Slums mushroom: Heyday for goons

Mariha Tahsin | Wednesday, 19 October 2016

According to government statistics, as of May 2014, the total number of slum dwellers and floating population in Bangladesh was 2.23 million. Of them 29 per cent were in Dhaka city alone. A total of .64 million people, constituting 9.0 per cent of residents of the two Dhaka city corporations fall in this category.  Numbers reported against these indicators by international organisations such as the UN, however, vary greatly. The discrepancy in the reported data is illustrated in the graph below. 
DISCREPANCY IN REPORTED POPULATION STATISTICS: Foreign organisations do not conduct independent surveys or census in Bangladesh, their figures are reported on the basis of data collected by the government. Hence, the variances are a result of differences in the definitions of terminology. The government defines slums as 'a cluster of compact settlements of five or more households which generally grow very unsystematically    and    haphazardly    in    an unhealthy    condition    and    atmosphere    on government  and  private  vacant  land' ; in contrast, the UN statistics division defines slum households as 'any household lacking adequate water supply, sanitation, sufficient living area, durability or tenure security'. For standardisation purposes definitions and numbers put forward by the BBS have been used for all analyses in this article.
COMPARISON BETWEEN FORMAL AND INFORMAL SETTLEMENTS: Slums are characterised by high population density, poor services, low socio-economic status of residents, poor governance and permanent threat of eviction. Notwithstanding the potential for improvement through policy interventions, the situation is deliberately perpetuated due to fear of enhanced services attracting more rural migrants, though, there is enough evidence to conclude that rural-urban migration is prompted by economic opportunities and wide urban-rural wage differentials. In fact, rural areas often perform better in terms of service delivery in comparison with urban slums, in spite of their physical proximity.
MAJOR MIGRATION PROMPTERS: Only 9.0 per cent of slum households have sewage facilities and 27 per cent have access to piped water, in contrast to almost all houses built by the formal housing sector. In addition, slum inhabitants are forced to use more expensive alternative fuels for cooking as only 22 per cent have access to gas. Not only do slum inhabitants receive interrupted, unreliable and poor-quality social services, they also pay exorbitant rates for them. A comparison between the average prices or qualities of service delivery to formal and informal settlements shows this.
Average tariff on all social services is higher in slums than in formal settlements. Furthermore, since rent usually incorporates external benefits into account, such as proximity to schools, healthcare facilities, governance and security; the difference in real terms is severer than the numbers reveal.
CREATION OF INFORMAL SETTLEMENTS: In response to the United Nations decision to mandate formulation of housing policy by member states, Bangladesh developed the National Housing Policy in 1993. The policy underwent revision in 1999, when the government's role was changed from a provider of housing to enabler. Therefore, the government is now responsible for increasing access to land, infrastructure, services, credit,  affordable  building  materials  and  promoting housing finance institutions.
Although the constitution recognises decent housing as a basic right of every citizen, much of the urban population is marginalised. Anyone unable to afford accommodation in legally sanctioned areas is forced to resort to informal settlements that offer unhealthy living conditions. This condition is attributable to the following factors:
MIGRATION: The 3.03 per cent annual rural to urban migration rate experienced by Bangladesh is the main driver of slum creation. This unusually high rate is a direct result of industrialisation, compounded by the fact that the nation is nearing the end of its demographic transition. Hence a majority of its population is young, exhibiting dynamic migration patterns. Economic expansion and environmental challenges have also motivated mass migration.
RIGHTS FRAMEWORK: In the absence of government policy targeted towards the betterment of informal urban settlements, government agencies feel neither responsible nor authorised to work in slum areas. This vacuum has been exploited by local goons, who provide poor services at exorbitant rates.
POPULATION DENSITY: According to the most recent census data, 46 per cent of the country's urban population is concentrated in Dhaka. This has driven up the city's population density to 7,444 persons per square kilometre, in contrast to 3,075 in Sylhet, the second most densely populated city of the country. Population flow towards the capital creates an additional demand for 50,000 houses per year against construction of 20,000. The persisting demand-supply gap creates a backlog, pushing up already high real estate prices, forcing the urban poor to find accommodation in informal settlements.
