Gov’t offers US$1.5bn STX guarantee to local developers


Government is prepared to extend to local housing developers the US$1.5billion sovereign guarantee it offered to STX Ghana for the construction of some 300,000 housing units, Dr. Rashid Pelpuo, Minister of State in Charge of Public Private Partnerships (PPPs) has said.

“Many of us believe that we can rely on local developers to bridge the housing deficit. If we give them the support they can do it. Others are trying to take advantage of the STX guarantee of 10-years,” Dr. Pelpuo said.

Government in 2011 entered into an arrangement with STX Ghana and its Korean counterparts for the construction of about 300,000 housing units to address the decade-old shortfall in the housing sector.  The initiative was seen as the largest government intervention in the sector. However, the deal fell through following STX’s boardroom wrangling involving the partners. This led to the Government of Ghana suspending its initial US$1.5billion sovereign guarantee.

Dr. Pelpuo, speaking at the Fourth Edition of the Ghana Economic Forum (GEF) held in Accra, said government is open to offering the same terms to any local consortium that is prepared to provide about 200,000 housing units.

“Ghanaian companies are finding it difficult to live beyond the founder. Local companies usually do not have the capacity we need. We will have foreigners taking over this country if we don’t build companies that can transcend generations.”

The country’s housing deficit is estimated at 1.7 million units, a figure David Ofosu-Dorte — a Senior Partner at AB & David and a member of the newly-created Ghana Infrastructure Fund (GIF) Board — said is not reliable.

“The current housing data is not accurate.We need a national data on housing, and we need to take action now,” he said. The lack of planning and a well-coordinated effort to address the growing housing deficit has been the bane of the country, a recent Institute for Statistical Social and Economic Research (ISSER) of the University of Ghana study acknowledged.

A report released by ISSER in April attributed the development of slums in the country’s urban areas to short-termed and short-sighted efforts from policymakers, coupled with the huge housing deficit for low-income groups and the youth. The research-based institution in its 2014 Ghana Social Development Outlook indicated that despite the current ‘unprecedented urbanisation’ and the boom in residential developments in urban Ghana, access to housing remains a major social challenge. “There is a huge housing deficit, particularly for the youth and low-income groups; and coupled with short-termed and short-sighted efforts to resolve the problem, that is responsible for the increasing slum menace. “Issues like high cost of land as well as rent and housing prices in a context of rapid urbanisation are other significant factors,” the report said.

The situation, according to ISSER, is very worrisome — especially when various policies to reverse the trend remain in the draft form.

The problem of poor housing and slums is increasingly becoming a feature of the Ghanaian urban landscape, particularly in the large metropolitan areas of Accra, Kumasi, Sekondi-Takoradi, Tamale and Tema.