Korea Research Institute for Human Settlements
254 Simin-daero, Dongan-gu, Anyang-si, Gyeonggi-do 443-712, Korea
Tel. 82-31-380-0164(Global Development Partnership Center), Fax. 82-31-380-0468 http://www.gdpc.kr
G l o b a l D e v e l o p m e n t P a r t n e r s h i p C e n t e r
G
lobal Development Partnership Center (GDPC) in KRIHS was opened on January 1, 2011. Its objec- tive is to fulfill the UN MDGs and contribute to the balanced global deve- lopment. By implementing develop- ment agenda for developing countries and promoting the official development assistance, the GDPC will contribute to the improvement of human settle- ments and economic development in developing countries.P
lannning and Policy Report is a publication intended to discuss issues on the human settlements and to share the knowledge and informa- tion on the balanced and sustainable development issues. It contains up-to- date agenda on the national territorial development and urban planning for developing countries, and aims to contribute to sustainable globalization.Planning & Policy Repor t 2011 V ol. 01
2011 Vol. 01
P l a n n i n g & P o l i c y R e p o r t
P lanning
& P olicy
Report
K
orea Research Institute for Human Settlements (KRIHS) is a non-profit research institute established in 1978 to comprehensively undertake research activities concerned with the efficient use, development and conservation of the territorial resources, thus contrib- uting to the balanced development of the territory and the enhancement of quality of life. It specializes in the fields of national territorial planning, housing and land use policies, transportation, regional and urban development, the environment, infrastructure, and geog- raphic information systems.˙¥` ˆ ` 2011.5.24 2:11 PM ˘ ` 1 ¿›‚†4 ¤‰ˆ˘œ·ı
G l o b a l D e v e l o p m e n t P a r t n e r s h i p C e n t e r
2011 Vol. 01
P lanning
& P olicy
Report
Published by the Global Development Partnership Center
Copyright March 2011 by the Korea Research Institute for Human Settlements All Rights Reserved. No part of this publication may be used or reproduced in any manner whatsoever without written permission of KRIHS, except in the case of brief quotations embodied in critical articles and reviews. For information please address inquiries to:
Global Development Partnership Center Korea Research Institute for Human Settlements 254 Simindae-ro, Dongan-gu, Anyang-si, Gyeonggi-do, 431-712, Korea.
Tel: +82-31-380-0547 / Fax: 82-31-480-0468 e-mail: gdpc@krihs.re.kr
Homepage: www.gdpc.kr Publisher: Yang-Ho Park
ISBN: 978-89-8182-793-9
Korea Research Institute for Human Settlements
Acknowledgements
T
he Korea Research Institute for Human Settlements (KRIHS) opened the Global Development Partnership Center (GDPC) under the auspices of the institute in December of 2010. The Center specializes in training and educating government officials from developing countries and planning and consulting on national territorial development with a view to supporting these countries. KRIHS strives to become a world class research institute and has established sister relationships with 16 institutions in eight countries, including the US, China, and Japan, and exchanges experts and information. Since 1991, KRIHS has conducted training programs in territorial development in cooperation with the Korea International Cooperation Agency (KOICA). About 520 government officials from 45 developing countries have participated in the programs thus far, which has contributed to the national territorial development of these countries.As part of this effort, KRIHS published the “Planning & Policy Report,” compiled from country reports produced by high-ranking officials who participated in the “National Territorial and Regional Development Policy,” a training program conducted by KRIHS’ International Cooperation Team, the former body of the GDP Center. The report concentrates on national territorial policies and urban development planning for developing countries based on Korea’s experience. I believe that the report allows us to browse through the current status and policies of the developing countries and thus provides very important materials, given the reality that we have learned about the cases and policies of the developed nations. Also, I believe publishing this report could be another meaningful step to help provide greater assistance to the respective countries’ national territorial projects.
I sincerely thank the authors who have contributed their precious time to creating the
“Planning & Policy Report”. The same appreciation also goes to those faculty members in KRIHS who advised them for the report, making it possible. Especially, I am deeply grateful for all the efforts that the staffs of the GDPC made to have successful Training program. I want to encourage the GDPC members to continue to make a successful journey to produce great consquences of their exertaion in the years ahead.
Yang-Ho Park President Korea Research Institute for Human Settlements
March, 2011
Review of the integrated housing development program: The case of Addis Ababa, Ethiopia
Sissay Dejene Woldehanna
National territorial (spatial) plan for Kenya:
Lessons based on experience from South Korea
Herbert Musoga
Housing challenges in Kenya
Jane Warukira Mwangi
Addressing the slum challenge in urban areas:
A case of slum upgrading in Kenya
Peris Chepchirchir Korir
Implications of megaproject-led development in Vientiane, the capital of Lao PDR
Miles Kenney-Lazar & Ek Vinay Sayaraj
007
029
039 051
065
Contents
Residential land development practices and patterns:
Cases from Ulaanbaatar, Mongolia, and Hanoi, Vietnam
Chinzorig Batbileg
North Triangle: The forefront of the Quezon City Central Business District will soon change the landscape north of Metro Manila, the Philippines
Eutemia B. Ontina
Urban development in Vietnam and its related issues
Nguyen Thi Bac Thai
079
109
133
Ethiopia
Contents
Abstract 8
1. Introduction 9
2. An overall assessment of the Addis Ababa condominium
development program using secondary sources 10
3. Achievements of the program 17
4. Major challenges of the program 21
5. Conclusions and Recommendations 23
References 27
Review of the integrated housing development program: The case of Addis Ababa, Ethiopia
Sissay Dejene Woldehanna
8
Ethiopia
Abstract
H
ousing shortages today in most urban areas of Ethiopia are a result of the largely misguided policies and a socio-economic fabric of the long past, and a lack of housing is among the most visible problem for urban centers in the country. To reduce the deficit and shortage of housing, the Ethiopian government launched a five- year integrated housing development program to construct 400,000 houses by involving 10,000 small scale and micro-enterprises to create job opportunities for more than 200,000 jobless citizens.Presently more than 175,000 jobs have been created through 2,000 private contractors and 4,000 small- scale and micro-enterprises. The construction of 150,000 houses are almost completed, while some are still in the construction phase, testifying that the housing development program is fostering the fast growth of the cities at a national level. Likewise, Addis Ababa is also given a primary focus by addressing the housing problem of that city.
