UNITED NATIONS
ECONOMIC
SOCIAL COUNCIL AND
ECONOMIC COMMISSION FOR AFRICA
AHD GERKilN FOUNDATION FOR DEVELOPING COUNTRIES Meeting on Technical and Social Problems
of Urbanization
(with Emphasis on Financing of Housing) Addis Ababa, 8-23 January 1969
OEE GHANA ROOF LOAN SCH.
M69-8O
THE GHAKA ROOF LOAN SCH
■ TABLE OP CQETTMTS
Paragraphs
Introduction. , '. * '.. -J
Differences and difficulties* 2 - 7
Eecent Experiences *..., 8
Tho need for a fresh start,, ; '' 9 - -]0
Housing finance in Ghana-... ... 1.1 - 1^
The roof loan programme.... ,. ,. 17 - -19
Advantages claimed for the programme 20
The implementation of the roof loan programme. 21
Village housing societies, ,.. 22 - 23
Inspection of the? house 24
The working of the roof loan scheme 25-27
Lessons and conclusions. 28 - 32
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' B/CN.14/H0U/32
THE GHAEJA ROOF LOAIT SCHBpJ^
■ 'Introduction .'■../ ■...■■ ■ , ■■■ - ' ■ •■ '■' ■ ■
' 2£-a -h? ^P9m of:^bi^ "P9P.er is" to" illustrate- :the "advantages
■ '-o-f developing in Africa n«w.-systems "of housing finance
« ^especially designed to meet the particular needs of African
countries. ... ■ .■..-• ■■ . .. -- j ,„"! .
' Differences and Difficulties ' ■ .- ■ '■:.■■■ ". •;
%e ho'usirig, fin,anc:e-methods of Northern Europe 'and ¥orth
— 'were,'development in .predominantly. middie-class urban
fc>4-g?ie-;a .xo ■ onanner midale-clas.s., savings into
to meet- middle-class needs of housing
^ and ^no-income gtoups are
IZlfl institutions touch, only a small part of the problem.. I( .. Tg th°Se in need of ^sing. , Middle^class based
4. Many of the newcomers to cities think of themselves as temporary urbanities.., : They expect to return to" their 'native village Vfeen they have saved enough, or at the end of'their
Tnihefr ole"^^ey ***%*' V***™' *> i^st their savings
£Jl °^ VXll^e ^hex-Man in the city. Customs of this
''11^' .^t,they,are..still strong enough
or rftal ™1hT /3avinS ^d the d«-«d for home ^f
or rent^ accommodation-, in-cities. ■ ■ ■ ■- ,
?\' \^f\f°' ^ba» expaasjcas is.held under
of land-tenure and Is therefore not
lnSl
, this 13 the exception rather than the norm,.thif?i ?,aTal abiS a&] sscur"y »' housing finance. In t^ ^ar ne^fiable
To be effebtive on a national scale, an African system of and.borrowers, than a comparable system in the west.
the*e difficulties'are differences in savins habits
f 1 S? ?f' °'H- KoeniSs^rger, Head, Department of
ical Studies, Architectural Association, London. The views expressed in this paper are.not necessarily those of tte
secretariat of the Commission.
Recent Erperj.'anne8.
The need for a fresh ate^t
I'* no^eTfoVhoS fi
saving that might ^
lonsistinfol
and
*<****"« that there
Housing finance in
of
intended to illustrate this
a housing
(a) A rental housing programme for lov-Laeome groups;
b A h^e-purchase programs Of publicly-built.housing;
was, restricted to asmalla small
ff ^7 Pr0S^amme (o)
of comparatively wealthy borrowers.
tractors for
S/CH.14/H0U/32
Page 3
: ' (3) -The applicant had to' nave a clear title to his land . ■
■ ' or a lease'for not less than 60.years. This rule,
•■ combin.ed with the scarcity'Of marketable titles, . limited'the -land available for■ security.
(4) There had to he a contractor for every house. This had
the effect of restricting lending to expensive houses and of eliminating, the owner who built a house with his
•■■■ ' own hands or in, slow; stages through a'small builder.
_ ■■ , These restrictions held the1 number of applicants down to
;..; ■■ .a mere trickle,1 ..- "....:.... .'..-... ..'....
■ 14. Following a report by Charles Garratt-Holden.l'the Gover
of:Ghana proposed, in November 1954, .to earmark just under £2 . million sterling for investment in'a government controlled and
managed, building and loan society.'
