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Guyana Conference: Aspirations for Real Change-2016 and Beyond
In Celebration of Guyana’s 50th Anniversary
Session 3
The Role of the Diaspora – A Framework for Collaboration
HOW CAN THE DIASPORA CONTRIBUTE TO AFFORDABLE GREEN HOUSING IN GUYANA?
ROHAN LACHMAN 8725 167 STREET, JAMAICA, NY 11432
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[email protected] AFFORDABLE GREEN HOUSING
INDEX
ABSTRACT: ISSUES OF AFFORDABLE GREEN HOUSING
BACKGROUND INFORMATION
FINANCE: OBSTACLES & SOLUTIONS
LAND DISTRIBUTION: REGULARIZATION INTERNET/ DATABASE/ PUBLIC-PRIVATE PARTNERSHIP
BUILDING SYSTEMS FOR AFFORDABLE HOUSING: CURRENT NEED CONSTRUCTION MATERIAL HOUSING CONSTRUCTION OPPORTUNITIES
RECOMMENDATIONS
INDICATORS FOR REAL CHANGE
BIBLIOGRAPHY
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ABSTRACT
This paper addresses the issues of affordable housing in Guyana and advocates an effective role for the Guyanese Diaspora. Over the last century, housing for the masses included chattel, lodgies, mudhuts, truli to wood, concrete and zinc. In post slavery and indentureship working families used their income to construct their homes without the assistance of Government. There was a boom in housing until mid 1960’s. New housing stock was not developed. One of the major factors that explain this reality is mass migration. As the wealth of individuals and the society increases, there is a drastic need for central planning, land allocation, development of infrastructure and utilities. The availability of data to monitor and measure progress of these changes continues to be a major concern and needs intellectual inputs, technology and financial resources. Policies are conceivable and can be implemented to effectively address the need for affordable green housing in Guyana with a clearly defined role for the diaspora
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BACKGROUND INFORMATION
Jobs, shelter, and security persist as a challenge for Guyanese. Poverty remains a basic socioeconomic and political stranglehold on the poor in these societies. Although the International Monetary Fund (IMF) Gini coefficient showed an alleviation of poverty from 1992 to 2006 for Guyana, there is no data on the wealth distribution across the population.
Gini coefficient of zero expresses perfect equality, where all values are the same (for example, where everyone has the same income). A Gini coefficient of one (or 100%) expresses maximal inequality*.
In 1996, United Nations (UN) Conference on Human Shelter, estimated the housing stock to be 151,679 for population of 718,405. In 2015, the population reached 767,000 (IMF) with limited housing stock being developed except for the upper income, business class and ministers. Low and moderate-income citizens and squatters, were allocated approximately 30,000 houselots, however, these have no infrastructure such as roads, water, electricity, sewage or drainage, allowing limited or no development of stock.
The current transportation infrastructure (roads and bridges) is being developed and making habitable land more accessible, however, the need for localized infrastructure still needs to be addressed. The drainage and sea defense system was established by the Dutch since 18th Century and has remained the same except for agricultural projects in the rural areas. Since Independence, the main cities, and rural towns, drainage have collapsed from poor maintenance and increasing population. The sea defense is crumbling from rising sea levels and no maintenance. Electrification is developed on an ad hoc basis, with no national strategy, with energy cost per capita exceeding more developed countries.
The need for decent housing in any society is a paramount in the development of the people and the creation of personal wealth and national growth. The Government still remains the major land owner in Guyana, from the time of the Dutch and British plantations. Once the land usage is regularized to allow redistribution and development, the other pieces of habitability must follow in lockstep for the transformation from land to habitat.
Guyana is resource rich, a country that can be ready to be developed with courageous and honest management and provide the people with high standards of sustainable livelihood. We must marshal our resources to eradicate and provide affordable housing. We can reverse brain drain to brain gain.
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*Dr Clive Thomas, Inequality Results, Stabroek News, 2014
FINANCIAL OBSTACLES
Guyana’s financing system is based on cash not financed or leveraged equity or monetizing of future value. As such most of the property ownership in the country is based on 100 % homeowner equity, with limited financial input from financial institutions or the Government. The New Building Society Limited (NBS) was incorporated in 1940 via a bill known as Chapter 36:21 of the Laws of Guyana and in the process took over the assets of its forerunner the British Guiana Building Society. A mortgage in Guyana is a consumer loan used for the building of a residential property. NBS has provided mortgage and savings products in Guyana since its incorporation in 1940, however its coverage and reach has been limited and does not allow for any investments in development as infrastructure i.e. land development, roads, water electrification, communications as such these reserves and profits are invested in overseas financial products. The Banks in Guyana have evolved in their monetary consideration as globalization is introducing technology and sophistication in the utilizing cash beyond the passbook savings account. There needs to be a modification of the banking regulatory requirements to allow for investments in all aspects of habitability to allow for the growth of housing across the population.
