Playing the Housing Lottery in Africa’s Political Capital

Abraham*, an engineer, lives in the farthest reaches of Facebook. Walk by the grocery shops and bottle stores, the pizzeria and bars. Keep going past the Yemeni place with great jazz, the internet cafe and post office. When you get a spicy whiff of the njera and wat being served at the Maleda’s sidewalk tables, you’ll know you’re only a block or two away. And then suddenly, as you round the corner from the communal slaughterhouse, you’re there, standing outside a utilitarian door separating his snug, 30m2 bachelor pad from the neighbours’ laundry and a spattering of ground-level satellite dishes.

Abraham considers himself fortunate. A rental in this complex of 2 370 low-rise apartments is hard to come by, and even harder to afford. He moved in here after his divorce and pays $240 a month for a bedroom, bathroom, living room and the minute kitchen where his househelp does the cooking and ironing. The water supply is constant and there are few power outages, he says. Abraham is lucky. Addis suffers from a severe water shortage. In some condominiums the water taps only run for three or four hours in the evening.

The Gotera condominium complex, as it is officially known, was constructed eight years ago as part of the Integrated Housing Development Program to ease Addis Ababa’s chronic housing shortage. Since then its music spots and restaurants have endowed it with a vaguely hip notoriety that attracts blue-collar locals and visiting out-of-towners alike. It is known as Facebook because, so they say, if you hang out here long enough, you will bump into everyone you ever knew.

Addis suffers from a severe water shortage. In some condominiums the water taps only run for th ree or four hours in the evening

A quarter of the 100 fastest growing cities in the world are in Africa. One of them is Addis Ababa, the capital of the fourteenth most heavily populated country in the world. It is also one of the least urbanised, with the great majority of its 96.6 million citizens still subsistence farmers. However, politicians and planners have a different vision for the future. They see the country industrialising as its people move into towns and cities, attracted by jobs offered in the agro-industry sector: textiles, leather, shoes. The cities—primarily Addis—now produce up to 60% of national GDP. Even so, the migration of people is more evident than the industrial parks, which are still in the making.  The country’s urban population has doubled over the past 35 years: from 8.5% to 17%. In Addis, the population is likely to triple within the next few decades and top 10 million.

The discrepancy between housing demand and supply is a longstanding phenomenon that dates back to Addis Ababa’s establishment as a permanent city over a century ago. Infrastructure is currently straining at the seams. While nine out of ten Addis residents have access to piped water, few can lay claim to good bathroom plumbing. More than half the residents have to use pit latrines. Fewer than 10% are connected to a sewerage system. With more than half the food eaten by residents  grown in the city using wastewater, typhoid and dysentery are commonplace.

The accelerated construction of fully serviced condominium complexes may be central to the government vision of transforming Addis Ababa into a middle-income megacity fringed by industrial parks and affordable housing for all, but it is an ambitious growth spurt for any city—let alone one that boasted the trappings of a pre-industrial age well into the last century.

With a literate civilisation dating back to Roman times, it is hardly surprising that explanations of urban renewal and expansion are frequently prefaced by references to the past. Ethiopia is the only black political power to have escaped colonial rule (except for a brief few years when the Italians invaded at the instigation of Mussolini). Emperor Hailie Selassie was the last in a line of 224 emperors spanning 3 000 years. They claimed descent from King Solomon and the Queen of Sheba. It is this fact that makes Addis Ababa (colloquially referred to as Addis) unique as a city.

Other African capitals coalesced around railheads, markets and administrative buildings. Roads and avenues drove a straight line. Sewerage and water systems were laid. European planning processes became instruments for divide and rule, settling townspeople along ethnic and political lines. Addis, on the other hand, is the product of a pragmatic peace where people of all classes have intermingled in a kaleidoscopic mix of housing.

For centuries Ethiopians were ruled by emperors and their restless barons who held sway over vertiginous mountain fiefdoms. In 1886, the same year gold was discovered in Johannesburg, Emperor Menelik II moved his mobile tented court, complete with mounted warriors and their families, from the lip of the Entoto Mountains down into the shelter of the topographical amphitheatre below that has cupped the city ever since. The shrewd Menelik invited other feudal lords to settle around him, offering them tracts of land atop the hills that constitute the city centre. That way, he surmised, he could monitor their movements and make sure they did not rebel. The regional rulers’ feudal entourages followed too and built their houses along winding lanes that followed the contours of the land. The rivers at the bottom of the hills delineated where one ruler’s land began and the other’s ended. Those who were of the lowest order settled in mud huts that clung to the riverbanks, thus creating the prototype inner city slum.

