesfamariam, 2010).
While many recent articles begin by recounting the fact that over half of the world’s people now reside in cities, the increase in the absolute number of people now living in cities is the more worsening the imbalance between needs and supply. In 1900, 220 million people lived in cities. By 2000, this number had increased tenfold to 2.84 billion and currently, around 54 % (more than half the world's population) resides in urban areas. In 2010, as many as 980 million urban households lacked decent housing, as will another 600 million between 2010 and 2030 (UN-HABITAT, 2016). Thus, according to UN-Habitat 2016, report one billion new homes are needed worldwide by 2025.
The majority of future growth is expected to occur in cities in Asia and Africa. The United Nations states that by 2030, seven of every ten urban residents will be living in either Asia or Africa (UN-HABITAT, 2016). The World Bank as well estimates that by 2030, three billion people, or 40 percent of the world’s population will need new housing units (World Bank, Stocktaking of the housing sector in sub saharan Africa, 2015). In addition to this, the UN figures show that only 13% of the world’s cities have affordable housing (World Bank, Stocktaking of the housing sector in sub saharan Africa, 2015).
According to Habitat for Humanity survey in 2015, it also estimated that 1.6 billion people live in inadequate housing while 150 million people were homeless worldwide and half of the population of the world, particularly in the cities of developing countries live in an informal settlement (UN-Habitat, 2015). Therefore, the imbalance of need and supply of housing is a global phenomenon. Especially, in the Sub- Saharan region of the continent, due to cities urban poverty, rapid population growth, and inappropriate (or inadequate) institutional arrangements and lack of public infrastructure the urban transition will have profound and long-lasting negative impacts on the lives of a large percentage of the population. Then, states of the region designed different urban programs to expand affordable housing for low and middle-income residents and to provide useful social, economic, and spatial insights in the cities of the region (Larissa Larsen, 2019).
Africa is rapidly urbanizing and will lead the world’s urban growth in the coming decades with a current population of 1.186 billion is expected to reach 1.679 billion (16 percent of world total) by 2030, assuming a growth rate of between 2 percent and 2.5 percent. About 55 percent of Africa's population is expected to reside in urban areas by 2050, with urban dwellers increasing from 471 million in 2015 to about 1.34 billion in 2050 and by about 2035, Africa will be majority urban with over 50 percent of its population living in urban areas (UN-HABITAT, 2016).
Currently, Africa is the least‐urbanized continent, accommodating 11.3 percent of the world's urban population, and the Sub‐Saharan region is the continent's least‐urbanized area. Sub-Saharan Africa is experiencing rapid urbanization as well as a growing slum population. According to the UN-Habitat report (2014), 1.2 billion urban residents expected by 2050 with an urbanization rate of 58 percent and 4.5 million new residents in informal settlements each year in the region. Many households cannot afford basic formal housing or access mortgage loans (World Bank, Stocktaking of the housing sector in sub saharan Africa, 2015).
According to world bank report (2015), African cities become the new home to over 40,000 people every day, many of whom find themselves without a roof over their heads. This implies that how much the problem is threatening urban residents in the continent as well as the region.
Ethiopia is one of the fastest-growing economies in the world where cities and towns are also growing along with the economy. According to Ministry of urban development, housing and construction (MUDHC) in 2014, the economic growth of cities and towns intensifies migration from rural-to-urban areas and causes an increasing concentration of people in urban areas. All these contribute to the increasing number of homeless families and mismatch between the increasing urban population demand-and the supply of housing (Ministry of Urban Development housing and Construction, 2014).
Currently, based on the latest United Nations projections, in 2019 Ethiopia’s population is about 113,241,524 out of which 20.9 % (23,376,340) of the population are living in urban areas (United Nations Department of Economic and Social Affairs Population Division, 2019).
Although Ethiopia was considered one of the least urbanized countries on the continent, this has been rapidly changing. According to the Central Statistics Agency (CSA) in 2013,the rate of urbanization, which was 5.8 percent between 2007 and 2012 is estimated to be 5.1 percent in the period between 2012 and 2037 (World Bank, 2015). These growth rates mean that the country will move from an urbanization rate of 20.4 percent to 22 percent recorded in 2017 to a projected 38 percent by 2037 (World Bank, 2019). Most of Ethiopian cities are characterized by little formal planning, poorly networked road and widespread informal housing. Moreover, growing population and rapid rate of urbanisation continues to put extensive pressure on housing supply and needs, especially among the poor.
