Cover Image
close this bookNational Experiences with Shelter Delivery for the Poorest Groups (HABITAT, 1994, 140 p.)
close this folderII. HOUSING THE POOR
View the documentA. The case-study countries
View the documentB. National shelter policies
View the documentC. Housing needs
View the documentD. Shelter delivery
View the documentE. Actors and programmes
View the documentF. Financing shelter

D. Shelter delivery

1. Mexico

In Mexico, as elsewhere, most housing programmes favour the better-off people. Yet, the number of loans for low-cost housing has increased during the 1980s, from 2166 in 1980 to 48,225 in 1985 and 104,070 in 1991. These loans are directed at the poor and the lower-income group, both in sites-and-services and upgrading schemes. The production of houses in the public programmes has grown slowly and the bulk of public low-income housing has been constructed during the last 10 years (see tables 17 and 18). Most of the dwellings made are for private ownership. The building of rental housing is seen as non-profitable. Housing-finance agencies did not contribute to the construction of rental houses in 1989 and 1990. The poorest are thus very much left to manage on their own resources.

Table 17. Low-income public housing production in Mexico


Annual number of low-income housing units constructed

Percentage of all completed units

























Note: The figures (not the total) are annual averages for the periods shown. “Low-income” refers to 65 or 60 per cent of the population with the lowest incomes. The source is not clear at this point.

Source: Based on Carmona, 1993.

Many squatter settlements (often called “invasions” in Mexico) in Mexico City have been recognized de facto and have received some basic services. Lawful property rights have, however, not been given to the residents, but recognition of a settlement has been granted to community leaders affiliated to the political party in power (Connolly, 1990). After 1970, regularization was integrated into the urban policy agenda. A number of state-level regularization agencies and housing institutes now exist. Land has been taken over, and state governments are the major controlling force for regularization and the supply of new land from expropriated community properties. The residents' committees elected every four years at block, neighbourhood and district levels have consultative powers vis-is the authorities. It is the neighbourhood-level committee that is allowed to negotiate on matters of regularization and services to the exclusion of other popularly formed community organizations. Authorities are now in charge of selling serviced as well as unserviced plots to individuals. Still, clandestine developers manage to operate.

Table 18. Public-sector investment in housing, Mexico


Investment as percentage of GNP











Source: Carmona, 1993.

Box 23. Valle de Chalco: self-help construction

In Valle de Chalco, on both sides of the highway that connects Mexico City with Puebla, illegal settlers formed 19 colonies from 1970 to 1980. In 1990 the total population of the area was 252,413. The first occupation involved the acquisition of ejido land by coyotes. Later the peasants started to sell land. Legalization of occupied land was a constant problem for the squatters. It is, for instance, a rule that an area in which the development of services is impossible, cannot be legalized. Another problem for the settlers is the fact that the area is divided between the Federal District and the State of Mexico.

In 58 per cent of the families, no member has regular employment. Of those having employment, 43 per cent earn one minimum wage or less. No organization represents the interests of the settlers. Even mutual aid is said to be a rare phenomenon in the area. All of the dwellings have been made through self-help, in some cases with the help of paid workers for certain parts of the construction. The settlers have managed, individually, to obtain illegal access to land and to make a shelter. Yet, they have not solved the problem of water provision, drainage and paved streets.

Box 24. Santo Domingo de los Reyes: making money at low-income levels

The project involves 4000 squatters. Since rental housing in Mexico City is scarce and expensive, the option available to the poor is to settle on a vacant plot in the outskirts of the city. Such a plot has no basic services. The squatter must pay an illegal organization for the right to use the plot, or obtain it from a local-level leader specializing in illegal land occupation. The dwelling is then constructed - little by little - through self-help. The leader will also organize the squatters to make certain infrastructure for themselves such as footpaths, drainage and water supply. Often such leaders are professional invaders, called coyotes, who make their living by invading lands. The squatters must pay the leaders for “protection.” Community leaders have an important task in reducing the influence and power of coyotes. They also function as intermediaries between the poor on the one hand and the coyotes and public authorities on the other, as reported from Quito, Ecuador (Burgwal, 1993).

In Santo Domingo de los Reyes the squatters made 90 to 200 m2 plots and streets and footpaths, without maps or an overall plan. Posts for lighting were erected, and electricity was obtained illegally. A water supply was organized by truck delivery. In the beginning water was carried from far away. Schools, shops and market places were also built. The squatters were tightly organized by the leaders. Later, the settlers themselves were able to take over the negotiations with the authorities, and to obtain advances in the process of legalization. At that time they tried to get rid of the leaders. They have not been completely successful in this, but they have managed, to some extent, to curb the power of the leaders.

