This paper evaluates the socioeconomic impacts of the condominium housing program among the beneficiary households using a cross-sectional data from a sample of 398 households who own the houses, in Addis Ababa specifically in Bloe and Yeka Sub Cities and 16 key informant interviews. To analyze the impact of housing program on consumption and social capital multiple linear regressions and logistic regressions were employed. And to cheek the model fitness multicolinearity (VIF), hetroscedasticity and link test methods are used.
Nowadays, housing development is a hot issue in Ethiopia and more specifically in the capital Addis Ababa. The housing development program is designed in order to meaningfully solve the housing demand and other complex urban problems. It is believed that the program promotes the urban residents’ income and saving capacity other than reducing the housing problem. This study assessed the affordability of condominium houses and the socioeconomic impact of the housing development program among beneficiary households. And finally would help the decision makers and implementers to know the impact of down payment for condominium housing on household’s consumption and the impact of condominium housing program on social capital of beneficiary households and draw lessons from experience. In addition, it can also be used as a base and reference for other researchers to conduct further study in this area.
TABLE OF CONTENTS
Contents
ABSTRACT
TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
ACRONYMS
CHAPTER ONE
INTRODUCTION
1.1. Background
1.2. Statement of the Problem
1.3. Research Questions
1.4. Objective of the Study
1.4.1. General objective
1.4.2. Specific objectives
1.5. Hypothesis
1.6. Significance of the Study
1.7. Scope of the Study
1.8. Definition of key terms
1.9. Ethical Consideration
1.10. Organization of the Study
CHAPTER TWO
LITERATURE REVIEW
2.1. Theoretical Review of Literatures
2.1.1. Concept and meaning
2.1.2. Importance of housing
2.1.3. Housing supply
2.1.4. Housing demand
2.1.5. Problem of housing in developing countries
2.1.6. Causes of urban housing problem in developing countries
2.1.7. Urban housing in Ethiopia
2.1.8. Urban housing policies in Ethiopia
2.1.9. Integrated Housing Development Program
2.2. Empirical Review of Literature
2.2.1. Performance of housing development program
2.2.2. Housing development program in Addis Ababa
2.3. The Role of Housing on Human Life
2.4. Conceptual Framework
CHAPTER THREE
RESEARCH METHODOLOGY
3.1. Introduction
3.2. Research Approach
3.3. Research Design
3.4. Population and Sampling Procedure
3.5. Sampling Frame
3.6. Sampling Techniques and Sample Size Determination
3.6.1. Sampling techniques
3.6.2. Sample size determination
3.7. Data Sources and Data Collection Instruments
3.7.1. Data sources
3.7.2. Data collection instruments
3.8. Method of Data Analysis
CHAPTER FOUR
RESULTS AND DISCUSSION
4.1. Introduction
4.2. Demographic and socioeconomic characteristics of respondents
4.3. Housing condition of respondent beneficiary households
4.4. Consumption of respondent households
4.5. Social-capital of respondents
4.6. Econometric analysis
4.6.1. Multicollinearity Test
4.6.2. Heteroscedasticity Test
4.6.3. Estimates of the Multiple Regression Model
4.6.4. Estimates of the Logit Model
4.7. Key informants Interview
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
4.2. Conclusions
5.2. Recommendations
REFERENCE
APPENDICES
Appendix1. Questionnaire
Appendix2. Interview Guiding Questions
Appendix3. Outputs from STATA software
ABSTRACT
Since 2005, Ethiopia has been implementing a large-scale housing program which aims to reduce the housing supply shortage and improve the living standard of the urban low and middle income households through the construction of high-rise condominium houses equipped with basic services. This paper evaluates the socioeconomic impacts of the condominium housing program among the beneficiary households using a cross-sectional data from a sample of 398 households who own the houses, in Addis Ababa specifically in Bloe and Yeka Sub Cities and 16 key informant interviews. To analyze the impact of housing program on consumption and social capital multiple linear regressions and logistic regressions were employed. And to cheek the model fitness multicolinearity (VIF), hetroscedasticity and link test methods are used. The result shows that the program has a negative significant impact on consumption of household’s i.e, the increase in the total cost of condominium houses reduces the consumption of beneficiary households. The family size and total monthly income has positive significant impact on consumption of households. On the other hand location suitability of houses has a significant impact on social capital of the beneficiary households that is when location suitability increases social capital will increase and vise-versa. Finally the study recommends for policy makers to give attention for affordability and location of condominium houses.
Key words : housing program, consumption, social capital, Impact
LIST OF TABLES
Table 1 Demographic and socio-economic characteristics for continuous variables
Table 2 Demographic and socioeconomic characteristics for discrete variables
Table 3 Housing condition of households for discrete variables
Table 4 housing condition for continuous variables
Table 5 consumption for discrete variables
Table 6 consumption situation for continuous variables
Table 7 summary of social-capital
Table 8 estimation result of consumption variables
Table 9 estimation result social capital variables
LIST OF FIGURES
Figure 1 conceptual frame work
ACRONYMS
Abbildung in dieser Leseprobe nicht enthalten
CHAPTER ONE
INTRODUCTION
1.1. Background
In recent times, urban centers have dominantly become major residential areas across the globe. Studies revealed that, at the beginning of the 20th century, only 10% of the world’s population settled in urban areas, however currently almost half of world’s population has become urban dwellers (UNCHS, 2012). According to the United Nations Urbanization and Migration report in Africa (2018) the proportion of world’s population living in urban areas rose from 30% in 1950 to 54% in 2015 and Africa’s urban population has been growing at a very high rate i.e. from 27% in 1950 to 40% in 2015 (UN-DESA, 2016). This shows that there is a higher rate of urbanization from time to time throughout the world. This fast growing rate of urbanization has different implications on the living condition of urban society. Because of rapid urbanization, the concentration of people, especially in cities and towns of developing countries increasingly aggravated the problem of housing (Dawit, 2016 ).This indicates that without substantial improvements in housing and provision of infrastructures the living conditions in urban areas are going to worsen.
Housing can be considered as a basic need of human beings just like food and clothing. Several scholars have written about housing from different perspectives. Fadamiro, Taiwo and Ajayi (2004), have argued that, housing can be taken as a very fundamental asset to the survival, health and welfare of man since it is one of the best indicators of a person’s living standard and his status in the society. Another scholar Kehinde(2010), also stated that shelter is central to the existence of human beings; accordingly, housing involves access to land, shelter and the necessary amenities to make the shelter functional, convenient, safe and hygienic. According to him, unsafe and inadequate housing can affect the security, physical health and privacy of man. Similarly, Okafor (2016) asserted that housing all over the world has remained an interdependent phenomenon that faces mankind and it represents one of the most basic human needs which no doubt has a profound impact on the health, welfare and productivity of every individual irrespective of socio-economic status, colour or creed. From the above arguments one can understand how far housing is an important basic need besides the reality of its unmet demand.
The housing problems and the housing needs are manifested in overcrowding, poor and inadequate social amenities, unsatisfactory and unwholesome environmental conditions and urban squalor, the absence of open space, the development of land area leading to overcrowding of buildings, inaccessibility within residential areas and in scarcity and high cost of building materials (Akinyode, 2016). According to the Human Development of Nigeria (2008), housing problems result mainly from the unprecedented growth of urban population. In Nigeria, according to this source, the states with the largest proportions of urban dwellers far in excess of the national average are Lagos (94%), Oyo (69%), Anambra (62%) and Rivers (60%). The inevitable outcome of this explosion is the aggregation of urban blight and squalor, resulting in the majority of urban dwellers living under sub-human conditions in squatter settlements, especially those without employment and any visible means of livelihood. In urban areas, the major housing problems are severe shortages of housing, overcrowding and the spread of slums and shanty towns (Uwejeya, 2012).
Ethiopia as one of the developing countries, it has not escaped from this problem. The urban centers are experiencing the problem of housing where many people are living in poorly constructed and physically deteriorated houses with inadequate facilities. This problem is worse in the capital Addis Ababa. According to MUDH, (2017) more than 1.2 million households do not own houses and need solutions to housing. There is thus a high demand of housing as a result of the rapid rate of urbanization (UN-Habitat, 2011) and this has led to the provision of housing into the hand of government housing developers who make provision for housing(Akinyode, 2016).
Like any other major city of Africa, there is an ever growing mismatch between the size of the population and its demand for basic services in Addis Ababa. The underdevelopment of housing and infrastructure contributes to the poor conditions under which the majority of Addis Ababa’s dwellers live. The lack of satisfactory housing conditions acts as a barrier to many low-income households to gain easy access to basic resources, including employment, health care and education. In addition, the urban poor and their families remain under the threat of eviction in Addis Ababa as part of the urban renewal program and because of road construction, land issuance for investors, housing cooperatives, office buildings, and residential quarters for higher military and civil governmental officials and condominium houses (Tebarek, 2013).Addis Ababa is thus increasingly becoming a city with numerous problems, which include severe housing shortage and poor housing, a highly skewed income disparity, deepening poverty, a concentration of low incomes, overcrowded conditions, high rates of unemployment, transport and infrastructure problems, squatter settlements and other related urban problems (UN-Habitat, 2011).
Housing is one of these services, which has for long been gravely demanded by the public at large. The housing shortage is especially acute for low-income households which account for over 80 percent of the city’s population. An estimated 60 percent of the city’s core is dilapidated and about a quarter of all housing units have been built informally. The city is also not able to provide adequate services to the expansion areas. Such problems are discouraging house construction and contributing to the expansion of slums (Habte, 2010).
Although various strategies have been designed to tackle the housing problem of the city dwellers in general and the urban poor in particular by the past current regimes, which range from initiating low-cost housing projects of the Imperial regime, nationalization of urban land and extra houses and formation of housing cooperatives during the time of the Dergue (1974-1991), to condominium projects of the current regime, the housing problem still remains an unsolved challenge (UN-Habitat, 2011).
Shortage of housing supply and high housing demand leads to high house rent and limits housing affordability to low-income households (Akinyode, 2016), low wages and high cost of building materials prevent the majority of the households from having their personal house thereby results in shortage of housing supply. This consequently exposes many households for the problems of housing related problems. This study tried to examine the socioeconomic impacts of urban housing program among low income households in Ethiopia.
1.2. Statement of the Problem
Continuous high urbanization and population rates in Ethiopia put extra pressure on urban infrastructure, services, and housing stock. According to Ministry of Work and Urban Development, the massive housing needs are unlikely to be met by the small scale housing cooperative, government, and upgrading approaches prevailing from the late 1970s until the mid 2000s, especially considering the high demand by the low-income sector of the population for affordable housing. In response to this challenge, the Ethiopian government outlined an ambitious vision for low-income urban housing development, designed as the Integrated Housing Development Program (IHDP), since 2005, for all slums to be cleared within ten years time (2005-2015) and for Ethiopia to be a middle income country by 2025. In particular, the IHDP envisages the utilization of housing as an instrument to promote urban development, create jobs, revitalize the local urban economy, encourage saving and empower urban residents through property ownership (MWUD, 2007).
The condominium housing program is currently being implemented in Ethiopia as a way to reduce the housing problem of urban low income people, among others. This method increases the access of the poor households to better quality housing at an affordable price. The program targets only middle and lower income households (MWUD, 2007). It allows low and middle income households, who typically live in precarious housing situations to access improved housing (UN-HABITAT, 2010). Through the construction of durable, fully-serviced housing units the program greatly improves the living conditions and access to basic services for low and middle income households.
