A/CONF.165/PC.2/5 & HS/15/3/3/Add.3

SUMMARY

The General Assembly, in its resolution 47/180 on the United Nations Conference on Human Settlements (Habitat II), affirmed that the Conference will conduct a mid-term review of the Global Strategy for Shelter to the Year 2000 and make recommendations for the attainment of its objectives by the target date. The Commission on Human Settlements, in its resolution 14/20, decided that at its fifteenth session it would discuss the mid-term review of the Global Strategy for Shelter to the Year 2000, prepared by UNCHS (Habitat) for the United Nations Conference on Human Settlements (Habitat II). In its resolution 14/1, the Commission requested the Executive Director, when preparing the mid-term review of the Strategy to pay special attention to the lessons learned by member countries in their efforts to translate the general principles of the enabling and strategic approach of the Global Strategy into practice.

In undertaking the review the Centre analysed information obtained from a variety of sources. In response to the request of the Commission, the Centre invited member countries to provide information on their experiences and, in order to facilitate a quick response on the key components of an enabling framework, the Centre issued a brief questionnaire to all governments. Some 74 governments returned a completed questionnaire and some provided additional information in time for the analysis. In addition, information was also received from international and non-governmental organizations. A brief description of the findings of the mid-term review survey, some examples of "best practice" in enabling strategies and a summary of external support to the implementation of the Strategy are contained in a separate document (A/CONF.165/PC.2/6; HS/C/15/3/Add.4).

The review indicates that while a large number of countries have adopted an enabling approach to shelter in their policies, very few countries have put into action the full range of implementing mechanisms. The review covers action taken in each of the main components of an enabling framework and also contains a set of recommendations for review by the Commission as well as by the Preparatory Committee of Habitat II.

I. Recommended actions

1. This mid-term review (MTR) of the Global Strategy for Shelter to the Year 2000 (GSS) is concerned with progress in the adoption and implementation of enabling strategies for shelter worldwide and what actions can be taken to ensure that countries best achieve the overall target of shelter for all by the year 2000. The first major conclusion is that the enabling approach has now been accepted to a greater or less extent by nearly all countries, if the MTR survey results are representative of the global situation. Therefore, the more important test is to determine to what extent countries have put in place policies, adopted time-bound programmes and devoted necessary resources sufficient to implement enabling strategies over the next six years. This chapter summarizes conclusions on progress to date and recommends actions to be taken at the local, national and international levels.

2. Since the adoption of the GSS in 1988 there have been new developments in the international arena, notably the adoption of Agenda 21 following the United Nations Conference on Environment and Development in 1992 and a consequent concern with principles of sustainable urban development. The GSS goals and policies remain relevant in such a context, although countries may want to give increased emphasis to some components, such as sustainable use of land resources and energy-efficient housing layouts. Another major development since the GSS was adopted has been the transformation of economic and social conditions in the former centrally-planned economies of Eastern Europe and the former Union of Soviet Socialist Republics, especially with democratic changes in the shelter sector. Again, GSS goals and policies remain relevant, but clearly the countries in transition will have their own immediate socio-economic priorities which will influence the adoption of enabling strategies for shelter.

A. Actions at the local and national levels

1. Overall progress

3. As a result of the intensive work on disseminating GSS principles by UNCHS (Habitat) and other external support agencies, especially during Phase 1 of the GSS in 1988-1991, plus the dissemination of research on housing supply, demand and outcomes and the work of-other major national and international initiatives such as the Urban Management Programme (UMP), the technical conditions necessary for enabling approaches are now understood by most countries. However, the original "milestones" for Phases 1 and 2 of the GSS have not been met by many countries. It follows, therefore, that explanations for shortfalls in progress are to do with lack of or inefficient use of resources (human, financial and technical), political priorities and deficient institutional structures.

4. It needs to be reiterated that measurements of progress in achieving shelter for all are currently constrained by a lack of quantitative data on housing outputs at the country level. This major gap should be filled over the next 6 to 12 months as countries submit their national reports for the United Nations Conference on Human Settlements (Habitat II), including data responding to housing indicators. It will then be possible to make comparisons of housing conditions, at least for those capital cities for which indicators are available from the 1991 survey under the Housing Indicators Programme (HIP). It is also recommended that countries submit their own definition of acceptable housing conditions and the progress made since 1988 in achieving that goal. (For example, China reports that average living space per head increased from 3.6 to 7 sq m in the 1979-1993 period, and has set a target for 8 sq m by the year 2000.) In the meantime, it is only possible to draw partial conclusions of progress on housing outcomes by comparing data from the 1991 HIP with the broad typology of countries developed under the MTR. In summary, there appears to be a broad correlation between countries with acceptable housing outcomes and well-developed enabling strategies (for example Chile, Jordan, the Philippines, Tunisia and Zimbabwe, as well as most of the industrialized countries). At the same time, it should be emphasised that both the HIP and the MTR show that "even for countries at the same level of economic development, housing quality and quantity vary considerably ... suggesting that poor quality housing is likely to be as much the result of housing policies as of poverty per se" (World Bank/UNCHS, 1991).

(a) General recommendations

5. A number of general recommendations can be made in response to these deficiencies which are relevant to a greater or less extent in most countries, particularly in the developing world, and these are summarized below. Recommendations on specific components of the GSS are discussed in section (b) below.

(i) Encourage political support

6. One of the biggest constraints for implementing the GSS is the need for, and frequent absence of, political backing for often difficult policy measures in the enabling approach, such as recognition of informal settlements, taxing vacant land and profits and allocating subsidies to those in most need. These difficulties arise from an amalgam of causes. First, technical staff dealing with shelter issues may not recognize that components such as land management, finance and community participation are highly political subjects. Secondly, these component areas of the enabling approach are the subject of many conflicts of interest among civil servants, politicians and private-sector interest groups. For example, it may not be in the interests of one or more of these groups to have clarity and simplicity in land information and regulations where that group is deriving illegal profits from land transactions. Thirdly, while adequate housing is of concern to everyone in the community, and everyone has a view on the subject, there are frequently insufficient paths by which individuals and community groups can express their ideas and priorities to politicians and administrators.

7. There are no easy solutions to such constraints on enabling strategies, since ultimately, technical recommendations are dependent on the macro-political structure in each country and, in particular, the extent to which multi-party democratic systems allow discussion and rights for all parts of the community. Experience shows that some actions have more general relevance.

8. First, being a champion of "housing for all" can be a powerful weapon for politicians, particularly at times which are propitious for reform and auction. Secondly, changes can be made at national and local-government levels to improve the use of limited staff and financial resources. For example, training, incentive structures, improved career paths and better internal management structures can improve the overall status and attitudes of civil servants. Round-table discussions between officials and private-sector groups interested in shelter (both formal and community-based) can help reduce or dispel the antagonisms and suspicions often existing between the two sectors. Performance standards can be introduced for measuring the efficiency of shelter-related services, such as planning and building procedures, which will help break down the frequent gaps between the community and civil servants, build in accountability and provide incentives for better performance.

(ii) Strengthen urban management

9. The importance of decentralization leads to issues of improved urban management concerning structures of urban governance, decision-making, revenue-raising, regulations and monitoring. Improvements in each of these areas can benefit enabling strategies. For example, decentralized decision-making powers can be used in conjunction with better consultations with community-based organizations (CBOs), non-governmental organization (NGOs) and landowners to achieve improved forecasts of housing land supply, housing demand and the resources available from the private sector. Shelter strategies can be made more relevant and specific to local needs and by doing so should encourage local communities to join forces with local government in project implementation, accepting the need for necessary taxation such as vacant land taxes etc. Overall, the driving force behind improved urban management should be to move from "planning the city" to "a city that plans" (UNCHS, 1993).

10. Part of the problem in many countries of moving from shelter-sector policy-making to implementation is the absence of a longer-term focal point for the sector. Even in local governments with few staff resources, a small permanent group of perhaps two or three technical staff reporting to the mayor or chief executive can be very effective in coordinating action by land, infrastructure, social, health, finance and other departments concerned with shelter strategies within the public sector, as well as providing a forum for coordinated action with NGOs, CBOs, land developers, construction companies and other private-sector "actors" in shelter-strategy implementation. It will be particularly important to establish strong links with revenue-raising agencies at the local level since control over financial resources at that level is a key to effective management of shelter-strategy implementation.

(iii) Develop improved partnerships between local governments and CBOs and NGOs

11. It is clear from many countries' experiences that new or improved participation by NGOs and CBOs in decision-making and implementation of shelter strategies is desirable. Ideally, such participation should be part of the democratic process but this route is not available, or only intermittently available, in many countries. There are other constraints on such participation, for example, the common problem in the early phases of NGO/CBO involvement in shelter strategies of antagonism between those organizations and local governments. This problem is compounded where NGOs fear being "taken over" by government.