FINANCIAL SOLUTIONS
The UNRF, CIDA and British Geological Society, et al, have been documenting the resources of Guyana for close to century and have excellent economic analytics of our resource value. This represents the “soverign trust” that is the bread basket of Guyana over this century. Guyana is at the inception of oil that is projected to be the foundation of its economic base. A sovereign wealth fund is in process to manage the proceeds from production. This type of fund will be of major socioeconomic and fiscal importance. Starting a fund is one thing; structuring it well and managing it wisely is something else. Kuwait Investment Authority is the first oil revenue based fund created in 1953 and is one of the largest funds that is financing the development and infrastructure of Kuwait and its investments in the international market. Guyana is being advised by the Canadians on setting up the fund. Canada has several of these and will provide a good protocol for management. There must include set asides for subsidy or financing of affordable mortgages to grow the stock of housing in the country (that has an average constructed age of seventy years). Guyana legal framework requires that roads, water and electricity be provided for homesteading. There has been land allocation, without utilities, substandard development and squatting form the low income and middle income housing stock. Alleviation of this crisis must be an objective of this fund.
Guyana needs two institutions: banks to fund and manage the requirements of housing development for mortgages and one for infrastructure development. Infrastructure still remains the prevue of the Government and mortgages, a liability to the homeowner. GUYANA CO-OPERATIVE MORTGAGE FINANCE BANK which supplied “mortgages” was closed
Page | 6 in or about 2000. The revival and funding of this type of commercial enterprise, supplying modern mortgages and other financial instruments that are real property based, will encourage future green housing development. With financing and subsidy from the Sovreign Fund, mortgages can be supplied to low income population on a subsided basis. In the 1960’s, Venezuela, created a low income subsidized housing program, that was initially funded through similar mechanisms and continues to do so today, although, in the last ten years with a degraded economy, there has not been much progress. This model will be a useful protocol for use in Guyana.
Water, Electricity and transportation have become the major hindrances to moving the country from the coastal plains to the hinterlands. This will be an impetus as climate change is affecting the global environment including Georgetown and the coastal rural areas. The need for roads, bridges, trains and ferries, has been the limiting factor in effecting economic development of hinterland and coastal resources for local and export markets. As in most countries, infrastructure is developed and funded thru Development Banks from International Organizations and funding from the Central Bank funded with sale of government bonds and securities.
GREEN AFFORDABLE HOUSING
Green construction must be an integral part of the new stock of housing to be built. Existing stock can be retrofitted to become green. Guyana location is ideal for the use of solar panels for electricity for home lighting, hot water cooking and street lights. Pre-colonial construction were more eco-friendly designs that allowed for natural air cooling, positioning of the property to minimize sun exposure. As the installed cost of solar decreases the large scale use of solar is an economic solution to reducing dependence on expensive fossil fuel electricity. Indoor air and water quality are overlooked aspects of sustainable affordable development. By maximizing energy efficiency and minimizing harmful chemicals, we provide homeowners with better, healthier living spaces.
ROLE OF THE DIASPORA IN PRIVATE-PUBLIC PARTNESHIPS
“Economic progress requires a minimum level of stability to reduce the risks of doing business and encourage the expansion of the economy. However, economic development places a premium on stability as economic agents seek to preserve and advance their gains” ( IMP PRP 2006)*. The diaspora happened for a multitude of reasons; of Guyanese in particular, socioeconomic, political and education drew us to new places that had the three legs of the paradigm available for immediate access. The diaspora represents that migration and gains of education, economics, communication and international networking at time when living is a global village. It represented the brain drain that can now provide added value to the existing and new enterprises in Guyana, housing being on the forefront. The creation of similar programs as the Non Resident Indian(NRI) Banking in India or financial instruments and funds that can help build and manage the new economy of Guyana.
