Housing the Urban Poor: an Integrated Governance Perspective
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ROYAL INSTITUTE OF TECHNOLOGY HOUSING THE URBAN POOR: AN INTEGRATED GOVERNANCE PERSPECTIVE The Case of Dhaka, Bangladesh Doctoral Thesis KH. MD. NAHIDUZZAMAN Stockholm 2012 TRITA-SoM 2012-02 ISSN 1653-6126 ISRN KTH/SoM/12-02/SE ISBN 978-91-7501-260-5 Royal Institute of Technology (KTH) School of Architecture and the Built Environment Department of Urban Planning and Environment Division of Urban and Regional Studies SE 100 44 Stockholm Telephone: +46 8 790 73 85 http://www.kth.se/en/abe/om_skolan/organisation/inst/som/avdelningar/urbana-studier/avdelningen-for-urbana- och-regionala-studier-1.36688 © Kh. Md. Nahiduzzaman, 2012 Printed by AJ E-print AB, Stockholm ii ABSTRACT Royal Institute of Technology (KTH) Department of Urban Planning and Environment Division of Urban and Regional Studies It is claimed that low-income people in Dhaka city do not have the financial ability to enjoy a decent housing environment. There is a clear lack of knowledge on how low-income people, drawing upon both their available income together and support from formal financial institutions, would be able to afford housing. It is commonly considered a fact that their access to formal financial means is largely hindered by their poor financial status, along with the absence of any form of land tenure security. The case of this study demonstrates, on the contrary, the adequate financial ability of the urban poor when it comes to meeting rent and payments for other necessary services. This study therefore primarily responds to the critical issue of whether the government is unaware of informal housing practices, or is simply ignorant of low-income housing provision. In this study, perspectives on change are analyzed in order to comprehend the obstacles and challenges embedded within the housing organizations of Dhaka city. Within the local governance paradigm, the concepts of deliberative dialogue and partnership are explored with the aim to reveal both the resources rooted in ‘informal’ low-income housing practices, and the resources at stake for the ‘formal’ housing gatekeepers. Different land tenure security options are explored in order to understand their compatibility with the informal nature of low-income housing. The theory of social business is critically reviewed, and used to examine whether low-income affordable housing could be seen as a product resulting from partnerships between vested actors, for whom the low-income community could be considered to be both a beneficiary and a partner. This study suggests that outside the boundary of ‘formal’ housing, there is an unexplored and functional ‘informal’ housing market where de facto owners purchase ‘business tenure security’ from the slum lords, while de facto tenants buy ‘house rental tenure security’ in exchange for regular rental payments. Within this informality, an innovative financial organization (the Jhilpar Cooperative) has emerged as a creative platform for business investment. This study reveals that Jhilpar’s inhabitants pay more than 30 percent of their monthly income for housing. As an absolute value, this is more than what is being paid by middle-class – and even many high-income – people. The slum inhabitants also pay more for a limited supply of basic services, such as electricity. This study concludes that the formal housing gatekeepers lack a complete knowledge of ‘informality’ – a notion reflected in, for example, the actual financial ability of the urban poor; the strength and potentials of systematic community-based cooperative business; and housing re- location decisions (employment-housing nexus). This fundamental lack of knowledge precludes the housing gatekeepers from taking the right decisions to achieve affordable low-income housing. These deficiencies have led to low-income housing projects that have barely benefited the urban poor, benefiting other income groups instead. Low-income housing projects utilizing land title provision, sites and services schemes, and relocation to other places (amongst other strategies) disregard the nature, strength, and potentials of housing ‘informality’ in the slums in the most pronounced manner. This identified knowledge gap also rules out private and public housing gatekeepers employing their resources as enablers or providers. To improve this impasse with regard to affordable low-income housing, this study advocates a ‘social business model for low-income housing’ as the most effective option for the Jhilpar community, whereby partnerships would be built on an ‘investment’ mindset, through a shift away from conventional ‘give away’ practices. Keywords: Housing affordability, tenure security, social business, partnership, deliberative dialogue, cooperative