The role of the informal sector in housing provisioning in Kumasi

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Housing plays a key role in the socio-economic development of every country but unfortunately, housing supply worldwide has not been able to meet demand. The inadequate housing is one of the biggest challenges facing both developed and developing countries today with finance being a crucial factor. The informal sector is the largest housing supply system but has not been able to meet the increasing demand partly as a result of the inadequate and ineffective financial mechanisms for financing housing in the country. The study therefore investigated the major finance mechanisms used by the informal sector and factors which hinder their access to formal credit facilities. It also made suggestions to improve access to credit facilities to the informal sector to improve housing delivery. A cross-sectional research design was adopted as a research approach for the study. The simple random sampling was used to select the ten communities whilst the convenience sampling method was used to select the homeowners. In order to increase the accuracy of the work, the research was operated at a 95 percent confidence level with a 5 percent margin of error. A total of 310 interviews were conducted out of the total determined sample size of 392. The study came out with some major findings which included the dominant use of informal source of finance, the existence of an underdeveloped mortgage market and uneasy access to formal credit facilities from financial institutions due to the type and nature of jobs. It was realised that this has affected housing delivery because homeowners had to build incrementally which took a lot of time before house completion. The study recommended microfinance for housing, site and services scheme by the financial institutions and a non-mortgage lending facility for the informal sector. Also, how to sustain the formal credit facilities for the informal sector is seen as an area for further research.
A thesis Submitted to the Department of Planning Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirement for the award of a degree of Master of Science in Development Planning and Management