OPIS Foundation

Learning from the Poor

The poor, worldwide, resort to all sorts of means to house themselves in the face of a housing industry and policies that fail to provide them with affordable options. In the last fifty years, as rural to urban migration expanded across all regions, the practice of self-help housing resulted in vast housing settlements which have baffled governments and society. At times, urbanization itself was put to blame for exacerbating this problem. However, a better understanding of the long-term urbanization process-and of its increasing pace in the last century-has shown it to be universal, unavoidable and even desirable. Also, throughout this period, except for a few enlightened cases, public policies with respect to these housing settlements have swayed from open hostility, physical removal, and open denial, to, at best, piece-meal and reluctant introduction of a few urban services. Very often, sheltering the poor was looked at as if it were a problem of insufficient commercial housing supply to be resolved via complex financing schemes and granting of subsidies. In most cases, such approaches have proved ineffective. In the last decade, public policies with respect to the housing settlements of the poor changed significantly. Increasingly, governments as well as multilateral and bilateral organizations are learning lessons-on the importance of good governance, and on allowing housing markets to work unimpeded-as the poor make efforts to house themselves.

Self-help and informality. It is common knowledge that the vast majority of the urban poor, and indeed the very poor, live in dire physical conditions, of which vulnerable and crowded dwellings and a deficiency, or absolute lack of urban services are the most apparent features. Indeed, the living conditions of the poor are tough and varied. They may simply live in the streets, sometimes in such large numbers that communities are formed such as in Freetown Seaira Leon; they may squat on public land, commons, or land with undefined or disputed property rights, frequently as permanent solutions, as in the rapidly expanding cities of most of the developing world; they may settle in legal or illegal land subdivisions on the peripheries of cities where they gradually build their houses and may eventually obtain provision of urban services; they may rent rooms in subdivided formal housing which were previously inhabited by higher income groups, in the center of large cities; or they may occupy precariously functioning and large high-rise housing complexes, conceived and implemented through governmental programs more common in but not unique to non-market economies, as can be observed in many large cities of Asia and Latin America. Of the above types, squatters and peripheral subdivisions constitute the vast majority of housing for the poor and are frequently termed informal settlements due to their lack of property titles and their non-conformity to municipal urban plans, norms, and regulations.

Despite its physical conditions, the housing of the poor may be seen as an important expression of human ingenuity and effort, reflecting important strategies to cope with an environment that is negligent, if not hostile, to the needs of the poor. These strategies, pursued individually or in groups, are the means through which the poor, rationally, strive to fulfill their housing preferences in a least-cost manner, within the limitations of their budget. Given the prevailing levels of income and other constraints, informal settlements can therefore be said to be solutions, not problems (in the classic expression of John Turner).

The housing of the poor is not static. There is plenty of evidence that gradualism and sweat equity-the use of their own labor in constructing their houses and settlements-given time, transform the housing of the poor into acceptable housing solutions. Markets are quite active in informal settlements; realtors are not uncommon; renting of smaller spaces or of full houses, is normal practice. Housing units are frequently bought and sold, though these carry a discount due to the lack of property titles and the presence of negative externalities. In fact, there is also evidence that processes such as gentrification and filtering-the movement of the housing stock across income groups-which are part of the development of cities everywhere, are also common to informal settlements. In this sense, informal settlements tend to emulate the formal city of which they are part not only physically but also in its social transformations.

As a number of analysts have pointed out, many informal settlements carry a number of problems related to the way they were originated and developed. Squatters chose locations which are environmentally sensitive, such as the shores of bodies of waters, or risky, such as hilly slopes and rights-of-way for public services (transmission lines, gas pipelines, or transport corridors). Also, informal settlements develop in a haphazard way, without definition of proper rights-of-way for vehicular circulation and infrastructure. These ubiquitous negative externalities indicate, on the one hand, the lack of will or power of governments to enforce environmental legislation and, on the other, the lack of mechanisms of collective action or the presence of some level of regulation to guide the development of informal settlements.

