Dr. Ousman Gajigo
In an earlier article, I discussed the problem of the lack of urban planning in the context of transportation. That is just one of many important elements of urban planning. Another major neglected aspect of urban planning in The Gambia is housing. While the issue of housing is important in all locations, it is a particularly salient for in urban residents. Even the poorest rural residents have no trouble finding land to build their own dwellings on it as they don’t typically face binding constraints on space. It might well end up being a poor-quality structure. But outside of an emergency, a rural resident would scarcely need to worry about where they would need to live to carry out their livelihood activities, which is almost always agriculture. So when one talks about the housing market, it is almost invariably discussed in the context of urban areas, where it is a major determinant in improving living standards.
The driving factor behind the urgency of housing planning in The Gambia is the rapid urban population growth. With 65% of residents living in urban areas, The Gambia has one of the highest urbanization rates in ECOWAS, second only to Cape Verde. Most of the urban population live on the small enclave ofGreater Banjul Area. Given the small size of the country, we are the 4th most densely populated country on the African continent. The overall urban population is growing at an average annual rate of 4% per annum, which translates to more than 70,000 people moving to urban areas each year. In the context of housing, this translates into strong and growing demand for housing in urban areas.
The urban housing situation is a disaster on several fronts. The supply of quality housing relative to demand is quite low mainly because the cost of construction is astronomically high relative to our low and stagnant income. Let’s put this concretely. The average cost of construction materials over the past 5 years increased by more than 10% annually, while the average per capita income in the country increased by less than 2% per annum over the same period. Aggravating the cost of construction is the almost complete absence of housing finance solutions.
At a policy level, land demarcation and housing constructionregulations are completely haphazard at the national level,unguided by any planning adapted to the local context. This is a policy failure because the government has the primary responsibility of regulating land use. The little regulations that are actually on the books are hardly enforced. When land is in short supply, as in the case of The Gambia, the government has a major responsibility to prioritize public interest when land is being broadly allocated to different uses, whether for housing or other uses.
Even after broader urban planning is done well, there is a fundamental question that a government needs to ask with regards to housing in high demand urban areas: shouldhomeownership should be considered primarily as an investment or should it be considered as a right, or some combination of both. The answer to this question would play a major role in determining how active a role the government would play in housing supply, regulation, land administration and policies that affect the construction sector, among others. The policy implication of considering the nature of home ownership – an important part of housing – as a right or as an investment is big.
When housing is considered primarily as an investment, then rising housing prices is not just simply a market trend but rather a goal. After all, an asset class is not is not much of an attractive investment if the value falls. When housing is considered a right, governments are forced to play more active roles, not only in regulations but also in facilitating access through direct interventions in mortgage markets. After all, persistent increase in the cost of housing is a problem because there will be a growing number of young families who cannot afford their own home. Other countries are only beginning to be aware of this problem after it becomes too acute and starts to undermine the societal fabric.
The reality is that housing is both an investment asset and fundamental right. The challenge is to strike the right balance given the context of the country, including the level of development, population dynamics and land availability. For most households that own their homes, housing is often theirlargest asset. Investment in the sector can be a positive driver of economic growth as it pulls along the construction sector. However, in a context of stagnating economy with no agricultural productivity or manufacturing, housing seen exclusively as an investment asset class can easily result in land speculation, which is bad for investment. A whole class of citizens, particularly young adults, cannot even contemplate a future where they own their house. Long-term development becomes hard to achieve when only a small fraction of the youthdream of brighter futures.
The development of a mortgage market is still vital whether or not home ownership within housing is considered an investment or right. Yes, the Social Security and Housing Finance Corporation is present but the mortgage financing needs in the country extend well beyond what it can provide. After all, most homes in the country are built informally. Moreover, SSHFC’smortgage operations are mostly siloed, without much linkage with the larger financial sector. This limitation highlights yet another link between planning in housing and planning in other sectors. After all, interventions in the mortgage markets means the government being cognizant of its implications on the financial sector, particularly the capital market.
The major problem we have in The Gambia is the lack of any planning in housing, which is a subset of general poor land administration. And its effects are there for anyone to see. One prominent example is the proliferation of so-called estate companies that engage in nothing more than land speculation, which further aggravates the chaos in land use andadministration. Proper regulations stemming from well-conceived planning would preclude any ragtag group of individuals that can somehow entice a relative of an Alkalo into selling them a huge piece of land that is quickly carved into smaller parcels without any regards to how such land fits within broader future development of that larger region.
Well thought-out policies can help guide housing supply and demand to ensure that sector’s dynamics are in line with the long-term development of the country. For example, it is in everyone’s interest that the Greater Banjul area does not become too congested due to runaway rural-urban migration. The most effective way to prevent such debilitating congestion is to create and sustain economic opportunities in other regions of the country. Housing has a role to play in this because the availability of quality housing in other urban parts of the country that are outside of the Greater Banjul area will lessen the draw from the Kombos.
Limiting unsustainable pressures on land that do not contribute to long-term development is vital. Careful use of fiscal instruments can increase not only domestic resource mobilization but also prevent misallocation of scarce land. After all, land sitting idly in high demand areas without being put to high value use is a missed opportunity for development that a poor land-scarce country cannot afford. Reduction of tax burdens on the construction sector is also essential for housing sector development. The government needs to recognize that housing is an infrastructural investment that is capital-intensive whose returns are spread over a long-term horizon. And given that the country is hugely undersupplied with regards to infrastructure, tax on essential housing inputs such as cement should be lowered. Quality estate companies that target middle class households should be considered for tax concessions. The temporary loss in tax revenue will be more than compensated through larger tax base in the long-term.
Proper planning also means having a land administration system where the demarcation of land parcels and construction of new structures do not undercut future infrastructural investments. It means putting careful thought to a standard land parcel sizegiven the overall small supply of land. It means enforcement of what a minimum road width should be so that such important decisions are not left to the whims of individual land sellers who do not think beyond their immediate commission.
Proper planning in housing would ensure appropriate zoning to ensure that there are designated areas for residential housing, industrial areas or mixed-use areas, and these are enforced. Industrial areas and residential homes are increasingly being squeezed together in many parts of the country without any planning whatsoever. This creates all sorts of problems, sometimes in unexpected areas. For instance, it makes energy distribution more difficult since periods of peak energy demand for industries is different from peak energy demand for residential areas, which makes effective electricity rationing impossible. Of course, there are other numerous reasons why there is a need for spatial separation of residential and industrial areas.
Adequately addressing housing planning necessarily touches on many sectors, some of which have not even been mentionedabove. It is a challenging but necessary task. Each day that the country lumbers on without planning increases future costs tremendously. Recently we witnessed the haphazard demolitions of unauthorized structures along major roads in our urban areas. A lot of people optimistically interpreted these as signs of seriousness about planning or enforcement. The truth is that those demolition activities are actually symptoms of failure in urban planning enforcement. The demolished structure will not say demolished because the actions by authorities was not informed by actual urban or housing planning.
