Affordable Housing in Ghana Gets MIGA Support
MIGA recently issued guarantees to Metro Ikram Sdn. Bhd. of Malaysia covering its investment in a housing development project in Ghana. The guarantees are covering the investor’s $2 million equity investment in and $4 million shareholder loan to Ghana-based Meridian Development Limited. The coverage is for five years and protects against the risks of transfer restriction, expropriation, war and civil disturbance, and breach of contract.
With Metro’s investment, Meridian will develop and build a large housing project in Ghana that will include 100,000 affordable, medium range, and premium homes. MIGA is providing coverage for the pilot phase of the project, entailing the construction of approximately 1,000 homes in Tema, approximately 30 kilometers outside the capital city of Accra. The project is a joint venture between Metro Ikram and the Social Security National & Insurance Trust (SSNIT), an agency of the Government of Ghana.
Ghana’s rapid population growth is straining urban infrastructure, and degrading social amenities and shelter conditions, particularly in the Accra-Tema metropolis. Lack of low-income housing compared to demand, the absence of private sector participation, and deficiencies in financing arrangements have made it difficult for ordinary Ghanaians to access affordable housing. The MIGA-supported project is expected to help address these problems.
“This project brings private sector expertise to the housing sector in Ghana,” says Nkem Onwuamaegbu, an underwriter in MIGA. “We expect it to deliver mass housing efficiently and effectively, with increased accessibility to complementary financing arrangements for lower-income workers.”
The project is in line with the Ghanaian government’s strategy to address the current housing shortfall and provide basic standard of living conditions, especially to the urban poor. In addition, the project is expected to act as a catalyst for direct and indirect economic activity. Local service providers including contractors, construction specialists, architects, and engineers will be employed during the construction phase of the project. Ensuing mortgage financing activities are also expected to contribute to the deepening of Ghana’s capital markets.
“We are pleased to offer our political risk insurance to help Ghana tap the potential of the private sector for its much-needed infrastructure development,” says Yukiko Omura, MIGA’s Executive Vice President. “We expect the project to address the country’s acute shortage and high demand for affordable housing.”
The World Bank Group is committed to supporting Ghana in its efforts to accelerate economic growth and promote private sector involvement in the country’s development. The International Finance Corporation, the private investment arm of the World Bank, recently implemented a two-year technical assistance project in conjunction with local financial and housing institutions to address the issue of mortgage lending in Ghana. MIGA, in conjunction with the Public-Private Infrastructure Advisory Facility—a multidonor technical assistance facility—is embarking on a broad study of Ghana’s housing market with the objective of developing a better understanding of its challenges and prospects.
For more on MIGA’s work in Ghana, visit http://www.miga.org/sitelevel2/level2.cfm?id=1080 and search by country. Click here for more on the World Bank Group’s work in Ghana.