12. Nevertheless, there are various ways in which participation can be improved. For example, federations of NGOs or CBOs may have sufficient strength and recognition to become involved in decision-making on shelter strategies; NGOs and CBOs can be represented on the boards of utility companies as in Colombia; and NGO professionals can act as "advocacy planners" representing the interests of local communities. There are limits to NGO and CBO roles in enabling strategies however, summed up by the fact that they should not be seen as a replacement for local government's essential role in shelter strategies.

(iv) Focus public-sector support to individual household actions to achieve adequate shelter

13. The MTR survey indicates that the majority of countries have recognized the comparative advantages of the public, private and community sectors in implementing shelter strategies; however, striking the best balance of action between the sectors cannot be pre-determined. For example, experience of different forms of private-sector involvement in infrastructure provision is limited in the majority of developing countries and time is needed to evaluate ongoing experiments, in particular their impacts on low-income groups. In general terms, local and central governments cannot rely on the private commercial sector to achieve shelter targets for all income groups by the year 2000 at the scale needed. Instead, they should focus their resources and powers on enabling individual households to achieve adequate shelter, in other words reinforcing the role of owner/builders and owner/renters to increase output, with increased assistance by NGOs and CBOs.

(v) Focus the direct role of the public sector

14. As already noted, even where enabling strategies are operational, the lowest income groups may still not benefit where, for example, infrastructure and/or tenure improvements increase land and property values and lead to the eviction of poor households. Typically, enabling strategies may help reduce the proportion of households unable to gain access to affordable shelter from, say, 30 per cent of all households to 10 per cent; however, this reduced core of low-income families may represent a significant un-met demand, and is likely to be distributed in a fragmented pattern across the urban area. In such areas, direct support by local governments is necessary and subsidies will be required in the form of subsidized land or buildings, housing credits or benefits, exemption from service charges or other means.

(vi) Increase women's participation in the policy-formulation process

15. UNCHS (Habitat) (1994) notes that while on the surface "gender aware" planning is now well-documented, progress at a more fundamental level has been disappointing. Policy-makers have generally ignored the special issues surrounding women's needs for shelter, particularly the key issue of their entitlements and claims to land and housing. The critical challenge, here is to bring more women into the decision-making areas of housing supply, very much apolitical/cultural issue, and a vital step if enabling strategies are to acknowledge the specific issues for women in housing design, production, regulation, finance and other components of enabling shelter strategies.

(b) Recommendations by component

(i) Land

17. Based on the MTR survey results, priority areas for action are: (a) improvements in land-supply mechanisms with a greater use of infrastructure-led urban expansion and use of innovative methods of off-site cost recovery; (b) greater understanding of land-market operations in the context of planning as a process rather than an "end-state" activity; (c) adoption of permissive forms and systems which concentrate on the essentials of land regulation using techniques such as performance standards, and which use class categories within which development does not require permission; (d) changes in attitudes towards

informal settlements whereby such areas are incorporated into the "formal" city; and (e) increased use of joint-venture and other forms of public-private partnerships in land development. By region, performance is in greatest need of improvement in sub-Saharan Africa, and Latin America and the Caribbean.

(ii) Property rights

18. The MTR survey shows that current systems of property rights are catering adequately for the "formal" city. Priorities should focus on extending greater security of tenure to informal settlements and making property transfer simpler and cheaper. Implementation mechanisms will include, inter alia: (a) partial or incremental forms of tenure which allow provision of basic services and opportunities for revenue raising; (b) acceleration of upgrading programmes; and (c) improved systems of cadastral mapping, registration and administration of property transfer.

(iii) Long-term finance

19. Extending access to credit is a critical key to the Habitat II theme, "Adequate shelter for all". Priorities here include: (a) allowing long-term mortgage finance to compete fairly with other finance institutions; (b) diversifying the range of lending instruments to allow more low-income households to obtain credit; (c) allowing new forms of collateral to be provided by self-employed/low-income households; (d) promoting and extending the use of community mortgage shares as a "wholesaler" link between formal finance sources and low-income households; and (e) allowing governments to provide conditional guarantees to give confidence to potential private-sector lenders.

(iv) Rationalizing subsidies

20. The MTR survey results show that the use of subsidies in the shelter sector is widespread but needs to be made more effective by more direct targeting to low-income households through: (a) housing benefits, capital grants or allowances within a finite time period; (b) reduction or elimination of rent control; and (c) tenure regulation programmes and/or infrastructure grants which are targeted at large numbers of low-income families. In general, the survey shows that success in introducing enabling approaches in this component is limited, particularly in low-income countries.

(v) Providing infrastructure

21. The MTR survey shows that adequate provision of infrastructure is one of the less successful components of enabling strategies. A wide range of actions may be needed including, inter alia: (a) recognizing and implementing the increased priority for resources to be devoted to infrastructure, using private-sector contributions; (b) using infrastructure-led investments as a tool for funding urban growth; (c) focusing on user's demand rather than more traditional supply-driven policies; (d) increasing community participation in each stage of infrastructure design, construction and maintenance; and (e) seeking innovative influences for cost recovery.

(vi) Organizing the building industry

22. There has been considerable improvement in the building-materials and construction sector in many countries, as well as increased realization of the industry's importance to the wider economy. Further actions needed include: (a) increased support to small-firm entry into building-materials production; (b) reducing restrictions on the supply of materials; and (c) further action against building-materials monopolies.

B. Strategic priorities and variables by country grouping

23. Although the MTR survey shows that correlations of success in enabling strategies by regional groupings are not as significant as income groups, there are certain types of country with broadly similar problems and priorities for action. These are: (a) low-income countries, such as Benin and India; (b) highly indebted middle-income countries, such as Argentina and Peru; (c) former centrally-planned economies, such as Hungary and Poland; and (d) other middle-income countries such as Malaysia. The analysis of problems and the major areas for policy reform are based on the MTR findings, supplemented by the conclusions reached by the World Bank (1993).

1. Priorities for low-income countries

24. Characterized by high and rapidly expanding urbanization levels, which put enormous pressures on resources, services and the urban environment, such countries often have crude financing mechanisms. These are doubly hindered by uncertainty over economic or political change and, in certain cases, civil disturbances. Inadequate resources contribute to a Lack of infrastructure and security of tenure which discourage household efforts to upgrade housing. Government involvement is often limited to specific user-groups. Building-materials production and distribution are more likely to be monopolized, and formal housing finance over a sustained period is rarely available, even for higher income groups.

25. Productive reforms may be made on both the supply and demand sides, although the most important are on the supply side (confirmed by the MTR survey), notably: (a) providing adequate infrastructure that keeps pace with development; (b) enacting systems of cost recovery; (c) relaxing standards; and (d) promoting competition in the building industry. Demand-side priorities include: (a) encouraging the emergence of mortgage lending by financial/banking institutions; (b) minimizing and focusing housing subsidies; and (c) upgrading systems of land registration. External technical assistance (UNCHS (Habitat), multilateral etc.) to these countries has had a direct impact upon establishing a national shelter strategy (NSS) framework (e.g., Kenya and Uganda), and should be strengthened.

2. Priorities for highly indebted middle-income countries

26. Characterized by major monetary and fiscal difficulties, the housing sector in many of these countries has functioned poorly, mainly because of spiralling inflation. high prices and low output. Long-term housing finance is burdened by subsidies which discourage domestic resource mobilization. Direct subsidies for housing and infrastructure in residential areas are regressive and exacerbate the problem of inflation. Rapid urbanization in the last 20 years has not been matched by resources in any way and the sheer scale of the problem in many urban areas (e.g., in Brazil, Peru and Venezuela) is only now being addressed.

27. These problems suggest that housing reform should involve fiscal as well as financial policy. Specifically, government should concentrate on establishing sound financial institutions and a set of packages that increase their depository base (as in the dual-index mortgage system in Mexico), and governments should reduce fiscal housing-sector transfers which are often connected to unsound financial practices. This means increasing commercial practices, reducing public liabilities and reducing and restricting explicit housing subsidies (as in the use of one-time capital grants for housing in Chile).

3. Priorities far former centrally planned countries

28. The principles of housing reform in these countries have changed from a welfare to a production approach. The economic potential of the housing market through developing an NSS is considerable but must be realized by changes in the structure of the financing sector and the reorganization of the housing-delivery system. (The MTR survey highlights the poor progress so far in the development and adoption of commercially-oriented systems.) In addition, these economies are suffering from rapidly increasing inflation rates (e.g., Russian Federation) and a degree of economic and political "uneasiness".

29. Among the specific priorities are, on the demand side: (a) increasing/permitting private ownership, sales and exchanges; (b) rent levels should reflect, at a minimum, the recovery of operating costs, and eventually the level of economic rent; (c) subsidies should be targeted to the most needy; and (d) financial institutions should increase resource mobilization and ensure financial soundness. On the supply side: (a) private-sector housing exchanges should be increased by the selective sale of public stock; (b) competition and a move away from government-monopolized building-materials and residential construction industries should be encouraged; and (c) land-use and building regulations should be streamlined and made dependant on economic considerations. The MTR survey shows that some countries, such as Hungary, are making progress on these changes, but clearly the "transition" period will last to the year 2000 and beyond in most countries.