In this regard the city government of Addis Ababa has put a lot of effort to alleviate the particular housing problem of the low income households of the city and invests each year billions of birr to construct thousands of condominium houses. In the last 12 years (from 2005 to 2017) the city government achieved remarkable result on changing the image of the city, creating job opportunity, making the city suitable to residents and so on. Addressing the needs of low and middle income dwellers are the main objectives of the program. That’s why the government took a lot of action to minimize the price of condominium house in favor of the target class. According to MUDH (2017), the support delivered by the government through two ways: first by providing land with free of lease payment, importing construction material free of duty and secondly by fully covering certain costs like cost of main road building, cost of infrastructure building, cost of water installations and cost of sanitary line installations.
Even though all the above supports expected to reduce the cost of the condominium houses significantly, but still people are complaining the price is unreachable to target groups. In the current status of the project there is affordability problem in terms of cost, convenience and quality of the houses. Despite the fact that condominium constructions are highly subsidized by the government the prices of houses are still high not only to the lower income people but also is above the average citizens’ purchasing power. As a result, those who have won the lottery are unable to pay the down payment and are leaving the house for those who are on the waiting list and who are able to pay (Jemila, 2010). In order to tackle the affordability problem, the program arranged different supportive payment modalities in cooperation with government Banks and Micro Finance Institutions. But fulfilling the criteria for loan is difficult for most of the city residents who don’t have fixed employment as a civil servant or within the private sector. Besides, some people may get financial support from families, friends and employers to make the down payment but many buyers, however, complain that the monthly mortgage fee is simply beyond their ability to pay. It is believed that the household housing expenditure is considered as affordable if it is not greater than 30% of the total income (Endale, 2017).
But the condominiums that are constructed by Addis Ababa Housing Construction Project Office have increased their selling price at an alarming rate without considering the target groups income. When we compare the change in condominium house costs related to changes in income of the civil servant within the last 12 rounds there is great disparity. The other problem that leads the condominium house unaffordable to the beneficiaries is the additional cost of repairing and maintaining the condominium houses. Most of households are delighted a lot when they became lottery winners but no longer would it be, after they received it, they become disappointed. No condominium houses have given service without incurring additional costs (Endale, 2017). He also noted out that, since the condominium houses are constructed far from center, due to lack of infrastructures and transportation access, the dwellers again exposed to other extra costs and loss of social networks.
According to Lerman and McKernan (2008), the research on the impact of holding assets, among which housing can be taken as an example, on economic and social outcomes of families is limited. If the policy makers and researchers do not make efforts to determine who is being reached by the program and how these services are affecting their lives, it becomes difficult to justify the housing program as a tool for urban development. The condominium houses being built in Addis Ababa, which is the focus of this study, are not exceptional. Moreover, there has been limited effort to study the socioeconomic impact of the housing program on the life of the beneficiaries.
This study was intended to contribute its share to the existing knowledge on the socioeconomic impact of the housing program on the well-being of the beneficiaries in Addis Ababa
1.3. Research Questions
i. Do condominium houses are affordable for beneficiary households in Addis Ababa?
ii. What is the impact of total cost for condominium housing on beneficiary household’s consumption in Addis Ababa?
iii. What is the impact of condominium housing program on the social capital of the beneficiary households?
1.4. Objective of the Study
1.4.1. General objective
The main objective of this study is to examine the socioeconomic impacts of urban housing program among beneficiary households in Ethiopia: Evidence from selected sub-cities of Addis Ababa city administration.
1.4.2. Specific objectives
In line with the statement of the general objective, the study tried to meet the following specific objectives:
i. To investigate the affordability of condominium houses by beneficiary households.
ii. To examine the impact of total cost for condominium housing on beneficiary household’s consumption.
iii. To assess the impact of condominium housing program on the social capital of beneficiary households.
1.5. Hypothesis
The study postulates the following hypotheses:
i. H0: Total cost for condominium housing has no significant impact on beneficiary household’s consumption.
H1: Total cost for condominium housing has an impact on beneficiary household’s consumption.
ii. H0: The condominium housing program has positive impact on the social capital of beneficiary households.
H1: The condominium housing program has negative impact on the social capital of beneficiary households
1.6. Significance of the Study
Nowadays, housing development is a hot issue in Ethiopia and more specifically in the capital Addis Ababa. The housing development program is designed in order to meaningfully solve the housing demand and other complex urban problems. It is believed that the program promotes the urban residents’ income and saving capacity other than reducing the housing problem. This study assessed the affordability of condominium houses and the socioeconomic impact of the housing development program among beneficiary households. And finally would help the decision makers and implementers to know the impact of down payment for condominium housing on household’s consumption and the impact of condominium housing program on social capital of beneficiary households and draw lessons from experience. In addition, it can also be used as a base and reference for other researchers to conduct further study in this area.
1.7. Scope of the Study
Condominium housing programs are being implemented in all sub cities of Addis Ababa city administration. In trying to achieve the research objectives, this study was conducted taking evidences from Bole and Yeka sub-cities.
The research was confined to examine the socio-economic impact of urban housing program among beneficiary households using the evidence from selected sub-cities of Addis Ababa City Administration. The study was conducted in Bole and Yeka sub-cities which host a large number of condominium houses that were built and transferred to beneficiaries from 2005-2017 as the program was started in 2005 and the houses transferred to beneficiaries were built till 2017 of the 10/90 and 20/80 housing programs. The participants of the study were the beneficiaries of 10/90 and 20/80 housing program selected from the two sub-cities.
1.8. Definition of key terms
Socioeconomic impact: is the social and economic outcome on the beneficiary households because of having the house that is found from the housing development program.
Housing: is an asset as well as a shelter that has a multidimensional aspect on humans’ life including protection against the hostile physical environment.
Housing development program: is the program designed and organized by the Ethiopian government to provide condominium houses to low and middle income people of the country specifically Addis Ababa and other cities.
Beneficiary households: are those households who are benefited (got a house) by the housing development program of Addis Ababa city.
1.9. Ethical Consideration
In any study ethical considerations are expected to arise. This study therefore took into consideration of those ethical issues on formulating and clarification of the topic, design, access and use of data, analysis and report of the findings in a moral and responsible way. Participants were assured that, the source of data collected would remain confidential and that anonymity was maintained. In addition, oral consensus with all the participants and an official letter from the Department of Development Economics was filled and submitted before doing anything else in any organization.
1.10. Organization of the Study
This study consists of five chapters. Chapter one contains the introduction which presents background of the study, statement of the problem, research question, objective of the study, significance of the study, scope of the study, definition of key terms and ethical consideration. The second chapter deals with review of related literatures regarding the topic of the study both theoretical and empirical reviews were included. The third chapter discusses the research methodology and methods employed for the study that includes study approach, design, population, sampling technique, and methods of analysis. The fourth chapter deals about results and discussion and chapter five contains conclusion and recommendations.
CHAPTER TWO
LITERATURE REVIEW
This chapter reviews from different sources and assesses the meaning, concepts and findings related to urban housing, low income households and surrounding issues. The chapter mainly contains the theoretical and empirical review, and conceptual frame work.
2.1. Theoretical Review of Literatures
2.1.1. Concept and meaning
Housing is a very important aspect in human life. It is a multi-dimensional concept and has been defined differently by different people depending on the emphasis and focus of analysis. Even though, housing is the basic human need, it is difficult to give an all-embracing concept to define housing. The problem of defining housing is difficult enough when a single country or the economically advanced areas as a group or considered, is compounded in an international context that includes poor as well as rich nations, world regions sharply differing in climate and societies with highly diverse cultures (Habte,2010)
For this reason, different scholars give different definitions of housing. Kidist, (2014) defines housing as one of the basic human needs along with food and clothing. As a result, mankind has been developing different kinds of shelter with the changing civilization and time. Moreover, International Housing Coalitions (IHC, 2007) stated that, housing is more than physical shelter and the residential environment consists of not only the dwelling units, but also the site and setting, neighbor and community, municipality and public services habitability and accessibility, rights and responsibilities, costs and benefits. Yet housing is even more than the residential environment, for it is only in relation to those who inhabit and use it that housing has meaning and significance not only physical and economic, but also emotional, symbolic and expensive. Housing can be also defined as a process, the actual product of creating human shelter and as a cultural reality. The basic definition is housing as shelter and the provision of human needs (UNHABITAT, 2011). According to the United Nations housing is a means which should perform a double function:
- The interior, one of providing a place where a household of different age, sex, education, occupation, intellectual modes and values can meet in harmony; and the exterior, one of providing meeting grounds for groups of households and for the healthy and enjoyment enrichment of their lives and the life of the community.
- In economic terms, housing is considered as a commodity which has a market value and can be bought and sold. Through housing is reflected a person’s economic standing and his affordability to attain a certain level of quality of life. Housing is also considered as a security which a person owns for the benefit of one’s future.
Housing is consumption as well as investment. The set of housing services consumed is surely different in the rich compared to the poor countries. Habte, (2010) argues that shelter accounts for a large component of the total bundle of services in the poor countries while luxury elements, and the utility and prestige they carry, are more important parts of housing in the rich nations. Consequently, the good itself like many consumer goods, is heterogeneous, yielding different mixes of services that vary with the level of development. Even though, housing is considered as a basic good for both developed and developing countries, a large proportion of town dwellers in all developing countries cannot afford housing at the standards considered desirable and required by law in western industrial countries (IHC, 2007). As a result, many cannot afford to make any regular contribution to value when it comes to spending their money. Even the cost of bringing housing for ever-expanding urban populations to a modern standard by means of subsidies is beyond the capacity of governments to meet especially in developing countries. In broad terms, housing affordability problems exist when housing costs absorb a great proportion of household income (Samuel, 2014).
From the above definitions, some argued that housing is a shelter that gives protection against the hostile physical environment; others said that housing is the sign of prestige; some other groups also argue that housing comprises a number of facilities, services and utilities which link the individuals and their families to the community and to the region in which it grows and progress. This leads to summarize that housing is an asset that has a multidimensional aspect on humans’ life.
Condominium housing is a name given to the form of housing tenure where each resident household owns their individual unit, but equally shares ownership and responsibility for the communal areas and facilities of the building, such as hallways, heating systems, and elevators. There is no individual ownership over plots of land. All of the land on a condominium site is owned by all home owners. Usually, the external maintenance of the roof and walls are undertaken by a Condominium association that jointly represents ownership of the whole complex, employing strict management to ensure funding from each homeowner.
In Ethiopia, under section 2 of the Condominium Proclamation No.370/2003, condominium is defined as “a building for residential or other purpose with five or more separately owned units and common elements, in a high-rise building or in a row of houses, and includes the land holding of the building. Common elements refer to all parts of the condominium except the houses owned individually.” In other words it defines condominium as a house built by regional housing development agencies, or previously built, that has common wall, ceiling and other common properties used for residence or for other purposes.
It is a multiple-unit dwelling in which there is separate and distinct ownership of individual units and joint ownership of common areas. The building is managed by the condominium association, either directly or through a professional manager. The owners of the individual units are jointly responsible for the costs of maintaining the building and common areas, but they are individually responsible for the maintenance expenses of their particular units. A condominium can be an apartment, house, townhouse or a unit in an apartment house in which the units are individually owned. Hence, there is always common property owned with others recreation areas, lawns, basement, garage as well as the individual units are owned outright.
There are several types of condominium houses such as residential condominium, non-residential condominium, standard condominium and phase condominium. Residential condominium is owned by the individual units which the owner will occupy for living purpose. There is also nonresidential condominium found in the property market such as hotel, services apartment, retail shop and office building. The structure is the same with the residential condominium but the difference is the usage of the building. Standard condominium is just a general type of condominium that can be found in any country. This kind of condominium is subdivided into units and common area. Hence, this kind of owner will own different but inseparable entities. One is the well defined space that is used for residential purpose; one is the common area which the owner have shared interest on it. Phased condominium is a condominium developed according to stages. The condominium development size increases from time to time until the development is complete. The advantage of this type is that the purchasers do not have to wait for so long for the development to complete.
