|Assessment of Experience with the Project Approach to Shelter Delivery for the Poor (HABITAT, 1991, 52 p.)|
|VII. Conclusions and recommendations|
As with any other approach, shelter projects have both advantages and disadvantages. A major limitation 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 only address the needs of a small proportion of total demand. Structural constraints of inefficient or regressive land 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 participation and 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 participation in housing projects. These constraints result in projects that may satisfy internal objectives, but have little impact in the wider context, or over time and are myopic in nature (Mutizwa-Mangiza, 1990: 50). Even in cases where the affordability issue has been resolved, whether by skillful design or some form of subsidy, problems frequently occur due to a lack of availability. For households seeking a modest dwelling, it is of little help to know that affordable units are being developed, if the numbers allocated are insufficient to ensure access.
A further limitation is that projects are often not planned, or evaluated, in terms of their impact upon the wider urban housing markets of which they form a part. Their effect upon public expectations of the role of government is therefore not known, or even considered, though it may exert a profound effect on patterns of demand. This multiplier effect may take several forms, such as the unauthorized development next to the Baishnavghata-Patuli project in Calcutta. Projects will influence the perceived options of land-owners, developers and individual households alike. A failure to see projects in this light thus 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 project approach has been so popular with so many governments for so long. Among many reasons, projects are generally consistent with the ways in which existing institutions organize their budgets and work programmes. 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 and developing projects and providing houses, plots or services have been developed over many years and have therefore generated powerful vested interests simply through inertia. Yet, it should not be ignored that they also provide opportunities for patronage and profit that have benefited politicians and professionals at least as much as they have low-income beneficiaries.
Projects also have several other attractions: they have a beginning and an end, involve the investment 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 the approach, however, is that when it is successful, it can generate considerable investment in shelter from private-sector investors, as was the case in the Kennedy City project in Bogota and the Baishnavghata-Patuli project in Calcutta.
Within the context of developing a housing strategy that encourages enabling concepts in the promotion of housing-production processes, the experiences outlined in this report beg some main questions to be addressed. Given the widespread acceptance of the project approach to shelter delivery for 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 communities themselves?
The shortage of independent evaluations of projects, in terms of internal objectives as well as their impact on wider policy issues, makes it difficult to identify future roles for the project approach with confidence. More effort is needed to learn from the experience gained so far, and greater willingness is equally necessary to accept and act upon such evaluations. In general, there are at present too few incentives for public-sector personnel in developing countries to learn from previous experience and to rectify the limitations of previous projects when preparing new ones. Despite these difficulties, it is clear that projects can fulfil several roles in promoting the formation and implementation of national shelter policies 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 relationships between the public and private sectors, NGOs and community groups. As this report has shown, this will require a transformation from traditional administrative practices, towards innovative, flexible and demand-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 an effective monitoring and evaluation component in all projects, so that lessons learned are incorporated into mainstream practices and sectoral policies as appropriate.
A third role can consist of experiments in the acceptability of revised standards, norms, regulations and procedures for the shelter-sector activities by private-sector developers and NGOs. Current standards and procedures, based upon ideals rather than realities, have in general been demonstrated to be counter-productive, since they force households that are unable to conform to pursue the very unauthorized options they are intended to prevent. One way of achieving this objective would be to distinguish between initial and long-term standards, so that the traditional process of incremental development can flourish openly. Another would be to relax selected regulations that do not have a direct bearing on the public aspects of development, such as floor-area ratios. Yet another could be to formulate separate standards for low-income areas, though this would create socially segregated neighbourhoods. In terms of building regulations, changes based upon performance specifications, rather than prescribed solutions, would enable a range of innovative technologies and materials to gain wider acceptance.
A fourth role would be to link shelter projects more effectively with economic development programmes, so that they could contribute to, and benefit from, the evolution of multi-nucleated urban centres, 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 development of policies, rather than merely the means of implementing them. To this end, the terms of reference for shelter projects should be based upon assessments of total needs and resources in the sector. Such an approach will entail an understanding of informal settlement processes (Tokman, 1990).
Finally, projects should concentrate on providing those elements of shelter that residents cannot provide or organize for themselves, such as affordable land, infrastructure and public services.
