Funding Community Initiatives

Silvina Arrossi, Felix Bombarolo, Jorge E Hardoy, Diana Mitlin, Luis Perez Coscio, David Satterthwaite

• Publisher: Routledge
• Year: 2014
• eBook ISBN: 9781134166695
• Edition: 1
• Topic: Economics
• Subtopic: Development Economics
• Index: Economics

Despite four decades of development planning, at least one third of the urban population of Africa, Asia and Latin America remains poor. Over 600 million live in 'life and health threatening' homes and neighbourhoods because of poor housing and inadequate or no piped water, sanitation and health care. But even as the shortcomings of government and development programmes become more apparent, so do the untapped abilities of low-income groups and their community organizations to develop their own solutions.

This book analyses the conditions necessary for successful community initiatives and includes case studies of 18 intermediary institutions (most of them Third World NGOs) who provide technical, legal and financial services to low-income households for constructing or improving housing. Many also work with community organizations in improving water, sanitation, drainage, health care and other community services.

Through the analysis of innovative financial systems for income generation, house construction and service provision, Funding Community Initiatives considers the feasibility of loans for addressing current urban housing problems. It also considers how to increase greatly the scale and effectiveness of support going to low-income households and community organizations.

This book will be of interest to students and professionals concerned with urban development in Africa, Asia and Latin America, especially those concerned with low income shelter and community finance.

Part I

OVERVIEW

1

THE NEED FOR INVESTMENT

INTRODUCTION

By 1990, an estimated 1.4 billion people lived in urban centres in the Third World.¹ Of these, at least 600 million are estimated to live in ‘life- and health-threatening’ homes and neighbourhoods because of the inadequacies in the quality of the housing and in the provision of infrastructure and services associated with housing and residential areas (such as piped water supplies, provision for sanitation, garbage collection and site drainage, paved roads and pavements, schools and health clinics).² This implies serious shortfalls in investment in the homes and neighbourhoods of the urban population.

The speed with which urban populations have grown in Third World nations has far outpaced the institutional capacity to manage it. The Third World’s urban population was under 300 million in 1950, which means nearly a fivefold increase between 1950 and 1990. During these forty years, the number of urban inhabitants in many Third World nations expanded more than tenfold. Some major cities have grown more than twenty-fold. There are dozens of cities with 500,000 or more inhabitants today which were only small urban centres in 1950. There are hundreds more with between 100,000 and 500,000 inhabitants which four decades ago had only a few thousand inhabitants or which were not urban centres at all.

However, the central characteristic of the urban problem is not the scale of population growth but the scale of the mismatch between demographic change and institutional change. This mismatch is between the speed with which population has concentrated in particular urban centres and the (often) very slow pace with which societies have developed the institutional capacity to cope with this. Most large urban centres today have city and municipal governments whose form, mode of operation and resource base have changed little in recent decades, despite enormous increases in population, resource consumption and waste generation.

Although the failure of public institutions to cope with this change is almost universal, the scale and nature of urban change, its likely extent in the future and the most appropriate means to address it will differ greatly from country to country. In some Third World countries, rapid urban growth began in the late 19th century or in the first decade of the 20th century; for a few others, it began between the two World Wars. But for the great majority, rapid urbanization has only taken place since the 1940s or 1950s. Some of the less industrialized and more rural nations have been experiencing the most rapid rate of growth in their urban population. Most of the slower growing cities are associated with countries which urbanized and developed earlier, and their urban authorities are not so pressed by the need for quick solutions. In many such cities, institutions are better developed, as is expertise, and policy makers can select from a range of different urban strategies. This is the case, for example, in Buenos Aires, Rosario and Cordoba in Argentina, Santiago in Chile, Montevideo in Uruguay, and Porto Alegre in Brazil. At the opposite end of the spectrum are the fast-growing cities of sub-Saharan Africa within countries which gained political independence one generation ago (or less) and where there are fewer traditions and limited expertise on which to call in managing rapid urban growth. These cities include Lagos, Dar-es-Salaam, Nairobi, Kinshasa and Lusaka. There are also cities with an ancient urban history, like Mexico City, Delhi, Bangalore, Bangkok and many more in Asia, which are also growing far beyond the existing capacity to plan and manage such rapid change.

The conventional model for the development of urban residential areas within market or mixed economies assumes that a considerable proportion of urban households will choose to make high levels of investment in their own shelter. This model assumes that such investment will be facilitated by long-term credit taken on by the household. It assumes that most individuals or households – whether as owners or tenants – will be able to meet the full cost of housing that has been designed by architects and constructed by building enterprises, using skilled technicians for specialist work. It also assumes that a range of public authorities and agencies will ensure the provision of infrastructure and services to all buildings and provide a planning and regulatory framework which ensures that buildings are healthy and structurally safe. While the particular form that this model takes varies amongst the nations of the North, as does the division of tasks and responsibilities between public and private sector, it remains an accepted responsibility of public authorities to ensure that all residential, commercial and industrial buildings have adequate infrastructure and services and that the buildings are structurally safe.

