african union for housing finance | ghana...general findings 5 african union for housing finance...

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African Union for Housing Finance QUALITATIVE STUDY: HOUSEHOLD INTERVIEWS

Ashna Mathema October 15, 2006

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African Union for Housing Finance

I. Introduction We selected a stratified sample across various urban poor neighbourhoods in Accra to conduct our interviews. These are part of the qualitative analysis undertaken for the AUHF study, to provide an in-depth picture of the living conditions and priorities of the urban poor in Accra. Although the data collected is not statistically significant, they do present an in-depth understanding of the situation, and help draw some broad conclusions with regard to the characteristics of these households. A quantitative socio-economic survey is currently underway. Once complete, it will be used to validate, verify and/ or substantiate the findings from this qualitative analysis, and vice versa. Field Work Household Interviews. Twenty-four household interviews were conducted in five settlements in Accra: Jamestown, Nima, and Mamponsa, Neo Plan Station (Circle) railroad settlement, and Sodom and Gomorrah. One additional interview was conducted in Kotobabi. These interviews were 2-3 hours long, and included questions related to household structure, relationship with other plot residents, migration history, access to and expenditure on housing and infrastructure, property title/ tenure, income and employment, access to finance, and development priorities. The first three settlements—Jamestown, Nima, and Mamponsa—may be categorized as “Legal/ de facto tenure” settlements (to differentiate them from “squatters”), meaning that most people in these areas were allocated the land or given permission to occupy the property by the “owner.” To further clarify, most people in these settlements do not have titles, and the property is not registered; it is de facto ownership, and recognized by the local leadership. The other two—NeoPlan Circle railroad settlement, and Sodom and Gomorrah—primarily comprise of squatters, although there are some “Legal/ de facto tenure” occupants of those areas as well. Interviews with Market Women. In addition to these household interviews, additional interviews were carried out with market women (and 1 man) who had signed up for the HFC micro-lending program. The structure of these interviews was slightly different in that they were geared more at extracting their experiences with the program, and to draw lessons from it to inform the design of future programs aimed at increasing access to finance for the urban poor. Interviews with Micro-lenders. We also conducted interviews with the three major lenders: HFC, Sinapi, and Pro-Credit to understand their programs and target groups.

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Data Analysis Most areas showed a mix of “legal” and “illegal” residents (for example, in Mamponsa, while most plots were allocated, one of our interviewees occupied a plot 100 mts from the beach, which whether or not it was allocated, cannot be deemed fit for habitation), or people who worked in the area and lived somewhere else (as was the case in Nima with an electronics workshop owner, and in Sodom and Gomorrah, where one person ran a bar, and another one a truck repair workshop, but both lived elsewhere). Due to these overlaps, and the inability to clearly define each of these areas as “legal” or “illegal”, the analysis has been based on data disaggregated by tenure, legal status, and income levels of individual households.

Renters N=5 1. By TENURE

Owners N=19

Squatters N=10 2. By LEGAL STATUS

Legal/ de facto tenure N=14

< =325K pci N=12 3. By INCOME

>325K pci N=12 Overall N=24

Data gathered from the interviews with the market women has been analyzed separately, to allow a “before” and “after” comparison of access to finance. In other words, the findings that are presented on informal settlements (above) do not include the cases of the market women. It must be emphasized again that this data is based on a small stratified sample, not a statistical sample, but it has enough breath and depth to provide a clear overall picture. The intent of the analysis here, in other words, is to give more context to the findings from the field research, to enable the reader to quantify the otherwise subjective and qualitative conclusions, with numbers drawn from real cases and real people. It is anticipated that the statistical limitations will be more than compensated by the depth of the stories of the people. The next section summarizes the key findings, and is followed by a more detailed discussion based on the data. Section IV presents the interviews in detail.

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II. Key Highlights 1. Family Houses in Old Accra

- Most of the families residing in family houses in Old Accra are poor. Their vulnerability is made worse by

the fact that these households are also large in size, often women-headed, with several extended family members and one or more single mothers. The poorest typically have the largest families, and the most number of dependents, and unemployed persons.

- Living conditions in many of these settlements are deplorable. Water and sanitation facilities are practically

non-existent within plots. People mostly buy water, at 2-3 times the actual cost, and use public toilets which are expensive, and often in short supply, and ill-maintained. Household expense on services is15-20 percent of total household expenditure, and this includes zero expense for housing.

- Places like Jamestown already have the trunk infrastructure in place. Still, there are very few houses that

have tapped into it to build individual toilets, or to get a water connection. This, they say, is because there are too many “owners” to the property, and it is almost impossible to come to an agreement on any issue related to investment. Also, some households earn less than the others, and cannot pay, which puts an uneven share of the burden on those who can.

