The Role of Financial Institutions in Housing Delivery in the Kumasi Metropolis of Ghana: An Institutional and Client Analysis

Abstract

The commitment of government in providing social housing in Ghana is non-existent in recent times.  As a result, the housing delivery in Ghana is driven by individual housing construction through the incremental process or acquisition from private developers which is challenged by financial constraints and the need to acquire alternative sources of funding becomes a necessity. This study sought to undertake an institutional and client analysis of the role of financial institutions in housing delivery and employed a case study research design within quantitative and qualitative research methodological paradigms to examine the research questions. A sample of 7 financial institutions which were involved in housing financing were purposively sampled and contacted for data using questionnaires and interview guides. By using questionnaires, a sample of 150 clients with links to the financial institutions were randomly selected and contacted for data. The study established that the contribution of financial institutions to housing delivery was unsatisfactory because of the limited options available, and the lack of consideration for the majority, but poor Ghanaians. It was also found that the financial institutions had failed to exert the impetus for improving housing delivery in the country due to low patronage by clients, incidence of non-settlement of loan amounts with interest, inadequate long term mortgage finance, lack of government support, high interest rate, strict demands for collateral security, long, boring, and expensive processes of arranging for mortgage finance or loans. The researchers therefore recommended among other remedial options that efforts should be made to improve the patronage and the establishment of long term mortgage financing with flexible interest rates and redemption options.

Keywords: Financial institutions, housing delivery, low income earners, Ghana.