An estimated 1.2 million housing backlog exists in the country with a projected demand of 655800 housing units during 2015-2025, far exceeding the estimated annual supply of housing of about 165000 units nationwide between 2007/2008 and 2013/2014 (World Bank, 2019). The figures show, attempts made by government to satisfy the needs of urban population through supplying affordable houses is still path in the unsatisfactory level.
However, a study conducted in the country’s 27 cities in 2014, showed that the integrated housing development Programme (IHDP) supplied the most houses (52 percent) followed by informal house building (31 percent), individual self-built housing (2.5 percent), real estate (0.3 percent) and municipalities (0.3 percent) (Mandefro, 2019).
As far as the government’s Integrated Housing Development Program (IHDP) makes the biggest contribution to the housing stock in the country, followed by houses privately built informally or formally by individuals and finally the real estate sector is in its infancy and contributes little for housing stock. Hence, the IHDP condominium scheme is now the dominant government-initiated housing programme in the country’s urban area.
More than 383,000 condominium units have been constructed and distributed under integrated housing development Programme (IHDP) between 2004 and 2018. Most of these units have been constructed in Addis Ababa (314,000) with the rest being constructed in other major cities (69, 000). Of these, units, over 245,000 have been transferred to the beneficiaries; the number of integrated housing development Programme households is estimated at 182,000 in Addis Ababa and 62,300 in other cities (Korean Konkuk University and HESPI, 2017/18).
Most of the existing housing stock is of low quality. Approximately 72 percent of households in large cities live in dwellings constructed out of 'Wood and Mud' (Chikka), while about a quarter of households live in housing constructed out of 'Cement or Stone’ (World Bank, 2019). More or less, the households living in such informal houses do not have access to basic social services. On the other side, in most urban centers the rental houses owned by the government and rented to residents with a comparatively low fee meet a large demand of the households.
The government is building 1,700 rental houses in Addis Ababa alone while similar initiatives are either being considered or already underway in other regions. Recently, the government has increased the price of rental houses for businesses by up to 1,500 percent in Addis Ababa (Mandefro, 2019). The government justified this move as a way of creating a competitive environment between businesses that rent government houses versus those who work from houses rented by private owners. Private sector real estate developers have so far played a limited role in the housing sector as stated earlier which contributes less than 0.3 percent.
Ethiopia's growing population and rapid rate of urbanization continue to put substantial pressure on housing, especially among the poor. Low income households face two main barriers to owning homes. One is the shortage of house supply from the government and private sectors and the second one is the incapability of the households to afford for the house. Based on this fact, the unmet housing demand is estimated at approximately 1.2 million (Ibid).
As a result, years before the government of Ethiopia takes many measures to overcome this chronic housing problem throughout the country by designing and implementing the condominium house project in cities and towns that aimed to provide and transfer 30 percent of the condominium house to females and 60 percent to the low and middle-income groups as to the socioeconomic objective of the project (UN-HABITAT, 2011).
The integrated housing development Programme (IHDP) in Ethiopia was proposed with the intended objectives to reduce urban poverty through job creation, enhance/develop saving culture, enhance the capacity of the construction industry, renew/upgrade slum areas, ensure proper handling of urban land-based on plan and to ensure fair wealth creation and distribution to the low and middle-income residents (Housing for low-income households and ensuring security).
Yet, the housing supply and its affordability are a critical problem for the country’s urban area due to many factors. Particularly in Addis Ababa city, the shortage of housing is increasing at an enormous rate due to the large no of migration for searching a better life in urban areas.