- The quality of construction is mixed: very poor in some places, alright in others. However, in general, the

floor-area-ratio is extremely low, with most structures being one or two stories. At the same time, room occupancy, and plot densities are very high. Many of the old family houses are overcrowded, with an average of 4 persons to a room among the poor families. We met several with 15-20 persons sharing a room: the room is used for storing the goods; the people sleep outside. In Jamestown, for example, there was a household with 16 family members, living in one room of a family house with 8 rooms, with 7 other households (a total of 40 residents, of which 16 share 1 room). In several cases, particularly among the poorer families, families split up in different houses due to lack of space. Husbands live separately from their wives, the children split up, or the children are handed over to the in-laws or grandparents to look after, because of lack of space.

- Most household heads run their own businesses, e.g. small scale food vending, water sale, and so on.

But most have no access to loans to expand their businesses. As a result, profits continue to be low, and the poorest often do not have capital to take advantage of savings from bulk purchases etc. They express interest in business loans, but not in a housing loan. They say they will build the houses from the money they make from the business.

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- Remittance income is not very substantial, but does constitute about 10 percent of the income of the poorest families. Rental income, if any, in the family houses does not really benefit the residents, because it goes to those owners who are currently not occupying the property (unlike other rental housing income in places like Nima).

- Despite all of the inherent problems with family house, culture of cross-family support lends itself as a

social safety mechanism. The poorest in the family at least have a roof on their heads, however modest and/ or inadequate, and do not have to incur additional expenses on housing. Ownership disputes are not as common as one would expect.

2. Landlords and Renters - Renters often pay an advance of up to 6 years of rent. Three years is more common for residential

property, 6 years for commercial property. - Rent paid in advance affects people’s mobility. It also affects the housing market negatively by potentially

locking up the stock for an extended period of time, and in turn, in increasing the rents (due to limited supply at any given time).

- Tenants claim to have very limited rights with respect to their tenancy contracts. Evictions are common,

and the tenant often has no real recourse, especially since the courts are already lagging far behind in terms of property dispute cases.

- In neighbourhoods like Nima, most original residents have moved out, and converted their old family

houses into rental housing. These are essentially absentee landlords, and do not provide toilets or water as part of the accommodation. The tenants possibly take it simply due to lack of a better or affordable alternative. Physical conditions are similar to the old family houses discussed above; in some cases, the tenants undertake basic improvements with their own funds.

- For the landlords, this is a low-risk, high return investment. For the tenants, it is the only affordable

housing available. - Renters are typically either single (unmarried single men or young women), or recent migrants (single or

married), which makes them economically better off in terms of per capita income. That is also another reason they are able to afford rent, which constitutes 10-14 percent of the total expenditure. Squatters, on the other hand, also with similar household characteristics, typically have lower incomes than renters.

3. Sanitation Facilities - Lack of toilet facilities are the result of a host of factors: poverty, complications emanating from multiple

ownership of family houses, absentee landlords who are not interested in making any improvements to the

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rental housing, and possibly the most critical demand-related issue, which might suggest that people simply do not prioritise a private toilet.

- Public toilets are very expensive: the price can vary between 400-1000 cedis per use. Hence, people

use toilets only when they really have to. The consequence: children defecating in the beaches or the bush, or even in the open, adults using any available corner. It is, hence, of little wonder that every wall in Accra more than 3 mts tall bears a warning against urinating

- Expenditure on toilets is directly proportional to the number of household members, and particularly high for

larger families which are also poorer. Five to ten percent of the total household expenditure goes to public toilets. In comparison, the economically better off families who have toilets in their plots typically spend in the range of 2 percent of total expenditure on sanitation.

4. HFC Micro-lending program - Market women who signed up for the HFC savings and micro-lending program had significantly higher

incomes, greater savings, and much better living conditions. They had toilets, shared in some cases (not public toilets, as was the case with the vast majority of the others), but mostly individual. And most had built new houses after signing up with the savings scheme: they had taken loans to expand their businesses, and using the profit from the larger business (and larger savings, because of larger capital that allows them to buy stuff cheaper in bulk, for example), were able to build their own houses.

III. Analysis based on Tenure, Legality and Income Household Size The average size of households in informal settlements was found to be 6, which in comparison with other African countries is not unusually large. However, the characteristics of these households—with a large number of single parents, dependents, and unemployed persons—makes them more vulnerable. This is particularly the case with poorer households, with per capita income (pci) below 325 cedis1, where we found 92 percent of the households headed by women, and 83 percent of the households with at least 1 single parent. Also the average household size is 8, bigger than the overall average, due to more extended family members (typically dependents).

