CO-OPERATIVES & POVERTY AMIDST PLENTY

by

S. MANICKAM,

Secretary/Deputy President THE RAILWAY COOPERATIVE THRIFT & LOAN SOCIETY LIMITED KUALA LUMPUR, MALAYSIA

Prepared in collaboration with

THE NATIONAL COOPERATIVE HOUSING FEDERATION OF INDIA: THE COOPERATIVE UNION OF MALAYSIA LIMITED : THE MIDLANDS COOPERATIVE UNION LIMITED : KOPERASI KOWANIS BERHAD MALAYSIA : THE NATIONAL RAILWAY COOPERATIVES LIMITED : (KOPERASI REL NASIONAL BERHAD) : THE RAILWAY COOPERATIVE THRIFT AND LOAN SOCIETY LIMITED MALAYSIA

Ask any Co-operator involved in the Housing Movement and he would off the cuff utter that nowhere is this statement more true than in the cities and towns of developing countries.

Sprawling slums and informal settlements are increasingly becoming the physical expression of a global trend: the urbanization of poverty. At the start of the third millennium, 47 per cent of the world’s population lived in urban areas. Within the next two decades, this figure is expected to increase to 56 per cent. Even more challenging is the fact that 98 per cent of the projected global population growth during the next two decades will occur in developing countries.

The vast bulk of this increase (86 per cent) will occur in urban areas and of the total world’s urban population increase 94 per cent will occur in developing countries.

This population increase implies that about 39,000 new dwelling units will be required each and every day in developing countries during the next two decades – to cater for population growth alone. An increasing percentage of urban dwellers are earning their livelihood from the informal sector. One of the results of these trends has been a rapid growth of slums and informal settlements, where more than half of the population in many cities and towns of developing countries are currently living and working.

It is against this backdrop that the leaders of the world recently set themselves a new goal. Heads of State and Government resolved “By 2020, to have achieved a significant improvement in the lives of at least 100 million slum dwellers as proposed in the ‘Cities Without Slums’ initiative.

The term slum also includes the traditional meaning, that is, housing areas that were once respectable or even desirable, but which have since deteriorated, as the original dwellers have moved to new and better areas of cities.

The condition of the old houses has then declined, and the units have been progressively subdivided and rented out to lower-income groups. A typical example is the inner-city slums of many historical towns and cities in both the industrial and the developing countries. The term slum has, however, come to include also the vast informal settlements that are quickly becoming the most visual expression of urban poverty. The quality of dwellings in such settlements varies from the simplest shack to permanent structures, while access to water, electricity, sanitation and other basic services and infrastructure tends to be limited. Such settlements are referred to by a wide range of names and include a variety of tenurial arrangements.

In an effort to contribute to the realization of the goal referred to above, the Cooperative Movement as a whole and the Cooperative Housing Movement in particular have, in addition to steps being taken by the United Nations, HABITAT, Governments, the States, CHS, NGOs etc, to also devise and help promote a comprehensive approach to improving the conditions of people living and working in slums dependant upon the need or needs in each particular environment and country within the Asian framework. The strategy that has to be adopted by the Asian Cooperatives would, inter-alia, involve and should address the security of tenure and access to affordable shelter and services, as well as incomes and economic livelihoods. The principal object would be to ensure the provision of:

(a) Security of tenure;

(b) Structural quality/durability of dwellings;

(c) Access to safe water;

(d) Access to sanitation facilities.

The main arguments for the clearance of slums have been linked to their potential as breeding grounds of political dissent, disease, crime and prostitution. Many slum removal initiatives have in fact had the removal of a percieved eyesore as their primary objective. Unfortunately for such initiatives poor people tend to remain poor even when their houses have been demolished.

The simple explanation for the existence of slums outlined above, for example the inability of formal shelter delivery systems to cope with demand, is just one part of the explanation. Firstly, the explanation has to be elaborated upon to explain why slums are where they are. The simplest answer relates to the economic logic of land and housing markets. Secondly it is more than obvious that the Co-operative Movement has ignored the plight of slums and has catered to the building of homes and condomoniums for the well heeled within the Movement. The need for the Housing Movement in the arena of Co-operatives to give greater and wider emphasis is now more than imminent and it is the hope that this Conference would be one of the forerunners in Asia to get everyone moving to make the Asian cities to be models parallel to cities like Singapore; Shanghai etc.

