IBSA Working Group in Human Settlement Upgrading

Country Draft Working Document, Not for Distribution

Appendix Three:

Framework Document: Enabling Environment for Informal Settlements Upgrading

in South Africa

1. Introduction 1.1 Problem statement The South African state has built 3m subsidised units over the past 18 years. Yet the current housing backlog is 2.1m households (REF). This is backlog that is bigger both in real and proportionate terms than in 1994. The number of informal settlements now stands at around 2 700 (interview, Topham, 2 Aug 2012, State of the Nation address, 11 Feb, 2011). These realities have informed the recognition that the nation cannot build its way out of its housing crisis through the universal supply of state-provided mass housing delivery and in particular the delivery of top-structures. They have also informed a shift in policy away from housing construction to “sustainable human settlements”; a shift towards to sustainable resource use; and a shift to the empowerment of communities and individuals in the housing process. A number of policy positions have posited the incremental upgrading of informal settlements in South Africa. To date these have not been central to housing delivery and remain the minor component of state funded housing projects. The need to revisit this approach has been recognised in policy and a framework has been put in place for realising the upgrading of informal settlements at scale in South Africa. The challenge now exists to shift mindsets and programmes to align with a housing approach that would foreground the upgrading of informal settlements. To that end policy, programmes, funding and support structures have been established. There are varying degrees of progress towards realising this new vision across the country with most activity being directed at planning at this stage and few projects being delivered. 1.2 National housing priorities: The current South African housing priorities encompass the upgrading of informal settlements, rental housing, basic services and land, as well as integration of the property market. In the current budget, the largest allocations are made for informal settlements, rental and rural housing.

1.3 Official definition of Informal Settlements The 2009 National Housing Code’s Informal Settlement Upgrading Programme characterizes informal settlements as settlements demonstrating one or more the following characteristics

Illegality and informality; Inappropriate locations; Restricted public and private sector investment; Poverty and vulnerability; and Social stress

(National Department of Housing, RSA, 2009) 1.4 Background The incremental upgrading of informal settlements is a housing focus that was conceived at the end of apartheid, but that was trumped by political demands for the delivery of fully serviced sites with top-structures. While commended for the scale of delivery, that approach has since been questioned for its inability to break the housing backlog, to keep pace with demand and to provide sustainable human settlements that are well located and attend to the livelihood needs of beneficiaries. Moreover the fiscal cost of the product is proving onerous. During the apartheid era, housing was used as an instrument of segregation and black South Africans were inadequately housed. The majority of black South Africans lived in the rural areas and in homelands with inadequate services. In the urban areas, black people lived in townships characterised by high densities and inadequate services. At the swearing in of the first democratically elected government in South Africa, President Mandela, announced that the new Government could deliver, during the first five years, one million houses. This challenge was pitted in the context of an enormous housing backlog (estimated at 2 million in June 1995), and the desperation and impatience of the homeless, as well as an extremely complicated bureaucratic, administrative, financial and institutional framework inherited from the previous government. The immediate task of the new government was to put in place a policy framework for all citizens, hence the slogan "Housing the Nation". The approach was based on a partnership between spheres of state, and to give meaning to the notion of a people-centred development in the creation of housing opportunities. The original vision for housing development in a post apartheid South Africa was centred on an incremental realisation of shelter. It is a vision that was embraced in the 1994 Botshabelo Housing Accord, which set out seven definite actions:

Stabilizing housing environment; Consolidating and unifying housing institutions; Encouraging savings for housing; Establishing a subsidy scheme to provide housing opportunities for

millions;

Providing housing support to communities; Mobilizing credit at scale; Making land available for housing. (Kithakye, D, undated)