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# immediate family members

# extended family members

Total # members in HH

Average Median Average Median Average Median

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Renters 2 1 0 0 2 1 20 0 0 Owners 4 3 3 2 7 6 63 58 2 Squatters 4 3 1 0 5 4 60 40 2 Legal/ de facto tenure 3 3 4 2 7 6 50 50 2 < =325K pci 4 3 5 3 8 7 92 83 2 >325K pci 3 3 0 0 3 3 17 8 2 Overall 3 3 3 1 6 5 54 46 2

1 325K cedis is the median per capita income per month recorded from our sample of 24 households across 5 settlements in Accra.

The following section presents the numbers by disaggregating the data in three ways: by tenure, legal status, and income levels.

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Renters versus Owners Renters typically seem to have smaller families. The average household size in our sample was 2, the median was 1.0. This may be attributed to the fact that many of them are young people, still single, who have recently moved out of their parents homes and established their own businesses. Others are recent migrants who have come into the city with their—relatively young and small—families. Owners, on the other hand, mostly comprise families that have lived in these settlements for generations, and have expanded in size over generations. The households are typically large, with the average recorded at 7 persons per household (with 4 members in the core/ immediate family, and 3 dependents or extended family members). All of the “owner” households interviewed in Nima and Jamestown, for example, had extended family members (nephews/nieces, parents, or siblings). The average number of extended family members was 5.8 (range 2-14; median of 3), and the average household size was 8.9 (range 3-16; median 7). See boxes 1 and 2 for illustrative examples. Squatters versus Legal/ de facto Tenure Occupants Like the renters, most of the households in squatter settlements (Sodom and Gomorrah, and the railroad settlement in our sample) are single families, and hence have a small household size, the average being 5. The average household size recorded in the “legal/ de facto tenure” category was 7. Since this includes both owners and renters, and given that the renters are substantially smaller households than owners, it does indicate that there are many owner households in the so-called “legal” settlements that are substantially larger. Examples shown in boxes 1 and 2 substantiate this. Households below versus those above median per capita income of 325K cedis/month Poorer households are clearly larger in size. Households with per capita income (pci) less than 325K cedis/month have an average household size of 8, nearly three times as large as those with per capita income greater than 325K. Single parents (with children) are also clearly more prevalent in poor households: 83 percent of the households with per capita income less than 325K had at least one single parent (an average of 2 single parents per household, mostly mothers). Ninety two percent of the “poor” households were headed by women. In contrast, we saw single parents in only 8 percent of the households with per capita income higher than 325K. In Jamestown, in particular, every household interviewed had single mothers, ranging from 1 to 5 in number (with an average of 2.5), and all of these were women-headed households. Once again, this is illustrated by the examples in Box 1 and Box 2.

Box 1. Margaret Amoah: Jamestown Female-headed household 4 single mothers, 2 mothers married but living

separately Household income: 1100K cedis/ month

Margaret Amoah lives in Jamestown. Her household comprises her mother and two children, but she shares her accommodation—one room in a family house—with her 4 sisters and their children, totalling 16 persons. Margaret is married, but her husband lives in his own family house in Jamestown for lack of space. Only 3 members of this 16-member household are males, and all of the 7 other households on this plot—Margaret’s cousins and their families—are women-headed. In all, on the plot, there is a total of 9 males (among whom only 2 are older than 18 years), and 31 females.

Room Occupancy and Plot Density

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Plot density is substantially higher in legal settlements where people have titles or de facto tenure, with an average of 7 households and 24 residents per plot. The same applies to poorer households, where the average number of persons per plot was recorded at 18. Poorer households also have the highest room occupancy, with an average of 4 persons to a room, double that of the others.

# persons per room # HHs per plot # residents per plot


Renters 2 2 8 9 12 10 Owners 3 3 3 1 15 8 Squatters 3 3 1 1 4 4 Legal/ de facto tenure 3 2 7 6 24 23 < =325K pci 4 4 4 3 18 11 >325K pci 2 2 5 5 12 10 Overall 3 3 4 4 15 11

The following section presents the numbers by disaggregating the data by tenure, legal status, and income levels. Renters versus owners Most of the renters interviewed were in the “legal/ de facto tenure” settlements (i.e. not in the squatter settlements), occupying rooms in plots with absentee landlords, and 10-20 rooms per plot. As discussed earlier, they are mostly small families, with an average of 2 persons per room. As a result, although they recorded the highest number of households per plot (an average of 8, and a median of 9), their plot density is a mere 12 persons per plot, lower than the overall average of 15.