It is of course beyond the means of normal comprehension to earmark Singapore or Shanghai as role models because of the varying tugs and pulls of political, socio economic and financial forces that interact in each domain. Whatever said the Cooperatives however need to take an increasingly pro active role to supplement the roles of all other agencies involved in slum clearance because in the final analysis there can never be a better substitute to shelter built by members under the aegis and the spirit of ‘Co-operativism.’

The introduction of enabling shelter strategies in most countries during the last two decades has implied a change from policies of intervention to policies of liberalization. Consequently, land and housing markets have been increasingly commercialized. In any commercial market, choice is a positive function of income.

The consequence is that the very poor often have no choice in housing at all, and have to live where no one else chooses to live. Secondly, an even more basic issue relates to the logic of general economic development. Many observers have highlighted the role that slums play in providing labour for the formal sector of national economies.

The earlier focus in most developing countries on physical planning and public housing shifted to self- help housing initiatives. These included sites and services projects, which mostly served middle-income households and proved to be unsustainable due to the high subsidies involved. The focus later moved on to the enabling approach, also considered in upgrading approaches which aimed at maximizing the contributions of all the actors in the housing production process within a supportive legal and regulatory framework.

Demolition of substandard dwellings, forced evictions from slums and informal settlements and relocation actions without due process, however, still continue in many cities and countries. Many of the policies and strategies adopted even have an appropriate recognition of facts and an assessment of the limitations, which should set the framework for realistic implementation processes. These policy and strategy documents, however, can rarely be effectively turned into action. Their effectiveness in implementation are constrained by:

(a) Weak or lacking institutional arrangements;

(b) Ineffective or lacking mechanisms to engage the poor themselves, and provide an appropriate enabling framework to harness their potential contribution;

(c) Inadequate or lacking legal frameworks;

(d) Inadequate or lacking fundamental tools such as land registration systems and records

(e) Lack of strategic focus, such as on the needs and potential contributions of women;

(f) Limited or lacking financial resources;

(g) Limited or lacking political will.

The most important factor that limits progress in improving housing and living conditions of low income groups in informal settlements and slums, is the lack of genuine political will to address the issue in a fundamentally structured, sustainable and large scale manner. It is widely acknowledged that political will in addressing problems associated with informal settlements and slums usually surfaces and strengthens before elections or at the verge of an important event that may affect a specific location or project.

After the event the political interest tends to revert to the previous status quo situation. There is no doubt that political will, long lasting and structured interventions with local ownership and leadership, and the mobilization of the potential and capacity of all the stakeholders, particularly the people themselves, constitute the key to success. Lessons from several countries underscore the importance and the fundamental role of sustained political will and commitment. The role of non-governmental organizations in promoting political will and advocacy is quite significant in many countries.

Obectives in approaching the issue of slums and informal settlements should go beyond traditional contexts and address the need for realization of “human rights” (all economic, social and cultural rights – and in this context, most importantly housing rights), poverty eradication and social integration, all of which should have a specific focus on gender equality and the needs of women.

In addition, these initiatives should balance market incentives and private investments - which are essential to efficient housing delivery - with social and environmental goals and collective action - which require public sector interventions and are central to equity and sustainability. Adequate housing should be regarded both as a goal in itself and as a contributor to sustainable economic growth, social development and integration.

Many existing good practices for shelter and services delivery can rarely get past the demonstration or pilot phase and tend not to be replicable. The main reasons for this are the lack of clear institutional linkages, the lack of economic sustainability and a failure to reinvest. New initiatives are often perceived as threats to existing structures in local administrations. Internal resistance to change is exacerbated by turf-wars and failure to share information among all stakeholders within the administration.

The fact that conventional housing finance usually works in favour of higher income groups is reflected in a highly segmented housing market. Housing is usually available – often with high vacancy rates – at the high quality, high cost and high-income segment of the market. Meanwhile, the low end of the market is extremely tight, with low or no vacancy rates. One of the reasons why the market does not work for the poor is the lack of finance.

