Urbanisation in Ethiopia

Massive investment in housing and energy, sewerage and road infrastructure is transforming Ethiopian towns and cities. Everywhere there is housing development of mostly concrete apartment buildings many with ground, second and third floor commercial uses, but also vast developments of eucalyptus and mud houses on the outskirts of smaller towns. Chinese road gangs, who live in self-contained settlements on the edge of towns, are building many of the new roads.  In Aksum in seemed that everyone was employed to pave the streets! As most people travel on foot or by buses, vans or bajaj (tuk tuks) there appear to be few garages or parking requirements and housing development, even in rural areas is dense.

Current and projected urban and rural populations

Ethiopia is about a seventh the size of Australia. Its 2017 population was around 105 million, the second largest in Africa after Nigeria. A European Union study in March 2017[1] found that 83 per cent of the population lived in rural areas and 17 per cent in centres bigger than 20,000 or in 820 small and emerging towns mostly larger than 2,000 people. The study projected a rural/ urban split of 76.7/23.3 per cent by 2020.  Family sizes, especially in rural areas, are large and 70 percent of the population is under 30.  

The capital city, Addis Ababa, is experiencing extraordinary population growth and urban development with satellite suburbs of condominiums, each housing up to 200,000 people, sprouting on farmland around the urban fringe. Addis is a relatively new city, founded by Menelik II in 1886. In 1974, when Haile Selassie was deposed in a military coup after 58 years as emperor and regent, its population was estimated to be half a million at most. By 1991, when the Derg regime was overthrown, there may have been about a million people living in the 2,300m high hills below Menelik’s palace.  Today there are somewhere between 3.4 and 5 million people living in the city and new estates and this number is expected to reach over 8 million by 2030.

Settlement

Many settlements in the country are without proper sanitation or clean water, many lack steady electricity, there is limited public transport and rubbish collection is grossly inadequate.  A 2015 survey of housing in 27 districts[2] showed that about 30 per cent of Ethiopia’s housing was informal – organised illegal housing and slums.  Of the 70 per cent of formal housing, the Government, through the Integrated Housing and Development Plan (IHDP), provided 51 per cent and individuals (through co-operatives and leases) 22 per cent. Municipalities (outside the context of IHDP) provided 0.5 per cent and private developers 0.4 per cent.   

Most formal housing is privately rented or owner-occupied. Under the Derg land was nationalised and there was some settlement in government housing or kebele (small local regions) housing and a ‘villagization’ project to concentrate rural populations in centres which would be easier to service. Since 1991 the government has managed to regulate the existing government and kebele housing so that renters have contracts and are paying rent and there are titles available for each property. Public rental housing stock is in decline, however as kebele units are demolished in the old parts of cities such as Addis Ababa, as well as many of the regional capitals.

Informal housing in urban areas, developed after 1974, is located on land that had been reserved for residential development and public spaces, peri‐urban locations designated for future urban expansion and riversides and hilly areas not planned for residential development. The 2017 study[1] notes that the problem of informal housing has its roots in:

·       The failure of city governments to provide sufficient land and infrastructure for residential purposes,

·       the inability of city governments to enforce building control regulations,

·       the lack of housing finance mechanisms - especially for low-income households, and

·       illegal management of urban and peri-urban land by illegal real estate developers (mafia), brokers, peri-urban farmers and corrupt bureaucrats and administrators.

In terms of quality of construction, over 50 per cent of the housing units in urban centres are categorised as sub‐standard and poor quality. Surveys of housing quality in 2007 and 2011 showed for example that 57 per cent of units had earthen floors (49 per cent in 2011) and 52 per cent had no ceiling (35 percent in 2011). On average 44.9 per cent are single room units. Over 44 per cent of the housing units have an average number of persons per housing unit of 3.8.