Box 2. Manti Ayikai: Jamestown Female headed household 2 single mothers Household income: 750K cedis / month

Manti (right, in the photo) is a widow who lives with her 85-year old mother, Rebecca, and 14 children: 7 of her own, and 7 from her deceased sister. The husband of the deceased sister is a fisherman and lives in Jamestown; he provides occasional child support for his 7 children. With so many members in the household, and only 2 rooms, several of the children go to the Chief’s palace next doors to sleep at night. The plot is shared with 4 other families. Manti runs a small business with her mother: they buy pigs in the rural areas, bring them to the city for slaughter, and cook the meat and sell it locally. They do not have space for a refrigerator, or the money, so they typically store the extra meat in a neighbour’s fridge at 5K cedis per day. From this business, they earn some 300K per month. In addition, they sell water from their private standpipe, which fetches them some 150K per month in profit.

The owner category in the table includes residents of squatter settlements, which are typically small nuclear families living in temporary houses in undefined lots,2 thus brining the overall average down. The next sections presents a more realistic picture of the densities in some of these legal settlements with de facto tenure. Squatters versus “Legal/ de facto tenure” occupants

2 The plot density for squatters is largely irrelevant because there is no real defined plot. The walls of the structures—typically temporary houses or kiosks—define the plot.

The average number of persons per plot in “legal” neighborhoods was recorded at 24. This is attributed largely to neighborhoods like Jamestown (with a large number of “owner” families) and Nima (with a large number of renter families). The average number of households per plot ranges from 1 to 13, and the number of residents on the plot from 8 to 40; in both cases, the poorer families are the one that record the larger numbers. Below and above median per capita income of 325K cedis/month As one would expect, the plot density and room occupancy is much higher among poorer families: the plot density for those households with per capita income less than 325K per month is 18 persons per plot, while that for the others is 12. Similarly, room occupancy is 4 persons to a room for the former, and 2.3 for the latter. Note that this is despite the relatively smaller average for the number of households on the plot, simply because they have larger households. In several cases, particularly among the poorer families, in Jamestown and other similar neighbourhoods, families split up in different houses due to lack of space. Husbands live separately from their wives, the children split up, or are handed over to the in-laws or grandparents to look after, because of lack of space. And this is almost always related to poverty. In Jamestown, there was a household with 16 family members, living in one room of a family house with 8 rooms, with 7 other households (a total of 40 residents, of which 16 share 1 room).

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Income and Poverty Given the variations in household characteristics in these settlements, it is more appropriate to use income per capita—rather than household income—to rate vulnerability. The overall median household monthly income for the sample is 1450K cedis, and the median per capita monthly income (calculated by dividing HH income by HH size) is 325K cedis. Our interviews indicate that the “owner” families are the worst off, with a median per capita income of 300K cedis/month. Renters, in contrast, are the best off with a per capita income of 505K cedis/month. Squatters fall in the middle ground between owners and renters: the disadvantage of their lower income is slightly offset by the fact that they pay nothing for housing (which is also the case with owners), but not enough to compensate for the family size, which even though much smaller than owner families, is not as small as renter families.3 The following section presents the numbers by disaggregating the data by tenure, legal status, and income levels.

3 The average HH size was observed to be 1 for renters, 4 for squatters, and 7 for owners.

HH income per month (‘000 cedis)

Per capita income per month (‘000 cedis)

Average Median Average Median

Renters 1210 1300 835 505 Owners 2022 1500 361 300 Squatters 2220 1400 519 300 Legal/ de facto tenure 1678 1450 477 325 < =325K pci 1369 1425 207 247 >325K pci 2438 1675 782 579

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Box 3. Steven Amanfo: Sodom and Gomorrah Male-headed household Household income: 9600K cedis / month

Steven operates a toilet/ shower business, and lives with his wife and 6 children in Sodom and Gomorrah. His income from the toilet business is substantial: 250-300K cedis per day. His wife is a vendor, who sells drinking water sachets; from this, she makes on average 20K per day. Four of his children attend school: one is in a technical school training in construction; the youngest three attend private school. Although not an elected leader per se, he commands respects in the settlement because of his “entrepreneurship”, he says.