Housing is critical, and the backlog has reached more than 300,000 units. This situation aggravates the living conditions of the city dwellers with 70 percent of the population living under poor environment conditions.
The program was launched in 2004 as a pilot project with a small number of units and construction sites. This program was a big opportunity for unemployed persons and the creation of job opportunities by creating small- and micro-enterprises, that transferred construction technology, capacitating the professionals working in the construction sector and improving the livelihood of city dwellers by changing the living culture in apartments.
The paper focuses on the achievements of the program in line with the reduction of urban poverty by the creation of job opportunities, solving the housing problem, while changing the image of the city. The shortcomings and challenges encountered during Äthe program are also dealt with in our conclusions and recommendation, which we cite in order to highlight the policymakers and encourage them to improve the ongoing integrated housing development program still further.
Key Words:Integrated housing development, enhanced urban development, job creation Ethiopia
9
1. Introduction
Addis Ababa is one of the fastest growing cities in the Third World. In 1961, its population was about 0.5 million. By 1984, it had tripled to reached approximately 1.5 million. At present, the population of the city estimated to be more than 3 million. The housing supply has been unable to meet these rapid increases in demand (NUPI et al, 1995). Without any exaggeration, the shortage of housing can rightly be picked as the single most critical social problem, suggesting an urgent need for a supply response. According to ORAAMP 2002 studies carried out in the area, about 80 percent of the households in the capital city of Addis Ababa are said to be in the low- income bracket. The bulk of these residents live in unhygienic, overcrowded, and dilapidated structures without adequate urban services and amenities. Moreover, due to a supply shortage, the accumulated housing backlog is currently estimated to have reached more than 300,000 units (ORAAMP, 2002).
In closely reading the performance of the housing sector, one can easily discover critical factors, which are believed to contribute toward the worsening of the housing situation. Among the many critical issues worth highlighting, the following are pivotal:
Low income of the majority of urban dwellers.
Limited access to serviced land.
Shortage and increase in price for the supply of construction materials.
Unaffordable housing typology requirement.
Lack of housing financing.
Lack of a clearly defined housing policy direction.
Further, to accommodate the rising demands of newly formed households and the increase in population, an additional annual construction of 30,000 units is critically needed. If the current situation is to be meaningfully reversed, on average 50,000 units (Background Paper MOFA, 2003) have to be built on an annual basis.
Hence, in due recognition of the seriousness of this challenge, the Addis Ababa City Government has launched a bold and highly ambitious integrated condominium housing development program to narrow the demand-supply gap for housing effectively within five consecutive years- beginning with fiscal year 2004.
The main objective of this condominium development program is to improve the standard of living for low-income citizens in the city by creating employment opportunities through extensive housing construction and the provision of decent housing. The specific objectives of the program are:
Regeneration of the slum areas, particularly the core area of the city.
Increased land delivery in the inner city for densification and vertical growth.
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Promotion of micro- and small- scale enterprises that can absorb more labor and operate with lower overhead costs.
Encouraging the promotion of cost efficient housing construction technology.
Empowering citizens of the city through greater ownership of houses.
Maintaining the livelihood of the poor in the city center.
Creating job opportunities.
Changing the image of the city.
Facilitating housing financing through simple and affordable payment modalities.
2. An overall assessment of the Addis Ababa
condominium
development program using secondary sources
2.1 Program Initiation
According to the ORAAMP 2002 studies, a massive housing shortage, poor housing conditions, proliferation of informal settlements and lack of basic infrastructures characterizes the situation of housing in Addis Ababa. To improve the situation, the city government of Addis Ababa has launched a grand housing development program. This low-cost housing development program was launched in 2004 with a target of 50,000 housing units per year. In line with this goal, the program includes the development of micro- and small-scale enterprises, reconstruction or redevelopment
of deteriorated kebele houses, and the provision of land for housing and neighborhood development.
According to the Addis Ababa housing agency (2004), the city administration of Addis Ababa has taken the initiative of introducing condominiums with the aim of reducing by 50 % the problem of housing while focusing on low- and middle-income residents of the city. The program also plans to make sure that 25% of the beneficiaries are women. As stated, different segments of the society should benefit from this program.
The main targeted beneficiaries were:
Residents of low- income and middle- income groups in the city.
Residents of publicly owned houses, who will be given priority to own the newly built houses through full purchase or ownership of apartments units by renting for longer periods.
The target is the construction of 50,000 housing units per year for a consecutive five years to create job opportunities for about 13,000 qualified and 30,000 unskilled laborers in the city and supports the technical and vocational training program of the education sector (AAHA, 2004).
2.2 Legal and Institutional Framework of the Program
Legal Framework
The Government of Ethiopia in 2003 adopted a Federal condominium proclamation
11 (Proclamation No. 370/2003). Based on this
federal legislation, the Addis Ababa City Government issued Regulation No.
12/2004. These two legislative background documents are critically necessary for the condominium development of the city to clarify the registration procedures in each jurisdiction for both common property and the legal entity that represents the owners.
The other important legislation is Proclamation No. 19/2005, which provides for the responsibilities of the city government organ in the transfer of city government houses and that execution. This proclamation is necessary to create equitable, transparent, efficient, and simple execution procedures that will enable ownership transfer of the units, constructed or under construction, to city residents. Based on this legislation, the Addis Ababa city administration housing agency then prepared model guidelines, bylaws and a code of conduct for a condominium resident association (2005),
which will be helpful for the implementation of the program into reality.
Institutional Framework
Due to the complexity of the program, different concerned institutions under the city government are involved. It is clear that any well- organized housing management requires a strong institutional set- up with a clear mandate and also accountability.
However, until recently, the housing sector has been neglected with no responsible organ for planning, coordinating, implementing and monitoring housing development activities in the city.
A new public institution under the umbrella of the city government and the housing development project office (AAHDPO) and also ten sub city project offices were established under the City Manager office to implement the intended development program.
AAHD Project office
Land, infrastructure
& Design dep’t
Construction department
MSE promotion &
training dep’t
Logistics, administration
& finance dep’t
10 sub city project offices
Housing transfer offices
Planning &
documentation Audit service
Figure 1_ Organizational structure of the housing development project office
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The organizational structure of the project office is comprises of a General Manager, auditing, a logistics, finance and administration department, a construction department, MSE, and a TVET development department.
