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Assessment of Experience with the Project Approach toShelter Delivery for the Poor

Table of Contents

Foreword

Introduction

I. Recent trends in shelter projects

II. Financial and economic impact of shelter projects

1. Mobilization of household savings

2. Affordability, subsidy and cost recovery

3. Institutional framework and financial management

o 1. Institutional culture of public-sector agencies

o 2. Role of local government agencies

o 3. Relationship with local community groups

4. Comparison with non-project shelter standards and costs

III. Social impact of shelter projects

1. Social impact at the local level

2. Contribution to residential stability

3. Proximity of projects to employment locations

4. Job creation at the local level

5. Impact of projects on the development of community-based and non-governmentalorganizations

6. Acceptability of project components to project beneficiaries

IV. Impact of the project approach on total shelter demand

1. Shelter demand and levels of supply by projects

2. Replicability of housing projects

V. Shelter projects and national policies

1. Impact of projects on policy, and consistency of project and policy objectives

2. Consistency with the objectives of the Global Strategy for Shelter to the Year 2000

VI. Achieving a multiplier effect through shelter projects

1. Impact on institutional capabilities and public-sector roles in the shelter-deliveryprocess

2. Impact on urbanization, urban growth, spatial planning and infrastructure provision

3. Addressing constraints in land and housing markets

4. Impact on building and planning codes, regulations and standards

5. Development of the construction industry and construction techniques

VII. Conclusions and recommendations

1. General criticism of the project approach

2. Projects in the context of national shelter strategies

3. Future emphasis and priorities in housing projects

o 1. Projects to provide new shelter

o 2. Upgrading projects

4. A framework for assessing the efficiency of project components

o 1. Elements provided by projects

o 2. Provision of other elements

o 3. Guidelines for preparing and assessing future shelter projects

5. The role of projects in the development and implementation of national shelter policiesand the Global Strategy for Shelter to the Year 2000

List of references


List of Tables

Table 1. Projects reviewed in this report

Table 2. Household savings mobilization and loan recovery in three Sri Lanka housing projects (up toApril 1990)

Table 3. Breakdown of project costs

Table 4. Urban housing need and production in Turkey

Table 5. Decision-making matrix for the four programme levels of the MHP

Table 1. Projects reviewed in this reportCountry City Name of project Type of project Number of units Number of householdsSite area (ha) Target groups* Project duration (years)Colombia Cartagena Chambacu Slum clearance 1,862 1,862 - L 10

Bogotá Kennedy City Row houses and apartments 10,568 10,568 367 L 4Bogotá Bolivar City Serviced plots10,300 10,300 11,000 L 9

Indonesia Semarang Sugyapranata NGO scheme sector housing 1,700 1,800 - L/M25

Jakarta Klender Core houses, apartments, plots etc. 9,515 10,608 176 L11

Bandung Margahayu Raya Private sector housing 5,585 5,585 120 L/M 11+Sri Lanka Colombo Nagagahapura Shanty upgrading 70 70 1 L 6

Colombo Nawakelanipua Sites-and-services 113 113 1.5 L 6Colombo Aramaya Place Shanty upgrading 64 64 1 L 2

Turkey Tarsus Tarsus Expansion Row houses 488 488 32 L 3Ankara Aktepe Apartments, core houses 3,626 3,626 96 L 12

Zimbabwe Harare Kuwadzana Sites-and-services 7,398 7398 n.a. L n.a.Kwekwe and Gutu Kwekwe-Gutu Sites-and-services 1,045 1045 103 L

n.a.*: Low- (L) or middle- (M) income groups.Source: Herlianto (1990), Jayaratne (1990), Mutizwa-Mangiza (1990), Tokman (1990) and Utria (1990).

Table 2. Household savings mobilization and loan recovery in three Sri Lanka housing projects (upto April 1990)Project Average loan amountSLRs Average household mobilization(SLRs) Loan recovery(percentage)Nawakelanipura 15,000 36,000 16Aramaya Place 15,000 48,000 50Nagagahapura 15,000 30,000 16Total 15,000 38,166 n.a.Source: Jayaratne (1990: 99 and 105).

Table 3. Breakdown of project costs- Market (or opportunity) cost of land- True cost of finance (based on commercial rates of return)- On-site services (and possibly a proportion of off-site costs)- Building materials- Labour- Administrative and professional costs- Costs of project maintenance

Table 4. Urbana housing need and production in TurkeyYear Housing need(number of dwelling units) Housing productionb

Number of dwelling units Percentage of housing needPercentage of public sector1984 272,000 122,580 45.1 4.41985 280,000 118,200 42.2 2.71986 290,000 168,600 58.1 3.61987 298,000 191,109 64.1 3.41988 305,000 205,483 67.3 2.81989 318,000 246,164 77.4 n.a.Total 1,763,000 1,052,000 59.7 3.4c

a: Muncipalities with population of more than 2000.b: According to occupancy permits.c: 1985-1988 only.Source: Tokman (1990: 1-3).

Table 5. Decision-making matrix for the four programme levels of the MHPDecision-making level Decision/choice SupportHousehold - designing the house- choice of technology- choice of materials- building the house- mobilizing resources - design options- technology options- community building guidelines small housing loan- information and trainingCommunity - organizing CDCs- planning and programming the Action Plan- collective decision-making in the content of the building guidelines- design and construction of amenities - organizing workshops- regularization of tenure- blocking out guidelines- preparation of design and Bills of Qualities- provision of funds- information and trainingLocal authority - identification and prioritizing of settlements programming of work- allocation of funds- selection of householders - implementation guidelines- provision of funds- technical supportNational - linking housing to local governments- strengthening the local government- ensure countrywide programmes and implementation- how not to dominate local institutions - define and interpret support-based policies- articulate programme through various forms of support: financial, technical and training- national guidelines and proceduresSource: Jayaratne (1990: 92).


List of abbreviationsCBO Community-based organizationCDC Community Development Council (Sri Lanka)DDA Delhi Development Authority (India)GSS Global Strategy for Shelter to the Year 2000HCDC Housing and Community Development Committee (Sri Lanka)HDA Hyderabad Development Authority (Pakistan)IYSH International Year of Shelter for the Homeless (1987)MHP Million Houses Programme (Sri Lanka)NGO Non-governmental organization NHDA National Housing Development Authority (Sri Lanka) NUHDC National Urban Housing Development Corporation(Perum Perumnas) (Indonesia)UNCHS United Nations Centre for Human Settlements (Habitat)UNDP United Nations Development ProgrammeUSAID United States Agency for International Development


List of references

Angel, S., and S. Boonyabancha (1985) "Land sharing as an alternative to eviction: the Bangkokexperience" (unpublished manuscript).

Angel, S., and T. Chirathamijkul (1983) "Slum reconstruction: land sharing as an alternative to eviction inBangkok", in Angel, S., and others, Land for Housing the Poor. Singapore, Select Books.

Archer, R. (1987). "Transferring the urban land pooling/readjustment techniques to the developingcountries of Asia". HSD Working Paper No.24, Human Settlements Division, Asian Institute ofTechnology.

Chana, T. (1984). "Nairobi: Dandora and other projects", in Payne, G. ( ed.), Low-income Housing inthe Developing World: The Role of Sites and Services and Settlement Upgrading. Chichester,John Wiley.

Cohen, M. (1983). "The challenge of replicability: Towards a new paradigm for urban shelter indeveloping countries", Regional Development Dialogue, vol. 4, No. 1. pp. 90-91.

Davidson, F. 1984. "Ismailia: combined upgrading and sites and services in Egypt", in Payne, G. (ed.),Low-income Housing in the Developing World: The Role of Sites and Services andSettlement Upgrading. Chichester, John Wiley.

Davidson, F., and G. Payne (eds.) (1983). Urban Projects Manual. London, Overseas DevelopmentAdministration.

Development Planning Unit (1984). The First Year of the Rural Housing Sub-programme: AnEvaluation of the Sri Lanka Million Houses Programme. Report of the Evaluation Mission,DPU, London.

Hardoy.J., and D. Satterthwaite (1981). Shelter: Need and Response. Chichester. John Wiley.

Hasan, A. (1986). OPP's Low-cost Sanitation and Housing Programme: An Overview. Karachi,OPP.

Hasan, A. (1987). "A study on metropolitan fringe development in Karachi, focusing on informal landsubdivision". Prepared as part of an ESCAP study on metropolitan fringe areas in the major citiesof the ESCAP region (mimeo).

Herlianto (1990). "Experience with the project approach to shelter delivery for the poor in Indonesia".Nairobi, United Nations Centre for Human Settlements (Habitat).

Honadle, G.H., and J.K. Rosengard (1983). "Putting 'projectised' development in perspective", PublicAdministration and Development, vol. 3, pp. 299-305.

Jayaratne, K.A., (1990). "Experience with the project approach to shelter delivery for the poor in SriLanka". Nairobi, United Nations Centre for Human Settlements (Habitat).

Jere, H. (1991a). "Case Study: Kalingalinga Integrated Upgrading", (mimeo).

Jere, H. (1991b). Unpublished letter to G. Payne.

Keare. D.. and S. Parris (1982). Evaluations of Shelter Programs for the Urban Poor. World BankStaff Working Papers Number 547.

Kent-Koop (1989). "Kent-Koop Booklet".

Morgan, E.P. (1983). "The project orthodoxy in development: re-evaluating the cutting edge". PublicAdministration and Development, vol. 3, pp. 329-339.

Mutizwa-Mangiza, N.D. (1990). "Experience with the project approach to shelter delivery for the poorin Zimbabwe". Nairobi, United Nations Centre for Human Settlements (Habitat).

Oestereich, I. (1980). "The upgrading of a squatter community: some conclusions drawn from theKalingalinga Integrated Upgrading Project in Lusaka, Zambia", Trialog, vol. 13, No.14, pp.30-35.

Payne, G. (1982a). "The Gecekondus of Ankara", in Ward, P., Self-Help Housing: A Critique.Mansell.

Payne, G. (1982b). Project Appraisal and Policy Recommendations for Urban SettlementsProvision. Port Moresby, GovemmentofPapuaNew Guinea, Department of Urban Development.

Payne, G. (1989a). Information Housing and Land Subdivisions in Third World Cities. Oxford,CENDEP, Oxford Polytechnic.

Payne, G. (1989b). "The impact of planning on access to land for housing", paper presented at theconference on "Cities and People" London.

Payne, G. (ed.) (1984). Low-income Housing in the Developing World: The Role of Sites andServices and Settlement Upgrading. Chichester, John Wiley.

Rakodi, C. (1989). "Developing institutional capacity for meeting the housing needs of the urban poor: Areview of experience in Kenya. Tanzania and Zambia". Cities. August.

Rapaport, A. (1977). Human Aspects of Urban Form. Oxford, Pergamon.

Rapaport, A. (1979). "An approach to designing third world environments", Third World PlanningReview, vol. 1, No.1.

Rapaport, A. (1980). "Culture, site layout and housing", Architectural Association Quarterly, vol. 12,No.1, pp. 307-327.

Randinelli, D.A. (1983). "Projects as instruments of development administration: a qualified defense andsuggestions for improvement", Public Administration and Development, vol. 3, pp. 307-327.

Silas, I. (1991). Unpublished letter to G. Payne.

Struyk, E., M. Hoffman and H. Katsura (1990). The Market for Housing in Indonesian Cities. TheUrban Institute Press.

Tokman, B. (1990). "Experience with the project approach to shelter delivery for the poor in Turkey".Nairobi, United Nations Centre for Human Settlements (Habitat).

Turner, B. (ed.) (1988). Building Community: A Third World Case Book. London, HabitatInternational Coalition.

Turner, J.F.C. (1990). "Barriers, channels and community control", in Cadman, D. and G. Payne (eds.),The Living City. London, Routledge.

UNCHS (1984). Promoting Organized Self-help through Co-operative Modes of Participation.Nairobi, United Nations Centre for Human Settlements {Habitat).

UNCHS (1987). Supporting Community-based Housing: Sri Lanka Demonstration Project CaseStudy, Part Two. Nairobi, United Nations Centre for Human Settlements (Habitat).

UNCHS (1990). Global Strategy for Shelter to the Year 2000. Nairobi, United Nations Centre forHuman Settlements (Habitat).

Utria, R.D. (1990). "Experience with the project approach to shelter delivery for the poor in Colombia".Nairobi, United Nations Centre for Human Settlements (Habitat).

van der Linden, J. (1986). The Sites and Services Approach Reviewed. Aldershot, Gower.

van der Linden, J. (1989). Successful Supply of Plots for the Poor: The Case of Hyderabad. UrbanResearch Working Papers, No.22. Amsterdam, Free University.

Walton, D. (1984). "The role of international consultants", in Payne, G. (ed.), Low-income Housing inthe Developing World: The Role of Sites and Services and Settlement Upgrading. Chichester,John Wiley.


Notes

1. For a discussion of the relevance of the project approach in general, see Honadle and Rosengard(1983), Rondinelli (1983) and Morgan (1983).

2. See Angel and Boonyabancha (1985) for examples of land-sharing projects in Bangkok.

3. This not known how public-sector officials and professional planners reacted to this newrelationship with low-income communities or the CDCs.

4. See for instance Rapaport 1977, 1979 or 1980.

5. See Angel and Chirathamkijkul (1983) and Archer (1987) for examples.

ABOUTAssessment of Experience with the Project Approach to Shelter Delivery for the Poor

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Foreword

In many developing countries, the provision of shelter, particularly for the low-income groups, isgrossly inadequate. There are many reasons for this, most of them beyond the control of the individualhouseholds concerned. Despite shelter programmes, projects and other forms of government actiontaken in most countries, the shelter problem prevails with increasing dimensions.

Government involvement in the shelter sector ranges from the provision of completed housing unitsto several forms of supporting measures. The inadequate and, sometimes, negative effects ofpublic-sector intervention in the shelter-delivery process can be summed up as problems of insufficientcoverage, affordability by beneficiaries, lack of replicability and, to a lesser degree, social acceptability.Relevant strategies must deal with these issues which limit the effectiveness of actions in the form ofplanned projects.

The Global Strategy for Shelter to the Year 2000 (GSS), adopted by the United Nations in 1988,is addressing the shelter problem of the developing countries through a perspective where the fullcapabilities of all actors involved in the shelter sector can be utilized. The enabling concept, as it isoutlined in the GSS, does not imply a reduction of public-sector responsibilities in the shelter and servicessector, but rather, a new arrangement of financial, institutional, human and physical resources,coordinated by public action.

The elements of shelter projects that are considered appropriate means of providing at least somecomponents of the needs in the shelter sector will have new roles within this approach. The researchproject described in this publication was undertaken to evaluate the experience with theproject-by-project approach to low-income shelter delivery in the developing countries. Based on thisevaluation, the main objectives of the study were to identify the components of the shelter-deliveryprocess that can most effectively be addressed by the project approach, and to find ways to improve theintegration of projects with large-scale programmes and policy level directives.

This report is based on information from case studies in Colombia, Indonesia, Sri Lanka, Turkeyand Zimbabwe. Where appropriate, reference has been made to other sources of information. Althoughthe report is limited to a number of projects in a few countries, the case studies cover a wide range ofdifferent experiences, and the projects reviewed broadly reflect approaches that have been widelyadopted by several governments.

I gratefully acknowledge the support provided by Mr. Geoffrey Payne, for the global research andevaluation of the country case studies and Messrs. Herlianto, K.A. Jayaratne, N.D. Mutizwa-Mangiza,B. Tokman and R. Utria, for the preparation of the case-study reports.Dr. Arcot RamachandranUnder-Secretary-GeneralExecutive Director


Introduction

The scale and the complexity of urban housing problems in developing countries raises majorquestions concerning the role of the shelter sector within social and economic development strategies.State intervention in the shelter sector exerts both direct and indirect influences on patterns of savings andinvestment. These in turn influence the quality of life for all. While public-sector expenditure on sheltermay be somewhat modest compared with that of other sectors, total investment frequently represents aconsiderable part of total capital accumulation in a country. Furthermore, on the household level, itusually represents the largest single investment ever to be made. The social and economic significance ofthe shelter sector is thus considerable.

In their attempts to improve existing housing conditions and stimulate the supply of shelter for theirincreasing populations, governments in developing countries have pursued a wide range of policies,programmes and projects. Yet, the wide range of institutions and professions actively involved in theshelter sector complicate the assessment of these approaches. Further complications arise from the closelinks to developmental and welfare strategies. This diversity and ambiguity may account for the lack ofspecific shelter policies in many countries. It also partly explains the widespread adoption of projects asthe main vehicle for public-sector intervention.

The obvious advantages of projects are that they are designed to produce a measurable and visibleoutput for a pre-determined investment, are subject to established administrative procedures, and can betargeted at specific social groups. They also offer the potential for flexibility in the use of resources and inorganizational learning and capacity-building. Furthermore, they fit comfortably within the grant provisionand lending practices of international aid agencies (Honadle and Rosengard, 1983). In a qualified defenceof the project approach, Rondinelli (1983) sums up the advantages of the project approach as outlinedbelow:

Projects are identifiable, bounded and organized sets of development activities;

Projects can be effective means of translating development plans and policies into specificcourses of action;

Projects are vehicles for mobilizing and allocating resources to development activities;

Projects can be analysed and appraised before funds are committed;

Projects are temporary activities that can lead incrementally to accomplishing largerdevelopment goals;

Projects can be used to undertake unique, innovative or non-routine development activities;

Projects can be used to channel development resources to specific groups of beneficiaries andto particular locations;

Projects can be formulated as manageable units of activity guided by well-defined planning and

administrative procedures;

Projects can be organized in a variety of ways and undertaken by a wide range of organizations;

Projects can be externally supervised and controlled and used to exert influence on broaderdevelopment policies.

Conventional projects for new housing have generally involved the construction of housing units inspecific locations for a number of previously selected households unable to afford acceptable housingprovided by the private sector. Early approaches towards existing substandard, or unauthorizedsettlements regularly focused on slum clearance and relocation projects in an effort to imposepre-determined notions of officially acceptable shelter solutions, without reference to their affordability oracceptability. The failure of either of these approaches to bring housing within the reach of low-incomepopulations in rapidly expanding urban areas has led to criticism not just of these specific projects, but ofthe relevance of the project approach itself. (1)

During the last two decades, however, several innovations have taken place in the projectapproach. This suggests that a re-evaluation is in order. Sites-and-services and settlement-upgradingprojects have been adopted by countries at different levels of economic development and of differentpolitical persuasions in all parts of the world. These approaches emphasize the benefits of incrementaldevelopment, flexibility and efficiency in the use of scarce resources and the need to achieve a "multipliereffect". The changes have coincided with major innovations in shelter policy. They involve a shift awayfrom attempting to meet housing needs through direct provision, towards enabling or facilitatingapproaches. Such approaches are designed to support the efforts of existing suppliers of land andhousing, such as the formal and informal private sectors and community groups.

Rather than suggesting a scrapping of the project approach as such, due to shortcomings of thepast, this report identifies how it can better reinforce broad policy objectives. The project approach willthus, not only because of its present pre-eminence, remain a major factor in enabling the urban poor toobtain affordable and acceptable housing as cities continue to grow. This report assesses the experiencegained to date through the project approach and identifies some major lessons learned. It also offersrecommendations intended to improve the role of projects within the framework of enabling shelterstrategies as described in the GSS (see UNCHS, 1990). It is based upon reports commissioned byUNCHS in Colombia, Indonesia, Sri Lanka, Turkey and Zimbabwe, though reference is also made toother cases where appropriate. It would be presumptuous to claim that the report is eithercomprehensive or definitive, since the sample is only based on five countries. Yet, the countries selectedcover a wide range of experiences, and the projects reviewed broadly reflect approaches that have beenwidely adopted.

In assessing the experience gained, it is important to relate examples to their context, since anyapproach is likely to have limitations as well as benefits and some will work better in some contexts thanin others. The real question when assessing the impact of a policy, programme or project is whether itsmerits outweigh its defects. This report, therefore, concentrates on the major characteristics of theproject approach as these have been observed in the five countries mentioned above in particular, and inother countries for which general information has been made available.

