Ethiopia faces major shortages in housing amidst a growing population, needing an estimated 1,000,000 units in 2013, with an additional 225,000 units in backlog every year. Due to issues in housing affordability, the majority of housing is produced and provided through informal channels. Despite this high need for housing, government policies have largely discouraged the involvement of the private and nonprofit sectors from getting involved in the provision of housing for low to middle income populations – instead, private developers focus on projects geared toward the upper class. While the Ethiopian government is largely responsible for providing low and middle income populations with housing, their attempts at subsidizing housing has not succeeded in meeting affordability criteria.
One example of this is the country’s Integrated Housing Development Program (IHDP). Beginning in 2005, the government builds condominiums for sale with a large upfront subsidy, and beneficiaries purchase the units with a government mortgage, down payments ranging from 10-40%. However, the prices for even the least expensive of these formal units remains out of reach for the lower third of income groups. Despite aims at making housing affordable through subsidized construction of formal units, informal housing remains the most affordable and available form of housing.
Source: World Bank Group. 2015. Stocktaking of the Housing Sector in Sub-Saharan Africa : Challenges and Opportunities. World Bank, Washington, DC. © World Bank.
Link: https://openknowledge.worldbank.org/entities/publication/7d780350-c353-5ce4-93cd-37b6cafc0f38