Overall 1904 1450 494 325

Renters versus Owners Although the median monthly household income for renters was found to be lower than that for owners—1300K versus 1500K—their per capita income is actually substantially higher, with a median of 505K versus 300K cedis per month. The average we recorded was still higher, at 835K cedis. This is largely due to the relatively small household size and other household characteristics discussed earlier. Owner families are diametrically opposite: relatively higher median household income, bus substantially lower per capita income (300K cedis per month) due to the larger household size. Squatters versus “Legal/ de facto tenure” occupants Squatters and renters present similar household characteristics and residential mobility, but are significantly different in terms of income levels, the squatters being much poorer with a median per capita income of 300K cedis per month. This could make for the argument that those can afford to get “legal” housing do so, the others simply squat. It is a rational economic choice for multiple reasons: one, housing is “free”; two, it may be poor in quality but is not much worse off than the living conditions in most rental housing in “legal” settlements where they would have to pay; and three, it is close to the workplace (most squatters operate their businesses from their homes). The relatively high average per capita income for squatters is explained by a few individuals who have “made it,” as they say, as is the case with Steven, a toilet operator in Sodom and Gomorrah, with an income of about 9600K cedis per month (See Box 3).

Below and above median per capita income of 325K cedis/month Based on the numbers, our sample may be split into the following per capita income quartiles:

1st Quartile x > 579K 2nd Quartile 325K< x <579K 3rd Quartile 247K< x < 325K 4th Quartile x < 247K

Income Sources Most households in informal settlements are actively engaged in at least one informal sector business activity. Two thirds of the households in our sample got all of their income from business activity. Remittance is directly related to the extended family structure: those who are functioning as nuclear families rarely receive any remittance or family assistance. This includes most of the squatters and the renters. Poorer families are more reliant on remittance and family assistance, which constitutes a larger share of their household income.

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Average % income from self-

employment (informal)

Average % income from

wages (formal)

Average % income from remittance/

family assistance

Renters 69 14 0 Owners 81 9 10 Squatters 100 0 0 Legal/ de facto tenure 68 18 14 < =325K pci 78 8 14 >325K pci 86 12 2 Overall 82 10 8

Self-employment Two thirds of the households got all of their income from business activity. The squatter households, in particular, were all self-employed, deriving all of their income from informal sector businesses. Only a fifth of those living in “legal” settlements worked in the formal sector.

Remittance Renters versus Owners None of the renters interviewed reported any remittance income. On the other hand, owners, in the legal settlements only (see below), reported a median remittance equal to 10 percent of household income.

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Squatters versus “Legal/ de facto tenure” Occupants Fifty percent of the households in Nima, Jamestown, and Mamponsa (the three “legal/ de facto tenure” settlements) reported remittance income. None of the interviewees in the 2 other settlements reported any remittance. The average remittance as a percentage of total household income for “legal” residents was found to be 14 percent. Below and above median per capita income of 325K cedis/month For the poorer households, average remittance was 14 percent of total income, compared with 2 percent for the others. This higher ratio may be attributed to the low basic income of the poorer families to begin with, but also goes to show that they are much more dependent on family assistance. Savings In general, more of the economically better off households (with per capita income higher than 325K cedis per month) have savings compared to the poorer households; they also save more, and save in formal sector schemes. Poorer households, on the other hand, have smaller savings, and tend to save in informal sector schemes (mostly susu collectors). 74 percent of the households interviewed had savings in one form or another. 44 percent of those who save do so with susu collectors, 38 percent in formal sector accounts, 13 percent in both, and 6 percent at home. Median savings amount to about 18 percent of the household income, which translates into 175 cedis per month. There is not a significant variation in the savings between renters and owners, and between squatters and “legal” residents. There is, however, a clear difference in the savings patterns between those below and above the per capita monthly income of 325K cedis.

William Paakwesi , MamponsaWater vendor/ public shower

operator Saves 20K cedis daily in susu

(600K cedis/ month)

Manti Ayikai, Jamestown: Food and water vendor

Saves 5K cedis daily in susu (150K cedis/ month)

Marianna Tetteh, Jamestown: Food vendor


Akua Kobi, Railroad squatter: Food vendor


Box 4. Susu savings accounts

Savings as % of income

Median savings/ month (‘000 cedis) Average Median

Median HH monthly income

(‘000 cedis)

Median per capita income/ month

(‘000 cedis) Renters 150 22 16 1300 505 Owners 300 15 18 1500 300 Squatters 300 21 19 1400 300

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Legal/ de facto tenure 150 15 13 1450 325 < =325K pci 175 20 20 1425 247 >325K pci 300 15 18 1675 579 Overall 250 17 18 1450 325

Box 5. Susu and formal savings accounts Top: Obayaa Aseiduaa is a petty trader who lives in the railroad squatter settlement. She saves 20K cedis daily in susu (600K cedis/ month) which she deposits into her formal bank account at the end of the month Below: Dorothy Mensah is a cloth merchant in Makola Market. She is a member of the HFC savings scheme, and also has one susu account, where she contributes 10K cedis per day. She uses the money in her susu account to pay the utility bills for the shop, and any other business-related expenses. The susu essentially works like a current account, and HFC as a savings account.

