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Gov’t to blame for condo construction woes!

Gov’t to blame for condo construction woes!

Last week’s news that the massive condominium housing project being undertaken in Addis Ababa is facing a budgetary constraint was greeted with shock and disappointment by many. The Ministry of Urban Development and Housing said in a 10-month performance report it submitted to Parliament that the government is eyeing other options due to funding shortage for the projects. It conceded that the ambitious target of building some 750,000 condominiums during the second Growth and Transformation Plan, which comes to an end in 2020, is unattainable owing to the fact that a budget was not appropriated for the program. Unfortunately the utter disregard for the considered proposals this newspaper and other stakeholders had offered on several occasions regarding the program has resulted in the debacle unfolding now. Ever since it was launched in 2004 the condominium construction project has been proceeding at a snail’s pace with only 140,000 units transferred to users to date. After 13 years of frustrating wait around 30,000 completed units are expected to be distributed in three months’ time among eligible individuals who had registered for the program back then. The government’s attempt to supplant the private sector by overstepping its role of providing policy support and intruding into a province that rightly belongs to the sector has not led to successes in alleviating Addis Ababa’s chronic housing problem. This constitutes a policy failure of epic proportions.

In 2013 around a million residents of Addis Ababa registered for the 10/90, 20/80 and 40/60 condominium housing schemes and began to deposit in the state-owned Commercial Bank of Ethiopia (CBE) the minimum saving required under each scheme. The 140,000 units handed over thus far were built under the 10/90 and 20/80 schemes only. Although tens of thousands have deposited the entire estimated value of the condominiums being constructed under the 40/60 scheme or are making the obligatory saving on time, they are regretting the decision to trust the government with their hard-earned money given it has been unable to implement a project it ought not to have started in the first place. The construction of about 131,000 condominiums under the three schemes was put suspended months ago on account of a funding shortfall, it was supposed to resume following the announcement that 15 billion birr was secured against a government-issued bond to put up some 171,000 units. All this mess could have been avoided if the government had not insisted that it alone can find a panacea for the nation’s housing problem and instead put in place a policy framework which encouraged both local and overseas companies to with a proven track record to partner with banks in building the condominiums.

From the outset concerns were raised over the inadequacy of the funds in government coffers, the absence of the required housing project management knowledge and experience within government structures, the poor execution capacity of the management and staff of the executing government agencies as well as ethics-related problems. It was apparent from its inception that the policy did not take into consideration these and similar factors that were bound to impact it detrimentally. Consequently the program is way behind schedule and running over budget. That is why 13 years later the vast majority of those who enrolled in the program are bitterly awaiting the keys to the houses they were promised would be delivered shortly. The government’s aversion to upholding transparency and accountability means that these citizens have no idea as to when the construction of the condominiums would be completed or when they would be handed over to them.

The government has said that various options are being explored to address the housing crunch. Chief among these, it disclosed, are the provisioning of land to housing associations and linking those who are planning to build their own house with building contractors. The problem though can be effectively tackled only through an integrated mechanism informed by a holistic study that draws on best practices from Africa and other parts of the world. The business-as-usual approach will not do any good to millions aspiring to own their homes. The government may consider such alternatives as supporting the menu of solutions proposed by sections of the public having the financial wherewithal while facilitating the conditions that enable low-income earners to acquire homes with low-interest mortgage. Or it’s possible that the study may come up with an even better answer. It is to be recalled that a couple of years ago some 28 foreign companies had expressed interest to participate in the condominium housing construction program. So is it better to exhaust all possibilities or try to correct a mistake with another mistake?

Under the previous Dergue regime a substantial number of families built their own houses, either individually or through housing associations, using low-interest bank loans. Many who were organized under housing associations likewise erected their own houses during the rule of the present government, albeit well into its tenure. In the meantime the rampant corruption that beset land allocation and the resulting acute paucity of land compelled the government to eye the construction of condominiums as a means to meet the demands of an increasing urban population. Although the condominium construction program of the past 13 years has contributed its share to easing the housing scarcity, the problem is still grave. In spite of the allocation of 1.5 billion birr by the Addis Ababa City Government, the disbursement of 16 billion birr by CBE and the billions saved by individuals who registered for the program, the demand continues to far outstrip supply. It’s therefore all the more perplexing to hear that the program is underfunded. To make matters worse the quality problems that have dogged the condominiums have been compounded by the significant cost the individuals to whom they were transferred incurred to fix them. All this bears out that the government’s rash decision to engage in something it should have left to the private sector are having stark consequences.   

It’s never too late to rectify a problem however impossible it may seem. Needless to say the solution, as alluded to earlier, has to be anchored in a scientific study undertaken by professionals possessing the requisite knowledge and experience. This is part of the government’s responsibility to create an enabling environment through the adoption of viable policies, strategies and a legal framework with a view to ensure that the condominium housing program becomes the epitome of transparency and accountability. The government would do well to acknowledge that it is to blame for the underwhelming performance of the program and is high time that it quit its involvement therein altogether.