Experts in conversation: Affordable housing in the developing world

World Built Environment Forum: Let’s look first at India. There, the number of people living in informal housing has risen over the past two decades. Given the expansion of the Indian middle-class and the country’s burgeoning economic influence, one might have expected numbers to be falling. Is there a simple explanation?

Professor Christine Whitehead: The first thing is that India’s population has increased very rapidly – and is continuing to do so. The proportion of people living in the informal sector hasn’t necessarily gone up, but certainly the absolute numbers have. But there’s also a point to be made about governance. There isn’t a great history of competent delivery of local services and utilities. Although there is a very well organised formal employment sector, the majority of people are still dependent on informal employment. Informal work and housing are very strongly linked. Fundamentally, if you get yourself into the formal employment sector, you can access credit and a whole range of services that you couldn’t otherwise access.

When the World Bank started working on the issue of informal housing, what they provided was “site and service.” They didn’t build the homes, they provided the site and the essential utilities: water, electricity, sewerage. They also made sure that there was a mechanism for borrowing a small amount of money so that you could build your own home. The actual house is not the most important thing, the most important thing is the formalisation of land rights and access to services.

WBEF: Last year, we ran a piece about a charity that is using geolocation tools to assign postal addresses to properties in the slums of Kolkata. In doing so, they allow people to, in a sense, formalise their living situation. Are you aware of any similar initiatives in India or elsewhere?

CW: The benefits of the internet and smart phones are enormous in the context of very large disadvantaged populations; it’s clear that if you want to deliver subsidies, for instance, smart phones are a remarkably effective means of doing so. They provide a mechanism by which people can access money direct, without intermediaries who may take a cut. That’s an example of how technology is helping people who lack basic paperwork to access services that they need.

WBEF: That brings us quite neatly to Indonesia where the lack of appropriate documentation is a crucial issue. Although there’s a dearth of data, it is believed that the vast majority of Indonesians live in informal settlements.

CW: I think they have to be. There simply isn’t a framework in place that would meet the definition of formal housing. But that doesn’t necessarily mean that they’re living in hovels. The first work I did on the informal sector was looking at 20-storey blocks of flats – in Indonesia, there are plenty of those. But they do not obey a clear regulatory planning framework.

WBEF: It seems inconceivable that large residential blocks could be built without official authorisation, unless they were tacitly encouraged as a means of meeting the supply backlog.

CW: Not all governments have the view that housing is a major part of their responsibilities. They don’t put in place the basics of a regulatory framework which a local authority would have the power to implement. If you’re going to urbanise, you’re going to need largescale development of high-density buildings of one form or another. It’s perfectly possible to build a 20-storey block which is nonetheless in the informal sector and doesn’t have running water or sewage, for instance. They tend to be built with whatever materials are available and the rights of ownership are not clearly defined.

WBEF: Another country where rights of ownership are hugely complicated is Pakistan. In the RICS Insight Paper International models for delivery of affordable housing in Asia, you reference the country’s “near-feudal land ownership regime”. Could you explain how land ownership works in Pakistan and how the system has contributed to a situation in which half of the population lives in the informal sector?

CW: In Pakistan there’s a historic form of land ownership with no paper trail, in which families are clearly “in charge” of a particular area, whether or not they can prove it in court. The relative power situation is partly about money, but many of the people on the land cannot pay with cash, so will instead provide services of some sort. Very much like the European feudal system of the Middle Ages, the landowners believe themselves to enjoy rights over their tenants. There is also the political reality that, in many cases, the landowners don’t want the system to change: they don’t have very strong formal rights of ownership but are politically powerful enough to resist reform. 

WBEF: One place where change has occurred is Vietnam. There, since the 1990s, the government has pursued a policy of market-led reform in the housing sector? Is it working?

CW: I think it’s working better there than in many other countries. The basics from which they started were a little more formal, and that has helped. But I think the market-led system has meant that large numbers of people can’t afford what is being provided. In the urban centres anything that’s reasonably well-built is going to be very expensive and there are a lot of people earning very low wages.

WBEF: So, it could be pushing people into the informal sector?

CW: It could be forcing them out of the urban centres, into the informal sector, yes. Formalisation is not always the answer. Affordable housing schemes backed by international money, with western ideas about how the money can be best spent, generally produce housing that is too expensive for the poorest. Most countries don’t have a demand side subsidy, so you have to pay the market rate and you don’t get government support to help you pay that rate. So, there are real tensions around formalisation. Even if government is prepared to put funding into the supply side, it is likely to be for housing that is not affordable at the lowest end of the wealth spectrum. And by ‘lowest’, I could mean the bottom half in many cases. The consistent objection is that formalisation helps the middle-classes, rather than the poor. Subsidies often go to the middle-classes, because they are the people who can be reached, and they’re also the people who vote.

WBEF: Is it the case, then, that any response to housing shortages in Asia must involve informal solutions? And if the informal sector cannot be quality guaranteed, is it really workable as a solution?

CW: Unless you have a cadastral base, unless you have effective means of identifying land ownership and tracking transfers of ownership, it’s extremely tough to build anything like a formal sector. At an individual level, if you’re somebody who is living in the informal sector, and it is decided that your home should be destroyed and replaced by something formal…that’s not a great outcome for you. It is, to some extent, just a matter of time and place, but what we should be doing is alleviating the worst examples of informality. That means ensuring that there is sewerage, and a water supply and, at the minimum, a road, so that you can get in and out of the place. That is still a big ask, and most of the international programmes of affordable housing have found it massively difficult.