Below and above median per capita income of 325K cedis/month Fifty eight percent of those with per capita income less than 325K cedis per month save on a regular basis. Among these families who save, the 57 percent save only in susu accounts, 14 percent save only in formal sector accounts (HFC, Sinapi, or a bank), and 29 percent save in both. The median saving as a percentage of income is 20 percent, or 175K. Seventy five percent of the households with per capita income above 325K cedis per month save money on a regular business. Fifty six percent of these households save in formal sector accounts, 33 percent in susu accounts, and 11 percent at home. The median saving as a percentage of income is 18 percent, or 300K.

HHs with savings % HHs in susu accounts

% HHs in formal

schemes

% HHs in both susu and

formal

% HHs at home

< =325K pci 57 14 29 0 >325K pci 33 56 0 11

Susu Savings Scheme The vast majority of those earning less than the median income save in susu accounts. Susu collectors are private groups that organize agents to collect individual savings on a daily (or weekly) basis. A service fee usually equivalent to the average contribution of a day is levied. At the end of each month, the money is returned to the individuals after deducting the fee. In simple terms, the susu scheme works like a safety deposit box, with membership renewable every month. Among our interviewees, most people who had such accounts contributed anywhere between 2K and 200K cedis per day (typically 5 days a week, but could be more or less depending on the arrangement). They “put the money away”, they say, mostly from their daily earnings, “otherwise it gets spent.” Typically, people use these savings at the end of the month, to buy stock for their businesses or bulk supplies for the house. So essentially, it serves as a short-term safety deposit box. To cite some examples, a woman in Makola market has an account with the HFC as well as a susu collector. She uses the susu for he business expenses at the end of the month, whereas the HFC account is purely a savings account where she deposits her profits. Another woman in railroad settlement, deposits her savings into the susu scheme, and at the end of the month, takes it to Metropolitan Bank (see Box 5). In her case, the susu account works as a safety deposit box where she stores her savings till she can take them to her bank.

Several interviewees expressed suspicion and scepticism with regard to susu schemes. Several complained of being cheated, where “the collector ran off with the money”, or having heard of others being duped.

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Formal Sector Savings and Loans Schemes There are many such schemes in Ghana, although telling from the case of Accra, there is still a lot of untapped potential in terms of clients for these schemes. We met a few people in Jamestown and the railroad settlement who had enrolled in the Sinapi program, for instance, and got assess to quick loans. Some people in Sodom and Gomorrah were aware of the savings scheme offered by the Homeless People’s Federation, and so on. However, most of the people were unaware of any such programs, and when we discussed these with them, they listened and expressed keen interest. HFC Savings and Micro-lending Program The HFC program for market women is a clear example of how savings schemes can really work for the poor. It is less the concept, however, and more the design of the specific program that makes it tick. In our interviews with market women, it was clear that many of them had started off in conditions comparable or far worse than some of our interviewees in the informal settlements, and today have substantial savings, and have been able to incrementally expand their businesses, and even build homes. More details on programs offered by Sinapi, HFC, and ProCredit are discussed in Annex A. The interviewees range across the income spectrum – from a vendor with a stall who was previously a tomato seller selling tomatoes on a basket on her head and now owns a table-top stall, to a slipper wholesaler who started out with a table-top stall and now rents a real shop to conduct business, to a cloth merchant who started with a small stall and now owns a cloth business worth some 1 billion cedis (see Box 6). The table below compares the economic situation of these market women to the other interviewees of informal settlements. Their per capita income too is nearly 3 times that of the other interviewees from the informal settlements. Their savings, in real terms and as a percentage of income, are substantially higher than the typical informal settlement dweller. The median current savings balance recorded was 13.6 million cedis and the average 27.6 million cedis.

Savings as % of income Median savings/

month (‘000 cedis) Average Median

Median HH monthly income

(‘000 cedis)

Median per capita income/ month

(‘000 cedis) HFC market women (N=10) 2500 45 45 6250 1000

Other interviewees (N=24) 175 18 17 1450 325

Box 6. HFC Micro-lending Top: Gladis Appiah started out as a hawker in Kanishi selling tomatoes, walking around with a basket on her head. From her savings over the years, she has expanded her business and now trades in provisions (cans, spices, etc.) on a table-top in Agbogbloshie market. Gladis opened an account with HFC in 2003. Her first deposit was 5K cedis. She now contributes 15-30K cedis daily, and has got a balance of 1.4 million cedis. She estimates that her stock today is worth some 5-7 million cedis. Below: Ophelia Wilson started out her business in a stall on the side-walk, with a monthly revenue of some 1-1.2 million. Through the HFC program, she was able to save, and reinvest into her business. She bought this shop in Makola market, and increased her stock over the years. Today, her shop’s net worth is about 1 billion cedis (300 million for the shop, and 700 million for the goods). Her current balance in the savings account is 45 million cedis.