The sub- city project offices have the capacity to execute on average 5,000 to 8,000 houses per year. The project office branches are organized in each of the ten- sub cities. These are the major institutions that will manage and develop the housing program for the city of Addis Ababa. Other actors involved in the program include the Addis Ababa land administration authority, Addis Ababa lease office, AAWSA, Addis Ababa infrastructure development authority, Addis Ababa road authority, Ethiopian commercial bank, NGOs, CBOs, and private contractors, which are directly or indirectly involved in the realization of the housing program for the city.
2.3 Land Preparation, Planning and Design
Land preparation
Land selection, plan format, and base map preparation should be executed in collaboration with the sub- cities on the basis of an existing cadastre and local development plan, as observed and discussed with the respected bodies. However, it was not successfully accomplished as intended. With regard to site selection, the study focuses on the very core areas of the city, which represents 50% of the intended objectives.
The other option was the demarcation of vacant land inside and around the ring road.
These sites are given priority because of the existence of infrastructure networks and the need to use the serviced land efficiently. The other criteria for the selection of these areas related to infilling and densifying the inner city by constructing medium- rise buildings (G+3-G+4). Most project sites are located in very important prime land locations nearer to services and the beneficiaries of the condominium units.
Some of the sites at the core area of the city could have bigger multiple investment opportunities, which could facilitate and bring sufficient revenue for the further development of the program. Coordination between the project office, land administration authority, and urban planning department regarding the selection and approval of the sites in terms of compatibility to the appropriate land use plan and local development plan is still lacking. There is no comprehensive urban renewal policy to guide and frame the development of the inner city, which is dilapidated and congested with an informal slum environment.
Planning and Design
Too implement such massive housing, standardization with regard to architecture, structure, electrical, sanitary and neighborhood designs are indispensable and needed. GTZ LCH, the project office, and the private consultants have exercised different condominium designs. The designs in the
13 low- cost condominium projects involve the
introduction of cost efficient technologies, such as using an environmentally friendly approach without utilizing wood formwork and using pre-cast beam technology and other cost reduction design options. The other important component when considering the design aspect is neighborhood planning, which gives emphasis to densification and vertical growth by taking into account social mix and land use functions. The neighborhood planning design considers different services and facilities for the neighborhood, such as common facilities used for these settlements, for example, traditional kitchen, stores, animal slaughtering rooms, etc.
2.4 Construction Management, MSEs, and the supply of construction materials
Construction Management
The Addis Ababa housing agency reported that the current housing backlog is estimated to be 300,000 housing units, and 40,000 housing units have to be built each year for new family formation (AAHA report, 2003). There were 453,081 applicants registered during the initiation of the condominium program in 2004. The total constructed condominium housing units so far have only reached 80,236 housing units, which is only 53% of the intended goals of 150,000 units to be constructed within 5 years.
As we have seen from the above facts, the cumulative effect of a housing backlog is very critical. During registration of the units, the people fill the form for the type of t house and their willingness to pay. The preference of the applicants for building ownership type was studio type (23%), one bedroom (45%), two bedrooms (26%) and three bedrooms (6%). These facts do not show the effective demand of the beneficiaries with regard to income. People were registered by simply disclosing their wishes. There was no pre- defined registration and selection criteria for the target group. High-income people can register for the studio type of construction.
With regard to construction management and contract administration, the major problems encountered during the implementation of the housing project in different parts of the city were continuous design changes, problem of site clearance, compensation and relocation of residents, lack of production and supply of construction materials, and lack of manpower and professional experience capacity. All of these contribute to the delay in the construction when not completed on time. Contractors are not taking responsibilities for the management and utilization of construction materials supplied by the project office. The designs approved for implementation were not sometimes compatible with the objectives for the respected sites.
Micro Small-scale Enterprises (MSEs) One of the objectives of the housing
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development program is the creation of job opportunities through MSEs in the production of construction materials and construction. In this regard 1,455 micro and small-scale enterprises were organized.
Through this program 176,317 job opportunities were created throughout the country based on the selected towns where the program operates. Related to this Addis Ababa’s contribution is more than 50%.
Support was given to this sector for the provision of working places for production, training, and organizational support. Credit support was given for the establishment and activities of the work as it was engaged. To strengthen and support the MSEs 30,000 TVET graduates were registered to participate in housing development, and 19,000 of them have been given training and now are qualified for the work (AAHDPO, 2007).
The main problems encountered in the implementation of micro-small scale enterprise activities have been organizational and technical and also awareness of the activities of MSE’s. With regard to the organizational activities, the MSEs have a limitation of knowledge and concept regarding its importance. In some sectors of activities, a limitation of organizational capacity in the specialization of the work, such as block work, sanitary installation, finishing work and site works, has been observed. With regard to technical and entrepreneur management skills, MSE’s lack the entrepreneur business skills, have a quality problem and also a lack of coordination
between the MSE and TVET graduates. In the organizational process of MSEs, problems of dependency, such as always waiting for continuous support from the city government, is present. The other problem relates to the attitude of civil servants toward the MSE’s. For the experts and workers in the government institutions, their support is driven not in a manner that encourages the MSEs, but rather having a negative attitude and discouraging and undermining their activities toward the MSEs.
Construction Materials
The supply of construction materials with regard to the vast demands of the project is very limited. For instance, the supply of cement depends on only two cement factories. Currently, the existing public and private enterprises are not able to fulfill the demand for construction materials. The Federal Government has taken action to acquire cement and reinforced bars from abroad to fill the shortage. The initiation taken by the government to purchase in bulk has helped in reducing the cost of the materials and the supply of the materials at critical times.
The other aspect is the rise in the cost of building materials. This rise is believed to be related to the high demand for construction materials coupled with an unresponsive supply side. The prices of building materials, such as cement, steel, sand, timber, and others have been increasing over time in the city. For instance, cement which is the
15 primary input for housing construction has
increased by more than 200% over 8 years’
time (1999-2006, AABOFED, 2006). Due to the high increase of most of the construction materials and the shortage of construction supply, there has been additionally a high increase in overall construction costs. This is an unacceptable trend for a city where most income is below the poverty line.
