Condos Shedding Poverty Cloak? Addis Fortune
The challenges faced by the Federal Government, according
to officials, are the lack of trained contractors, a shortage
of transportation trucks, as well as the hike in the prices of
construction materials.
08 September, 2008
Yeshi Tessema lives in a studio condominium house around Police Officers’ Club in Kebele 07/08 of the Arada District. The 80-year old spends most of her time at home and is supported by her children who sweat to earn a living. The condominium constructions that were set off in 2005 by the then Mayor of Addis Abeba, Arkebe Oqubay, now state minister for Works and Urban Development, was a blessing in disguise for Yeshi, one of the winners of the first raffles when condos were distributed to the urban poor.
Yeshi reminisces about the tough old days where she had to pay her hard won 18 Br monthly for one of the crudely built shacks she rented from the government.
“I was living in a state-owned house since 1974,” she says recollecting what she went through for close to three decades.
In the past three years, however, Yeshi has not had to worry about the housing woes that persist in Addis Abeba, despite government efforts to alleviate the shortage.
Although happy with this development, she cannot help but sympathise with her counterparts who, like her, registered for the condos three years ago prior, yet have not been so fortunate and are desperately longing for a decent roof over their heads. What pains her even more is the fact that most of her neighbours do not warrant being in the condominiums, as they are certainly not what one would classify as ‘poor.’
In a bid to stave off the severe housing shortage of the low and medium income residents in the metropolis, the Arkebe-led provisional city administration launched the constructions of 30, 729 houses in 2005/06. Over 2,285 houses were subsequently completed and transferred to residents of Addis through the Addis Abeba City Housing Agency.
In 2006/2007, the caretaker administration that succeeded the provisional one under Berhane Deressa’s mayoral reins followed in Arkebe’s footsteps and initiated the construction of a further 33,000 houses on 150hct of land in Addis Abeba. This was part of the national housing construction strategy aimed at building 61,000 houses in 36 towns of the country. The construction of these houses did, however, rolle over into the following year.
Although the caretaker administration managed to transfer part of the condominium houses to city residents through raffles and cabinet decisions, it did not seem to have prioritised the housing needs of the poor. The condominiums seem, instead, to cater for those easily able to afford decent accommodation on their own, judging by the depth of their pockets.
Yeshi does not think that this is fair. Looking out through her window at the cars parked down below - ranging from Volkswagen ‘beetles’ to a Mercedes C180 - she wonders how such ‘wealthy’ people ended up in these low cost houses.
“The condos were meant to be for the poor,” she bemoans.
She has a point. A cursory glance at one of the condominium sites after office hours reveals a number of automobiles parked in the premises of the condominiums, leaving little space for anything else. Some even worry about the lack of parking lots, a great luxury for residents of the city as it is scarcely available.
Sisay Abebe, a private communications consultant, is one of the dwellers of a condominium in Abuare, in the Kirkos District. This lack of adequate parking space annoys him, as sometimes he is forced to park his Volkswagen outside the premises. Even when he does succeed in finding a space, there is always another car blocking his way out, very irritating when trying to beat the morning rush.
“People park their cars so haphazardly that the next day, one person will have to wait until the other moves his car out,” he told Fortune. “Also, I was once had my spare wheel stolen when I parked my car outside the premises.”
A condominium structure consists of multi-unit dwellings where each unit is individually owned and the common areas, such as corridors recreational facilities, places reserved for slaughtering animals and parking space are communally used by tenants.
The construction of the first condominiums in Addis Abeba was undertaken with the technical support of the German Technical Cooperation (GTZ).
“When the constructions were first started, we assumed that one out of five residents would require a parking lot,” Isayas Abebe, programme director at the GTZ, told Fortune. “There are now cars all over because the houses have not been inhabited by the intended people.”
The concern of the current condominium residents is nothing when compared to the plight of the destitute in Addis. What worries Yeshi is the criteria used, or rather the lack of it, when considering low and middle income earners for the condos.