The specific projects reviewed were selected according to some general criteria. The projects are:

Located in urban areas;

Explicit about their focus on the shelter needs of low-income groups;

Completed and evaluated (to enable assessment that could lead to policy changes); Consideredas successful in meeting their objectives to address the needs of low-income groups. Basicinformation on the case studies reviewed in this report are presented in table 1.


Chapter I. Recent trends in shelter policies

Housing conditions and political priorities vary considerably between developing countries. Yet, itis possible to detect a general trend in the approach to shelter projects. Throughout the world, it has beenrealized that the cost of building houses or apartments for those who cannot afford their full cost in theprivate market, can only be achieved by high levels of subsidy. Due to financial constraints in mostdeveloping countries these subsidies restrict the number of units provided to a small proportion of totaldemand. The remaining households are forced to fend for themselves in unauthorized settlements.

The emphasis of recent projects has therefore moved away from the direct provision of land,services and housing for a minority, towards a range of options that concentrate on the provision of oneor two of these elements, such as land, or services. Furthermore, the residents of many recent projectsare allowed to control the provision of houses according to their own priorities and resources. Thesechanges are intended to reduce unit costs and enable scarce resources to reach a significantly higherproportion of households in need. They are also intended to enable beneficiaries to obtain the types ofhousing they prefer at costs they can afford, so that economic, social and environmental priorities can beachieved.

This shift to a more flexible approach can also be observed as changing attitudes towards existingforms of shelter and settlements that do not conform to official norms and standards. Whereasslum-clearance projects were the conventional response of public sector agencies during the 1960s and1970s, it is now widely accepted that these only dealt with the symptoms and not the causes of shelterproblems. Displaced households simply settled elsewhere, so that the social antagonism and economiccosts offset any other benefits achieved. Recent efforts have focused on improving unauthorizedsettlements wherever possible, since the costs of doing so are small compared with the social andeconomic benefits achieved.

The case studies reviewed in this report reflect the gradual transition from conventional to moreflexible and innovative approaches. They include projects for new housing and the upgrading of existingsettlements by a combination of public agencies, non-governmental organizations (NGOs) and privatedevelopers. The types of shelter provided include apartments, row and core houses, prefabricated unitsand serviced plots. The size of projects range from 64 units on a site of one hectare to more than 10,000units on several hundred hectares (see table 1 ).

The transition from conventional provision to more innovative support strategies has requiredconsiderable changes in the attitudes of professionals and in the roles of governments. These changeshave not been achieved quickly or smoothly. Some of the difficulties involved are clearly evident inTurkey, where projects have tended to be small and not easily accessible to low-income groups. About70,000 plots were allocated in sites-and-services projects between 1978 and 1989; an average of lessthan 6000 a year. Although this represented a considerable increase in public-sector supply, it comparespoorly with the performance of informal processes that have provided about 95,000 units a year,representing 90 per cent of total low-income supply (Tokman, 1990: 10-11).

The Aktepe project in Ankara provides a good illustration of the conventional approach. In 1965,it was designated as a "squatter prevention area" by the Ministry of Reconstruction and Resettlement. By1975 it had provided 3626 units in the form of apartments, core houses, prefabricated units and servicedplots (Tokman, 1990: 13-14). Although the project was centrally located in the city, poor projectmanagement delayed implementation and increased costs, few of which were subsequently recovered.

The Tarsus project reflects a change in that provision was based upon a housing-demand analysis,with standards and forms of housing adapted to meet the needs and resources of different sectors ofdemand (Tokman, 1990: 22). It also reflects a move to decentralize decision-making to local levels. Yet,decentralization of resource mobilization and allocation processes still needs to be effective. At the levelof the individual project, it appears impossible to overcome this limitation. Recent projects in Turkey,such as the Bati-Kent development scheme near Ankara, suggest that the issues of scale andmanagement efficiency are now being addressed. Few of the units in these projects, however, areaffordable to low-income households, especially if transport costs to places of employment are included.

Another example of the difficulties in changing the approach to projects for new housing can beseen in the case of Colombia. For many years only a few shelter projects were undertaken. Most ofthese were conventional construction projects executed at a small scale and incapable of beingdeveloped into truly effective solutions. Most of these projects had little relationship to other sectoralpolicies and actions and rarely even fulfilled their internal objectives (Utria, 1990: 12). During the 1980s asubstantial number of housing units was constructed, but these units catered only for the middle-incomegroups. Sites-and-services projects were introduced in an attempt to compete with illegal subdivisions.They were reasonably successful in satisfying their internal objectives of providing basic services tolow-income households and security of tenure to land. Yet, the sites-and-services projects have not beenfree of political motivations or subsidies. Furthermore, they have attracted migrants from rural areas,drawn by the prospect of a generous solution (Utria, 1990: 30).

Some projects, however, have been undertaken at a scale that enables them to address totaldemand. The Kennedy City project in Bogotá, for example, provided more than 10,000 dwelling unitsfor 120,000 people in the form of apartments, row houses and plots for aided self-help construction inthe early 1960s. It has since expanded to accommodate nearly 2.5 million people in what is now almostan autonomous metropolitan settlement (Utria, 1990: 80). Another project known as Bolivar City (also inBogotá) has also provided more than 10,000 units in the form of serviced plots. The project wasintended to provide a legal and affordable alternative to squatting or unauthorized settlements. An addedinnovation was that the project also involved improvements to the largest marginal settlement in Bogotáand directly or indirectly benefited 1.3 million people (Utria, 1990: 37-38).

Another example of the gradual evolution of the project approach can be seen in the case ofZimbabwe. When the populations of cities expanded rapidly, partly due to increased rural-urbanmigration during the war for independence, the Government implemented ultra low-cost housing projectsdeveloped by large scale contractors. Since independence, however, national policy has concentrated onseven measures: freehold tenure, higher minimum standards, aided self-help, building brigades, housingco-operatives, partnerships between public and private sectors, and full cost recovery(Mutizwa-Mangiza, 1990: 10).

The Kuwadzana project in Harare represents an example of current government approaches toaddressing the housing problem. This has exerted a considerable influence on national policy through itsemphasis on aided self-help for households below the median-income level (Mutizwa-Mangiza, 1990: ii).The types of housing provided represented a compromise between the desire to raise minimum initialstandards, whilst at the same time recovering project costs. In this sense, the project served as aneffective means of introducing changes into other developments by both public and private sectors.

Since 1980, eight shelter projects have been undertaken in Harare. Four of these have been locallyfunded, three by the World Bank and one by the German Agency for Technical Cooperation (GTZ) andUSAID. There has been an increasing emphasis on the role of the private sector, especially buildingsocieties and employers. Building societies played a major part in the development of the Kwekwe-Gutuproject, despite initial concerns regarding affordability and default rates in lending to low-income groups.The project sought to develop affordable and innovative housing solutions based on self-help practices. Italso sought to achieve replicability through the establishment of domestic thrift societies and other financemechanisms. As will be discussed below. these innovations have greatly increased the ability ofpublic-sector agencies to address the scale and nature of housing demand in Zimbabwe.

A similar evolution has taken place in many other countries. In Indonesia, for example, governmenthousing projects were initiated as part of the first Five Year Development Plan in 1969. These started asresearch and development projects, but were expanded in the second plan when Perum Perumnas, theNational Urban Housing Development Corporation (NUHDC), was established. Since then, the projectapproach has been expanded regularly. Housing built by both public and private sectors in the periodfrom 1984 to 1989 amounted to about 300,000 units, or an average of 60,000 a year. Yet, unauthorizedsettlements increased even more rapidly and the Kampung Improvement Programmes were expanded tobridge the gap. Some settlements were considered too difficult to improve, however, and the UrbanRenewal Programme initiated in 1979 was directed at these. Complete settlements were demolished andrebuilt on the same sites using apartment blocks. Multi-storey housing is not, however, popular inIndonesia and many people decided to move elsewhere (Herlianto, 1990: 13).

An early example of Indonesian housing projects is located in the east of Jakarta in an area knownas Klender. This was one of the first projects designated by NUHDC w hen it was established in 1974and provided for a mixture of housing options from apartment blocks, duplex houses, sites-and-serviceswith core houses and ready-to-be-built plots. The project was nominated by the Government ofIndonesia as one of four demonstration projects during the International Year of Shelter for the Homeless(IYSH) in 1987. This suggests that although it was developed some years ago, it is still regarded asreflecting current thinking on housing and the role of the public sector. The project succeeded inproviding housing for about 57,000 people, or nearly 10,000 households. More than 75 per cent ofthese, however, work for the Government or the army. Very-low-income households, or those workingin the informal sector, had difficulties in participating (Herlianto, 1990: 21).

The increasing tendency to involve the private sector in housing projects affordable by low-incomegroups is illustrated by the Margahayu Raya project in Bandung. This was designed specifically toaddress low-income needs and was designed and implemented in only two years. It was frustrated byinflation, however, and ended up accommodating middle-income households (Herlianto, 1990: 33-35).In an even more innovative approach, NUHDC has initiated joint public-private-sector projects in whichprivate developers are free to redevelop parts of inner-city slums for commercial purposes, in return fortheir agreement to build rental housing units for the existing low-income residents on the remainder of thesite.

According to Silas (1991), the main development in the shelter sector in Indonesia during the lastfive years has been in improving the quality of prevailing projects, especially the Kampung ImprovementProgramme, which has been adapted and refined to suit local needs. In Surabaya, it is intended tointroduce an integrated urban development programme, linking the planning, implementation andmanagement of settlement and infrastructure projects. Guided land-development projects are alsoenvisaged.

Among all countries that have adopted an enabling strategy, Sri Lanka must be considered themost radical. In 1984, the Government initiated the Million Houses Programme (MHP). The programme

consisted of six sub-programmes covering rural and urban areas, the private sector, plantation housingand major resettlement projects. The urban sub-programme consisted of about 300 housing projects in51 local authority areas. It was launched in 1985 with three objectives:

(a) Making a substantial and lasting impact on the housing situation of the urban poor;

(b) Placing the poor at the centre of the process (by adopting a devolved approach);

(c) Ensuring that the approach was sustainable in the longer term.

Sri Lanka's prominence in the adoption of an enabling or support approach ensures that itsexperience is of particular interest and significance. Yet, it should be noted that the MHP was introducedas a national shelter strategy, which took the form of a coordinated, large-scale programme at the outset.This makes it fundamentally different from an incremental project approach adopted in most countries,where innovative projects are commonly used as experiments to test the validity of new policy optionsbefore they are adopted at a large scale. The issues of replicability and the need to generate politicalsupport had already been resolved in principle. One of the most significant issues raised by the SriLankan experience thus relates to the development of institutional capability to implement the newapproach effectively. The scale of the programme and the commitment of the government to theapproach have generated an equal commitment to monitoring and evaluating the progress of theprogramme. Bottlenecks can thus be identified and overcomed. Such a willingness to learn fromexperience is not present in all countries.

The question of subsidies is critical in assessing the possibility of expanding projects andprogrammes to the scale required on a long-term basis. In Sri Lanka land-ownership rights have beengranted to all slum dwellers in the city of Colombo. This has been done free of cost except for a smallmonthly charge to cover the cost of deeds (Jayaratne, 1990: 21). This hardly acts as a deterrent to thefurther development of squatting and other forms of unauthorized development.

Another crucial issue in the Sri Lankan approach is the emphasis placed upon decentralization, notjust of implementation, but of decision-making as well. This was also emphasized in the rural programme,where the new approach was promoted under the slogan "Minimal intervention, maximum support by theState and maximum involvement of the builder families". The rural programme, which was initiated in1984, did not abrogate the State's responsibility for assisting the poor. Instead, it involved taking on amore difficult responsibility, that of providing and maintaining the necessary components of secure andaffordable land, infrastructure and facilities to enable households to organize their own housing accordingto their means and priorities (Development Planning Unit, 1984: 4).

Many other examples of innovative shelter projects exist in other countries. The IncrementalDevelopment Scheme, or Khuda ki Basti undertaken by the Hyderabad Development Authority (HDA)in Pakistan, for example, is notable in attempting to learn from the practices adopted by illegaldevelopers, or land grabbers. The HDA even went so far as to employ one. As a result, initial standardsof services provision are modest, and absolutely no standards are imposed concerning the design orconstruction of individual houses (van der Linden, 1989: 9). To ensure that only low-income households,or those in genuine need applied, the project agency established a reception area in which all householdsapplying were required to live for two weeks. After this period they were allocated a plot and expectedto begin construction of their house immediately (van der Linden, 1989: 10). The approach wasdeveloped by HDA's director in secrecy, since it was feared that powerful vested interests, both insideand outside government, would seek to prevent it. Only after the scheme had been approved by theChief Minister was it formally presented to the governing body of HDA for approval and implementation(Hasan, 1987: 17).

The willingness to address vested interests and use shelter projects as experiments as illustrated bythe Khuda ki Basti case study, indicates the extent to which the project approach has evolved in recentyears. Although such examples present an encouraging sign of steady progress, the majority of projectsremain dependent on direct or hidden subsidies, achieve poor levels of cost recovery and fail to achievereplicability.

Approaches towards existing low-income settlements have undergone a similar transformation tothat of new shelter provision. Relocation projects have been replaced by projects to improve or upgradesuch settlements wherever possible. In some countries (e.g., Colombia), slum-clearance and relocationprojects are still undertaken. These are less common though, and likely to be for specific reasons relatingto urban renewal programmes, rather than as attempts to improve the appearance of cities, or to removethe poor. In the Chambacu project in the tourist city of Cartagena, about 1800 households were offeredsubsidized plots with completed houses elsewhere in the city, as compensation for vacating their informalsettlement near the major tourist sites. These subsidies were intended to be generated from profits fromthe commercial centre developed on the site and were agreed to by residents. In the event, however, thecommercial development has not taken place, suggesting that the development was, in practice, intendedas a slum clearance project rather than one of urban renewal (Utria, 1990: 68).

In many other countries, upgrading projects have been undertaken at a scale sufficient to benefitthe majority of low-income households. The greatest achievement in this respect must be that ofIndonesia, where the Kampung Improvement Programme has benefited almost all low-income residentsof informal settlements in Jakarta, Bandung and Surabaya. Although these projects concentrated on thephysical upgrading of public services and adopted an engineering approach that did not attempt the fullrecovery of project costs (Herlianto, 1990: 18), they stimulated residents to make substantial secondaryinvestment in shelter improvements. These dramatically improved living conditions and public healththroughout each city. at density levels that would have been difficult to achieve in new developmentprojects.

Upgrading projects place increasing emphasis on community participation in the formulation ofproject objectives and plans, as well as in their implementation. The Kalingalinga upgrading project inZambia enabled 4400 low-income squatter households to obtain improved houses, services and securityof tenure (Jere, 1991b). This was achieved with the active involvement of the community at all stages ofthe development. A more efficient land use reduced overcrowding and provided 1800 overspill plots fornew houses. The Zambian objective of maximizing economic development in shelter projects wasachieved by creating small companies and other commercial activities locally to produce concrete blocksand other essential elements.

One problem affecting the Kalingalinga project was that many early community leaders weremembers of the political party that was in opposition before Zambia became a one party State. Theiraccess to people in positions of influence was thus limited. Oestereich (1980: 31) considered the nextgeneration of leaders to be of an inferior stature. Eventually, however, a residents' committee was formedwhich was able to generate official support for the upgrading of the settlement. This suggests that the roleof effective local organizations in initiating, as well as planning, implementing and maintaining a project,needs to be fully acknowledged.


Chapter II. Financial and economic impact of shelter projects1. Mobilization of household savings

Evidence concerning the extent to which shelter projects have succeeded in mobilizing domesticsavings is not easily available. In Sri Lanka, for example, there is no institution that takes in deposits andmobilizes resources with the aim of providing housing finance. Nonetheless, the MHP generated six timesmore investment by residents than that made available by the public sector (Jayaratne, 1990: 28). Thiswas a major achievement by any criterion. Table 2 below shows that household savings mobilization inthe three Sri Lankan projects reviewed in this report was two-and-a-half time that of the publiccontribution. Yet, cost recovery in public projects was very low, and greater success was achieved bythrift and credit cooperative societies (Jayaratne, 1990: 29).

About 86 per cent of all investment in house building is apparently made through informalprocesses, such as loans from relatives, friends and moneylenders. To encourage such investment, theGovernment of Sri Lanka provided 40-year leases to shanty dwellers in low-income project areas andinstalled services and community facilities as well. In the Aramaya Place upgrading project, it appearsthat the provision of tenure security and basic shelter were sufficient to encourage even low-incomegroups from ethnically mixed settlements to invest between SLRs.1000 and SLRs.150,000 in houseimprovements. Several links have also been established between the Community Development Councils (CDCs) and locally active NGOs (Jayaratne, 1990: 71-72).

In Turkey, housing finance is provided by the National Housing Fund. In practice, however,low-income households can only have access to such loans if the municipality in which they live isundertaking a shelter project, or if they can afford to pay the "buyer's share" when purchasing a housingunit in the local market that meets the criteria of the Fund. Another consideration in Turkey is that allprojects implemented by the Ministry of Public Works and Settlement require initial payments amountingto 25 per cent of total costs. Household savings are losing their value, however, due to inflation. In asituation where fewer shelter units are produced, the result is that household savings are utilizedelsewhere (Tokman, 1990: 34). Low-income groups are thus effectively excluded from participation inhousing projects. Yet, early experiences like the Aktepe project, when inflation was lower, have shownthat well designed and affordable projects can be an effective means of mobilizing household savings.

In Zimbabwe, the shift of emphasis towards aided self-help resulted in a parallel shift of thefinancial burden on to project beneficiaries themselves (Mutizwa-Mangiza, 1990: 53-54). The projectsare held to have generated a ratio of public to private sector investment of about two to one, representinga substantial amount of investment by households themselves (Mutizwa-Mangiza, 1990: 54 ). The abilityof residents in sites-and-services projects to take in tenants, or use their plots for commercial purposeshas further supported affordability and socio-economic development. This has a number of benefits; itenhances the incomes of project beneficiaries, ensures that investment in housing is increased and, by nomeans least, indirectly enables projects to benefit the poorest households by expanding the provision ofcheap rental housing.

Several methods have been tried in Indonesia to stimulate domestic savings and improve housing

affordability. One of these is the Down-Payment Saving system, recently renamed the Pre-FinancingSystem. This was designed to help low-income households save for the deposit required on entry topublic housing projects. The system attracts interest on the savings until the household can raise theamount necessary for the deposit. It also provides project agencies with an indication of the household'sability to pay, and it encourages households to save regularly and to budget for large items, such ashousing. Traditionally Indonesians prefer to keep their savings as cash, rather than investing them. Whencash is available, they tend to spend it on consumer durables (Herlianto, 1990: 70). Housing has been asuccessful means of encouraging people to invest in major capital assets and has, of course, generatedconsiderable employment in the process, to the benefit of the economy as a whole.

In Colombia, the Constant Real Value Savings System (UPAC), which was established in 1972,has been extremely successful in capturing savings. The system protects savings against inflation by meansof a daily monetary adjustment, to which interest is added. It currently takes in about $US500 million ayear, with total resources of about $US3000 million. Although it is not related to any shelter projects, ithas enabled many households to participate in such projects (Utria, 1990: 14). In practice, however, thelow-income households have been unable to borrow from the UP AC, due to the relatively high cost ofsuch loans (Utria, 1990: 14).

The ability of a shelter project to mobilize domestic savings depends on many factors. A majorfactor is the perception by beneficiaries of the extent to which it meets their needs. Another is the extentto which they are able and accustomed to place small capital assets in an institution. Traditionally,low-income households have not considered such institutions an attractive or reliable place to deposittheir savings, possibly for fear that they will attract official attention, or that they will not be accessiblewhen needed. Any attempt to mobilize and put them to good use for the benefit of national and localeconomies will need to accept and address these deep-seated reservations. Given their limitedexperience of dealing with low-income groups, conventional banks or housing-finance institutions will findthis difficult to achieve. Since the majority of all housing for the poor is financed by domestic savings, thetotal sums involved are clearly enormous. The potential for developing new forms of savings and lendinginstitutions is considerable and has yet to be tapped.