 All formulators of policies increasingly agree that the design of more appropriate urban policies for the poor requires that a set of elements be culled from the experience of the poor themselves. This must include the acknowledgement of the role played by sweat equity; the acceptance of the gradual nature in which the housing and the settlements of the poor grow, guided by the changes in family structure and in the short-term fluctuations and long-term increases in family income; a clearer definition of property rights; the creation of mechanisms to support collective action and control externalities; and the creation of poor-specific financing mechanisms, which take into account the need for loans of small amount, poor credit records of borrowers, and the short-term fluctuations of their incomes.

Governance. They also agree that attention ought to be paid to three basic governance issues:

1. decentralization of responsibilities to local governments;
2. introduction of private sector participation in the provision of urban infrastructure; and
3. the increasing participation of civil society in the definition and implementation of housing policies for the poor.

Finally, most parties would also agree that the role of central governments remains extremely important in "scaling up" local experiences.

There is no single solution to the problem of providing housing for the poor. Most countries ought to adopt a number of approaches in order to satisfy different sub-markets; for example, the segment of households with incomes high enough to jump the frontier between informality and formality, squatters or slum dwellers who require the continued gradual improvement of their homes, or new poor households, whether these be migrants or existing urban dwellers. The emphases to be given to each of the above will, of course, depend on the country's level of income, rate of urbanization and proportion of poor.

Ideally, the formal, commercial housing sector produces a diverse range of commercial housing solutions (including land parcels) that respond to the price demands of all types of households, including the poor. However, historical experience demonstrates that the range of solutions is, in fact, very limited. The housing industry operates above both the capacity and the willingness to pay of the poor (this being one of the reasons why the poor house themselves).

Measures that contribute to lowering the average costs of housing production would then permit the poor, at the margin of the formal housing markets, to jump the frontier of formality to be served by a supply of low-cost formal, finished housing units.

These are measures oriented to the improvement of existing informal settlements, the so-called upgrading of slums or urban areas. They consist of a number of initiatives aimed at correcting negative externalities in these settlements, planning their future growth, providing urban services, rectifying and/or providing property titles, and providing technical assistance and micro-credit to improve individual housing units. The frontier of slum upgrading practice in many countries lies on the methods and means through which investment and operation costs are to be recovered, communities are to be involved in the upgrading process and governments are to finance these actions. Decentralization of responsibilities and revenues to local governments have played an important role in making municipalities-with little support from the central government-become an important innovator in terms of slum and squatter upgrading, with hundreds of small and large experiences being attempted by municipalities all over the world. Two of the world's largest metropolitan area programs of upgrading are currently being implemented in Brazil: the frequently cited Favela-Bairro, in Rio de Janeiro, and the Recife Pro-Metropole.

 Land is the initial step in the gradual process of self-production of housing. The means by which it is developed or partitioned and, then, acquired, whether legally or illegally, has profound consequences for city development in years to come. In most developing cities, the poor locate either by squatting in public or private land, or buying land plots in informal subdivisions at the periphery, as seen in most of Latin America; by negotiating fractions of lots that are subdivided increasingly, as seen in much of Asia; by buying second (or third) story roof slabs in existing slums, as again seen in the large cities of Latin America; and by making use of various governmental programs of provision of access to land, among them the classical sites-and-services projects.

All of the above have consequences, both at the level of the individual families as well as at the level of the city, which are not completely understood. This makes the proposing of land policies particularly difficult. However, in general one would think that the overall desirable policy goal would be to increase the supply of affordable land with minimum negative structural consequences for city development. And to do this one would have to resort to the appropriate use of regulation, land taxation, and local governmental investments. To begin with, this would rule out invasions and squatting as unacceptable. It would also suggest that governments should be more lenient with informal land subdivisions, reducing standards and requirements of installation of infrastructure accepted here, as well as, the principle of gradual housing and urban improvement. In such a context, there seems to be ample possibility of negotiation with local developers, in order to avoid, via land readjustment practices the worst consequences of this type of development, such as the coordination of main road layout. A similar type of reasoning can be applied to cases mentioned above. Finally, one should say that the current ethos is not sympathetic to making use of governmental programs, and few are indeed found that are exemplar.

Land policies is an area in which much and urgent research is needed in order to better clarify important issues. The following are of particular interest:

1. urban and land regulation;
2. expansion of trunk infrastructure;
3. the concession of financing and subsidies to land purchase and cost recovery of governmental programs;
4. land taxation; and
5. land titling.

There are important examples of such research led by the The OPIS Foundation in Sierra  Leone.