Studies like ‘Assessment of Condominium Housing towards Fitness to the Intended Purpose’ (Tesfamariam, 2010), ‘An Assessment of Urban Housing Supply and Affordability in Jimma town: With Special Reference To Condominium Housing’ (Gudeta, 2010), ‘Assessment Of Integrated Housing Development Program In Addis Ababa: Housing Distribution And Employment Creation’ (Hussen, 2010),‘Assessment on the Performance of Integrated House Development Program with Particular Reference to the Program's Objectives’ (Merkabu, 2014), ‘Assessment of Affordability and Living Condition of Condominium Housing’ (Getachew, 2016), The Effect of Integrated Housing Development Program on Housing Ownership of Lower-Income Groups: The Case of Dire Dawa (Leta, 2016), The Integrated Housing Development Program: Identifying Strengths and Gaps (Abraham, 2017),The Performance Of Condominium Housing Program In Jimma Town (Fesseha, 2017), The Assessment Of 20/80 Condominium Housing Projects Performance In Addis Ababa: The Case Of Akaki-Kalitti Sub City’ (Lemma, 2018) that have been conducted so far on integrated housing development program(IHDP) in reference to condominium housing revealed that the implementation process of the program has faced major challenges. Accordingly, the researcher categorizes the assessed challenges under two areas.
A. Challenges related to Policy:
Highly-centralized policy-making and program design approach, often program design doesn’t involve target beneficiary groups, poor planning of the project, targeted peoples were not well informed about the process, advantages and costs of the condominium houses are among the major policy related challenges.
B. Challenges related to implementing the program:
Lack of institutional capacity to effectively implement the program, lack of leadership quality, lack of technical profession and experience, insufficient coordination and communication among the project stakeholders, lack of program evaluation as a learning tool to improve service delivery, lack of qualified contractors and well trained man power in the constructional sector, lack of commitment to confirm construction work according to specification and design, untimely completion of the project works, high inflation of constructional materials and transportation cost, construction mistakes and defective works, weak transparency and accountability practices during the construction period, most of the houses are occupied and rented by non-targeted group, most of the houses are transferred to people who are not from the area, and corrupt practices were identified as major factors that inhibited the effective implementation of the program.
As a result, the achievement of condominium housing program is not yet successful and not benefitted the targeted urban poor’s mainly due to affordability issue. Since, the challenges are likely to happen in the researcher’s study area and as program has long term and lasting impact on the quality of life, socio-economic, environmental and spatial dimensions of the residents and physical spaces the researcher will be initiated to do this study.
The second reason that inspired the researcher to conduct this study is due to the fact that the little attention is given to solve the affordability challenges in order improve the effectiveness of the program by satisfying the needs of urban poor’s. Although, identifying the major challenges related to household capability to afford for the house has great contribution to the Akaki Kality sub city administration particularly and city’s housing development and administration agency as well.
As far as the researcher’s knowledge is concerned, the researcher could not access any research which is conducted on this topic with in this particular study area was also the other factor that made the researcher to conduct this study. Therefore, if this study will be conducted on this topic, it will be used as source of identifying problems of condominium house affordability and can be used as an important reference in order to improve the effectiveness of the program.
The housing problem is one of the most challenging aspects of the urbanization process predominantly in the developing world as a result of rapid population growth due to immigration and natural growth. A growing density of population in developing urban areas has resulted in a continuously rising demand for house, but the provision of new housing for these peoples are dramatically shows insignificant change. The gap between supply and demand has resulted in problems of housing affordability, with rising prices, creating particular pressure for the first time buyers (UN-HABITAT, 2016). Housing in Ethiopia is not considered as a shelter only, but as an asset, means of social security and indicator of social status (Yewoineshet, 2007). This is not the fact that was reflected only in Ethiopia. Housing is the multidimensional indicator of the society in the most developing world.
In Ethiopia housing problem is seriously felt in many urban centers. As a result, efforts have been made by the government to enable interested and capable individuals construct their dwelling units through the provision of free plots of land, credit facilities and technical services, opening the way for the real estate development, etc. Alternatively, the recent emerging strategy is the provision of a condominium housing program that was launched under the Integrated Housing Development Program (IHDP), which was initiated by the Ministry of Works and Urban Development in 2005 (UN-HABITAT, 2011)
Following the introduction of this program at national level, the Addis Ababa City Government in 2004 launched a strategic plan which was named ‘Grand Addis Ababa Housing Development Program (GAAIHDP) with multi-sector goals of providing integrated, affordable and low-cost housing, empowering urban residents through property ownership, job creation and income generation, improvement of the quality of the urban environment, infrastructure development, and urban renewal.