The greatest success in this respect has been achieved by locally based community banks, savingsassociations, credit unions and similar institutions. These manage to combine local accountability withefficiency and ease of access, and are able to process small savings and loans efficiently. Furthermore,the benefits of success are shared by the community rather than outsiders, thereby reinforcing theirattractiveness. The Grameen Bank in Bangladesh is a prime example of such successes.


Chapter II. Financial and economic impact of shelter projects2. Affordability, subsidy and cost recovery

A primary objective of recent shelter projects has been to reduce unit costs to a level that can beafforded by the project's target population. This is intended to reduce subsidies, recover a higherproportion of project costs and enable existing budgets to benefit more households. The ability to achievethis objective clearly depends on patterns of income distribution and the costs of land, services, buildingand finance attributable to the project. These will, in turn, be determined by their market, or opportunitycost and the minimum standards of initial provision considered acceptable by the project agenciesconcerned.

Despite increasing awareness of the need for shelter projects to be affordable and for an increasedproportion of costs to be recovered, the evidence suggests that progress to date has been modest. Keareand Parris (1982: vi) claim that plots in sites-and-services projects financed by the World Bank duringthe 1970s were affordable down to the twentieth percentile. Such affordability has, however, often beenachieved by subsidizing project components such as land, finance, or services to levels that restrict thenumbers that can be delivered within available budgets. For this reason, even when it can be achieved,affordability is of little consequence if the supply of affordable units is restricted and households aredenied access.

One possible reason for this problem may lie in the concept of affordability itself. Any approachthat determines forms and standards of provision based on what households with different levels ofincome can afford for housing, or other expenditure, is forced into making assumptions that may not bejustified. Furthermore, data on incomes are notoriously unreliable and households at a given level ofincome may have very different expenditure priorities. Finally, the ability to afford a commodity shouldnot necessarily be equated with a willingness to pay for it.

A more reliable indicator of affordability is probably the existing level of expenditure for a givenstandard and type of shelter. This is also more useful to project planners in that it can be compared toshelter of a particular type, in a particular location, at a given time, providing an insight into the optionswith which a project will be compared by its target population. The purpose of assessing the amountsthat households can afford for housing is to provide a basis for determining total project costs for initialdevelopment. A breakdown of such costs is provided in table 3 . The reduction or elimination of any ofthese costs from the project budget will amount to a subsidy on that element. This will, in turn, bereflected in the perceived value of the shelter within the urban housing market and also restrict the numberof units that can be provided. Experience shows that it is extremely rare for shelter projects to be plannedon the basis of true costs, even during the feasibility stage. The largest single element of subsidy isinvariably that of finance, since even a small percentage reduction in the rate of return charged to aproject has a dramatic impact on the capital value saved. The next subsidy in terms of value is invariablyin the cost of land. In urban areas this can be substantial. Beyond these, the costs of administration,professional fees and project maintenance are almost never attributed to shelter projects in full, and areroutinely omitted altogether.

The understandable desire by project planners not to create developments that might beconsidered "planned slums" frequently results in project standards being higher than low-income groupscan afford. This leads to pressure to provide subsidies in order to ensure affordability, but producesprojects that are attractive to higher income groups than those intended. Needless to say, manybeneficiaries may be tempted to realize the full market value of the housing received by selling theirinterest. Furthermore, the high demand for housing provides no incentive for project planners to relatestandards to levels of affordability. The dependence on subsidies is thus reinforced. This restricts thenumber of developments that can be undertaken and creates expectations that are difficult to satisfy.

Another important issue when assessing the economic viability of shelter projects for the poor, isthe extent to which attributable costs are recovered for reinvestment in order to achieve replicability. Thecase studies provide valuable information on the issues of affordability, subsidy and cost recovery. InTurkey, for example, costs in squatter-prevention projects are allocated at market value, except thatinterest rates are only 5 per cent and a 25 per cent deposit is required. Inflation in recent years has beenaround 60 per cent and commercial rates of interest 70 per cent. The finance subsidy is thus at least 55per cent per annum. In upgrading projects, no charge is made for the plot of land, even though the valueof this may increase dramatically with the granting of tenure and incorporation into the formal landmarket. Some form of subsidies is the norm in public-sector projects and this has been officially acceptedfor some years (Tokman, 1990: 34). In the Aktepe project in Ankara, many beneficiaries only paid theinitial cost and the percentage of default on credits was considerable (Tokman, 1990: 17). At the sametime, households in the Tarsus project had average income levels two-and-a-half to three times higherthan the specified maximum. Cross-subsidy policies are considered to have helped achieve financialviability and affordability, though the emphasis on commercial development may exclude low-incomegroups in the future.

Administrative costs can be considerable and are rarely, if ever, estimated in Turkey. Whenimplementing agencies are assessing the eligibility of project beneficiaries this involves a complicatedmethod of allocating points. This assessment adds to total project costs and adversely affects projectviability. This problem no doubt increases with the popularity of a project. Prolonged implementationperiods and high inflation rates have made housing projects unaffordable to project agencies, since thecosts of building have risen at least as rapidly as other costs (Tokman, 1990: 34). Despite subsidies,projects have therefore failed to reach more than a small percentage of the poor.

In Sri Lanka, the proportion of total project costs recovered has also been disappointing, with only58 per cent of attributable costs recovered in the rural programmes and 47 per cent in urban areas. Inthree case study projects, cost recovery levels on housing loans were 16 per cent, 16 per cent and 50per cent respectively (see table 2 ). Furthermore, out of 81 projects in Colombo city only one paysproperty taxes intended to recover a proportion of the costs for land acquisition, development andservicing. Although average household incomes among low-income groups have risen to aboutSLRs.1600 per month, households can afford only Rs. 75-100 a month of this for housing. This isinsufficient to obtain a 25 m2 plot of land at existing prices and official standards have exacerbated this byimposing minimum plot sizes of 75 m2. The inability to afford access to land effectively excludes manylow-income households from participating in government projects. The only way of reconciling thisanomaly is to provide subsidies, Although the government has recently waived normal building andplanning regulations for low-income housing projects, the only way of reconciling this anomaly may be byproviding subsidies.

Jayaratne (1990: 43) estimates that the Sri Lankan projects received subsidies on attributablecosts of infrastructure and house construction loans that amounted to more than 50 per cent of totalcosts. In addition, land costs and charges were subsidized considerably and only 20-50 per cent of the

market price was charged on suburban sites, with even less in Colombo itself. This has been possiblebecause projects for new development have generally been located on Government-owned land. Oncethis is exhausted and land has to be acquired from private owners at market rates, it will be difficult tosustain the programme. It also appears that some elements of infrastructure works were not costed to theprojects. This implies an additional element of subsidy. Yet, even these subsidies have apparently failedto make shelter components affordable to the target groups. Actual costs seem to be five to seven timesthe levels that the households themselves indicated that they could afford. The ability to sustain the levelsof subsidy inherent in the housing loans from the National Housing Development Authority (NHDA)must, therefore, be open to question.

In Zimbabwe, standards of residential development were raised after independence in line withnational aspirations. The minimum plot size was established as 300 m2, and a four-room dwelling built ofbreeze blocks was established as the norm (Mutizwa-Mangiza, 1990: 60-61). This was eventuallyrelaxed after pressure from funding agencies such as USAID. It was also hoped that building costs wouldbe reduced through the operation of building brigades working without the profit motive. Theachievement of the brigades has, however, been disappointing.

In terms of their internally defined target populations, the solutions offered within the twoZimbabwean projects examined in this report have, generally, been affordable. An assessment of theaffordability of these solutions in the context of the entire spectrum of low-income distribution, however,has revealed serious affordability problems. When the Kuwadzana package was tested against the thenincome distribution in Harare's low-income areas (assuming, as the Government did that 27.5 per cent ofthe monthly income is devoted to housing), it was revealed that 16 per cent of the low-incomehouseholds in Harare could not afford any of the available options and that only 16 per cent could affordthe full four-room core house that the Government of Zimbabwe had insisted on as the minimum to becompleted in 18 months. Yet, empirical evidence revealed that only 17.6 per cent (instead of the officialfigure of 27.5 per cent) of monthly income was available for housing. On this basis 42 per cent of thelow-income households in Harare could not afford any of the available options while only 7 per centcould afford a four-room core (Mutizwa-Mangiza, 1990: 55).

In the Kuwadzana project in Harare, land costs were subsidized and this is considered to affect thereplicability of the project adversely, especially for private sector developers. A further erosion ofaffordability was due to the time that it took for the project to be completed. Inflation in the costs ofbuilding rose at 60 per cent over two years (1986-1988), a much higher level than was budgeted, or thathouseholds could afford (Mutizwa-Mangiza, 1990: 31). Similarly, inflation in the construction sector hasresulted in a nine-fold increase in the cost of houses within four years (1981-1985), while the generalinflation rate was between 20 and 30 per cent per annum (Mutizwa-Mangiza, 1990: 54). There is someevidence that project beneficiaries are selling their plots. It is not clear, however, if this is because ofcosts being unaffordable, or if it is to realize the capital value of the subsidies provided.

In Indonesia, affordability is assessed by dividing the target population into two groups. The firstgroup is the lowest-income group, which is defined as households earning less than $US250 per month;they receive subsidies on project costs and terms of finance. The second group consists of householdswith incomes between $250 and $500 a month. These households not only pay the full cost of theirhousing, they also contribute to cross-subsidies to help the lowest-income groups. This suggests that thetrue costs of land, services, finance and shelter provided are based on affordability levels of $250 amonth, requiring repayments of about $100 a month.

Commercial interest rates in Indonesia are 18 to 19 per cent. These are charged to middle- tohigh-income groups, though projects for low-income households are only charged at 12 per cent(Herlianto, 1990: 15). This represents a considerable subsidy on finance alone. Cross-subsidies are

generated from commercial and other activities, as well as from higher-income group housing.

In the Kampung Improvement Projects financed by the World Bank subsidies of about $US25 perhousehold are allocated by the Government to cover the cost of improving public infrastructure. In othersettlement improvement projects, carried out under the National Pioneering Project, subsidies amountingto about $USI700 per hectare are granted (Herlianto, 1990: 18). Considerable use of subsidies was alsoevident in the Klender project. This project was intended to serve the needs of a wide range of incomegroups, in the ratio of one high-cost: three-medium cost: six low-cost, thus reflecting the incomedistribution for Jakarta as a whole (Herlianto, 1990: 26). Herlianto claims that the scheme wasself-financing (1990: 27), though it is difficult to see how this has been achieved, given that 75 per cent ofall plots received subsidies (it also appears that few of the remainder were paying full commercial costs).Certainly, this would help explain why up to half of the original government employees allocated plots inthe project appear to have moved out (Herlianto, 1990: 28) and been replaced by households withhigher incomes.

Projects implemented by Yayasan Sosial Sugyapranata (YSS), an NGO in Semarang, forvery-low-income households received substantial funding from donations and grants within Indonesia andoverseas (Herlianto, 1990: 50). This enabled the projects to be affordable, but it inevitably restricts theirreplicability. YSS required only token repayments, in order to instil an awareness that households areacquiring their own assets. The repayments are placed in a revolving fund to contribute to future projects.It appears, however, that the project is essentially undertaken on a charity basis.

Affordability in Indonesia, as elsewhere, has been adversely affected by inflation and devaluation.Shelter projects have thus been increasingly unable to reach their target populations (Herlianto, 1990:62). As. a result, credits (and their associated subsidies) are being received by lower-middle- andmiddle-income households, rather than the low-income groups intended (Herlianto, 1990: 63). Officialproject assessments of affordability are based on an expenditure of 33 per cent of incomes on housing.As inflation has eroded affordability and interests have been adjusted, adjustments have been made towhich households are eligible to participate in the projects. This problem has been most significant in newdevelopment projects, where land has to be acquired, than for upgrading projects where people are inplace and the emphasis is on physical upgrading. Private-sector schemes seem to be more affected bythis than public schemes. Private developers now find it impossible to reach lower income groups.

One reason why affordability issues are less problematic in upgrading projects, is perhaps that unitcosts involved are less or that upgrading standards are more flexible than those for new developments. Itis also possible that the existence of a local community that can be consulted about project componentsand costs enables the most appropriate package to be prepared, and that this increases the willingness topay. In the Kalingalinga project in Zambia, cross-subsidies were applied to reduce unit costs andgenerate a revolving fund to finance future works. Unfortunately, inflation eroded the value of repaymentsbased upon fixed rates of interest. The funds recovered were thus insufficient for this purpose (Jere,1991a).

Housing agencies in Colombia recognize that the problem of low-income groups is a priority. Inpractice, however, government action has concentrated on those groups that can afford the housingprovided (Utria, 1990: 18). Low-cost housing has always been subsidized in Colombia. The subsidycommonly amounts to 70 per cent, including land, professional, financial and administrative costs. Thedefinition of target groups contributes to problems of affordability, since an estimated 71.5 per cent ofhousing supply is targeted to middle- and high-income groups, while 28.5 per cent is directed atlow-income groups. The corresponding figures for housing demand are 27.4 percent and 74.6 per centrespectively (Herlianto, 1990: 29).

Disparities between intentions and outcomes are, of course, common to policies and programmes,as well as to projects, and may be due to a combination of factors. In the Ismailia DemonstrationProjects in Egypt, all project components were costed at rates that, at the time of project preparation,were both affordable and replicable. Cross-subsidies were to be generated from the sale by auction ofattractive and well located concessions, and commercial and industrial plots, as well as from differentialpricing of all other residential plots. This was intended to enable the project to cater for the needs of allincome groups on a self-financing basis.

To ensure that this objective was achieved, initial standards of provision in terms of infrastructureand house construction were extremely modest. The emphasis was thus on stimulating a local process ofincremental consolidation. In the event, several changes were made to the project that made it moredifficult for low-income groups to participate. These included discouraging the construction of housesusing temporary materials, increasing the price of land, reducing the period of repayments from up to 30years to only 5 years, increasing the size of deposit required, installing full public services at subsidizedrates, increasing the minimum width of plots and, perhaps most critically, changing the criteria forselecting beneficiaries so that income levels and evidence of need were no longer applied (Davidson,1984: 142-144). The outcome of these changes was to stimulate considerable investment in the projectarea. Yet, the degree to which low-income groups were able to participate was less than intended.

In the Bolivar City project in Bogotá, affordability was achieved by subsidizing the serviced plotsand interest rates on credit. This represented a combined subsidy of 70.6 per cent, or about $US 1208.In addition, the costs of road provision, administration and professional services were not charged to theproject, representing an even higher level of subsidy (Utria, 1990: 44). It is hoped that some of thesesubsidies can be recovered through property taxes, though it is still too early to assess the amounts, sincethe project has only recently been completed. In another Colombian project, Kennedy City in Bogotá,subsidies were provided under the Alliance for Progress programme, making it difficult to replicate theapproach with local resources.

The above examples have confirmed that most shelter projects, even those intended to beself-financing, have failed to be affordable to low-income groups. It has also demonstrated that attemptsto close this gap through the provision of subsidies have generally been unsuccessful. When the problemsof affordability and subsidy are compounded by poor levels of cost recovery, the financial viability ofshelter projects is impossible to achieve and the prospects for replicability are severely constrained.Unfortunately, the record has not been good, even for sites-and-services projects. Van der Linden(1986: 67) cites evidence from more than 60 projects carried out with financial support from the WorldBank showing that none had achieved full cost recovery. According to Keare and Parris (1982: xii), ratesof default in the Zambian World Bank project were generally in excess of 50 per cent and, in somecases, upwards of 80 per cent, with many households making no payments. Yet, it should not beassumed that poor repayment levels automatically reflect a lack of affordability. In Zambia, the poor levelof repayments was largely caused by lack of an effective collection system, and also of political will onthe part of Zambian Government leaders. Keare and Parris even went so far as to state that governmentreluctance to make defaulters pay may be a disguised form of subsidy to project participants (1982: 64and 85).

In Sri Lanka, the situation is no better. Only 13 per cent of the total repayments due had been paidup to 1986, though this gradually increased to 50-60 per cent, excluding the backlog. Levels later variedbetween 10 and 30 per cent, depending on how defaults are calculated (UNCHS, 1987: 50 and 64).Cooperative thrift societies have been proposed to improve this aspect of the MHP.

Government policy in Zimbabwe has been to recover all project costs except for land. It is notclear, though, if the cost of finance is based on commercial or subsidized rates. Arrears on repayments in

the Kwekwe-Gutu project are between 22 per cent and 28 per cent. Quite obviously this has had anadverse effect on replicability. Yet, this is considered as broadly consistent with the record ofmiddle-income groups and not, therefore, a cause of serious concern. It is not clear how this affected thevalue of the revolving fund established by international grants. What is clear is that some householdsassumed that because it was a government project, they would not have to make any repayments(Mutizwa-Mangiza, 1990: 46).


Chapter II. Financial and economic impact of shelter projects3. Institutional framework and financial management

When addressing the issues of institutional framework and financial management there are threemajor issues to be considered. These are analysed in the three following sections.


Chapter II. Financial and economic impact of shelter projects3. Institutional framework and financial management1. Institutional culture of public-sector agencies

One of the primary factors that influence the success or failure of shelter policies, programmes andprojects is the institutional culture of the public-sector agencies involved. If these are positively disposedtowards innovation and responsive to changing patterns of demand, the chances of success areconsiderably enhanced. Where agencies are reactive and inflexible, opportunities for progress will becorrespondingly reduced. The first approach can be characterized as a management approach, in whichresources are continually being redeployed in line with assessments of need, while the latter represents anadministrative approach and is characterized by a preoccupation with implementing inherited, orreceived, norms, standards and procedures, irrespective of their relevance in the wider environment.Unfortunately, public-sector agencies in many countries have not yet shaken off the traditionaladministrative approach. This has particularly negative consequences for the shelter sector, since it is notthe exclusive preserve of anyone profession or discipline, and depends for success on the collaborationand sensitivity of many professions and agencies.

The introduction of new approaches to shelter projects under such conditions is greatly facilitated ifpolitical support is available at the outset. This has been the catalyst in many successful cases, of whichthe MHP in Sri Lanka is perhaps the clearest example. This was administered by a high-level committeerepresenting 12 ministries, with the NHDA acting as the lead agency. Despite the enormous scale of theprogramme, the data show that the rural and urban sub-programmes achieved a high proportion of theirtargets (95 per cent in rural and 76 per cent in urban areas). The Ministry of Policy Planning andImplementation has indicated that the Programme was completed satisfactorily by the end of 1988. If thisis correct, it was no doubt directly due to political commitment at the highest level of government and thevery high levels of public investment involved.

Similar political commitment was largely responsible for the successful introduction ofsites-and-services projects in Egypt (Davidson, 1984), and the expansion of the settlement-upgradingprogrammes in Indonesia and Zambia. Where such support is not available, the degree to which projectscan be expected to achieve their internal objectives, let alone generate a multiplier effect, will berestricted. Innovative projects, such as those sponsored by international funding agencies, tend to remainas isolated project cells. More often than not, the concepts or methods that they were testing are neverbeing absorbed into the mainstream of the parent agency's activities.


Chapter II. Financial and economic impact of shelter projects3. Institutional framework and financial management2. Role or local government agencies

If local government agencies are excluded from the formative stages of project design andimplementation, they may be reluctant to accept responsibility for maintenance. This problem resulted inthe inability to consolidate innovative new shelter projects and recover project costs in Papua NewGuinea (Payne, 1982b). The only solution to this problem is to ensure that local authorities are introducedto the underlying principles of innovative projects at the earliest stage in their development. Even then, itmay be difficult for local authorities to undertake the tasks required of them, due to a lack of institutionalcapability, or cumbersome procedures. In Colombia, for example, administrative procedures concerningcontract tendering require a minimum number of bids, below which tenders are not accepted and thewhole process has to begin again, with a resulting delay and increase of costs. Given that large-scalecontractors may not be too enthusiastic about undertaking projects for low-income groups in the firstplace, such a situation is not uncommon. To exacerbate this problem further, all contracts have to beapproved by the Administrative Court, which functions independently of the district administration, but isconsiderably overloaded. This process alone can add 6-12.months to project preparation (Utria, 1990:41). Similarly, in the Bolivar City project, it appears that inadequate attention was given to operationalplanning, or the implementation process. This necessitated changes to the project after implementationhad commenced, resulting in further delays and increased costs (Utria, 1990: 48).

