Assessing Risks and Financing Strategies for Affordable Housing Delivery in Ghana.
By URI.
This study examines the key risks and financing strategies influencing the delivery of affordable housing in Ghana. It seeks to identify the constraints undermining financing efficiency and to propose a strategic framework for mitigating risks and enhancing sustainable housing provision.
Design/methodology/approach: A mixed-methods approach was employed, combining quantitative survey data from developers, financial institutions, and policymakers with qualitative insights from semi-structured interviews. Descriptive and inferential analyses were used to assess the severity of risks, while thematic analysis identified emerging financing patterns and institutional dynamics.
Findings: The results reveal that high construction costs, inflation, limited access to long-term mortgage finance, and fluctuating interest rates are major risks affecting affordable housing projects. Institutional risks, such as weak regulatory enforcement, inadequate land administration systems, and policy inconsistencies, further exacerbate financing challenges. The study highlights the need for diversified financing instruments including public–private partnerships (PPPs), real estate investment trusts (REITs), housing Microfinance, and green bonds to attract sustainable capital. A risk–finance integration framework is proposed to strengthen decision-making and improve delivery efficiency.
Research limitations/implications: The research focuses on Ghana and may not capture contextual differences across other African housing markets. Future studies could apply longitudinal data to examine the evolving nature of risks and financing structures over time.
Practical implications: Findings provide actionable insights for policymakers, investors, and developers seeking to enhance financial resilience and promote inclusive housing delivery through innovative funding approaches and collaborative governance.
Originality/value: This study contributes to affordable housing discourse by integrating risk assessment with financing strategies, offering a comprehensive framework that supports evidence-based policy reform and sustainable housing market development in emerging economies.
1.0 Introduction
Ghana faces a severe housing deficit, with over 1.8 million units needed and an annual growth of approximately 70,000 units, exacerbated by rapid urbanization and rural-urban migration (Sarpong et al., 2025). This shortfall significantly impacts low- and middle-income earners, pushing many into informal settlements with limited services (Sarpong et al., 2025). Historically, Ghana’s housing policies have lacked consistency and sustainability, failing to improve the performance of key stakeholders in the housing industry (Ameh & Osafo, 2020). The challenge of affordable housing extends beyond simple supply and demand dynamics, encompassing issues of pricing, financing, and policy effectiveness (Ameh & Osafo, 2020). Despite various governmental interventions and programs, the efficacy of these initiatives in delivering true affordability has been questioned, often due to centralized decision-making and limited stakeholder engagement (Afrane et al., 2025). This paper aims to provide a comprehensive analysis of the risks and financing strategies for affordable housing delivery in Ghana. It will specifically investigate the risks associated with homeownership, examine the financing practices of construction firms, and assess the impact of urbanization and housing policies on the provision of affordable housing.
2.0 Risks Associated with Homeownership and Affordable Housing Delivery in Ghana.
Homeownership in Ghana presents significant financial risks, primarily due to expensive mortgage financing and demanding loan qualifications. Many households find it challenging to meet the requirements of mortgage institutions, which include substantial deposit percentages and short mortgage terms (Ameh & Osafo, 2020; Bondinuba et al., 2018). The elevated loan-to-value ratio (LtVR) further exacerbates the cost of mortgage financing, suggesting that government-insured mortgages could be a viable approach to lower the overall expenses of housing supply (Ofori, 2024). Interestingly, houses provided through government realtors and mortgage financing are frequently more expensive than those developed by private estate developers, indicating a critical need for mortgage policy reforms to enhance affordability (Ofori, 2024).
Private sector involvement in affordable housing development encounters a range of hurdles, including fluctuating market dynamics, limitations in land supply and acquisition, the high price of construction materials, and hindering policies (Okoro et al., 2023). Technical and financial elements further compound these risks. Mitigating strategies for these challenges encompass fostering collaborative efforts, improving access to land and finance for private developers, and promoting the domestic production of building materials (Okoro et al., 2023).
Beyond these financial and private sector concerns, Ghana’s affordable housing crisis is deeply entrenched in historical urban investment patterns, the lasting effects of elite capture, and various forms of exclusion (Boateng & Klopp, 2024). These ingrained issues influence urban governance, thereby limiting access to land, housing finance, and adequately serviced housing and neighborhoods. Such factors perpetuate an inequitable foundation for the provision of housing and services within Ghanaian cities (Boateng & Klopp, 2024).