Interestingly, most of the women interviewed had toilets in their plots if not within the house. Most had built new houses after signing up with the savings scheme. Most had taken loand to expand their businesses, and using the profit from the larger business (and larger savings, because of larger capital that allows them to buy stuff cheaper in bulk, for example), were able to build their own houses.

Cost of Housing and Services Nearly a quarter of the monthly expenditure of households in informal settlements is on housing and services. This is despite the fact that most do not spend anything on housing. The excessive expenditure on services is mainly attributed to lack of water and sanitation facilities in the vast majority of these houses. The table below shows household expenditure on housing and basic services (water, sanitation, electricity).

% HH expenditure on services (water,

sanitation, electricity)

% HH expenditure on

housing

Total % HH expenditure on

housing and services


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Renters 17 17 11 12 27 27 Owners 18 19 3 0 20 19 Squatters 20 19 2 0 22 19 Legal / de facto tenure 17 17 7 0 24 21 < =325K pci 18 19 5 0 23 22 >325K pci 17 17 5 0 22 19 Overall 18 17 4 0 22 21

Box 7. Public toilets as a business Our interviewee Steven Amoah started his public toilets business a few years ago, and today is a rich man in his neighbourhood, Sodom and Gomorrah. His income is 9600K cedis per month. In our sample across 5 settlements, the next highest income is less than a fourth of Steven’s.

There is a general consistency in the spending patterns, in that they all spend an average of 17-20 percent on services. The only stark difference is in the housing expenditure for renters. As expected, they pay rent, which averages about 11 percent of monthly household expenditure, thus making their total expenditure on housing and services about 27 percent. The high cost of services is attributed largely to the extremely poor, and often non-existent, systems for sanitation and water supply. These are discussed below. Sanitation Whether in the squatter settlements or the so-called “legal” settlements, there are hardly any private toilets or even shared toilets within the residential plots. Even in neighbourhoods like Jamestown, where the trunk infrastructure for sewage lines already exists, there are very few private toilets. Only 20 percent of our entire sample of interviewees had any form of toilet facility on the plot, mostly shared with several other households. Most people use public toilets, either provided by the AMA, or built privately by local businessmen. Incidentally, the toilet industry is a real money-maker (see Box 7), and several entrepreneurs who have the resources for a water connection and the ability to get the necessary approvals, have built public showers and toilets.

Apart from the issues of poor hygiene, and limited supply of toilets, they are expensive. The table below shows the expenses incurred by households on toilet facilities. These numbers are conservative estimates, assuming at most 1 use per person per day, unless specified otherwise by the individuals.

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Cost of toilet (per

use) in cedis % HH expenditure on

toilets

% HH expenditure on water, sanitation,

electricity


Renters 358 325 8 4 17 17 Owners 647 700 9 7 18 19 Squatters 720 500 11 8 20 19 Legal/ de facto tenure 518 600 7 7 17 17 < =325K pci 575 600 8 7 18 19 >325K pci 629 600 5 4 17 17 Overall 602 600 6 5 18 18

Depending on the availability and the locality, the price can vary between 400-1000 cedis per use. This is a costly affair by any standards: where people barely have a dollar a day at their disposal, it is difficult to imagine how they can part with 5-10 cents each time they use the facilities. As a result, people use toilets only when they really have to. The consequence: children defecating in the beaches or the bush, or even in the open, adults using any available corner. It is, hence, of little wonder that every wall in Accra more than 3 mts tall bears a warning against urinating (see Box 8). Households with toilets. In contrast, those house owners who do have the facilities within the compound spend significantly less (see table below): an average of 2 percent on toilets, a third of the overall average.

% HH expenditure on toilets

% HH expenditure on services

% HH expenditure on housing

Total expenditure on housing and services

Average Median Average Median Average Median Average Median

Owners with toilets 2 3 6 6 0 0 6 6 Overall 6 5 18 18 5 0 23 21

Box 8. Lack of sanitation facilities Top: The beach front in Mamponsa, used for dumping garbage and defecating. Below: A wall in Jamestown, with graffiti: “Don’t urinate. Pig urinate here. Dog urinate here.”.