One reason for the limited capability of public agencies is the lack of adequately qualified andmotivated professional staff. In the Zimbabwean projects, a shortage of land surveyors, together withinappropriately high standards slowed down site development and consequently raised project costs(Mutizwa-Mangiza, 1990: 46). Yet, the picture is not totally negative. In the MHP in Sri Lanka, thedevelopment of institutional mechanisms at the local authority level was an integral element in its success.These enabled NHDA to offer construction contracts to community groups rather than to privateconstruction companies, thereby reducing administrative costs from 30 to 15 per cent (UNCHS, 1987:45), not to mention the other benefits of community involvement. It is not clear, however, if this includesthe cost of technical assistance from project staff which placed considerable demands on staff resources.One major difficulty with the MHP is related to the financial terms, under which interest rates variedbetween 6 and 10 per cent in sites-and-services and other low-income projects. This represented asubstantial subsidy, to which was added subsidies on land and land-development costs, the provision ofbasic infrastructure and community facilities. No mechanism for recovering the cost of land developmentand infrastructure was established under the MHP. The total cost of these elements has routinely beenborne by the Government (Jayaratne, 1990: 43). The present value of the interest-rate subsidy alone inthe rural programme is greater than the present value of the loan amount. Channels for obtaining housingloans are limited and not accessible to the poor because of collateral and deposit requirements.


Chapter II. Financial and economic impact of shelter projects3. Institutional framework and financial management3. Relationship with local community groups

A third major factor related to the institutional framework is the extent to which project agenciescan develop positive relationships with local community groups. Administrative flexibility in Sri Lankaeven enabled the local community in the Nagagahapura project to block out the land and prepare the sitelayout for a small (1 hectare) sites-and-services project and allocate plots among themselves. They thenproceeded to formulate their own building regulations with official professional advice. This must be oneof the most innovative approaches in terms of community-led new shelter development undertaken withofficial support, though it is by no means unique. In Zimbabwe, for example, the Kuwadzana projectprovided a model for local authorities. The project provided community orientation materials anddeveloped cost and loan affordability calculation methodologies. Furthermore. it provided guidelines forlegal agreements and guidelines on project staffing (see Mutizwa-Mangiza. 1990: 29).

A major innovation of the Kwekwe-Gutu project was its use of building societies to financelow-income housing, despite their normal reluctance due to problems with affordability and default(Mutizwa-Mangiza, 1990: 36). The arrangement involved substantial grants from the UNDP and USAID. The funds from USAID were used to set up revolving funds that would enable building societies toestablish a financing system for low-income housing. As an alternative to deposits, an allowance wasimputed for the value of self-help labour. The loan only required repayment of the cost of the building,however, and it appears that land, infrastructure and interest rates were largely subsidized.

The ability of urban authorities to ensure the provision of land, services and social facilities on aroutine basis ultimately depends upon the revenue base they are able to generate. Efficient projectmanagement can contribute significantly to this by encouraging a sense of financial rigour in all sections ofthe population. Politicians and administrators seem to share a common tendency to regard projects as awelfare service, rather than a developmental investment 1ltis tendency militates against this approach andprevents adequate resources from being generated. The evidence from the case studies suggests that theopportunity to use projects as a means of increasing the urban revenue. base has yet to be grasped.

One example from Sri Lanka exemplifies this issue. As was mentioned earlier, only one out of the81 projects undertaken in Colombo pays property taxes to the Municipal Council. One reason for thispoor performance is that although decision-making in projects has been decentralized to local levels,procedures for cost recovery are still centralized. Another reason is that the whole process of costrecovery within the MHP has been politicized. Before the Presidential elections in 1989, the Governmentdecided to forgo collections of loan payments from all households with incomes below the official povertyline. Since most households in housing projects belong to this category this has been a major reason forthe low level of cost recovery (Jayaratne, 1990: 106).


Chapter II. Financial and economic impact of shelter projects4. Comparison with non-project shelter standards and costs

The ability of shelter projects to attract their target populations is influenced largely by what theyprovide for a given level of cost. This suggests that it is essential to know the total costs of public-sectorunits and existing non-project options accommodating such groups. Surprisingly, such information isdifficult to find in the literature.

Keare and Parris compare the costs of housing built by the Government and units built by residentsin World Bank-financed sites-and-services schemes projects in Zambia (1982: xiv). The experienceshows that the former cost five times more than the latter. Turner (1988: 14) also claims that the costs ofhousing provided or improved by low-income communities are three to five times lower than units builtfor them. Similarly, it appears that housing provided through projects in Turkey is twice as expensive assimilar non-project housing on adjacent land (Tokman, 1990: 40). Of course, repayment levels are oftenvery poor in public-sector projects, so the impact of such distinctions on the perceptions of potentialbeneficiaries may be exaggerated in practice. However, this reluctance to pay even the subsidized cost ofpublic-sector housing, whether of a conventional pre-built type, or a plot in a sites-and-services project,only serves to perpetuate remand for types and standards of provision which cannot easily be sustainedby project agencies.


Chapter III. Social impact of shelter projects1. Social impact at the local level

The social impact of a shelter project depends largely upon its objectives. For' projects focusingon the technical problems of developing land and increasing housing supply for a given cost, any socialimpact is likely to be coincidental. In other words, the degree to which a local "multiplier effect" of socialand economic development is achieved will depend upon the effort put into achieving it. Some projectsundertaken by public-sector agencies have been exceptionally successful in this respect. The Kalingalingaproject in Zambia, for example, generated many small enterprises to assist in strengthening the social andeconomic base of the community. The residents also decided on the detailed road layout, location ofschools, the clinic, market and other facilities. The objective of this work was not so much to reducecosts, but rather to stimulate the notion of everybody working together for the community's benefit, and inthis it was extremely successful.

Similarly, projects in Colombia have been extremely successful in stimulating economicdevelopment at the community level for low-income groups. This is partly due to the stimulus the projectactivities gave to the local building-materials and construction industries. Establishment of smallbusinesses and manual-labour workshops, in addition to rental incomes, have further increased theincome generating capabilities of many households (Utria, 1990: 99).

The Ismailia Demonstration Projects in Egypt, also made a considerable impact on local social andeconomic development options, especially for the existing population. The upgrading works concentratedon elements which residents were unable to resolve for themselves. These included the provision ofsecurity of tenure, basic services and access to small amounts of credit at affordable terms. Thecommitment by the project agency to address local needs was also important. All these elements servedto provide a more secure environment for people to invest in house improvements. A major impact of theproject was that the provision of full services along existing main roads quickly led to rapidredevelopment of properties to higher standards (and presumably higher prices). Yet, the services alongthe smaller roads did not change so rapidly, enabling the very-low-income tenants to remain.

The Indonesian shelter projects, which concentrated initially on the physical upgrading of publicservices, have also generated a considerable impact on the lives of residents. Many residents are activelyinvolved in the maintenance and improvement of their neighbourhoods. Interestingly, this not onlyimproved people' s confidence in themselves, it also led to other people holding them in higher esteem.The economic situation of households is also enhanced, even if they sell their plot and house, because theprofits that they make can help them to obtain other assets or capital (Herlianto, 1990: 78-80).

Despite these and other examples, however, the nature and extent of community participation inpublic-sector shelter projects is generally determined by the agency, rather than by the projectbeneficiaries. In the Kuwadzana project in Zimbabwe, this is limited to the construction (using aidedself-help practices) of individual houses, rather than to the wider issues of plan formulation, or standardsand phasing of project components. The social aspects of shelter projects are often considered theresponsibility of staff with lower professional status than the planners, architects and engineers

responsible for the more visible project hardware. Accordingly, by the time they have made theirdecisions, opportunities to achieve a positive relationship with the local communities have been lost.

Shelter projects in Turkey are, in general, concerned exclusively with the provision of housing.Employment opportunities created are generally taken up by other groups and not by projectbeneficiaries (Tokman, 1990: 35). In the Tarsus project, community participation was not included as aproject objective, and was thus not achieved. In the Aktepe project in Ankara participation was limitedto households organizing their own houses, and then only for those who received plots only. Socialservices were, however, provided by both projects, and this contributed to the social development ofproject areas and adjacent informal settlements. It also appears that once a sense of community haddeveloped in an area, most residents were willing to take an active part in its consolidation andimprovement. This attitude is not, however, restricted to official projects and is also common ingecekondu (squatter) settlements. Curiously, in general, cooperatives do not appear in Turkey to sustainsuch community action once housing has been obtained.

Projects planned and implemented by NGOs seem to have less difficulty in stimulating communityparticipation. In an Indonesian project at Semarang, for example, the NGO encouraged the activeparticipation of the community in the development of their settlements (Herlianto, 1990: 54). Thisincluded preparing the site, building the houses and even maintaining the area. Similarly, the Orangi PilotProject in Karachi, was developed around local demands for local drainage and sewerage services thatthe local authority had not provided. The NGO responsible for this Project worked with the communityto help them create local community organizations which then installed sewers in each lane. using fundsand labour provided by the community (Hasan. 1986: 6).


Chapter III. Social impact of shelter projects2. Contribution to residential stability

Although not usually stated, the objective of most new settlement projects is to provide residentialstability for low-income groups who may have previously been suffering from insecure and inadequateaccommodation. The fact that it is unstated may well be because it is assumed. The irony of this objectiveis that many households regard access to a shelter project to be the equivalent of winning a lottery ticketin that they receive a plot, or house unit, which is worth considerably more on the open market than theyare required to pay for it. By selling out to higher income groups, they are able to realize the market valueand achieve a substantial capital asset. The extent to which this practice occurs varies enormously. In theKlender project in Jakarta (Herlianto, 1990: 29) and a private-sector project in Bandung (Herlianto,1990: 43), it appears that there has been considerable out-movement of original project beneficiaries.They have been replaced by higher-income households, though no study has been made of the extent orreasons for this process (Herlianto, 1990: 29). Likewise in Delhi, and many other Indian cities, thetransfer of property rights by power of attorney is so widespread that a large proportion of plots in thefirst phase of the massive Rohini project was acquired by estate agents.

In Zimbabwe as well, there are evidence of illegal transfers of plots to middle-income households.Yet, the extent of this is not known. In general, however, projects are held to contribute to residentialstability (Mutizwa-Mangiza, 1990: 59). In the Kalingalinga project in Zambia, about 20 per cent ofhouseholds sold out to newcomers. The Aktepe project in Ankara, however, seems to score well in thisrespect. Likewise, it is estimated that only 5 per cent of original beneficiaries in the Tarsus project havemoved out, though it is still, of course, early days. Projects in Turkey appear therefore, to contribute toresidential stability. This is basically due to formal restrictions, however. In cases where people do moveout, it seems that they are replaced by households with a similar socio-economic profile.

For some very-low-income households, residential stability is not considered a priority andmobility is more important. This may be because they do not have regular employment, and that theirincomes are too low to pay for a house of their own. It may be necessary for them to move from onelocation to. another following economic opportunities. Most such households in Indonesia, for example,live in kampungs and shanties. The improvement of such settlements raises problems for thesehouseholds, since any improvement costs recovered from plot or house owners tends to be reflected inhigher rents charged to tenants. This increase may force them out and residential mobility is thusincreased even more. To date, no effective solution has been found to this problem (Herlianto, 1990: 81).


Chapter III. Social impact of shelter projects3. Proximity of projects to employment locations

One of the most common problems with planning shelter projects for low-income communities isthe availability of affordable land. Unless the authorities already control land in close proximity toemployment locations, it often has to be acquired at market prices. Affordability constraints limit theprices that can be paid, and this in turn consigns projects to sites some distance from employmentlocations and possibly even from public transport networks. This is a particularly critical problem forvery-low-income households, since they are often dependent on street trading and need to carry theirgoods and equipment with them. They are also less able to afford the recurring costs and time involved inlong journeys to places of employment. The Rangsit project, located about 30 kilometres outsideBangkok, exemplifies this issue. Many residents of this site were in arrears on their repayments. About200 of the 1420 plots remained unoccupied some years after the project was completed, while otherplots have been resold by their original allot tees to households more able to accept the long journey tothe city.

Many other cases of similar problems could be cited. Two examples from New Delhi, however,indicate ways in which these difficulties can be reduced, at least for some households. One example is thelegislation that enables the Delhi Development Authority (DDA) to acquire agricultural land for urbandevelopment at existing use value. This reduces levels of compensation to the extent that evenlow-income groups can afford to pay the full cost of their serviced plots and dwellings. Additional incomecharged from higher-income housing and commercial developments yields substantial surpluses to theDDA. The main losers in such a process are the large numbers of small land-owners and farmers on theedge of the city, who are denied the opportunity to realize the potential value of their land.

The other example relates to the slum-clearance programme undertaken by the DDA during theEmergency in 1975 and 1976, when about 5()(),000people from inner-city tenements and squattersettlements were forcibly moved to a number of relocation colonies about 10 kilometres from the city.Each household was provided with a plot of 25 m and basic services (consisting of communitystandpipes), and were left to organize their own housing. The draconian measures that created thesecolonies were also applied to prevent settlers from vacating their plots and returning en masse to theiroriginal locations, and considerable hardship was imposed on the residents. When the Governmentcollapsed soon after, some eventually drifted back to the city. For those who were able to remain,however, there was an unexpected benefit; within 5-8 years the city expanded to engulf them andemployment, transport and services became easily available. In addition, the very fact of large numbers ofpeople living at high densities created a considerable demand for local services and employment thatacted as a cushion, especially for those with building skills.

The lesson of this experience is that although very-low-income groups cannot be expected to bearthe costs of living far from centres of employment, lower-income households that are able to cope for thenecessary period until the city expands to meet them, may find that the value of their houses, and accessto employment opportunities locally and in the city centre, improve dramatically.

A related consideration is that it may be easier to achieve success in this respect in smaller urbanareas, where the distances involved are relatively less, or in projects undertaken in conjunction with thedecentralization of existing commercial or industrial activity from more central locations. Among the casestudies, the Aktepe and Tarsus projects in Turkey were both well located in urban areas that wererelatively small at the time they were implemented. This may well be difficult to achieve in future. InZimbabwe, projects are usually located some distance from main employment centres, following commonpractice during the colonial period. This has imposed long journeys on project residents and the averagewaiting time for buses is now more than half an hour. Increasing costs of fuel and problems in obtainingimported spares are likely to exacerbate this problem in the future (Mutizwa-Mangiza, 1990: 59). InColombia, shelter projects are also commonly located some distance from major employment locationsand it is common for workers to spend 2-4 hours daily travelling to and from work (Utria, 1990: 100).

The Semarang project in Indonesia was very successful in enabling a group of very-low-incomehouseholds to obtain housing. Yet, as with all projects in which land costs are a major consideration inachieving affordability, it also imposed considerable problems in terms of the time and cost of travel toplaces of employment (Herlianto, 1990: 55). In other Indonesian shelter projects, access to employmentlocations presents major problems. The only areas where sufficient land is available at affordable ratesand in sufficient quantities are located at considerable distances from the city. The irony is that only therelatively better-off households, who can afford private transport, were able to move to such locations(Herlianto, 1990: 83).

One advantage of upgrading projects, compared with new settlements, is that they are oftenlocated on land close to employment centres. Such land would be prohibitive to acquire at current costs.In Bangkok and Manila, the added value of the land is used to encourage land-owners to allocate part ofa site for the permanent use of unauthorized settlers in return for planning permission to develop theremainder of the site to its full commercial potential. Such land-sharing projects have been very successfulin enabling very-poor households to remain in central locations near their places of work at rents that theycan afford, and at the same time improve their living conditions. Such projects usually entail multi-storeydevelopments at high density, however, and this may not be considered acceptable in every developingcountry. (2)


Chapter III. Social impact of shelter projects4. Job creation at the local level

Shelter projects can be a powerful means of facilitating economic mobility for low-incomehouseholds. This can be most effectively achieved if residents are allowed to use their plots forcommercial or industrial activity, or the provision of additional accommodation for rental use. Accordingto Keare and Parris (1982: ix), atypical housing project of 7000 units financed by the World Bankgenerated 3700 person/years of employment and $US4.2 million (1978/79) in wage income. The leasingof rooms is also accepted as an effective means of increasing incomes and making plots affordable to thetarget populations. This process of economic development can even benefit households who do not, orcannot, invest in secondary activity, since the market value of even modest dwellings will usually rise as aresult of investments made by neighbours. As a project area consolidates, and densities increase, thebenefits of initial investments will yield results for some and encourage investment by others. Yet, theability of shelter projects to generate economic benefits has not always been appreciated or realized. Asa result, many projects remain as housing estates without houses, and furthermore, residents arediscouraged from making investments in rental accommodation or non-residential activity that canprovide an escape from poverty.

Opportunities for job creation are not improved in many shelter projects by restrictions on land usethat prevent residents from using their plot as a source of primary or even secondary income. InIndonesia, NUHDC does not permit residents to use their plots for anything other than residence, eventhough most unauthorized settlements (in Indonesia and elsewhere) are bursting with economic activity.The low initial densities planned for in new low-income projects also inhibit the level of local demandnecessary to support extensive economic activity.

This suggests that density and land-use restrictions need to be relaxed. Projects should be plannedto allow for the level of densities and economic activities that are found in established unauthorizedsettlements. This would not only ensure efficient (and therefore more affordable) land development, itwould increase opportunities for local employment generation as well. Recent projects in Indonesia have,in fact, incorporated house-shop units. These have been well received and have helped projects tobecome more self-sufficient (Herlianto, 1990: 85). Another beneficial outcome has been the tendency forprivate sector residential and commercial development to follow public-sector projects. This hasprovided additional employment opportunities for low-income households.

There has been a substantial development of economic activity for low-income groups at theKalingalinga project in Zambia because of the sustained efforts of local NGOs and community groups(Oestereich, 1980, and Jere, 1991a). This development has not, however, been a component of shelterprojects in Colombia (Utria, 1990: 101), or Turkey (Tokman, 1990: 35), where benefits frequently go tohigher-income or non-resident groups. In Zimbabwe, the Kuwadzana project is considered to have beenparticularly successful in generating local employment. Nearly all households employed at least onebuilder, and about 2200 informal-sector builders had registered with the project within a few months ofthe project starting. This indicates a dynamic capability of the informal building sector given theappropriate opportunity.

The extent to which local residents can obtain employment in a project itself depends upon thenature of the project and the contractual arrangements for its implementation. In large new housingdevelopments, where a large contractor is appointed to undertake the work and there are few, if any,people living in or near the site, the scope will generally be limited. In upgrading projects, or thoseundertaken by NGOs, however, employment opportunities may be regarded as an integral element of theentire project, as in the Hyderabad Slum Upgrading Projects in India. In this case, comprehensivevocational training programmes were provided to impart skills that they could use on the project and inadjacent settlements.


Chapter III. Social impact of shelter projects5. Impact of projects on the development of community based and non-governmental organizations

Many types of community organizations exist in developing countries. These may be broadlyclassified into two groups; community-based organizations (CBOs) and NGOs. CBOs are generallycomposed of residents who organize themselves to achieve specified local objectives and they aredirectly accountable to their constituents (such as housing cooperatives and residents' associations).When objectives have been satisfied the CBO may disband. The NGOs generally consist ofprofessionals based outside low-income settlements. They operate on a non-profit basis, with localgroups. In many cases, NGOs act as catalysts, or intermediaries, to facilitate a productive relationshipbetween local government agencies and low-income communities or CBOs.

The number of CBOs in developing countries is enormous, though many concentrate on socialwelfare projects, such as health, education, or vocational training, rather than shelter. Yet, many CBOsdiversify into shelter-related activities as the importance of environmental conditions in improving healthand opportunities for education are accepted, or when previous priorities have been addressed.

The number of NGOs active in the shelter sector in developing countries is still relatively small.Yet, their importance and numbers are increasing steadily as both communities and governments realizethat they are able to achieve locally responsive results more efficiently than have been possible throughother, more conventional, approaches. The achievements of NGOs and CBOs are often considerable,and range from organizing initial settlements to pressurizing local authorities to regularize land tenure,provide services and public facilities, and also organize the construction and maintenance of housing.Some examples of these achievements have been documented by Habitat International Coalition (Turner,1988).