4. Priorities for middle-income countries

30. These are characterized by well-meaning strategies and policies that have become over-burdensome, bureaucratized. costly and ineffective, with the result that rapid gains in income and population growth have led to rapid increases in land and housing prices, with reducing output. Essentially, poorly-functioning housing markets not only affect the urban poor but the economy as a whole.

31. The most important reforms are on the supply side. Regulations should be reduced with the aim of creating a more responsive system of land and housing supply. Infrastructure should be demand-based with opportunities for private development of adequate quantities of land. The financial system should be reformed and developed, allowing equal private and public competition.

32. Although countries can be grouped by common variables as above, and no doubt by others such as the extent of urbanization, political systems etc., in the end success in developing enabling strategies will be country-specific. Thus for example, political will and the unique local culture that combine with the above results in getting things done could prove the most useful tool in implementation of the GSS (South Africa is proving to be a case in point).

C. Action at the international level

33. There are several actions which can be taken at the international level to provide further support for the GSS goals up to the year 2000.

34. First (and not directly shelter-related), improved macro-economic conditions affecting developing countries, such as improved terms of trade, have a fundamental impact on the success of shelter strategies, particularly in sub-Saharan Africa. Evidence has been shown earlier about the positive correlations between macro-economic health and the success of shelter strategies.

35. Secondly, external support agencies should focus their technical assistance efforts on capacity-building at the local-government level, as well as their more traditional focus on component-specific improvements such as an improved housing-finance systems or improved building materials. In prioritizing components and countries for assistance, external support agencies (ESAs) should draw on information from the KM and the ongoing indicators programmes. In parallel with such an improved focus of support, there needs to be improved networking of information on best practice to maximize the effectiveness of assistance within and between countries.

36. Thirdly, UNCHS (Habitat) in its role as coordinator for the GSS should take the following key actions:

II. Conceptual framework

A. Background to the Global Strategy for Shelter to the Year 2000

37. The adoption of the Global Strategy for Shelter to the Year 2000 by the General Assembly in 1988 marked a recognition by governments that their previous emphasis on direct action to provide housing was not successful and that a thorough re-evaluation of approaches to the housing needs of their people was needed. The formulation of the GSS built on the momentum generated by the International Year of Shelter for the Homeless, 1987, which had focused attention on the major role played by the urban poor in housing themselves with little or no assistance from government. At a more general level, the GSS was an implicit if not explicit recognition of major changes in the setting for shelter which had come about in the 1970s and 1980s. The General Assembly, in its resolution 47/180 on Habitat II, affirmed that the Conference should conduct a mid-term review of the implementation of the Strategy and make recommendations for the attainment of the objectives by the year 2000.

38. UNCHS (Habitat) (1994) traces the major changes which affected the shelter sector after Habitat: United Nations Conference on Human Settlements in 1976. In summary, those changes included.

39. There have been three stages of housing policy in the past 20 years. Stage one, the era of large-scale public-sector investment in shelter, was already coming to an end in the mid-1970s. Stage two saw two main trends: first, the development of the project approach, typically sites-and-services and upgrading projects which, because of the subsides and poor cost recovery involved, were neither replicable nor sustainable and which did not necessarily meet the needs of their target low-income residents. secondly, a shift in thinking towards supporting the poor in their effort to provide their own shelter, i.e., the antecedents of the enabling approach underlying the GSS. Stage three, beginning in the early 1980s, focuses on managing the legal, regulatory and economic framework so as to help the private sector (formal and informal) to deliver housing more effectively as well as focusing more clearly on the links between shelter and economic development, with an emphasis on enabling housing markets to work. Stage three also saw consolidation of other trends, i.e., the role of women in shelter provision, increased recognition of renting as a key housing alternative, environmental issues and the importance of community participation in shelter policy-making and implementation. There is no question that the development of the GSS was central to this third stage and added the urgency of an ambitious target, i.e., to achieve shelter for all by the year 2000.

B. Components of the Global Strategy for Shelter

40. The overall objective of the GSS is to facilitate adequate shelter for all by the year 2000, "i.e., shelter with adequate privacy, security, space, lighting, ventilation, basic infrastructure and location with regard to work and basic facilities, all at reasonable cost" (UNCHS, 1990).

41. The policy needed to address this objective is an enabling one whereby the full potential and resources of all the actors in the shelter production and improvement processes are mobilized; but the final decision on how to house themselves is left to people themselves. The enabling policy is built upon a recognition of the comparative advantages of the public and private sectors at each stage in the process of delivering shelter. In summary, the enabling policy requires government to ensure that land and financial markets function efficiently and with equity and to provide the political support which will help the private sector to provide shelter for all income groups. It does recognize, however, that governments may need to provide direct support to particularly vulnerable groups who are not otherwise in a position to gain access to affordable shelter. The GSS identifies four interlocking components of national shelter strategies to implement this policy, i.e.:

43. The GSS also supports: (a) economic development objectives through employment creation, stimulation of industrialization and capital formation; (b) the goal of health for all through improved shelter and services; (c) community development; and (d) improved techniques of urban management.

C. Indicators of progress

45. Based on Commission on Human Settlements resolution 13/9, to design and test an internationally comparable set of quantitative and policy-sensitive indicators for monitoring shelter sector progress, UNCHS (Habitat) and the World Bank developed the Housing Indicators Programme (HIP), seen as an essential step in the implementation of the GSS. The Programme has four main aims:

46. During the period 1990-1993, HIP defined and tested a comprehensive set of indicators drawing largely on existing data in 53 cities. A progress report on the results of the first phase was presented to the Commission at its fourteenth session. In its resolution 14/13 confirming the value of HIP, the Commission recommended an acceleration of the globalization phase of HIP, in which 10 "key" housing indicators were to be collected in all countries and in a number of cities in each country. The following key quantitative, policy-sensitive indicators, which are easy to collect and of proved utility in monitoring the performance of the housing sector, were endorsed by the Commission for global application:

47. In addition, a list of 25 key indicators (including the above short list of 10 indicators), 10 alternate indicators, 10 regulatory indicators and 10 alternate regulatory indicators were distilled from a long list of some 160 indicators. It was proposed that these 55 indicators be used in an extensive survey of a city, to be updated say every 10 years. The short list of 10 key indicators would be collected on a biannual basis for each major city in a country.

48. The Housing Indicators Programme takes a normative view of the housing sector, based on the performance of the sector from the viewpoints of housing consumers, housing producers, housing-finance institutions, local governments and central government. Indicators are, therefore, designed to address housing supply, housing demand and housing outcomes on a quantitative basis.

D. Methodology for the Mid-term Review

49. In order to obtain a reasonable sample of country-level shelter-sector information, it was decided to develop a brief questionnaire which could be responded to quickly by governments, given the relatively short time period available to prepare the MTR. The questionnaire recognized that it was only possible to carry out a qualitative survey (the MTR survey) of progress in country-level NSSs. The survey was complemented by analysis of other data on country and regional shelter conditions held by UNCHS (Habitat) and other agencies. In addition, field visits were made to selected countries to make an in-depth analysis of their progress in developing enabling shelter strategies.

III. Elements of the enabling approach

A. Political commitment to enabling strategies

50. The issue of adequate shelter for all involves a wide variety of interest groups in the public and private sectors, touches on many sensitive issues such as landownership, finance, community involvement, macro-economic linkages, and environment and is, above all, a highly political subject. It has been shown in many countries that dealing with shelter as a technocratic issue and ignoring realities such as the political implications for interest groups, government policy, empowerment etc, often leads to a failure of well-meaning programmes and projects. It is important. therefore, to obtain the maximum political endorsement for enabling strategies at each stage of the process. In addition, the need for institutional coordination among the actors involved, both horizontal (i.e., inter-agency and public-private) and vertical (central-local levels) raises issue of governance which will require political endorsement for their successful implementation.

B. Policy and institutional framework

52. Effective enabling strategies at the national scale (rather than on a project-by-project basis) require strong vertical and horizontal coordination and clear responsibilities for policy-making and implementation. These responsibilities need to be clearly allocated to organizations within the public and private sectors. In addition, appropriate human, financial and technical resources need to be allocated to allow those organizations to fulfil their mandates, and this is of particular importance at the local-government level.

C. Regulating land and housing development

54. Regulating demand is, in general, counter-productive. The supply of land and housing needs to be responsive to demand. For example, minimum plot size, maximum density and zoning in general are aspects of demand coercion and should normally be avoided unless under special and exceptional circumstances. The focus of regulations for land and housing development should be to achieve the optimum balance between the costs of regulation (on household and businesses) and the benefits of regulation (e.g., public health. building safety, environmental protection, avoidance of congestion etc.). In particular, enabling policies need to focus on the cost,, and benefits for low-income households who are, on the one hand, least able to absorb the costs of, for example, unrealistic building standards and, on the other hand, are most likely to be exposed to health, safety and congestion hazards.