Table 1: Typology of Risks.
| Risk Category | Specific Risks | Impact on Affordable Housing Delivery |
| Economic Risks | Expensive mortgage financing, high LtVR | Limits access to housing for low- and middle-income earners; increases overall cost of homeownership (Ameh & Osafo, 2020) |
| Market Risks | Land supply and acquisition constraints | Drives up land prices, increasing project costs; hinders development of new housing units (Okoro et al., 2023) |
| Policy Risks | Unsupportive housing policies, elite capture | Inconsistent and unsustainable housing policies; perpetuates exclusionary practices in land and housing finance (Ameh & Osafo, 2020) |
| Operational Risks | High cost of construction materials | Directly increases the cost of housing units, making them unaffordable for the target demographic (Okoro et al., 2023) |
| Social Risks | Multi-dimensional exclusions | Unequal access to land, finance, and serviced neighbourhoods; perpetuates informal settlements and inadequate housing (Boateng & Klopp, 2024) |
3.0 Financing Practices of Construction Firms and Innovative Strategies
Construction firms in Ghana encounter significant financing challenges, often relying on a combination of financing sources and facing constraints in accessing adequate capital (Owusu et al., 2008). To mitigate market volatility-dependent risks in residential development projects, diversification of capital sources, hedging strategies, and maintaining liquidity are recommended (Voronkov, 2025). Innovative financing models, such as Public-Private Partnerships (PPPs), are increasingly recognized as strategic mechanisms to bridge the affordable housing gap by leveraging private sector efficiency and financing (Uduokhai et al., 2022).
Public-Private Partnerships offer substantial potential for affordable housing delivery in Africa; however, their success is frequently hindered by weak institutional capacity, unclear legal frameworks, inadequate risk-sharing arrangements, and limited access to long-term housing finance (Uduokhai et al., 2022). Nations demonstrating stronger governance mechanisms and transparent contractual models generally exhibit improved cost control and timely project delivery (Uduokhai et al., 2022). Financial risks within PPP projects, specifically concerning land provision and dependence on public funding, present significant challenges that necessitate proactive mitigation strategies and comprehensive contingency planning (Yanti & Rachmawati, 2024).
Alternative and innovative financing models are crucial for increasing accessibility and affordability in the housing sector. These include microfinance, impact investing, and most notably, PPPs, which strategically combine governmental and private sector resources to fund affordable housing projects (Achumie et al., 2024). Furthermore, operational models like modular construction and community-driven development are emerging as effective methods to reduce costs and construction time, thereby enhancing the overall efficiency and affordability of housing projects (Achumie et al., 2024). Real estate portfolio valuation techniques are critical in attracting investment by providing accurate property assessments (Ayumu & Ohakawa, 2022). Both traditional methods such as Sales Comparison, Cost, and Income Capitalization approaches, and modern techniques like Automated Valuation Models (AVMs), are essential for unlocking funding for affordable housing projects (Ayumu & Ohakawa, 2022). Nevertheless, persistent barriers, including issues with data accuracy and political instability, continue to impede the accessibility of adequate funding (Ayumu & Ohakawa, 2022; Eyiah and Bondinuba, 2020).
Common financing instruments used by construction firms in Ghana often include:
· Debt finance
· Equity finance
· Project finance
· Pre-financing arrangements with buyers
· Retained earnings
4.0 Impact of Urbanisation and Housing Policies on Affordable Housing Delivery
Rapid urbanisation and population growth in Ghana have intensified the demand for housing, leading to a significant housing shortage that traditional approaches have failed to address for low- and middle-income families (Sarpong et al., 2025). This demographic shift has resulted in elevated prices and a poignant shortage of affordable options, particularly for those navigating the urban landscape (Teye et al., 2017). The urban housing crisis is often theorized as a direct consequence of rapid demographic expansion outpacing supply, or the urbanisation of poverty (Boateng & Klopp, 2024).
Ghana’s housing policies, both pre- and post-independence, have been inconsistent and often unsustainable, failing to significantly improve the housing situation (Ameh & Osafo, 2020). While various programs have been implemented, including social housing and Public-Private Partnership (PPP) projects, their impact on the performance of housing industry stakeholders has been limited, leading to a persistent inadequacy of houses. This indicates a need for sustainable policies that address the demand and supply principles of the housing market (Bondinuba et al., 2017; Bondinuba et al., 2021). The success of affordable housing policies relies heavily on inclusive and informed decision-making processes, ensuring that key stakeholders and beneficiaries are adequately engaged in policy development (Bondinuba and Stephens, 2018). Centralised decision-making processes, where some stakeholders have minimal engagement, have constrained the effectiveness of policy development for affordable public housing in Ghana (Bondinuba et al., 2021).
Strengthening institutional and legal frameworks, fostering financial innovation, and promoting transparency are essential for optimizing PPP models to support inclusive and sustainable housing development (Uduokhai et al., 2022; Hedidor, et al., 2016). Innovative strategies to tackle the housing deficit in Ghanaian urban areas include modular and prefabricated housing, eco-friendly building materials, and community-based initiatives (Sarpong et al., 2025). Modular construction has the potential to reduce construction time and costs, while green materials enhance environmental sustainability. Policy deficits, infrastructure constraints, and capacity shortages, however, hinder the successful implementation of these strategies.
5.0 References
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