Financing

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*Thought Piece: [http://landfirst.org.za/wp-content/uploads/2013/05/tp_basic_finance.pdf basic finance]  
 
*Thought Piece: [http://landfirst.org.za/wp-content/uploads/2013/05/tp_basic_finance.pdf basic finance]  
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*[http://www.incrementalsettlement.org.za/wiki/images/2/26/Grants_for_managed_land_release.pdf Grants for MLS]
  
 
More still to come
 
More still to come

Latest revision as of 11:45, 7 October 2016

MLS-phase-2.png

Incremental settlement is an initiative of Afesis-corplan

MLS Contents


Contents

Key document

See the section below on additional information.


Bulk financing

Most of the funding for all the activities involved in the preparation stage will come from government. The Municipal Infrastructure Grant, for example, can be used to provide much of the bulk infrastructure.

It is highly unlikely that low income households will be able to pay the land purchase price so government grants will be needed to buy the land. Government needs to give this far more attention than it has in the past as more focus is now being given to finding land that is well located.

The community group could use some of its own savings to initiate some of the preliminary feasibility studies, but this needs to be done with caution so the community does not waste its money on studies for land that is found to be unsuitable for development.


Basic finance

The broad concept behind the basic product phase is to see how many priority activities can be provided at the least cost.

It is possible to conduct basic planning within identified areas and provide some form of basic tenure and services, without using government housing subsidy funds. At the moment there is no obvious government funding source tailor-made for this basic product stage, but it is possible to use municipal and other emergency or bulk infrastructure funding for much of this phase.

It is also possible for some of the community and households savings to be used for some of these activities like, for example, putting in a water standpipe. At least by this stage it is known that the development will take place, unlike the preparation phase where sometimes land is found to be unsuitable for development.

It must be remembered that generally basic products are provided without transferring title to individual ownership so households involved are not captured on national housing data bases that they have owned property before or received a housing subsidy..


Financing aided support

Most of the funding and resources for the self development phase comes from households themselves. When people feel secure in an area they are more willing to invest in that area. They no longer sit back and wait for government to provide them with everything and they start to do things themselves and/or organise with others to do things together.

The basic / incremental tenure mechanism does not lead to households names showing up in the national subsidy data base and deeds registry, so households can start to use their own money to start to build more formal structures and start to make a life for themselves in their communities, without worrying that they will not qualify for further housing subsidy funding in future.

Once a person has tenure security it will be much easier for an employer to provide some financial or material support to enable households to incrementally improve their houses and neighbourhoods.

There are some government programmes that support gardening and local food security, or small business support, or home based care. These services can all be provided as part of a comprehensive programme to support people to do their own agriculture/ gardening, undertake their own businesses and look after the vulnerable members of their community.

In the housing sector, government support is not geared towards aided support. The government grant is a once off grant, and there is no funding for longer term housing support facilities and services. If the incremental settlement process is to be up-scaled this is an area where serious changes in government policy need to be considered.

It is important however, for communities to continue to put pressure on government to continually, as per the constitution, progressively improve people’s housing and living conditions over time with available resources. The provision of basic products and services, and aided support is not the end of the process. Government must continue to provide funds to upgrade these incremental settlement areas.


Financing upgrade

The most likely source of funding for much of the upgrading phase will be from governments upgrading of informal settlement grant. This grant is specifically geared for more incremental settlement development approaches.

It does not matter if an incremental settlement area starts off from a context where people are all living in shacks or it starts of from a context where the land is empty and people move onto the land in an organised manner. In both contexts the incremental settlement process involves first providing basic services and tenure to households in the area, so they can start (in a greenfield context) or continue (in an in-situ context) to use their own resources to improve their houses. The governments housing subsidy is then seen as just a small intervention in a much longer process of continuous improvement.

The funding for the upgrading of public spaces, schools, clinics, multi-purpose halls etc. will all have to be sourced from the various government programmes set up to provide these types of facilities and services.

One of the challenges of government funding for upgrading of settlements is the need for coordination between the different departments. There may be a need for some form of committee, made up of government, the community and other role-players, to take responsibility for coordinating this upgrading process and for keeping the pressure on government so that the areas further upgrading does not get neglected.


Affordability and sustainability

Affordability refers to how households can afford to live in the houses and neighbourhoods that are developed. One of the main aspects of affordability is the ongoing fees associated with living in an area, including rates and services fees to the municipality, repayment on loans used to improve the house, and maintenance costs associated with normal wear and tear.

Affordability can also be addressed by reducing the level of service provided, designing the product/ service for durability, providing subsidies to reduce costs, or increasing incomes so households are able to afford these ongoing fees and costs. None of this is easy and requires on-going and dedicated work over a long period of time to make progress in any of these areas.

Financial sustainability refers to how the municipality can continue to sustain the environment over time (paying for its maintenance and upkeep) and provide support to all who need it across the country. The incremental settlement approach is designed to be one where limited government resources are strategically used to provide a basic product at the start and then as government is able to afford it to continue to upgrade these areas.

The broader aspect of sustainability refers to economic, social and environmental sustainability. It is no use developing houses and environments if, for example, they need electricity to continually keep them cool in summer and warm in winter, or people to have their own cars in a global context of rising fuel costs and climate change. It is also not worth developing a neighbourhood if people do not want to live in the houses for cultural or other reasons.


Additional information

You can find links to additional information related to this topic by following the following links:

More still to come

Comments

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