55. Regulations also need to focus on the realities of the informal city, where relevant, seeking ways in which such auras can be absorbed into the "formal" regulated city. Regulations are more likely to be acceptable and, therefore, enforceable to the community if they are accompanied by "pro-active" land-development mechanisms which provide increased supplies of land for shelter, particularly for low-income households, i.e., enabling strategies ideally will incorporate integrated land-management policies and programmes.

D. Property rights

57. Developing efficient and equitable systems for land tenure, titling and transfer are an important component of securing adequate shelter. Again, such systems will need to address the particular problems of slum and squatter areas, often using innovative techniques such as incremental tenure which recognize the rights of households in such areas to be part of the wider city. Rights to property, whether owned, leased, rented or otherwise occupied, need to provide maximum security to the occupier and to be clearly documented. Such security not only benefits the households directly but is more likely to encourage more positive attitudes by the household to such critical issues as maintenance, improving the local environment, and contributing to local construction and maintenance activities.

E. Developing long-term housing finance

59. While finance for shelter is usually available for high- and middle-income households, there is a general need to widen and deepen the flow of long-term finance at affordable levels to low-income households. In general, as the World Bank (1993) notes, financial policies should allow institutions to borrow and lend at positive real interest rates and on equal terms with other institutions. Mortgage instruments should permit the interests of borrowers and lenders to be met with appropriate terms while reducing defaults. Crucial target groups are those wishing to borrow without collateral; techniques such as cooperatives or CBOs acting as intermediaries need to be explored, as do innovative approaches w incorporating informal credit mechanisms into formal finance systems. Lending for the provision of rental housing needs to be facilitated. Long-term housing finance also needs to take account of the potential flow of funds from international capital markets to housing-finance institutions in a particular country.

F. Rationalizing subsidies

61. Traditional forms of subsidies to shelter, e.g., lower than market interest rates, provision of land at low or no cost, capital grunts, etc.. should be used as a transitional measure or as a last resort, after other methods for improving access by the poor to housing have been tried. When subsidies are necessary they should be well-targeted, measurable and transparent, and should avoid distorting housing markets. In general, subsidies in the form of rent control are inequitable, tend to reduce the supply of houses and should be avoided. Moreover, in many developing countries the provision of infrastructure includes explicit and hidden subsidies benefiting well-off consumers. These subsidies distort demand and supply, most often at the expense of the poor. These subsidies need to be removed and/or redirected toward households which consume less land, infrastructure and services.

G. Providing infrastructure

63. Infrastructure has an important role in achieving improved shelter conditions at both the macro and micro scales. At the macro level, infrastructure-led development of urban expansion areas can contribute to increased land supply for poor households (particularly if other land-regulation measures are modified to improve affordability). At the micro level, infrastructure investments in water, drainage, sanitation, solid-waste management, roads and footpaths etc. can go far to meeting the basic-needs objectives for poor households. Crucial issues are cost recovery and the potential roles of the formal private sector and community in providing and maintaining infrastructure.

H. Organizing the building industry

65. A key enabling objective is to develop a diversified building industry able to respond to the different scales of need from large land developers to individual owner/developers. In moving towards this objective, strategies should address inter alia, maximum use of natural-resource endowments in-country, encouragement of appropriate local technologies rather than reliance on imported technologies, removal of unnecessary regulatory barriers and coordination of building-materials strategies with building regulatory frameworks,

IV. Causes of presence or absence of an enabling approach

67. The Global Strategy for Shelter marked a formal endorsement of the enabling approach to shelter which had been developing during the 1980s. Since then there has been a general acceptance of the approach; thus 73 per cent of countries responding to the MTR survey have, or are in the active process of endorsing, enabling strategies for shelter, and only 6 per cent have taken no action to date. Two thirds of countries report they have or are in the process of establishing coordination mechanisms for integrating shelter policy with overall macro-economic and social policies. By any measure this reflects major progress; in 1991 for example UNCHS (Habitat) reported that some 50 countries had "undertaken an array of initiatives towards the improvement of the condition of shelter and services, especially for the poor", of which a few had formulated comprehensive NSSs. By 1994, it is fair to say, the majority of countries had met the GSS first phase target of formulating an NSS and designing new institutional arrangements, although the original GSS target date was 1991.

A. Pressures for introducing enabling strategies

68. Looking back to the 1980s, there were various pressures acting on governments to consider enabling approaches. A critical pressure point for most governments in the 1980s was the impact of urbanization trends starting in the 1960s, whereby the share of the urban population in all developing countries rose from 22 per cent to 37 per cent in the 1960-1990 period, at average growth rates of 4 per cent per year. (In the least developed countries the equivalent figures were 8 per cent to 20 per cent and 5.3 per cent per year.) The resulting pressures on central and, more importantly, local governments to manage such growth were evident in the form of increasing urban poverty, health problems, environmental decline, commercialization of land resources and the growth of the informal sector as affordability of housing decreased. Thus UNCHS (Habitat) (1994) reports that in many cities land and housing prices rose more rapidly than incomes and that, for example, in Karachi the informal sector accounted for 33 per cent of total residential land conversion and met over 50 per cent of housing needs in the period 1970-1985. Gilbert (1992) estimated that the proportion of people living below the poverty line in cities increased by 73 per cent for developing countries as a whole over the same period. In particular, there was a move away from an attitude that urban growth could be stopped or slowed down by a rural development emphasis in government policy to one of accepting that urban growth will continue and that the crucial issue is how to manage that growth. The impacts of urbanization were exacerbated in the many countries which suffered severe economic recession during the 1980s, and in those where resulting structural adjustment policies brought about further reductions in real incomes.

69. Pressures come from a variety of sources - in Jordan for example, despite economic boom conditions in the late 1970s and early 1980s. some 12 per cent of the population were refugees and housing problems multiplied. Existing institutions, regulations and policies were unable to manage the sector and the Government began work on a comprehensive National Housing Strategy which was completed by mid-1987 and approved by the end of 1988.

70. The net effect of socio-economic trends were to lead many countries to reconsider their traditional public-sector-led interventions in the urban sector and to begin to analyse the potential role of the private sector in maintaining, if not improving, urban services and environmental conditions.

71. As already noted in chapter II, it was clear by the early 1980s that the "project" approach to shelter could only deal with a minority of shelter needs unless there was a more radical shift in the balance of resources between the public and private sectors. Again, therefore, there was pressure on governments, particularly at the local level, to examine the existing and potential role of the private sector in the delivery of shelter. By the mid-1980s there had developed a variety of "enabling" approaches. Two of the best examples were the Million Houses Programme in Sri Lanka and the Programme on Human Settlements in Colombia, which assumed that families would provide their own shelter while the public sector devoted its resources to indirect support. These "programming" approaches were accompanied by a growing interest in the 1980s in institutional strengthening in the form of improved urban management policies and techniques, innovations in the areas of housing and municipal finance, and increasing concern over environmental protection.

B. Factors contributing to successful enabling strategies

1. Reinforcement of existing enabling policies

72. Countries such as Jordan, Kenya, Sri Lanka, Thailand and Uganda had already begun implementation of some components of the enabling approach before 1988, e.g., reorientation of public- and private-sector roles, withdrawal of direct housing provision by the public sector, and a greater involvement of the community/NGO/CBO sectors in policy implementation.

2. Strong institutional and political frameworks

73. Strong horizontal coordination of the many organizations involved in shelter delivery, i.e., planning, finance, infrastructure, regulatory, construction, macro-economic, land management, ere., is a prerequisite for implementing enabling approaches. The MTR survey shows that some two thirds of countries have established mechanisms for coordinating shelter policy with overall macro-economic and social policies. Coordination will be reinforced where the roles of the various organizations are rationalized (as in the Philippines, where roles have been restructured under the overall lead of the Housing and Urban Development Coordination Council), and where information, policy-making and coordination is focused in one agency (e.g., the Joint Sub-Committee on Housing under the National Economic and Social Development Board in Thailand). Experience also emphasises the importance of political backing for strategies; the enabling approach includes sensitive areas such as land and finance and the work of strong ministries with powerful "empires". it may require strong and continuing political persuasion to bring about coordination among such ministries, (e.g., the leading role of the Ministry of Local Government and the support of the then Prime Minister in Sri Lanka for the Million Houses Programme).

3. Adequate resources at the local-government level

74. National-level coordination is important, but on its own it will not create adequate conditions for the enabling approach; it needs to be complemented by the decentralization of powers and the development of necessary resources of local government, which in any country ultimately is the prime focus for the delivery of shelter and the local-level coordination of actions to achieve this. The record here is very mixed. In many developed countries and some developing countries, such as Colombia and the Philippines, adequate powers, if not human, technical and financial resources, have been given to municipalities; in many others, administrative and political decentralization has occurred but the all-important tool of financial autonomy has not been granted.