This report has identified two main types of shelter projects; those providing new shelter and those improving or upgrading existing shelter or settlements. In some cases, the two will be combined. This will offer many advantages, since it will provide employment opportunities for the existing populations, increase the prospects for community participation, provide evidence of local perceptions and priorities to planners developing new areas and provide an overspill area for residents displaced from the upgraded settlement. Since many existing low-income settlements are located on the fringe of urban areas, the scope for combining affordable new shelter and upgrading projects is considerable and deserves emphasis. The two sections below gives an outline of recommended options when the two types of projects are undertaken separately.
The case studies referred to in this report have reinforced evidence from many countries that governments are not, by and large, as efficient at acquiring, developing and managing land as the private sector or community groups. By concentrating on projects, governments have failed to develop their potential 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 implementing support strategies in which the role of the public sector is to complement and regulate the activities of private-sector developers and community groups. In the case of new shelter provision, this could initially involve joint ventures with formal and informal private-sector developers and NGOs. These could take several forms, as outlined below.
The first form of such joint ventures is that private sector developers, together with land-owners should be enabled to prepare proposals to develop any new area, providing they meet social policy objectives. The new developments should preferably, but not necessarily, be located in areas scheduled for future urban development. In return for planning permission to develop part of the site, the developer and land-owner would agree to provide some of the land to the local authority for the development of low-income shelter or, alternatively, would itself provide some plots to standards and at selling prices deemed by the local authorities to be affordable to low-income groups. The actual proportion reserved for such low-income housing development would vary according to the commercial potential of the location and negotiating capability of the local authority. Clearly, safeguards would be required to ensure that such arrangements were efficiently administered and not open to abuse. For this reason, it may be considered appropriate to determine the proportion of low-income plots in advance. This, however, may discourage developers and land-owners from presenting any proposals at all, if they find the potential profit margins unattractive.
The second form to be mentioned is lease-back projects. These deserve emphasis in areas where land is commonly held under customary land-ownership arrangements. These enable public-sector authorities to gain access to land for development by leasing it from its owners at nominal rent for a specified period. The land is then developed at the expense of the public sector to meet commercial and social policy objectives, before it is returned to its original owners at the end of the lease period. Such projects 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 Korea possibly has the greatest experience.5 These projects have improved the efficiency of land markets, but they seem to have made only a marginal impact on access for low-income groups.
5/ See Angel and Chirathamkijkul (1983) and Archer (1987) for examples.
Sites-and-services (or area-development) schemes are the fourth and last form to be mentioned here. They have been placed at the bottom of the list of approaches deserving emphasis for several reasons. 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 of encouraging local authorities to move away from direct provision towards enabling approaches and have instead 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 for the poor. One means of achieving this would be to increase the size of projects so that they can support the 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 and could also attract middle and higher income groups into a project. All of these would improve the potential for achieving self-financed, but affordable, development, thus creating settlements that are heterogeneous and dynamic places in which to live. The Rohini and Hai el Salam projects are good examples of progress in this field. An even greater potential benefit of sites-and-services projects is their ability to attract secondary investment by private-sector developers. By locating projects in areas of intended urban growth, they can serve to generate a multiplier effect considerably greater than their direct contribution to supply. So far, local authorities have generally failed to appreciate, let alone harness, these secondary effects. They thus deserve emphasis as a means of expanding the relevance of existing project approaches.
Whatever combination of the above is deemed appropriate in specific cases, the primary objective of all new shelter projects should be to reduce entry costs to levels that compete with those currently available elsewhere, such as through the informal sector. This will enable low-income households to enjoy a genuine choice and enable them 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 a creative means of moving from individual actions towards structural interventions in urban land and housing markets.
The third objective should be to offer a range of options in terms of plot size and shape, levels of initial services and allowances for house costs for any given total cost level. This is because important planning decisions usually will have been made before the residents arrive on a site and opportunities for community participation are therefore likely to be limited. Simply by offering three options in terms of plot size, services provision and initial building standards within a given cost range would provide nine options that can enable households to assert their preferences and priorities. Monitoring the most popular options can 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 residential plots to a level that approximates to new household formation. This will improve availability and is the only long term means of restricting land and house price inflation. In many cases, it will require comprehensive changes to speed up the procedures for acquiring, developing and allocating land for residential use.