Conventional housing finance institutions are accessible and provide housing finance to the middle and high income segment of the population. Public sector housing finance institutions have offered longer-term loans also to lower income groups, but even these have largely been restricted to borrowers with clear land title and certifiable income – a condition only met in public low-income housing projects.

The vast majority of the population remains excluded. This is the sector that beckons the Housing Cooperatives. The poor, low and even middle income majority of the population in developing countries can not afford a loan even for the least expensive, commercially built housing units. The Cooperatives have the means and know how and the necessary contacts both nationally and internationally on how to get these poor downtrodden ones to get together to pool their scarce resources as seed money to get a project moving. One example that shows success in one city would be sufficient motivation for other slum dwellers to get themselves involved in the process to get more and more dwellers to find the ways and the means to utilize the co-operative concept to eventually find a shelter over their heads. Following that the Co-operatives would have a vast vista of co-operative projects to handle which would meet the upstream and downstream requirements of the members in the area.

The main reason for for slum dwellers to even dream of owning a home is their salaries which are in the low income, high construction costs and the high cost of long-term finance. Consequently, many poor and low or even middle income owner-occupier households build their own houses progressively over long periods (as long as 10 to 15 years), or are simply tenants. Different approaches to housing finance are required, as long-term mortgage loans are inappropriate to the financial possibilities of the poor. Access to small amounts of credit, with short-term maturities, can be useful if the poor and low income groups are to be supported and the Co-operatives certainly excel in this area.

While a large proportion of urban dwellers are tenants simply because they cannot afford to be owners, other urban dwellers choose to be tenants because of the advantages this may give them in the labour market. A large proportion of slum dwellers are not only involved in the informal sector when it comes to a place to live – their place of work is also in the informal sector. The nature of their employment may imply that they have to move around in order to maximize their income. In order to minimize transport costs they choose to live in locations close to their place of work, where the cost of housing may be beyond their reach. Ownership of affordable housing in another part of town may be incompatible with their willingness or ability to spend excessive amounts of time and money for transport purposes.

The supply of cheap rental housing is an essential component of the continued existence of a cheap urban labour force. Or, as was noted in paragraph 10 above, slums are good for business. This begs the question: who owns the structures in the urban slums of developing countries? Again, there is very little comprehensive data.

The following is a tentative categorization of such structure owners:

(a) Slum lords, who rent out a large number of dwellings (wealthy individuals with political clout, either local politicians or those able to influence local politicians);

(b) Headmen, who may manage a two digit number of dwellings (proxies for slum lords, low-income individuals -frequently of imposing physical stature- who manage the properties of frequently anonymous slum lords, and may be paid in kind or cash for this service);

(c) Small-scale landlords, who rent out a smaller number of structures or rooms (normally in the range of 5-15 units);

(d) Self-help landlords, households that rent out a room or two, frequently added to their own residences for this particular purpose.

Attempts to increase the supply of cheap rental housing require a thorough understanding of the way the different markets for such housing operate. Many slum structure owners do not operate with the specific purpose to make undue profits.

Several studies indicate that households that rent out rooms in their own house tend to be just as poor as their tenants. Their primary objective is to supplement their income, however. The importance for governments to adopt rental housing policy to attract private investors has so far been overlooked in most developing countries.

One of the weakest links of government housing policies for the urban poor is the policy (or the lack of it) for urban land management. Due to rapid urbanization, the urban poor are forced to find their shelter in illegal settlements located in a variety of lands: customary land, government land reserves, marginal land or in illegal subdivisions.

The resulting growth of informal settlements, primarily in peri-urban locations, is often the response to government inaction, or ineffective interventions that create more problems than they solve.

Government inaction has been most marked in the area of land information systems. Few countries have sought to improve their land titling and registration systems. Weak cadastral, registration and tenure record have made efficient land market operations next to impossible. This has made access to land even more difficult for low income households.

Most city governments are also facing mounting problems with the collection and disposal of solid wastes. Typically, only a third of solid wastes generated by urban residents and commercial establishments are collected by city authorities.

