strategy

Mobilizing shelter production by commercial sector

Synonyms:
Stimulating private sector provision of housing
Context:
ECO-HAB International's first Forum (Venezuela, 27-28 March 1995) concluded that there are enough concepts, models, demonstrations and completed projects in place to show that the private sector can meet a substantial amount of the demand for new housing. Recommendations include the following: (1) Those whose housing interests are planned for must participate in decision-making that affects their communities, taking local culture and preferences into account. Housing can no longer be considered without looking at issues of governance, civic engagement, the future of cities and the participation of various stakeholders. (2) A clear definition of property rights and land title is a prerequisite to the development of an effective housing finance system. (3) Housing policy cannot be addressed without considering influences on population, such as migration and resettlement resulting from war, environmental damage, infrastructure requirements and governmental restructuring. Moreover, it must always be considered in relationship to such vital community development issues as clean water, waste removal, health care and crime. (4) Sensible housing planning yields economic rewards. Traditionally the building sector has been a barometer of economic growth. At a very basic level, shelter and housing finance are also livelihood finance, and a very import source of self-esteem for lower-income borrowers. (5) Financial institutions should seek to understand and design technologies to accommodate the economic characteristics and financial needs of borrowers. Borrowers should be educated about new financial instruments and financial discipline. (6) The housing needs of low-income households can be met in part through community-based credit and community-guaranteed repayments, using private-sector partnerships that may involve non-profit organizations in capital mobilization and technical assistance. This enables the extension of credit to income groups not currently being reached by private-sector financial institutions through multi-layered financial arrangements. Local accountability to locally-focused financial intermediaries is a key component in financial infrastructure. (7) Cooperative approaches to housing offer great expansion potential for affordable housing in many countries and can be instrumental in reducing the costs of housing programmes. Cross-sector cooperation is often needed to bridge gaps between local needs and more traditional financial intermediaries. (8) Local government initiatives and programmes are essential for progress to be made in the field of shelter finance. There are many examples, including helping with land acquisition, infrastructure provision and organization for training and technical cooperation. Tax exemptions, rent subsides, guarantee insurance, subordinated debt, co-investment, leasing arrangements and the development local funding from various organizations should be encouraged. Nor should the development of rental properties be neglected. (9) Increased support and funding should be given to international efforts to assist in urban management programmes to help correct city management problems. Auditing and public accountability for government fund expenditure should not be neglected.
Implementation:
This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities.
Claim:
While commercialization of shelter provision (the exchange of land, housing and associated services on the market)does seem to be the global trend, empirical evidence shows that the impact of commercialization on access to housing and on housing standards varies significantly from one city to another. In some cities, land and house rents and construction costs do seem to have risen more rapidly than per capita incomes. Elsewhere, the housing options of the urban poor may not be declining, and may even be expanding as incomes keep pace with prices and/or people adapt to declining conditions in the housing market in different ways.
Counter Claim:
Increasing commercial private-sector involvement in low-income housing, by itself, is likely to lead to a reduction in the shelter options of the urban poor. Without strong links with government and third-sector organizations, poor people are likely to lose out to more powerful interests in housing markets which are liberalized under conditions of large-scale inequality, poverty and imperfect competition. Attention must therefore be focused on strengthening government and third-sector organizations (particularly at the municipal level) so that they are better able to play their role as partners.
Subjects:
Housing, tenants
Commerce
Production
Military
Private
Type Classification:
C: Cross-sectoral strategies