Usually, the external maintenance of the roof and walls are undertaken by a Condominium Association that jointly represents ownership of the whole complex, employing strict management to ensure funding from each homeowner. This association consists of representatives of all condominium residents who manage the site through a Board of Directors, elected by Association members (UN-HABITAT, 2010). A register of condominium units and common areas on site and any restrictions on their use is commonly established in a Master Deed which authorizes the Board of Directors to administer condominium affairs and assess owners on their performance of adequate maintenance. Rules of governance are usually covered in a separate set of Bylaws which generally govern the internal affairs of the condominium blocks. Bylaws usually establish the responsibilities of the Condominium Association; the voting procedure to be used at Association meetings; the qualifications, powers, and duties of the Board of Directors; the powers and duties of the officers; and the obligations of the owners with regard to assessments, maintenance, and use of their unit and common areas. A set of Rules and Regulations, providing specific details of restrictions and conduct, are established by the Board and are more readily amendable than the Declaration or Bylaws. Typical rules include mandatory maintenance fees (often a monthly collection), pet and livestock restrictions, and color/design choices visible from the common areas of the buildings.
The maintenance of walls and features inside a condominium unit is the sole responsibility of the homeowners themselves (UN-HABITAT, 2010). This area is defined as the area bounded by the walls of the building, allowing the homeowner to make some interior modifications without creating an impact on the common areas. These boundaries are specified by a legal declaration, filed with the local governing authority.
Housing development program is the program designed and organized by the Ethiopian government to provide condominium houses to low and middle income people of the country specifically Addis Ababa and other cities
2.1.2. Importance of housing
Shelter is one of the basic needs of mankind and it is important for the physical survival of human beings. It is also recognized as an entitlement for all human beings (Jemila, 2010). Furthermore, adequate housing has vital importance for social welfare and for the development process of a given country as a whole. In line with this Jemila, (2010) speculates that settlements in which people live and work provide economic, social and physical environments that facilitate or hinder the ability of people to generate and increase income. According to Jemila (2010), adequate housing stimulates both physical and economic improvement of the population. It is mainly due to the fact that where we live affects so much of our daily lives. Besides, the cost of housing is large in the household budget.
Houses are not only just places to live but also they are assets for their owners. It can be used to generate income through home-based business activities and it can also serve as collateral for loans for the owners Jemila, (2010). It can be summarized that owning a house is fulfilling one’s basic need and right as well. In addition, good housing condition improves the health and the productivity of the inhabitants and thereby contributes to their wellbeing and also to the broader economic and social development of the society and the nation at large.
2.1.3. Housing supply
Housing supply can be affected by different factors according to Wagura, (2013), the basic factors are land availablity,Infrastructure, Building materials, Organization of the building industry and Quality of the labor force which are detail presented as follows :-
i. Availability of land: since houses are built on land, the availability of land, the related transactional cost and security of tenure influences the supply of housing.
ii. Infrastructure: physical and social infrastructure such as roads, pavements, street lights, waste collection facilities, water and sanitation systems, transportation networks, electrification, market and commercial centers accessible to residential areas, are all important in enhancing the market to supply of housing.
iii. Building materials: the availability of building materials determines the cost of houses built which in turn determines the number of units supplied. Inflation may result in the increase of their prices. The materials must meet technical adequacy and socio-cultural demand.
iv. Organization of the building industry: the manner in which the construction industry is structured has a direct effect on the number of houses supplied. Where the industry is well organized, unrestricted, and competitive, the supply of housing will be higher than in a restricted industry all other factors kept constant. Government policies including those of tax rebates and other housing incentives form part of the structure. Other policies affecting the interest rates are also influential.
v. Quality of the labor force: high quality of the labor force has a positive impact on the efficiency and standard of housing supply. If the same labor force is highly mobile, the construction industry will be able to access skilled and quality labor and therefore have a positive impact on supply (Wagura, 2013)
In the same manner Pettinger, (2019) find thatthe number of new houses being built, Planning restrictions on the use of land, Local opposition to new home builds and the profitability of building new houses are the main factors that may affect housing supply. This is dependent on the demand for houses and prices. In a boom, builders are usually keener to build more. Falling house prices can lead to a restriction in supply (Pettinger, 2019).These factors may differ from country to country.
2.1.4. Housing demand
The demand for housing can be influenced by different factors which can be broadly categorized as Demographic changes, Rates of urbanization, new household formation, Property rights, Housing finance and Macroeconomic conditions (Wagura, 2013) and are presented as follows.
i. Demographic changes: the increase in population creates an increase in demand for housing. In developing countries the population has been rising over the years with bulk of the population increase being experienced in urban areas.
ii. Rates of urbanization: this is closely related to population growth where the rate of urbanization increases due to natural population growth and rural-urban migration. In addition, there is interurban mobility as people get job transfers or expand their opportunities. Thus a high urbanization rate leads to demand pressure for housing in the urban areas.
iii. New household formation: household formations relate to the changing demographic structure. As young people mature and move out of their parental homes, they desire to have their own homes and thus creating demand for housing. Other issues relating to household formation are divorce and separation rates and job transfers where a member of the family has to leave the dwelling unit to work in another town.
iv. Property rights: Security of ownership leads to increased investment which creates job opportunities for people luring more to urban centers. This creates a growing demand for housing for the laborers
v. Housing finance: the ability to access financing to acquire housing will determine the effective demand for housing. Where there is access to housing finance, housing subsidies, low-income banking facilities and cooperative systems, the effective demand will be higher.
vi. Macroeconomic conditions: these conditions affect the affordability of housing. Where an economy is experiencing inflationary pressures and high cost of funds, then the demand for housing will be low. (Wagura, 2013)
2.1.5. Problem of housing in developing countries
The problem of housing is not a localized phenomenon to any specific area. Rather it is a global challenge that all countries are facing. Even though the problem manifests itself in different ways in different societies, it is usually the poor that are more vulnerable to this problem. According to Akinyode (2016), around 20 percent of the world’s population is thought to be lacking decent housing. With regard to the residents of the developing world, it is estimated that over half of the population live in substandard and overcrowded housing.
The problems of housing in developing countries are enormous and complex; it also exhibits visible regional differences. In most urban centers, the problem is not only restricted to quantity but also to the quality of available housing units and the physical state of the living environment (Akinyode, 2016). According to Akinyode, (2016) there are at least three distinct types of poor urban dwellers in developing cities that are: 1, there are the homeless and the street sleepers. 2, population that are to be found renting accommodations in slums and tenements and. 3, there are squatters and occupants of slum areas.
Accordingly, among the three poor urban dwellers’ categories, it is the squatter settlement or the slum settlement that is the most common sign of rapid urban development in the developing world. Hence, it is estimated that shanty towns and squatter settlements constitute about 50 percent of the total urban population of the developing countries, but on some occasions like Addis Ababa and Casablanca, the proportion is far higher to 90 to 70 percent respectively. Moreover, in the majority of cities in the developing world, the people who live in squatter and slum settlements live in overcrowded situation with little or no infrastructural services (Akinyode, 2016) .
Moreover, residents who live in slums and squatters are usually unable to afford even the most minimal housing provision by the formal land and housing markets with basic services. People also face vast barriers in accessing legal housing and land because of the difficulty of the bureaucracy Jemila, (2010). In addition to lack of infrastructural services, the main problem experienced by residents of squatter settlements in developing countries is insecurity of land tenure. Because they do not have an authorization to occupy the land they inhabit, they can be evicted by authorities at any time. The constant threat of eviction is a major factor in the reluctance of residents of informal settlements to invest in the improvement of their dwelling. It is also a major factor in the decision of utility companies (like electricity and water) and other service providers (like loan providers) are also reluctant to go into informal settlements. As a result, squatter settlements often remain neglected and unimproved for years Jemila, (2010).
2.1.6. Causes of urban housing problem in developing countries
The rate of urbanization is considered to be one of the indicators of a country's economic development. When the urban center grows in developing countries, it leads to the increase in the population mainly through rural-urban migration. High population growth contributed to an increase in the demand for houses in urban centers. When a country becomes more urban, more houses will be needed to accommodate the increasing population in urban centers. However, in developing countries the pace of urbanization is not supplemented by the provision of adequate housing. This is one of the reasons for crowdedness and the development of squatter settlements in most cities of the developing countries (Abraham, 2007).
Moreover, the inability to properly plan and manage rapid urbanization has also resulted in uncontrollable growth of cities, decayed inner cities and growth of slums, especially in urban periphery areas (Akinyode, 2016). According to Akinyode, (2016) the supply of housing has been constrained due to restrictive government land policies, marginalization of the private sector in housing development and shortages of key construction resources, which have caused price increase and delays in the delivery of buildings.
In line with this Dawit(2016), stated as the main cause of the housing problem in the developing countries to be governments’ lack of financial capacity to deal with the problem in an effective and efficient manner. In addition to lack of financial resource, lack of willingness by politicians and the inadequacy of institutional framework which are in place to deal with the problem are the other factors that aggravate the problem.
However, as the provision of housing is a very expensive process, one of the main problems in providing adequate housing is associated with the difficulty to make adequate investment on it as mostly governments give low priority to the housing sector due to shortage of resources (Jemila, 2010). Furthermore, the existence of severe housing shortages, poor quality housing situation and the expansion of squatter settlements in majority of developing countries is caused by the governments lack of willingness in addition to lack of capacity to address the issue in a fundamentally structured, sustainable and large-scale manner.
The other cause of the housing problem is the existence of weak housing finance development in these countries. The reason is that many developing countries lack the financial muscle that could go to housing (UN-Habitat, 2011). Due to this, the residents’ who have low level income are unable to afford even the smallest or cheapest professionally constructed legal house with basic services Akinyode, (2016) also identified the imbalance between housing supply and the increasing housing demand due to natural increase in population, high rate of rural-urban migration, overcrowding and deterioration of the already existing housing. In addition, he stated the high price of land, building materials and labor, a lack of alternative investment opportunities and speculation as the major causes of housing shortage in developing countries. Other factors like the absence of urban policy that incorporates housing policy could help to successfully narrow the gap between urbanization and housing development (Abraham, 2007).
In general, the above authors identified lack of resources, lack of political will, population growth, uncontrolled and unplanned urbanization, lack of residents’ capacity to afford legal houses, the low rate of economic growth, constant increase in land prices and construction materials, inappropriate strategies for urban planning and land appropriation and absence of urban policy that incorporate housing policy to be the major causes of housing problem in developing counties.
2.1.7. Urban housing in Ethiopia
Based on Worldometers elaboration of the latest United Nations data (2019), Ethiopia’s urban population constitutes about 20.9 percent of the total population (Worldometer, 2019). This shows that Ethiopia has low urban population ratio than most developing countries. Even with this low level of urbanization, most urban centers suffer from a variety of urban problems including inadequate infrastructure, housing and services, high unemployment and weak institutional mechanism for good urban governance and sustainable urban development (Tegegne, 2005).
According to (Abraham, 2007), housing shortage is one of the major problems that the country faces in almost all urban areas. Recent estimates concluded that, currently the housing shortage in Ethiopia particularly in Addis Ababa is more than 1.2 million (MUDH, 2017). In addition to the shortage, the existing houses are below qualitative standard and lack adequate space. Moreover, the extent of provision for water supply, electricity, drainage facility and other services in the existing settlements is also very low.
