estimates place less than 10 percent of the African population in formal sector housing (Giddings 2007). The pressures of urbanization and population growth in Sub-Saharan African cities directly impact the supply and demand for urban housing in the region. A number of constraints affect housing supply in SSA. Although these issues are not unique to the region, they are exacerbated by rampant urban growth and high levels of poverty.<sup>17</sup> As a result, the most egregious feature of the urban housing shortage is the prevalence of informal housing, specifically the proliferation of slums.

The United Nations’ definition of slums identifies slums as having one or more of the following five deprivations: 1) durable housing of a permanent nature; 2) sufficient living space (not more than three people to a room); 3) easy access to sufficient amounts of safe, affordable water; 4) access to adequate sanitation facilities, and 5) security of tenure that prevents forced evictions. Even within slums, the degree of deprivations is highest in SSA, with 80 percent of the region’s slums suffering from one or two deprivations, and nearly half facing two or more shelter deprivations (UN-Habitat 2007). The severity of the housing problem in SSA is thus characterized by high instances of slums as well as extremely poor conditions of informal housing. Yet despite this reality, little is known about the ways in which households seek and obtain shelter in SSA.

The under-supply of formal housing is often viewed as a market failure, reflecting a number of regulatory and policy constraints that increase the cost of business, thereby decreasing housing affordability. Collier and Venables (2013) identify five key “policy failures” that result in insufficient formal sector housing development in Africa. These include: 1) lack of affordability of housing because of inappropriate building regulations; 2) weak land titling and legal enforcement; 3) lack of innovation in housing finance to reach down market; 4) failure to supply adequate supporting infrastructure; and 5) insufficient regard for labor creation in the urban planning process. Giddings (2007) also identifies a host of constraints preventing housing and infrastructure from being supplied at scale in SSA, many of which echo those highlighted by Collier and Venables (2013). Giddings finds that these constraints are comprised of policy and institutional constraints, technical and physical constraints, and housing finance constraints. Policy and institutional constraints outline the public sector’s shortcomings in prioritizing housing, partnering with the private and civil sector, developing human and institutional capacity, developing a sound legal and regulatory framework, and effective macroeconomic policies to attract private sector engagement and grow housing finance. Technical and physical constraints include land and housing shortages, lack of infrastructure provision and high construction costs. Giddings’ focus on housing finance constraints reflects the most studied barrier to increasing housing supply.

Household demand for housing finance is explored through the pillars of housing affordability and market segmentation. In SSA, the analysis of housing affordability is often “crudely” undertaken by simply identifying national per capita income and estimating household income and housing costs given local prices (Tipple 1994). Similarly, more recent studies examine housing finance opportunities within country poverty headcount ratio pyramids (Centre for Affordable Housing Finance in Africa 2013). These efforts to analyze demand have a number of pitfalls, which include neglecting the underlying structure of household income and wealth by focusing on poverty headcounts. The heavy emphasis on affordability without fully understanding the current state of housing in SSA and where policy-makers should focus their efforts points to a gap in the literature which this report attempts to tease out.

# **3.1 Poor shelter amenities and widespread lack of infrastructure are the signature of housing in SSA**

Across SSA the percentage of households who enjoy shelter and infrastructure amenities varies by type of amenity, but also by type of urban area and household income quintile. Table 2 presents the percent of households across the entire sample examined in the surveys who enjoy housing amenities (see Table 1 for full list) as well as the percentage of households that face housing or infrastructure shortages. The

> 17 According to the World Bank’s Development Indicators, the poverty head count ratio in Sub-Saharan Africa 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).

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