Low income earners are those who get anything less than 1,000 Br a month, according to Zenaselassie Seyoum, a statistician at the Central Statistical Authority (CSA). Those who earn between 1,000 Br to 2,000 Br fall in the medium income category.
These margins, however, have been blurred by the current escalating cost of living, which is pushing middle income earners into the low income group as their purchasing power has significantly eroded.
The country’s overall inflation rate stood at 25.3pc in June 2008. This rate is 9.5 percentage points higher than the corresponding annual average rate of 15.8pc in June 2007. Food inflation commands 57pc of the total increase, while house rent, construction materials, water, fuel and power have contributed 20pc of the price hike.
Despite criticisms, the condominium housing projects have continued sprouting nationwide.
The Ministry of Works and Urban Development (MoWUD) has in 2007/08 launched the construction of 83,000 houses in 59 towns countrywide, including towns in Gambela, Benishangul-Gumuz, Somali and Afar Regional States.
In 2006/07 and 2007/08, the Federal Government envisaged constructing 144,000 condominium houses.
When the government first introduced condominium housing, it was with the view to addressing three economic challenges: a housing shortage that had mounted to over 400,000 in Addis Abeba alone; unemployment, which (according to a data obtained from City Bureau of Finance and Economic Development in 2005) affected over 33pc of the total economically active citizens in the city; and lack of sufficient opportunities for small-scale businesses in the construction sector financed by microfinance institutions.
Although the condominiums appear to have failed to alleviate the urban poor’s housing plight, authorities claim that the nationwide constructions have indirectly helped the poor.
There seems to be some achievement in terms of stimulating small-scale businesses and cutting down on unemployment,.
In 2007/08, these housing projects absorbed 70,142 unemployed and 3,580 small scale construction firms, says Kassu Yilala (PhD), minister for the Ministry of Works and Urban Development (MoWUD).
Altogether, in the past two years the projects created job opportunities for 150,000 jobless people and 4,090 small-scale construction firms.
The challenges faced by the Federal Government, according to officials, are the lack of trained contractors, a shortage of transportation trucks, as well as the hike in the prices of construction materials.
To address these challenges, the government has this year alone boosted the capacities of close to 2,000 contractors. It has also procured 750 vehicles with a carrying capacity of 40tn each; close to 200 have already been brought into the country. Another 1,000 trucks and 125 loaders have also been procured, although the government has begun the process for importing only 200 trucks and 100 loaders.
The project has also enjoyed financing from the state-owned Commercial Bank of Ethiopia (CBE) in a bid to cushion both residents and small-scale businesses from the financial crunch. The bank has made 3.2 billion Br available for the project last year and this year.
“The houses were indeed meant to benefit the low income people,” Tsedale Mammo, general manager of the Addis Abeba Housing Development Project Office, was quoted as saying by the state daily The Ethiopian Herald.
The construction costs, however, turned out to be more than the government could possibly handle. Therefore many houses could not be completed and transferred to beneficiaries because of the shortage of financing.
The increased cost of construction meant a corresponding increase in the finances needed by the government to undertake the housing projects. This led the Addis Abeba City Administration to consider an option not initially planned for in the allocation of condominium houses, that is, transferring the houses to people who can actually afford the price in one go, then using the money to finance the rest of the houses. This option was considered plausible.
“There started to die the spirit of serving the housing demands of low income groups of the society,” says Endale W.Segade, an accountant in a private company, who himself registered but did not win the raffles. “We started to hear of houses being sold to individuals who had paid the total price right away. I don’t know how even a middle income earner could pay the money immediately, let alone someone from the low income class which barely manages to survive through the month on a meagre income.”
The project office has plans to construct 200,000 houses for the urban poor. This would meet the housing demands of 50pc of the city’s residents. The office would construct over 93,000 new houses, and complete the construction of 37,404 houses in this fiscal year. The new City Council has endorsed a 2.2 billion Br budget for new and ongoing housing construction projects that are being undertaken this year.
But will these houses reach the urban poor?
That remains to be seen given the present scenario.