The function of housing is the most important economic resource to Addis Ababa residents than any other urban cities of our country. The main point is to investigate the government policy in providing adequate and affordable housing in line with the low and middle-income people of Addis Ababa which is promised in its objective at the Integrated Housing Development Program (IHDP), as stated in (Lemma, 2018). The IHDP set that the city ‘s current housing project has a goal of constructing 400,000 condominium units between 2010 and 2015. However, the program has not met its original targets it has built 171,000 housing units to date which implies that the projects of condominium housing failed by more than 50 percent. Therefore, how to ensure adequate supply and access to decent housing at affordable cost to all households is a big problem in Addis Ababa city.
Addis Ababa housing construction project office (AAHCPO) is one of the organs established to construct and transfer condominium houses for city inhabitants. According to the project office report in 2016, in the last two registration programs 2005 and 2013, about 974,835 residents registered for the condominium houses, within 12 years only 176,065.00 houses are constructed and transferred to beneficiaries in over 100 sites throughout the city (Mekonnen, 2017, p. 2). An additional 132,000 housing units are currently under construction. The program has produced 370,000 jobs, thus surpassing its original employment goal of 200,000 (Larissa Larsen, 2019)
The shortage of housing is increasing due to the uneven rise of housing demand in the city. According to a recent survey of the office long time and much effort must be needed to fulfill the needs of the city’s residents those registered for condo houses. As stated on Addis Zemen News Letter cited in Mekonnen (2017), 55 years will be required to access the condominium houses for all the registered dwells. Consequently, there is fear of not achieving the integrated housing development Programme (IHDP) goal that targets low and middle-income inhabitants. The main tailback on the success of the program is matter of affordability which is related with the capacity of the residents to afford for cost of the house. Especially the cost of the condominium houses that transferred to beneficiary in different round not considered the capacity of target group (Mekonnen, 2017).
Furthermore, there is the pressure on housing demand due to very rapid population growth in Addis Ababa city. The housing development pace is not so fast to contain this huge number of populations. According to Wondwesen cited in Getachew (2016), since most of the residents of Addis Ababa have low and irregular income; houses both from the government and the private real estate developers are not affordable to the low income group of the population. Because of this a large number of households are forced to live in private rental houses and kebele houses (Getachew, 2016). Therefore, the lives and health of households living in housing of such poor quality and with such inadequate provision for water, sanitation, and drainage are under continuous threat. Thus, this study mainly focuses to assess condominium houses affordability by identifying the factors that hinder the households to afford for the house, factors that affects the low and middle income peoples to benefited from the program and listing out the possible recommendations that helps as input for the best performance of the program in the study area to solve the problem of the households at some level.
Among the studies conducted towards condominium housing program aspect and related issues listed above, majority of them revealed that the affordability issue is the major challenging agenda to meet the intended target of the program. Thus, beneficiaries of the program were relatively high-income groups of the cities/town residents who have previously better housing units than the lower and middle-income groups. Supporting this, the report documents from the project site have witnessed the selected study area is falling under similar problems (Akaki kality sub city adiministration housing and development office, 2019).
Additionally, the researcher is the resident of this condo site and he had some information about the actual problem related to condominium houses affordability and saw frequently when residents of the condominium house arguing about it. Particularly, their strong argument was the condominium housing program was designed for low and middle income earners but, the fact on the ground is reverse. They assume that higher income peoples are more beneficiary in their condominium site due to their capacity to afford. This opportunity will help the researcher to assess easily the housing affordability of the study area. Further, it also helps to gather data through being familiar with the resident’s ethical issues.
More or less from its beginning up to now the program has passed under serious problems. However, identifying the existing challenges and putting possible solution helps for the successful achievement of the program is highly needed from each stakeholder.
Therefore, conducting an assessment on the household’s capability to afford for condominium house along with identifying the magnitude of the above mentioned problems and other drawback is the focus of the study. Thus, in order to recommend alternative solution, the study focuses on addressing the following basic research questions.
1. Can the residents/households of condominium/ of the study area afford the condominium houses?
2. Has the Gelan condominium site benefits the low and middle income households?
3. What are other challenging factors influence the low and middle income households to be beneficiary from Programme in the study area?
The overall objective of the study is to assess the condominium houses affordability: In the Gelan condominium site of Akaki Kality sub-city administration.
The specific objectives of this study are:
1. To assess the household capability to afford for condominium houses;
2. To assess how much the site has benefited the low and middle income households;
3. To identify other challenging factors that affect the low and middle income households to be benefited from the program.