This conventional model was developed in the North in response to rapid urban change. Its effectiveness can be seen in the reductions in mortality and morbidity rates and in the incidence of many infectious diseases during the last decades of the 19th century and early decades of the 20th century. In the mid-19th century, levels of life expectancy were much lower and infant and child mortality rates were much higher in many of the poorer districts of cities in the North than is the case in most Third World cities today.³ Although many urban problems remain in the North, a very high proportion of all urban citizens have shelter which protects them from the elements and which has basic infrastructure and services. However, this model of urban development took many decades to develop. Much of the urban population in the North suffered from serious deficiencies in shelter, infrastructure and services during much of the 19th century (and many people continued to suffer during part of the 20th century).

This model for the development of residential areas does not work in the vast majority of urban centres in the Third World. Government agencies in the Third World often have similar roles and responsibilities to those in the North; indeed, the very structure of the building and planning regulations and of local (municipal) government is often based on precedents drawn from the North or remains little changed from Northern models introduced under colonial rule. But the authorities who in theory are responsible for investments in infrastructure and services lack the commitment, power and resources to do so.⁴ They also fail to provide the regulatory framework to ensure that buildings meet health and safety requirements. Even where such a framework is enforced, it is so inappropriate to local conditions and possibilities that the cost of the cheapest ‘legal housing’ is pushed beyond what can be afforded by the majority of the population.

Many reasons can be put forward to explain why the model developed in the North works so poorly in the South. Although their relative importance will vary greatly from nation to nation, the reasons include more rapid urban population growth, less well-established institutions for local government, less democratic societies with more centralized government structures, and often more inequitable distributions of income and assets, and slower economic growth (for some nations). In most cities, there are large gaps between the cost of the cheapest conventional shelter and the ability to pay of most of the urban population. What is perhaps less easily explained is the lack of examples of more appropriate models of public sector intervention for urban development.

Most investments in the built environment in all but the central districts and the more wealthy neighbourhoods come from a large and varied multiplicity of individuals and households. Most of these are unrecorded and are made outside any legal building or planning regulations. Most new housing is also built illegally. Only rarely does public policy support this investment and it may constrain or hinder it. The gap between reality and ‘the conventional model’ can be seen in the official statistics for the number of conventional houses constructed annually. In Third World nations, the number of conventional dwellings constructed annually is usually between two and four per 1000 inhabitants – and the actual increment in the housing stock (including all illegal and informal housing) is likely to be between 15 and 30 units per 1000 inhabitants. In many of the poorer nations, the number of conventional dwellings constructed annually can be below one per 1000 inhabitants when the population is expanding at between 20 and 35 persons per 1000 inhabitants per year and the urban population expanding at between 30 and 60 persons per 1000 inhabitants per year.

Most city or municipal governments have virtually no independent investment capacity. They also have inadequate powers for revenue-raising and lack the institutional capacity needed to plan and manage infrastructure and service provision and to recover costs. Most of their budgets are spent on meeting recurrent costs. Constrained local (and national) budgets for public works mean postponement of new investments in city infrastructure and no expansion in the number of people served. Private investment in infrastructure and services is constrained not only by low levels of demand (since most of the population have incomes too low to pay enough for infrastructure and services to be profitably supplied by private companies) but also by the difficulties for individuals or households in funding investments which can only be made on a neighbourhood or district basis such as roads, pavements, drains, sewers and piped water systems. The result is large areas within each urban centre, city or metropolitan area with no paved roads or pavements, no piped water systems or electricity supplies, no sewers or drains. Such areas also suffer serious deficiencies in services and amenities such as garbage collection, health centres, dispensaries, schools and day-care centres.

It is impossible to arrive at an accurate estimate for the proportion of the 1.4 billion urban residents who lack adequate services and infrastructure within their homes and residential areas. Case studies of specific cities show that it is common for between 30 and 60 per cent of the population to live in illegal settlements, tenements or cheap boarding houses where infrastructure and service levels range from the inadequate to the almost non-existent.⁵ In many urban centres, especially in poorer African and Asian nations, the majority of the population lives in areas with major deficiencies in most or all such infrastructure and services. Most urban centres in Africa and Asia – including many cities with a million or more inhabitants – have no sewerage system at all.⁶ Even in cities where investment has been made in sewers, connection to the system is often restricted to the richer areas. Garbage collection services are deficient in most residential areas; an estimated 30–50 per cent of the solid wastes generated are left uncollected.⁷ The proportion of the population living with serious deficiencies in infrastructure and services may be smaller in the major cities of more prosperous nations – although in metropolitan areas such as Sao Paulo, Mexico City and Buenos Aires there are still millions suffering in this way.

There are also major problems with maintaining existing infrastructure and services. Inadequate attention to maintenance can be seen in the deterioration of bus and train services, the worsening state of roads, the poor maintenance of water, sewer and drainage systems and public buildings. In many nations, this problem has been exacerbated by foreign aid projects which provided the funds for new capital investments in roads, water and drainage systems, hospitals and health centres, schools, power stations and public transport but failed either to provide for recurrent costs or to support the development of local capacity to manage and maintain the new investments.

The quality of much existing and most new housing is very poor, reflecting the low incomes of those building, renting or buying houses. Such housing often provides the inhabitants with inadequate protection against the elements and little provision for security...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• About the authors
• Foreword
• Acknowledgements
• Introduction
• Part I: Overview
• Part II: Case studies
• Bibliography
• Index