The haphazard growth of peri-urban settlements and a total disregard to basic norms allow little access to solid waste removal services in these densely populated areas. The result is indiscriminate dumping of wastes in roads, pavements and open drains – with the associated health risks.

An important obstacle to stepping up investment flows in urban basic services has been the reluctance by city authorities to put in place a realistic pricing policy that could ensure cost recovery, which could then be ploughed back as new investment. Ironically, it is the affluent groups who benefit most from under-pricing of basic services such as water supply, as the poor are rarely connected to municipal services and have to rely on the informal market.

Generally the poorest city residents pay the highest unit price for services, such as water and energy. This tends to reinforce the cycle of poverty. The relationship is not however well understood. Clearly, further research is necessary to address tenure and housing rights, shelter provision and urban poverty reduction.

The Cooperative Housing Movement in all the countries where they operate in one form or other have the potential to bring efficiency gains and cost-effectiveness in urban basic services delivery. Moreover, effective regulatory controls may ensure that poor neighbourhoods are not neglected. Yet, with few notable exceptions, most city authorities continue with their role as service providers, with little involvement of communities and the private sector.

A strong political commitment, transparency in management and sound strategies are needed to attract more private sector investment in urban services. Involvement of Cooperatives and non-governmental organizations and community participation in the provision and management of urban basic services can go a long way towards cost recovery and long-term sustainability of services.

Policies and programmes should therefore focus with priority on building capacity at the local level for effective community participation in the planning, provision and management of infrastructure and services. The women of the community, in particular, have proved themselves to be important agents for change.

The understanding of urban poverty still needs to be developed. This will necessarily require a clarification of the link between what is understood by social exclusion: including work and unemployment, distribution of wealth and equity issues, racism and xenophobia, spatial dimension and urban management, and identity and political systems.

Institutional responses tend to focus on income generation, without considering the social, political and psychological factors which constitute the indivisible character of poverty. Public sector responses to poverty are also usually based on a simplified view of the poor as a homogeneous group. In reality, the poor are very diverse in their difficulties, needs and capacities. They thus require a differentiated, but coordinated, assessment and response.

Increasingly, the provision of basic services in the low-income areas of cities has become a key opportunity to improve the living environment for the urban poor, while at the same time improving livelihood prospects. The sheer densities of population prevalent in slums make the need to reduce the environmental and health impacts even greater and also make micro-enterprises established for the purpose more financially viable.

Services include water, sanitation, waste management and transportation. Several novel approaches have been reported where viable micro-enterprises have been established. This has led to an increased demand for appropriate finance mechanisms for diversification and expansion, together with progress in the development and application of appropriate technologies.

The right to adequate housing has gained increasing recognition among human rights bodies and stakeholders, and many governments have adopted or revised housing policies to include various dimensions of human rights. The second United Nations Conference on Human Settlements (Habitat II), held in 1996 harnessed this trend. The outcomes of the Conference, the Istanbul Declaration ,the Habitat Agenda, constitute a framework where human settlements development is linked with the process of realization of human rights in general and housing rights in particular.

The promotion of security of tenure is an attempt to address several aspects of urban upgrading. Specifically, it is an entry point into the complex, multidimensional nature of poverty, the politics of land and slum upgrading, and urban citizenship and associated equal rights of women and men.

Security of tenure is also increasingly regarded as a useful entry point for improving living conditions. In practical terms for the individual slum dweller, security of tenure translates into a degree of certainty that can motivate investment of his or her own resources for the purpose of improving shelter and services. In some cases, a certificate of right or temporary occupancy can serve as an instrument for making claims on public resources or negotiating with authorities for access to basic services. Secure tenure may also legitimize land or structures on that land as forms of collateral for credit, and therefore investment.

The concept of shelter is broad, and frequently crucial aspects of tenure are ignored or forgotten. For example, although the tenure of a dwelling is important, the tenure of the workplace is extremely important. This is particularly the case for slum-based micro-enterprises. Any strengthening of tenure aspects related to livelihood and income generation will positively and considerably improve the quality of life of people living in poverty.