business, informality. iii CONTENTS Abstract iii List of Tables ix List of Figures ix List of Maps x List of Pictures x Acknowledgements xi CHAPTER ONE: INTRODUCTION 1-8 1.1 General Problem Formulations 1 1.2 Specific Problem Area of the Study 2 1.3 Research Problem 4 1.4 Research Questions 5 1.5 Study Objectives 5 1.6 Delimitations of the Study 6 1.7 Structure of the Thesis 6 1.8 Operational Definition: Urban Poor and Housing 7 1.8.1 Urban Poor 7 1.8.2 Housing as a Concept 8 CHAPTER TWO: THEORIES AND CONCEPTS 9-38 2.1 Perspectives on the Change Process – Prospects and Obstacles 9 2.1.1 The Change Process 10 2.2 The Nature of Governance 14 2.2.1 Local Governance 14 2.2.2 Narrowing Down to the Crux of Local Governance 16 Deliberative Dialogue towards Mutual Benefits 18 Partnership 21 2.3 Urban Land Tenure: Informal Housing Continuum 23 2.3.1 Urban land tenure facts 23 2.3.2 Full title of land and the rights-based approach 25 2.4 Affordable Housing and Finance 28 2.4.1 Housing Affordability 28 2.4.2 Measuring Housing Affordability 29 2.4.3 Housing Finance in Developing Countries – An Exploration 30 Access to Formal Financing Institutions 30 High Collateral and Credit Markets 31 iv Asset-Liability Mismatch and Lack of Long-Term Credit 32 High Costs of Lending to the Poor 32 2.5 Social Business – Business in its Humane Form 32 2.5.1 What is a Social business? 32 2.5.2 Social Business: A New Bottle or New Wine? 34 2.6 Summary of Theories and Concepts 38 CHAPTER THREE: RESEARCH METHODOLOGY 39-52 3.1 Methods: Qualitative and Quantitative 39 3.1.1 Qualitative Method 39 3.1.2 Quantitative Method 39 3.2 Case Study Research 41 3.2.1 Sampling Technique 42 3.2.2 Selection of the Study Area 43 3.2.3 Generalization from the Case Study 44 3.3 Data Sources 44 3.3.1 Primary Data 45 Questionnaire Survey 45 Interviews 46 Informant-cum-assistant and Reliability 47 Direct Observations 48 3.3.2 Secondary Data 48 3.4 Data Analysis 49 3.5 Combining Induction and Deduction – Abduction 49 3.6 Validity and Reliability 49 3.7 Limitations of the Methodology: what went wrong and might have been better 50 3.8 Summary of Methodology 51 CHAPTER FOUR: DHAKA CITY AND CASE STUDY AREA – 53-62 JHILPAR SLUM 4.1 Administrative Entities and Demography 53 4.1.1 Administrative Jurisdictions in Dhaka City 53 4.1.2 Dynamics of Population and Slums in Dhaka City 54 Distribution of Slum Populations 56 The Ownership of Slums in Dhaka 58 Employment of the Slum Dwellers 58 4.2 Cooperatives – Micro Social Entrepreneurship in Dhaka 58 4.3 Location Analysis of Slum Settlements 59 4.4 Jhilpar Slum – The Case Study 61 4.4.1 Location of Jhilpar Slum in Dhaka City 61 4.4.2 An Introduction to Jhilpar Slum 61 v CHAPTER FIVE: LAND GOVERNANCE IN DHAKA 63-74 5.1 Urban Land Administration and Management 63 5.1.1 Urban Land Ceiling and Management 64 5.1.2 The Land Appeal Board 64 5.2 Urban Land Tenure and Legislations 65 5.1.2 Land tenure categories in Dhaka city 65 Khas Land and Public Land 66 CHAPTER SIX: HOUSING RIGHTS AND NATIONAL POLICIES AND 75-82 DEVELOPMENT PLANS 6.1 Housing Rights 75 6.2 Low Income Housing Provision in National Development Plans 76 6.2.1 1986-90: Third Five Year Plan 76 6.2.2 1990-95: Fourth Five Year Plan 77 6.2.31997-2002: Fifth Five Year Plan 77 6.3 National Housing Policies (NHP) 77 6.4 Dhaka Metropolitan Development Plan (DMDP) and Housing the Urban Poor 78 6.4.1 Structure Plan – SP (1995-2015) 79 6.4.2 Urban Area Plan – UAP (1995-2005) 79 6.4.3 Detailed Area Plan - (DAP) 79 CHAPTER SEVEN: HOUSING GOVERNANCE AND LOW-INCOME 83-101 HOUSING PROVISION 7.1 Gatekeepers of the System 83 7.1.1 Housing in Private Sector 83 Real Estate Developers and their Business-as-usual Focus 83 Eastern Housing Limited 84 Sheltech Private Limited 85 Housing by Non-Government Organizations (NGOs) 85 7.1.2 Housing in the Public Sector 88 National Housing Authority (NHA) 88 RAJUK 89 Department of Architecture (DOA) 89 Dhaka City Corporation (DCC) 90 Water and Sewerage Authority (WASA) & Dhaka Electricity Supply 91 Company Ltd. (DESCO) House Building Finance Corporation (HBFC) 91 Low- and Middle-income Housing Projects in Dhaka 91 7.2 Financing Low-income Urban Housing: A Barrier? 95 7.2.1 Introduction to Housing Finance 95 7.7.2 Housing Finance Sector 95 Central Bank: Bangladesh Bank 96 Nationalized Commercial Banks 97 Non-Monetary Financial Institutions 98 7.3 Heightened House Rent and Affordability of the Urban Poor 99 vi 7.3.1 Heightened House Rent 99 7.3.2 Affordability of the Urban Poor 100 CHAPTER EIGHT: HOUSING AS A SOCIAL BUSINESS? 102-108 WITNESSING THE CURRENT PRACTICES 8.1 Corporate Social Responsibility and the Journey of Social Business 102 8.1.1 What is Corporate Social Responsibility (CSR)? 102 8.1.2 Borderline between CSR and Social Business 102 8.1.3 The Social Business Journey 103 Grameen-Danone Food (GDF) 103