7.3.1 Projects to provide new shelter

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.