The Other Side of Mass Housing [opinion]

THIS is the side we are not talking about: The efficacy of mass housing – as a public policy tool – in producing beneficial long-term economic change.

This is also the hidden side of everything economics. For low-income earners getting on the housing property ladder comes with lots of aantages. However, in terms of wealth creation, low-moderate income purchasers under the mass housing scheme would likely be constrained to buy houses in the nicest neighbourhoods where the return in housing investment is high.

To recap, in case you have not been paying much attention, since the mass housing project was launched by President Hifikepunye Pohamba late last year, it has been plagued with repeated delays and numerous technical problems that together reveal how little effort was put into the planning stage.

Sounds familiar? It is TIPEEG all over again. Though you would think that after TIPEEG, we would have known better that implementation hiccup would be one self-set trap to avoid at all cost!

A lot also has happened since then: We have heard about the highest paid expert brought in to help steer the project toward its north pole. By now you are probably also aware, against the expert’s aice, about the role of profit-driven middlemen who are jerking up the cost in order to maximise profits, without even having done anything except the mere reality that they have written a proposal that won the tender.

There is also the controversy of political connection in the awarding of tenders, which is similar to the workings of “crony capitalism,” in which we are told that some of the tenderpreneurs connected to politicians and NHE staff scored big, including novice companies established a day after the expression of interest for the mass housing scheme was aertised.

Paralysed, of course, is our state tendering process, a system designed to be fair, equitable and efficiency. But you may call this the dawning of Namibia’s own age of oligarchy, an epoch characterised by a cozy alliance between the state and a new class of billionaires at the expense of the rest of the folks.

Recently the President reportedly instructed that the project should go on after intervening in squabbles between the Ministry of Regional and Local Government and Housing and Rural Development and the National Housing Enterprise (NHE). The disagreements of the two parties are two sides of the same ugly coin in which the ministry wanted the NHE stripped of the mandate to implement the mass housing scheme due to the way the agency was handling the tender process.

The President’s intervention, however, has resulted in the ministry releasing the funds to implement the housing project as well as the setup of new mass housing price guidelines in order to lower the cost. The reason why the President (despite the tender irregularities and numerous technical problems) saw it fit to continue with the project we may not know.

It is, however, safe to assume that President Pohamba, like many of us, is disgusted about the ridiculous high housing prices which are preventing many low-to-moderate income families from owning housing properties throughout the country.

Therefore, closing the gap-through the government subsidised mass house scheme – between the market price housing and what a low-to-moderate income family can afford is a good public policy of providing a pathway out of poverty for low-to-moderate income earners.

A low-income mass housing subsidy that helps a family to afford other household necessities like education, health, food and transportation that should appeal to everyone because its is in line with the value of a good society.

That being said, however, affordability is one important economic consideration in home buying and long-term economic prospect is the other. A home is an investment, but a home in one of the nicest neighbourhoods – with superior schools, health care centres, parks, cultural and recreation opportunities, well maintained road infrastructures – is almost three times as good an investment.

What the mass housing project is doing is simply locking the low-moderate income families in neighbourhoods with poor long-term economic perspectives. We know that a home (no matter how big and nice) in Katutura, Nkarapamwe or Orotweveni has poor investment horizon than one in an area with good economic prospects such as Academia or Klein Windhoek.

Put simply, housing property owners in areas with good long-term economic prospects make more in investment returns on their properties. This is because homes in prestigious communities usually appreciate faster and hold their value better than average or lower-end communities.

Therefore, it is no longer enough to just providing affordable housing but we should also talk about the kind of neighbourhoods where most of the affordable housing for low-income earners are to be built.

We should also focus on the redevelopment and revitalisation of the low-end neighbourhoods in order to increase their long-term economic prospects, including the alternative to subsidy, the relocation of low-income families to opportunity-rich suburbs in order to increase their chances for economic success.

Ndumba Kamwanyah is a lecturer at Unam. His work examines the intersection between policy and governance.

Source : The Namibian