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Shelter
February 1985
>> This Is USAID >> USAID Policy Papers >> Shelter
[Download original document] II. The Shelter Sector Context
Shelter is a basic human need, following the need for food and clothing. Most LDCs recognize shelter as a priority in their development strategies, because it is a basic aspiration of their people and it is an essential component for sustained national economic growth. Shelter provides essential contributions to overall national economic development which, when combined with its social benefits, justifies a claim on an appropriate level of national and international resources in relation to investment in other sectors. In this sense, shelter and infrastructure contribute toward making investments in other sectors, such as industry and agriculture, more productive. A minimum level of shelter is essential to productive workers.
Well located and designed shelter and urban services and facilities are an essential part of the productive investment base of any modern economy and contribute to the efficiency and productivity of national development programs.
The supply of shelter is critical to the orderly growth of urban areas. Shelter represents a significant share of overall urban investment from both public and private sources. Typically, the informal sector has provided 80 percent of the existing housing stock, without the benefit of formal lines of credit. The efficiency and productivity of this informal investment is of critical importance to individual households as well as to national development.
Shelter and urban services and facilities create demand within the domestic construction and building materials industries. A dynamic construction industry is essential for overall national development. Shelter construction, both formal and informal, can provide major stimulus to the development of skills, entrepreneurship, and the capital investment necessary to make the construction sector a major contributor to national economic growth. It also provides a point of entry into the job market for many unemployed and unskilled workers and can stimulate small-scale and informal private sector contractors.
The maintenance of an adequate supply of well located and affordable shelter contributes to overall worker productivity. The incentive of home ownership can attract otherwise unavailable private savings into the banking system. It contributes to the national capital stock. For most low-income households, home ownership is their most likely means of accumulating capital assets which in turn can be mortgaged to provide working capital for small-scale enterprises and other household economic purposes. Housing contributes to consumer demand for household products and furniture, further strengthening other sectors of the economy.
The scale of the shelter sector challenge in the LDCs is enormous. The United Nations estimates that urban areas in the LDCs will increase by one billion persons between 1980 and 2000. Most of these people will be poor USAID estimates that 300 to 350 million new housing units will be required as replacement stock and to accommodate new household formation, and between 41,000 and 105,000 square kilometers of new land will be urbanized depending on the densities and policies selected. The World Bank estimates that over $600 billion will be required to meet the water supply and sanitation requirements of the expected population growth.
It is apparent that the selection of appropriate policies, interest rates and standards, the pursuit of cost recovery mechanisms, the mobilization of private savings for investment in shelter, the coordination with other donors, the appropriate distribution of responsibilities between the public to the private sectors, and the efficiency of both the formal and informal shelter sector delivery systems can have a major impact on the ability of LDCs to meet the enormous challenge of urban growth. USAID, through its shelter sector programs, can do much to assist LDCs to meet the challenge with technical assistance, training, and selected capital assistance through the Housing Guaranty mechanism.
USAID's research studies, now in process or being further developed, show that most shelter sector needs of LDCs can be met through the adoption of appropriate policies, affordable standards, and private resource mobilization without adversely effecting other development sectors.
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Last Updated on: July 11, 2001 |