4. Effective involvement of community groups

75. Public participation is critical to the enabling approach but experience is mixed. Participation in the form of involvement in the design, construction and maintenance of housing projects (sites-and-services, upgrading etc.) is perhaps most successful, particularly where support is available from NGOs and CBOs. Participation at a city-wide, regional or national level is less common. Where such wider participation does exist, the approach is normally through workshops, town meetings etc., at which key shelter issues, constraints and opportunities are discussed (e.g., the procedures for formulating regional shelter strategies in the Philippines). Participation, in the form of democratic representation at local or national political levels, is naturally dependant on individual country conditions; it will be particularly effective where residents can express their views on shelter issues at the municipal level through the channels of a mayor and local council. Participation in any form may, however, miss those groups in society who are most in need of representation, i.e., very poor households, women and squatters, who have the fewest resources in terms of time, legal rights and social acceptance. This area of participation will need careful consideration in most countries, such as the feasability of "advocacy" planning by public-sector professionals, for example.

5. Attitudes towards informal settlements

76. Government attitudes to informal settlements, which in many developing countries form a sizeable proportion of cities, are an important indicator of the acceptance of the enabling approach. Gradually, attitudes are changing from one where governments ignore or actively move against such settlements to one of toleration or attempts to incorporate them into the "formal" city. It is reasonably common now for governments to extend upgrading programmes into "extra-legal" settlements, with agreement by the landowner, in some cases with the conferment of improved title to the land.

6. Understanding land markets

77. Understanding the real-world operations of land markets, the role of developers, go-betweens, owner-builders, landlords etc., is an important but still uncommon task for municipalities, but one which is important in developing the most effective forms of shelter delivery. By gaining a better understanding of the ways in which land-use actions impact on prices, how poor households somehow obtain minimal shelter, how households value shelter vis-à-vis other priorities such as employment, and how inefficient systems of land-use regulation, property registration, titling etc. add to costs and reduce shelter affordability, governments can more efficiently organize their role in indirect support to the private sector. Land-market assessments to improve such understanding have been used in Karachi in Pakistan, Bangkok in Thailand, Colombia, Sri Lanka and elsewhere, with resulting benefits in improved land-related policies for shelter delivery.

7. Realistic regulatory controls

78. The GSS highlights price controls, property rights and land-use/building regulations as areas for priority action, but the record of government action has been very mixed. In essence, there is a common conflict between the desire to deregulate the workings of the land and property markets so as to increase output and reduce costs while, at the same time, trying to use regulations to increase the possibilities for low-income households to secure minimal shelter.

79. In relation to prices, the availability of rental accommodation is probably more likely to emerge from policies which support the widest access to home-ownership. Similarly, measures to control land prices through taxation, maximum ownership and expropriations have generally been unsuccessful, as in the case of the Urban Land (Ceiling and Regulation) Act in India. Again, policies which lead to increases in the overall supply of serviced land are likely to be more effective in reducing the rate of land price increases.

80. Planning and building regulations can also increase costs to households without sufficient public health, environmental and other resulting benefits. More flexible approaches to land and property regulation are needed, such as performance standards, permissive systems of development control, and incremental approaches to construction materials.

C. Factors constraining successful enabling strategies

81. Absence of one or more of the above critical factors is likely to constrain successful strategies. In addition, other constraints may exist.

1. Deficiencies in urban management

82. The wider issues of poor urban management often impact on the implementation of enabling strategies, including confusion and duplication of functions at the municipal level, bureaucratic inertia, the temptation for government staff to demand illegal payments in matters of land transfers, building permissions etc., and antagonisms between the public and private sectors and between the public sector and NGOs/CBOs. To a great extent, therefore, improvements in implementation of enabling strategies have to move at the pace of wider improvements in urban management.

2. "Scaling-up "from the project approach

83. "Scaling-up" from individual project-level successes to programmes at a scale which can address city-wide needs is a major constraint on enabling strategies in many countries. In many cases there has been a failure to establish a robust institutional and financial framework for the approach, instead relying very often on external technical and/or financial support. A common example is that projects are designed, constructed and occupied under the auspices of a "one-off project management unit or something similar, when it is time to hand over the project to the responsible local-government agency for maintenance, etc. there is resistance since that agency had not been involved or consulted in the process of project development.

3. Lack of government support to the shelter sector

84. In some counties, governments may not give priority to the shelter sector in particular, and give low priority in general to urban issues. In Bangladesh, for example, official government policy gave priority to rural development until the late 1980s, although there have been substantial programmes of assistance to Dhaka and secondary towns in the fields of urban upgrading, land-development mechanisms etc. Some work was carried out in 1993 on the preparation of a national housing strategy but little further work has been done since.

4. Countries in transition

85. In many former centrally-planned economies (e.g., the Russian Federation, and countries in Central and Eastern Europe) and other countries, such as the United Republic of Tanzania, the process of transition to a market base for the operations of the shelter sector is difficult and time-consuming. In such countries, it is natural that enabling strategies are only in a preliminary stage of policy formation. In Hungary, for example, the transition involves devolution of power and transfer of ownership of public housing stock, widespread privatization of the property and construction industries, creation of competitive markets, legal definitions of market transactions, social protection, promotion of community participation, and phasing out of State housing subsidies, all set against adverse macro-economic circumstances.

V. Impact on shelter sector performance and outcomes

86. Chapter IV examined the broad reasons for success and failure in implementing the enabling approach. The present chapter examines the ways in which specific components of the enabling strategy have affected shelter sector performance and outcomes. The analysis corresponds to the broad divisions of housing supply, demand and outcomes.

A. Housing supply

1. Costs and availability of land

87. Land supply is a fundamental component in the delivery of shelter and, therefore, a critical component of the enabling approach. Facilitating access to land for all households is a major objective of Agenda 21 and among UNCHS (Habitat)'s highest priorities in supporting Agenda 21. Yet a common experience in developing countries is that land-management policies have been unable to deliver sufficient land in suitable locations affordable by low-income households. As a result, there are growing numbers of landless and homeless people. spontaneous settlers, displaced people, refugees and returnees.

88. The GSS enabling approach seeks to deliver sufficient land by improvements in the delivery of serviced land and by changes in attitudes towards informal settlements. However, earlier attempts to achieve these goals through the expropriation of private land, land banking, land exchanges, maximum land holding regulations and taxation of vacant land had little success, despite sometimes elaborate legislation such as the 1989 Urban Reform Law in Colombia and the Urban Land (Ceiling and Regulation) Act in India. In all, such policies tended to restrict land availability rather than increase supply and did little or nothing to benefit low-income households,

89. More recent policy initiatives recognize that it is only realistic to work with rather than against prevailing land markets. These approaches are characterized by: (a) increasing recognition and incorporation of the informal land market into the formal city; (b) "pro-active" approaches to new land development involving various forms of partnership with private-sector formal and informal interests; and (c) indirect assistance to low-income land seekers through reducing the time and costs of land registration, land-transfer procedures, building permits and other administrative procedures. In short, there is a need to address the issue of land for sustainable human settlements in the context of wider socio-political issues concerning equitable management of land resources and economic development.

90. These approaches are meeting with greater success, as evidenced in Thailand, for example, by the emergence of a mass housing market affordable by low-middle-income households, despite rising real land prices since the 1970s. In the Philippines, the Joint Venture Program is based on land provided on the basis of a public/private partnership with cost recovery. In India, Indonesia, Jordan and Zambia, among many other countries, there are programmes for incorporating informal settlements into the general city structure. The MTR survey shows that some 56 per cent of countries have squatter-settlements upgrading programmes.

91. There are now many examples of partnership between public- and private-sector interests in land development, including joint ventures, land readjustment and guided land development among others. An important theme of such initiatives is the use of infrastructure to guide urban growth rather than traditional zoning tools.

92. The Land Development Multiplier indicator used in HIP is relevant here. Key findings are that: (a) the provision of serviced land is more responsive to demand in higher income countries and least responsive in sub-Saharan Africa where infrastructure and housing production lag demand; and (b) the premia associated with the provision of serviced urban land are considerably higher than the actual costs of land servicing. Within regions, the multiplier varies considerably, reflecting differences in demand; the extent of infrastructure shortfall and regulatory impediments to land development.

93. The importance of efficient land records, secure tenure and fast transfers in the smooth operation of land markets, and hence greater delivery of shelter to low-income households, is shown by an increasing emphasis by governments on modernization of cadastral survey, registration, titling, administrative procedures and reduction of financial charges, using aids to productivity such as GIS. (This last component links to an important enabling mechanism - increased understanding and dissemination of information on land markets, allowing local governments in particular to create conditions for improved shelter delivery.) Responses to the MTR survey show that some two thirds of respondents have generally up-to-date registration systems (although the proportion of new development not entering the formal registration system is not known), and that there is a positive correlation with country income levels. The survey also shows that some 60 per cent of countries report that property transfers are not or not usually subject to burdensome administrative requirements or taxes.