Water Supply As in the case of toilets, the problem of lack of water supply is consistent across all categories. Only about30 percent of our interviewees had a water connection on the plot. Regardless of whether the person is a squatter or a “legal” occupier of the property, an owner or a renter, someone extremely poor or relatively well off, most households do not have water connections in their homes. On average, they spend about 9 percent of their household income on water, which is about half of their total service cost (excluding housing).

Cost of water (per bucket) in cedis

% HH expenditure on water

% HH expenditure on water, sanitation,

electricity

Average Median Average Median Average MedianRenters 383 400 5 4 17 17 Owners 364 300 6 6 18 19

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Squatters 386 350 7 4 20 19 Legal/ de facto tenure 384 300 6 5 17 17 < =325K pci 363 350 8 8 18 19 >325K pci 427 500 10 5 17 17 Overall sample 385 300 9 7 18 18

Households with water connections. A situation similar to the toilets exists with water supply. Those who have piped water pay at the rate of 6.9 cedis/ liter, which in terms of buckets (25 liters) is about 175 cedis per bucket. Those without water supply in their plots pay 2 to 2.5 times that. This, like toilets, contributes in large part to the increased cost of services: households with piped water spend on average some 14 percent of their income on housing and services, as compared to those without who spend nearly double that (27 percent of their income). To some extent, this may be attributed to the fact that most people with piped water sell it to others as well; the profit from the water sales more than offsets the cost of the water they use themselves. Even so, their base cost of water is far lower than their selling price: 175 cedis per bucket versus 400 cedis (see table below).

HH expenditure on water per

bucket (in cedis)

% HH expenditure on

water

% HH expenditure on

services

% HH expenditure on

housing

% HH exp. on housing and

services

Average Median Average Median Average Median Average Median Average MedianHHs with piped water on plot 175 175 2 2 12 11 2 0 14 12

HHs without piped water on plot 425 400 11 8 21 19 6 1 27 25

Overall sample 385 300 9 7 18 18 5 0 23 21

Box 9. Wastewater disposal Open disposal of solid and liquid waste in Sodom and Gomorrah: note the residential structure built just over the open sewage, and the narrow foot-bridge (on the right of the picture).

There are also many areas where the water supply is poor in general, so it does not really help having a piped water connection. For example, in Nima we talked to an owner of a family house who has piped water, but says he the water does not come for months at a time. They have to go to other neighbouring settlements by taxi to fetch water, which adds to the already exorbitant cost. Another example is Andreas, a renter in Kotobiabi: he spends 140K cedis per month on transporting water, nearly equal to the cost of the water itself, which is150K cedis. In other words, he spends 21 percent of his 1400K cedis monthly income on water and transportation of water.

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Electricity Most of the households we interviewed had electricity, all barring 4 (out of 24). This is interesting in light of the fact that most of these households do not have water or toilets, but manage to get an electricity connection. Very few are responsible for paying the bill to the electricity company, of course; they pay a flat amount by usage or “points” (derived from number of sockets or gadgets being used) to the registered “consumer”. In other words, much of the electricity is bought and sold illegally, without the necessary permits. This is particularly the case in squatter settlements like Sodom and Gomorrah, where practically every unit has power, even the small wooden kiosks (see Box 10). However, the fact that so many people have electricity sheds light on the fact that there is something more than “poverty” per se that hinders people from getting access to the other services like water and sanitation, possibly high connection / capital costs etc, and/ or regulations pertaining to water and sanitation which have associated health and environmental implications. A third possibility could be the high demand for electricity on part of the consumers, and relative ease of supply and high profitability on part of the seemingly aggressive local “distributors”.

Box 10. Electricity connections Vida Awarika is a 28-year old single mother of two young girls living in a temporary wooden kiosk in Sodom and Gomorrah. She works as a seamstress, with an income of 800K cedis per month. Vda has no piped water or toilet, but does have an electricity connection. When we asked her where they pay their bills, she responded: “We don’t know. Someone comes and collects the money. I don’t even know where the meter is. There are so many wires that it is difficult to trace the path.” In other words, someone has given her a connection, charges her exorbitantly for very little consumption, and makes a fortune.

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IV. Interviews This section presents the interviews in detail in the following order: 1. Jamestown (mostly traditional family houses, with “owner” families) 2. Nima (mostly renters in family houses with absentee landlords) 3. Kotobiabi 4. Mamponsa (beach side settlement) 5. Sodom and Gomorrah (squatter settlement near the lagoon, slated for resettlement) 6. Railroad settlement (squatter settlement) 7. HFC market women (from Makola Market and Agbogbloshie Market)

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