UN-HABITAT Executive Director, Mrs. Anna Tibaijuka, called on international financiers to focus more on the continuing problems of affordable housing and finance in developing countries.
Speaking at the just concluded Wilton Park affordable housing conference in Sussex, England, she said formal credit facilities had become expensive due to high interest rates and the current nervousness in lending to the low-income housing market.
This has led to an increase in the number of people lacking access to decent shelter, currently estimated at some 1 billion now slums around the world.
Mrs. Tibaijuka told government ministers, mayors, slum dwellers, public servants and diverse experts in housing, finance and development issues who attended the dialogue that slums were an important and strategic part of the city economy, which needed improvement through a sustainable housing and housing finance strategy.
“Housing is so central to the health of any economy that it is still amazing that there is so little attention paid now to the ways in which low-income housing can be integrated into the organisation of our cities throughout the world. If someone does not have a place to live they cannot contribute to the economy of the city,” she said.
Among the critical issues that needed to be addressed, she said, were the availability of sufficient land for low-income housing, the servicing of such land with proper access and basic infrastructure, access by inhabitants to formal credit arrangements to mobilise their savings and make their own investments in the future of the city, and the phenomenon of toxic debts arising from poorly regulated housing finance systems that have precipitated the current global economic and financial crisis.
“In our efforts to assist the world’s poor in terms of finance and affordable housing, we need to discus the convergence of global and local domestic agenda. While the current financial crisis extends beyond the initial crisis of poorly regulated housing finance systems, most experts agree that one of the most effective ways of stimulating economic recovery is public investment in housing and infrastructure,” she said.
She noted that although housing finance in developing countries was in permanent crisis as displayed by expansive slums, the sector had not attracted the attention it deserves from governments as well as their development partners.
For example, it still remains a struggle to have housing deprivation recognised as a critical dimension of poverty. Few developing countries readily include development into their poverty reduction strategies supported by the World Bank or UN Development Assistance Frameworks. For the full speech, click here.
Participants at the dialogue, hosted by the Wilton Parks Conference Centre in conjunction with the UN-HABITAT, discussed the theme - ‘Financing Affordable Housing for Low Income Groups: Innovative Funding For Urban Housing’. The Wilton Parks Conference Centre is an academically independent Executive Agency of the Foreign and Commonwealth Office.
The meeting brought together several critical players in the housing delivery process, who stressed the multi-dimensional nature of the process.
“If they are encouraged, the poor people have proved that they are able to make the improvements needed to transform their environments,” said Mr. Jockin Arputham, President of Shack/Slum Dwellers International with headquarters in Mumbai, India.
“By coming together, searching out vacant land in the cities, mobilising funds through savings and, organising the funding to make the projects bankable, slum dwellers have shown in several countries that they know what needs to be done to rid the cities of slums,” he added.
Slum Dwellers international through its Urban Poor Fund – a self managed autonomous facility – has been working to convert grants to equity by funnelling such funds to National Federations, which then ensure that their members make the best use of them.
Ms. Somsock Boonyabancha, Secretary General, Asian Coalition for Housing Rights in Bangkok, Thailand, said people loved to organise themselves and, given the opportunity, they would transform their slums.
The Asian Coalition for Community Action (ACCA), a program of the group, is currently supporting city-wide up-grading in 15 countries, targeting up to 100 to 150 cities in the region. “The people are not the problem, it is the system that has a problem,” she said.
However, the presumption that low-cost housing can not be accommodated in the funding portfolios of commercial banks and private developers was refuted at the conference.
According to Mr. Chandula Abeywickrema, chairman, Banking with the Poor Network and deputy general manager at Hatton National Bank, Colombo, Sri Lanka, commercial banks, which traditionally did not have any interest in this area were now taking a second look at the prospects of building their future customers today, by developing early savings culture and financial literacy programmes.
“If the regulators, the Central Banks, can create conditions where commercial banks are encouraged to develop micro-finance lending portfolios in the housing sector, with a more supportive tax policy, commercial banks will be able to contribute to the growth of the sector,” he said.