Geographically, the study is limited to Akaki Kality sub-city administration, particularly only on the Gelan condominium site. Even though the construction of condominium housing projects has applied to the ten sub-cities (more than 18 project sites) of Addis Ababa, due to constraints of finance, time and the researcher's ability, the study was bound on Akaki Kality sub-city administration, Gelan project site. This project site is purposively selected because there is no study conducted before to assess the achievement of the condominium house affordability. Since the site is the third largest site among other sites in the sub-city it was useful to get a wide range variety of respondents which increases the degree confidence of the study. The study was bounded only on the affordability issues of the condominium house in the site. Thus, it is restricted to the site for analysis of an issue that focuses on the stated objectives of the program.
This study was providing relevant information to the city's housing construction project office officials working at a different administrative level, which will help them to think over the problem and find out alternative solutions. And also, the study was providing helpful recommendations based on findings that can assist the local administrators in putting their own appropriate decision to fix the current real problems of housing affordability for low-income residents of the city’s in general and study area in particular. Besides, it was also creating awareness for policymakers, stakeholders and others who are interested in knowing the actual problem and challenges of the study area.
Generally, it was helping the federal government to evaluate the effectiveness of the project and also helps as a road map for the plan of condominium construction in the town. Finally, the study was used as a springboard for other different researchers to undertake further study on the issue.
The study was faced major limitations related to data gathering. Getting reliable data was difficult due different multiple personal reasons and unwillingness of respondents to participate in filling questionnaires, and giving interview.
Despite the limitations the researcher was try to solve through clarifying the intention and significance of the study to the researcher, respondents, local officials and community in the study area. Involving some respondents from the study area to participate in gathering data and selecting various data gathering tools to measure the reliability of data from different sources are also another alternative mechanism that was used as a solution.
The research population was too large to cover in the limited time given and thus proportional sampling was taken as a solution that may have an impact on the general output of the study. Additionally, the concerned officials and employees who are helpful in this study was reserved themselves to cooperate with this study due to their personal issues and lack of time.
This was alleviated through creating awareness on the purpose of the study and arranging free time out of the office hours and using efficiently the primary and secondary data sources to reduce the situation that was cause delayed responses that affect the research schedule.
As always observed on government offices, the unavailability of well documented and organized secondary data was also another limitation. This was solved by referring various types of secondary data sources. Finally, the researcher was facing some technical limitations and knowledge gap on research methodology and data analyzing and interpretation part. However, through making continuous consultation with advisor; the researcher was filled each gap to reduce the negative effects of these limitations on the study.
The research was consisting of five chapters. The first chapter outlines the introduction part that includes background of the study, a statement of the problem, objectives of the study, research questions, scope/delimitation of the study, the significance of the study and organization of the study. The second chapter deals with the review literature on condominium houses affordability and related issues through presenting and discussing theoretical framework and empirical literature. The third chapter emphasizes the methodology part of the study such as study design, sources of data, sampling method, method of data collection and method of data presentation and analysis of the study. The fourth chapter focuses on the data presentation, analysis and interpretation of the findings. Finally, chapter five reveals the conclusion and recommendation part of the study.
Definitions of important terms that would be utilized in the study are:
Housing: for this research housing could be taken as a living environment consisting of the dwelling units; the infrastructure associated with the dwelling units such as roads, water supply system, sewage system, electricity etc. (CSA, the 2007 Population and Housing Census of Ethiopia, Results for Addis Ababa, 2010).
Housing unit: a separate and independent place of abode either intended for habitation or not intended for habitation but is occupied as living quarter by a household (CSA, the 2007 Population and Housing Census of Ethiopia, Results for Addis Ababa, 2010).
Household: a group of persons who often live in the same housing unit or in connected premises and have a common arrangement for cooking and eating food. A household consists of a husband, his wife, their children, relatives and some other person’s residing together in the household (MoFED, 2008).
Household Size: Is the total number of members of a household (CSA, 2010).
Housing affordability: is the willingness and ability of householders to pay to consume housing services, which depends on the housing price, household income, and the terms and availability of mortgage finance (AHURI, 2006).
Household expenditure: is defined as the sum of household consumption and non-consumption expenditures (CSA, 2010).