2. Costs and availability of infrastructure

94. Traditionally the provision of infrastructure has been an important task for the public sector at local- and/ or central-government level, given that the initial capital investments are often high and that the provision of city-wide networks of water supply, for example, requires careful coordination in terms of planning, maintenance, finance and cost recovery. The GSS approach emphasises the quantity of infrastructure needed up to the year 2000 and the techniques needed to achieve this objective, for example, by reducing per capita costs of infrastructure, using appropriate technologies and taking into account operations and maintenance costs in decisions on technologies. The results to date are mixed. In developed countries and some higher income developing countries, such as Singapore, infrastructure provision has in general kept pace with demand. In many developing countries however, infrastructure investments have fallen behind growth. The MTR survey shows that two thirds of countries report having full or partial coverage of infrastructure. However, only 47 per cent of countries report that infrastructure provision keeps up with growth. The HIP analysed infrastructure expenditure per capita and found that such expenditure rises consistently with economic development. Levels of spending are lowest in sub-Saharan Africa and South Asia and highest in industrialized countries.

95. Fox (1994) notes that the key to reformed infrastructure policy is to focus on users' demand rather that the traditional concentration on the supply of services. This responsiveness needs to drive decisions such as what services to deliver, what technologies to employ and how prices should be set. Properly set prices will generate increased resources to deliver services, will ration consumption and will serve as an indicator of demand. These broad goals are being integrated in a variety of innovative approaches to infrastructure delivery using both informal and formal private-sector involvement. For example, the Orangi Pilot Project (OPP) in Pakistan involved community construction of a water-borne sewerage network with technical advice from OPP staff, while in Colombia the Aqueduct and Sewerage Corporation of Santafé de Bogotá has worked with community organizations to construct drainage networks. In many cases, NGOs and CBOs assist communities in infrastructure provision; for example, the work of Sulabh International in India in assisting in the construction of a large programme of sanitary facilities, with user charges applied to recover maintenance costs.

96. There is now some use of private organizations in the construction, operation and financing of infrastructure services ranging from contracting out of services to full privatization. Some 36 per cent of respondents to the MTR survey reported that the private sector participates in infrastructure provision in some form, particularly in East Asia and among the industrialized countries. There is likely to be increased involvement by the private sector. Governments will need to negotiate such involvement, for example, by protecting consumers from excessive charges, particularly where a monopoly situation is likely, and safeguarding the interests of low-income groups, whenever possible.

97. The GSS gives much importance to the adequate financing of infrastructure, given that lack of infrastructure networks limits the amount of serviced land available for shelter production. It advocates cost recovery via user charges and innovative beneficiary charges on those enjoying higher land values as a result of infrastructure improvements. It also introduces the potential for the private sector's involvement in infrastructure finance and operations. This is particularly important where infrastructure agencies do not have a secure financial base, the situation in 40 per cent of countries responding to the MTR survey, particularly among countries in the lowest income group. The MTR survey also reveals that, only 50 per cent of countries recover some or most infrastructure costs through pricing, taxes and fees, with highest levels being in East Asia and the industrialized countries, and the lowest in South Asia and sub-Saharan Africa. Overall increased focus in the investment planning process on demand for infrastructure and increased community involvement in decisions on levels of service, construction and maintenance, results in improved levels of cost recovery.

98. Direct cost-recovery mechanisms where the infrastructure provided is not amenable to user charges, e.g., roads, drains, footpaths and sanitation, are rare. This is a particular problem where such investments raise adjoining land values and bring windfall gains to landowners. In theory, betterment taxes or adjustments in relevant land and property valuations can be applied, such as the Colombian appreciation tax used to collect contributions to the costs of investments, but in practice these techniques are difficult to apply and/or rely on land registration and information systems which are often out of date. Cost recovery is easier where the infrastructure is provided as part of a formal development scheme, since costs can be passed on by the developer to the final customer and user charges can be applied. In such schemes it is easier to help low-income households since cross-subsidies can be incorporated. The area of least progress, therefore, relates to off-site infrastructure cost recovery. There are a few innovative approaches which involve land "trading". For example, in many developed countries and some developing countries, land developers may be asked to contribute infrastructure in cash or kind in return for permission to develop or redevelop land (e.g., the system of "planning gain" used in the United Kingdom of Great Britain and Northern Ireland); in other cases infrastructure can be provided at no cost to government through land-readjustment techniques.

3. Costs and availability of building materials

99. The availability of building materials at the right prices, specifications and quantities is clearly a major contribution to effective housing supply. However, there have been many problems in meeting this objective, particularly in relation to building technologies. Thus many countries went through a phase in the 1960s and 1970s of using imported technologies, often inappropriate and expensive, downgrading the use of traditional materials and sometimes using regulatory controls to ban such materials. The GSS addresses this situation by giving clear priority to supporting local production and indigenous materials, with particular emphasis on small-scale production units. In doing so, the GSS acknowledges that the vast majority of housing in countries outside the former centrally-planned economies is built by individuals, or by individuals using family and specialist help for certain tasks.

100. Many countries now have building technology institutes or similar organizations, such as the Building Materials Technology Promotion Council in India, which undertake research into low-cost materials, disseminate information and offer training in different aspects of the construction process. Developing a low-cost building-materials industry may also involve changes in the wider economic context, e.g., eliminating bottlenecks in materials supply, changing tariffs and/or import controls and ensuring that materials are acceptable to housing-finance organizations for loan purposes (e.g., the newly formed Accreditation of Innovative Technologies for Housing Committee in the Philippines).

101. Other components of an enabling approach to the supply of building materials are also being addressed. Many countries still have building-materials monopolies which are restricted by statute and enforcement. Clearly the further breaking-up of monopolies will assist the objective of supporting small producers. Similarly, restrictions on the private-sector supply of building materials need to be reduced or eliminated. The survey shows that about half of countries have few such restrictions. Overall, therefore, although monopolistic practices are still the greatest single constraint, there is clear evidence of a trend towards well-functioning building-materials industries in many countries and, in addition, increasing realization of the importance of such industries to the wider national economy given that the shelter sector is now acknowledged by most countries to be a production rather than a consumption sector.

4. Planning and building regulations

102. The regulatory environment, particularly planning and building regulations, has enormous impacts on the affordability of housing in all countries. Traditionally, such regulations were introduced to protect public health, ensure structural safety, encourage "amenity", and support environmental quality. These goals still apply and there are strong links to housing outputs. In addition, planning and building regulations can contribute to more recent concerns for sustainable development. While introduced for the best of motives, there is, however, widespread poor experience in implementing traditional planning and building regulations. In summary, inappropriate standards, inflexible land-use controls through zoning, unrealistic development-control procedures and many other constraints have had the effect of inflicting costs which are higher than their benefits in many regulatory systems.

103. The GSS considers that the revision of building and infrastructure codes and regulations is a matter of the highest priority, and there are now a variety of examples of appropriate systems. Underlying the question of appropriate regulations is the issue of standards and the needs of the urban poor. By modifying standards to a level affordable by the poor, existing informal settlements can become "legal", enforcement can be seen to be both necessary and fair, the poor can use new rights to land as a security for obtaining lands and will have more incentives to improve their living conditions. An innovative set of planning, infrastructure and building standards relevant to low-income households has been developed by the Housing and Land Use Regulatory Board in the Philippines. Examples of similar revised standards have been developed in Colombia, Indonesia, Kenya, Nepal, Sri Lanka and many other countries. For example, some two thirds of countries responding to the MM survey report that they have standards and regulations which allow housing to be built which is affordable to low-income households. Another indicator of the enabling approach to regulations is where standards do not discriminate against indigenous/traditional building-materials; over 70 per cent of countries responded positively to this question in the MTR survey.

104. In an increasing number of countries, performance standards are being introduced, whereby the developer is allowed a choice in how to meet objectives rather than the traditional "prescriptive" approach (e.g., the Minimum Building Standards now used in Malawi). Apart from increasing affordability for poor households seeking shelter, simplifying regulations can reduce costs dramatically (e.g., modified standards used in the National Shelter Strategy in Zimbabwe, i.e., reduced plot sizes, have reduced costs by 29 per cent per plot).

105. Improvements in development-control systems can also simplify regulatory processes and reduce unnecessary costs to the individual applicant. "Enabling" models of development control have been introduced, inter alia, in Bangladesh, Colombia, Nepal and Sri Lanka, based on a permissive or exemption system, i.e., within particular land- or building-use class categories the developer can proceed with the designated land use subject to the minimum of restrictions (Clarke, 1994). Some countries, such as Jamaica and Sudan, have designated special zones within which standards and regulations are relaxed to benefit the poor; a disadvantage being that a two-tier system of regulations may encourage spatial segregation of the poor.

B. Housing demand

1. Affordability

106. Housing demand is a function of the level of household income, the availability of credit, the use of subsidies, security of tenure and other factors. Judging by MTR survey results, income probably has the single most influential impact on shelter adequacy. In turn, income levels are a function of a whole range of concerns including macro-economic growth, productivity and urban poverty. A critical indicator of successful strategies is the proportion of households able to afford a minimally acceptable living unit. The World Bank (1993) has found that, globally, there is consistency in the share of income going to shelter financing and the changes in this share with increases in average household income. Indirectly, enabling approaches to shelter can influence affordability and hence shelter delivery through: (a) improved security of tenure and property rights in informal settlements which encourage households to improve their property and allow them to offer land and housing as collateral for land; (b) the availability of housing finance (both formal mortgage finance and informal loans); and (c) taxes and subsidies on land and property.