Integrated Housing and Development Plan (IHDP)

In 2003, Addis Ababa implemented a large-scale housing development program which was scaled up in 2005 to become a countrywide Integrated Housing and Development Plan (IHDP). In 2006, the government-owned Commercial Bank of Ethiopia (CBE) started to make available construction finance to regional governments. By 2016 the plan was being implemented in a total of 56 towns. The IHDP aims to:

·       Increase the stock of urban housing

·       Upgrade dilapidated inner city neighbourhoods

·       Achieve efficient use of urban land

·       Improve the image of cities

·       Generate employment, especially for urban youth, through micro and small-scale enterprises

·       Promote private and national savings

·       Increase home-ownership among low income households

·       Promote low-cost housing technologies

·       Develop a modern construction sector

The IHDP is also working towards meeting Millennium Development Goals (MDG) 1 -alleviating chronic poverty through improved access to basic facilities (such as shelter, water and sanitation) and 7 – Target 11 - improving the lives of slum-dwellers by increasing their access to housing and economic activities.

Since launching the plan, Ethiopia has built condominium estates in the larger cities and rural housing in medium-sized towns at a pace unrivalled anywhere else in Africa. More than 300,000 subsidised flats have already been allocated to new owner-occupiers in Addis Ababa, Hawassa, Bahir Dar, Mekele and other smaller towns. The government aims to build 50,000 units each year in Addis. [2]

IHDP Housing

 IHDP housing units are transferred through a lottery system. Prospective owners become eligible to enter the draw if they have saved the relevant proportion of the total cost. There are three project types; 40/60, 20/80 and 10/90. Paying back the full amount plus interest and receiving the title deeds usually takes around 15 years.

The 10/90 blocks are all studios and cost around $6,500 (representing a deposit of $650). The total cost of a three bedroom unit in the 20/80 blocks is around $36,000 whilst a two bedroom unit is around $31,400. The 40/60 developments target middle income households and are above $48,300. The City Administration Housing Agency recently held a lottery for 5,000 condominium units for government school teachers comprising 1,418 studios, 2,825 one bedroom and 757 two bedrooms. Public bidding is under the control of the country’s Ministry of Urban Development and Housing and is said to attract bidders from all strata of Ethiopia and to exclude venture capital and foreign capital interests.    

Private Development

The real estate housing sector is concentrated in Addis Ababa and its surrounding towns and other major urban centres such as Dire Dawa, Adama, Bahir Dar, Hawassa and Mekele.

Construction by private developers has been significantly below the expected output.

In Addis Ababa, between 2000 and 2011, housing supply by the private sector was 3.8 per cent, compared to 61.1 per cent by the government and 35.1 per cent by individuals (cooperative and lease). There were times when the government had to repossess part of the idle land already given to real estate companies[1]. While private developments are affordable for upper income households, now, because of the exhaustion of land in Addis developers are economising and building apartments rather than villas

In 2014 the government announced the Diaspora Housing Scheme, which aims to encourage members of the Ethiopian community abroad to return and invest in the country’s development. The scheme offers housing  similar to the 40/60, 20/80 and 10/90 condominium housing schemes and is said to have attracted tens of thousands of Ethiopians abroad who have shown strong interest by registering through their respective embassies and consulates. In Addis Ababa we visited a five-year old private estate of 100 three-storey houses.  Several residents of the estate lived there part time, continuing to work as doctors in Sweden for the rest of the year! (This estate had an active local neighbourhood committee which had successfully stopped the Church opposite from broadcasting loud prayers between 4.00am and 9.00am!).

Infrastructure

Generally, services are expanding with the condominium developments. Every site is planned to include basic health care clinics, kindergartens and elementary schools. All ground floors on all types and, on the new 40/60 blocks the first three floors, are reserved for commercial business activities.

Transport infrastructure, such as roads, sewerage and energy systems is also being expanded. Labour-intensive, cobblestone road projects are creating job opportunities for unemployed youth and providing them with seed funding to start their own small business. [1] Addis Ababa opened its two-line, 34.4 km light rail system in 2015. The line was financed by China’s Export-Import Bank (Exim Bank), cost $641 million and took three years to build.  It is overcrowded, only serves a small part of the city and is generally regarded as making traffic congestion worse. Planners have noted that that it has no connections to the bus network, insufficient power to run enough trains and very difficult pedestrian access to stations.[2] It seems that it wasn’t included in the Addis Ababa Strategic Plan.

