Path Dependence on Colonial Extractions: A Perspective on the High Cost of Housing in Ghana (Part I)

Housing is undoubted more than one third of global wealth. All over the world, meeting the need for housing in adequate terms especially for low and middle-income households have been difficult due to the high cost of housing. In essence, the prices of the houses in the market are beyond the affordability levels of about 90% of households in Ghana, which translates into a housing deficit of about 1.6 million units for a population of about 25 million. The term affordability can be construed in two ways; first in terms of households’ ability to purchase outright with cash from savings and secondly, in terms of being able to service mortgage repayments if such housing finance facility is available. Affordability is mainly a demand-side factor linked to the level of income, which stems the housing financing debate.

This article only discusses the supply-side to housing provision and its possible linkages to colonial legacies. It is widely debated that the colonial history of most developing economies and the adoption of colonial legacies by these countries have had a devastating effect on how far they have reached on the development lather; thus, the concept of colonial extractions and path dependence respectively. So, we trace the colonial legacies of building standards and rent controls in Ghana and attempt to find meaning and linkages with the current high cost of housing in Ghana. 

All cities need building standards: London has had them since the early Middle-Ages (1216), when thatched roofs were banned due to the hazard of fire[1]. The link between building standards, housing costs and housing affordability is quite simple. High building standards all things equal are expected to increase the cost of housing, which reduces affordability. In 1947, Britain suddenly and substantially raised its housing standards (the Parker-Morris standards) after the Second World War during the rebuilding process of the country as part of a much larger social reform programme introduced by the British government of 1945-50. These standards were implemented through the Town and Country Planning Act. This was during the “Golden Decades” of growth in Europe which experienced substantial increases in household incomes. In other words, housing affordability increased all things equal, since the rise in income suggested that most people could afford better housing than they had at a premium. Despite the income rise, these new standards were arguably too high as argued.

Subsequently, these new building standards were implemented in the British colonies at a time when the average income in Ghana was about one-twentieth (1/20) of Britain’s. This will undoubtedly increase the cost of housing especially in the urban areas, since the old “atakwame”- mud and thatch buildings were forbidden as the case was in London. Homebuilders were to use sandcrete and concrete blocks which had better resistance to fire and were more durable. The trade-off between using these new materials (in the wake of shortages) and the cost of housing was a compromise on affordability. It wasn’t obvious in the urban centres at the time because these areas were small and mainly occupied by the elite, who had incomes equable to their British counterparts and/or lived in houses provided by the colonial government. In essence, these elites may not have paid out of pocket to enjoy these new houses and hence, didn’t anticipate the impact on the cost of housing of implementing the British Town and Country Planning Act of 1947 in Ghana. 

It would be erroneous to suggest that these building standards were forcefully handed over to us by the colonial government upon Independence. This is because, our leaders had the option to accept or reject. Options actually give us the right but not the obligation to enforce these standards, which were perhaps inappropriate for the low level of incomes in Ghana. Adam Smith’s classical invincible hands that worked against cutting our cloth according to our size was the fact that it would have been an act of extraordinary courage and insight for newly installed governments to lower building standards to suit income levels at the time. According to Collier and Venables (2013), “the new African political elite wanted to join modernity not to dilute it. And so Africa was stuck with building regulations which, had they applied to 19th century London, would most probably have frustrated formal housing for ordinary households”. In fact, they were too ambitious for Ghanaian household incomes and in my candid opinion remains so today. 

Regulations cover building standards, such as wall thickness, room size, and depth of foundations, and also the minimum size of plot. Now, we have to build largely with foreign materials mainly because our industries cannot efficiently produce them locally. Given the ever macroeconomic instability, underpinned by the cedi’s depreciation in Ghana since the days of Adam, not Adam Smith, the cost of these materials keep increasing although income growth is as sluggish as a snail. Implied from the renowned economist Thomas Malthus, the economic progression of housing cost outpaces the arithmetic increases in income; thus, the reduction in housing affordability and increasing housing deficits in Ghana. So, we have gotten to where we are today because of decisions we made in the past (path dependence) and this limits the opportunities available to us today. Can the elites in government today opt to reduce building standards when such a decision in the minds of many could indicate “backwardness” instead of progress in this times of materialism? 

The typical evidence of the impact of these standards in Ghana is our desire to build big houses on large tracts of land, which are expensive and unaffordable. Has it ever occurred to you the origins of these desires, which are typically not indigenous to Ghanaian rural folks? Deductively, most of these were inherited from the British building standards as determined by the Town and Country Planning Act of 1947; contained and shared by the colonial elites who worked for the British government. But shouldn’t we also abandon such desires even now that our teachers have long abandon such desires and adherence to such draconian building practices? In fact, the British along the line reduced those building standards in the UK because of this same housing affordability problems they perpetuated. In effect, these building standards have beyond the economic impacts, given us an insatiable social lifestyle which is only sustainable in luxury. However, housing is first and foremost a necessity, not an ostentatious good (Luxury). Can we choose to meet necessity rather than luxury and social status? Maybe not.

Since the adoption of capitalist principles, which required a total shift from government provision of housing to market provision, where governments are expected to play the role of facilitators and enablers, housing affordability has even become more of a problem than HIV/AIDS in Ghana. Going forward, we need to delink the connection between the luxury type of building materials we use and building styles we design as well as the building standards that specify and enforce them. Perhaps, utilizing the vertical space in the form of flats, terrace buildings and condominiums may be well suited as a cost-cutting tool; but this requires a lot of research and social engineering.

The direct impact of high cost of building materials resulting from these high building standards could be mitigated by finding or developing building materials whose prices do not correlate with foreign exchange fluctuations. And this reminds me of the many research works conducted by the College of Architecture and Planning of the KNUST that lie on dusty shelves unused. During an exhibition two years ago in the same institution, laterite blocks were developed but up to now has had little to no impact in the market. By this approaches, we would be able to reduce the compounding impact of an unstable macroeconomy on the cost of building materials, labour cost and the ultimate housing cost. Further, reducing our room sizes and plot sizes by reforming our Building Codes and Standards could be cost-cutting, which will lever affordability. After all, we still enjoy the small rooms in the UK; don’t we? Some may typically qualify as store rooms as per Ghanaian standards.

However, I am not suggesting this on the back of weak research and no evidence-based. I rather believe that the starting point is to commission a comprehensive research on the impact of Building standards on housing cost and affordability in Ghana. Such evidence would be instructive on where the latitude lies for reducing some of the luxury building standards to attune to “necessary” standards. In summary, our colonial legacies and extractions might have influenced housing cost and affordability; perhaps negatively and continues to do so today – path dependence.

Kenneth A. Donkor-Hyiaman

Kenneth A. Donkor-Hyiaman

Dr Kenneth A. Donkor-Hyiaman is a Real Estate and Urban Economist and a Lecturer in Real Estate Finance and Real Estate Development at the Department of Land Economy, Kwame Nkrumah University of Science and Technology, Kumasi. kwakuhyiaman2@gmail.com +233(0)508043011

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