2.5 Subsidy
Subsidy for Beneficiaries
The information provided by the Addis Ababa housing agency shows that at the beginning of the program, the houses being built were sold to beneficiaries who provided a 10-30 percent down payment. The remaining unpaid amount will be recovered over 10-20 years’ time. Target subsidy schemes are designed for the housing program and principally aimed at addressing low- income and middle- income households.
For this reason, the city government allocates a 30% subsidy of the total housing cost for those who apply for studio and one- bedroom housing. The government request a 7.5% and 10% down payment and a 0%
and 2% interest rate respectively. Also, there is a 6- month and 3- month grace period, respectively, for the same units. However, gradually the subsidy intervention has decreased, especially with regard to the interest rate, which is determined according to the market interest rate, which is 8.5%. A government subsidy may be useful to
broaden the affordability of housing in today’s environment where housing costs have greatly increased, but it must be undertaken only with careful considered parameters.
The completed condominium houses are distributed to the beneficiaries through a lottery system. A 20% upfront payment is expected from the beneficiaries, and the remaining 80% is facilitated through a bank loan for a 20- year payment period. The purchase of building materials abroad is import duty free, and the purchase of local building materials are also exempted from the value added tax (VAT), so as to increase the affordability of new housing for the people.
Subsidy and support for contractors MSEs and others involved in the program, Through the integrated housing development program, the government has taken the initiative to subsidize the program for those participating in the construction sector by enabling them to take advantage of different supporting mechanisms. Some of these are as follows:
Micro and small scale enterprises (MSE) are assisted through organizing cooperatives, by facilitating land and working spaces, and making loan arrangements for the purchase of production machineries and operational costs, supply of raw materials, and facilitating the link between production and skills directly to assist the program.
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Contractors, consultants, and professionals involved in the project are capacitated through training and a loan facility to buy dump trucks and equipments to operate the project efficiently.
The construction technology of IHDP is different from the conventional technology.
The slab is constructed with a prefabricated beam and slab block, which is environmentally friendly and minimizes the carpenter work, concrete, and reinforcement bar. Cost efficient partition walls using material like Agro stone (appropriate building material, reduction of
>30% for the cost of building) technology is also used.
The allocation of serviced land for this particular project with an infrastructure supply is facilitated free of charge by the government.
Foreign building technicians (Chinese) are involved in the building workmanship, such as masonery, carpentering, plumbing, and plastering. They work to transfer knowledge and skills to local builders.
The supply of basic materials, such as cement, and reinforcement bars, etc., is purchased in bulk and supplied to project offices.
Transporters are capacitated through the facilitation of loans for freight trucks and the transportation of materials for the project.
Establishment of a project office at the regional and local levels. The central coordinating bureau coordinates,
facilitates, evaluates, and provides feed back for the project offices. This facilitation is mainly for loans, machinery, capacity building, standard designs, research and development on alternative building technologies, etc.
2.6 Transfer of the condominium units
Proclamation No. 15/2005 was issued to address the responsibilities of the city government, that is, the housing agency, in the transfer of the city government houses and their execution. Accordingly, to facilitate the transfer process, the housing agency has prepared regulations, manuals, and guidelines: (introduce the nature of the list below)
Housing administration regulation and detail guidelines.
Condominium management model regulation.
Condominium resident cooperatives’
model regulation.
Out of the total 150,000 housing units planned, 80,236 units are under construction. Out of these, one- bedroom design accounts 31,809 units (40%), followed by two- bedroom units at 22,928 (28%), a studio type design at 12,920 units (16%), a three- bedroom designat 7,006 units (9%) and shops at 5,573 units (7%).
The low- income and middle- income
17 targeted condominium units are the studio
and one- bedroom type, accounted for 44,729 units or 56% of the total construction.
Then 63,000 (79%) housing units were sold and transferred to the beneficiaries. Then 5%
of the transferred houses were distributed to those who relocated from the development program, the rest or 95% were transferred to those beneficiaries through the lottery system. The program is mainly gender sensitive. <more than 50% of the transferred units were distributed through the lottery system to women. The women were given two chances to be part of the lottery system.
First, they were given 30% of the units designated only for women to compete within themselves through the lottery. The other chance was the equal opportunity given women to compete in the whole lottery system with men.
3. Achievements of the program
3.1 Creating job opportunities and promoting MSEs
The major achievement of this program has been the creation of job opportunities for skilled and unskilled workers. The condominium development needs more labor intensive workers. The required material, labor, and managerial inputs for the provision of housing and the redevelopment program are mainly based on local labor.
The city’s experience in organizing and
mobilizing micro and small enterprises has contributed much to the condominium development of the city. So far in the development of the program, 1,455 micro and small enterprises have been created.
More than 90,000 jobs were created through this program (AAHDPO, 2010). This will encourage and develop entrepreneurial skills for the MSEs to be more creative and productive in the future. Such experience and skill development will create a reliable market for products, expand and diversify of MSE activities and enhance the financial, material, and technical capacity of MSEs to make them more competitive in the market arena.
The significance and achievement of the program has contributed a great deal in terms of job creation and local business expansion. It has promoted the economic activities of the city and continuous growth.
Apart from activating sustainable housing development and affordable housing delivery, it is expected that the program will revitalize the urban local economy and serve as motivation for the creation of a competitive private sector.
3.2 Supplying a massive number of housing units
Due to an implementation capacity limitation and delay in the provision of cleared and serviced land, the achievement for the year 2004 was limited to only about 300 units. To offset this shortcoming, the intention was to
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build 50,000 housing units annually onwards, starting from 2005. However, this extensive operation demands serious study, and the process has to be maintained step- by-step. It is because of these factors that so far, only 80,236 housing units are under construction. More than two -thirds of these units are completed and are undergoing the transfer process to the beneficiaries. As per the track record of the city before 2004, a different study indicates only about 5,000 units were built over a 10- year period despite the participation of all actors.. If we compare the degree of difficulties to this fact, the achievement is tremendously commendable. However, in regard to the stated targeted beneficiaries and the intended objectives that were set, the achievement does have some limitations, namely, the capacity of the city to manage the whole program and the affordability of the units for the people, particularly for low income people. These are the major limitations founds.
