The construction sector in Ghana is grappling with significant cost challenges, particularly in essential building materials such as cement, sand, wood, and labour. These rising costs are severely hindering efforts to implement an effective affordable housing scheme, according to Mr. Mark Hotor, Greater Accra Chairman of the Association of Building and Civil Engineering Contractors of Ghana (ABCECG).
The construction sector’s year-on-year producer price inflation reached 22.7% in August 2024, with civil engineering experiencing the highest inflation rate at 24.7%. The buildings subsector followed with 18.7%, while specialized construction recorded the lowest at 16.7%, based on data from the Ghana Statistical Service (GSS).
Speaking to The High Street Journal, Mr. Hotor confirmed that the escalating costs of building materials have significantly impacted construction budgets nationwide. He highlighted the sharp increase in cement prices and unpredictable labour costs, noting that labourers’ wages can fluctuate drastically, further complicating construction planning. “Today, you might pay a labourer GH¢ 100 for a day’s work, but the next day, he could demand GH¢ 150,” he explained, emphasizing the unpredictability of overall expenses.
The implications for Ghana’s housing sector are severe, particularly for affordable housing initiatives. Mr. Hotor expressed concern about how high material costs make it almost impossible to achieve affordable housing goals. “We talk about affordable housing, but how can we achieve that when the cost of materials remains so high?” he asked.
To address these issues, Mr. Hotor advocated for reducing taxes on building materials to alleviate financial pressure. He also pointed to the fluctuating cedi-dollar exchange rate, which exacerbates material costs as manufacturers often cite currency depreciation to justify price hikes.
Beyond the immediate financial strain, rising construction costs threaten the sustainability of housing projects, which are essential for meeting the growing demand for homes, especially for lower-income families. Without strategic interventions to control costs, the government’s push for affordable housing could falter. Mr. Hotor reiterated the importance of addressing labour costs in addition to material price reductions.
A long-term solution will require a holistic approach, including stabilizing currency fluctuations, reducing production costs for manufacturers, and encouraging innovation in using alternative building materials. Without these efforts, Ghana’s housing crisis may deepen, impacting many citizens struggling to afford decent accommodation.
Analysts suggest that while rising construction costs pose challenges, they also offer an opportunity for stakeholders to rethink housing strategies. Collaborative efforts between the government, private sector, and construction industry players will be crucial in developing sustainable solutions, they add. By focusing on reducing material costs and improving labour and production efficiency, the housing sector can move closer to achieving affordable housing for all.
