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Shelter
February 1985
>> This Is USAID >> USAID Policy Papers >> Shelter
[Download original document] III. Framework For Developing Shelter Strategies
In seeking to improve the physical living conditions of its people, the typical developing country is confronted with a series of difficult problems. In assessing a proposed Shelter program for any country, the Mission should make a judgment on whether its economic policy orientation is consistent with reasonable expectation. Policy dialogue objectives should be considered as part of a shelter strategy. Typical problems to be reviewed include:
1. Difficult National Economic Conditions
Inflation, unrealistic interest rate policies, excessive levels of subsidies, low levels of income and employment, and inadequate know-how impede investment in and overall production of shelter. As a component of the development strategy for an individual country, USAID's involvement in shelter programs can help address some of these economic problems and thereby influence the productivity of domestic savings invested in shelter.
2. Politically Charged Approach to Shelter Problems
The combination of limited economic resources, the rising expectations of populations in developing countries, and competition between interest groups, make many aspects of development the subject of vigorous political debates. Shelter is no exception. USAID may help LDCs to avoid the sacrifice of long-term goals in shelter development for short-term political expediency by maintaining a continuous policy dialogue with host country officials, and encouraging the long-term support for technical personnel and the private sector.
3. Limited Access to Urban Land and Secure Tenure
Inappropriate urban land policies often contribute to increased land costs to the urban poor, inefficient land use, and increased infrastructure and service costs. Unclear tenure inhibits urban development and limits access of households to more formal lending institutions. Development of simplified procedures to assist in evaluation of satisfactory mechanisms for determining and transferring title are vital to a healthy residential land market.
4. Inappropriate Physical Development Standards
The legal standards for physical development of housing units and related urban services and facilities are often too high and therefore too expensive for the majority of the urban population to afford. Since low-income housing is very often built by the occupants themselves, such standards affect low-income groups adversely. Greater inequities in the shelter delivery system are the result. An example is the denial by the government of urban services to self-built homes which are below prevailing legal standards.
5. Limited Institutional Capacity
The process of development is frequently hampered by the limited institutional capacity of the host country. Shelter policies and programs, even when well designed, may fail due to the lack of skilled professional personnel, inefficient procedures, dearth of basic data to formulate appropriate policy decisions, and the lack of coordination among various agencies responsible for implementing aspects of a shelter program.
6. Failure To Maximize Private Savings
Many LDCs have not yet developed the financial policy framework or institutional structure necessary to mobilize adequate private savings for shelter sector investment. About 80 percent of shelter finance is currently provided through informal channels. The remainder is supplied through formal credit institutions which generally serve middle and upper-income groups. While international transfers, such as the HG program cannot substitute for domestic savings mobilization, they can be used catalytically to assist in mobilizing domestic savings.
7. Inappropriate Interest Rate Policy
Host government policies often hamper the mobilization of indigenous financial resources which might otherwise be available for shelter. Ceilings imposed by the government on interest and/or below the reasonably expected rate of inflation (so as to make them negative in real terms), discourage the flow of investment funds into home finance institutions and often lead to their ultimate decapitalization.
8. Excessive Subsidies
The needs of the developing countries for shelter are vast compared to the availability of resources for meeting them. Therefore, the prerequisite for any successful housing policy addressing the needs of the poor majority is recognition by the government concerned that programs dependent on public subsidies can only make a small dent in the huge need for improved shelter. Their only realistic goal is to undertake shelter construction at standards which are to be affordable by poor families without the necessity for subsidies. The pre-conditions for self-sustaining programs on a scale large enough to have an appreciable impact on shelter requirements include sound pricing policies and cost recovery. Public housing programs often produce housing units that either require recurrent annual subsidies, which exceed the resources available and compound their budgetary difficulties, or produce completed units which are too expensive for low-income households.
9. Inadequate National Housing Policies
Solutions to all of the above problems are made more difficult in the absence of a clear, consistent national housing policy. However, many LDCs do not have explicit housing policies in place. Unfortunately, many of those which do exist are seriously deficient. They frequently do not adequately address the shelter needs of the urban poor, fail to recognize the potential contribution of the informal sector to shelter delivery, do not provide sufficient incentives and opportunities for the private sector to fully participate in all aspects of the shelter sector, and do not reflect the linkage between shelter investment and economic growth.
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Last Updated on: July 11, 2001 |