2. Long-term finance

107. The GSS emphasises the role of finance in successful enabling strategies, i.e., the need for a steady flow of long-term finance; orienting government fiscal policies to allow the shelter sector to compete for funds on a fair basis, encouraging finance for rental purposes and reducing loan defaulting. There are inherent difficulties in improving housing-finance systems for low-income groups however, resulting from the problems of reconciling the need for guarantees of a reasonable rate of return to lenders with the need for affordability for intending borrowers. As a result, the HIP survey shows that, in most developing countries, only 10-20 per cent of annual investment is provided by mortgage-finance and housing-finance institutions which are often constrained by political decisions limiting their ability to engage in mortgage lending (World Bank 1993). In addition, many low-income householders do not qualify for loans because they are self-employed, cannot offer collateral, are women heads of households or for other reasons. Such householders turn to informal sources of credit, family assets, use available savings, or, more likely, use a combination of all these sources.

108. Various avenues have been explored to bridge the gaps in shelter finance for low-income groups. One well-tried method is to support increased household savings with the assumption that they will be used to contribute to housing investment. Most countries have housing and savings institutions but such institutions find it difficult to mobilize savings from the poor or to lend funds for shelter to the poor. Their benefit is mainly to middle-income savers (although enabling such savers to obtain housing does not make it less likely that they will "capture" housing meant for the poorest). Similarly, housing-finance institutions, such as the Central Mortgage Bank in Bolivia, the Government Housing Bank in Thailand and the Housing Finance Development Corporation in India, direct their lending to middle- and high-income borrowers. In some instances, tax holidays and other benefits are offered as an incentive to investment in housing rather than other forms of investment.

109. In general, however, such incentives do not benefit low-income households. There are examples where housing-finance institutions widen the range of lending instruments, in the form of lower interest rates, flexible repayment schedules, acceptance of more innovative forms of collateral, earmarking of funds and lending to "wholesaler" organizations who on-lend to families who might not otherwise qualify for loans (e.g., the Community Mortgage Schemes in the Philippines and Thailand). Institutions are also becoming more flexible in the types of loan they offer, for example, by making loans available for building materials, income-generating activities, renovation activities and infrastructure works.

110. Another growing avenue for obtaining housing credit is through the use of community-based finance institutions and NGO-assisted savings and credit schemes. Such schemes have existed for many generations in rural areas and some of the most effective examples are found there (e.g., the Grameen Bank and Bangladesh Rural Advancement Committee in Bangladesh). However, as CBOs and NGOs expand in response to the growing needs of informal settlements in urban areas, so experiments are beginning there (e.g., the Self Employed Womens Association in India). The advantages of community-based finance institutions is their local knowledge, flexibility, peer pressures to repay loans and good financial base.

111. Finance for rental housing is clearly an important component of overall enabling finance policies, given that some 40 per cent of the world's urban population lives in some form of rental accommodation (UNCHS, 1990) and that the availability of low-income rental housing is a sign of a healthy shelter sector rather than an admission of failure. It is now generally accepted that the main suppliers of low-income rental housing are low-income home-owners in informal areas, so that the most effective financial support to potential renters is through the implementation of policies for increased finance to home-owners as a whole.

112. In conclusion, the most critical component of enabling strategies for shelter finance is the development of efficient and equitable forms of long-term mortgage finance. The characteristics of such mortgage finance can be summarized as follows. First, housing finance should be able to compete on equal terms with other financial institutions with lending at positive real interest rates. The MTR survey shows that about 74 per cent of countries allow private-sector lending, allow private-sector finance institutions to compete on equal terms with public institutions, and have housing loan interest rates higher than inflation. Governments will need to maintain strong regulatory powers to oversee the activities of housing-finance institutions (according to the MTR survey this already happens to a greater or less extent in some 70 Per cent of countries). Other components of a well-developed mortgage-finance system include; the availability of mortgage-finance insurance institutions (present in some form in 54 per cent of countries); the ability of primary lenders to resell to other institutions (leaving aside industrialized countries, such a facility is only available in some one third of countries). Lastly, equal opportunities for borrowing by all income groups backed by statute, monitoring and enforcement is available in some 65 per cent of countries,

3. Subsidies

113. The GSS recognizes the continuing, need for subsidies to assist low-income households _who may otherwise live in unacceptable housing conditions and that the choice of subsidies should be reviewed according to the principles of compassion, equity and efficiency. It also emphasises that any shelter subsidy system should be seen as a part of an overall strategy for poverty alleviation and will take its place alongside other candidates for subsidy, such as education, health and income support.

114. Subsidies can take many forms, but are grouped into: (a) on-budget items (e.g., direct grants for home construction; per capita allowances for upgrading projects; housing allowances to public shelter employees), and (b) off-budget items (e.g., negative interest rates waiving of outstanding loan repayments; provision of free land for housing projects; sale of public rental accommodation at discounted prices; tax exemptions; and rent control). The MTR survey records that subsidies for housing are explicit, rather than hidden, in 47 per cent of countries responding.

115. Where subsidies are required, certain guidelines should be followed. Fast, practical means of getting the subsidy to the eligible households need to be devised; Secondly, subsidies should be structured to avoid bringing undesirable indirect impacts, and thirdly, it is preferable to use capital grants or housing allowances that have a finite duration or a built-in review procedure. Preference should be given to subsidies such as tenure-regularization programmes that are targeted to large numbers of low-income families, and to programmes that provide infrastructure or one-time construction grants in areas where the majority of the inhabitants are poor (World Bank, 1993). The MTR survey shows that the use of such direct subsidies is not widespread; only some 37 per cent of countries replied positively.

116. Cross-subsidies are widely used in supporting consumption of services by the poor. Techniques vary. Some cross-subsidies are incorporated in tariffs; for example the National Housing Authority in Thailand charges higher rates to commercial and industrial users than to the poor. Lower prices may be charged for social land users such as low-income housing while commercial users are charged at market rates, a system used for example by the City and Industrial Corporation of Bombay. This approach has been commonly used in sites-and-services projects, where larger plots have often been charged at rates designed to subsidize smaller lots. Cross-subsidies can also be used through land-development techniques such as land-sharing. As with cost recovery, the use of cross-subsidies to achieve social goals in shelter has been limited.

C. Housing outcomes

117. Housing outcomes can be analysed at the sectoral level, i.e., quantity produced and investment, and at the household level, i.e., housing quality, price and information. Outcomes are influenced by a variety of factors, including macro-economic conditions, political structures, climate factors, natural resources and shelter policy. This section focuses on the latter, i.e., how the enabling policies in housing supply and demand, discussed in sections V.A and V.B, impact on shelter outcomes. It draws on the outputs of -the HIP.

1. Housing production

118. The recognition of the predominant role of the private sector (both formal and informal) in shelter production is an underlying theme of the GSS. Looking back over the past few decades it is clear that public-sector intervention in shelter construction and upgrading has rarely accounted for more than 10-20 per cent of total shelter production (outside of the former centrally-planned economies). This situation is generally confirmed by the MTR survey, which reports that some 60 per cent of countries have minimized or are minimizing direct government involvement in housing production and operation. It follows, therefore, that enabling approaches need to focus on indirect support to individual owner/builders, small contractors, materials suppliers etc., to allow them to generate as much housing as possible, affordable by low-income groups through either ownership or rental.

119. There will remain a role in many countries for direct action by the public sector, or by joint public/private-sector action, in more directly supporting the production of housing for particular disadvantaged groups such as the poorest families, women-headed families, those needing relocation from hazardous locations etc., not provided for by other paths to housing. This is an effective use of scarce resources and targets immediate shelter benefits to those in greatest need.

120. In parallel with the recognition of the real "actors" in shelter production, there is an increasing role for CBOs and NGOs in supporting individual and group action to increase shelter output. In summary, CBOs and NGOs have important roles in mediating between the community and State sectors, supplying expertise to individual or community efforts, providing training and taking an advocacy role in shelter policy-making on behalf of the poor. Given that CBOs and NGOs operate most effectively at the local neighbourhood level, there needs to be increasing cooperation between CBOs, NGOs and local authorities so that the lessons leaned can be scaled up, as appropriate, to the city-wide level.

2. Housing investment

121. There is increasing recognition of the multiplier effects of housing investments on the wider economy (typically a factor of 2.0). Employment in the shelter-construction industry is associated with employment in other industries at similar ratios. As or more important, however, housing can have a major influence on income by links to the macro-economy through overall housing price levels and rates of change contributing to inflation levels, personal savings and household wealth, and through price differentials from place to place (which can significantly impede labour mobility and increase unemployment). Financial and fiscal linkages are also important; in some countries with rapid economic and urban expansion, mortgage loans are the most rapidly growing share of commercial bank portfolios, contributing to overall development of the financial sector. Indeed the opportunity to own a home provides the greatest single incentive for household savings in all countries where mortgage lending is broadly available. Conversely, housing subsidies still form a significant proportion of government expenditures in a number of countries, particularly in former centrally-planned economies, and often lead to budget deficits and considerable inflationary pressures (World Bank, 1993).

