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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:The informal sector and mortgage financing in Ghana
Editor:Decardi-Nelson, I.
Year:2012
Periodical:Ghana Journal of Development Studies (ISSN 0855-6768)
Volume:9
Issue:2
Pages:136-152
Language:English
Geographic term:Ghana
Subjects:informal sector
mortgages
housing
Abstract:The increasing cost of building materials in Ghana coupled with other challenges hinder the ability and desire of people to own houses. Over the years, accessibility to mortgage financing has become more skewed towards the formal sector to the neglect of the informal sector, based on perceived and real challenges with informal sector financing. These notwithstanding, the need for innovative mortgages for the informal sector cannot be overemphasized as more than 60 percent of employees within that sector cannot afford to own decent accommodation. The Case Study Approach was employed to gather data from about 30 percent of construction artisans in the Ashanti Region. The study reveals that 6 out of the 8 basic eligibility criteria used by financial institutions in mortgage loan were exclusion factors to the informal sector, i.e. impeded access to mortgage financing by households in this sector. These were proof of address, proof of employment and income, ability to service the loans, loan duration and deposit. The paper recommends that there should be a financing mechanism that is flexible in terms of repayment. There should also be short term repetitive loans with some increment prior to first payment completion and flexible collateral that the borrower can afford. Finally, mortgage loans can be in the form of building materials. Bibliogr., sum. [Journal abstract]
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