LAND AND HOUSING PRICES: High population density combined with unfriendly topography in the urban centres has created a land shortage that is exacerbated by underutilisation of publicly owned land. Residential land values in urban centres of the country range between US$ 60-190 per square foot, in contrast to the US average of US$ 150. Taking into account that Bangladesh gross domestic product (GDP) per capita in FY 2014-15 was US$ 1,506 and USA's was 23 times that, it is obvious that the market is malfunctioning.
REAL ESTATE DEVELOPMENT: Private real estate developers have no incentive to cater to low-cost housing needs despite there being a large demand for such houses. Currently, the lowest cost accommodations in the market sell at above US$ 30,000. This price could be lowered by encouraging developers to construct smaller apartments without unnecessary amenities. 
FINANCIAL INSTITUTIONS: Current housing loan payment schemes mandate down-payments of at least 33 per cent combined with monthly loan repayments at minimum interest rate of 13 per cent per annum.  Using conservative estimates, even for the cheapest houses, monthly repayment would amount to US$ 150. Given, the high payment-to-income ceiling of one-third, minimum income of the household would have to be US$ 450 per month. This makes them affordable by only the top 20 per cent of the population. In spite of such low access of the majority of the population to formal sector private housing, the government allocates on an average only 3.0 per cent of all housing investments to the development of accommodation for the poor. 
EVICTION: Constant threat of evictions deters agencies from investing in infrastructure of informal settlements. Delivery of vital services such as sanitation, education, water and health are severely affected by this phenomenon.
BUILDING REGULATIONS: Building regulations in the country are tailored to the needs of the richest 20 per cent. Some of the mandated amenities are irrelevant for the masses, instead those drive prices up and push many out of the market. Instances of inappropriate guidelines include necessitating garage spaces for residents who are unlikely to be able to afford cars and requiring free space of 40 per cent on building plots, reducing floor space and forcing construction of more storeys.
A MULTI-PRONGED APPROACH: In order to reduce the growth of informal settlements and improve the condition of existing ones, implementation of a multi-pronged approach is required. 
Building regulations will need to be re-tailored to suit pro-poor initiatives. The need for implementation of existing policies will have to be stressed. Policies contributing to higher construction costs will have to be revised and eliminated where applicable. Suggested changes include:
- Suppressing minimum lot size for land subdivisions; 
- Allowing for the possibility of bringing utilities to housing units built without title/building permit; 
- Lowering registration fees for land; 
- Lowering transfer fees for land and housing; and
- Reviewing the existing regulations, with the aim of removing the main obstacles to smooth functioning of the market.
CAPACITY BUILDING: No government agency feels directly responsible for development of informal settlements. Hence, little effort has been made to develop comprehensive interventions. In order to build capacity of key agencies, investment in this arena needs to be encouraged, which can only happen after rights of slum inhabitants are explicitly specified. In addition, after proper assignment of responsibilities, cooperation amongst the key agencies could be encouraged to promote planned and sequential development. Effective projects that could be emulated include Bangkok's government initiative, CODI. CODI's board consists of representatives of relevant stakeholders to share knowledge regarding the needs and plans of each side. The project supports community upgrading through small loans. It also initiated tenure negotiations which resulted in cooperative land ownership with long term (5+ years) tenure agreements.
ACCOUNTABILITY FOR LAND USE: After undertaking an inventory of public land a strategy could be devised to redistribute vacant and excess land for low-cost housing projects.
HOUSING FINANCE: It is essential to incentivise financial institutions to promote schemes for low-cost housing. A possible approach could be creation of a special fund for low-cost housing schemes using finance received from donor agencies. This is a feasible plan given the low interest rates and long repayment periods these agencies lend at. As these institutions usually lend at 1.0-2.0 per cent interest for 40 to 50 years, on disbursement of these funds as housing loans at 4.0 per cent interest, there is also commercial incentive for private financial organisations to get involved.
Mariha Tahsin is a graduate of the University of Essex and currently works as a business consultant for Swisscontact-Katalyst. 
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