with a US$523 annual rental premium, having an electricity connection commands a US$794 annual rental premium. Access to an improved toilet is estimated to be valued at annual premiums of US$169 and US$125 in Kigali and Dar es Salaam, and a much higher US$601 in Abidjan.

|**Table 3.**|**The estim**<br>|**ated price of**<br>|**a fully eq**<br>|**uipped hous**<br>|**e**<br>||||
|---|---|---|---|---|---|---|---|---|
||**City**|**Country**|**Rooms**<br>**(avg)** <sup>28</sup>|**Estimated**<br>**House**<br>**Price, 2005**<br>**current**<br>**USD**<sup>29</sup>|**Lower**<br>**bound**<br>**(95%**<br>**confidence**<br>**interval)** <sup>30</sup>|**Upper**<br>**bound**<br>**(95%**<br>**confidence**<br>**interval)**|**Estimated**<br>**Rent**<br>**to**<br>**Income**<br>**Ratio**<br>**(annualize**<br>**d)**|**Actual**<br>**Percentage**<br>**of**<br>**Expenditures**<br>**on Rent (city**<br>**avg.)**|
||Kigali|Rwanda|3|1,757.54|1,049.44|2,943.43|21.0%|12.4%|
|**Actual**|Abidjan|Cote<br>d’Ivoire|2|1,661.02|1,515.17|1,820.94|20.7%|9.5%|
|**Rent**|Dar<br>es<br>Salaam|Tanzania|1|823.10|587.22|1,153.74|24.4%|3.8%|
||Maputo|Mozambique|3|4,101.72|1,809.71|9,297.68|35.1%|2.3%|
||Kigali|Rwanda|4|4,330.04|2,174.53|8,621.82|36.8%|N/A|
|**Imputed**<br>**Rent**|Maputo|Mozambique|3|3,506.82|2,491.91|4,935.09|14.1%|N/A|

- **5 Going back to the basics – Tackling the housing challenge providing infrastructure**

This paper presented findings on housing conditions, housing expenditures, and implicit prices of housing characteristics in using household survey data from 20 countries in SSA. Given the rapid urbanization in the region, and the increased pressure for affordable housing in the region, the findings fill a gap in regional, cross-country empirical data, creating a knowledge base for policy makers, researchers, the private sector, and development partners to make informed decisions when addressing affordable housing provision and the increase and growth of informal settlements. The question remains as to how policymakers can improve housing conditions in SSA, considering high levels of poverty and relatively poor housing conditions across the region.

One option may be to build programs that aim at increasing household expenditure on housing through financing schemes, or cash transfer strategies. However, strong budget constraints that have households spending over 60 percent of their total budget on food would limit the amount they can dedicate to housing even if additional financial mechanisms are in place. In fact, estimates of the income elasticity of

> 28 The number of rooms is calculated from the sub-sample means (i.e. the average number of rooms comprising a dwelling unit occupied by a household in each city depending on whether or not they report actual or implicit rents). The mean is rounded to the nearest whole number of rooms to estimate the price of realistic dwellings.

> 29 The estimates are the mean predicted price for the number of rooms in the dwelling unit. Predicted prices are solved using he log transformation of equations (1) and (2) and employing the transformation correction _exp_ ( σ<sup>2</sup> /2).

> 30 Confidence intervals are calculated using the delta method.

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