The legalization process moves slowly and is so far only achieved for parts of the settlement. Due to the development of the area, the price for the plots has increased, thus benefiting the owners. The compensation the authorities now have to pay for the land is at such a level that the squatters cannot afford it without large subsidies being given. Many plots are thus taken over by lower-income households and even by middle-income people.

Squatter settlements without an outside person or group fixing the “invasion” were typical in the past. Today new squatter settlements are normally arranged by so-called coyotes or pirates on communal or ejido lands (see boxes 23 and 24). The ejido land is communal holdings distributed under land-reform programmes in Mexico. The peasants have use-right over such land. Urban growth has made much of this land close to cities more valuable as building sites than as agricultural land. It then becomes profitable to allow settlements of poor people on the land. The ejido land holders will claim compensation from the settlers. The settlers may later have to pay the Government for the land. Speculators involved in these illegal subdivisions of land are able to avoid the cost of service provision. The settlers move in without basic services, and then ask the authorities to provide them. Tenure will remain insecure, and the authorities may evict the settlers if that is politically possible. Many settlements which are in breach of planning laws, develop due to the profit motive of speculators and to politicians seeking popularity and votes. Some squatter communities are able to organize themselves and to build rudimentary basic infrastructure and services gradually. This helps to establish the settlement's legitimacy, although not in a legal sense. Other settlements remain in a state of extreme deprivation, lacking all facilities, and hence the poor find themselves under a permanent threat of eviction.

Box 25. Jalapa: upgrading at the urban fringe

This project in Jalapa is an integrated development of four squatter settlements' shelter, education and health facilities and productive and cultural activities. The settlements lack basic services and infrastructure and the housing conditions are bad. 83 per cent of the family heads earn one minimum wage or less. The inhabitants are organized, and have improved the settlements to some degree. No public programme is directed to these areas.

The Union of Settlers, Tenants and Solicitants of Housing of the State of Veracruz and CENVI have been engaged in the four settlements. They promote participative planning by mobilizing the inhabitants. Technical, financial and administrative support is given to the collective efforts of shelter and infrastructure improvements. The collaboration between CBOs, the NGO and a public institution is promising. The successful projects in Jalapa were possible due to support from CENVI.

2. Indonesia

In Indonesia, the National Urban Housing Development Corporation (Perum-Perumnas) implements housing projects aimed at the poor and lower-income group. In line with the State National Development Goals of 1988, shelter should be affordable without neglecting the minimum standard of decent housing. Units of 21 m2 are the most needed in Perum-Perumnas low-rise housing. For flat housing, 36 m2 units are the most popular. The public sector construction targets have, however, not been met. In the planning period of Repelita-IV (1984-1989) 140,000 units should have been provided by Perum-Perumnas. The actual figure was about half that. The number of house ownership credits certified by the State Savings Bank (BTN) going to Perum-Perumnas has declined during the 1980s - from 46 per cent at the beginning to 20 per cent at the end of the decade. The Government has gradually moved towards building more high-rise flat housing. This is, however, an unpopular form of shelter due not only to cost but also for socio-cultural reasons. Yet, even the cost of the cheapest housing unit supported by the formal housing sector in Indonesia, the “very simple house,” amounts to at least Rupiahs 3 million (see table 19). This amounts to 12 times the annual income below which a head of a household is categorized as being poor. Even the interests of such an investment is beyond the reach of the poor. It is thus not possible for the poor in Indonesia to afford even the cheapest formal-sector housing unit. Yet, while concluding the above, it should be kept in mind that the average household may have several sources of income, not only the one of the head of the household, which is used in the statistics on income groups.

A special programme for the poor is the Serviced Plots Program. In Repelita-V, a total of 50,000 units are planned. The credit from BTN for a 21-m2 core house requires a 10-per cent down-payment and it carries a 12-per cent annual interest over 20 years. The beneficiaries may build their shelter gradually by own-effort. Public amenities such as footpaths and toilets are provided. Furthermore, the plan is to make 20,000 simple rental dwellings for those unable to obtain credit. The rental houses and flats will be subsidized by the Government.

Yet, even this scheme is, by definition, not affordable for the poor. Even if they can afford a down-payment (of at least two annual incomes), the annual interests on this loan would amount to at least Rp. 540,000, while the annual income defining the poor is about Rp. 250,000.

Table 19. Average formal-sector house prices, Indonesia (1992)

Size (m2)

Constructed by

House type



(Rp. million)

Private companies
(Rp. million)

Very simple



































Source: Herlianto, 1993.