122. The HIP incorporates two indicators which help to measure the potential importance of the housing sector to the performance of the macro-economy:

3. Housing quality

123. Housing quality means different things to different individuals, and culture and income groups. In general, however, it is an amalgam of adequacy of living space, quality of construction, availability of services, security of tenure and good location. The HIP used several indicators of housing quality (floor area per person, persons per room, proportion of permanent structures, proportion of unauthorized structures and infrastructure expenditure per person) and identified a strong link between improving housing quality and economic development for all income groups. Similarly, infrastructure spending (the ratio of all capital, operations and maintenance expenditure on infrastructure services per person) rises consistently with economic development.

124. However, the HIP also shows that the variations in housing outcomes for a given level of GNP per head are generally large relative to income differences. This suggests that resources are being translated into better-quality housing at very different rates in different countries, and that poor-quality housing is likely to result as much from ineffective housing policies as from poverty per se (World Bank, 1993).

4. Housing price

125. Levels of housing price and rent in relation to household income are important outcomes of enabling strategies. The HIP shows that factors influencing house price-to-income ratio indicators are dominated by place-to-place differences. Thus for example, reported ratios are particularly high in countries with restricted private property rights such as China and Poland or where construction costs and land prices are high as a result of tight regulatory environments (e.g., Japan and the United Kingdom). Again, the rent-to-income ratio reflects the wider characteristics of a particular housing market. The ratio is low among low-income countries, rising with economic development to reach a peak in middle-income countries and then falling. Some of the lowest ratios are in sub-Saharan Africa (e.g., the United Republic of Tanzania) and in European transition countries with strong rent control, such as the former Czechoslovakia, Hungary and Poland).

5. Housing market information

126. An important output of the enabling approach is improved information on the operations of housing markets, including data on land availability, prices, land registration, planning, infrastructure and building regulations, construction materials and other inputs to the shelter system. Such infonnation is particularly important for individuals and community groups involved in housing supply, who may have less time and may find it more difficult and expensive to identify advice and information than public and private-sector formal organizations. The level of such housing market information, both in terms of quantity and quality, is usually inadequate. the MTR survey records that only about half of countries collect housing-sector performance data on a regular basis and make them readily available. Improved strategies for housing market information will usually require a central focal point for identification, allocating responsibilities and resources for collection, analysis and distribution, and putting in place regular updating procedures. Particular priorities vary among countries and the "sensitivity" of certain types of data such as air photography, may restrict some types of information. In general, however, cities should give high priority to land information systems, including data on property registration, since such information is vital to understanding housing markets and is a key to other benefits such as improved property taxation.

VI. Progress in adopting the enabling approach, 1988-1994

127. As noted earlier, measurement of progress in the impacts of the enabling approach on housing outputs in the first half of the GSS is hampered by the absence of a systematic database for 1988 and 1994. Quantitative conclusions must await analysis of housing indicators being obtained from countries in preparation for Habitat II. It is possible, however, to measure relative progress by broad GSS component and analyse correlations with two causal factors, income levels and regional locations. Further analysis could be extended to include correlations with, for example, levels of urbanization and political systems, but resources do not allow such analyses in this report.

A. Typology of countries

128. By aggregating the results of the MTR survey by component and sub-component it has been possible to derive a ranking of country level of success in implementing enabling strategies. The typology shows that such success is broadly correlative with increasing national income per capita. However, there are significant variations in country success in a given income band, suggesting that other factors such as the choice of policy measures, political commitment to shelter and availability of technical assistance are as or more important a causal factor than national income alone. For example, some countries, such as India, Namibia and Tunisia, have well-developed strategies in relation to their average incomes per capita. Conversely, countries such as Honduras, the Libyan Arab Jamahariya and Papua New Guinea have achieved relatively little progress in relation to income levels.

B. Countries with an evolved NSS

129. Preceding chapters provide evidence to conclude that in general a good start has been made in the adoption and development of NSSs in most countries. However, evidence also suggests that no single country has, as yet, a completed enabling strategy in place. In addition, and as previously mentioned, the implementation of enabling strategies varies widely from one country to another, between region and income gro

PREPARATORY COMMITTEE FOR THE UNITED NATIONS CONFERENCE ON HUMAN SETTLEMENTS (HABITAT II)	COMMISSION ON HUMAN SETTLEMENTS
Second session Nairobi 24 April - 5 May 1995 Item 4 of the provisional agenda	Fifteenth session Nairobi 25 April - 1 May 1995 Item 5 of the provisional agenda
MID-TERM REVIEW OF THE GLOBAL STRATEGY FOR SHELTER TO THE YEAR 2000
Report of the Secretary-General of the Conference and Executive Director

A. Price indicators
	Indicator l: House-price-to-income ratio
		Ratio of the median free-market price of a dwelling unit and the median annual household income
B. Quantity indicators
	Indicator 3: Housing production
		Total number of housing units (in both the formal and informal sectors) produced in the previous year per 1000 population
	Indicator 4: Housing investment
		Total investment in housing (in both the formal and informal sectors), as a percentage of gross domestic product
C. Quality indicators
	Indicator 5: Floor-area per person
		Median usable living space per person (m²)
	Indicator 6: Permanent structures
		Percentage of housing units located in structures expected to maintain their stability for 20 years or longer under local conditions with normal maintenance
	Indicator 7: Authorized housing
		Percentage of the total housing stock in compliance with current regulations
D. Demand-side indicators
	Indicator 8: The housing credit portfolio
		Ratio of total mortgage loans to all outstanding loans in both commercial and government financial institutions
E. Supply-side indicators
	Indicator 9: The land development multiplier
		Average ratio between the median land price of a developed plot at the urban fringe in a typical subdivision and the median price of raw, undeveloped land in an area currently being developed
	Indicator 10: Infrastructure expenditures per capita
		Ratio of the total expenditures (operations, maintenance and capital) by all levels of government on infrastructure services (roads, sewerage, drainage, water supply, electricity and garbage collection) during the current year, and the urban population

UNITED NATIONS		A	HS

	General Assembly	Distr. GENERAL A/CONF.165/PC.2/5 HS/15/3/3/Add.3 ORIGINAL: ENGLISH
	Commission on Human Settlements

CONTENTS
				Paragraphs
I.	Recommended actions			1-36
	A.	Actions at the local and national levels		3-22
		1.	Overall progress	3-22
			(a) General recommendations	5-15
			(b) Recommendations by component	16-22
	B.	Strategic priorities and variables by country grouping		23-32
		1.	Priorities for low-income countries	24-25
		2.	Priorities for highly indebted middle-income countries	26-27
		3.	Priorities far former centrally planned countries	28-29
		4.	Priorities for middle-income countries	30-32
	C.	Action at the international level		33-36
II.	Conceptual framework			37-49
	A.	Background to the Global Strategy for Shelter to the Year 2000		37-39
	B.	Components of the Global Strategy for Shelter		40-44
	C.	Indicators of progress		45-48
	D.	Methodology for the Mid-term Review		49
III.	Elements of the enabling approach			50-66
	A.	Political commitment to enabling strategies		50-51
	B.	Policy and institutional framework		52-53
	C.	Regulating land and housing development		54-56
	D.	Property rights		57-58
	E.	Developing long-term housing finance		59-60
	F.	Rationalizing subsidies		61-62
	G.	Providing infrastructure		63-64
	H.	Organizing the building industry		65-66
IV.	Causes for presence or absence of enabling approach			67-85
	A.	Pressures for introducing enabling strategies		68-71
	B.	Factors contributing to successful enabling strategies		72-80
		1.	Reinforcement of existing enabling policies	72
		2.	Strong institutional and political frameworks	73
		3.	Adequate resources at the local-government level	74
		4.	Effective involvement of community groups	75
		5.	Attitudes towards informal settlements	76
		6.	Understanding land markets	77
		7.	Realistic regulatory controls	78-80
	C.	Factors constraining successful enabling strategies		81-85
		1.	Deficiencies in urban management	82
		2.	"Scaling-up "from the project approach	83
		3.	Lack of government support to the shelter sector	84
		4.	Countries in transition	85
V.	Impact on shelter sector performance and outcomes			86-126
	A.	Housing supply		87-105
		1.	Costs and availability of land	87-93
		2.	Costs and availability of infrastructure	94-98
		3.	Costs and availability of building materials	99-101
		4.	Planning and building regulations	102-105
	B.	Housing demand		106-116
		1.	Affordability	106
		2.	Long-term finance	107-112
		3.	Subsidies	113-116
	C.	Housing outcomes		117-126
		1.	Housing production	118-120
		2.	Housing investment	121-122
		3.	Housing quality	123-124
		4.	Housing price	125
		5.	Housing market information	126
VI.	Progress in adopting the enabling approach			127-134
	A.	Typology of countries		128
	B.	Countries with an evolved NSS		129
	C.	Countries with good progress in some NSS components		130-132
	D.	Countries with link progress in NSS		133
	E.	Conclusion on progress		134
References				127-134