4.1 Shelter demand and levels of supply by projects

The assessment of housing demand is not a simple task and requires an in-depth approach. Struyk and 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 always available. Another problem is that officially acceptable standards may be unrealistic in determining estimates. Despite these difficulties, however, it is only by reference to an overall perspective that the performance 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 between housing 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 to 41.8 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 the demand on public-sector resources may now be taking its toll. It has been estimated, for example, that 4-5 per cent of GNP will be required to meet the total annual demand for 145,000 new units and upgrade 103,000 existing dwellings each year (Jayaratne, 1990: 11). In 1980, 10 per cent of GNP was allocated, but this is now down to 1 per cent because of internal and external economic problems. At the same time, however, urbanization, and therefore demand, is expected to increase, raising questions about the sustainability of existing programmes. In the city of Colombo, for example, about 53 per cent of all housing still consists of slums or shanties and about 650 hectares of land are required to meet the city’s housing needs. With 1988 land prices in the order of 5-10 times 1978 prices, access to land by either public-sector agencies or individuals is becoming increasingly difficult.

Evidence from Turkey also suggests that progress has been mixed. Annual demand for housing in urban 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). Although the gap is still large, steady progress has therefore been made each year in reducing it. These data, however, present only 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 were provided through projects. Nonetheless, a total of 93,662 households benefited from various shelter projects between 1978 and 1989, an average of 7800 a year. In the period 1984-1989, public sector supply 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 about 350 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 them live in various types of informal settlements that have generated about 95,000 housing units a year nationally (Tokman, 1990: 6). Access to formal- sector housing, whether public or private, is almost impossible 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 most severe in urban areas, since urban growth is expected to continue at high levels until at least the year 2004 (Mutizwa-Mangiza, 1990: 2). The metropolitan areas of Harare-Chitungwiza and Bulawayo are projected to grow at their present level of 7 per cent per annum for some years, declining steadily to an average of 5 per cent per annum by 2004. A USAID study undertaken in 1985 indicated annual urban housing demand levels of 60,000 (1989), 75,000 (1994), 94,000 (1999) and 102,000 units a year by 2004, 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 and the 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 were completed (Mutizwa-Mangiza, 1990: 4). The rate of low-income housing production by the NHF, which represents the largest source of central government funding for housing in the country, has also declined by more than 40 per cent over the six-year period 1982-1988. The increasing emphasis upon private sector provision funded through building societies has not, so far, been able to rectify this shortage.

Table 4. Urban^a housing need and production in Turkey

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

Official policies in Zimbabwe towards unauthorized settlements have always been hostile and any that developed were demolished before they could be consolidated. Because of this, and the inability of shelter projects to meet total housing demand, levels of overcrowding have increased within the existing stock (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 is concentrated on the island of Java and in the largest cities, which are growing at twice the rate of total population. Jakarta has a current population of 8 million and Surabaya 3 million. It is expected that the level of urbanization will have risen from 25 to 40 per cent by the year 2000 (Herlianto, 1990: 2). To provide each household with its own dwelling, replace obsolete units and accommodate new household formation within a 20-year period, would require an estimated 1.4-1.6 million new units a year. This has to be compared with a total level of formal sector supply of nearly 900,000 units between 1974 and 1988, 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 per cent 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 1 per 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 a substantial increase each year from 200,000 in 1984 (Herlianto, 1990: 67). Inflation and devaluation in Indonesia (and elsewhere) have, however, seriously eroded the ability of shelter projects to reach the low-income groups (Herlianto, 1990: 58).

In Colombia, the total housing backlog was estimated at 968,000 units in 1990. An additional 190,000 new units are required every year. If the backlog was to be eliminated over a 10-year period, this would indicate a total annual demand for about 287,000 housing units (Utria, 1990: 10). Not only is the volume of demand immense, the nature of demand is equally problematic; since 45.6 per cent of 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 adequate minimum legal shelter (1990: 12). At least 20 per cent of the population are even unable to afford the units that are available, and the national economy is unable to provide subsidies to enable them to bridge the gap (Utria, 1990: 9). Total supply reached a record level of 110,000 units in 1984. The public-sector agencies active in funding or providing shelter, supplied approximately 28,250 plots and dwellings (Utria, 1990: 13-14). Although there is an active and sophisticated private- sector construction sector, this concentrates on addressing the needs of the more affluent urban minority. The only effective option for the poorer majority is thus to obtain land and housing through one of the many informal-sector developers. These consequently account for more than half of total housing supply.

The Bolivar City project in Bogota, for example, was one of the largest to be undertaken in recent years. It provided 10,300 plots for low-income households and benefited even more through the provision of services and community facilities to existing settlements (Utria, 1990: 52). Similarly, the Kennedy City project in Bogota provided 10,568 units over a five year period. During the same period the annual level of demand in Bogota was 10,000 units. Furthermore, the project had a considerable indirect impact, since it attracted additional investment from private-sector developers to the area. On this 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 local deficit (Utria, 1990: 50). Clearly, demand has outstripped supply through projects in Colombia, and the gap is increasing every year.

The general conclusion from this evidence is that the project approach has not been an effective means of supplying shelter to a level approximating demand in any of the countries covered by this review. The exception that perhaps proves this rule is Sri Lanka and this was due largely to political commitment at the highest level of government. Even then, the economic price imposed by direct and indirect 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 of Ismailia in Egypt. In a single year (1981), the number of plots allocated by the Ismailia Hai el Salam Project 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 relatively small city, and was not, therefore, representative. Most housing in developing countries continues to be supplied through non-project processes. Projects are, at best, holding their own at a modest level. In most 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 and Kennedy projects in Bogota noted, an important feature of their success was that they succeeded in attracting indirect investment from private-sector developers. It may well be that the greatest contribution of 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 project was 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 involved and the complications of settling compensation claims. The site was then developed for a total of about 30,000 people and was due for completion and allocation of plots about ten years after the project had been designated. In the intervening period, the surrounding agricultural land was subdivided and developed by private-sector developers and land-owners in the confident expectation that services would soon be available in the area. Even before any residents had moved into the sites-and-services project, it appeared that the unauthorized settlement was already accommodating more than the total projected population for the sites-and-services scheme. Since this development was unauthorized, it was attractive to households in the lower income category and enabled occupants to develop designs and standards of housing that reflected their own needs and priorities, rather than those of the developer, or local authority. Furthermore, such development was achieved without any direct investment by the public sector. This experience exemplifies how the prospects for the project approach could be considerably enhanced if public-sector agencies could harness this capability of projects to stimulate secondary investments.