What works for low-income households? Assessing the effectiveness of government housing projects in Namibia
What homes are within reach for those on low incomes? The detailed project summarised here seeks to answer that question by delving into the options available to potential house self-builders, buyers and renters in the town of Karibib, Namibia.
Houses developed by the Shack Dwellers Federation of Namibia in Karibib, Namibia (Photo: Guillermo Delgado)
This insight compares costs in four government-backed housing projects which took place around the same time, and in close proximity geographically. The analysis looks at how they were financed and the role of savings, subsidies, sweat equity and land-related costs.
The four projects were:
- A housing development by a state-owned company, the National Housing Enterprise (NHE)
- A serviced site development by a social enterprise, Development Workshop Namibia (DWN)
- A community-led housing project developed by a social movement, the Shack Dwellers Federation of Namibia (SDFN), and
- A community-led informal settlement upgrading project in the Usab Informal Settlement (UIS), which produced serviced sites.
A serviced site is a plot of land with access and utilities (including water, sewerage, electricity) already in place. The purchaser either builds the dwelling themselves, or manages the process.
All four projects are in Karibib, a small inland town of around 8,434 residents, 180km to the north west of the capital Windhoek. Its population has grown rapidly since 1991, encouraged by the expansion of mining.
It also serves as a logistics hub, providing road and rail linkages between Windhoek and the coastal mining and fishing towns – and tourism centres.
Affordable housing?
Karibib’s progressive town council has encouraged multiple agencies to address housing needs as shown by the four projects described here.
Unit costs vary from US$188 (community-led upgrading with no dwelling provided, affordable) to $16,249 (complete new house, 100% unaffordable for low-income households), and from $2,016 (community-led, serviced site with housing) to $1,680 (serviced site without housing).
As the table below shows, this four-project comparison does not compare ‘like with like’. The most expensive of the four projects resulted in the building of new houses, with community-led upgrading being the least expensive.
The community-led serviced site was only 9% of the low-cost housing project – therefore 100% affordable for those within the lowest income groups.
Footnotes:
- The first three rows show priority target groups of the National Housing Policy
- *Housing affordability is assessed as housing costs not exceeding 30% of a household's monthly income
- **Only those earning the highest income in this income decile would be able to afford repayments
- ***This is prime rate minus 1%
- ****According to First National Bank Namibia's quarterly house price monitor as well as using a standard mortgage calculator of a local bank to measure total costs and monthly repayment
A local government/grassroots federation partnership, combined with sweat equity, can be very effective at producing affordable, low-cost solutions. Readers should also note that government contributions are vital for larger bulk infrastructure, such as installing a sewerage system.
Sweat equity and savings as key contributors
Faced with high costs and low incomes, community organisations do what they can to reduce costs. Informal settlement upgrading in the case of the Usab Informal Settlement relies heavily on sweat equity to reduce costs (in addition to central government subsidies). The Shack Dwellers Federation of Namibia project was planned on the basis of similar sweat equity contributions, but difficult rocky terrain prevented this and increased servicing costs.
Participation in saving groups’ processes is a way of organising and demonstrating readiness for medium- to long-term commitments. Having savings may mean no loan is needed, although some form of subsidised finance may be required by the purchaser.
Can people afford to live there?
Regarding affordability, both the absolute cost and the cost of repayments (including the interest rate charged and the length of loan) are crucial influences on the actual burden on the household and the ability to repay. The required repayments determine what is accessible to the lowest-income groups, and these require some form of subsidy to remain affordable. This, as we discuss below, is an impactful use of public or donor funds.
Using the affordability measure above we concluded that:
- NHE complete house is not accessible to the lowest income groups
- DWN serviced site, SDFN complete house and UIS serviced site represent the most affordable options, and
- When monthly repayments are considered, only the SDFN and UIS options appear to be within the reach of very low-income households – which in Namibia, as in many parts of Africa, represent the largest segment of the population.
Essential subsidies
All four projects involve subsidies from the government and donors to make the overall cost of land servicing and housing more affordable. Only some of these subsidies may be evident to those involved. The loan package, and associated terms and conditions, are also key to affordability.
As noted above, in the cases analysed, affordability for the lowest-income households was only possible for the SDFN and UIS options. DWN’s serviced sites are affordable only for those households in the upper third of the population.
The costs charged by DWN are relatively low, but the relatively rapid repayment schedule limits accessibility. Houses constructed by NHE are not affordable to the lowest-income groups.
This insight and the study from which it draws highlight the importance of a partnership approach to informal settlement upgrading, providing tenure security and services to people in situ. The financial analysis also highlights the importance of sweat equity which, in the case of UIS, amounted to a significant 20% of total costs.
While informal settlement upgrading only provides access to land tenure and basic services, these provide the foundation for further incremental housing development.
The housing developments of SDFN show what is possible with additional support, such as further financing and land availability. Once tenure security has been achieved, many households develop their dwellings themselves. The flexibility of self-build offered by UIS, SDFN and DWN allows households to extend their dwellings, providing space for livelihood activities or rental accommodation.
Government support underpins infrastructure
The state remains the only party capable of disbursing the funds required to address low-income housing. A mixture of subsidies and community-led finance emerges as the appropriate combination for enabling scalable housing projects.
The community-led finance option enhances affordability, as commercial finance cannot reach the lowest-income groups. While the private sector has made donations, and communities have demonstrated capacity for savings, the large amounts required for infrastructure are only possible with central government support.
The importance of community capabilities and capacity, in particular the management of community contributions (financial and labour), involvement in block making and construction (SDFN) and access to the federation’s loan fund, cannot be overemphasised. Without this support, it is unlikely that the UIS upgrading and SDFN self-build would have been possible.
The contribution of international cooperation, although marginal in scale, was crucial in these cases as it triggered the involvement of professional support and enabled the growth of skills in the community.
With thanks to Katrina Phiri, masters student in economics at the University of Namibia, and Anna Muller, co-director of the Namibia Housing Action Group (support NGO of the Shack Dwellers Federation of Namibia), for contributing to the development of this insight.
Further reading
A comparative analysis of the cost of alternative approaches to addressing housing need in Namibia, Delgado, G., Mitlin, D., Phiri, K., & Muller, A. (2025), journal article