In Addis, the population is likely to triple within the next few decades and top 10 million

A relic of that age still remains, tucked into the hillside below the Piazza. The Taitu Hotel was built in 1907 at the whim of Menelik’s wife, the Empress Taitu. During the Italian invasion in 1935, the sharp-tongued British author Evelyn Waugh stayed for months on end while awaiting permission to go to the front. In those days the access street was cobbled, laundry hung from balconies and pedestrians sauntered mid-road without a glance backward at the overladen donkeys that were a common form of load-bearing vehicle. There were no paved roads, people travelled by horse and cart, the silver Maria Theresa dollar was the coin of the realm and piped water was considered an elitist luxury.

The Taitu, an art deco fly in amber that is still open for business, has changed remarkably little in the intervening years. Its corrugated-iron roof is foxed with rust and bougainvillea covers the latticework balconies. It is a favourite after-work watering spot where Ethiopians pack the tables by the bar. The annex that once housed the dining room kept apace with the times and became a popular jazz club. It burned to the ground at the beginning of the year and the conflagration spread to the upstairs bedrooms. They have since been renovated and are receiving guests.

A quarter of a century ago, the Taitu still offered a barely altered view of the city. Coptic churches thrust their domes up from stands of eucalyptus trees. Old men dressed in the traditional garb of jodhpurs and turban and women in white shammas stopped to pray at the gates, kissing the metal intently. Passers-by dropped coins into lepers’ dirt-smudged palms. Clusters of low-storeyed cement-block buildings were webbed together by sprawling shantytowns of mud-and-wattle houses with corrugated iron roofs. There was no piped sanitation. Garbage festered in open drains. The regime of Mengistu Haile Mariam still clung to power. The trappings of Marxism were in evidence: from ration cards for food to the obligatory blue and khaki suits that denoted cadres of the Workers’ Party of Ethiopia. Few people owned a car and even fewer had a telephone. Donkeys were one of the preferred forms of transport for cement and building materials.
Mengistu nationalised land after toppling Emperor Haile Selassie in 1974. People were allowed to own one house only. The great majority of the housing was informal mud-and-wattle structures. The state rented them out to the people. In the absence of maintenance, most housing units fell into disrepair. When the Ethiopian People’s Revolutionary Democratic Front (EPRDF) seized power in 1991, a new broom swept the town. Like its predecessor the EPRDF government was socialist, but their modus operandi was dubbed “state-driven capitalism”. Plans for growth and transformation were announced. Riding on the back of a projected annual GDP growth of nearly 15%, Ethiopia was going to join the ranks of middle-income countries by 2025. Restrictions were eased to allow entrepreneurs to play a role in the economy and attract investors in textiles and leather goods, but land ownership remained with the state.

 

In 2011, the municipality decided to clear all the slums in central Addis and turn it into a business district. The Urban Lands Lease Holding Proclamation nationalised urban land and eliminated all remaining forms of transferable and inherited urban private property. In cases of conflict of interest between public development projects and private property entitlements, the government’s interest took priority.

“In effect, the municipal authorities were saying that they wanted to replace all informal structures by 2020,” says Felix Heisel, a researcher at the ETH Zürich and former lecturer at the Ethiopian Institute of Architecture, Building Construction and City Development. “That meant 70% of all the buildings were to be replaced and their inhabitants relocated. A sustainable redevelopment of this scale is impossible to achieve in only eight years. I have the impression they wanted to emulate Dubai or Shanghai.”

After a gasp of disbelief, private developers took stock of the situation: they saw untold opportunity spread before them. No building in the business centre was to be less than seven storeys. Land was to be auctioned on 60-year leasehold. The reforms set off a feeding frenzy and land prices sky rocketed, overtaking those in European capitals and rivalling New York. In Bole, a part of the city near the airport, land is sold through closed bids for $17,000 m2. In contemporary Addis the fault line between poverty and success is always underfoot. Newly built highways skirt partly demolished slums as they thread their way between four-star hotels, burger joints and beauty salons funded by the Ethiopian diaspora.