3.3 Slum improvement program
A lack of maintenance has resulting in almost all government -owned kebele houses running down to an unrecoverable stage. Most of these units are made from traditional construction materials, such as wood and mud, andand are structurally inadequate. These houses make up the major part of the slum areas of the city. The overcrowding condition and absence of
water, toilets, and kitchen facilities make life in these dilapidated houses miserable.
Different studies have shown that the total number of kebele houses is estimated to be about 150,000 (AAHA, 2006).
The core objective of the slum improvement program is to improve the standard of living of low-income citizens in the city by creating employment opportunities through extensive housing construction and the providing of decent housing. More than 80% of the houses in the slum areas of the cityare these kebele houses. Most of the housing units are very crowded, attached to one another, have but one room and in most cases without defined boundaries. In order to avoid the inefficient utilization of urban land that results in the unhealthy expansion of the city and waste of resources in service and infrastructure delivery, condominium
Figure 3_ One of condominium sites in the inner city, built in infill areas Figure 2_ Slum areas of the inner city
19 development was chosen as one of the
preferred strategies. This strategy has been successful in renewing the slum settlements of the inner areas and also in improving the image of the city.
3.4 Maintaining Social Cohesion
Social cohesion is critical in order for societies to prosper economically and development to be sustainable. The intention of the program action is to create a more integrated social fabric, minimize household vulnerability, and avoid undue social crisis.
One of the objectives then of the condominium programs is to create a social income mix and land use mix as functions accommodated in the construction of the units. The concept is critically important for a settlement to be able to build a secure and safe neighborhood environment.
Addis Ababa is known as a city with good social cohesion, reflected in its highly mixed housing typologies and socio-economic functions. This trend of settlement pattern is in keeping with the condominium program design and those arrangements. The program was targeting the majority of low- income, middle-income, and high-income beneficiaries in the same design of condominium arrangements, and it has been practically implemented.
3.5 Financial Sustainability
In Ethiopia, as well as in Addis Ababa, both
formal and informal sources of housing financing are very limited in practical terms.
In the formal sector of construction, a business bank (CBB) is the only bank that currently provides mortgage loans for housing or real estate development and high class strata for the public. The other category for housing finance is an informal source, which primarily refers to traditional and informal lending institutions. The major ones of these are the saving and credit cooperatives (SACCs) and equip (traditional saving). SACCs are member owned and are managed credit unions that receive deposits, pay interest, and loan at interest to members. Mostly these unions are made up of government employees. Loans are short term normally and not for more than five years. Similarly equips are informal community revolving funds, usually organized by a group of 10 to 20 neighbors, colleagues, etc., for savings with each person paying monthly or weekly into a fund.
Then a member can withdraw the whole amount for whatever purpose, often for business and housing improvements.
The other finance modality is a micro lending mechanism, which supports the housing development of the city. The Addis credit and saving institution (ADCSI) was established in 2000 and capitalized with ETB517,000 (US$34,000) in city funds. It provides savings accounts and lending service credits to individuals, cooperatives, small business, and others.
Recently in 2006, the institution prepared a
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down payment policy to support down payments for condominium beneficiaries.
However, there are pre-requisites for this credit, such as:
New borrowers, they should save for at least 6 months and permanent members for 3 months for permanent members, prior to the loan agreement.
Borrowers should bring a letter from the housing agencythat indicates their selection for a condominium.
Borrowers should be free of any debt from other institutions.
Ownership title remains in the hands of the housing agency as collateral until full payment is delivered.
Amount of a loan based on housing type:
For studio and one- bedroom types, up to ETB5000 (US$298) with a 10% interest rate.
For two- and three- bedrooms type, up to ETB10,000-15,000 (US$596 - US$895), respectively, with a 12% interest rate.
The beneficiaries should have saved a certain percentage of the down payment to get access to the condominium.
- For a studio 40%
- For a one- bedroom 60%
- For two- and three- bedrooms, 60% and 70%, respectively
The percentage of upfront down payment saving seems unaffordable. It should be
considered rather based on the ability of the people. The percentage rate for the down payment should be less than the amount mentioned as far as the collateral. Although it is a new beginning, the policy (use noun) should be encouraged and strengthened.
Based on head office confirmation, so far it has served only a limited number of condominium beneficiaries. The saving culture is still not developed well in Ethiopia.
Awareness should be given to the beneficiaries of condominium owners regarding the credit policy and the importance of saving and its benefits. It is hoped that in the coming years, it will raise a lending and credit for loans, particularly to the low income people (ADCSI, 2006).
The other important aspect of the program is the agreement to facilitate the loan arrangement between the commercial bank of Ethiopia and the city government of Addis Ababa. The Federal Government has facilitated bank loans to the Addis Ababa City Government for bridging financing for construction of the houses. Addis Ababa City Government would partly finance the construction of the houses in the city from its own revenue. However, given the huge amount of the financing required for the program, the city government has sold bonds to the Commercial Bank of Ethiopia to finance the program with modalities of 5%
interest to be paid back within 10 years envisaged. The city would repay its loan after selling the house to beneficiaries based on on a 10-20 year payment period.
21 The bank collects the monthly payment
from beneficiaries through its branch offices according to the detailed agreement set between the two respective parties. In terms of the process for transferring the units, there will be loan facilitation through the Commercial Bank of Ethiopia. The beneficiaries should pay 20%
of upfront of the cost of the transfer before the loan agreement is completed between the Commercial Bank of Ethiopia and the beneficiaries. The loan arrangement supported for residential units will be for the rest or 80% and for commercial units, 60% of the total purchase cost. That percentage will be covered by the bank at the market interest rate of 8.5%. In this manner, the program was successfully implemented through the facilitation of mortgage loans with an agreement made between the City Government and the Commercial Bank of Ethiopia which is a government bank.
4. Major challenges of the program
The five year condominium housing program of the city of Addis Ababa has faced many challenges; it is not going as well as intended at the beginning of the program. Hence, the major challenges were determined and given special attention. Of these challenges, the major ones are:
4.1 Availability and cost of construction materials
The quantity required and the capacity of the construction industries are not balanced;
there was a big shortage in the supply of cement, gravel, pre-cast beams, and slab, directly connected to the world market because the metal and metallic products are imported . The other aspect related to the in the cost of building materials is believed to be the high demand for construction material that exists in the construction industry aggravated by an unresponsive supply side. The prices of building materials, such as cement, steel, sand, timber, and others, have increased over time in the city.
