|Assessment of Experience with the Project Approach to Shelter Delivery for the Poor (HABITAT, 1991, 52 p.)|
|VII. Conclusions and recommendations|
|7.4 A framework for assessing the efficiency of project components|
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.