Challenges of IHDP

There are about a million people on the waiting list for a condominium in Addis Ababa [3] but the real need is much greater. While the amount and pace of construction looks amazing to the outsider, the IHDP has been criticised, primarily for failing to provide sufficient housing and housing for low income households.[4] Initially the prices charged by the government were too low to sustain the programme. So in 2013 it introduced a scheme explicitly aimed at the middle class—those who could afford down payments of 40 per cent and also announced that people who had saved the whole price of the property would skip the lottery and head to the front of the queue. While waiting, applicants have to keep putting money into a savings account. If they stop, they are tossed off the list, further weeding out the poor. [5]

It is claimed that the Ministry of Urban Development and Housing hasn’t completed design work in time and that the city administration hasn’t provided land for construction. Finalizing and transferring the housing units to beneficiaries has also taken longer than anticipated. Some households that won the condominium lotteries then found they couldn’t pay the balance and others couldn’t raise additional finance to complete the finishing work. Some larger households found the housing too small. Infrastructure hasn’t kept up with development and there has been poor quality of construction, especially of sanitary and electrical installations.

Particularly in the centre of Addis Ababa there has been an extensive slum clearance program with new developments such as condominiums, hotels, private apartments and office and business complexes replacing the informal settlements.   A friend’s family is being moved from a settlement across the road from the African Union building because the site is being turned into a ‘resort’. In this case, and in most others, the replacement land and compensation is insufficient and a source of dissatisfaction. Those displaced have to rely on other income or family support if they want to build a replacement house.

Addis Ababa is facing a land shortage. In 2014, municipal authorities published the Addis Ababa integrated zone master plan. The plan proposed an expansion around the city, beyond the existing municipal boundaries which would have split the region of Oromia in two. This was fiercely opposed in a series of demonstrations from 2014 until the beginning of 2018. The plan has been withdrawn, and any new development will be based on the city remaining within its current administrative limits.

Tips for future Housing Strategies

The European Union study[6]  concludes with a list of considerations for future Housing Strategies that could be considered useful for housing strategies in all parts of the world.

·       Progress that has so far been registered in the housing sector must be further strengthened through reflective evaluation of existing policies and practices

·       The Federal Government should promote appropriate construction technologies for the production of affordable housing

·       Cities should adopt neighbourhood upgrading programs to thwart public health threats as well as enhance their ambience

·       City administrations should streamline land management and development control systems so that they can efficiently provide land for residential construction 

·       City administrations should take measures to expand provision of serviced land  

·       Subsidies provided as part of public housing programs should target households and not housing units

·       Cities should implement housing policies that promote inclusiveness

·       The Federal Government should develop a framework for housing finance that contributes to affordable housing supply

·       Onsite resettlement should be part of urban redevelopment programs.

Unrest over land and related political repression has led to the resignation of one Prime Minister in Ethiopia in the last year (2018). The new Prime Minister has said the government’s mission should not be to make every single person a house owner but to ensure that everyone will be able to afford to rent. It’s not clear what the implications for the IDHP will be but there is likely to be a larger role for the private sector with the government assisting developers to engage in affordable housing through policies, land and bank loans.

Julian Golby 

September 2018

With thanks to Eskinder Hailu of Highway Tours Ethiopia for many good conversations about Ethiopia! http://www.ethiopiantour.com/family-vacation-adventure.php

[1] https://www.worldbank.org/en/news/feature/2017/12/11/a-stepping-stone-to-job-creation

[2] https://thediplomat.com/2018/02/china-and-ethiopia-part-1-the-light-railway-system/

[3] Gardner, Tom. Monday 4 December 2017. “Addis Has Run out of Space: Ethiopia’s radical redesign”  The Guardian

[4] Abnet et al

[5] https://www.economist.com/middle-east-and-africa/2017/08/31/ethiopia-is-struggling-to-make-housing-affordable

[6] Abnet et al

[1] Abnet et al

[1] op cit

[2] https://www.economist.com/middle-east-and-africa/2017/08/31/ethiopia-is-struggling-to-make-housing-affordable

[1] Abnet et al 2017, https://moodle.donauuni.ac.at/binucom/pluginfile.php/596/mod_page/content/15/Housing%20in%20Ethiopia.pdf

[2] MoUDH 2015, quoted in Abnet, et al 2017