The problem is aggravated due to the country’s low investment in the housing sector. Even if the country’s investment in housing construction is in progress, still it is in lower condition compared to developing countries. With regard to Addis Ababa, which constitutes 15 percent of the country’s urban population, the city is experiencing an acute shortage of residential housing (MWUD, 2008). According to information obtained from the Ministry of Urban Development and Housing ((MUDH), 2017), there is lack of about 1.2 million houses and also the demand for housing increase by more than 50,000 per year due to high population growth in Addis Ababa (Jemila, 2010).
The housing problem that the city faces has resulted in severe congestion and overcrowding in the living condition of the city’s residents. Moreover, the existing huge gap between the supply and demand for housing has led to illegal housing construction and squatter settlements in many places throughout the city (Jemila, 2010).
Besides, many of the housing units constructed in the city are of poor quality due to old age, limited variety and poor workmanship. The scarcity of shelter related infrastructure, especially lack of adequate water supply and sanitation has also contributed to the poor housing condition in the city (Tsion, 2007).Most international estimates put the proportion of the Addis Ababa’s population that is living in rundown and slum settlements as one of the highest in the world. According to Akinyode, (2016) the proportion of squatter and slum settlement in Addis Ababa is 90 percent. Worse housing conditions that are combined with the expansion of squatter settlements cause a rapid increase in the proportion of the population of Addis Ababa that live in such settlements (Tsion, 2007).
2.1.8. Urban housing policies in Ethiopia
The housing sector has been subjected to a variety of policy interventions in the past years in Ethiopia. In the pre 1975 period, housing market operated in free market principles. Landlords leased urban land and constructed residential houses to tenants, and there was no restriction with regard to the selling and buying of houses. Though the government had little involvement in the housing sector, due to the housing shortage it was expected to provide low cost housing without taking the role of the private sector which was at that time mainly catering for medium and high income groups. However, the then free market condition was one of the factors that were blamed for the unplanned development of most urban centers, in addition to the very high cost of rent for tenants. As a result, the majority of the urban population was forced to live in highly crowded and congested houses that are mostly built and owned by land-lords (Jemila, 2010).
Following the 1974 revolution, the Derg nationalized all urban land and extra houses by Proclamation No. 47/1975 and was directly involved in the supply of housing. Due to low public sector production of housing, the Derg organized and supervised housing cooperatives to respond to housing requirements. To encourage the development of the cooperative system, the Derg intervened with a wide range of incentives including allocation of land without charge for the construction of owner-occupied housing units, subsidizing building materials and mortgage loans below the market rate were also provided on a subsidized basis to cooperatives (Abraham, 2007).
Despite this effort, total housing production satisfied only a small portion of the demand for the period. The majority of the urban residents that the Derg claimed to stand for could not benefit from the land reform where urban land was granted free of charge, because their income was too low to construct the smallest standard dwelling houses. Tsion (2007) claimed that, the housing development approaches that were implemented by the Derg were unable to successfully address the neediest which are mainly the low and lower middle income group. Although the factors causing these consecutive failures are numerous, the basic cause can be stated as the choice of non-inclusive housing development approaches that are less responsive to local situation.
Since the transition in 1991, the EPRDF government has sought to introduce a more market-oriented approach to housing development. With the introduction of the urban land lease holding Proclamation in 1993, the government defined leasehold as the tenure form of choice. Land to be used for social services and low-cost houses may be leased free of charge (Proclamation No. 80/1993). The Addis Ababa City Government‘s Urban Land Lease Holding Regulation No. 3/1994 declared that urban land should be used for business activities and residential construction. In addition to the land lease law, other measures have contributed to the liberalization of the housing market. Subsidies on the sale of building materials have been removed and interest rates for housing construction have been set at market rates, etc (Regulation No. 3/1994).
In addition, a consolidated Urban Development Policy was formulated and approved by the Council of Ministers of the Federal Democratic Republic of Ethiopia in 2005. Urban housing development is identified as a key pillar in the priority intervention areas of the government’s Urban Development Policy (MWUD, 2008). The policy generally can be termed as inclusive when it comes to housing. The intervention areas identified in the policy document form the bases for the development of the Integrated Housing Development Program (IHDP) in 2006, which is designed for implementation between 2006 and 2010 though the Housing Development Program is implemented in Addis Ababa since 2004.
2.1.9. Integrated Housing Development Program
The Integrated Housing Development Program (2nd pillar), stands in line with Millennium Development Goals 7, Target 10 that seeks to reduce by half residents without access to safe drinking water and sanitation by 2015 and Target 11 that seeks to bring about considerable improvements in the lives of at least a 100 million slum dwellers by 2020. It is also concerned with the objectives of upgrading the conditions in urban areas, achieving high-density development and trimming down the cost of infrastructure, lowering the rate of urban sprawl and reducing slums in Ethiopia by about 50%. Through this program, the government aims to finance and construct much needed accommodations giving priority to the interest of middle and particularly low-income households (Kidist, 2014).
Towards these aims, the ambitious vision set by the government as part of the Integrated Housing Development Program for the years between 2005 and 2010 comprised of five major goals (MWUD, 2008). These included:-
- Constructing 360,000 housing and 36,000 commercial units nationally and
- In the process generating 200,000 job opportunities,
- Availing the necessary infrastructure, planned and serviced land for housing
- Boosting the performance of the contractors, consultants and engineers and finally
- Providing adequate assistance to property developers, housing cooperatives and private home builders, So that they can be able to construct 125,000 housing units per annum.
Since the beginning of the program in 2005, half of the initially targeted number of housing units (213,000) have been built nationwide, presenting low-income residents a chance to secure tenure in accommodations with basic services and infrastructure (MoFED, 2010). Unfortunately, these houses are still outside of the financial reach of the “poorest of the poor” in the country with government estimates suggesting that as much as 70% of the low income tenants that receive these houses rent them out to households with higher income as they can’t make the bank loans or the necessary monthly mortgage payments (UN-Habitat, 2011).
Although this contradicts with the original purpose of the program to provide homes with basic services for low-income tenants, all is not lost, as even in the current setting of this persisting change of providing affordable homes, two unforeseen opportunities have risen from the new income the rents bring these low-income landlords. The first is that, the low-income landlords are now able to relocate to better-facilitated Kebele houses with the new income and the second is that it is an income generator in itself meaning that they are economically wealthier and can afford a better standard of life than before (UN-Habitat, 2011).
Clearly, there is much to be done to realize the full rewards of the ambitious visions set on 2005 on the onset of the Integrated Housing Development Program in improving the living conditions of Ethiopians. At the same time however, it is imperative to note that the program has sparked a large-scale low-income housing initiative that has been widely successful in partially curbing the house deficit in the country, in its creation of over 176,000 new jobs and considerable role in the enhanced performance and capacity of the construction sector (MoFED, 2010; UN-HABITAT, 2011). This accomplishment demonstrates among others, the employment opportunities the Integrated Housing Development Program has availed while constructing much needed low-cost houses and the potential of the housing sector to enable growth in the economy.
2.2. Empirical Review of Literature
2.2.1. Performance of housing development program
The IHDP is undertaken since 2006 in 55 towns located under five regions and Addis Ababa and Dire Dawa. As reported by MoFED (2010), during 2004/05 – 2009/10, it was planned to construct 396,000 new houses and by the end of this period 213,000 houses had been built in various regions and City Administrations. Of the houses constructed 72,000 were handed over to the beneficiaries. However, the IHDP has been suspended in the regions for reasons like: the condominium blocks have been described as „an eye-sore‟ in the smaller low-rise provincial towns and demand has been low due to considerably lower purchasing power in the regions than in Addis Ababa (Tamiru, 2009).
Recently, the government has started implementing a new housing project in Addis Ababa which is divided into four different categories based on payment modalities: 10/90, 20/80, 40/60 and housing association. The payment modality for the last one (housing associations) necessitates hundred percent upfront settlements, while the others incorporate 10, 20 and 40 percent down payment by individuals mixed with a long-term mortgage plan,(Ebisa, 2014).
2.2.2. Housing development program in Addis Ababa
To solve the housing problem of the city, it is essential to enable the construction of houses in existing parts and also in new areas of the city. Hence, the Addis Ababa City Government has designed an Integrated Housing Development Program that aims to improve the quality and quantity of houses that are available in the city. In addition to the housing shortage, the majority of the existing houses are decaying. Any effort to solve the housing problems of the city should, therefore, consider the redevelopment and upgrading of the decaying houses under the city’s Kebele Administrations and the renewal of the slum areas (AAHDPO, 2007).
The Housing Development Program also considers the very high unemployment problem and prevalence of the informal sector in the city. Moreover, the program recognizes the potential role of the construction industry in creating employment opportunities and inducing the development of MSEs. Therefore, the Program is designed to create large employment and increase the incomes of the city residents. Apparently as income of the wider public increases, the potential for enabling low income residents to become house owners and fair distribution of income will be enhanced (AAHDPO, 2007).
Currently, low-cost building technology is not widely applied in the construction industry in the country. So long as housing construction cost remains very high, it becomes difficult to create a situation where the wider public would be able to rent or buy these houses. Thus, the program intends to construct affordable houses using cost-saving building technologies. Hence, it is important to involve as many MSEs as possible in the program so as to promote low cost housing technologies that require lower level of skill that can be implemented extensively in a short period of time (Bob et al, 2008).
Generally, the strategy of the city government that has adopted to implement the Integrated Housing Development Program is very consistent with multiple objectives of poverty alleviation and economic development. In particular, the Program is designed to be consistent with the Millennium Development Goals and Targets. It would contribute directly to Goal 1 of eradicating extreme poverty and hunger by stimulating local economies, creating jobs and access to decent housing. The Program also contributes to Goal 3 of Promoting gender equality and empowerment of women by creating jobs, supporting women to establish their own businesses and access to decent housing. And it is directly related to Goal 7 of Ensuring environmental sustainability (sustainable access to safe drinking water and basic sanitation, as well as a significant improvement in the lives of slum dwellers) by delivering decent housing with adequate infrastructure and services (MWUD, 2008).
2.3. The Role of Housing on Human Life
Affordable and stable housing has been linked with improving health, education and economic outcomes for families and children. Many studies show that stable housing is both a foundation for well-being as well as a platform for connecting people to services and resources that include quality health care centers and schools and other facilities. According to Mahider, (2013) when housing is stable and affordable, families can spend more time and resources on medical care, nutritious food and the like. Homeownership increases housing security to families: it gives more control to owners over their physical surroundings, lowers real monthly payments over time, protects against unanticipated changes in rental costs, and helps build wealth. Homeownership also provides a ready mechanism for families to borrow money and get credit to improve their home, make purchases or invest in education or the financial markets. It is also argued that these benefits are available to all homeowners regardless of economic status.
A central role of assets, like home ownership, is to cushion the decline in consumption that might otherwise arise with a sudden income loss (Lerman and McKernan, 2008). Families can draw down their assets or use assets as collateral to borrow and replace lost income, thus potentially experiencing a smaller loss in consumption. Conceptually, enhanced family and residential stability derived from asset holding are likely to help children improve their educational outcomes and feel more rooted in their community (Lerman and McKernan, 2008). A relatively large empirical literature suggests that homeownership improves children’s educational attainment and decreases teenage pregnancy, among other potential effects. McDonald, Funderburg, Swenson, Russett and Simeon, (2007) also argue that there is a significant relationship between housing and children’s educational achievement.