15* Before proceeding with this project, the Government of Ghana -consulted"the first United Nations Housing Mission and was advised
against-the commitment of all its'resources to the proposed building ,and loan society.. -.The W: Mission, argued that this
proposal would duplicate the existing loan programme, cater to ^ the
needs of the same- limite&'ciienteley discourage private initiative
in the building ..society field, .and yet fail 'to reach a substantial number of would-be home:owners and investors.16. The- UN Mission suggested that'the grant of £2 million be
.split and used for , two: programme ss--'
£890,000 was to be invested.in a mortgage bank intended to
encourage private initiative in the field of housing finance.
: . .. The .remaining £1,100,000 was-to be used to start a new venture-intended;., to reach a-lower income';level. This new ' ,. . .venture was .called, "the roof loan programme".
The roof.loan programme^ ■ ...
17v.The'programme is best described by auo-ting from the report of
the. UN. Mission-' . . ■ .. ■ ■.,-,.:;.'
'17-1. "Among all these programmes- ■{'ivev.-.tfoose quoted in paragraph 11.(a), ,(b)? and (c) supra), there is none for the" predominant
,por:tion.of..the population, i.e.', those who live in self-built^housing. The-se .families include, not only those in small
.; cement.block.houses, but the dwellers in swish, swish-crete.1/ £j;-that time Secretary of, the -Building Societies Association,
London. ... ..-.-.-.
2/ United Nations, Eeport No. Tm/G0c/i dated 26 April 1956.
Page 4
. wattle-and-daub and thatch. They represent -the country1s largest building resource and economically the most
. important. These people supply their own labour, use local materials and a minimum 'of imported materials. They
are also the lowest income families for whom Government aid .-is "most justified*
1?«2 The roof, the Mission found, is the main aspect of the
housing problem in the Gold Coast. Whether of iron sheeting, aluminium, asbestos, thatch, tile or shingles, the problem of quality, durability or finance persists. If the roof problem .can be solved in the Gold Coast, a major part of the housing problem would be ea^gd, ' ~" "
17.3-The Mission therefore suggests the use of the £1,100,000 fund^reserved for the Building and Loan Society as a. revolv- ing Loan Fund for a Hoof Loan Programme. The advantages of such a programme are thats
(a) it directs part of the Government's financing efforts
.towards the lower income families? " '
(b) it relies primarily on self help and encourages it;
- (,c) • it emphasizes local materials in the wall structure;
(d) it/enables the building of large quantities of housing;
(e) it holds down the loan on a new house to an absolute
minimum;
(f) it enables the Government to influence the choice of
materials for roofs and tb evolve a programme of mass
purchase. .
17-4. There are many other. advantages .- it'.might ease the per-
<■ ■ plezing problem of the "unfinished house." and even bring into being the "unstarted house", represented by the vast
stocks of sterilised building blocks punctuating city
streets. Loans on the roof would be represented by the last section of the building,' which.would enable .the lending agency to, "be selective in its loans and reduue the danger of
defaults in completion. The loan would be made only when, ■ after inspection, the'roofless building was- found to have a
■ ■ good foundation and a s-lid wall structure.^
17.5«The roof loans would, be in varying amounts depending on
whether the roof is of olay tile,. asbestos, aluminium, woodshingles> corrugated iron sheets, thatch or .other materials.
Xhe largest loan would be made ■ on the roof.'with the longest
life expectancy, e.gE? clay tile or asbestos, but differen
tials would be set up to ..encourage production of local
, 14/HOU/3te
E.age 5
■.; • materialjs- such as clay-tiles,.; a-recommendation for the
■ . " .,. development of which will-.be contained in the Mission's
■ . -final Report. ■■■.■■■ -.- .: .. i- =■■.■':
1-7*6.The., ■term:."Roof Loan- Scheme" is.:.used- here more for the purpose of^identification than for1 comprehensive description..
