Ghana’s universities face a severe shortage of student accommodation. This problem stems from a decline in public investment in student housing infrastructure since the late 1990s. Private investors have become crucial in providing housing around university campuses.
The University of Ghana's main Legon campus saw its student population increase from 23,000 in 2012 to 59,000 in 2024. This 156% rise in student numbers has not been matched by new state-funded hostel beds. Most recent hostel additions have come from private capital.
Private capital seeks investments that offer sufficient returns. These returns compensate investors for deferring consumption and taking on risks. Construction costs have risen more than general inflation over the past two decades, according to data from the Ghana Statistical Service. This increases the costs for private investors building hostels.
The acting Rent Commissioner recently accused some hostel owners of exploitation. This accusation has brought the student accommodation issue into public discussion. However, experts warn that price controls could distort the market, leading to negative outcomes.
Economic principles suggest that demand and supply set prices in a market-oriented economy. Attempts to control prices below market levels can cause market distortions. Historical evidence worldwide shows that rent controls, while potentially lowering rents short-term, often lead to supply cutbacks. These policies can also reduce accommodation quality and encourage black markets. The students such policies intend to protect often suffer the negative effects.
The era of readily available, state-provided student housing is largely over. The reliance on private sector-led student accommodation is a new and lasting reality. Discussions about affordability must be balanced with sound economic principles.
Threats of rent controls could scare away private investors. This would hinder the expansion of hostel supply, which is critical to addressing the current shortages. Instead, policymakers should focus on expanding supply through other means.
The government could offer tax waivers for various stages of hostel construction. University authorities could also reduce land costs for developers. Investors benefiting from these incentives could then commit to agreed rental rates. This collaborative approach could address the challenges without resorting to ineffective price controls. The Ministry of Education, Ghana Tertiary Education Commission (GTEC), GETFund, university authorities, private sector, and civil society must work together. They need to find sustainable solutions for both hostel accommodation and broader educational infrastructure deficits.