Currently, Pakistan has an
overall housing backlog exceeding 6 million units with an annual
addition of 300,000 units - based upon conservative estimates
from the Population Census of 1998 and the National Housing Policy
of 2001. Roughly 30-40 percent of the demand is addressed by mainstream
developers who cater to the high-end market. The remaining units
fall under the category of the low-income segment. The government
has made repeated attempts to address this segment through various
initiatives - seldom succeeding. The current low income housing
deficit within Pakistan is 3 million units with an addition of
150,000 units per annum.
In addition to these alarming
rates, within the urban context, there is a disturbing pattern.
Of those that do own homes, there is a clear pattern of constructing
additional rooms as opposed to constructing new homes. This leads
to an increase in the density of homes, thus further exacerbating
the housing problem. With most homes having been constructed over
twenty years ago (58 percent), over 50 percent of the population
under the age of 25 , and no solutions in sight, demand in the
lower income segments is expected to explode in the next decade.
Context
In order to truly comprehend this problem, one must put him/
herself in the shoes (or bare-soles) of the average citizen of
Pakistan. An individual is earning between US$ 135-185/month (working
in the public/private sector or self-employed) and is responsible
for maintaining his/her nuclear family as well as members of the
extended family. The average citizen lives with a level of uncertainty
on a daily basis, and is constantly faced with a multitude of
potential issues to handle relating to running of his/her household
and providing for the family.
For those living in rental units (30 percent of the population),
their average monthly income is US$ 165 and their monthly saving,
after all expenses relating to rent, food, utilities, transportation
and miscellaneous are deducted, under ideal circumstances, is
US$ 15.
With the average person saving US$ 15/month and the average 80
square yard plot costing US$ 7,000, it would take nearly forty
years before one could afford such a plot.
The result, is the current
housing crisis Pakistan is faced with.
Policy,
Poverty and Housing
Historically, low-cost housing in Pakistan has either been the
realm of NGOs, the government, or the informal sector.
Due to the heavy capital requirements,
as well as the level of skill involved in scaling up in the housing
sector, NGOs have not gained much ground.
The government has been very
successful in the actual building of low-income housing developments,
but has failed in all subsequent aspects such as effectively targeting
the BOP (bottom of the income pyramid) and building healthy and
sustainable communities.
Traditionally, government
models have been based on a lottery system that is generally rigged
in favour of the investor community who then exploit the BOP through
renting those same units. With those units intended for homeowners,
but occupied by renters, there is no ownership within the community.
This inevitably spirals into becoming another slum where drugs,
prostitution, and crime thrive.
The informal sector meanwhile
is riddled with problems such as lack of legal tenure, crime,
no master-planning, and little or no infrastructure.
With poverty rates nearing
50 percent, and population in the major urban centers expected
to double in the next fifteen years, Pakistan is in the midst
of a massive housing deficit.
With housing policies favouring
the elite, the development and supply of affordable housing presents
itself as both a great challenge and a greater opportunity.
The Ansaar
Management Company
To meet this challenge, a group of professionals from various
disciplines have come together to create the Ansaar Management
Company (AMC). AMC is driven by a mission to provide high quality
and affordable housing solutions to the average citizen of Pakistan.
The company targets households earning US$ 85-300 per month and
specializes in a community-based approach to development. AMC
focuses on nationwide scalability and sustainability through its
integrated for-profit, low-cost approach. AMC's initial projects
focus on ten selected cities of Pakistan.
AMC's model, based on a thorough
analysis of the issue, effectively improves on what the government
has been doing right, and works towards the institution of systems
within areas that the government has not paid due attention to.
The following features set the AMC model apart from others.
All residents must move on
site within 60 days;
All residents must reside
on site for 5 years (they cannot sell, rent, or leave the plot/home
empty);
Only one plot per family.
No bachelors allowed;
Active community development
is essential for the first five years, utilizing a unique system
of resident mobilization requiring residents to live physically
live on-site;
Various NGOs and organizations
are invited to establish initiatives in areas of health, education,
and community development;
A financially sustainable
model that offers 70 percent of the plots at cost, while offering
the remaining in the open market.