Different literatures on their empirical findings present some evidence that assets positively affect health and psychological well-being in a causal way. More studies find a positive association between assets and health and psychological well-being. By helping people meet unanticipated health care costs and thus encouraging them to seek appropriate diagnosis and treatment, assets can improve health outcomes (Lerman and McKernan, 2008). According to McDonald et al. (2007), there are three main ways in which housing affects health. The physical characteristics and quality of homes produce environmental effects that may result in health problems. Unstable housing may affect access to health care and may also have mental health effects. High housing costs may affect how much the household spends on other essential items such as nutrition and health care, which may result in health problems. Moreover, considering the relationship between housing costs and health effects, they concluded that low-income households who incur high housing costs spend much less on food and health care as compared to equivalent low-income households with affordable housing. Strong evidence suggests that the average homeowner accumulates a significant portion of wealth in the form of housing equity.
Wealthy homeowners also accumulate more non-housing wealth than renters, suggesting that they save more. Mahider (2013), argue that homeownership brings significant economic benefits to both the families that choose to be owners and society in general. Homeowners live in larger, higher-quality dwellings. They enjoy a better stream of housing services, with costs that usually fall over time, and stand to gain considerable financial returns if they remain owners for a long time. Marcano and Ruprah (2008), in their study of impact of Chile’s housing program using Propensity Score Matching, found that the program had significant positive effects on materiality conditions (access to water, sewerage, and electricity), but it had a negative effect on overcrowding (number of person per room). However, their study shows that the program has no significant effects on welfare indicators (poverty, school attendance, occupation ratio, etc.). In other words, their result shows an unambiguous improvement in the quality of the housing solutions. However, the impact on other outcomes is doubtful. According to them this could be due to high residential segregation that resulted from attempting to maximize the number of housing solutions on the cheap. In addition to the welfare impacts, homeownership also contributes to economic development. According to Mahider (2013), increasing homeownership is a central strategy for successful economic development. From the above empirical evidences one can understand the multidimensional importance of housing on one’s life.
2.4. Conceptual Framework
The researcher developed a conceptual framework to identify the network of relationship between housing development program, housing affordability, and consumption impacts because of housing program, social capital impacts, beneficiary household, and government. This theoretical framework has derived and situated for this study from a theoretical model for housing supply and affordability which is developed by Dawit, (2016).
This section develops a conceptual framework for housing development program towards its socioeconomic impact in the context of Addis Ababa and to provide recommendations on the general condition of affordability of condominium houses, the impact of cost of the house on consumption and the impact of the program on social capital of the beneficiary households. The following figure shows the relations within the different components of the proposed framework.
The main components of the framework are housing affordability, housing supply, total cost of the house, down payment for condominium houses, consumption of beneficiary households, social capital of beneficiaries and government. The figure develops a linkage between those components. The housing supply by the program is related to housing affordability that leads to house ownership of the poor and also has a relation with consumption and social capital of them. In the basic framework of the proposed model, the housing supply and its impacts are related. The whole process is closely associated to examine the affordability of housing, the impact of housing program on consumption and social capital of beneficiaries. According to Kamete (2001) cited in Habte, 2010, there are external and internal factors that affect housing affordability. The external factors revolve around the cost of the housing. This is the sum of land acquisition, infrastructure, both on and off site, planning, designing, administration and community facilities, interest rates, amortization periods and subsidies. The internal factors that affect affordability have to do mainly with the socio economic circumstances of the target group.
The real challenge therefore is how the program is supplying decent housing at an affordable cost to beneficiary households. If prices in the housing market increases faster than incomes, more low income households will be in need of affordable housing. Conversely, if income increases faster than the cost of housing, fewer households will be in need. Although this ratio is straight forwarded, it is affected by a Varity of other underlying supply and demand factors like land and labor cost, housing market, interest rate, population increase, an increase of income and the like. Housing is a physical shelter fixed in a place and intended for human habitation including all services desired for the physical health and social well-being of the family and the individual. Affordable housing is a housing which adequately suits the needs of low income households at costs below those generally found in the existing market. As a result it provides social and economic benefits for the target groups. The framework helped the study and the researcher to analyze the housing supply condition and its affordability, and their socioeconomic impacts among beneficiary households. And helped to know and determine how the housing development program has an impact among beneficiary households. The following figure shows the relationship between study variables.
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Source, Dawit (2016), with researcher’s modification
Figure 1 conceptual frame work
CHAPTER THREE
RESEARCH METHODOLOGY
3.1. Introduction
This chapter describes the research methodology that was employed by the study. It includes the research approach, research design; population and sampling procedure; variables of the study, data source and data collection instrument, as well as data analysis and ethical considerations.
3.2. Research Approach
The study used mixed research approach. In a mixed research approach, data will be gathered, analyzed and presented in the combination of both quantitative and qualitative methods. According to Creswell, (2014) mixed research method is an approach involving collecting both quantitative and qualitative data, mixing the two forms of data, and using distinct designs that may involve philosophical assumptions and theoretical frameworks. The central assumption of a mixed approach is that the combination of qualitative and quantitative approaches which provides a more complete understanding of a research problem than either approach alone (Creswell, 2014).
For this study, mixed research approach helps to understand the research problem and questions appropriately. In particular a quantitative approach is selected to analyze the affordability of condominium houses as well as the socioeconomic impact of housing program on beneficiary households (the impact of down payment on household’s consumption, and the impact of housing program on social capital). Whereas the qualitative approach helps to have an in-depth understanding about the context using interview and open ended questions that also help to triangulate the validity of the data obtained in quantitative approach as well as to analyze quantitative data in a narrative way (Creswell, 2014).
3.3. Research Design
The research design refers to the strategy and plan within which research is conducted. It constitutes the strategy for the collection, measurement and analysis of data in order to address the research questions or problems (Kotahri, 2004). It is also a plan that specifies the sources and types of information relevant to the research problem. For Creswell (2014) research designs is defined as the type of investigation within qualitative, quantitative and mixed research approaches that provide overall direction for procedures in a research. For this reason, in this study, the researcher used a concurrent mixed research design; by which both qualitative and quantitative data were collected, measured, and analyzed simultaneously.
3.4. Population and Sampling Procedure
This study focused on beneficiaries of condominium housing program that are living in the City Administration of Addis Ababa, which is the largest and capital city of Ethiopia. The city is acting as the seat of the Ethiopian Federal Government and Oromya Regional State. According Worldometer, (2019) estimation the city has a population of around 4 million inhabitants.
The target population for the study was beneficiaries of condominium housing program currently living in the city. According to Addis Ababa Housing Development Project Office (AAHDPO, 2017) about 180, 000 houses are built and transferred for beneficiaries.
Two sub-cities (Bole and Yeka) was selected using purposive non probability sampling method. Since these sub-cities have above 80,000 houses that are transferred for beneficiary households which covered almost half of the houses built and transferred in the city. These sub-cities have condominium houses both in the inner city and expansion area/ periphery sites. As a result they were more suitable to gather necessary information.
3.5. Sampling Frame
Sampling frame is a list of potential respondents in the population (Creswell, 2014). For this study, the sampling frame is the list of households who are beneficiary of the housing development program (lottery winners of condominium houses) and higher officials and experts of housing development offices in the selected Sub Cities.
3.6. Sampling Techniques and Sample Size Determination
3.6.1. Sampling techniques
The study employed both probability and non probability samplings that are cluster sampling and purposive sampling techniques. Since cluster sampling helps to select respondents from different clusters and helps to get representative samples from each cluster as well, as it is probability sampling technique it allows for each sampling unit to be selected as a sample. And purposive sampling helps the researcher to get appropriate information.
Bole and Yeka sub-cities were selected purposively for this study as they have condominium houses both in the inner city and expansion area/ periphery sites. They were more suitable to gather necessary information. Cluster sampling was employed to select the condominium sites in both sub-cities. The sites were clustered as inner city and periphery sites (Bole has 5 sites from that 2 were inners & 3 were periphery and Yeka has 6 sites among them 3 were inner & the remaining 3 were periphery). One site from each cluster was selected randomly i.e one inner city site and one periphery site from each sub-city; total four sites were selected. Sample respondents were selected based on cluster and drawn randomly from the selected sites using simple random sampling (lottery method). In order to strengthen the data gathered by probability sampling, purposive non probability sampling technique was also employed to interview six higher officials’ and ten experts who are working in housing development offices of AAHDP, Bole and Yeka sub-cities.
3.6.2. Sample size determination
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398 beneficiary household respondents were selected for questioner. For interview in each sub-city there were 2 higher officials and 4 experts in addition at AAHDPO there were 5 higher officials and 15 experts who are working in administrating the condominium houses. From these six higher officials (two from AAHDPO and two from each sub-city) and ten experts (four at city level and three at each sub-city) were directly participated through purposive sampling. Therefore, 398 beneficiary respondents for questionnaires and 16 informants for interview (higher officials and experts) total 414 participants were involved in this study.
3.7. Data Sources and Data Collection Instruments
3.7.1. Data sources
The sources of the data which were employed for the analysis of this study were both primary and secondary data. However, the study mostly depended on primary data collected from beneficiary households, higher officials and experts of the sub-cities using questionnaires and interview methods respectively. Secondary data were also collected from books, journals, organizational plan, and reports.
3.7.2. Data collection instrument s
For this study both qualitative and quantitative data gathering instruments were employed to collect data from its source.
3.7.2.1. Questionnaire
To collect quantitative as well as qualitative data the researcher developed questionnaire and distributed to the selected sample respondents by the researcher himself and data collectors in face-to-face approaches. The reasons for selecting questionnaires as data collection instrument is, it is easily manageable to gather and analyze, it allows respondents a greater depth of response, time to verify answers, anonymity, and economical in terms of time and cost (Kotahri, 2004:).
A short-term training was provided to the data collectors before involving in the process of data collections and appropriate information was given to the respondents before distributing the questionnaires. Frequent follow-up was also conducted to make the response rate as good as possible.
For the purpose of this study, a combination of close ended and open-ended item questionnaires were developed based on the main concepts of the study variables, which were drawn from literature in the area of the socioeconomic impact of housing development program among beneficiary households
3.7.2.2. Interview
Interview with the higher officials and experts was conducted in a face-to-face contact to gather qualitative data. The researcher developed interview guiding questions. For this study, semi structured interview techniques were used because of its being more economical, providing a safe basis for generalization, and requiring relatively lesser skill on the part of the interviewer (Kotahri, 2004).
3.8. Method of Data Analysis
Both descriptive and econometric analyses were held in this study to achieve the intended research objectives.
3.8.1. Descriptive analysis
The study used descriptive statistics like frequency, percentage, mean and standard deviation to compute, summarize and describe the quantitative data collected in order to determine the affordability of condominium houses, consumption and social capital.
To analyze the qualitative data, different techniques were employed. First, the depth data collected from interviews and responses of open-ended questionnaires were reduced in to smaller volume through different level of coding. And then, it was named and categorized to use the data to support, enrich and compare the quantitative data. In this study, the qualitative and quantitative data was mixed during interpretation and discussion period in order to compare and make clarity on the collected data
3.8.2. Econometric analysis
Econometric analysis was employed to test the relationship between the dependent and independent variables. Inferential statistics specifically multiple regression model was used to test the relationship between the down payment for condominium housing and households’ consumption and logit model was used to test the relationship between housing program and social capital of beneficiaries.
3.8.2.1. Model specification
This study adopted consumption and social capital as a measure of socioeconomic situation of beneficiary households. Multiple regression model were used to analyze the impact of down payment for condominium house on household’s consumption and using logit model the researcher analyzed the impact of housing program on social capital of beneficiary households that contribute to one’s welfare (Wasyhun, 2018).