“This is like being in happy hour,” grinned one developer as he sipped Coca Cola in the courtyard of the Radisson Blu Hotel, a popular spot for the well-heeled. “We borrow from the banks to build. The rates are high and the lease is short, but it will be worth it. It’s a high-stakes game.”

The gap between housing supply and demand widened from 4% in the 1980s to 27% in the first decade of this century. In 2005, the government launched the Integrated Housing Development Program, a five-year plan to provide heavily subsidised shelter to low-income and middle-income families. The intention was to build 400 000 units, create 200 000 jobs in the construction sector and stimulate the growth of 10 000 small enterprises in cities across Ethiopia. It earmarked 175 000 housing units in Addis alone. By mid-2010, 80 000 units had already been released into the Addis real estate market. It was a formidable achievement given how ill-prepared the construction sector was for the task that lay ahead at the outset of the programme.

“What the Ethiopian authorities are doing to solve the problem shows admirable ambition,” thinks Heisel. “Their housing initiative is probably unique. They are adding apartments on a grand scale throughout the city, but no city in the world could overcome a housing shortage on the scale that Addis faces, especially as migration is adding even more to the demand. The solution requires a multiplicity of actors, materials and designs.”

Given the insatiable demand for homes, the city administration introduced a public lottery system for the allocation of condominiums. The random selection process was deemed an equitable method for meting out housing in a desperately over-subscribed market. In 2005, nearly half a million people put their names down in the hopes of getting a home. Today there are one million people registered for the lottery.

Condominiums are available in three categories to accommodate monthly earnings ranging from $23 to $138. The payment formula allows the buyer to make a down payment equalling 10%, 20% or 40% of the unit cost, and then to pay off the balance through a mortgage. The unit costs are weighted to favour low-income households. Studios and one-bed apartments sell for 30% less than their construction cost, while three-bed apartments carry a premium of 10% above the construction cost.

The housing scheme is a work in progress. It has never received donor funding, and it has had to be innovative to ensure its survival. As a result, state intervention and capitalist market forces continue to display an unusual capacity for mutual accommodation. During the first phase, construction was funded from municipal coffers, and prospective buyers were only required to make a down payment once they had been allocated housing. After three years, the municipal administration ran low on funding and remodelled the financing format. It began to sell bonds to the Commercial Bank of Ethiopia to underwrite all aspects of the programme, including construction costs.

This new system demands that aspiring homeowners start putting down money as soon as they sign up for the lottery. Two years ago Abraham applied for a three-bedroom apartment ($17 400) on the 40-60% scheme. He has been making deposits towards the 40% down payment ever since—his money goes into a blocked savings account at the Commercial Bank of Ethiopia. The full construction costs of the condominiums will, over time, be recovered from the buyers. The land and infrastructure costs are recovered through the sale of commercial units for shops and restaurants. With real estate prices soaring, if Abraham had applied for his apartment today, it would have cost him $24 700.

Among Ethiopians, Abraham’s monthly expenditures on rent, utilities and the down payment on his new condo are considered onerous. He can manage because he has skin in the development boom. Abraham has hired out his modest stable of dump trucks, cement mixers and generators to the ubiquitous China Communications Construction Company (CCCC), a Chinese state-owned enterprise which is currently building a six-lane highway to Nazaret, a town 100km southeast of Addis Ababa (and also known as Adama). It is Ethiopia’s first expressway and comes with a price tag of $612 million. The project’s financing mix is typical of much of the development in and around Addis where infrastructure tends to be financed partly by loans from the Export-Import Bank of China with the balance funded from federal or municipal coffers. It was the Chinese who funded and built the new African Union headquarters. They are responsible for about 70% of all road construction in Ethiopia. China is also one of Ethiopia’s principal trading partners, alongside Saudi Arabia. Nearly half of Ethiopia’s foreign debt is owned by China.

The CCCC’s most recent success lies not far from Abraham’s apartment. An electrified light-rail commuter system was inaugurated this September, the first of its kind in sub-Saharan Africa. It has the capacity to carry 15 000 passengers an hour in one direction over 34 km of rail and is billed as the transport solution for connecting the condominiums that are being built on the city periphery to the city centre. The Beijing-headquartered Export-Import Bank of China has underwritten 85% of the $475 million project.