Loans for the roof might well, include some additional , ■■ -.advances .fpr doors and. windows "and for'finishes. For a
,;. small two-room cottage of-about 2€&- so., ft. plinth area, the
;. . cost-would .run rougbly as.'follows:-
Of
Cost of doors and windows Cost :q£ .;lime wash1 .' ,
■' ' il COST
£
£
£
£ 60
8 2 70
,..;.- • representing, abput one-^uarter .to- one third of the value . . .of the whole,;building". ■ ■ . -. „ .;■
18. The United Nations mission recommended that a central dis
pensing, agency.b.e set-up for.--roof .loans.-: It^ did not go into details .whether; this should, be. a government department, a board ..pr. a. corporation, but :it emphasised the ^desirability of making
it independent of political pressures.:.- '
1.9- In t.he-. absence of negotiable ■■land.as-.security/^for the roof "
loan, the: XM" mission suggested "that loans 'should be made dependent
on ,the. agreeinent of., the .-.Ipcal communityj- -which should advertise
its;.iKitention ,to -support,, a loan, application ■and--invite "objections
■%°.m Persona ,.p]Laiming to, have -an-.-iaateteest in th:e daihd'. If no
ob""jec-tion,.was ^a^sed.;, /the whole -building .■should .be•■■treated .as '
security to t-he( extent of. t-hB, loan;and collection .costs. Upon default.;,, the. central-agency -would : have ■-tG-.-f6xeolo.se"> on the "
building; (not- the .land,):- and,-extraot rent fdir the-totiilding, '
sufficient, to, enable repayment .of. the l=oan^ with' -Interest and chajrg.est., Failure to. pay„■ the •fixed rent would;-authorise eviction and. sale of the, .building: fo&f -the -,outstanding', amount 'of the loan.Advantages claimed for the programme
20. The following advantages were" claimed ''for' the 'proposal of the UK", miss.ionj- ■■ . . ■■:.;..■■'*:. -■' . ■'-■'■
(a) By restrictimglpans. ta-.-a.-part-af ,a: house, it would bo
possible to :give many&.small loans"instead'of a few
large ones. The benefits that could be derived from the
available government funds were to be spread over thelargest possible number of projects. ,
Page 6
(b) It would overcome th,e restrictions of the African land
tenure system by using the house as security rather than the land on which it stood. ' The lengthy and tiresome search for titles which had delayed and frustrated most previous attempts of- popularising housing loans would "be eliminated.
(c) The whole house, would be used as security for a loan
covering only a part of it. An added advantage would be the replacement of paper securities by the realities of brick and mortar: the walls of the house had to be in existence before a loan for the roof could be given*
(d) Savings in kind such as stores of bricks, cement
blocks, stabilized earth walls, etc., could be used for the benefit of house production.
(e) Local communities would be involved in the question of
housing finance. Understanding of housing matters and a sense of responsibility would be among the results.
(f) The Roof Loan Programme would be tailormade for local
conditions and would not depend on the import of foreign capital, foreign concepts and foreign insti tutions.
The Implementation of the Roof Loan Programme
21. The Government of Ghana accepted the recommendations of the UIT Housing Mission and entrusted its newly-formed Ministry of Housing with the execution of the project. The Ministry decided to restrict the revolving fund initially to £300,000 and to try out the project in rural areas rather than in the cities of Ghana. .The .extension of the programme to urban areas was to follow after it had proved successful in villages."' The rural housing branch of the Ministry was entrusted'with the detailed supervision of,the programme and the Department of Community Development and Mass Education was mobilised to assist in its ■
execution.
Village Housing Societies
22; The United .Nations Housing Mission had suggested the involve ment of local authorities in the programme- The Ministry of Housing went further and invited villages in all parts of the country to form "village housing societies11.- These societies had
E/CN.14/HOU/32
Page 7
to. consist-of- at least 20 members,■including 5 of the seniormost heads of households. Each village' society was entitled to
propose every year 5 "of its members for roof loans. The loans were made in kind after the building had "been inspected and certified as of sufficient quality and durability to justify investment in the roof,. .The loans, were-'.in'terest free and had to be. repaid in four annual instalments at harvest time, beginning one year after the" making of the loan and completion of the roof, 23- The village housing society was held responsible for the punctual repayment of the loans. If'a member of a society fell . into arrears, with"his repayments,"his society was warned and, if
it did not succeed in making him pay tip,' the society was blaok- listed and excluded from the right of proposing further loans
■until-its member cr members had paid his 'or their debts. In other wsrrds, the- society undertook a corporate, responsibility fo.r th©
security of the loan. This was intended as an additional
.security to the mortgaging of the building.'
■Inspection of- the House : ' '
24. Whilst preparation for the issue of the first loans was. in progress, tire-Department of Community Development and Mass ; Education trained a number of inspectors to check applications for roof loans. It was the duty of these inspectors to visit applicants to &ee whether foundations', - walls, doors and windows, etc., were of- a-sufficiently high standard to justify the issue of^a roof loan. Well-Vuilt earth walls were acceptable under
■this project as long as the*inspector felt confident that they
■would'last--five years until' the "loan was repaid. If the sub- ' structure was accepted,' the inspector gave the applicant a voucher for the number of roofing sheets, purlins and hardware needed,-. The'.applicant could collect these materials from ;tne nearest 'store or government depot. No money,would change hands until the ..beginning of the repayment period.
