Cost Cutting Halts Condo Construction
By Yohannes Anberbir
Week of 28 September edition
The Ministry of Works and Urban Development (MoWUD) has suspended all this year's housing projects, aside from in Addis Ababa.
Reducing the government's expenditure is the primary reason behind the move, a senior government official revealed.
Low cost housing projects, popularly known as condominiums, were first introduced in the capital city in 2004 when the city administration was in the hands of former Mayor Arkebe Equbay, who is now state minister of MoWUD.
Arkebe's ambitious plan to construct 50,000 low cost houses each year in Addis Ababa was deferred when he was voted out of office in the 2005 election. However, the ruling party appointed him to his current position at MoWUD where he has been pushing the construction of the low cost houses nationwide.
The federal government launched its Integrated Houses Development Program (IHDP) four years ago under the direct supervision of Arkebe. The program aims to construct 400,000 houses in 70 towns.
The program launched in 2005/06 with a total budget of 24 billion birr and constructed 33,000 houses in 33 towns in the first year. The following year 61,000 houses went up in 36 towns.
But now the huge expenditure has pushed the government to suspend new constructions this fiscal year, fearing the inflationary impact of them.
"We are currently working on unfinished projects, but are suspending all new constructions," said a source at the ministry.
The escalating prices of construction materials also raised the expenditures of the housing projects, the senior government source told Capital. In turn, the huge project was one of the reasons for the price increase of building materials in the first place, he added.
This year, Addis Ababa City Administration did not provide a budget to its Housing Development Office, recommending that it instead transferred finished houses and reinvest the funds obtained from the transfer. This prior action is the reason Addis Ababa was excluded from MoWUD's order.
The Commercial Bank of Ethiopia (CBE) is the other financial source for the city's housing project, and the city administration is currently expecting a 1.2 billion birr loan from the bank.