Condominium: it is a single, individually owned housing unit in a multi-unit building. The condominium owner holds sole title to the unit, but owns the land and common property (elevators, halls, roof, stairs, etc.) jointly with other unit owners, and shares the upkeep expenses on the common property with them. And also, the word condominium divides into the prefix “con” means sharing and “dominium” which means, ownership. It simply means sharing with others. (Condominium proclamation No.370, 2003).
Condominium housing: are a housing complex containing units owned by individuals and common areas owned jointly by all the unit owners (UN-HABITAT, 2011).
Iqub: A voluntary, informal, and indigenous form of rotating saving and credit scheme, where each member contributes a mutually agreed amount of money on weekly or monthly basis. In such schemes, each member is entitled to receive the collected lump sum once as per his contribution (Getachew, 2016).
Housing is one of the basic necessities for human beings. However, there are very complex linkages between adequate housing supply and affordability practices. Throughout the developing countries cities, rapid population growth from high rate of natural increase and rapid rural to urban migration together with low level of their income has resulted in high demand of urban housing which resulting in housing affordability problems. Like most urban centers of developing countries, Ethiopia ‘s urban centers are characterized by a poorly developed economic base. Most cities and towns in Ethiopia face a surplus of problems, including an acute and ever-worsening housing shortage. But; housing problems may not be the same in each city because of variations in physical conditions, economic development and cultural preferences of the given society (UN-HABITAT, 2016)). As UN-Habitat (2007) cited in Getachew, Addis Ababa is a city where probably up to two thirds of households live at or below subsistence levels, with the rest living below the poverty line. Therefore, it is not surprising that the overwhelming majority of households are simply low standard dwelling unit. In fact, in a city where most households spend nearly 50% of income on food, there would not be much money left for housing. So, housing affordability is long lasting agenda for the city’s residents.
Though, this chapter presents the review of related literature which is relevant to the study under theoretical and empirical literature review.
Housing is a very important aspect in life. It is a multi-dimensional concept. It has been defined differently by different institutions and scholars depending on the emphasis and focus of analysis. The basic definition is housing as shelter and the provision of human needs. Allen (1987) defines a ‘house’ as a building for human habitation. While ‘housing’ is ‘dwelling houses collectively, provision of these shelter or lodging’.
The United Nations however, defined housing not simply as shelter, but also as a means of creating communities, giving great emphasis on the functions which housing has to perform. Similarly , housing is a means which should perform a double function: the interior, one of providing a place where a household of different age, sex, education, occupation, intellectual modes and values can meet in harmony; and the exterior, one of providing meeting grounds for groups of households and for the healthy and enjoyment enrichment of their lives and the life of the community (Gudeta, 2010).
A committee of experts on the public health aspects of housing convened by World Health Organization (WHO) defined housing as the residential environment, neighborhood, micro-district or the physical structure that mankind uses for shelter and the environments of that structure, including all the necessary services, facilities, equipment and devices needed or devised for the physical and mental health and social well-being of the family and the individuals (Ibid).
As Rapoport (1969) cited in Gudeta, highlighted the concept of housing from a different perspective. According to him, the house is an institution, not just a structure created for a complex set of purposes. As building a house is a cultural phenomenon, its form and organization are greatly influenced by the cultural milieu to which it belongs.
In economic terms, housing is considered as a commodity which has a market value and can be bought and sold. Through housing is reflected a person’s economic standing and his affordability to attain a certain level of quality of life. Housing is also considered as a security which a person owns for the benefit of one’s future. According to Ethiopian context housing has also a similar multi-dimensional definition throughout the country.
According Gottdiener and Budd (2005), urban space is highly differentiated by the quantitative and qualitative of housing condition such as size, location, extent of provision of basic services and accessibility. Accessibility to adequate housing is a critical issue for the urban poor. In most rapidly growing cities of the developing countries housing is a critical problem precisely because there are too few units (Gudeta, 2010). The other problem stated by the author is the quality of existing and new housing units such as substandard housing and overcrowding (Ibid).
Although, in newly industrializing and developing countries, private financial institutions because low per capital incomes and job-insecurity are unwilling and unable to provide long term credit to facilitate the development of an urban owner occupied sector, while governments usually lack the resource to provide large-scale public sector housing schemes to satisfy the needs of low-income households (Ibid). Furthermore, Balchin and others in 2000, stated that there are housing programs in many parts of the developing world-all aimed at providing new hosing as well as upgrading existing urban settlements (Gudeta, 2010). They suggested that, these programs should provide some solution to the housing problems that are facing city governments, although housing need is escalating at faster rate than supply (Ibid).