The extent to which projects have supported or strengthened these community efforts has beenmixed. In Sri Lanka, for example, NGOs make a minimal contribution in the shelter sector, though theywere apparently founded to build houses for those who could not afford to take a (subsidized) loan in theurban housing sub-programme. Presumably the cost of these units was written off, but in one case cited(Nawakelanipura), the number only amounted to two units. CBOs, however, have been active in ruralareas for some time and provide a means of saving money and meeting other community priorities. In theurban sub-programme of the MHP, CDCs were an integral element in facilitating local participation.These social groups were generally smaller than the physical boundaries of their neighbourhoods, whichmade it easier for people to work together. The Housing and Community Development Committees ofthe urban local authorities were established to set guidelines for project implementation and consisted ofboth elected and appointed members from local government and community organizations. TheNawakelanipura project exemplifies the importance of CBOs in Sri Lanka. Shortly after moving into thesite the residents formed their own CDC. This put pressure on many government organizations tocomplete the provision of basic amenities and facilities (Jayaratne, 1990: 64). The CDC even undertooka contract to construct the community centre and subsequently became responsible for all work atproject level. Participation by local communities through the CDCs appears to have had a major impactin generating initiative at local level in both rural and urban areas (Jayaratne,1990: 101). This extended far

beyond the level of self-help house building and involved participation in decision making about projectdesign. (3)

A consideration in determining the effectiveness of CDCs or other locally based organizations isthe basis of support from local leaders. If this derives from the local community, it will probably form thebasis for effective participation and partnership. If, however, it derives largely from outside support, itcould be resented locally and undermine the potential for local support and involvement (UNCHS, 1987:35). Creating local trust and confidence by example is the best way of strengthening local organizations.In Sri Lanka, for example, the NHDA thus invited Redd Barna, an NGO experienced in working withlocal communities, to help establish CDCs. This exposed local dissatisfaction with existing leaders andresulted in the election of new leaders with a local mandate (UNCHS, 1987: 35). A general conclusionfrom this experience was that NGOs are more effective in generating local community organizations thangovernment agencies.

Another conclusion from Sri Lanka is that the CDCs proved capable of undertaking the initialplanning of upgrading projects, the formulation of building guidelines, the assessment of building loanaffordability and the adoption of regularization and plot allocation procedures. They also undertook tosupervise the implementation of upgrading works that the NHDA or local government' agencies wereunable to achieve and resolved disputes regarding plot regularization among residents (UNCHS, 1987:39 and 41).

Community involvement constituted a major component in the Sri Lankan projects. Besides thecase of the Nagagahapura project, the project team responsible for the Wanathamulla project completedthe initial blocking out within a month and the site survey in a further three months. They then setboundary pegs in place in collaboration with residents, so that any disputes could be resolved on the spot(UNCHS, 1987: 43). This "action planning" approach was developed from one project to another andwas particularly successful in regularizing and upgrading existing settlements.

It appears that the concept of aided self-help has been generally accepted by project beneficiariesin Zimbabwe and the speed and quality of locally built housing has been impressive (Mutizwa-Mangiza.1990: 60). In the Klender Project in Jakarta, residents are also able to participate in the development ofthe environment once they start living in their new houses and "can also be responsible for themaintenance" (Herlianto, 1990: 29). It appears that residents have been very active in pursuing thisoption. In the Bolivar City project in Bogotá, residents participated by assuming responsibility for theconstruction of their houses and managing some of the community facilities. The same applied in theKennedy City project in Bogotá, though there was also provision for community participation through theformation of community action boards, which dealt with welfare programmes within each "super-block"(Utria, 1990: 88).

Community participation is an important factor in the early stages of Colombian projects, whenresidents are constructing their houses, but this ceases once the houses are complete. One reason for thisis that the community zone boards are dominated by the political parties and residents have limited scopeto pursue their own interests (Utria, 1990: 101).

Innovative projects frequently seek to maximize community participation though, in practice, it isusually restricted to activities determined by the project agency, rather than the local community. Thus,many projects advocate the virtues of "aided self-help" in house building whilst elements such as sitelayouts, density levels and land use are decided by the project agency. As a United Nations studyconcluded: "...participation is initiated and controlled by the authorities ... and the task of communitydevelopment workers ... is to organize community participation when and where it is consideredimportant by the project staff to facilitate the execution of the project. ... If they do more than that, and

stimulate people to participate as much as possible in all phases of the project, they risk being criticizedby the other project staff for slowing down the project, instead of getting plans and proposals quicklyendorsed by the beneficiaries" (UNCHS, 1984: 5-6). As van der Linden notes (1986: 123-124) theparticipation component is often executed half-heartedly and in part only. This also explains whyresidents are often reluctant to participate on this basis.

A major innovation of the Khuda ki Basti project in Hyderabad, Pakistan, was that it gave highpriority to community participation. Several methods were adopted, though each seemed to offend oneor more interest groups and people who were effective in getting things done, did not always employ theirskills in the interests of the community (van der Linden, 1989: 23-26). In the end, the HDA ceasedattempts to organize direct participation and opted to work with the organizations which residents formedthemselves. However, this only serves to emphasize the potential role of CBOs as intermediariesbetween communities and local government agencies.


Chapter III. Social impact of shelter projects6. Acceptability of project components to project beneficiaries

One of the difficulties of assessing the acceptability of project components in the shelter sector isthat the perceptions of beneficiaries will be influenced by the nature and cost of non-project alternatives.The tendency for projects to include direct and/or indirect subsidies means that beneficiaries receivemore than they pay for, and probably more than they would obtain in non-project options. Comparisonsare therefore difficult to make, as respondents will not be comparing options on equal terms. Projectevaluations that are restricted to levels of satisfaction with individual project components should,therefore, be treated with extreme caution, since they are unlikely to provide a reliable basis for relatingproject performance to other options available within land and housing markets.

Another consideration is that many project agencies do not regularly assess projects once theyhave been completed and even indicators of acceptability. such as excessive numbers of applications.may not be reliable if projects are offering a commodity that is generally in short supply. In the BolivarCity project in Bogotá. for example. no survey has been conducted to assess resident satisfaction. Themajor impression. however. is that the settlement has become a popular area in which to live (Utria.1990: 55). Also. applications for plots and houses in the project were over-subscribed by several times,though the substantial subsidies being offered obviously made the project attractive to higher incomegroups.

A more reliable indicator of acceptability may be obtained by assessing social aspects. TheKennedy City project in Bogotá apparently enjoys the highest level of resident satisfaction, not so muchbecause of the housing provided, but because of the community facilities and employment-generationschemes it included (Utria, 1990: 9). It is also popular in that it stimulated a socially heterogeneousneighbourhood, since public housing for low-income groups was complemented by private sectorhousing for higher-middle- and middle-income groups, removing any association of the project as sociallyundesirable. It also pioneered the concept of aided self-help in Colombia, an approach that has sincebeen replicated throughout the country.

An even better indicator of success can be obtained by assessing the extent to which a project isconsidered to have satisfied the previously stated priorities of low-income groups near a newdevelopment project or, in the case of an upgrading project, the particular community concerned. InAnkara, Turkey, this demand-driven approach operated through the administration of the mahalles, orurban wards. Under this arrangement, each community made demands through their mahalle muhtar, orhead-man, to the municipality for the specific project components they required. For inner-citycommunities, this would invariably be for more open public space, or facilities, such as schools or clinics,needed for their increasing population. In newly established settlements on the urban periphery, however,the demand would commonly be for access roads and basic services. By distributing the municipalbudget according to these locally expressed priorities, the prospects of ensuring that each communityregularly received the most acceptable combination of project components was considerably increased,without the necessity of undertaking expensive research (Payne, 1982a).

Yet, the perceptions of residents are not always infallible. In the Klender project in Jakarta,unequal access to water supplies was identified as a major problem by residents. The most pressingproblem, however, was transport. This was resolved by providing a bus service operating in a reservedbus lane (Herlianto, 1990: 29).

Other assessments list a variety of responses to projects. In the Margahayu Raya private sectordevelopment in Bandung, the site was too far from employment centres for the original residents.Subsequently, there were severe maintenance problems, since the local authority did not acceptresponsibility for the area (Herlianto, 1990: 44). In the Kalingalinga project in Zambia, most residentswere happy with the project components, though the inability to provide all tenants with their own plotsfor new houses because of inadequate space, prevented them from benefitting to the same extent.

Residents in the Kuwadzana project in Harare were particularly pleased with the option to choosehouse designs that enabled them to take in lodgers to supplement household incomes. At the Aktepeproject in Ankara, residents complained of poor maintenance and inappropriate house designs. Yet, ingeneral, residents of projects in Turkey regard shelter components as acceptable in terms of layout, size,location and cost. Beneficiaries in the Bolivar City project in Colombia, however, were dissatisfied withthe bureaucratic rigidity and inefficiency of the local administration.


Chapter IV. Impact of the project approach on total shelter demand1. Shelter demand and levels of supply by projects

The assessment of housing demand is not a simple task and requires an in-depth approach. Struykand others (1990: 23) identify five elements of demand that have to be estimated over a specific period:

(a) Units required to accommodate new household formation;

(b ) Units required to replace existing units that will have fully depreciated during the plan period;

(c) The replacement of deficient units the upgrading of which is not economically feasible;

(d) Units required to relieve existing levels of overcrowding;

(e) The upgrading of units that are economically justified.

An obvious problem when assessing housing demand is that the required data are not alwaysavailable. Another problem is that officially acceptable standards may be unrealistic in determiningestimates. Despite these difficulties, however, it is only by reference to an overall perspective that theperformance of supply through projects can be measured. The exercise is thus strongly recommended.

The experience of Sri Lanka is interesting in this respect and suggests that the relationship betweenhousing demand and supply is improving in that:

(a) Occupancy rates have come down from 5.7 to 5.3 between 1971 and 1981;

(b ) The proportion of permanent houses increased from 35.4 to41.8 per cent of the total stock(68 per cent in urban areas);

(c) More households have received basic amenities, such as clean water, latrines and electricity(Jayaratne, 1990: 14).

Such an achievement is impressive by any account, though other indicators suggest that thedemand on public-sector resources may now be taking its toll. It has been estimated, for example, that4-5 per cent of GNP will be required to meet the total annual demand for 145,000 new units andupgrade 103,000 existing dwellings each year (Jayaratne, 1990: 11). In 1980, 10 per cent of GNP wasallocated, but this is now down to 1 per cent because of internal and external economic problems. At thesame time, however, urbanization, and therefore demand, is expected to increase, raising questions aboutthe sustainability of existing programmes. In the city of Colombo, for example, about 53 per cent of allhousing still consists of slums or shanties and about 650 hectares of land are required to meet the city' shousing needs. With 1988 land prices in the order of 5-10 times 1978 prices, access to land by eitherpublic-sector agencies or individuals is becoming increasingly difficult.

Evidence from Turkey also suggests that progress has been mixed. Annual demand for housing inurban areas has risen steadily from 272,000 units a year in 1984, to 318,000 in 1989, whilst total

production has risen from 122,580 in 1984 to 246,164 in 1989 (see table 4 ). A1though the gap is stilllarge, steady progress has therefore been made each year in reducing it. These data, however, presentonly part of the picture, since they include units developed by the formal private sector and cooperatives.The total number of dwellings provided through the squatter prevention programme in Turkey is reported(Tokman, 1990: 29) to be 19,791 between 1977 and 1989 (an average of 1650 a year). In addition,land for a further 70,000 plots was allocated in the same period, though it is not clear if they wereprovided through projects. Nonetheless, a total of 93,662 households benefited from various shelterprojects between 1978 and 1989, an average of 7800 a year. In the period 1984-1989, public sectorsupply varied between 3250 and 6500 units a year, or 2.7 to 4.4 per cent of total formal production (see table 4 ). This modest contribution is reflected in the Aktepe project in Ankara which provided about350 units a year for 12 years, and in the Tarsus project which provided an average of 120 plots a year.In Ankara. as in other Turkish cities, most of those in need are low-income households. Most of themlive in various types of informal settlements that have generated about 95,000 housing units a yearnationally (Tokman, 1990: 6). Access to formal-sector housing, whether public or private, is almostimpossible for low-income groups, especially in urban areas (Tokman, 1990:3).

In Zimbabwe, the level of demand is relatively modest compared with that in many other countries,though even there it has proved difficult for projects to produce sufficient dwellings. The problem is mostsevere in urban areas, since urban growth is expected to continue at high levels until at least the year2004 (Mutizwa-Mangiza, 1990: 2). The metropolitan areas of Harare-Chitungwiza and Bulawayo areprojected to grow at their present level of 7 per cent per annum for some years, declining steadily to anaverage of 5 per cent per annum by 2004. A USAID study undertaken in 1985 indicated annual urbanhousing demand levels of 60,000 (1989), 75,000 (1994), 94,000 (1999) and 102,000 units a year by2004, of which the largest single component was for new household formation (Mutizwa-Mangiza, 1990:2). Officially sanctioned housing production is, however, low and declining. It was at its highest in 1978,before independence (Mutizwa-Mangiza, 1990: 3), but even then only 15,718 plans were approved andthe level of supply could not be sustained and waiting lists soon increased again (Mutizwa-Mangiza,1990: 53). In 1982/83, 12,000 dwellings were completed with loans from the National Housing Fund(NHF), but in every succeeding year, the number has declined and in 1987/88 only 4862 units werecompleted (Mutizwa-Mangiza, 1990: 4). The rate of low-income housing production by the NHF, whichrepresents the largest source of central government funding for housing in the country, has also declinedby more than 40 percent over the six-year period 1982-1988. The increasing emphasis upon privatesector provision funded through building societies has not, so far, been able to rectify this shortage.

Official policies in Zimbabwe towards unauthorized settlements have always been hostile and anythat developed were demolished before they could be consolidated. Because of this, and the inability ofshelter projects to meet total housing demand, levels of overcrowding have increased within the existingstock (Mutizwa-Mangiza, 1990: 58-59).

Indonesia has major problems of housing demand. As the fifth most populous country in the world(estimated 1990 population is 183 million), the total numbers are substantial. The majority isconcentrated on the island of Java and in the largest cities, which are growing at twice the rate of totalpopulation. Jakarta has a current population of 8 million and Surabaya 3 million. It is expected that thelevel of urbanization will have risen from 25 to 40 per cent by the year 2000 (Herlianto, 1990: 2). Toprovide each household with its own dwelling, replace obsolete units and accommodate new householdformation within a 20-year period, would require an estimated 1.4-1.6 million new units a year. This hasto be compared with a total level of formal sector supply of nearly 900,000 units between 1974 and1988, or 60,000 a year, 77 per cent of which is provided by the private sector and is targeted at middle-to high-income groups (Herlianto, 1990: 3). The problem is not made easier by the fact that 60-70 percent of the total population are officially designated as belonging to the low- or very-low-income groups

(Herlianto, 1990: 3). Formal housing supply only represents 15 per cent of total supply and a modest 1per cent in rural areas, with the balance provided by individual households, NGOs and cooperatives.Formal housing projects have benefited 540,000 people (not households), in 1989, representing asubstantial increase each year from 200,000 in 1984 (Herlianto, 1990: 67). Inflation and devaluation inIndonesia (and elsewhere) have, however, seriously eroded the ability of shelter projects to reach thelow-income groups (Herlianto, 1990: 58).

In Colombia, the total housing backlog was estimated at 968,000 units in 1990. Anadditiona1190,000 new units are required every year. If the backlog was to be eliminated over a 10-yearperiod, this would indicate a total annual demand for about 287,000 housing units (Utria, 1990: 10). Notonly is the volume of demand immense, the nature of demand is equally problematic; since 45.6 per centof the country's population has unsatisfied basic needs and nearly half of these live in urban areas (Utria,1990: 11). Utria estimates that 56 per cent of urban households are unable to afford the cost of adequateminimum legal shelter (1990: 12). At least 20 per cent of the population are even unable to afford theunits that are available, and the national economy is unable to provide subsidies to enable them to bridgethe gap (Utria, 1990: 9). Total supply reached a record level of 110,000 units in 1984. Thepublic-sector. agencies active in funding or providing shelter, supplied approximately 28,250 plots anddwellings (Utria, 1990: 13-14). Although there is an active and sophisticated private-sector constructionsector, this concentrates on addressing the needs of the more affluent urban minority. The only effectiveoption for the poorer majority is thus to obtain land and housing through one of the many informal-sectordevelopers. These consequently account for more than half of total housing supply.

The Bolivar City project in Bogotá, for example, was one of the largest to be undertaken in recentyears. It provided 10,300 plots for low-income households and benefited even more through theprovision of services and community facilities to existing settlements (Utria, 1990: 52). Similarly, theKennedy City project in Bogotá provided 10,568 units over a five year period. During the same periodthe annual level of demand in Bogotá was 10,000 units. Furthermore, the project had a considerableindirect impact, since it attracted additional investment from private-sector developers to the area. Onthis basis, the Kennedy City project met about 21 per cent of total needs over the period (Utria, 1990:86). Yet, two decades later, the same size Bolivar City project only met 3.25 per cent of the annual localdeficit (Utria, 1990: 50). Clearly, demand has outstripped supply through projects in Colombia, and thegap is increasing every year.

The general conclusion from this evidence is that the project approach has not been an effectivemeans of supplying shelter to a level approximating demand in any of the countries covered by thisreview. The exception that perhaps proves this rule is Sri Lanka and this was due largely to politicalcommitment at the highest level of government. Even then, the economic price imposed by direct andindirect subsidies has proved to be extremely burdensome and probably cannot be sustained.

One of the few cases in which projects have been able to meet total housing demand is that ofIsmailia in Egypt. In a single year (1981), the number of plots allocated by the Ismailia Hai el SalamProject Agency was 1000, against an estimated total demand in the city of 900 (Davidson, 1984: 146).Yet, this was largely due to the completion of the first phase of a large project in what was a relativelysmall city, and was not, therefore, representative. Most housing in developing countries continues to besupplied through non-project processes. Projects are, at best, holding their own at a modest level. Inmost cases they are proving inadequate and even inappropriate.

Yet. it is possible to end this discussion on a positive note. As the comments on the Bolivar andKennedy projects in Bogotá noted, an important feature of their success was that they succeeded inattracting indirect investment from private-sector developers. It may well be that the greatest contributionof the project approach in new shelter provision is in this multiplier effect The example of the

Baishnavghata-Patuli sites-and-services project in Calcutta may suffice to illustrate the point The projectwas developed on a site acquired by the Calcutta Metropolitan Development Authority during the 1970s.The formalities of land acquisition took some years because of the large number of land-owners involvedand the complications of settling compensation claims. The site was then developed for a total of about30,000 people and was due for completion and allocation of plots about ten years after the project hadbeen designated. In the intervening period, the surrounding agricultural land was subdivided anddeveloped by private-sector developers and land-owners in the confident expectation that serviceswould soon be available in the area. Even before any residents had moved into the sites-and-servicesproject, it appeared that the unauthorized settlement was already accommodating more than the totalprojected population for the sites-and-services scheme. Since this development was unauthorized, it wasattractive to households in the lower income category and enabled occupants to develop designs andstandards of housing that reflected their own needs and priorities, rather than those of the developer, orlocal authority. Furthermore, such development was achieved without any direct investment by the publicsector. This experience exemplifies how the prospects for the project approach could be considerablyenhanced if public-sector agencies could harness this capability of projects to stimulate secondaryinvestments.


Chapter IV. Impact of the project approach on total shelter demand2. Replicability of housing projects

Many governments in developing countries have been undertaking innovative projects in thehousing sector for several years. The concept of replicability as a major consideration of project design,dates from the time when international agencies, especially the World Bank, became involved in thehousing sector in the early 1970s (Cohen, 1983). It was envisaged that if unit costs could be reduced tolevels which low-income households could afford, the burden of subsidy would be reduced and it wouldbe possible to repeat projects to the level required, within existing budgetary resources. Yet, as Rakodihas observed, "the achievement of replicability is dependent on the extent to which the technical, financialand social measures adopted in the projects to improve the supply of land, utilities and services, andhousing finance, and facilitate the construction and improvement of housing, are appropriate andsustainable" (1989: 2). Replicability depends not only on political commitment, but the institutionalcapacity to design and deliver these components at the scale required.