Why
AMC is a Social Enterprise
Carved from AMC's on-ground experience, the table below indicates
how, compared to a typical informal scheme, AMC offers a vastly
superior product in terms of utilities, amenities, and living
environment - while remaining competitive price-wise.
AMC develops roughly 500-2500
residential and 25-125 commercial plots for sale for a given project
and charges a project management fee to manage all aspects of
the project, including but not limited to, civil works, home construction,
marketing and sales and community development:
Unlike informal developers,
AMC provides all plots in the project with electricity, a water-supply,
underground sewerage lines and disposal, as well as roads during
the tenure of the project. Doing so ensures that residents do
not face the hardships faced in urban slums and squatter settlements.
Since AMC's approach to housing is holistic, it also facilitates
essential social and economic services of education, healthcare,
and micro-credit through a network of NGO partners to further
enhance the living quality of its residents.
Additionally, AMC arranges
mortgage financing for standardized one bedroom, two bedroom and
three bedroom housing units to facilitate clients.
A CSR-Framework
for Low-Income Housing
The unskilled/skilled labour force - the average citizen - who
earns Rs. 3,000-10000/month, is one of the most neglected segments
of society. The government does not cater to their needs, nor
does the private sector. The labour class tends to be a sincere
group of people, but dire circumstances force them to behave irrationally
- to cheat, steal, become violent, and, in the worst circumstances,
even kill. The only way to transform the dynamics of this segment
is to minimize the occurrence of dire circumstances.
As organizations begin to
explore various options to carry out their commitment to CSR,
AMC offers a financially viable option that achieves high social
and environmental impact. With a plethora of textile mills throughout
the country, and a constant struggle to retain good talent at
all levels, the AMC model is a mutual solution for the labour
force and the organizations that employ them.
The AMC proposal consists
of the following principles:
Owners or associations of
industrial units, independently or jointly-with AMC investors,
purchase raw land in close proximity to their industrial estates;
Plots or built-up units be
offered to qualifying laborers/employees (those that have demonstrated
commitment to the organization via pre-determined metrics) in
strict adherence to the AMC policies (moving in with the family
within 60 days);
Mortgages are offered to
the residents/employees on a 70:30 debt: equity basis, where the
organization can opt to subsidize the equity portion or simply
serve as the facilitator during the entire transaction. (This
method would allow a labourer to move into a basic housing unit
with as little as PKR 25,000);
AMC manages the entire process
from land acquisition to post five year community management,
including engaging partners (investors, NGOs, etc) to build schools,
hospitals, community centers, commercial areas, etc within the
community;
With a thriving community
of 3000-10000 members (depending on the size of the development),
the organization can now sell the remaining
30 percent of the plots (prime, as well as commercial) to the
open market, for profit.
Incorporating the key elements
mentioned below, AMC designs and implements all of housing projects
on socially and ecologically sound and sustainable principles
that also serve as metrics for investor/donors:
Estimated
Quantitative Social Impact
The key to alleviating poverty in Pakistan is to provide the poor
with assets. If this asset comes in the form of a house, the value
becomes manifold. AMC provides this valuable asset.
It not only saves the poor
from continuous rental payments, it also provides them with collateral
as well as peace of mind, thus contributing to more productive
work. AMC focuses on selected indicators for quantifying the social
impact of its projects. These indicators include:
Creation of assets;
Savings on rental payments;
Value addition by new employment
generation due to new construction;
Health-related benefits accruing
due to environmentally friendly practices.
Based on the above, AMC anticipates
a social return of
US$ 2.36 on each dollar spent by one household. When annualized,
this number progressively swells to over US$ 13 million for all
households involved in a standard project of 2500 units.
about the writer
Jawad Aslam, currently an Acumen Fund Fellow, has been working
in the low-income housing sector of Pakistan for the past three
years. He has recently launched AMC, a for-profit spin-off of
the world-renowned incremental housing model of Khuda Ki Basti.
Jawad was born and raised in the USA, and currently resides in
Islamabad with his family.
