Public-Private Partnership: An Innovative Financing Strategy for Affordable Housing in Addis Ababa City Administration
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Date
2025-05
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Addis Ababa University
Abstract
The challenges associated with providing housing in urban centers have turned in to an overwhelming burden due to the lack of financing capacity of local governments. Nowadays, countries have considered the private sector’s involvement to finance housing provision through Public-Private Partnership arrangement. In Ethiopia the efforts of affordable housing provision exacerbated by the financing shortage and the soaring inflation which requires policy attention. Whereas, the increasing demand for housing due to rapid urbanization and population growth made the efforts of housing provision a difficult task. Although, Addis Ababa City Administration has been trying to tackle housing shortage over the past twenty years through Integrated Housing Development Program the achievement was far behind the target set by the city. Recognizing this drawback, the city has decided to engage the private sector in the efforts of housing provision through the Public-Private Partnership arrangement. The study adopted a pragmatic philosophical approach. Moreover, sequential mixed explanatory approach was utilized to get into the insights from the large number of respondents through surveys, allowing for a comprehensive understanding of the theme through qualitative data. The findings of the study shown the project initiation, resource allocation, and signing of the contract document were areas of good performance. However, lack of participatory risk identification, failure in clearly identifying the deliverables, and the delay in starting the construction were weakness observed. Moreover, private partner’s engagement shown lack of transparent competitive procurement which fails to reflect the true offering of the market. On the other hand, the partnership effort faced challenges like funding constraints, lack of targeted incentives, weak institutional capacity, and the private sector’s inability to raise the initial 30% of the project cost. Likewise, with regards to finance and risk sharing Public-Private Partnership appears a feasible financing option. Finally, the research recommended the implementation of Transparent Land Based Housing Financing Model. To achieve efficiency in the public-Private Partnership implementation ensuing competitive procurement, enhancing institutional capacity and participatory risk sharing strategy are emphasized.
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Keywords
Challenges, Financing, Housing, Opportunity, Public-Private Partnership, Risk, Transparency, Addis Ababa, Ethiopia.