The Frustrating Attitudes of Low Income Housing Sector Peers

Written by on July 13, 2012 in Featured, land rights, Measure Impact, poverty - 1 Comment

Now the dust has settled after the Rio+20 and delegates have conveniently brushed aside many of the core issues in a familiarly recognised fashion, many of us were left scratching our heads as to what the US$ 210 million spent on the summit actually yielded.  No more so was this frustration reflected than in relation to the interrelated topics of urban reform and global base of the pyramid (BoP) housing.

In fact, the prevailing attitude to this irrefutably massive issue has long been that slums and degraded urban environments are here to stay; the tipping point has already past and so it is a matter of searching for solutions that will somehow bear the load as opposed to truly tackling the situation.  Take the recent quotes, for example, made on US news channel WWNO by journalist, author and TED speaker Robert Neuwirth that “no government, no developer, no Donald Trump out there is going to be able to build for people at a price that they [informal community residents] can afford” and “in a very pragmatic way, these [slums] represent the urban neighbourhoods of the future.”

It is important to a step back at this juncture and; in addition to seriously questioning how exactly the disorganised growth of BoP living environments is “pragmatic”; consider the enormous implications of such affirmations being accepted as mainstream thinking – particularly coming from influential spokespeople such as Neuwirth who have the benefit of ground level experience.

At the same time however, as dangerous as these assumptions are, the arguments do follow a certain logic in relation to the current reality.  Whilst comments are often made with regard to to tapping into the vibrant economic potential of informal communities (via impact investment models for example), BoP housing remains neglected due to the asset class being what Aden Van Noppen of the Acumen Fund recently stated as “unsexy” – an assertion that broadly resonates with Neuwirth´s thoughts.

In terms of what is happening, we see that the little funding available becomes jettisoned into fundamentally weak ideas.  Distinctions are made between the “degrees” of slum living conditions and aspirations for the sector are based on incremental improvements as a coping strategy or, at best, small scaled peripheral housing developments – which barely even make a negligible dent in dealing with the rapid levels of urban sprawl across the developing world.

Nevertheless, despite the housing microfinance dialogue being very relatively quiet in 2012, this does not stop the model being referred to as a “catalytic shift” and a form of “innovative asset-building” by organisations active in the sector (see my extended comments on “The BIG IDEA” BoP housing report published by the Next Billion website and Ashoka).  The contradiction here is that, with budget allocations being so low not to mention a wide array of other practical questions, sector proponents remain unresponsive to how such are objectives are truthfully being executed.  The US$ 45 million Overseas Private Investment Corporation (OPIC) fund mounted in line with Habitat for Humanity a year ago is a prime example of this – with no results or information on outcomes being publicised to date.

Organisations such as OPIC are indeed debatably shielded from constructive criticism and, whilst making claims to be involved in pushing the new affordable housing construction sector forward, a closer look at many of the projects underway demonstrates that business models are very distant from catering to the average family that is living in a slum.

What is being produced here is a dangerously misunderstood perspective of how developing world urban environments are to be formed.   If, for example, the delegates at the Rio+20 were able to take themselves out of their comfort zone, it is quite easily seen that – whilst solid progress that has been made in pacifying Rio de Janeiro’s favelas – declarations of BoP housing policy in Brazil being a template for the developing world are misleading.  Despite the notable economic strides made this century, the majority of the country´s lower-middle class population still remains in insalubrious housing conditions that are completely out of line with even the most basic of technical standards (not to mention being increasingly expensive as a result of the widening real estate market speculation).  Advocates of this notion of “renewed urban regeneration” in Brazil will undoubtedly quote initiatives such as the “Morar Carioca” (which has recently received support from the Inter-American Development Bank) as well as “Minha Casa, Minha Vida” – but evidence has shown that the real costs have been significantly underestimated and progress is superficial.

Whilst the economic crisis certainly has not helped develop an environment where housing and urban development investment proposals can be formed cohesively, this is no reason to bury our heads in the sand.   To begin moving in the right direction, the industry must seek to not only radically change its own uninformed attitudes but, more importantly, be willing to analyse BoP housing and urban business models with a fine tooth comb as opposed to continually engaging in mere theoretical discussion and ineffective strategy building.

Ruban

Ruban Selvanayagam is the partner-director at the Fez Tá Pronto Construction System – http://www.feztapronto.com/ – a patented, copyrighted and fully consolidated real estate development model focused on serving the base of the pyramid with genuinely affordable, high quality, technically adherent and ecologically friendly housing. Please also see his regularly updated Habitation for the Planet blog – http://www.habitationfortheplanet.org/blog/ – with articles, interviews and relevant research into the global base of the pyramid housing sector.

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