It is important to note that securing tenure for the community (or the household) does not necessarily mean securing tenure for women and their children. This is because of unequal household and social relationships based on law, custom or economic relations. In slum upgrading that involves regularization of tenure, specific measures must be taken to ensure that extension of secure tenure benefits men and women equally.

When addressing the issue of slum improvement and slum upgrading it is critical to include a specific focus on women and their situation, needs and roles in shelter development. In poor urban neighbourhoods, women predominantly remain the managers of homes and neighbourhoods, and providers of services. A large number of women in the slums work in the informal sector, often at home or close to home.

Women's engagement in public life is thus very often through neighbourhood organizations that are linked to providing or negotiating for services such as refuse removal, accessible clean water, spaces for commercial activities and safer public transport.

If the “Cities Without Slums” goal is to be achieved, it is not sufficient to raise incomes and construct more houses. Specific interventions are required to significantly improve the conditions of vulnerable and disadvantaged groups. In this connection, it is important to take note of the rapidly changing global demographic structure. Estimates indicate that the population of the world is ageing at an unprecedented pace.

In less than half a century, life expectancy in the world increased by 20 years. By 2025, one of every seven persons will be in the older age group (over 60 years) and about 70 per cent of this group will be living in developing countries. This global trend coupled with the ongoing urbanization process has significant effects on human settlements as well as on economic and social development. Governments and stakeholders need to consider these issues in all aspects of housing policy, including the upgrading of slums.

While consensus had been building on the need for decentralization of responsibilities and empowerment of local authorities as a fundamental principle in urban governance, evidence from all around the world indicates that this process is not advancing very fast.

Difficulties are arising both from the central level and from inadequacy of operational modalities at the local level. The most important difficulty in the decentralization process is the limitations of transfer of authority. Legal and administrative frameworks should promote autonomy over the acquisition and expenditure of public revenues. On the other hand, lack of participatory planning processes, limitations in the capacity of civil society organizations and modalities to involve the most vulnerable groups in decision-making appear as factors at the local level hindering the effectiveness of decentralization.

Although accurate statistics are not yet available, it seems that the number of slums and informal settlements are increasing globally. This trend is continuing, despite the fact that considerable improvements

Much success stories abound of the progress that have been achieved in some countries that have initiated effective programmes and decisive actions in addressing the goal of adequate shelter for all. To ensure and facilitate the expansion of these positive developments to other countries, the Millennium Declaration endorses the “Cities Without Slums” goal of “improving the lives of at least 100 million slum dwellers by 2020”

The figure of 100 millions sounds huge, but when compared to the estimated current population of one billion slum dwellers globally, it is a modest but realistic target. It implies addressing the needs of only 10 per cent of the world’s urban population who currently suffer from diverse aspects of inadequate shelter, including lack of security of tenure and access to basic services and infrastructure.

From the outset, it is clear that such a long-term initiative needs to involve fully all stakeholders related to the upgrading process, first amongst them the slum dwellers themselves. The best organ to motivate the slum dweller is obviously the Co-operative movement.

Secondly, all related public authorities at the national, city and local levels should be involved from the beginning to the end. Thirdly, all related civil society organizations (including non-governmental organizations, research institutes and professional associations) should mobilize their capacity and potential to contribute to these activities.

If the global “Cities Without Slums” action plan is to be taken seriously, it should be translated into national and local action plans and duly monitored. Countries and cities should therefore be invited to define their own targets and monitoring mechanisms. According to the action plan, 20 citywide and/or nationwide programmes should be initiated during 2001-2005.

Within this framework, eminent persons in the Co-operative fraternity may wish to provide guidance in seeking answers to the following questions:

(a) How can the commitments of the Habitat Agenda and the Millennium Declaration be turned into effective national and local policies and actions;

(b) How can the implementation of the two global campaigns (particularly the Campaign for Secure Tenure) be made more effective, both at the global and national levels;

(c) Who are the stakeholders in this process and how can they be best assisted;

(d) How can guidelines be prepared on key areas such as prevention of unlawful evictions, proper relocation processes when inevitable, and promotion of rental markets for the poor;

(e) How can a coordinated global monitoring and evaluation system be best established and operated.