The evidence suggests that replicability has been more difficult to achieve in shelter provisionprojects than in upgrading projects. This is not to deny that some projects have been substantial inthemselves and have been expanded into long term programmes; the Dandora project in Nairobiprovided 6000 new serviced plots and formed the basis for further projects funded by the World Bankand other agencies. Yet, it took more than seven years from project inception to plot allocation. Thisreduced the rate of supply to an average of about 850 plots a year at a time when the city needed about14,500 a year (Chana, 1984: 20-21).

In Colombia, the project approach is held, not only to have failed to address the strategicconstraints restricting housing supply for low-income groups, but to have diverted attention away fromthem (Utria, 1990: 93-4). Furthermore, projects have been designed according to norms and standardsmore appropriate to the needs of middle-income, rather than low-income households. It is thus themiddle-income households that have benefitted most from housing projects in Colombia (Utria, 1990:95). In Turkey, squatter-prevention projects like Aktepe were replicated throughout the country. Yet,they were eventually abandoned as ineffective, since there was no cost control or effective projectmanagement (Tokman, 1990: 19). If the approach adopted in the Tarsus project proves successful, it isenvisaged that it would be expanded to other areas of Turkey. However, projects tend to be restricted tosituations where public land is available and/or where land acquisition is easy and cheap (Tokman, 1990:27).

In Zimbabwe, the Kuwadzana project met 36 per cent of Harare's total official housing waiting listfor 1981/82 (Mutizwa-Mangiza, 1990: 52). This, however, overlooks the total period during which theproject was being prepared and implemented. On this basis, its contribution is more modest. Even thisachievement was short-lived and on balance the project approach "has dismally failed" to cope withlow-income housing demand (Mutizwa-Mangiza, 1990: 3). One reason for this failure is thatpublic-sector allocations for low-income housing are declining and that private-sector finance institutions,such as building societies, have not yet succeeded in expanding their operations sufficiently to fill the gap.Although the idea of partnerships between public-and private-sector agencies has been accepted, this

has yet to be translated into practical strategies.

Another factor inhibiting replicability in Zimbabwe is that standards of infrastructure provision arevery high. This has pushed the cost of housing above levels that the intended beneficiaries can afford(Mutizwa-Mangiza, 1990: 68). Increasing subsidies in order to improve affordability would only reducethe prospects for achieving replicability still further, given the declining resources available to meet everincreasing shelter needs.

If the replicability of the project approach in Zimbabwe is to be improved, much will depend onthe ability and willingness of the building societies to increase lending to low-income households.Although no building society has so far replicated the approach of the Kwekwe-Gutu project, theexperience gained in lending for self-help housing projects has encouraged them to extend their lendingoperations (on an individual basis) to low-income housing. The largest building society has now financeda total of 2292 housing units for low-income households (Mutizwa-Mangiza, 1990: 47). The fact thatseveral independent evaluations have been made of shelter projects is a positive development.Furthermore, it appears that these evaluations have been taken seriously by the administrators andprofessional planners in Zimbabwe, to the extent that projects and strategies have been modified as aresult. Replicability has not been made easier, however, by poor cost-recovery levels. The mainconstraint on achieving replicability in Zimbabwe is the inability to produce serviced and affordable land.One way of overcoming this constraint is to expand sites-and-services projects, with a percentage ofplots allocated for rental housing. This would, however, give the public sector a major role in theprovision of serviced land, despite general experience in other countries that such projects have failed toensure replicability.

Such problems are not, of course, restricted to Zimbabwe. In a private-sector development inBandung, Indonesia, replicability was adversely affected by inflation, and later phases of the projects thusdrifted up-market. Nonetheless, by providing cross-subsidies from more profitable projects forhigher-income households, the approach was still replicable. In fact, the same developer has carried outmany similar projects since, and has now built nearly 17,000 units in other parts of Bandung and othercities (Herlianto, 1990: 41). The ultimate test of a successful housing project is that it is repeated orcopied by private developers or community groups. Replicability is thus best ensured when otherdevelopers want to undertake similar types of project. On this basis, the project in Bandung wasdefinitely successful.

In another Indonesian project, in Semarang, undertaken by an NGO, about 1800 low-incomehouseholds were able to obtain their own dwellings. Yet, reliance on funds from a large number of privatedonations and grants restricted the replicability of the approach adopted here. An even bigger constrainton replicability, however, may lie in the limited number of dedicated and energetic leaders available toinitiate and supervise such projects.

One of the difficulties in learning from projects is that evaluations are frequently not undertaken andthat even when they are, the information gained is not incorporated into subsequent project proposals. InColombia, evaluations are normally not carried out at all. Furthermore, documentation is often inadequateor unavailable, making it difficult for others to undertake the task. The lack of stability in policies andpersonnel further impedes the scope for evaluating past experience and learning from it (Utria, 1990: i).The lack of channels for evaluating projects discourages the development of an iterative process inproject development and management. This in turn is a major impediment in developing projects relevantto the scale and nature of demand. Even when projects are evaluated, it is comparatively rare for theresults to be widely disseminated, so that professionals in other agencies can benefit from the experience.Presumably, one reason for this is the reluctance of public-sector personnel to expose themselvesunnecessarily to what may be considered public criticism. Overcoming such reservations will not be an

easy task, given that it permeates many government departments. If the objectives of support or enablingpolicies are to make a major contribution to the provision of affordable and acceptable shelter for all,however, it is vital that the principle of learning from experience is accepted.

In Colombia, it is claimed (Utria, 1990: 59) that the Bolivar City project is replicable, even thoughthe level of subsidy was well in excess of 70 per cent and total budgetary resources for the housingsector are declining rather than increasing. In assessing replicability, it is clearly important to distinguishbetween acceptability of an approach and the capability of realizing it. In this case, the two would notseem to coincide.

Upgrading projects appear to have fared better in achieving replicability than new developmentprojects. In Jakarta, the Kampung Improvement Programme enabled virtually all low-income householdsto obtain services and security of tenure within a period of about 12 years. Likewise, in Manila it wasexpected that the upgrading programme would achieve replicability within 15 years (Walton, 1984: 177).In Lusaka, nearly 20,000 existing houses were provided with basic infrastructure and 5500 plotsprovided for those affected by plot regularization. This enabled the projects to reach 70 per cent of theresidents in unauthorized areas of the city (Rakodi, 1989: 3). One reason for this distinction between newdevelopments and upgrading projects could be that in the latter, residents are already occupying the landat densities that would be difficult to achieve in new development projects. Another factor is that projectsfor supplying new plots have not been used to enhance institutional capacity to develop land-deliverysystems capable of meeting the demand from each income group (Rakodi, 1989: 5).


Chapter V. Shelter projects and national policies1. Impact of projects on policy, and consistency of project and policy objectives

A precondition for assessing the impact of projects on shelter policies is that such policies exist. Inmany countries, government interventions in the sector reflect a wide range of separate objectives andmeasures adopted by different ministries and development authorities that are accountable to differentconstituencies and operate under different criteria. This is partly a reflection of the diffused nature of theshelter sector, with its relevance to economic, social and environmental policies and its relative lack ofimportance as a specific activity in the eyes of many governments. The outcome of such a situation,however, is that it is difficult to assess the impact of discrete interventions such as projects.

Where national shelter policies exist, the impact of projects appears, on balance, to be modest. Inboth Turkey and Sri Lanka, a range of strategies has been adopted in the shelter sector. In Turkey, itappears that projects have failed to generate any change in national shelter policy. However, theacceptance that they have failed to address the demand for housing has led to the acceptance ofnon-project approaches that provide security of tenure and services in informally developed settlements.In Sri Lanka, the upgrading of informal settlements was undertaken as a complementary activity to thesupply of new plots through the MHP (Jayaratne, 1990: 37). This was due to a recognition that informalsettlements were making a positive contribution to total housing supply, especially for the low-incomegroups. The innovations achieved through the MHP have made a major impact on the shelter optionsopen to low-income households. Yet, it would not be correct to conclude that this was due to the impactof projects upon policy, since in practice the policy was formulated first and projects were then initiatedto implement the policy objectives.

In Indonesia, experience with the project approach shows that it has exerted a considerableinfluence on national housing policies since independence in 1945. Large projects, such as that atKlender in east Jakarta, have enabled a range of income groups to be served on a relatively self-financingbasis, through extensive use of cross-subsidies (Herlianto, 1990: 32). Whilst this does not amount to animpact on policy as such, it is significant that a private-sector project in Bandung was awarded a BestAchievement Award by the Government. The project was later emulated by other private developers. Bythe same token, the NGO projects in Semarang were officially endorsed in 1989, when the StateMinister of Housing established a task force to encourage and enhance the role of NGOs and communityparticipation in housing development (Herlianto. 1990: 56).

Among all the cases where government has used the shelter sector as a central element of policy,the case of Colombia deserves mention. The 1983-1986 National Development Plan identified housingas a driving sector of the economy, with the intention of both providing housing at the scale required andstimulating economic activity and employment (Utria, 1990: 17). This resulted in a major expansion ofhousing supply that initially benefited all social groups, including the poor. Later in the decade, however,the populist element weakened as projects concentrated on housing for middle-income groups. Theshelter sector policies of the new Government of Colombia place the emphasis on establishing a nationalhousing system based on subsidized social housing for low-income groups (Utria, 1990: 34). The scale ofsuch subsidies, however, will place considerable strains on the Colombian economy. Only the future can

tell whether this policy can be sustained.

Evidence from other countries tends to confirm the modest impact of projects on policy. This canbest be appreciated in the case of sites-and-services projects, which have been undertaken throughoutthe developing world. Despite their widespread application, Hardoy and Satterthwaite (1981: 254) foundthat in only two out of 17 countries surveyed had such projects become the central part of urban housingpolicies. This may be for several reasons, though three appear common. First, such an outcome is notintended in the first place; secondly, it may be that governments lack the confidence or technicalresources to initiate new approaches; or thirdly, that strong vested interests oppose any change toexisting programmes. Whatever the reason, or reasons, it is generally true that the impact of projects onpolicies has been limited. As Hardoy and Satterthwaite have also noted (1981: 254), projects of anytype divert attention away from the real priority, reforming the urban land market so that it does notautomatically exclude lower-income groups from legal housing.

Settlement-upgrading or -improvement projects do not appear to be as vulnerable to the abovecriticisms. The impressive Kampung Improvement Programme in Indonesia is by no means the onlyexample of government agencies undertaking supportive, realistic and replicable improvements to theliving conditions of a significant proportion of low-income households in large cities. They have also beenmore successful in reaching the very poor than new development projects.

The lack of independent evaluations of projects, in terms of their internal objectives as well as theirwider policy impact, makes it difficult to identify future roles with confidence. More effort is needed toevaluate the experience gained so far, and greater willingness is equally required to accept and act uponsuch evaluations. At present, there are too few incentives for public-sector personnel to learn fromprevious experience and to rectify the limitations of completed projects in preparing new ones.Correcting this will require instilling anew institutional culture in many housing and planning agencies. Thiscan only be achieved in full through the education of the next generation of professional staff and thereorientation of existing personnel.

In the final analysis, the impact of projects on policy also depends upon external factors that arebeyond the control of project planners. The Ismailia Demonstration Projects in Egypt for example,achieved a far greater impact upon housing policy than the project team had even contemplated.Ironically, this was not because all the project objectives had been achieved. In fact, changes to theproject made during the process of implementation made it more difficult for low-income households toparticipate. Yet, the standard of construction achieved by residents of what was intended as aself-financing project for low-income groups, was so high that senior officials and politicians, including thePresident, were sufficiently impressed to announce that future government housing policy wouldconcentrate on the provision of infrastructure and finance, rather than conventional housing supply(Davidson, 1984: 146).


Chapter V. Shelter projects and national policies2. Consistency with the objectives of the Global Strategy for Shelter to the Year 2000

Before the International Year of Shelter for the Homeless (1987) came to an end, the GeneralAssembly of the United Nations concluded that the Year should be followed by a longer term,implementation-oriented effort that could capitalize on the interest and momentum generated by the IYSH. The General Assembly thus decided to launch the GSS, with the objective of facilitating shelter for all bythe year 2000. The GSS is intended to ensure adequate shelter conditions for all groups" irrespective ofincome, gender, age, and physical capacity, in all types of settlements, ranging from rural hamlets totowns and metropolitan conurbations. The fundamental principle of the Strategy is the need forgovernments to adopt an "enabling" approach, in which people are given the opportunity and means tomeet their own housing requirements according to their priorities and capacities.

In Sri Lanka. the MHP was the embodiment of an integrated approach in which both policy andproject objectives were fully consistent with the enabling approach advocated by the GSS. Recentdevelopments in housing policy in Zimbabwe are also considered to have been brought into line with thisapproach. In India and Pakistan. new national (or draft national) housing policies lay great stress on theneed to adopt an enabling, facilitating, or support approach as advocated in the GSS.

These are all positive signs of progress, achieved in a remarkably short time. As such, they deserveto be welcomed and supported by all those engaged in the shelter sector. Yet, it is one thing to approve apolicy statement but quite another to translate it into a range of practical measures that can beimplemented quickly and efficiently at the scale intended. Even Sri Lanka has found it difficult to sustainthe approach adopted in the MHP. Clearly there are many approaches and experiences that deserveconsideration in order that projects can contribute to the establishment of more efficient and equitableland and housing markets. The challenge is now being accepted by politicians to formulate appropriatepolicies. It will then be the task of professionals working in the sector to formulate the most appropriaterange of practical measures to ensure that such policies are fully implemented.


Chapter VI. Achieving a multiplier effect through shelter projects1. Impact on institutional capabilities and public-sector roles in the shelter-delivery process

The coordination of many different public-sector agencies is required for the preparation,implementation and management of appropriate and affordable shelter projects. This requirement is oftendifficult to achieve, given that each of these agencies has its own priorities and methods of working.Furthermore, these agencies must be individually and collectively capable of undertaking developmentaloperations within complex land and housing markets in ways that will not only achieve internal projectobjectives, but improve the efficiency and equity characteristics of these markets over time as well. Suchan ambitious agenda places a heavy burden on the public sector of any country. Traditionally, theseagencies have been required to administer discrete packages of housing goods and services according topre-determined norms and procedures. Changes in the tasks required of them stretch management andtechnical resources and require levels of coordination with other related agencies that may be lacking anddifficult to develop. Many agencies are handicapped by a shortage of well-trained professional staff anddepend upon imported systems of administration.

To overcome these constraints, it is sometimes considered advisable to establish new institutionswith specific responsibility for undertaking innovative projects, in the hope that this will establish thenecessary institutional capability for wider application. In the event, new agencies have created their ownproblems. Existing agencies may regard them as competitors for scarce resources. Furthermore, the newagencies frequently depend upon staff seconded from existing agencies, whose loyalties are inevitablysplit. Even if these problems do not arise, any addition to the number of agencies operating in the sectorrenders the task of coordination more difficult.

Another option frequently adopted is to establish special project units or cells within existingagencies that can operate as a multi-disciplinary team in close collaboration with outside consultants. Thisapproach is particularly common in projects funded by international agencies. In India, for example, manyhousing and development authorities have their World Bank project cells. The difficulty with thisapproach is that the projects, and the teams involved with them, remain as separate units and aredisbanded when the project is completed. Thus, the concepts and methods they employ do not permeateinto the mainstream activities of the parent institutions.

In the Ismailia Demonstration Projects, a compromise solution was adopted. This involved theestablishment of a locally based project agency staffed by personnel seconded from local governmentagencies. To assist the agency in the implementation of the projects and establish local capability toundertake similar projects in the future, technical assistance was provided under international aidprogrammes. This arrangement worked so well that the project agency was later expanded andreformulated to become the Ismailia Planning and Land Development Agency. A similar process can beseen in the Dandora project in Nairobi.

An even more basic consideration in the development of institutional capability relates to theperceived role of housing-development agencies within the sector. The enormous scale and complexity ofthe demand for shelter in developing countries cannot be resolved by applying rigid administrative

systems. What is required is a dynamic, efficient, coordinated and flexible response from all public sectoragencies involved. This suggests that there is a need to move away from traditional concepts ofadministration, towards a management approach which embodies these qualities and uses availableresources to achieve a complementary relationship between public, private and voluntary (NGO/CBO)sectors.

The evidence of this study suggests that it will take some years to achieve such a transformation.The common approach by which proposals are first prepared by town planners, passed to architects,then engineers and then surveyors, often before they are even costed, or related to the needs of theintended beneficiaries, still continues in many countries. In other cases, local authorities do not possessthe capacity to prepare development plans or project proposals. They are thus forced to depend uponoutside consultants appointed by funding agencies. It is also difficult for many senior professionalsaccustomed to having their authority accepted without question, to accept the benefits of working aspartners with low-income communities, taking advice from social workers and accepting that newdevelopments may look like slums for the first few years.

In Turkey, the Government has recently decided to concentrate on providing developmental rightsand services to existing squatter and informal settlements, rather than develop land itself. This reflects aconsiderable shift in public-sector roles within the sector though it would be an exaggeration to claim thatthis is due to the impact of projects.

The Sri Lankan experience is perhaps the most radical example of new public-sector roles beingdeveloped through the project approach. This centres upon the adoption of a support strategy in whichthe State ensures the supply of secure and affordable land, infrastructure and facilities in ways thatencourage households to organize their own housing. Far from being an abrogation of responsibility, thisrepresents a more challenging role than the traditional one of building conventional subsidized housingunits for a select minority. Such a transformation in professional attitudes and levels of technical expertiserequire a substantial investment in training or staff development. In Sri Lanka, this was undertaken over along period as an integral part of the implementation of the MHP. The transformation was essential toovercome problems with the previous 100,000 Houses Programme, where administrative inefficienciesand inadequate staffing resulted in only 8500 housing units being produced or upgraded between 1980and 1984 (UNCHS, 1987: 3).

Another limitation that had to be addressed in Sri Lanka was that the relaxations in conventionalpublic-sector administrative requirements were restricted to low-income projects and do not appear tohave applied to other developments. The same constraint appears to apply to participation (UNCHS,1987: 86). On the basis of the Sri Lankan experience, it is possible to develop a decision-making matrixfor four key levels of shelter action; the household, the community, the local authority and the nationalgovernment. Each of these can be related to a range of decisions, or choices, which need to be made andthe appropriate types of support which an effective shelter strategy can provide to facilitate the provisionof appropriate and affordable shelter at the scale required. Such a decision-making matrix is presented intable 5 .

A common problem in moving away from projects providing completed housing units towardsthose undertaken as part of support policies, is that there is an increasing need for technical assistancefrom project staff. This imposes considerable indirect, and unaccounted, costs on a project as staffmembers attempt to respond to the unique circumstances and needs of individual households. In PapuaNew Guinea, for example, technical-assistance staff found themselves being required to act as unpaidcontractors to project beneficiaries. This was partly because the beneficiaries were unable to make muchprogress in their spare time and also because they lacked the technical proficiency to conform to officialbuilding regulations. Technical assistance therefore needs to be properly costed if such programmes are

to be replicated and adequate numbers of appropriately trained staff are to be made available asrequired.

In Zimbabwe, projects have evolved considerably during the short period since independence in1980. The introduction of aided self-help projects reflected a move towards project beneficiariesultimately paying the full cost of their housing (or at least for the building). This developed into a strategyin which government investment is intended to be matched by both the private sector and projectbeneficiaries in equal amounts. While adopting this strategy, the role of the public sector has beenincreasingly redefined towards the enabling approach advocated in the GSS. This is seen as comprisingaided self-help, full cost recovery and a partnership between public and private sectors(Mutizwa-Mangiza, 1990: 62). In practice, this involves expanded sites-and-services projects. It thusallocates a major role to the public sector in the provision of serviced land, despite general experience inother countries that this has not ensured replicability. If public systems of provision are unable to satisfydemands for land, services, finance and housing for all on a sustainable basis, other options will need tobe considered.