The Government initiated KIP to upgrade the environment in which the poor live. This began during Repelita-I in Jakarta, with World Bank support. It was later extended to cover 10 other cities, 200 towns and about 1000 small towns. Although KIP was not aiming at solving the housing shortage per se, it has shown that improvements of infrastructure and services in the kampungs encourage people to improve their dwellings. In general, KIP resulted in an increase in the number of households selling food of different kinds from their dwelling place (Batarfie, 1987). This provides important additional income, although the amounts may be small. A very important aspect here is the extension of the dwellings, which people undertake, by adding a room for letting purposes. Improved direct support for such extensions should be adopted by governments in developing countries (UNCHS, forthcoming). This would help the poorest families who cannot afford more than to rent a small room. The KIP is also important in a more indirect sense, because when the Government has improved a kampung, it is regarded as a legal settlement. People are then eligible for government subsidies. These programmes in Indonesia are well conceived but far below the needed magnitude for sheltering the poor. The Government's ability to provide housing for the poor and lower-income groups is very limited. At the same time as there is a fast growing need for more subsidized shelter, the public sector's capability to cope is decreasing. It is thus essential to stimulate the traditional spirit of mutual aid in small communities.

3. India

In India, shelter delivery for the poor is very difficult. The requirement of cost recovery, the rising cost of building materials and the decline in government funds available for housing have led to the adoption of shelter solutions that price the poor out of the delivery system. In general, housing in urban areas in India is primarily the responsibility of individual families, about 90 per cent of the investments and 70 per cent of the supply of housing units are made by the households themselves (Kundu, 1993).

Moreover, access to plots is controlled by mafia-style promoters. In 1981 between 20 and 26 per cent of the urban population lived in slums and squatter settlements. The Government earlier tried to house the poor in multi-storeyed flats built on slum land or to resettle them in sites-and-services areas. Both failed, due among other things to cost and location. The thrust has recently been to improve the infrastructure of the slums in order to remove the worst environmental deficiencies. The dwelling situation is thus not improving. Squatting is made more difficult on non-used public and private land except at the urban fringe. Since the distance from the outskirts of the cities to places of economic opportunities in the centre is often large and transport costly and time-consuming, many among the poor are forced to stay on the pavements. Many lower-income group people may also be found in the illegal and unregulated settlements at the urban fringes. It seems essential that a process of accelerated resettlement of pavement dwellers is initiated by public authorities in the big cities in India. Resettlement success can only be achieved through a constructive dialogue with the pavement communities. It seems that the location of resettlement is the fundamental issue. The first priority of most squatters is to live near the source of livelihood (see box 26). Bahri (1988) for instance, arrived at this conclusion from a household survey in Hyderabad.

According to Pugh (1990), squatters in Delhi, who had been resettled, found themselves far away from job opportunities. The utility services were scarcely better than in their original locations. More importantly, family incomes tended to decrease due to increased difficulties for women to find work in the neighbourhood and to travel expenses incurred by men in searching for work in and around the city centre. As much as half of those who become resettled, may sell their plot rights illegally to higher-income households. They then revert to squatter settlements closer to their places of work opportunities.

During the 1980s there were several programmes of slum upgrading in the cities, benefiting the poor with simple but temporary shelter (see boxes 27 and 28). The combined size of these programmes is not possible to assess, nor is the percentage of beneficiaries of the poor urban population. This is due to lack of adequate and comparable data. In general, there was a rapid growth of housing stock during the 1970s and 1980s, simultaneously with a relatively declining public-sector investment in housing. The private sector is thus responsible for a growing share of shelter provision in India. Yet, small contractors are not operating on a wide scale in India. Their quality is often low, and people have little confidence in them. People are thus generally forced to use public agencies or large builders for house construction. This is expensive, and the poor are left to provide themselves with shelter. In the 1980s there was a rapid increase in the number of shacks in urban areas (a much faster growth than in the 1970s). About 20 per cent of the housing units produced during this period belong to the formal housing market. Sixteen per cent of all urban households live in mud dwellings, while 26 per cent live in temporary dwellings.