In multiple regression analysis, the mean or expected value of Y is referred to as the multiple regression equation (Anderson etal, 2011). According to them,
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According to this study Logit model is used to investigate the impact of urban housing program on the social capital of beneficiary households. Hence, According to (Hosmer and Lemshew, 1989), Logit model is quite convenient for analysis when a dependent variable Zi which cannot take negative values of explanatory variable which has sensible partial effect over a wide range and also better to estimate features of distribution of y given X1, X2,….,Xk other than the conditional expectation. Logit model would be adequate techniques for addressing probability question. It can be defined as
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Where Pi is the probability of having good social capital and Zi is a function of m explanatory variables (Xi) and expressed as:
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Where β 0 is the intercept and β i are the slope parameters in the model .Since the conditional distribution of the outcome variable follows a binomial distribution with a probability given by the conditional mean Pi, interpretation of the coefficient will be understandable if the logistic model can be rewritten in terms of the odds and log of the odds, (Gujarati, 2004).
The odds ratio to be used can be defined as the ratio of the probability of increase social capital (Pi) to the probability of the decrease social capital (1-Pi).
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Taking the natural logarithm of the odds ratio of equation (5) will result in what is known as the logit model as indicated below:
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If the disturbance term Ui is taken in to account the logit model becomes:
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Hence, the above econometric model was used in this study and was treated against potential variables assumed to affect the dislocated periphery. Accordingly In the second analysis, factors influencing the social capital were estimated using binary logistic regressions model (Gujarati, 2004)
Thus, in the first stage, the variables were estimated using binary logistic regression model. According to (Maddala, 1997) logit model is specified as:-
The logit model is:
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Table1. Definition of variables
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Source: researchers own construction (February, 2020)
CHAPTER FOUR
RESULTS AND DISCUSSION
4.1. Introduction
This chapter presents the main results and discussions of the surveyed data. The data was collected through semi structured questionnaire from 398 sample beneficiary household heads and interview from 16 higher officials and experts of housing development program. Both in the questionnaires and interview all samples were addressed and presented. The chapter is divided and discussed into five sub-sections. The first sub-section describes the socioeconomic and demographic characteristics of the sample respondent households with respect to identified explanatory variables. The second sub-section presents the housing condition of households. The third sub section describes the households’ consumption situation as well the fourth sub-section describes the status of social capital in the beneficiary households. In the fifth sub-section the multiple linear regression and logistic regression are presented to show the impact of price of housing and the impact of housing program on social capital of the households. Concurrent sequential method of analysis is employed to integrate quantitative data with qualitative.
4.2. Demographic and socioeconomic characteristics of respondents
This section has described the household characteristics that explain the information on demographic, and socio-economic characteristics such as age of the household, sex of the household, educational level, family size, income, economically active family members, marital status, employment type and occupation which is assumed that either positive or negative influence on the outcome variables.
Table 1 Demographic and socio-economic characteristics for continuous variables
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Source: Researcher’s own calculations, 2020.
Data about age of the respondents in the sample showed that the average age is 39.2 years and it ranges from 26 to 73 years. This shows the age of respondents is mature enough to the study. The average family size (including relatives, permanently living with the family, and servants) of the sample households is 4.08 and ranges from 1 member to 9 members. 27 (7.03%) of the respondent households have one member and only 8 household has nine members. Majority of the households have four members in their family. This finding is more or less similar with the report of Central Statistics Authority that stated Ethiopian households consist of an average of 4.8 persons ( CSA, 2012).
From the respondents response the mean net monthly salary of respondents is birr 5007.7 and ranges from birr 0 to birr 20,000. Looking at the monthly total family income (in Birr) of the households in the survey, the average income is Birr 8417.09 ranging from Birr 1500 to Birr 24657 per month.
Table 2 Demographic and socioeconomic characteristics for discrete variables
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Source: Researcher’s own calculations, 2020.
Sex wise, the selected respondents are varying in the indicators. It could be seen from Table 2 above that, the respondents are to some extent fairly distributed. It is revealed that, out of 398 respondents, 219(55.03%) are females and the remaining 179(44.97%) are males. Accordingly, it is shown that the female and male respondents are participated in this study. Additionally, it can be deduced that the collected data is the reflections of the ideas of both sex groups in nearly balanced manners. From this one can infer that in the study there is no gender discrimination.
The level of education of the sample respondents stretches from elementary up to post graduates (Master’s Degree holders). Accordingly, 16 (4.02%) respondents are elementary level, 34(9.3%) of the respondents are high school level, 99(24.87%) are TVET and Diploma holders and the majority which is 246(61.81%) are first degree and Master’s degree holders. The educational status of respondents can be summarized as almost all are educated and they are mature enough for the study As far as the marital status of the sample household heads is concerned, among the observed beneficiary households, most of them which are 287 (72.1%) are married, 96 (24.12%) household heads are single and the rest 15 (3.77%) household heads are divorced. Of all the household heads in the sample, 351 (88.2%) household heads are employed and 47(11.8%) are unemployed. Regarding the employed household heads of 351, the majority, i.e. 238 or 59.8% of the employed household heads are government employed, 76 (19.1%) heads are private sector employed, 45 (11.3%) heads are self-employed and the rest 39 (9.8%) household heads are employed in other sectors. From this one can infer that the source of respondents’ income is generated from fees found from employments.
4.3. Housing condition of respondent beneficiary households
This sub-section has described the housing condition of respondents that presents the information about the situation of the houses and it includes, registration time, housing program type, numbers of bed rooms, advance payment, down payment, sources of payment and total cost of the house that may either positive or negative influence on the socio-economic situation of beneficiary households and some variables are presented as follows
Table 3 Housing condition of households for discrete variables
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Source: Researcher’s own calculations, 2020.
Regarding the housing registration the city administration was held two times in 1997 and 2005 e.c. As Table 3 above shows most of the respondents 363 that covers 91.2% have been registered in first in 1997 other 35 respondents which covered 8.8% was registered in 2005. The typology of houses for which the respondents registered were 20/80 and 10/90 as a result among 398 respondents household heads 356(89.5%) were registered for 20/80 housing program and the remaining 42(10.5%) were registered for 10/90 housing program. In addition to the typology the beneficiary households have been selected different bed rooms and 12.8% of respondents in number 51 selected studio, 38.9% that contained 155 respondents selected one bed room, 30.9% containing 123 respondent household heads selected two bed rooms and others, 17.3% of the respondents that covers 69 household heads selected three bed rooms. The reason for selection was the income of households. Respondents were asked whether they have got the type of house they registered for and 293(73.6%) respond as they got, the remaining 105 respondents which covered 26.4% of respondent households did not get the type of house they registered for. After all 255(64.1) beneficiary household heads among respondents are living in the house they got and 143(35.9) are not living in the house. The main reason they justified is because of unable to pay the down payment, the remoteness of the sites for their working areas.
All 398 respondent household heads paid advance payments since the house can only be transferred for lottery winners if they pay the advance payment within a specified period of time. As a result lottery winners are expected to pay the advance payment. As per the data surveyed respondent households paid the advance payments from different sources. From 398 respondents 78(19.6%) respondents have paid the advance payment from their salary, 94(23.6%) paid from their personal income, 113(28.4%) of respondents paid the advance payment from loan of different financial institutions, 101(25.4%) respondent household heads source for advance payment was family support and the rest 12(3%) of respondents paid the advance payment from other sources. From this one can infer that most of the respondent household heads have paid their advance payments from loan and family support.
Regarding the monthly payment continuity 313(78.6%) respondent households pay continuously and the remaining 85(21.4) are not paying the monthly payment continuously. The source of monthly payment for housing is different sources. Majority of respondents 252 (63.3%) are paying from their salary and only 9(4.3%) are paying from loan.
The belief of respondents in the legal transfer of the houses, affordability and suitability of condominium houses are summarized on Table 3 above. Based on the observation 111(27.89%) of respondent household heads agreed as the houses are transferred legally on the other hand 287 respondents that covered 72.11% believed as the transfer of houses by the government is not legal. Respondents shared their beliefs on the affordability of the cost of houses, for 54(13.57%) respondent household heads it is affordable and for 344(86.43%) not affordable. Besides the affordability, the suitability of houses (location, transportation etc…) 163 respondent household heads which covered 40.95% answered as the houses are suitable and the remaining 235 household heads that covered 59.05% respond as the condominium houses are note suitable. From this one can deduce that the houses are not affordable and not suitable in terms of location, transportation and so forth.
Table 4 Housing condition for continuous variables
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Source: Researcher’s own calculations, 2020.
As indicated above, Table 4 summarized different costs of the housing development program. During the time of registration the average coast of houses were 94,157.1birr which ranges from 15,000 to 230,000 birr and the actual total coast of the houses at the time of winning the lottery is 176,612.1 birr that ranges from the minimum birr 22,000 to birr 480,000. This shows there is a difference between the cost during registration and lottery winning time. The expected average monthly payment at a time of registration was birr 507.2 the minimum expected payment was birr 156 and the maximum was birr 2500. Whereas the actual average monthly payment of beneficiary respondent households is birr 1651.6 and it ranges from the minimum monthly payment of birr 490 up to the maximum monthly payment of birr 5000. Regarding their previous costs of 311 respondents who were lived in rent houses the average rent payment was 1922.7 that ranges from birr 5 to birr 5000. From this data one can conclude that there is unexpected and huge difference between the costs and monthly payments during registration and the actual monthly payment and cost of the house.
4.4. Consumption of respondent households
This section has described the household consumption status that includes eating frequency of the family members, occurrence of child and adult illness, number of family members attaining school education expenditure, health expenditure and food expenditure which can be affected by the housing development program. And some variables are presented in table 5 below
Table 5 Consumption for discrete variables
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Source: Researcher’s own calculations, 2020.
Table 5 above shows the eating time frequency of respondent households’ family members per a day before living in the condominium house and now at a time of living in the condos. As the data indicates among 398 respondent households 33(8.3%) were eating two times per day, 276(69.4%) were eating food three times in a single day’ 74(18.6%) were eating four times and the remaining 15(3.8%) were eating more than four times per day. On the other hand the frequency of eating while living in the condominium house, 90(22.6%) are eating two times in a day, 243(61.1%) are eating three times per day 54(13.6%) are eating four times in a single day and others 11(2.8%) are eating more than four times per day.
According to the existence of educational expenditure, occurrence of child and adult illness and the institutions where the illness is treated. From the observed 398 respondent beneficiary households 275(69.1%) are exposed for educational expenditures and 123(30.9%) are free from educational expenditures. Regarding child illness 116(29.15%) have faced child illness and 282(70.85%) didn’t faced any child illness in the last 12 months. According to adult illness 151(37.94%) experienced adult illness and the others 247(62.06%) did not experienced any type of adult illnesses. Those 171 respondent households took treatments from different health institutions. Among them 48(28.07%) treated the occurred illness in nearest hospitals, 115(67.25%) treated in nearest health centers, 4(2.34%) treated in nearest pharmacies and the remaining 4(2.34%) treated the illness in other institutions in the last 12 months.
Table 6 Consumption situation for continuous variables
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Source: Researcher’s own calculations, 2020.
Table 6 above summarizes basic expenditures and numbers of family members attaining school. Based on the observations the average food expenditure (cost of food) is birr 3554.9 which ranges from birr 700 to birr 12,000, the average health expenditure (cost of health treatment) from respondent households that experienced child and adult illness is birr 913.7 that contains a minimum cost of birr 0 to birr 12,000 in the last 12 months and the average educational expenditure is birr 1610.6 per month with the range of minimum birr 0 to maximum of birr 14,000 per month. Regarding the Number of family members attaining school, the average family members are approximately 2 that range from 0 to 6 members.
