# **1 Introduction**

Urbanization and rapid population growth are transforming Sub-Saharan Africa (SSA). Currently, SSA has the lowest levels of urbanization (roughly 37 percent) of the world’s geographic regions, and projections show that Africa as a whole will remain the least urbanized area in the world through 2050.<sup>1</sup> Despite having the lowest levels of urbanization, Africa, along with Asia, faces the highest absolute urban population growth. In fact, these two regions are set to drive global urban population growth over the next half century. With a population of nearly 900 million and an annual urbanization rate of 1.17 percent, SSA currently adds over one million people to its urban areas every year.<sup>2</sup> This urban growth sets the urban population of Africa on course to exceed the urban populations of Europe and Latin America, regions whose urban populations currently exceed 70 percent of their total population (UN-Habitat 2013: 29) .

These unprecedented trends in urban growth in SSA place immense pressure on urban services to meet the needs of the burgeoning urban population. In particular, rapidly increasing demand for housing and strained urban housing supply emerges as one of the most pressing urban issues facing the region. Pressure on the urban housing market is further exacerbated by the high level of poverty in SSA. According to the World Bank’s Development Indicators, the poverty head count ratio in SSA for those living under $2 a day was 69.9 percent of the population in 2010, exceeding South Asia (66.7 percent) and more than double the rate of East Asia & Pacific, which has the third highest level of poverty (29.7 percent). The combination of rampant urbanization and globally high levels of poverty in SSA highlights the importance of focusing attention on affordable housing policy in SSA.

Currently, however, no systematic review of housing conditions exists for SSA, particularly from the point of view of households. A number of country- or city-level reports offer insight into the housing challenges of specific places,<sup>3</sup> but do not shed light on the contours of housing patterns and impediments impacting the region’s households. This lack of clear knowledge on the relative importance of the factors influencing households’ housing demand in countries in SSA inhibit policy makers, researchers, the private sector, and development partners from making informed decisions when addressing affordable housing provision and the rapid increase in, and growth of, informal settlements.

This paper drills down into the housing issues in SSA from the perspective of the household, by analyzing how households make tradeoffs in allocating their budgets over time to housing and other amenities. The purpose of this work is to develop an understanding of the differences in households’ expenditure patterns and housing decisions across countries in SSA. In an unconstrained environment, households choose the best house they can afford. However, when other key amenities such as transport services are costly, households may under-consume housing, and take suboptimal decisions in terms of housing quality in order to access these key services. For example, when transport systems are not available, households may choose to live in slums so they can access jobs, schools, or health care. In particular, this paper focuses on three underexplored topics facing households in SSA: 1) household spending on housing; 2) overall housing quality; and 3) the willingness to pay for housing amenities and the estimated value of a fully equipped house.

> 1 United Nations World Urbanization Prospects, 2011 Revision.

> 2 Ibid.

> 3 There are numerous studies on local housing markets. Some recent examples at the city level include the dynamics of slum rental markets in Nairobi (Gulyani and Talukdar 2008) and a review of housing conditions in Accra (Konadu-Agyemang 2001). At the country level, recent reports include a review of the Kenyan housing market (African Development Bank 2013) and indepth reports by UN-Habitat for Ghana (2011b), Malawi (2010), Senegal (2012a); Uganda (2011c), and Zambia (2012b) as part of the Urban Sector Housing Profile series.

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