Box 26. A redevelopment programme in Dharavi, Bombay

The Prime Minister's Great Project is a programme initiated by the Government of Maharashtra in 1985 to improve existing slums, particularly Dharavi, the biggest slum in Asia. Dharavi covers an area of about 330 acres of low-lying, marshy land. Tanneries have grown in this area adjoining an old and small fishing village. Earlier single-storeyed semi-permanent labour shelters were constructed there. Then huts were put up in every vacant spot. The huts are made of old tin, bamboos etc. There is an extreme overcrowding and appalling sanitary conditions. Legalization and better shelter conditions are sought in this programme. Infrastructure and shelter improvement loans will be provided to the poor. The population of Dharavi is estimated to be about 250,000. A part of it is on private land. Those who wanted to take part in the programme, had to organize themselves in CBOs. The accommodation provided consisted of one-room tenements with a toilet. Each tenement costs around Rs. 60,000. A subsidy of Rs. 5400 is given. An interest free loan of Rs. 7100 and a loan of Rs. 20,000 at low interest are provided. The rest of the needed cash must be arrange by the people themselves. This is very difficult for the poor. This kind of high-rise flat housing programme although subsidized, is of limited use to the poor.

At present, the purchase of urban land for housing by the poor is out of the question. Only the public housing agencies can provide land to the poor through, for instance, cross-subsidizes. Recently, land rights have been given to slum dwellers by some local authorities, often for political reasons. Those getting a plot can then obtain housing loans. For the squatters occupying private land, this option is not available. It is evident that the public sector has been unable to reach but a small segment of the urban poor.

Box 27. Ekta Vihar: squatter upgrading in New Delhi

The experience of limited success in several resettlement projects in Delhi made the Government try upgrading existing slum settlements on the site when the land is not required for other urban purposes. The Ekta Vihar project has the objective of promoting self-help and community involvement through technical and financial assistance. Social and economic activity support are included as well.

Some residents of Ekta Vihar asked an NGO, Action for Securing Health for All (ASHA), to open a clinic in their slum. This led to the formation of a CBO and contact with EIUS. EIUS provided the settlement with hand pumps and community toilets. ASHA started to train community health workers. The squatters then wanted to improve the infrastructure in the area and their shelters. The haphazard arrangement of dwellings and the narrow footpaths were a hindrance to upgrading. ASHA organized the community into a registered CBO with elected leaders. ASHA also acted as an intermediary between the CBO and public institutions. This was necessary because the squatters had no confidence in the government policies for upgrading. They had been evicted several times from different areas.

The authorities were persuaded to allow the 475 households to reside permanently on the land, and land rights were transferred to EIUS. The allocation of plots was made jointly by EIUS, ASHA and the CBO. The residents chose their neighbours. The standard on basic services and the dwellings were kept low to discourage selling. EIUS together with ASHA made three demonstration dwellings to show the construction technique and building materials. A loan of Rs. 5000 at 4 per cent annual interest was given to each household. The development of the land was given to the residents as a grant. The CBO was entrusted with the control of any resale of plots. Every household has to pay Rs. 30 a month for environmental upkeep of the community. The low default on this charge and the repayment of the loans are due to the fact that the residents see the positive transformation of their habitat. It is also important to recognize that the area has a fairly central location with relatively easy access to the residents' established sources of livelihood.

Box 28. The Bustee Improvement Programme (BIP), Calcutta

The Bustee Improvement Programme (BIP) became operational in 1972. A century of neglect had left much to be done in the bustees. By 1986, the BIP had improved about two thirds of Calcutta's slums substantially, benefiting around 3 million people. The aim of the Programme is to improve the environment, especially the sanitation situation, without influencing the tenancy system. This system is formal, i.e., it is within the legal and tax framework. The improvements sought are: to construct latrines with a septic tank for every 25 persons or on the basis of a cluster of dwellings; to provide a water tap for every 100 persons with at least 20 litres per capita and day; to make drainage ditches connected to underground sewerage systems; to pave footpaths and minor roads; and to provide garbage collection and bath facilities at convenient locations. By 1987, a total of 460,000 slum dwellers had got better basic services under this programme.

Bustee organizations typically consist of the inhabitants of several clusters of houses. These organizations are approached by the authorities in order to identify the slum dwellers' specific needs in that particular area, and to secure their cooperation in, for instance, rearrangement of the dwellings around the water tap and toilet facilities provided. Included in this model of slum upgrading is a health-care programme. To enable the poorest to take part in the programme, it was realized that income-generating opportunities had to be initiated for them. A small-scale enterprise programme was therefore initiated to find viable service and production activities that could be started with credit assistance and technical advice.