4.5. Social-capital of respondents
This section has described the social capital of respondent households that is influenced by the housing development program. The main variables included in this sub section are idir, ekub, mahiber, coffee drink with neighbors, kens visit and feeling of loneliness. The situation is analyzed as follows presented in table 7.
Table 7 Summary of social-capital indicators
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Source: Researcher’s own calculations, 2020.
According to Table 7 above the indicators of social capital are summarized and based on the summary above among the 398 observations 208(52.3%) respondent beneficiary households were members of idirs’ and the remaining 190(47.7%) were not members of any type of idir in their previous living areas. After they are winners of the lottery of condos 233(58.5%) becomes idir members and 165 (41.5%) respondent beneficiary households are not members of any idir. Interms of Idir there is an improvement, beside those respondent households who are not members of Idir justified that the living situation is not comfortable for idir since the households are from different area, it is difficult to organize idir.
The other indicator of social capital in Ethiopian case is Equb. The participation of respondents in Equb is discussed as follows from the observed 398 respondents 164(41.21%) were participating in equb and 234(58.79%) were not participating in equbs in their previous living areas and after getting condominium and started to live in 107(26.9%) respondent households are participating in equbs and 291(73.1%) respondent households are not participating in equb. In this regard there is a decrease in participation of Ekubs and the reason for the decrease is the income limitation of households and the topography of the houses is not suitable for developing social network From 398 observations 188 (47.24%) were members of mahibers and 210 (52.76%) were not members of mahibers in their previous living areas. After being winner of the house and start living in the condominium house 147(36.9%) respondent households are members of mahibers whereas 251(63.07%) are not members of any mahiber. The participation in mahibers is olso decreased as the data explained above and reasons justified by most of respondents is no social cohesion among neighbors and some respondents believe that mahiber is not necessary.
Regarding the kens/relatives visit 381(95.73%) of the respondent households had a habit of visiting their kens and only 17(4.27%) did not have the habit of visiting their relatives and the frequency of visiting was varied as per the observation 99(25.45%) respondent household heads were visiting their relatives once a week, 43(11.05%) were visiting twice a week, 117(30.08%) were visiting once a month 95(24.42%) were visiting in the occasion of every holyday and 35(9.00%) were visiting their relatives in other situations in their previous living areas. The respondent household heads were asked whether there is a decrease in the visit of relatives after start of living in the condominium house. And 255(64.07%) respondent households respond there is a decrease of visiting the relatives, 143(35.93%) respond there is no decrease in visit of relatives. Respondents provided different reasons for the decrease in visit of relatives from 309 respondents 187(60.52%) justified the increased distance as a major reason, 56(18.12%) respond high transportation cost is the reason, 34(11.00%) respond because of lack of transportation and the remaining 32(10.36%) justified because of other reasons.
The researcher further traced the habits of coffee drinking habit with neighbors and feeling of loneliness. Among 398 observations 256(64.32%) respondent households respond as they had habit of drinking coffee with neighbors and 142(35.68%) did not have a habit of drinking coffee with neighbors in their previous living areas. After starting to live in the condominium houses 100(25.13%) of respondent households are drinking coffee with their neighbors and 298(74.87%) are not drinking coffee with their neighbors. The respondents were also asked whether there is a feeling of loneliness or not and 102(25.63%) respond as they feel lonely and others 296(74.37%) respond as there is no feeling of loneliness.
Finally respondents gave suggestions and recommendations for the housing development program. Regarding the major challenges of the program respondents justified that it didn’t achieve its target; rather it is exposed for complex good governance problems and corruption. Problem of transferring the houses on time, problem of ownership, infrastructures are not fulfilled, transferring without finishing, high bank interest, problem of security and sanitation. There is problem of affordability, the program discriminates more low income section of the society, no playground for children. The program is a means of displacement for farmers. It decreases the social cohesion of the society and it develops individualism. Monitoring and evaluation system of the program is weak and needs attention.
The housing development program has also provide opportunities from these the majors are gives freedom, made households free from living in rent and family houses. The program enables the beneficiary households to become house owners. The program created job opportunities for different unemployed section of the society. The program changed slum areas of the city to new and conducive environment, enables the beneficiaries to experience modern way of life, created new villages and contribute for the development of the city.
Respondents gave recommendations for the program that should be taken into consideration. The government shall try to identify homeless households with appropriate investigation, shall give for private contractors to create accountability for any failure, the program should consider the situation of the beneficiaries. It is better, if the governments implements new strategies to build more houses and assure quality of houses. The houses shall be transferred to beneficiaries after completing the necessary infrastructures and all finishing works to minimize the maintenance coasts of the house. Location of the housing development shall be revised and should not be in peripheries of the city. The program should include recreation centers and play grounds in the design. The bank shall provide grace period for lottery winners at least till complete the maintenance and finishing works of the house. Finally respondents recommend the government to strengthen the monitoring and evaluation methods of the program and take appropriate measures.
4.6. Econometric analysis
This study conducted the necessary model diagnosis test include model specification test for the overall model fit (goodness of fit), multicollinearity problem and test for model specification error test. multicollinearity test is conducted to know whether there exists a correlation among independent variables. How to handle the problem of heteroscedasticity is also discussed. . In addition, model test carried out before running the logistic regression while model specification error test (linktest) was carried out after running the regression.
4.6.1. Multicollinearity Test
Variance of Inflation Factors (VIF) was used to check Multicollinearity among continuous variables. A sample correlation coefficient greater than +0.7 or less than -0.7 for two independent variables is a rule of thumb warning of potential problems with multicollinearity (Anderson et.al, 2011). The correlation coefficients among the independent variables are less than +0.7 . From this it can be deduced that there is no multicollinearity problem among the independent variables. Hence running the multiple regression equation becomes feasible.
4.6.2. Heteroscedasticity Test
Heteroscedasticity is a systematic error that happens when the variance of the errors is not constant (Gujarati, 2004). Heteroscedasticity problem makes the model inefficient to estimate the regression coefficients because of biased variance and covariance of the coefficient. Thus, the data has the problem of heteroscedasticity to alleviate this problem; the robust regression model is used.
The model fitness test of the logistic equations justified the fact that the models are enough to explain the dependent variables. This evidenced by the fact that the Pseudo R2 statistics of the model is 0.0486 which lies between 0 and 1. The result confirmed that the explanatory variables (independent variables) of the model could explain the dependent variable and well fitted (see appendix 3). The link test identified the model specification error occur when the relevant variables are omitted from the model or one or more irrelevant variables are included in the model. The null hypothesis shows there is no model specification error. In this specific study the p-value of hatsq shows not significant then we fail to reject the null hypothesis and conclude the model is correctly specified. In this regard, for the linkage between the location/suitability/ of condominium houses and the social capital of households the p-value is 0.446 (see appendix 3). The p-value implies it is not significant so we fail to reject the null hypothesis and conclude that there is no model specification error.
4.6.3. Estimates of the Multiple Regression Model
Table 8 Estimation result for consumption of beneficiary households
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Source: Researcher’s own calculations, 2020.
Table 8 has depicted whether each explanatory variable is significant to the model at a significant level of 5%. As it is shown, the explanatory variables family size of the household, total monthly income of the household , number of rooms of the house ,total cost of the house, down payment of the house and age of the household head are significant to the model at 5% significant level. The remaining variable level of education is insignificant.
Based on the statistical tests of the regression, the statistical significance of the coefficients of the explanatory variables which are family size, total monthly income of the household and number of rooms of the house, total cost of the house, down payment and age are 0.004, 0.000 and 0.021, 0.02, 0.009 and 0.044 respectively. Since these values are less than the significant level of the study which is 0.05, we can conclude that all of these explanatory variables are statistically significant. On the other hand, the result of the other explanatory variable education level is different from what it is expected to be. Since the statistical significance of its coefficient of 0.797 and greater than the significant level of this study, this explanatory variable becomes insignificant to the model at 0.05 significant levels.
Table 8 has also depicted the direction of the relationship between the independent variables and the dependent variable using the coefficient of the regression. As explained by the table, age, family size, total monthly income and number of rooms they choose and down payment have positive relationship with consumption. When the family size of the household is increased, the consumption of the household will increase. The same is true for the total monthly income, i.e. when the total monthly income of household increases, the consumption of the household also increases. Whereas the direction of the variables age, number of rooms they have and down payment are different from what it is expected to be, when the age of the household head increases the consumption also increased. In addition, the increase in number of rooms will lead the increased consumption of households and when the down payment of the house increased the consumption also increases. On the other hand, total cost of the house and level of education has inverse relationship with consumption. The other unexpected result is the inverse relationship between education level and consumption of households. According to this result, the increased level of education will decrease the consumption of the households.
The magnitude of the relationship of each independent variable with the dependent variable has been also portrayed by table 8 using which is the coefficient of the regression. The interpretations of the coefficient of statistically significant independent variables are as follows.
The coefficient for the independent variable, family size is 205.444. This is to mean that the family size of the household is increased by 1 leads to increase the consumption of the household by 205.444. Similarly the increase in total monthly income of the household by 1 birr will lead the consumption increased by 0.4437. The third significant independent variable for this study is total cost of the house and its coefficient is -0.005. The increase in the total cost of the house by 1 birr will lead to decrease consumption by 0.005. The other three variables the age, number of rooms of the house and down payment its coefficients are32.9482, 571.378 and 0.5289 respectively. Even though, these independent variable are significant, its coefficients are positive and an increase in age by 1year leads to increase consumption by32.9482. The same is true for the increase in number of rooms by 1 increase the consumption of households by 571.38 and the increase in down payment of the house by 1 birr leads to increase consumption by 0.529. These results are completely against from what is expected and it may reflect the total income of the household and family size and total cost of the house has significant impact on consumption.
4.6.4. Estimates of the Logit Model
Table 9 Estimation result for social capital of beneficiary households
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Source: Researcher’s own calculations, 2020.
As it can be seen in Table 9, all the explanatory variables age of household head, family size and suitability of the location of the house are significant to the model at 5% significant level. Based on the logistic regression, the statistical significance of the coefficients of the three explanatory variables which are age, family size and suitability of location are 0.000, 0.018 and 0.021 respectively. Since these values are less than the significant level of the study which is 0.05, we can conclude that all of the three explanatory variables are statistically significant. In other words, it can be deduced that these variables as the statistically significant causes of decrease/increase of social capital of households at 95% confidence level. .
Table 4.9 has also depicted the direction of the relationship between the independent variables and the dependent variable using which is the coefficient of the logistic regression and which is the odds ratio. As explained by the table, family size and suitability of location of the house have positive relationship with social capital of households. When the family size of the household is increased during living in condominium houses from others, the probability of having good social capital will increase. The same is true for suitability of location of the condominium houses, i.e. when the locations of the condominium houses are more suitable, the social capital of households’ increases.
On the other hand, the age of the household head has inverse relationship with social capital. The increase in age of the household head leads to decrease the social capital of the household.
The direction of the relationship between the three explanatory variables and the dependent variable has also been shown by the odds ratio. The odds ratio which is greater than 1 for family size and suitability of location has shown that these explanatory variables have positive relationship with social capital. On the other hand, age has odds value of less than 1 and hence this explanatory variable has inverse relationship with social capital. The magnitude of the relationship of each independent variable with the dependent variable has been also portrayed by table 9 using the odds ratio. The interpretations of the odds ratio of statistically significant independent variables are as follows. The first significant independent variable for this study is family size and its odds ratio is 1.1639. The odds ratio in favor of social capital will be increased by 16.39% if the family size is increased by 1%. Hence, family size has the significant impact on social capital. The odds ratio for the second statistically significant independent variable which is suitability of location is 1.6641. The odds ratio in favor of social capital will be increased by 66.41% if the location suitability is increased by 1%. Therefore, location suitability has the major impact on the social capital of the households living in condominium. The odds ratio of age is 0.9445, as the age is increased by 1 year reduces the social capital of households living in condominium houses. Therefore, these three independent variables have a significant impact on a decrease/increase of the social capital of households.