For instance, cement which is the primary input for the condominium housing projects increased by more than 200% over 8 years 1999-2006 (AABOFED, 2006). This will cause an increased cost increment to the city government ultimately, and the effects will be observed to the lower section of citizen housing.
4.2 Institutional capacity
It is clear that good urban housing construction management requires a strong institutional set- up with competitive human- skilled manpower. This is a problem observed in the institutional framework of the housing development project office and the housing agency. It contributes to a delay in the outputs of the program and its intended
22
Ethiopia
objectives. The absence of strong institutions in the sector that can work in a cohesive manner, a lack of adequately skilled manpower in construction management and in the design aspect, and a lack of a well- organized information system curtails the speed- up the project as planned.
4.3 Housing finance
Formal and informal sources of housing finance are in practical terms very minimal in addressing the shelter needs of the low income population. Formal sector financial mechanisms have been very ineffective in reaching poor families in the city. Most funds that targeted the low-income have instead ended up in the hands of middle-income and high-income. The low-income group depends completely on informal credit sources like equip (community revolving fund) which are both expensive and mostly short-term in nature. The allocation of a subsidy to a studio- type room and the one- bedroom unit has proven to be not selectively targeted to income group, but rather to the construction type. The identification of the low income population to the better off population for obtaining subsidies should be critically analyzed and accomplished. Otherwise, it is addressing the wrong target group. The other challenge in addressing the housing finance lending mechanism to the poor is a lack of collateral as well as the guarantee of regular and recorded income. These are the major
concerns. The lack of policies that are successful in encouraging domestic savings and the development of financial institutions and instruments is also critically important and that issue should be given much further consideration.
The other challenge is the financial sustainability of the city government. Half of the city government’s budget is going to the condominium program. For instance, to redevelop 150,000 kebele houses ETB16 billion (US$954 million)is required (World Bank Experts, 2003). So, the major challenge to be able to continue this program without any interruption is a clear source of housing finance and a guarantee of sustainability. Both are crucial.
4.4 Income level of the citizens
The question of affordability is a critical aspect when addressing the shelter needs of low income people. Different studies, conducted on the income of the citizens of Addis Ababa, have disclosed that the majority of the population (80%) is in the low- income category. So, in relation to the condominium program, most dwellers are from the low-income group and have no financial capacity to afford the current minimum standard housing, the studio type.
These low-income groups are also not eligible to borrow money from the formal financial institutions, as they cannot meet the bank’s requirements. In general, the low level saving capacity of these low income people
23 justifies the need for strategic intervention
and alternative housing provision options.
Otherwise, the housing demand and especially the demand of the low income segment of population will not ever be satisfied.
4.5 Serviced land supply for continuation of the program
The growing need for houses and the huge housing backlog in the city demands a large supply of land delivery preparation. In the first phase of condominium development, the study focused on the selection of vacant areas to infill and densified the inner part of the city. In light of the next phase of the condominium project land supply serviced networks is the major challenging factor that should be considered critically. The exhaustion of vacant and pocket areas in the inner city leads to a land delivery mechanism in the outside part of the city. This creates an impact for the low-income group that will be displaced from their former residence where the transportation system is difficult, the disintegration of social cohesion happens, and there Is a distance the place of work.
Usually the lives of low-income people very much interrelate to the center of the city. So, in the condominium development, the next phases will be a big challenge for the city government. It will not be easy to address the low-income section of the society and their living sitesaccessible .
4.6 Implementation of the slum improvement program
One of the envisioned programs of the city government is a kebele (the lowest local administration unit) redevelopment program.
The program targeted 150,000 kebele houses, which were critically deteriorating and congested. The regeneration and revitalization of the inner city through this slum improvement program is a vital contribution to city development. The question is how to finance and manage the program. The program needs relocation, reconstruction, and resettlement approaches.
It requires an enormous amount of resources from the government and cannot be thought of as a way simply to replace kebele housing. Different approaches have to be considered with regard to any redevelopment program and include relocation and reconstruction at the same time as they upgrading projects of selected sites. These - factors should be included in the program rather than simply demolishing whole kebele houses.
5. Conclusions and Recommendations
5.1 Conclusions
Housing problems are an international problem and affect all societies, particularly the low-income residents of any city. The accumulation of housing problems is
24
Ethiopia
manifested in the city of Addis Ababa due to the population increase there that includes a natural growth rate and the influx of population form urban and rural migration.
Thus, Addis Ababa has become a place with severe living conditions and a critical situation for getting access to decent housing for the lower part of society there.
With regard to the sustainability of the ongoing construction (?) program, initially the program envisaged building 150,000 housing units within 5 years. The achievement, however, was 80,236 (53%) units. This outcome does have to be encouraged and appreciated, considering all the challenges and constraints that have faced the program. Shortage of finances, lack of institutional capacity, shortages and the high prices of construction materials, serviced land supply and particularly low affordability for many residents are critical issues and are still a challenge to achieve full sustainability of the program.
5.2 Recommendations
With regard to the condominium program, there are observed problems and prospects for the implementation process of the project. The main challenges refer to the issue of affordability when addressing the shelter needs of the low-income group. It is true that there is no one solution to this problem; there needs to be continuous improvement and an evaluation mechanism in order to achieve a better living
environment for this segment of society . In line with above facts, specific recommended strategies are being forwarded which hopefully will improve the existing on going condominium program and address the shelter needs of both low- and middle- income individuals.
Redevelopment Program
Different approaches could be taken to improve the kebele houses situation. In areas where the most congested and dilapidated prime land of the inner city lies, particularly along the main commercial axis roads, further careful study and selective location of the redevelopment program with full clearance of an area could be an option.
This option would benefit the city from developing (?) a more concentrated business location where there is a clear demand for formal office apartments, commercial business centers and high- rise residential apartments. In that way, the land will be put to its highest and best use for all segments and change the image of the city.
Different actors can initiate condominium development programs through real estate and cooperatives that include a mix of other investment programs. The public condominium construction gradually should decrease the involvement of such a massive program and only focus on the market gap selectively for low- and middle- income segments of the society. The main role of the city government should be to enable different actors to become involved in the
25 supporting mechanisms and bring about
massive housing development so as to radically decrease the housing backlog and housing deficit.