The Programme's multifaceted approach has improved the living conditions of the poor even though the tenurial right to plots has not been given. The cost of the Programme is to be recovered by a tax on the beneficiaries. Yet, the collection of this tax has not been pushed. The maintenance of the improvements made is thus a problem, since the authorities are unwilling to take on this responsibility as long as the recovery rate of betterment charges is so low. Yet, it must be said that BIP has had some degree of success. It is however insufficient, and lacks several necessary dimensions (Moitra and Samajdar, 1987). The Programme should be harmonized with the regional economic development programme; the complex land-tenure situation should be solved; the rising rentals forcing the poor to find cheaper accommodation should be checked; and the balance between cost recovery for replicability and necessary subsidies for the poorest must be found.

The soundness of the fundamental idea behind the BIP should, however, be stressed. The public expenditures on BIP have reached the poor. The typical experience in site-and-service and resettlement programmes of land and shelter being to a large extent traded up from the poor to higher-income groups have largely been avoided. Moreover, redevelopment projects often reduce the number of people that can be sheltered on a piece of land. The extremely high congestion in the bustees makes it, in some sense an efficient use of land. The most important thing to note, however, is that the number of dwellings in Calcutta probably would have declined, if redevelopment had been initiated instead of the BIP.

The “night-shelters” in Delhi are meeting a demand for a cheap place for individuals to spend the night. Cost recovery may be difficult to achieve in this kind of accommodation. Replicability is thus limited. A chain of night-shelters, which also caters to women, could for instance be made and operated by NGOs. The need for a place to sleep close to business opportunities is widespread among the poor. In India there has been a steady decline in the supply of rental accommodation, mostly due to the Rent Control Act. The rental options for the poor are fraught with exploitation by “slum lords” and other intermediaries. In the formal sector there has been little construction of tenements for rent since rental rates were frozen for long periods, reducing profitability in this kind of housing investment.

4. Nigeria

The Land Use Decree has been a major hindrance for shelter provision in Nigeria. It has not released land speedily and adequately enough to satisfy the basic land needs for housing construction. Moreover, its cumbersome procedures are intimidating for the poor, for whom formal access to land is very difficult. A prime example of a law that is quite obsolete is the Nigerian Town and Country Planning Ordinance of 1946. This law controls the major part of the process of translating unused land into land for shelter construction. The main criticism of the law is that it does not offer sufficient participation by relevant actors; it does not reflect modern land-use planning concepts, usages and practices; and it has not been synchronized with the provision of the Land Use Decree of 1978.

Between 50 and 60 per cent of total house-construction costs in Nigeria are those for building materials. Currently, much of the materials is imported. Local capacity and capability of building-material production must be developed. The reasons for the high building-material costs, besides importation, are: high demand owing to the oil boom; adoption of high building standards by the more well-off population; over-priced contracts; and inefficient distribution systems, aggravated by intermediaries. The Government is moving away from direct production of building materials and intends to limit its role to facilitating private sector production. Furthermore, the Government will encourage simple, imaginative and functional building design, and realistic specifications and space standards to facilitate cost reductions, affordability and acceptability; and will develop appropriate technology and support the use of local building materials.

It is obvious that housing supply in Nigeria has bee unable to keep up with housing demand. There are a number of reasons for this situation, among which are:

· Unstreamlined and incompetent mortgage arrangements;

· High cost of land and sometimes utter inaccessibility to it;

· High construction costs occasioned by the continuous upward rise in the cost of building materials;

· Lack of skilled labour;

· Inadequate housing finance;

· Too much attention is paid to prestigious projects. Most public servants in Nigeria have, for example, built prestigious mansions in their villages that are usually occupied for not more than three months each year. These are regarded as status symbols while economically, they constitute relatively dormant investments;

· Most builders of residential accommodation are set on recouping their invested capital within the shortest possible time;

· In enforcing development control measures, very high standards are usually set which have a dampening effect on housing provision. Appropriate building standards can do much to create a safe and pleasant environment. Yet, misconceived, they can contribute to depressing the living standards of the poor. If such regulations are inappropriate and set standards too high for existing income levels, their primary effect will be to reduce the amount of housing that is available at prices the people can afford.

Other factors that adversely affect the low-income groups include:

· High rates of inflation;

· Inadequate infrastructural facilities.

· Limited access to serviced land and the difficulties of obtaining title (certificate of occupancy);

· Lack of finance.

The lack of finance is the most important factor inhibiting the access of low-income Nigerians to decent housing, through high interest rates; unaffordable down payments; low earning power, making it impossible for low-income groups to afford the monthly repayment rates; and inability to provide guarantors acceptable to the mortgage institutions. Consequently, only a few urban dwellers - and even fewer rural dwellers - have so far benefited from mortgage loans by the commercial banks, the Federal Mortgage Bank of Nigeria and the state housing corporations.