The intention was an incremental approach focused initially on the delivery of starter housing. However, the more incremental approach was speedily eclipsed by the pressure to develop housing in a developer driven, fast paced approach and by the quantitative target of delivering one million houses in five years. This target focused on the delivery of state funded houses and in the ensuing years litle attention was paid to the upgrading of informal settlements. Moreover the cost of well located land inhibited the development and upgrdaing of settlemnts nearer to infrastructure. As a result greenfields development became the pirmary typology. Rather informal settlements, where they were attended to, were in many cases earmarked for removal to greenfields settlements of houses that became popularly known as ‘RDP houses’ As described below, in 2004 a new housing policy - Breaking New Ground - set out the incremental approach to informal settlement upgrading. In the short term the upgrading provisions of this policy too were also eclipsed, this time by a local reading of the Millenium Development Goal to eradicate all informal settlements by 2014. But a new focus on the Uprading of Informal Settlments Programme (UISP) supported by the National Upgrdaing Support Programme (NUSP) is directed at invigorating the incremnetal approach to ultimately take the central position in the country’s housing programme. (Topham,17 November 2010, Topham, interview, 2 Aug 2012)

2. South African context: Articulation of national human settlements mandate: Role of state of national housing and slum upgrade 2.1 A state-driven approach South African housing policy is state driven and focused on a supply driven, mass housing delivery approach:

In 1994 SA adopted a housing framework that had to respond to the fact that there was housing supply sector to deliver affordable housing. A capital subsidy that would stimulate delivery at scale was developed.

The key was to develop a simple straightforward approach where households are clearly eligible or not.

The policy encompassed large scale issues of land development process, housing finance sector, servicing issues and secure tenure.

It was broad based (rather then deep), low to moderate to even higher income earning households.

It created a programme that was easy to implement but difficult to adjust according to local conditions. It is an approach based on the political need to redress exclusion and inequality.

It remains the key political measure of state delivery to the poor and is both the flagship of national delivery and the target of protest. The expectation of the housing benefit across the country has resulted in widespread dissatisfaction where the absence of state delivered housing is a proxy for state ineffectiveness to meet the needs of deprived communities 2.2 The context: Current Housing Circumstances The informal settlements upgrading imperative in South Africa is contextualized within the wider housing circumstances. The state driven housing development resulted in the rapid delivery of housing units. The national housing programme has been delivering approximately 220,000 housing opportunities per annum (which include 160 000 housing units and 60 000 serviced sites). However, the key problems identified in the South African experience of post democracy housing development are:

Inappropriate regional distribution of the housing budget; Continued growth of informal settlements especially in metropolitan

areas and large cities (3million units constructed since 1994, but housing ‘backlog’ increased from 1.5million to 2.1million);

Lack of rental housing options for the poor, including inner city areas where adequate accommodation remains difficult to produce and manage while remaining affordable;

Inability of the private sector to supply housing in the gap and affordable markets;

High transactions costs and unenforceable regulations related to buying and selling houses; and

Fragmented, low density and inequitable cities. Complex development and approval processes resulting in long delays

and increased costs. Problems in respect of land identification and release resulting in

insufficient reasonable priced well-located land availability. A strong focus on the undertaking of mega-project at the expense of

mass participation (Department of Human Settlements, RSA, 2011; email communication Kecia Rust, 28 July 2012)

Further, it is argued that the delivery of a standard unit in all circumstances often works against the livelihood and coping strategies of the poor and their differential shelter needs. It has even resulted in the sale or abandonment of homes and the movement of people back into shack settlements (WCSHSS, undated)

Housing market conditions: There are 9,7 million households in South Africa earning less than R 10,000 per month, of which 6,9 million qualify for subsidised housing. For households earning between R 3,500 and R 10,000 there are limited subsidies and finance available. There are significant housing product gaps including: Limited or no secondary market in respect of existing formal housing for households below R 15,000;

Limited new formal housing stock for ownership for households: with incomes between R 3,500 and R 10,000 (the housing gap); and for ownership below R 3,500 as a result of insufficient subsidies. In respect of rental housing: The Social Housing sector is not functional due to insufficient institutional capacity and stock; Limited new formal rental stock being delivered for households with incomes below R10,000 pm There are 1,2 million households living in informal sectors in informal settlements and backyard accommodation. (Department of Human Settlements, RSA, 2011)

2.3 Mandate: Policy context of informal settlement upgrading The mandate to commit state resources to the upgrading of informal settlements resides in several legislative and policy imperatives (KZN Dept. Human Settlements (Feb. 2011): 2.3.1 The South African Constitution 1996 The South African Constitution, 1996 enshrines the right of everyone to have access to adequate housing and makes it incumbent upon the State to take reasonable legislative and other measures within its available resources to achieve the progressive realization of this right. In terms of the Constitution of the Republic of South Africa Act 108 of 1996 (sections 152 and 153), local government is responsible for the development process in municipalities and for municipal planning. The Constitution further states that municipalities are responsible for integrated development planning in order to meet the following objectives:

to ensure sustainable provision of services, to promote social and economic development, to promote a safe and healthy environment, to give priority to the basic needs of communities, to encourage involvement of communities.

