Low-Cost Housing Project(Bangladesh Bank)

Small municipalities in developing countries often find that procuring new low cost housing to relocate families living in disaster-prone areas is largely constrained by political, economical and social difficulties. Acquiring safe land, matching public and private resources, encouraging individual savings, selecting, evaluating and approving beneficiaries and choosing minimum standards are some of the major barriers in the process of housing delivery.

Low-cost housing markets in developing countries are often distorted. In fact these markets do not always behave efficiently creating housing shortages and reducing the possibility of finding affordable sheltering for the bottom poor. They clarify that this shortage of housing is usually related to the following characteristics:

1. Capital market failures: purchasing a house usually requires financial assistance. This means that purchasing this good is dependent of the availability of financial services (an external product) in the form of loans or mortgages.
2. Imperfect information: the adjustments between demand and supply require well-informed suppliers and consumers. However, the construction industry and the real estate market are highly fragmented and therefore information is not easily accessible and is expensive to obtain.
3. Inelasticity of supply: Houses are site-dependent and therefore cannot be easily transferred from one area to another in order to meet high demands in a particular area.
4. Houses have to be built inland which is scarce in inner cities; the price of the commodity is highly dependent on the price of land which in turn reflects the most profitable use (which is rarely low-cost housing).
5. The uniqueness of products: every site is different (climates, topography, neighbors, vary from site to site) and thus the price of a house is largely affected by externalities from the context in which it is located. Thus, the market price does not necessarily reflect the tension between the costs of production and demand.
6. The market does not act freely between interested clients and suppliers. Instead, it is largely affected by centralized and largely controlled agencies: urban planning agencies, deeds registration agencies, banks, and financial institutions, property companies, and landowners.
7. Builders and developers in the low-cost housing sector must accept slim profits per unit to maximize affordability. Thus the activity is only profitable if it can be delivered in large numbers to obtain economies of scale. Nevertheless, due to the lack of large pieces of land in desirable locations, this is particularly difficult to achieve.

This qualitative and quantitative shortage – and the disaster risks associated with it – is a major challenge for small municipalities in developing countries. In most of the cases municipalities do not have the resources, the infrastructure, and know-how to deal with housing shortages without external support. The intervention of central governments becomes then necessary. This intervention often takes the form of housing subsidies and different procurement strategies need to be established to direct these resources to the families living in unsafe conditions.

An initiative in 1999 by Srizony Foundation with the financial assistance of Grihayon Tohbil under Bangladesh Bank have overcome a near-impossible feat of relocating 511 families in Moheshpur, Jhenaidah Sadar, Kaligonj, Harinakindu, and Sailkupa Upazila under Jhenaidah district, Chuadanga Sadar Upazila under Chuadanga and Magura Sadar and Mohammadpur Upazila under Magura district illustrate a convenient way of planning, procuring and building housing for disaster prevention. In this model, an efficient partnership between the Seijony Bangladesh and Grihayon Tohbil under Bangladesh Bank was created. The partnership managed to successfully channel public subsidies and administrative means to use public funds and transform them into core-houses, ultimately transferring them to an ongoing process of progressive construction managed by individual beneficiaries. Some mistakes were made in urban and architectural designs. However, the strategies used might set up an example for future municipality-based initiatives of disaster prevention in developing countries. Srijony Bangladesh have covered a total number of 611 families under the housing project which is a huge number. Strong and frequent follow up has also been made in order to proper implementation of the project.

There are multiple difficulties faced by us while implementing and managing projects aimed at disaster risk reduction. Common challenges include: acquiring safe land, matching public and private resources, obtaining financing, encouraging individual savings, selecting, evaluating and approving beneficiaries, and choosing minimum standards but we achieved the near-impossible feat and helped those families rehabilitate in a safe place.