This report has demonstrated that in many cases, dramatic progress has been achieved in developing and implementing projects to improve or upgrade existing low-income settlements. In some cases, such as the Kampung Improvement Programme in Indonesia, these have taken an engineering emphasis and been implemented to such a scale that a majority of the low-income households in a city have been reached. In other cases, such as Zambia, the emphasis has been on using projects to achieve social 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 project components and the way in which they are organized. In this respect, upgrading has an advantage over new 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 realistic about what can be provided and make sound decisions on alternative options. The main constraint is to establish an institutional framework in which such collaboration can develop between local residents and the staff in the relevant shelter agencies.
An institutional framework that enables low-income communities to identify their needs, and ensure that these are addressed in local authority resource allocation procedures, would enable upgrading projects to flourish without necessarily placing greater demands upon such resources. In Turkey, and many other countries, such systems have been in place for many years in the form of the mahalles. These enable informal settlements in different parts of a city to obtain the access roads, water supplies, drainage networks, 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 them paying 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. Their commitment and accountability to local communities, together with the high degree of professionalism which most NGOs embody, place them in the best position to act as intermediaries between communities and local authorities.
Many existing low-income settlements contain a significant proportion of tenants, and these often constitute the poorest households in an urban area. By definition, many of these will not be able to afford access to new shelter projects, at least in the short term. They will therefore depend upon upgrading projects to obtain any improvements in their living conditions. If these projects generate significantly higher environmental conditions than existed before the project, such groups will be placed in an extremely vulnerable position, since they will be unable to respond to corresponding increases in rent levels imposed by land-owners. This problem may arise even if the costs of such improvements are not attributed 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 the proportion of households that pay rent and their potential for meeting the likely costs of rent increases resulting from different levels of upgrading. This should be reflected in the level to which a settlement is upgraded, or the rate at which improvements are made.
The range of upgrading projects is considerable and this report has only mentioned a few. One which deserves particular emphasis, because it reflects the degree of sophistication that has been achieved, is that of land-sharing. This approach is used particularly in central Manila and other high-density city centres, to enable squatters to obtain security of tenure. The land-owners are, in return permitted to redevelop the site for a combination of commercial and residential units. The profits generated from even a limited number of commercial units are sufficient to finance the construction of new high-density apartments on the remainder of the site for the original residents. The land-owners are still left with more profits than if they had sought full possession of the land through the courts without receiving planning permission for full development.
The above sections have described some types of projects that deserve emphasis. The selection of specific options will depend on local conditions, priorities and resources. Turner (1990: 181-191) has proposed a framework for assessing project component efficiency. This framework could easily be adapted to enable priorities to be decided on an annual, or other more convenient, basis. The framework consists of a basic series of project elements, such as land, finance, services and buildings, which can be disaggregated 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 the shelter sector at any level (national, provincial, or local), and therefore the priorities that need to be addressed. In a situation where the range of options for obtaining finance, for example, is restricted, it could be expected that market distortions would be greater than when many options existed. New projects may therefore be selected that focus on new mechanisms for generating and allocating finance for housing and monitoring their impact on the shelter market at the appropriate level. Subsequent exercises may then reveal that other bottlenecks have become more critical, and these could become the next priorities for project development. An additional merit of this framework applied over time is that it can ensure that the development of the project approach is continually related to structural issues in the shelter sector.
Within this framework, projects that put all human, financial and technical resources to the most intensive use possible, will invariably prove the most successful. In practice, this will mean developing high-density, mixed land-use schemes with minimal initial standards (and costs) of provision, arranged in such a way as to stimulate and reward further investment and development by the residents.
Before it is possible to consider specific elements to be provided by projects, it is important to recognize that local governments will need to be strengthened to a level sufficient to enable them effectively to fulfil their responsibilities on a long-term basis, before the impact of projects can be expanded to meet internal or wider policy objectives. Besides this, it will be important to accept the contribution made by private-sector groups, NGOs and local communities, and develop working relationships with them based upon their complementary roles.