The Constitution of South Africa provides that all spheres of government have a role in meeting the housing need. Broadly the roles of the different spheres are: National Government has the power to develop laws and policies that deal with matters that apply at a national level. Therefore at a national level Housing Policy is developed to facilitate an effective and equitable housing sector. National housing targets, goals and objectives are developed at this level. Provincial Government has the power to make specific laws and policies for the province in terms of all functional areas including housing. National Housing targets are subdivided amongst local municipalities based on housing needs analysis and delivery targets for each Municipality. Municipalities have the power to administer matters such as housing and all

others relating to implementation of development projects in their areas. Municipal housing objectives and targets are defined in the municipality’s Housing Sector Plan. 2.3.2 The Housing Act (1997) Government has in terms of the Housing Act, 1997 (Act No 107 of 1997) introduced a variety of programmes that provide poor households access to adequate housing. The policy principles set out in the White Paper on Housing aim to provide poor households with houses as well as basic services such as potable water and sanitation on an equitable basis. These programmes are captured in the National Housing Code. 2.3.3 National Housing Code (2009) The purpose of the National Housing Code is to set out clearly the National Housing Policy of South Africa. The National Housing Policy comprises an overall vision for the provision of housing in South Africa and the way in which this vision should be implemented. The requirements for the establishment of the National Housing Code are set out in Section 4 of the Housing Act, 1997 (Act No. 107 of 1997). The National Housing Code states that upgrading will take place on a progressive basis in a phased development approach that is flexible, needs-oriented, optimises use of existing land and infrastructure and facilitates community participation in all aspects of development. Part 3 of the revised code provides for the Upgrading of Informal Settlements Programme (UISP) - discussed below. (National Department of Housing, RSA, 2009) 2.3.5 Millennium Development Goals The Millennium Development Goals of the United Nations to which South Africa is party are an important factor in the framing of South Africa’s policies and developmental programmes. The goal to significantly improve the lives of at least 100 million slum dwellers by 2014 (later revised to 2020) is of particular relevance and has directly influenced the country’s development of an Upgrading of Informal Settlement Programme (UISP). 2.3.5 Breaking New Ground A revised policy followed the majority party’s 10 year review of progress after democracy. That review found that the housing programme had delivered a large quality of housing but that it fell short in terms of location, of addressing apartheid city form and of being responsive to the livelihood needs of the poor. A new housing policy – Breaking New Ground- was developed. Breaking New Ground, the national Comprehensive Plan for Sustainable Human Settlements (2004), states that “Informal settlements must urgently be integrated into the broader urban fabric to overcome spatial, social and economic exclusion.” To enable this integration the department introduced a new, Upgrading of Informal Settlement Program (UISP). This programme supports a phased in-situ upgrading (Including interim services) approach to informal settlements, in line

with international best practice. The upgrading process is not prescriptive, but rather supports a range of tenure options, infrastructure standards and housing typologies. According to BNG, the Department will shift towards a reinvigorated contract with the people and partner organizations for the achievement of sustainable human settlements. “Sustainable human settlements” refer to in the BNG document as follows: “well-managed entities in which economic growth and social development are in balance with the carrying capacity of the natural systems on which they depend for their existence and result in sustainable development, wealth creation, poverty alleviation and equity”. In taking a “demand-driven and supply negotiated” stance this policy framework opens the way for projects to be contextually specific rather than mass produced. (National Department of Housing, 2004) 2.3.6 Upgrading of Informal Settlements Programme (UISP) The Upgrading Informal Settlements Programme (UISP) is conceived in Part 3 of the National Housing Code. This programme emphasizes in situ upgrading over relocations and emphasizes an incremental, infrastructure-led approach. The policy intent of the programme is as follows:

Facilitate structured in situ upgrading of informal settlements as opposed to relocation

Recognise and formalise the tenure rights of residents within informal settlements

Promote health and security by providing affordable and sustainable basic municipal engineering infrastructure, that allows for scaling up in the future

Address social and economic exclusion by focusing on community empowerment and the promotion of social and economic integration. Build social capital through participative processes and address broader social needs of communities.