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* International Monetary Fund Guyana: Poverty Reduction Strategy Paper Progress Report, 2006 LAND DISTRIBUTION
REGULARIZATION
Guyana has adopted and maintained a dual legal framework, which is a hybrid of two legal traditions: the Civil Code legal tradition transplanted from Europe and the Roman Law, and the Common Law tradition introduced by the British. Grants, Deeds, Transports and Titling were used for land allocation in Guyana: 84% Public Land, 2% Private Land (Freehold or Transport) and 14 % Amerindians (Titled).
LAND OWNERSHIP IN GUYANA
Guyana has a dual registry system of property rights with distinct requirements, processes, and enforcement mechanisms. “The two types of registry systems are deeds (Deeds Registry) and title (Land Registry, instituted in 1961) registries that operate in separate jurisdictions, which in theory help avoid the problem of double entry and dual registration. But overall Guyana’s property rights system is bureaucratic and complex, with regulations that are overlapping and competing, overloaded, and nontransparent. This affects the proper allocation, enforcement and effectiveness of property rights, as well as, the efficiency of all property-based markets such as housing, land, commercial property and financial markets (especially primary ones such as mortgage markets). What complicates matters even more is that neither of the two registry systems is effective. In Guyana, the property rights system is largely ineffective in all its three aspects: security and effectiveness of emitting the right, organizational management of the rights; and enforcement of the rights”. *
In Enterprise Gardens Project in Guyana, public land was granted to the Central Housing & Planning Authority which then transported each allocation to the person allocated. This shortened the subdivision and titling process and the land was then used to collateralize “mortgages”. Thought the process worked for the Project, it needs to be institutionalized to simplify and ensure proper documentation that can become a scalable database that can be
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*Guyana Property Rights Study, Elena Panaritis,Angelo Kostopoulos, No. IDB-DP-141, 2010 INTERNET/ DATABASE/ PUBLIC/PRIVATE PARTNERSHIP
The reforms need to start with strong political will that will define the vision for implementing property rights system and data base for economic use. These elements will define the implementation strategy for change. “The property rights system is the core element of governance of a country’s wealth base”. To optimally manage these rights in a financial marketplace, the valuation must be measured in market based comparisons. Only then can there be a true measure of each real asset. In moving the society to data driven market economy, Guyana needs to capitalize on the disparate sources of information to create data banks. Data mining is a resource that is the product of these data banks. There is a pervasive need in Guyana for the development and management of the information generated from all facets of the society and economy to create derivative markets to attract developers and entrepreneurs to be stakeholders in the society. The development of Real Estate Databases with historical values and statistics, will allow Banks and financial institutions to have real time valuation that can be used to quantify real property and be able to move the financing into the 21st Century. The reality of affordable housing becomes concrete as all factors lend to availability, accessibility and affordability. There is an immediate need for internet based historical real estate data and to be used by buyers and sellers. The diaspora remains the three legged paradigm as future stakeholders in real estate development
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BUILDING SYSTEMS FOR GREEN AFFORDABLE HOUSING
CURRENT NEED
To quote the Rolling Stones “ Gimme Shelter”. The cry remains loud and constant. Across the world, from developed to lesser developed nations, the need for housing is in constant shortage, skewed to leave the poor mostly without, aggravatingly so in the poorer countries such as Guyana. Guyana has a density ranging from 3.8 people per sq. km to 15 in the Urban low income community; and has a national average density of 5 people per building, increasing to 10 for low income renters in urban area.
World Bank Indicators - Guyana - Density & Urbanization* YEAR 1990 2000 2010 2014 Population density (people per sq. km) in Guyana 3.8 3.7 3.8 3.9
CONSTRUCTION MATERIAL
The natural forest of Guyana supplied plenty of wood for the construction of housing and buildings for municipalities and administration from settlement to date. Concrete and steel were introduced into everyday usage during the late 1960. There is a lack construction skills due to migration. There are no training guilds and apprentice programs available for carpenters, plumbers, electricians and mason. These needs can be reduced by constructing with prefabricated materials for constructability, economics and reduced skill levels required. Newer construction is concrete and steel, most of the wood is used for roofing and windows, a major percent of production is exported. Guyana does not produce cement or steel. Both of these are imported. Guyana can produce cement from an abundance of sand/ quartz, however there is minimal natural deposits of calcium and magnesium needed for the manufacture of cement. Steel will remain imported until demand reaches economy of scale for local production. Guyana does have natural iron ore deposits that can be mined for local use and export market
SYSTEMS FOR AFFORDABLE GREEN HOUSING
Types of housing that needs addressing are single family units for more rural living and rental apartments for higher density urban areas. There are architectural, construction and financial models that are used across the world for affordable low cost housing. Barbados and Trinidad have used prefab wooden houses from Guyana. However, economies of scale was never achieved. Venezuela started building prefab concrete houses during the 1950’s and have developed models that are in use locally and exported to Latin America and the Caribbean. There have been several Venezuelan projects in Guyana using different models
Page | 10 and materials. One company in particular, Fundacion Vivienda Popular developed an economical model for affordable houses in Venezuela and Latin America. The mission of the company was to create an eco-system to provide mortgages and supply the houses to low income buyers. Because of ease of constructability, the material can be used for extremely large houses and apartment buildings. The financing from each unit provided a revolving fund that was reinvested into the mortgage fund and purchase of additional units. The Organization for Economic Co-operation and Development report describes the advantages that environmental and economic policies impact have on sustainable affordable buildings.