In many other countries, a major problem with innovative shelter projects occurs when they arehanded over to the local authorities for routine maintenance. The greater the separation between planningor implementation agencies and the local authorities, the more likely these problems are to arise. Thissuggests that local authorities should be closely involved in the early stages of project identification,planning and implementation. Furthermore, they should be involved in the planning phase regardingfinancial and maintenance issues.

In some countries, new public-sector roles emphasize the need to establish more productiverelationships with the private sector. In Indonesia, for example, the management of the public-sectorhousing corporation is becoming more professional as it has to compete, and collaborate, with privatedevelopers (Herlianto, 1990: 95).

In other countries, the emphasis is placed on the contribution of NGOs and on how to developbetter relationships between them and government agencies. The experience gained in self-help in Zambiaresulted in a government commitment to encourage home-ownership through self-help efforts based uponsites-and-services and settlement upgrading. To this end, local councils are expected to adopt anenabling role and NGOs have been institutionalized at the national level. Jere (1991b), however,considers that Zambian projects have tended to concentrate on the symptoms rather than the underlyingcauses of urban poverty. One limitation in overcoming this situation is the weakness of local and citygovernment, which has greater responsibilities than its resources enable it to fulfil.

The approach adopted by Kent-Koop (The Union of Bati-Kent Housing Cooperatives) in Turkeyis worth mentioning in this connection. This non-profit organization was founded in 1979 by 13 housingcooperatives with the intention of providing housing for low- and medium-income groups. A number ofgroups, such as trade unions, traders' and artisans' organizations and various professional chamberscontributed to the formation of Kent-Koop, under the leadership of Ankara Municipality. Theconstruction activities of Kent-Koop started at the Bati-Kent location, 16 kilometres from Ankara citycentre, on land provided by the Ankara Municipality. The initial target was to construct 4500 housingunits annually. This target has later been exceeded. In addition to its construction activities, Kent-Koopalso established several non-profit organizations working in the fields of mapping and surveying, design,engineering and production of building materials. These organizations are currently functioningsuccessfully. By 1989, Kent-Koop had assisted 33 different municipalities in organizing joint ventureswith local housing cooperatives, addressing the needs of about 200,000 households (Kent-Koop, 1989).

A last, but by no means least, issue to be raised in this section is that staff mobility and high levels

of secondment often make it difficult for experience gained on projects to be assimilated for the benefit offuture projects. The institutional culture of the public sector is thus often averse to the notion of innovationand the risk taking that is needed for successful shelter projects (see also section II.3.1). Much moreattention is needed if this major constraint is to be resolved.


Chapter VI. Achieving a multiplier effect through shelter projects2. Impact on urbanization, urban growth, spatial planning and infrastructure provision

In theory, housing projects, particularly the large-scale projects, are supposed to have significantimpacts on spatial planning and on directing urban growth. Yet, the evidence from several countriesindicates that projects in general are less effective in this respect. There are several reasons for this,among which the scale of the projects has particular importance. The rather small scale of atypicalhousing project is usually not sufficient to initiate growth in the desired directions. A second factor is thatprojects are usually implemented in a financially feasible area, rather than in a location that meets theneeds of the target groups. Consequently, most housing projects have remained as isolated cases for longperiods of time, before eventually being integrated with the urban expansion. A third important factor isthe delay in provision of services and infrastructure. These components are often the last to be provided,and this fact often limits the possible multiplier role of housing projects. Yet. there are some goodexamples where housing projects have had substantial effects on urban growth.

The fact that shelter projects can have significant impacts on urbanization and rates of urbangrowth is clearly demonstrated by the case of Colombia. It is true that shelter projects made only isolatedcontributions to total housing supply, with little or no relationship to the urban development process,urban structuring, or infrastructure planning (Utria, 1990: 106). Yet, the publicity that attends thelaunching of shelter projects creates expectations in the rural, as well as the urban population, whichfurther stimulates urbanization.

In Turkey, projects have been too small to achieve any impact upon processes of urbanization orurban growth (Tokman, 1990: 39). Projects may even have negative impacts on efforts to direct urbangrowth. Long implementation periods of some housing projects in Turkey have sometimes hindered thedevelopment of nearby areas. The large-scale Sincan Sites-and-Services Project in the westerndevelopment corridor of the Ankara Metropolitan Area is a good example in this respect. When largeareas of public land were allocated for this scheme, speculators purchased large tracts of land nearby, onthe expectation that land values would increase rapidly when the Municipality provided infrastructure andservices. The project, however, took a very long time to get moving, no infrastructure or services wereprovided for many years. It thus became a dead-lock, not only for prospective beneficiaries of theproject but also for land speculators and others who could have benefited from the possibilities of thereasonable land prices at these locations. After about 20 years, however, the western developmentcorridor became the significant expansion of the Ankara Metropolitan Region as was originally planned.

With this negative experience in mind, the examples where housing projects have had positiveimpacts on directing urban growth are more abundant. The Baishnavghata-Patuli project in Indiademonstrates that projects can exert a very powerful indirect influence on the direction, rate and costs ofurban development. Yet, this strategic impact is rarely even appreciated, let alone harnessed, by projector policy planners. As a result, the benefits of project investments accrue mostly to private-sectordevelopers, who have a more keenly developed sense of how land and housing markets operate andhow to manipulate them to their advantage. The site for the Klender project in Indonesia, however, wasselected to stimulate further growth to the east of Jakarta, according to strategic planning objectives. By

developing large areas of land in relatively less expensive locations, it was also easier to achieveaffordability objectives, though this made it more difficult to reach the target population of low-incomegroups.

Another example of the extent to which even individual projects can influence the direction andform of urban development and planning can be seen in the case of the Rohini project in New Delhi. Thiswas intended to provide housing for up to 300,000 people of all income groups, with a full range ofcommercial and industrial activities and public facilities. Projects of this scale can support local projectagencies, or teams, working in multi-disciplinary groups to develop major contributions to housing supplyand the planned development of urban areas. This contribution can be further increased if shelter projectsinclude the provision of commercial and industrial areas that can contribute towards the development ofmulti-nucleated urban areas and diversification in the location of employment centres.

Besides influencing patterns of urbanization and urban growth, projects are influenced by them. Acommon constraint, for example, is the difficulty of obtaining land in suitable locations at prices thatproject agencies can afford to acquire and develop for low-income households. In many cases, the onlyland that meets these criteria are in areas that are unstable, liable to flooding, or otherwise difficult andexpensive to develop. On this basis, land that is inexpensive to acquire may be almost prohibitive todevelop and build upon. A large part of these additional costs is borne directly by the low-incomeresidents.

Another common constraint to shelter projects located on the periphery of a rapidly expanding cityis that residents are isolated from public services and places of employment. In rapidly expanding cities,however, they are likely to find themselves integrated into the administrative and physical structure of thecity more rapidly than those in a city that grows slowly. Their ability to endure such locations maytherefore be enhanced considerably, especially if planning policies encourage the decentralization ofindustrial and commercial activities that can provide low-income groups with employment opportunities.

At a technical planning level, the Kwekwe-Gutu project in Zimbabwe incorporated severalinnovations in spatial planning that enabled the project to meet local needs and reduce unit costs. Theseincluded "cul-de-sacs", "p" loops, "back-to-back stands" and communal tower lights (Mutizwa-Mangiza,1990: 42). Similarly, the Ismailia Demonstration Projects were designed to achieve the maximumproportion of available land within the private, or revenue-generating domain, in order to reduce unitcosts. This was done in a way intended to reflect the traditional layout patterns found in settlementsplanned by local residents and the patterns of space use to which they were accustomed (Davidson andPayne, 1983). Such concerns have been amply surveyed and analysed by observers such as Rapaport (4)

and need to be borne in mind by planners and architects whose living styles and values are at variancewith those of their eventual clients, the poor.


Chapter VI. Achieving a multiplier effect through shelter projects3. Addressing constraints in land and housing markets

Although projects may have made little impact to date on the nature or behaviour of urban landand housing markets, increasing awareness of the need to consider this factor is influencing the latestgeneration of projects. During the last decades urban land prices have increased at a rapid rate in SriLanka. The MHP has thus not prevented an increase in the number and proportion of slums and shanties.In the city of Colombo, these now account for 53 per cent of the total housing stock (Jayaratne, 1990:17). The main objective of the NHDA under Sri Lanka's MHP has been to remove (not just address orreduce) the physical, economic and legal constraints obstructing access by poor people to housing(Jayaratne, 1990: 85). This ambition reflects a recognition that informal settlements are an integral part ofthe housing process. Nonetheless, the relaxation in regulations has remained as the exception and not ledto a revision of such regulations in general terms. The removal of constraints thus appears to have beenachieved mainly at the project level rather than by addressing the constraints in land-market behaviourthemselves. Furthermore, the provision of legal title to residents in shanty settlements can hardly act as adeterrent for other low-income groups that consider developing new shanties. It thus begs the question ofwhat happens when the limited reserves of public lands are exhausted. The costs of acquiring privatelands are increasingly high, and procedures for land acquisition can take up to three years. As Jayaratneconcludes, Sri Lanka lacks an overall policy regarding land tenure or land management aimed at thelow-income groups (1990: 95).

The aided self-help approach adopted in Zimbabwe has apparently been replicated both in Harareand various small towns. This was partly because the approach was found appropriate, and partlybecause funds from the USAID package increased in value due to the devaluation of the local currency,enabling the existing funds to stretch further. This does not necessarily indicate a strong degree ofreplicability. The key constraints in Zimbabwe are the supply of serviced land, financial resources andbuilding materials. The former is partly due to a chronic shortage of land surveyors, but also to the factthat many land-owners are unwilling to release land for development. This unwillingness stems fromexpectations of better future options. The fact that they are not required to pay tax on undeveloped landonly further supports their unwillingness to release land for development. As a result, land prices haverisen by at least 100 per cent during the last two years (Mutizwa-Mangiza, 1990: 50). The projectapproach has therefore failed to address this constraint successfully.

One problem that requires consideration is that attempts to increase the scale of land and housingsupply significantly create pressure on all parts of the supply system, from land surveying and registration,to services provision, the building materials industry, labour markets, and on government administrations.Inevitably, the ability of each of these supply agencies to respond effectively to increased demand quicklyand efficiently will vary and the weakest link in the chain will tend to delay progress in the others. In SriLanka, the sudden increase in demand for building materials generated by the MHP led to a rapid shortterm price increase, until supply rose to adjust. This suggests that some form of overall monitoring andevaluation capability should be established at an early stage in the development of innovative large scaleprogrammes. Furthermore, it would be advantageous that this has the necessary authority to influence thesubsequent activities of all the major actors involved.


Chapter VI. Achieving a multiplier effect through shelter projects4. Impact on building and planning codes, regulations and standards

National aspirations and powerful professional vested interests have acted as major constraints onattempts to revise building and planning codes, regulations and standards in developing countries, evenwhen the need for change is accepted in principle. One understandable reason for this is that it is difficultfor politicians to equate the benefits of progress with the need to reduce standards that may have beenimposed previously by colonial administrations. Similarly, professional planners and architects are trainedin the belief that their function is to improve the living conditions of the poorest members of society. It isdifficult for these professionals to see how this can possibly be achieved by reducing standards, even ifonly a small minority actually benefits from projects designed in accordance to existing norms, regulationsand standards.

Nonetheless, the levels of expenditure on shelter-related investments by central, provincial andmunicipal governments, tend to remain at low levels in real terms and, in many cases, to decline. Yet thedemand for shelter continues to expand inexorably. The inability to bridge this gap through the impositionof conventional standards restricts the proportion of beneficiaries to an ever-declining proportion of thosein need. Furthermore, it distorts both public expectations and market behaviour in ways which onlycompound the problems.

In Zimbabwe, for example, standards of planning and building actually rose in the euphoriafollowing independence. Following pressure from international funding agencies such as USAID,however, relaxations and reductions were made in planning standards to make projects more affordable.Projects in Colombia are not considered to have made any significant contribution in this respect.Attempts to remedy this shortcoming have so far been frustrated (Utria, 1990: 103-104). Projects inTurkey are not monitored or controlled with a view to incorporating lessons learned into general practice.No relaxations or revisions have therefore been made to planning regulations or standards. Similarproblems have proved difficult to resolve in Kenya, where a study of building regulations and codes wascommissioned as part of the World Bank loan for the Dandora project in 1972. Up to the late 1980s, theGovernment of Kenya was still considering the proposed changes, but no decision had been made.

In some Asian countries standards of initial on-plot development and infrastructure have beenreduced following experience gained from earlier projects (van der Linden, 1986: 114). Minimum plotsizes in Indian urban shelter projects have been progressively reduced (current minimum 25 m1 toachieve affordability and efficient land use. In other countries, land-use efficiency has also improved inrecent projects from less than 50 per cent of the total site area, to 70-80 per cent (Keare and Parris,1982: 100). The range of options available to households at any given level of income has also tended toincrease (Payne, 1984: 9).

The Khuda ki Basti project in Pakistan is among the most radical approaches in terms of initialstandards of infrastructure provision and the types of building design and construction that are officiallypermitted. Only a communal water supply and unsurfaced roads were provided initially. Furthermore,residents were free to build or organize their houses in any way, and to any standard, they decided. This

willingness to accept that initial development will be of an extremely modest nature has been a majorfactor in enabling very-low-income households to participate in the project. Rather than being forced tospend an impossible initial amount on housing they were allowed to invest in improvements when and asthey could afford them. Far from producing a planned slum so commonly predicted by professionals insuch cases, it appears that the rate of consolidation has been as high as in other informally planneddevelopments. Examples of this type can perhaps encourage project planners elsewhere to relax initialstandards and put more trust in households of all incomes to improve their housing conditions as much astheir circumstances permit.

In Sri Lanka, the project approach has produced many revisions to planning and building codesand regulations. Shelter projects have, for example, been designated as special project areas in whichbuilding and planning regulations have been waived to make them more affordable to low-income groups.This enabled minimum plot sizes to be reduced from the normal minimum of 150 m to 50-75 m2, or evenless in parts of Colombo (UNCHS, 1987: 48). Yet, even this is unaffordable to many households.Another innovation was the provision of affordable shallow sewers, which were introduced insites-and-services projects and funded directly by the Government. These relaxations and innovationshave been restricted. however. to low-income projects and do not appear to apply across the board toall developments. Finally. areas that do not conform to full building regulations are not considered part ofthe formal housing system. This makes services and loans difficult to obtain (UNCHS. 1987: 48) andrestricts the impact of such innovations on urban shelter provision in general.


Chapter VI. Achieving a multiplier effect through shelter projects5. Development of the construction industry and construction techniques

It is difficult to obtain evidence concerning the extent to which projects have helped to developnew construction techniques, or address the capacity of the local and national building-materials-supplyindustry to meet the required level and nature of demand. Yet, some experiences can be cited. InIndonesia, for example, the introduction of low-technology materials and construction systems haveenabled the benefits of such economic development to move further down the socio-economic ladder tobenefit low-income households (Herlianto, 1990: 93). This is reinforced by relaxations in the enforcementof building codes, though the codes themselves have not been officially revised (Herlianto, 1990: 91). Inthe Kalingalinga project in Zambia, local block-making enterprises were established and successfulexperiments held, using earth as a building material. These proved to be almost too successful, in thatopen spaces were raided for earth.

In the other case-study projects and countries, there appears to have been no progress in usingshelter projects to introduce innovations in building technology or materials. In Sri Lanka and Turkey,projects are not in general regarded as opportunities to experiment with new construction systems ortechniques and projects have had no discernible effect on the building industry. The same applies toZimbabwe, where the experience with the project approach has not succeeded in stimulating theconstruction industry to meet increased demand, or encouraged experimentation in constructiontechniques. Yet, it should be noted that some housing projects, particularly those initiated throughpublic-private partnerships to address the needs of upper-middle and middle-income groups, have triedout new technologies and construction systems. The main result has been the development of moreenergy-efficient and less costly building materials. Furthermore, such projects have facilitated thedevelopment of new organizational arrangements where public-sector agencies have entered intopartnerships with housing cooperatives and private construction companies. The approach introduced byKent-Koop in Turkey is a good example of this type of development.

Projects in Zimbabwe have contributed indirectly to the development of the informalbuilding-materials industry (Mutizwa-Mangiza, 1990: 61). This was not, however, an intended outcomeof the shelter projects. It happened rather despite the projects, since the formal-sector building-materialsindustry was unable to meet the demand. Project implementation and industrial production planning wasthe responsibility of different ministries with little or no co-ordination taking place. This experience alsobegs the question of whether industrial production can be efficiently managed by public-sector agencies.It is invariably an aspect best left to the private sector, despite apparent ideological reservationsconcerning this locally.

Yet, the greatest case of lost opportunity is probably that of Colombia. More than any otherdeveloping country, Colombia attempted to use housing as a means of expanding the constructionindustry and through it, the national economy. The failure to capitalize on its early efforts has resulted inthe country slipping well behind most other developing countries in this respect.

None of the above discussion is to deny that there are important examples of innovation in building

materials and construction systems being developed in other countries. It simply indicates that projects,so far, have not been used to test prototypes. Many countries also boast building research institutes thatgenerate numerous examples of appropriate technologies. such as sand-cement blocks, pozzolana, andbamboo or sisal reinforced beams. The shortage would not appear to lie in the number of technicaloptions, but in their dissemination and effective marketing to the builders and developers who need to beconvinced of their merits. Another constraint may be that existing building regulations discourage, or evenprevent, the adoption of new materials or construction systems. even on an experimental basis. It isunlikely that this problem can be overcome until building regulations are either based upon performancespecifications. rather than prescribed. conventional solutions, or relaxed, so that builders can adoptincremental development processes. One option for resolving this problem may be to specifyperformance standards for new buildings that leave the builder free to figure out how conformity can beachieved using available and affordable materials and construction techniques. Another option could beto distinguish between initial and ultimate standards of development that could enable poor households tofollow the traditional process of incremental development. There is a need to develop procedures thatprovide incentives to good practice rather than to punish non-conformity.


Chapter VII. Conclusions and recommendations1. General criticism of the project approach

As with any other approach, shelter projects have both advantages and disadvantages. A majorlimitation of the project approach is that it deals essentially with symptoms rather than causes.Irrespective of the skill and sensitivity with which they are prepared and implemented, projects onlyaddress the needs of a small proportion of total demand. Structural constraints of inefficient or regressiveland and property markets and other expressions of inequality and deprivation, are rarely addressed.

The focus on technical efficiency to the detriment of other issues, such as community participationand social relevance is another major shortcoming, as is a general failure to resolve the affordability issue.This is partly because even the original calculations of affordability excluded the poorest households.Later increases in project costs have further reduced the potential for low-income household participationin housing projects. These constraints result in projects that may satisfy internal objectives, but have littleimpact in the wider context, or over time and are myopic in nature (Mutizwa-Mangiza, 1990: 50). Evenin cases where the affordability issue has been resolved, whether by skillful design or some form ofsubsidy, problems frequently occur due to a lack of availability. For households seeking a modestdwelling, it is of little help to know that affordable units are being developed, if the numbers allocated areinsufficient to ensure access.

A further limitation is that projects are often not planned, or evaluated, in terms of their impactupon the wider urban housing markets of which they form a part. Their effect upon public expectations ofthe role of government is therefore not known, or even considered, though it may exert a profound effecton patterns of demand. This "multiplier effect" may take several forms, such as the unauthorizeddevelopment next to the Baishnavghata-Patuli project in Calcutta. Projects will influence the perceivedoptions of land-owners, developers and individual households alike. A failure to see projects in this lightthus restricts the ability of public-sector agencies to use them as instruments of urban housing policy.

Given the seriousness of the limitations outlined above. it is necessary to ask why the projectapproach has been so popular with so many governments for so long. Among many reasons. projects aregenerally consistent with the ways in which existing institutions organize their budgets and workprogrammes. Furthermore. they can easily be monitored and evaluated against pre-determined criteria,and, finally, they are familiar to all the professional groups involved. The ground rules for identifying anddeveloping projects and providing houses, plots or services have been developed over many years andhave therefore generated powerful vested interests simply through inertia. Yet, it should not be ignoredthat they also provide opportunities for patronage and profit that have benefited politicians andprofessionals at least as much as they have low-income beneficiaries.