When does Abraham think he’ll get a home? He smiles and shrugs. “It depends on the government’s will.” The government’s will, as he puts it, gives priority to those who make a onetime down payment in full. However, less than 10% of homeowners can do this. Abraham hopes to pay off the 40% down payment in five to seven years. Once that is done and his name has been picked from the lottery, he can negotiate a mortgage with the Commercial Bank of Ethiopia at 14% over 10 years.
Others buyers, like Efrem*, a teacher, have used the housing scheme to leverage their quality of life upwards. After winning the lottery and paying his deposit, Efrem discovered he could not afford to cover his utility bills so he rented out. Then after a few years, he sold at a good profit ($25 000) to a landlord who already owned several rental properties. It was a black-market deal as it is illegal to own more than one condo. Efrem used the money to buy a more spacious apartment further out of town, as well as a small vegetable shop that supplements his teacher’s salary.

This year, housing programme officials had to rethink their policy yet again. More than half of the lottery applicants were signing up for three-bedroom units because they were more suitable for families. In response to the demand, the Ministry of Urban Development, Housing and Construction commissioned designs for apartment blocks with 16, 20 and 24 storeys. The original concept was only three and four storeys so that the buildings would not need costly elevators.

“The price of the houses may increase,” says Desta Shewamola, head of the department of houses and building design preparation and implementation. “The government, however, may subsidise it.”

Given the insatiable demand, according to Shewamola, the government is now looking for a helping hand from private contractors to develop housing complexes. It is also considering inviting foreign investors to do the same. If this happens, it will put smiles on the faces of the academics and non-government planners who originally contributed to the master plan. “In terms of where the government should be directing its money, it’s not the perfect solution,” offered one contributor. “If the private sector was allowed to operate too, the government could concentrate on low-cost housing.”

Private-sector architects and planners worry that despite the incredible progress that has been made, the programme is dismantling social and economic structures. There is a saying that underscores the strong sense of community that is part of Ethiopian culture: “A next-door neighbour is more important than a distant relative.” Yet condominium clusters tend to be sited on the periphery of the city, isolating residents from job opportunities and their traditional social support network. Another problem is that the city authorities have omitted to create green spaces for playgrounds, parks and sports facilities.
“We have to restructure the city from a holistic point of view rather than focusing exclusively on housing,” says Fasil Ghiorghis, an architect who worked on the original condominium designs and who holds the chair for conservation of urban and architectural heritage at the University of Addis Ababa. “Experience from around the world shows that no state—middle-income or otherwise—can provide enough housing for all its people. Instead of trying to achieve the impossible we should be figuring out how to reach more people with less money.” Ghiorghis believes that standardised turnkey housing doesn’t fit individual needs. “Give people a basic infrastructure that they can finish to their own requirements.”

Ethiopia has the largest population of slum dwellers in eastern Africa. In 2007 the figure was put at 11 million. An unknown but very large number of slum dwellers are being evicted to make way for inner-city development. The relocation procedure is considered exemplary, even by the World Bank. Landowners are given a 90-day notice and compensated at the market value with relocations costs covered. While 80% of Addis residents live in “slum-like substandard” housing, according to UN Habitat, few of them have claim to the land they live on because they rent from the government on a contract done with a handshake. They also cannot afford the condominium scheme despite the favourable subsidies.

With no alternative place to go, they will be forced to move to the extreme periphery of the city where they will build yet more informal structures. In Arat Kilo, for example, not far from Prime Minister Hailemariam Desalegn’s residence, hundreds of people are being evicted from their shacks on the banks of a river to make way for an extension to the Sheraton Hotel. It is uncertain where they will move.

Soon Addis will have an expressway connecting it to other cities, an industrial park, a light-rail system for transporting hundreds of thousands of commuters, several four-star hotels, glass-fronted office blocks and a massive increase in affordable housing. But it does not have the underlying infrastructure to support this expansion, nor does the new city taking shape have green parks to relax in or fresh air to smell.

Is this miraculous makeover of Addis a role model for future urban growth elsewhere in Africa? Or is there still much to fix to fulfil the ambitious dreams of the planners? Measured against the yardstick of sustainable prosperity indicators, Addis—with its tightly choreographed rejuvenation—is rated on a par with Lagos where expansion is largely unscripted. Observed an urban expert, “Addis is growing, but in what sense? Urbanisation is not about housing; it’s about the people. We’re pushing the poor out of the city. There should be a critical assessment of how renewal is impacting on lives and livelihoods.”

* Not their real names

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