4.7. Key informants Interview
The key informant interview which was gathered from 16 interviewees is summarized and presented as follows. According to key informants interview the condominium house are built and transferred for about 13 rounds and 278,000 households are benefited by the program. Houses are transferred to beneficiaries through different methods by lottery method, for ex-propertied households when they leave their living area for development projects. The main objective of the program is to tackle the problem of housing in the city and to improve the social, economic and political situation of citizens. Mostly the economic goal is achieved in terms of house ownership wealth accumulation and job opportunity creation for unemployed. On the other hand because of the location the beneficiaries may face different social and economic problems like transportation. In meeting the objectives one of the informants place his idea as … In the economic view I can say the housing development program met its objective. Because it made homeless households house owners, as a result the program enables them to accumulate fixed asset. In addition the housing program created multiple job opportunities, many micro and small enterprises and multiple grade contractors have been participated in the construction of houses in this regard more than 200,000 job opportunities are created in the last 10 years. Besides the economic objectives the beneficiaries who lived in the peripheries may lose to achieve special the social networks they build in the former residents and exposed for different social economic crisis. But for long term this problems can be solved…
The plan of the housing development program was to build and transfer at least 50,000 houses per year for beneficiaries. But because of different reasons the program did not achieve the plan among the reasons lack of skilled man power in the construction sector, financial constraints, inflation on the prices of construction materials and corruption are the most significant factors.
Regarding the affordability problem of houses, the cost of house was estimated based on the time cost of construction materials and human resource costs. But at the end of the day the cost of materials and manpower costs will increase unexpectedly since the construction take more than two and three times to be completed and transferred for beneficiaries because of the above reasons.
The major challenges that the program faced are corruption, inflation of the construction material cost, lack of skilled man power specifically problem of project management. The government took different measures to tackle the challenges of the housing development program. Among the measures taken the project office was re organized, different experts and contractors become accountable for their corrupted movements. And most of the constructions are given to the private contractors to minimize corruption.
Previously houses were transferred before completing the house and other relevant infrastructures like piped water, electric city, road, school and health facility. These created different compliances by beneficiaries then at a time the project integrates all infrastructures and almost all are fulfilled before transferring.
The project selects the condominium sites after social, economic, environmental and feasibility analysis. The location may affect beneficiaries for short term till the area becomes adapted by the society. But in the long run the areas are becoming the main business centers and the government is investing different efforts to fulfill infrastructures like roads to connect them with the central part of the city. In addition the government is trying to construct houses in the inner city to solve the problem of discomfort because of the locations that are in the periphery areas.
CHAPTER FIVE
CONCLUSION AND RECOMMENDATION
4.2. Conclusions
In the last 15 years, Ethiopia experienced an ambitious Housing Development Program that is a large-scale approach to address the current housing deficit, the poor quality of the existing housing stock, and the developing housing demands due to continued urbanization. The program targeted the low and middle income households, who typically live in precarious housing situations. It allows the low and middle income households to access improved housing. Through the provision of durable, fully-serviced housing units, the program greatly improves their living conditions and access to basic services. The houses are distributed to the beneficiaries mostly through a computer lottery method. Most of the beneficiary households in the sample took the houses through this method and female household heads are benefited more based on the principle that female heads of a household should be given priority as a result 30 percent of the houses are distributed for females only.
This study evaluates the socioeconomic impacts of the housing development program on beneficiary households. It contributes to the impact evaluation of condominium housing programs regarding the consumption and social capital effects that can be attributed to the beneficiary households. Although the official government documents do not explicitly list the expected program outcomes other than the avoiding of overcrowding and the improvement of the quality of housing, this paper rather tried to measure socioeconomic impact of the program using some selected social and economic indicators, income of the households, food expenditure, health expenditure ,education expenditure of the household, total cost of the house, affordability of the house, suitability of the condos and kens visit based on a cross-sectional data from 398 households in Addis Ababa City, Bole and Yeka Sub Cities who are beneficiaries of condominium houses.
The first step builds on descriptive analysis of the household characteristics to have some image about the demographic and socio economic conditions of sample households. From the total sampled households 55.03% were female and 44.97% were male respondents. According to the descriptive analysis, the average amount of age, income, family size of households living in condominium houses are 39.17, 8417.08 and 4.09 respectively. The average actual total coast of the houses at the time of winning the lottery is 176,612.1 birr. And the actual average monthly payment of the house of beneficiary respondent households is birr 1651.6.
Most of the respondent household heads have paid their advance payments from loan and family support. The affordability of the house by the beneficiary households about 86.43% responded the condominium houses are not affordable. So, it is concluded that the condominium houses are not affordable. The respondents that covered 72.11% believed that the transfer of houses by the government is not legal and concluded condominium houses are not transferred legally for households.
Regarding to consumption, the average food expenditure of households is birr 3557.85, health expenditure is birr 2088.10 in the last 12 months and the average educational expenditure is birr 2329.50 per month. On the other hand the frequencies of eating while living in the condominium house 61.1% of the households are eating three times per day.
The social capital of the beneficiary households are explained by membership of edir, ekub mahber and drinking coffee with neighbors. Based on the findings 53.13% respondent of beneficiary households were members of idirs’, 74.22% respondent households are not participating in equb, 63.02% are not members of any mahiber and 74.22% of the respondents are not drinking coffee with their neighbors. In addition 77.6% of respondent households respond there is a decrease of visiting the relatives justified by the increased distance from their relatives as a major reason. The respondents were also asked wither there is a feeling of loneliness or not and 45.31% respond there is no feeling of loneliness and others 54.69% respond as they feel lonely. From these results, it is concluded that living in condominium houses decreases the social networks of the households Among the variables used to estimate the results, age of the household head, family size of the household, total monthly income of the household, the number of rooms, total price of the house and down payment of the house have statistically significant. Only the education level of household head is statistically insignificant. Family size and total monthly income of the head of the household positively affect the consumption, i.e. the increase of family size and monthly income of households lead to the increase in consumption. The total price of the house affects the consumption of the household negatively, i.e the increase in total price of the house leads to the decrease in consumption of the households. The other variables age, number of rooms and down payment are expected to have negative effect. But the result shows the increase in age, number of rooms of the house and down payment of the house increases the consumption of households. The other unexpected result is education level of the household. It has negative relation to the consumption of households but it is insignificant.
The logistic estimation result shows that condominium housing program has significant impact on beneficiary households’ social capital measured by the location suitability of the condominium houses. The increase /decrease of the suitability of the location of condominium houses lead to the increase/decrease in social capital of the beneficiary households. From the findings the housing condition of the households, suitability, their access to services, and the location of condominium houses are not suitable, they feel loneliness and there is a decrease in kens visit because of the distance from their relatives. So, the decreased in suitability of condominium houses decreases the social capital of the households.
Based on the multiple regressions, the result shows that the housing program measured by total price of the condominium houses has a negative significant impact on consumption of beneficiary households. And the logistic regression result shows the housing program has significant impact for the decrease in social capital of beneficiary households.
5.2. Recommendations
Building on an accurate evaluation of the impact of programs helps those concerned with the program to react to what is really happening. Particularly, measuring as accurately as possible the impacts of an intervention helps to understand the processes of intervention and their impacts so as to improve those processes. The condominium housing program is one of the pro-poor programs being implemented in Ethiopia targeting the low and middle income households in urban areas.
Evaluating the socioeconomic impacts that can be attributed to the housing program is important to see what the program is achieving besides solving the housing shortages. Of course, the direct goal of the program is to help the low and middle income households to access better quality houses equipped with basic services. Based on the empirical findings, the following policy implications are drawn to expand the beneficiaries of the program and to reduce the socioeconomic impact of the program among beneficiary households. The research recommends for policy makers, higher officials of the housing development program and for future researchers
For policy makers and higher officials of the program
The program was expected to have significant positive impact on the economic and social status of the beneficiary households. However, according to the result, the housing program has statistically significant negative impact on consumption and significant positive impact to have poor social capital of beneficiary households concerning the suitability of the condominium sites.
- Thus, in order to overcome the problem of consumption and social capital of beneficiary households, policy makers need to work hard for making the price of house affordable, give due attention for the location of the house and improving infrastructures of the condominium sites.
For future researchers
The study has tried to evaluate the socioeconomic impacts that can be attributed to the Condominium housing program. However, a lot remains to be done in this area for future research therefore;
- When trying to evaluate the socioeconomic impacts of the program, only certain indicators of socioeconomic statuses of the households are considered. But, the well-being of households may change in many other ways due to the program. Therefore, much effort should be exerted to assess the impact of the housing program on other socioeconomic dimensions.
- The cross-sectional data used in the study may not correctly reflect the impact of the program. As a result, this study may not be holistic measure of the impact of the program, to draw policy implications. Thus, the program should be assessed taking long time span and using panel data.
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APPENDICES
Appendix1. Questionnaire
Questionnaire Prepared For housing beneficiary households
Dear respondents the purpose of this survey questionnaire is to gather information about the socioeconomic impacts of condominium houses for the low income beneficiary households as requirement for the partial fulfillment of master degree in Development Economics from Ethiopian Civil Service University. Your accurate response to survey question is vital to complete these. Your response to the survey will remain confidential, and be used for academic purpose only. So if you need additional information Please don’t hesitate to contact me with the following addresses.
Sincerely
Please put this sign ( ✓ ) in front of your answer
Part I. Basic information of respondents
Abbildung in dieser Leseprobe nicht enthalten
Part II. Questions related to affordability of the housing program
Abbildung in dieser Leseprobe nicht enthalten
III. Questions Related to Households’ Consumption
Abbildung in dieser Leseprobe nicht enthalten
IV. Questions Related to Households Social Capital
Abbildung in dieser Leseprobe nicht enthalten
Finally, please answer the following questions.
Abbildung in dieser Leseprobe nicht enthalten
Appendix2. Interview Guiding Questions
Interview guiding questions for higher officials and experts of housing development offices
1. What is the main objective of the housing program
2. How do you evaluate the program in accordance with meeting its objective?
3. Why did not condominium houses have been built and transferred to the beneficiaries as per the plan of the program?
4. Why the costs of the condominium houses are not affordable to beneficiaries?
5. What are the major challenges that faced the housing program?
6. What are the measurements, taken to make the condominium houses affordable to the target group?
7. What are the socioeconomic impacts of the program on the beneficiary households based on your evaluation?
8. Do you have planned to improve performance and change its structure to make the inhabitant beneficiary?
9. How do the condominium houses are transferred to beneficiaries with regard to infrastructures (piped water, electric city, road, school, health facility, …)?
10. Do you believe that the locations of condominium houses are suitable for the beneficiaries?
THANK YOU
Appendix3. Outputs from STATA software
Abbildung in dieser Leseprobe nicht enthalten
[...]
- Arbeit zitieren
- Yeshi Alelgn (Autor:in), 2020, The Socioeconomic impacts of Urban Housing Program Among Beneficiary Households in Ethiopia. Evidence from Selected Sub-Cities in Addis Ababa, München, GRIN Verlag, https://www.grin.com/document/1003120
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