"The Working of the ...Roof Loan. Scheme ' '
25* .The roof loan project was in,operation for approximately six years. It. proved popular. -The number of loans was limited merely by,the size .of the revolving fund, but not by lack of applications
from village housing societies. ■
26, After five years the number of bad debts was reported to be less than ..6- of 19S. This was claimed to be due mainly to the '
■influence .of the .village, housing societies, which did not wish their names to, be blacklisted, ■ ■
E/CN.H/HOU/32
Page 8
27- In spite..of its evident success in rural areas, the project was never extended, to cities as had been envisaged originally.
■It was eventually closed down for-reasons of internal politics. . , unconnected with its economic success or:failure.
Lessons and .Conclusions ■ .-■■ ... i "*
. 2d,_ The. foregoing account of the Ghana Roof Loan Scheme is in
tended to illustrate the point made in the "beginning: African needs for housing finance cannot "be met entirely by the import of institutions. a.nd .capital from abroad... Both are needed, but neither is likely to.satisfy more-than a small fraction of the'demand. ] ,. ■ . . ...
29* The,Ghana Roof Loan-Scheme- is.not'quoted as a pattern to be _accepted_and copied., elsewhere. It is.quoted as an example qf.'a
successful attempt to find a specific solution for specific local conditions. It demonstrates the importance, not only of a thorou thorough knowledge of the.social traditions of a country, "but also of respect for traditions, that are sometimes more powerful . / instruments of social administration than imported institutions,-' 30. The principal lessons to "be learned from the Ghana experiment
are these:. , . - -
\~\) It is possible to devi.se a system'of housing finance for genuinely low-income- housing?
(2). It is possible to extend such a'projept to self-helj
builders-within the- no-t-completely-nionetary economy
.of a village? . ■ .
(3) It is possible to operate such a"scheme on the basis of
' a revolving fund without substantial losses;
■ ■ (4) It .is possible to circumvent the land tenure problem
by substituting guarantees of local groups (village
•;housing- Societies).:.for land- "as- 'collateral;
.(5) It is possible to utilise existing traditions of saving
■ in. kind (such as collecting cement., blocks and other
. forms of instalment jDuildingV'to increase production ofhouses-with a minimum'of government investment?
■ (6)- It .is possible to administer a housing finance project
with the help of;existing government institutions and
local voluntary associations (village housing societies)
without building up an expensive new bureaucracy.1/ Conference document Ho. S/CH.I4/HOU/2I contains a most valuable
study of such traditions in some East African countries.Page 9
':^:;Qh4aa,-,f3X5.Qrijnont.must be ••■considered inconclusive in the
llbwing.-aspqets.:-, :. <; :,■-?:■■■•,;:■: :" ■'■■■" "" ■ :"- ■ ' ■-■■y'-
(1) The total effect of the project on the Ghana housing
situation during the period of its operation is not known. How.many loans were given per annum? How many houses were completed? How much was the increase in tho figures for completions of houses compared with
previous years?
(2) ^©.overheads of the project are not known. How much
of the time of the Permanent Secretary of the Ministry of Housing, of the Director of Eural Housing, of the Director of Community Development and Mass Education
and of their subordinates was spent on the rcof loan
project? What was the cost of the inspectorate and other administrative arrangements?(3) The Ghana experiment did not leave room for the
participation-of private capital other than that of the
applicants for loans themselves. It did not contain an element of profit which might have made it possible to
increase the revolving-fund through the participation of private investors.(4) The Ghana experiment did not generate savings other than
those m kind represented by the investment the
applicant had to make before he was given a roof loan.
(5) The Ghana experiment did not provide an indication
whether it would' be possible to finance an institution
tor low-inoome housing loans, wholly or in part, froma collection of middle-class savings (deposits).
(6) The Ghana experiment was inconclusive about the
possibility, of securing the repayment of loans through voluntary associations (neighbourhood housing societies)
also under urban conditions.aspsots did no* form past of the Ghana project,
SiV9 bG0aUS9 th the ^tda--
™£> \ * fTfbG0aUS9 the ^^^^antrecdrasare,un
published. A detailed survey-of. thorhistftry.ahd^results.of
r<c. ' 'v '. * ■'■"■ /' ~h : '" .
Page.10
long
agency^ would go a
d and would ,ro7e
0 ied