Projects also have several other attractions: they have a beginning and an end, involve theinvestment of a given level of resources for a pre-determined output and accountability can be assured,making them visible and easy to administer (Mutizwa-Mangiza, 1990: 49). Another positive aspect of theapproach, however, is that when it is successful, it can generate considerable investment in shelter fromprivate-sector investors, as was the case in the Kennedy City project in Bogotá and the

Baishnavghata-Patuli project in Calcutta.

Within the context of developing a housing strategy that encourages enabling concepts in thepromotion of housing-production processes, the experiences outlined in this report beg some mainquestions to be addressed. Given the widespread acceptance of the project approach to shelter deliveryfor the urban poor, how can projects:

(a) Be made more responsive to the diverse needs of low-income households?

(b) Provide a basis for addressing structural constraints in land and housing markets?

(c) Stimulate additional investment by the formal and informal private sectors and communitiesthemselves?


Chapter VII. Conclusions and recommendations2. Projects in the context of national shelter strategies

The shortage of independent evaluations of projects, in terms of internal objectives as well as theirimpact on wider policy issues, makes it difficult to identify future roles for the project approach withconfidence. More effort is needed to learn from the experience gained so far, and greater willingness isequally necessary to accept and act upon such evaluations. In general, there are at present too fewincentives for public-sector personnel in developing countries to learn from previous experience and torectify the limitations of previous projects when preparing new ones. Despite these difficulties, it is clearthat projects can fulfil several roles in promoting the formation and implementation of national shelterpolicies and in their ability to help the poor. Some of these roles are outlined below.

One of the most important roles is the possibility to provide the basis for new relationshipsbetween the public and private sectors, NGOs and community groups. As this report has shown, this willrequire a transformation from traditional administrative practices, towards innovative, flexible anddemand-driven managerial approaches. Although such a change will take several years to complete,projects can provide the necessary practical experience and feedback.

Secondly, and to assist the development of the above process, it will be necessary to establish aneffective monitoring and evaluation component in all projects, so that lessons learned are incorporatedinto mainstream practices and sectoral policies as appropriate.

A third role can consist of experiments in the acceptability of revised standards, norms, regulationsand procedures for the shelter-sector activities by private-sector developers and NGOs. Currentstandards and procedures, based upon ideals rather than realities, have in general been demonstrated tobe counter-productive, since they force households that are unable to conform to pursue the veryunauthorized options they are intended to prevent. One way of achieving this objective would be todistinguish between initial and long-term standards, so that the traditional process of incrementaldevelopment can flourish openly. Another would be to relax selected regulations that do not have a directbearing on the public aspects of development, such as floor-area ratios. Yet another could be toformulate separate standards for low-income areas, though this would create socially segregatedneighbourhoods. In terms of building regulations, changes based upon performance specifications, ratherthan prescribed solutions, would enable a range of innovative technologies and materials to gain wideracceptance.

A fourth role would be to link shelter projects more effectively with economic developmentprogrammes, so that they could contribute to, and benefit from, the evolution of multi-nucleated urbancentres, offering a range of employment prospects in areas of intended growth.

Fifthly, it will be necessary to use projects as a means of providing feedback for the developmentof policies, rather than merely the means of implementing them. To this end, the terms of reference forshelter projects should be based upon assessments of total needs and resources in the sector. Such anapproach will entail an understanding of informal settlement processes (Tokman, 1990).

Finally, projects should concentrate on providing those elements of shelter that residents cannotprovide or organize for themselves, such as affordable land, infrastructure and public services.


Chapter VII. Conclusions and recommendations3. Future emphasis and priorities in housing projects

This report has identified two main types of shelter projects; those providing new shelter and thoseimproving or upgrading existing shelter or settlements. In some cases, the two will be combined. This willoffer many advantages, since it will provide employment opportunities for the existing populations,increase the prospects for community participation, provide evidence of local perceptions and prioritiesto planners developing new areas and provide an overspil1 area for residents displaced from theupgraded settlement. Since many existing low-income settlements are located on the fringe of urbanareas, the scope for combining affordable new shelter and upgrading projects is considerable anddeserves emphasis. The two sections below gives an outline of recommended options when the twotypes of projects are undertaken separately.


Chapter VII. Conclusions and recommendations3. Future emphasis and priorities in housing projects1. Projects to provide new shelter

The case studies referred to in this report have reinforced evidence from many countries thatgovernments are not, by and large, as efficient at acquiring, developing and managing land as the privatesector or community groups. By concentrating on projects, governments have failed to develop theirpotential to regulate land and property markets through indirect fiscal or regulatory mechanisms.Emphasis should therefore be given to projects that provide the basis for developing and implementingsupport strategies in which the role of the public sector is to complement and regulate the activities ofprivate-sector developers and community groups. In the case of new shelter provision, this could initiallyinvolve joint ventures with formal and informal private-sector developers and NGOs. These could takeseveral forms, as outlined below.

The first form of such joint ventures is that private sector developers, together with land-ownersshould be enabled to prepare proposals to develop any new area, providing they meet social policyobjectives. The new developments should preferably, but not necessarily, be located in areas scheduledfor future urban development. In return for planning permission to develop part of the site, the developerand land-owner would agree to provide some of the land to the local authority for the development oflow-income shelter or, alternatively, would itself provide some plots to standards and at selling pricesdeemed by the local authorities to be affordable to low-income groups. The actual proportion reservedfor such low-income housing development would vary according to the commercial potential of thelocation and negotiating capability of the local authority. Clearly, safeguards would be required to ensurethat such arrangements were efficiently administered and not open to abuse. For this reason, it may beconsidered appropriate to determine the proportion of low-income plots in advance. This, however. maydiscourage developers and land-owners from presenting any proposals at all, if they find the potentialprofit margins unattractive.

The second form to be mentioned is lease-back projects. These deserve emphasis in areas whereland is commonly held under customary land-ownership arrangements. These enable public-sectorauthorities to gain access to land for development by leasing it from its owners at nominal rent for aspecified period. The land is then developed at the expense of the public sector to meet commercial andsocial policy objectives, before it is returned to its original owners at the end of the lease period. Suchprojects have already been implemented in parts of Asia with considerable success.

Land-readjustment, land-pooling and land-sharing projects are a third form of such joint ventures.Such projects have been undertaken successfully in several countries, though the Republic of Koreapossibly has the greatest experience. (5) These projects have improved the efficiency of land markets, butthey seem to have made only a marginal impact on access for low-income groups.

Sites-and-services (or area-development) schemes are the fourth and last form to be mentionedhere. They have been placed at the bottom of the list of approaches deserving emphasis for severalreasons. They are already being implemented by public-sector agencies throughout the world and

therefore can no longer be considered innovative. They have also lost their original radical potential ofencouraging local authorities to move away from direct provision towards enabling approaches and haveinstead become routine components of direct provision. Despite these limitations, however,sites-and-services remain as an approach that could still contribute to innovations in shelter delivery forthe poor. One means of achieving this would be to increase the size of projects so that they can supportthe establishment of local project offices based at the project site and working in multi-disciplinary teams.Larger projects would also increase the prospects of including commercial and industrial activities andcould also attract middle and higher income groups into a project. All of these would improve thepotential for achieving self-financed, but affordable, development, thus creating settlements that areheterogeneous and dynamic places in which to live. The Rohini and Hai el Salam projects are goodexamples of progress in this field. An even greater potential benefit of sites-and-services projects is theirability to attract secondary investment by private-sector developers. By locating projects in areas ofintended urban growth, they can serve to generate a "multiplier effect" considerably greater than theirdirect contribution to supply. So far, local authorities have generally failed to appreciate, let aloneharness, these secondary effects. They thus deserve emphasis as a means of expanding the relevance ofexisting project approaches.

Whatever combination of d1e above is deemed appropriate in specific cases, d1e primaryobjective of all new shelter projects should be to reduce entry costs to levels that compete wid1 d1osecurrently available elsewhere, such as through the informal sector. This will enable low-incomehouseholds to enjoy a genuine choice and enable d1em to obtain access to secure yet affordable shelter.

The second objective should be to use projects as a means of testing alternative standards.regulations or procedures for developing land and providing shelter. In this way. they can become acreative means of moving from individual actions towards structural interventions in urban land andhousing markets.

The third objective should be to offer a range of options in terms of plot size and shape, levels ofinitial services and allowances for house costs for any given total cost level. This is because importantplanning decisions usually will have been made before the residents arrive on a site and opportunities forcommunity participation are therefore likely to be limited. Simply by offering three options in terms of plotsize, services provision and initial building standards within a given cost range would provide nine optionsthat can enable households to assert their preferences and priorities. Monitoring the most popular optionscan then provide evidence for changing official standards and regulations at urban or national levels.

The fourth objective of new shelter projects should be to stimulate the supply of new residentialplots to a level that approximates to new household formation. This will improve availability and is theonly long term means of restricting land and house price inflation. In many cases, it will requirecomprehensive changes to speed up the procedures for acquiring, developing and allocating land forresidential use.


Chapter VII. Conclusions and recommendations3. Future emphasis and priorities in housing projects2. Upgrading projects

This report has demonstrated that in many cases, dramatic progress has been achieved indeveloping and implementing projects to improve or upgrade existing low-income settlements. In somecases, such as the Kampung Improvement Programme in Indonesia, these have taken an engineeringemphasis and been implemented to such a scale that a majority of the low-income households in a cityhave been reached. In other cases, such as Zambia, the emphasis has been on using projects to achievesocial objectives, by encouraging people to work together for common benefits.

There is, of course, room for both these approaches and many more. An important consideration.however, is to maximize the degree of local initiative and control over the process of selecting projectcomponents and the way in which they are organized. In this respect, upgrading has an advantage overnew shelter projects, since residents are in place and usually keen to articulate their needs and resources.If made aware of the true costs involved, international experience suggests that most people are realisticabout what can be provided and make sound decisions on alternative options. The main constraint is toestablish an institutional framework in which such collaboration can develop between local residents andthe staff in the relevant shelter agencies.

An institutional framework that enables low-income communities to identify their needs, and ensurethat these are addressed in local authority resource allocation procedures, would enable upgradingprojects to flourish without necessarily placing greater demands upon such resources. In Turkey, andmany other countries, such systems have been in place for many years in the form of the mahalles. Theseenable informal settlements in different parts of a city to obtain the access roads, water supplies, drainagenetworks, or schools, etc. that they require, based on locally determined, rather than centrally planned,criteria. When local people can receive the goods and services that they demand, the prospects of thempaying for, and looking after, them are invariably greater - and therefore cheaper in the long term.

A major element in the success of upgrading projects has been the contribution played by NGOs.These deserve emphasis and support throughout the world, not just in developing countries. Theircommitment and accountability to local communities, together with the high degree of professionalismwhich most NGOs embody, place them in the best position to act as intermediaries between communitiesand local authorities.

Many existing low-income. settlements contain a significant proportion of tenants, and these oftenconstitute the poorest households in an urban area. By definition, many of these will not be able to affordaccess to new shelter projects, at least in the short term. They will therefore depend upon upgradingprojects to obtain any improvements in their living conditions. If these projects generate significantlyhigher environmental conditions than existed before the project, such groups will be placed in anextremely vulnerable position, since they will be unable to respond to corresponding increases in rentlevels imposed by land-owners. This problem may arise even if the costs of such improvements are notattributed to plot owners, because they may see the rental value of their property as capable of

supporting higher rents and greater profits. For this reason, upgrading projects should assess theproportion of households that pay rent and their potential for meeting the likely costs of rent increasesresulting from different levels of upgrading. This should be reflected in the level to which a settlement isupgraded, or the rate at which improvements are made.

The range of upgrading projects is considerable and this report has only mentioned a few. Onewhich deserves particular emphasis, because it reflects the degree of sophistication that has beenachieved, is that of land-sharing. This approach is used particularly in central Manila and otherhigh-density city centres, to enable squatters to obtain security of tenure. The land-owners are, in returnpermitted to redevelop the site for a combination of commercial and residential units. The profitsgenerated from even a limited number of commercial units are sufficient to finance the construction of newhigh-density apartments on the remainder of the site for the original residents. The land-owners are stillleft with more profits than if they had sought full possession of the land through the courts withoutreceiving planning permission for full development.


Chapter VII. Conclusions and recommendations4. A framework for assessing the efficiency of project components

The above sections have described some types of projects that deserve emphasis. The selection ofspecific options will depend on local conditions, priorities and resources. Turner (1990: 181-191) hasproposed a framework for assessing project component efficiency. This framework could easily beadapted to enable priorities to be decided on an annual, or other more convenient, basis. The frameworkconsists of a basic series of project elements, such as land, finance, services and buildings, which can bedisaggregated as required. For each element, the options available for low-income groups are identified,irrespective of their legal status.

Comparison of these elements can then be used to identify major constraints, or bottlenecks, in theshelter sector at any level (national, provincial, or local), and therefore the priorities that need to beaddressed. In a situation where the range of options for obtaining finance, for example, is restricted, itcould be expected that market distortions would be greater than when many options existed. Newprojects may therefore be selected that focus on new mechanisms for generating and allocating financefor housing and monitoring their impact on the shelter market at the appropriate level. Subsequentexercises may then reveal that other bottlenecks have become more critical, and these could become thenext priorities for project development. An additional merit of this framework applied over time is that itcan ensure that the development of the project approach is continually related to structural issues in theshelter sector.

Within this framework, projects that put all human, financial and technical resources to the mostintensive use possible, will invariably prove the most successful. In practice, this will mean developinghigh-density, mixed land-use schemes with minimal initial standards (and costs) of provision, arranged insuch a way as to stimulate and reward further investment and development by the residents.


Chapter VII. Conclusions and recommendations4. A framework for assessing the efficiency of project components1. Elements provided by projects

Before it is possible to consider specific elements to be provided by projects, it is important torecognize that local governments will need to be strengthened to a level sufficient to enable themeffectively to fulfil their responsibilities on a long-term basis, before the impact of projects can beexpanded to meet internal or wider policy objectives. Besides this, it will be important to accept thecontribution made by private-sector groups, NGOs and local communities, and develop workingrelationships with them based upon their complementary roles.

Within this framework, experience shows that the private sector is generally the most efficient atacquiring, developing and allocating land for housing. In Bangkok and Mexico City, both rapidlyexpanding conurbations, it has enabled land prices to remain quite stable. It has also increased supply,and thereby enabled lower-income households to improve their houses to affordable standards (seePayne, 1989a). Even in cases where public agencies have controlled large reserves of land in appropriatelocations for shelter development, as in Delhi during the 1950s to 1970s, or Nigeria, since 1979, it hasproved impossible to stimulate supply to the level, and in a form, required to meet local needs (seePayne, 1989b).

The most effective role for the public sector is to regulate land markets and ensure a "level playingfield", so that all supply systems are competing on equal terms. This is essentially a regulatory role and notone best undertaken through projects, though this should not deny that there will be many exceptions tothis recommendation, or that existing project approaches should be immediately replaced.

Another element that is not amenable to provision or improvement through projects is that of theindividual house or dwelling. Since the needs and resources of each household will be unique anddynamic, no standard approach can be adopted that will satisfy them. This is also the element that canmost easily be organized by households, irrespective of incomes, providing they are free to adopt theirown standards and design preferences. Until the relatively recent introduction of the public sector intohousing delivery, this was the normal way for most houses in the world to be provided, and it is one towhich a return would generally be beneficial.

This leaves one element for consideration; the provision of public services and infrastructure. Thisis, par excellence, the element most appropriately delivered by projects; in fact, it is difficult tocontemplate another means by which it could be delivered, whether in new shelter areas or theimprovement of existing settlements. The challenge is to make such provision more responsive toincremental development and local priorities, so that it can mirror the processes of gradual consolidationand densification adopted at the level of the individual house. As stated above, this will require greatercoordination between local authorities, NGOs and local communities.


Chapter VII. Conclusions and recommendations4. A framework for assessing the efficiency of project components2. Provision of other elements

The above section referred to recommendations concerning the provision of land, infrastructure,services and houses. The remaining element concerns methods of providing finance for investment inshelter.

There are many financial mechanisms for mobilizing savings and allocating finance for shelterinvestment Yet, there are few formal institutions that serve low-income groups. This is due to theperceived high risk, low profit and frequent lack of collateral. It is unlikely that formal institutions caneasily be modified to overcome these constraints. The greatest potential is most likely to come fromenhancing. the scope of locally based informal institutions, such as savings societies, credit unions,cooperative banks etc. The most widely cited example of such an institution is the Grameen Bank, inBangladesh. This Bank has become a large-scale institution by addressing the needs of the pooresthouseholds who could only afford to save individually minute amounts, but that collectively, amounted tolarge sums. Conventional finance institutions lending in the shelter sector frequently find it difficult to lendfor low-income developments. The risk of default on unsecured loans and the high transaction costs ofadministering large numbers of small loans are two main reasons for this.

Efforts to overcome these constraints have generally concentrated upon providing full tenure status(freehold or long leases) to project beneficiaries, so that they can offer effective collateral. Even this isunlikely to succeed, however, if institutions are prevented in practice from foreclosing on loans that are indefault. Informal finance institutions avoid this problem by establishing credit worthiness based on regularsavings, or peer-group pressure. Whilst this may entail a degree of default, this is not necessarily morethan what is suffered by formal institutions, and is often considerably less. Such informal institutions arealso locally accountable and achieve a balance of benefits to savers and borrowers alike which enablesthem to reduce transaction costs. Clearly, they deserve to be supported and expanded.


Chapter VII. Conclusions and recommendations4. A framework for assessing the efficiency of project components3. Guidelines for preparing and assessing future shelter projects

This report has highlighted many factors that influence the ability of shelter projects to meet theneeds of the poor. These factors provide a basis for the development of future projects, though theimportance of each will, of course, vary with local conditions. To assist in the preparation and assessmentof project proposals, it is recommended that specific objectives be prepared that indicate the scope andnature of the project and the means whereby it is intended that the objectives will be attained. Thefollowing points are offered as guidelines that should be included in all project proposals:

The aspects of policy that the project is intended to demonstrate or test;

The elements that distinguish the project from previous projects addressing the needs of thepoor;

The intended impact of the project on land and housing markets;

The degree to which the project is intended to be self-financing or dependent upon direct orindirect subsidies;

The costs of entry to the project compared with other shelter options and the options forresidents to use shelter as a means of income generation;

The options for residents to participate actively in the planning, implementation and managementof the project;

The adequacy and flexibility of the administrative structure;

The methods for monitoring and evaluating the project and indicating the extent to which theobjectives have been fulfilled, so that lessons learnt can be incorporated into future projects.


Chapter VII. Conclusions and recommendations5. The role of projects in the development and implementation of national shelter policies and the GlobalStrategy for Shelter to the Year 2000

Many countries now accept the need to adopt an enabling strategy towards shelter provision. Thisis reflected in the recent national shelter policies of India, Pakistan and several other countries. Yet, fewcountries have succeeded in translating such objectives into operational programmes, or relating existingproject approaches to them. Since projects represent a major component of public-sector intervention inmost countries, and are likely to remain so for some years to come, they provide an important startingpoint for the implementation of enabling strategies. If the recommendations outlined above were to beimplemented at national, provincial and local levels, the range of shelter options available in practice tothe urban poor would increase significantly within a short time.

It is highly unlikely, of course, that progress will be achieved on all elements simultaneously, or thatdelivery systems could respond efficiently to rapid change on all fronts. The primary concern shouldtherefore be to identify and address local priorities, or bottlenecks that restrict the efficiency of existingurban land and shelter delivery systems and their ability to meet the needs of low-income groups.Projects can then be designed specifically to address these constraints and widen options for futuredevelopment. Creating such an iterative approach in the shelter sector, while integrating projects as partsof programmes focusing on the promotion of enabling shelter strategies, will more than justify theretention of the project approach. In this context shelter projects will function as instruments of the shelterprovision process whereby the capabilities of all actors in the shelter sector can be utilized.

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