Experience with housing delivery in many developing countries highlights the difficulty in effective targeting and subsidies to low income families. For example, as Linn (1983), cited in Gudeta, suggest that, the supply of new housing stock is limited by, fixed or highly inelastic cost in the short run, rising cost in the long run, and also transaction costs that may impede the provision of necessary inputs. In general, UN-HABITAT (1996), point out five major factors influencing housing supply for low income groups (Gudeta, 2010). These are:
- The price and availability of land for housing that in tum influenced by the demand for land from other sectors and by the attitude of national, city and municipal authorities to different kinds of illegal development;
- The scale and nature of road construction and public transport provision.
- The extent to which illegal or informal housing and land developments are tolerated.
- The availability of piped water provision for sanitation and drainage and other forms of infrastructure and services needed by housing and residential neighborhoods.
- The efficiency of the official legal and regulatory framework within which those who supply housing operate.
Ethiopia's urban centers are characterized by a poorly developed economic base, high levels of unemployment and incidence of poverty and slum habitation. Urban unemployment is estimated to be 16.7% - and up to 28.6% in Addis Ababa. Available data also indicate that nearly 40% of the nation's urban dwellers live below the poverty line (IHDP, 2006). An indicator of the magnitude of urban poverty is the proportion of the urban population that lives in slums - about 70% of the urban population is estimated to live in slum areas. It should be noted however that Ethiopian cities are not characterized by segregated settlement pattern and slums form an integral part of the city (Ibid). Achieving Millennium Development Goal 7, Target II - improving the quality of lives of slum dwellers - is a major challenge in Ethiopia. Studies made in the last five years conclude that, there is currently a housing shortage of between 900,000-1,000,000 in urban centers, and only 30% of the existing urban housing stock is in good or fair condition (Yewoineshet, 2007).
Ethiopia has identified housing problems as one of the key problems facing cities and towns. The Urban Sector Millennium Development Goals Needs Assessment estimated that the additional housing units needed due to population growth and formation of new households between 2005 and 2015 in order to achieve the MDGs in 2015 would be 2,250,831 units approximately 1,125 million during the IHDP period. This entails the construction of the 225 ,000 housing units per annum. Further, the studies conducted in different times shows that, the market mechanism has failed so far to deliver affordable houses to the majority of urban dwellers over the past many years in the country, and is not expected to respond to such huge housing needs in the foreseeable future (Gudeta, 2010).
Due to variations in the level of development and per capita income across different regions, it is impossible to achieve agreed definition of affordability. However, scholars recommended housing affordability according to the socio-economic situation of the given area/or society. On the other hand, World Bank (1982) cited in Gudeta, stated indicators of Affordability in relation to household monthly income that a house hold is willing and able to pay for shelter and related expenditures.
Affordability is the measure of adequate housing assured to all as a matter of right to secure the housing need and desire with the resources we have or can obtain Stone (1993) cited in Gudeta. This shows that, affordability expresses the linkage between the wellbeing of individual families and the mechanism of housing provision and income determination.
Affordable housing is the ratio of expenditures on the income, which is not more than 30 percent of the gross household income. This can be measured by `Price to Income Ratio (PIR)’, `Housing Expenditure to Income Ratio Measure’ and Residual Income Ratio’. All the three above methods put household income as an important source. Apart from the three methods as mention above, the Conventional Measure is also being used to determine affordable housing. This method of measurement is based on 20 to 30 percent of the income is used the expenditures to buy a house (Ahnad Ariffian Bujang, 2006).
Stone (1993) cited in Gudeta express that the conventional standard that every household can afford up to a certain fixed percentage of income for housing. Stone (1993:32) explain this idea by giving hypothetical example as:
“Some low-income households and large (three person or more) households pay less than 25 percent of their incomes but are nonetheless shelter poor. Because they still do not have enough left over after paying for housing to obtain minimum level of lion shelter necessities. By the same token, high income households and many small household’s middle income call pay more than 25 or 30 percent of income for housing and still obtain adequate level of non-shelter necessities, and thus are not shelter poor (Stone, 1993 in Gudeta, 2010)” .
