Financing Informal Housing Provisioning in the Kumasi Metropolis of Ghana

Abstract

Inadequate housing supply is one of the biggest challenges facing both developed and developing countries today with housing finance being a critical factor. The informal sector is the largest housing supply system in Ghana but has not been able to meet the increasing housing demand. This is partly because of inadequate and ineffective financial mechanisms for financing informal housing provision in Ghana. The Study therefore investigated the major financing mechanisms used by the informal sector and factors which hinder their access to formal credit facilities. A cross-sectional research design was adopted for the Study. Simple random sampling was used to select the ten communities whilst the convenience sampling method was used to select the homeowners. A total of 310 interviews were conducted out of the total determined sample size of 392. The major findings emanating from the Study included the dominant use of informal source of housing finance; the existence of an underdeveloped mortgage market; and uneasy access to formal credit facilities from financial institutions. These have led to homeowners building incrementally and hence delay in housing completion. The Study therefore recommends microfinance for housing, site and services scheme and a non-mortgage lending facility for the informal sector.