Enable low-income condominium residents to participate in different income generating activities
To better enable low- income families to obtain decent housing, it is better initially to make them ready by guaranteeing stable employment opportunities on which they can rely and thus pay upfront and monthly loan payments. One possibility is to support those low-income family members who do not have regular income. They should be given employment opportunities in the physical t construction so as to pay their regular monthly rent payments. The second possibility could be to organize the low- income residents within a single block building to run commercial activities and support those activities with micro -lending financing to buy the units and run the business. The third option could be to organize the low-income residents with cooperatives of MSE’s and facilitate them with supports like place of work, finance and skill training.
Arrange a micro- finance support system
Government policy should encourage micro- lending programs that can accommodate more beneficiaries and particularly the lower section of society to qualify for a housing loan.
Micro- lending institutions should allow for a range of loan sizes for the payment of the down payment for a studio type at 7.5% and at 10% for one- bed room type of construction for units targeted to the low income residents. The loan interest should be affordable; it is currently more than commercial bank rate of interest.
The loan term should be fair, ranging from 3 to 5 years to accommodate a reasonable monthly payment. Usually a low-income person’s preference is for a short-term loan to avoid risks from their unsustainable income and exposure to other problems.
The responsible institutions should encourage borrowers through incentives to take on personal savings. This could serve as a strong indicator of the ability to pay a loan. Some portion of these savings can be retained as part of the collateral for a loan.
The city government should encourage NGOs or CBOs to participate in the micro-lending program; NGOs could play supportive roles in financial planning and the training of borrowers.
Current regulatory policy for micro lending must be adjusted. Current rules established by the National Bank of Ethiopia limit the general loan size to not over 5,000 birr and loan maturity to not more than 2 years. If micro lending is to become a major motive for housing production and purchase, loans exceeding both of these limits should be allowed (Martha, D. 2005).
26
Ethiopia
Rationalizing and targeting of a subsidy
A targeted subsidy program can ensure that the program is both appropriate and affordable in scale, well targeted with transparent selection criteria, and avoiding the distorting of the housing market. The eligibility criteria should also be properly designed and transparently implemented by not avoiding low-income residents. It should target people, not the houses. The objective of the condominium program in Addis Ababa is to target the low-income population through studio type rooms and one- bedroom units and that should be done in both a selective and targeted manner during the transferring process. In order to visualize these recommended strategies, further detail implementation mechanisms are needed.
In line with the program, it is very important to oversee other options and give them clear attention, which should be adapted easily to the existing circumstances to fill the gaps not addressed currently by the program. Different housing provision strategies like housing cooperatives (condominium), self- help housing movement through minimum site and service schemes, rental housing, a slum improvement program by upgrading selected sites located in good housing condition areas would be appropriate option to envisage to address the different housing provision option.
The City Government of Addis Ababa has to be envisaged so as to bring dynamic changes to the housing sector. The city
government should undertake an enabling approach by empowering different actors in the provision of affordable housing and facilitate different, even creative, supportive mechanisms. In this manner, a holistic housing policy framework can be established and bring sustainable change to the sector and meet the commitment of addressing the shelter needs of low-income people.
27
References:
Addis Ababa City Government. (2006), Addis Ababa City Government Five -Year Strategic Plan Draft (2006-2011). Addis Ababa.
Addis Ababa Bureau of Finance and Economic Development. (2006), Housing Policy for Addis Ababa, a Preliminary Assessment, Addis Ababa.
Addis Ababa City Government. (2004), Grand Housing Development Program, Addis Ababa.
Addis Ababa Credit and Saving Enterprise.
(2006), Down Payment Policy Loan for Condominium Development (amharic version). Addis Ababa.
Addis negarit gazeta Proclamation No.19/2005.
(2005), Proclamation to provide for the responsibilities of the city government organs in the transferred of the city government houses and its execution. Addis Ababa.
Addis negarit gazeta Regulation No. 12/2004.
(2005), The Addis Ababa City Government Condominium Regulations. Addis Ababa.
(check alphabetizing for this entry and the one above)
Addis Ababa Housing Development Office (2005), A study conducted around the utilization of a condominium building by those residents, who are residing at the gerji model houses. Addis Ababa.
Addis Ababa Housing Development Office.
(2004), Project Profile of the Condominium Program, Addis Ababa.
Arnaud, M. (2003), Comments about Housing and Land Policy Under Preparation, The Housing Agency and Commission, Addis Ababa.
Bertaud, A. (2004), Improving the Delivery of Urban Land and Housing in Ethiopia: The case of Addis Ababa, Study Report, Addis Ababa.
Carol, R. (2005), Analysis of the Federal condominium proclamation and Addis Ababa and condominium regulation document, Addis Ababa.
Claudio, A. (2006), Introduction to Housing Policies.
IHS, The Netherlands.
ECB & MWUD. (2006), Finance and Transfer of
Houses/Housing (?) Modalities Agreement.
Addis Ababa.
Federal negarit gazeta proclamation no.370 /2003. (2003), Condominium Proclamation.
Addis Ababa.
GTZ IS. (2005), OROMIA and SNNPRS Regional Housing strategy. Addis Ababa.
Arnaud, M. (2003), Comments about Housing and Land pPolicy Under Preparation. Addis Ababa.
Martha, D. (2005), Approaches to housing finance for the affordable sector, Urban Institute.
Addis Ababa.
Martha, D. & Carol, R. (2005), Condominium and Housing Cooperative Handbook. Addis Ababa.
MWUD. (2006), Plan for accelerated and sustained development to end poverty document, urban development and construction industry, component of PASDEP. Addis Ababa.
ORAAMP. (2002), Housing component studies, Addis Ababa.