Therefore, the conventional percentage of income measures thus understate the affordability problem of families with children and other larger households in comparison with households of one and two persons, as well as overstating the affordability burdens of higher income households.
The housing sector has been subjected to a variety of policy interventions in the past years in Ethiopia. In the pre-1975 period, housing market operated in free market principles. Landlords leased urban land and constructed residential houses to tenants, and there was no restriction with regard to the selling and buying of houses. Though the government had little involvement in the housing sector, due to the housing shortage it was expected to provide low cost housing without taking the role of the private sector which was at that time mainly catering for medium and high income groups (Tilahun, 1997:117;cited in Hussen, 2010). However, the then free market condition was one of the factors that were blamed for the unplanned development of most urban centers, in addition to the very high cost of rent for tenants. As a result, the majority of the urban population was forced to live in highly crowded and congested houses that are mostly built and owned by land-lords (Ibid).
Following the 1974 revolution, the Derg nationalized all urban land and extra houses by Proclamation No. 47/1975 and was directly involved in the supply of housing. Due to low public sector production of housing, the Derg organized and supervised housing cooperatives to respond to housing requirements. To encourage the development of the cooperative system, the Derg intervened with a wide range of incentives including allocation of land without charge for the construction of owner-occupied housing units, subsidizing building materials and mortgage loans below the market rate were also provided on a subsidized basis to cooperatives (Abreham, 2007:117; Martha ,2006b:20; cited in Hussen, 2010).
Despite this effort, total housing production satisfied only a small portion of the demand for the period. The majority of the urban residents that the Derg claimed to stand for could not benefit from the land reform where urban land was granted free of charge, because their income was too low to construct the smallest standard dwelling houses (Solomon, 1994:278; cited in Hussen, 2010). Over all the housing development approaches that were implemented by the Derg were unable to successfully address the neediest which are mainly the low and lower middle income group. Although the factors causing these consecutive failures are numerous, the basic cause can be stated as the choice of non-inclusive housing development approaches that are less responsive to local situation (Ibid).
Since the transition in 1991, the EPRDF government has sought to introduce a more market-oriented approach to housing development. With the introduction of the urban land lease holding Proclamation in 1993, the government defined leasehold as the tenure form of choice. Land to be used for social services and low-cost houses may be leased free of charge (Proclamation No.80, 1993). The Addis Ababa City Government ‘s Urban Land Lease Holding Regulation No. 3/1994 declared that urban land should be used for business activities and residential construction. In addition to the land lease law, other measures have contributed to the liberalization of the housing market. Subsidies on the sale of building materials have been removed and interest rates for housing construction have been set at market rates, etc (Regulation No.3, 1994).
In addition, a consolidated Urban Development Policy was formulated and approved by the Council of Ministers of the Federal Democratic Republic of Ethiopia in 2005. Urban housing development is identified as a key pillar in the priority intervention areas of the government’s Urban Development Policy (MoWUD, 2005:2; cited in Hussen, 2010). The policy generally can be termed as inclusive when it comes to housing. The intervention areas identified in the policy document form the bases for the development of the Integrated Housing Development Program (IHDP) in 2006, which is designed for implementation between 2006 and 2010 though the Housing Development Program is implemented in Addis Ababa since 2004.
To solve the housing problem of the city, it is essential to enable the construction of houses in existing parts and also in new areas of the city. Hence, the Addis Ababa City Government has designed an Integrated Housing Development Program that aims to improve the quality and quantity of houses that are available in the city. In addition to the housing shortage, the majority of the existing houses are decaying. Any effort to solve the housing problems of the city should, therefore, consider the redevelopment and upgrading of the decaying houses under the city’s Kebele Administrations and the renewal of the slum areas (AAHDPO,2007:4; cited in Hussen, 2010).
The Housing Development Program also considers the very high unemployment problem and prevalence of the informal sector in the city. Moreover, the program recognizes the potential role of the construction industry in creating employment opportunities and inducing the development of micro and small enterprises. Therefore, the Program is designed to create large employment and increase the incomes of the city residents. Apparently as income of the wider public increases, the potential for enabling low income residents to become house owners and fair distribution of income will be enhanced (Ibid).
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