As noted under Financing, “mortgages” in Guyana, are basically personal loans, since there is no established Real Estate Market, with data bases to provide market valuation, reflecting market asset value that can be used to issue mortgages or other financial instruments, that are stand alone assets/ collateral with market comparative pricing. The development of Real Estate Databases with historical values and statistics, will allow Banks and financial institutions to have real time valuation that can be used to quantify real property and be able to move the financing into the 21st Century. The realty of Affordable housing becomes concrete as all factors lend to availability, accessibility and affordability.
HOUSING DEVELOPMENT OPPORTUNITIES
The approach to increasing the housing stock should be based on tested models and the use of innovative technologies, materials and best practices. Models are available and accessible, with no additional R&D. Diaspora with experience in the construction and financial industry can participate in private- public enterprises to ensure local ownership of affordable housing. Caveat in third world environment, the risks of doing business and encourage the expansion of the economy with external stakeholders is that the Government must be willing partners and respect and guarantee the economic and intellectual inputs of the other parties. Building Green can help implement an effective national energy management strategy.
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* International Monetary Fund Guyana: Poverty Reduction Strategy Paper Progress Report, 2006 RECOMMENDATIONS
“Aspirations for Real Change-2016 and Beyond” hopes to identify and propose solutions that will include those that are of the Diaspora and their inputs: conceptual, concrete, advisory and good governance expertise.
Alleviation of poverty took backseat to the politics of the society from onset of Independence to today. The future points to better times, however with an umbilic tie to good governance. Affordable housing has been neglected as corruption permeated the process. Future indicators; economy, education, projected GNP and movement of the economy to market based bodes well for housing.
A managed Real Estate database will allow this sector to access modern mortgages that are based on real current market value not limited to personal income and favors. The current tight credit market is leaving many low income homebuyers unserved. The use of credit based on market valuation will mitigate the risks to the financial institutions and homeowners and allow for the expansion of the credit market.
With the expectation of oil export to finance the economic development, the Soverign Fund being created, must address the credit issues that are associated with, housing, infrastructure, manufacturing, technology and education. These must be the some of the basic financial objectives.
The Diaspora have a wealth of value to add to the growth of the society; this includes money, experience in the international markets, technology, communications, construction, governance, law, et al.
INDICATORS FOR REAL CHANGE:
1. Create a database for real assets: statistics and market value for use of Governmental Agencies, Banks, Financial Institution and Citizens. 2. Participate in the creation of a mortgage bank with internal and external stakeholders and the construction of housing and the development of infrastructure. 3. Advocate for a policy and mechanisms to monitor the equitable allocation of land, rights and ownership. 4. Monitor transparent and accountable governance in specific relation to Affordable Green Housing.
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5. Sensitize policymakers to recognize that climate change will require a shift in creating new poles of development in the interior and affordable housing and new industries must go hand in hand.
BIBLIOGRAPHY
International Monetary Fund Guyana: Poverty Reduction Strategy Paper Progress Report, 2006 Elena Panaritis, Angelo Kostopoulos, Guyana Property Rights Study, Elena Panaritis, Angelo Kostopoulos, IDB- DP-141, 2010 Fundacion Vivienda Popular,Caracas, Venezuela, 2016 Second United Nation Conference on Human Settlements (habitat ll), Instanbul, Turkey, 1996 Paul Nehru Tennassee, Guyana, the Causes of Poverty, Recommendations for an AAIA Strategy, 2005 Dr Clive Thomas, Inequality Results, Stabroek News, 2014