Kenya
Contents
Abstract 30
1. Introduction 31
2. Why a national spatial plan for Kenya? 31
3. Lessons from South Korea 35
4. Conclusion 37
References 37
National territorial (spatial) plan for
Kenya: Lessons based on experience from South Korea
Herbert Musoga
30
Kenya
Abstract
T
his article argues that Kenya, in her quest to prepare a National Spatial Plan, can draw important lessons from South Korea’s experience in National Territorial Planning. This comparison is drawn given evident gains that South Korea has made by preparing and implementing National Territorial Plans as well as perceptible contextual similarities between the two countries. These similarities include: strategic geographical location, resource regions, past and present development challenges, and development goals. It is recognized, however, that differences also exist between the two economies that call for adapting South Korea’s lessons to Kenyan realities. South Korea’s remarkable economic performance, to a large extent, has been propelled by innovative and responsive approaches to spatial planning and can provide a reference frame for Kenya.Key Words:National Spatial Plan, National Territorial Plan, South Korea, Kenya
31
1. Introduction
Kenya, much like many developing African countries, desires to become a “tiger”
economy. This ambition is articulated in the Kenya Vision 2030 national development blueprint, which aspires to make Kenya “a globally competitive and prosperous country with a high quality of life by 2030” . It aims to transform Kenya into “a newly industrializing, middle income country providing a high quality of life to all its citizens in a clean and secure environment”.
To achieve this ambition, the Kenyan Government recognizes that a national spatial plan is a critical instrument that will provide a spatial framework. Such a framework will coordinate the development efforts among various sectors of the economy and facilitate sustainable use of the national space economy. The National Spatial Plan is also expected to identify strategies and opportunities to link Kenya to emerging regional economies and opportunities.
Kenya must benchmark its plans with global success cases, especially against Eastern economies in order to prepare their plan successfully. The East provides a relevant reference point given that these economies are by and large newly industrialized; a position to which Kenya aspires. It is also a historical fact that in the early 1970s Kenya was at similar level of per capita income with these economies. Yet these economies have leapt to much higher levels of development.
Drawing on best practice experiences from
these economies would help enhance the chances that Kenya can successfully implement a plan and therefore help the country achieve her vision and ambition.
This article is based on my experiences as a visiting researcher to KRIHS in 2009 and my many years of experience as an urban and regional planner in the public service in Kenya.
The purpose of this article is to indicate possible lessons that Kenya can draw from the South Korean experiences with National Territorial Planning. It is recognized, however, that contextual differences exist between Kenya and South Korea, but it is also apparent there are circumstantial similarities between the two countries.
This paper is divided into three main parts.
The first part presents a case for a National Spatial Plan for Kenya based on the challenges confronting the country and the opportunities available for development. Part two identifies the possible lessons that can be drawn from the South Korean experience. The final section draws some conclusions.
2. Why a national spatial plan for Kenya?
Kenya, with a population of 38.6 million people and land size of 581,313 square kilometers, is confronted with several developmental challenges. It is also, however, presented with numerous opportunities for development. These aspects of development demand a National
32
Kenya
Spatial Plan to function as a coordinating reference frame to subsequently harness opportunities and tackle constraints.
2.1 Challenges
From the first perspective, several glaring challenges within Kenya can be identified.
First, apparent regional development disparities potentially constitute a threat to national cohesion. At independence, Kenya inherited a national space economy that was highly skewed in favor of the high potential regions. The British Colonial Government pursued this policy deliberately and was keen to extract resources from these areas for export to the West. The transport system was therefore developed in order to facilitate
the “White Highlands” (areas occupied by white farmers) and neglected the areas with less agricultural potential. Equally, primary urban areas with the requisite services and facilities were developed following the same pattern to the detriment of drier regions. Drier regions actually constitute more than 75% of the country’s land mass (see Figure 1).
Subsequent government policies after independence reinforced these disparities.
For instance, under the “growth center”
strategy, the criteria used to identify the centers included the agricultural potential of the immediate hinterland of the urban centers and the level of services and infrastructure.
This strategy aimed to create opportunities and develop capital works programs to expand large towns in addition to Nairobi and Mombasa. This would provide more alternatives for absorbing the migrant population and avoid the problems arising from excessive population concentration in one or two centers. The plan was to achieve this goal by accelerating the development of a limited number of selected towns throughout the country. This led to less attention being paid to the arid and semiarid areas, which the Colonial Government had already excluded from the national development agenda (Figure 2). Excluding such a large area of the national space locked out significant potential to generate national wealth. The country’s economic growth and development thus slowed.
The latter perspective is the persisting primacy of the capital city, Nairobi, and Figure 1_ Skewed Distribution of Main Urban
Centers and Road and Railway network over the Kenyan National Space
33 therefore an unbalanced/inequitable urban
system in the country. This further demonstrates the polarized nature of the national economy. Urbanization trends in
Kenya show a more or less stable concentration of population in Nairobi and Mombasa. In 1948, the population concentrated in Nairobi and Mombasa was 73.9% of the total urban population; in 1969 they accounted for 67% of the total urban population; in 1979, the two cities accounted for 51% of the total urban population; and by 1989, Nairobi and Mombasa accounted for 46% of the total urban population. By the last census in 1999, the primacy index had actually reached 1.97 from 1.05 in 1948. The dominance of these two cities has therefore persisted.
Related to the unbalanced urban development are issues of urban sprawl, which is leading to encroachment onto erstwhile rich agricultural land. This phenomenon is contributing directly to food insecurity and the development of unsustainable urban settlements. Other challenges that need to be addressed by the Figure 2_ Distribution of the Growth Centers
(Human settlement Strategy, 1978) Year
Kenya Pop.
(000) No. of Urban Centres
Urban Pop.
(000)
% Urban
Urban Growth Population Growth Rate (%)
Nairobi Pop.
(‘000)
Nairobi Population Growth Rate (%)
% of Urban Population in Nairobi
Primacy index
1948 5406 17 285 5.2 - 119 - 41.7 1.05
1962 8636 34 855 7.8 6.3 227 4.6 33.8 1.40
1969 10943 47 1076 9.9 7.1 506 12.2 47.0 1.55
1979 15334 91 2314 15.1 7.7 828 4.9 35.7 1.40
1989 21444 139 3864 18.0 5.2 1325 4.7 34.1 1.62
1999 28159 179 5429 19.3 3.4 2083 4.5 38.4 1.97
Table 1_ Trends of Urbanization in Kenya, 1948-1999
Source: Compiled from the 1948, 1962, 1969, 1979, 1989 and 1999 Kenya Population Census Reports.
Note: Primacy Index in this case is measured by the four-city primacy index, or the ration of the population of the largest urban center (Nairobi) to the combined population of the next three largest urban centers.