Within this framework, experience shows that the private sector is generally the most efficient at acquiring, developing and allocating land for housing. In Bangkok and Mexico City, both rapidly expanding 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 (see Payne, 1989a). Even in cases where public agencies have controlled large reserves of land in appropriate locations for shelter development, as in Delhi during the 1950s to 1970s, or Nigeria, since 1979, it has proved impossible to stimulate supply to the level, and in a form, required to meet local needs (see Payne, 1989b).
The most effective role for the public sector is to regulate land markets and ensure a level playing field, so that all supply systems are competing on equal terms. This is essentially a regulatory role and not one best undertaken through projects, though this should not deny that there will be many exceptions to this 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 the individual house or dwelling. Since the needs and resources of each household will be unique and dynamic, no standard approach can be adopted that will satisfy them. This is also the element that can most easily be organized by households, irrespective of incomes, providing they are free to adopt their own standards and design preferences. Until the relatively recent introduction of the public sector into housing delivery, this was the normal way for most houses in the world to be provided, and it is one to which a return would generally be beneficial.
This leaves one element for consideration; the provision of public services and infrastructure. This is, par excellence, the element most appropriately delivered by projects; in fact, it is difficult to contemplate another means by which it could be delivered, whether in new shelter areas or the improvement of existing settlements. The challenge is to make such provision more responsive to incremental development and local priorities, so that it can mirror the processes of gradual consolidation and densification adopted at the level of the individual house. As stated above, this will require greater coordination between local authorities, NGOs and local communities.
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 in shelter.
There are many financial mechanisms for mobilizing savings and allocating finance for shelter investment Yet, there are few formal institutions that serve low-income groups. This is dye to the perceived high risk, low profit and frequent lack of collateral. It is unlikely that formal institutions can easily be modified to overcome these constraints. The greatest potential is most likely to come from enhancing 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, in Bangladesh. This Bank has become a large-scale institution by addressing the needs of the poorest households who could only afford to save individually minute amounts, but that collectively, amounted to large sums. Conventional finance institutions lending in the shelter sector frequently find it difficult to lend for low-income developments. The risk of default on unsecured loans and the high transaction costs of administering 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 is unlikely to succeed, however, if institutions are prevented in practice from foreclosing on loans that are in default. Informal finance institutions avoid this problem by establishing credit worthiness based on regular savings, or peer-group pressure. Whilst this may entail a degree of default, this is not necessarily more than what is suffered by formal institutions, and is often considerably less. Such informal institutions are also locally accountable and achieve a balance of benefits to savers and borrowers alike which enables them to reduce transaction costs. Clearly, they deserve to be supported and expanded.
This report has highlighted many factors that influence the ability of shelter projects to meet the needs of the poor. These factors provide a basis for the development of future projects, though the importance of each will, of course, vary with local conditions. To assist in the preparation and assessment of project proposals, it is recommended that specific objectives be prepared that indicate the scope and nature of the project and the means whereby it is intended that the objectives will be attained. The following 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 the poor;
· 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 or indirect subsidies;
· The costs of entry to the project compared with other shelter options and the options for residents to use shelter as a means of income generation;
· The options for residents to participate actively in the planning, implementation and management of the project;
· The adequacy and flexibility of the administrative structure;
· The methods for monitoring and evaluating the project and indicating the extent to which the objectives have been fulfilled, so that lessons learnt can be incorporated into future projects.
Many countries now accept the need to adopt an enabling strategy towards shelter provision. This is reflected in the recent national shelter policies of India, Pakistan and several other countries. Yet, few countries have succeeded in translating such objectives into operational programmes, or relating existing project approaches to them. Since projects represent a major component of public-sector intervention in most countries, and are likely to remain so for some years to come, they provide an important starting point for the implementation of enabling strategies. If the recommendations outlined above were to be implemented at national, provincial and local levels, the range of shelter options available in practice to the 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 that delivery systems could respond efficiently to rapid change on all fronts. The primary concern should therefore be to identify and address local priorities, or bottlenecks that restrict the efficiency of existing urban 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 future development. Creating such an iterative approach in the shelter sector, while integrating projects as parts of programmes focusing on the promotion of enabling shelter strategies, will more than justify the retention of the project approach. In this context shelter projects will function as instruments of the shelter provision process whereby the capabilities of all actors in the shelter sector can be utilized.