(National Department of Housing, RSA , 2009) 2.3.7 State of the Nation Address 2009 President JG Zuma in the State of the Nation Address of 3rd June 2009 confirmed that the human settlements future in South Africa must at least consist of: • Development of suitably located and affordable housing (shelter) and decent human settlements • An understanding that human settlements is not just about building houses • Transforming our cities and towns (moving towards efficiency, inclusion and sustainability); and • Building cohesive, sustainable and caring communities with improved access to work and social amenities, including sports and recreation facilities (community development and optimal access/ inclusion). In the main, the future development of human settlements in South Africa is to be principle based and outcome driven. The principles are outlined in the Housing Act while the outcomes are the subject of the Mandate of Government

resulting from the election manifesto of the ruling party as expressed in the Medium Term Strategic Framework. Sustainable human Settlements and improved quality of household life are defined by: • Access to adequate accommodation that is suitable, relevant, appropriately located, affordable and fiscally sustainable • Access to basic services (water, sanitation, refuse removal and electricity) • Security of tenure irrespective of ownership or rental, formal or informal structures • Access to social services and economic opportunity within reasonable distance. 2.3.8 National Development Outcomes (2010): Outcome 8: Sustainable Human Settlements and Improved Quality of Household Life A National Delivery Agreement (ministerial performance agreement) has been established between the Presidency and the Minister of Human Settlements (NDoHS). This is one of twelve outcomes for development which were formulated in January 2010 and which form part of the National Medium Term Strategic Framework for the period 2010-2014, and which set out the focus areas of state delivery for that period. Outcome 8 notes that the apartheid legacy of spatially and economically marginalising the poor has meant that people live far from job opportunities and major services, typically in “dormitory” type residential areas. Many continue to survive without basic services in informal settlements. The current housing development approach with a focus on the provision of state subsidised houses will not be able to meet the current and future backlog and there are questions related to its financial sustainability. We need to diversify our approach to include alternative development and delivery strategies, methodologies and products including upgrading of informal settlements, increasing rental stock, and promoting and improving access to housing opportunities in the gap market. The core subsidised housing product must be but one of many approaches. Outcome 8 notes that poor planning has resulted in the poor location of subsidised housing development and that many informal settlements, by way of contrast, are well located with respect to social amenities and economic opportunities, but lack security of tenure and/or access to adequate basic and social services. Outcome 8 is a commitment to provide at least 400 000 households in well-located informal settlements with tenure, basic services and access to amenities over the period May 2010 to April 2014. This embraces the provision of tenure and services in well-located informal settlements as the first step in an incremental process of their transformation to sustainable human settlements. Outcome 8 sates that the vehicle for achieving this target is the UISP.

This commitment represents an opportunity for the state to implement a large-scale, sustainable upgrading programme based on the incremental improvement of shelter. The target is unequivocal, and represents 33% of the estimated 1.2m households living in informal settlements. It stands for a shift in emphasis in the way in which the state will assist the poor with shelter provision. The targets set in this agreement are:

To ensure that 400 000 households in well-located informal settlements to receive basic services and secure tenure by 2014

To accredit 6 metro and 21 large town councils to administer functions of the housing programme in their areas

To establish National Upgrading Support Programme (NUSP) and publish Upgrading Resource Kit

To provide 6 250 ha of public land for low-income housing 2.3.9 The Cabinet Lekgotla (July 2011) The Cabinet Lekgotla (July 2011) reinforced the need for municipal upgrading plans to provide for secure tenure, engineering services, waste collection, social amenities, public open space, public transport, and electrification. Since then, the National Development Plan: Vision 2030 (November 2011) has called for an expansion in incremental upgrading of informal settlements with active community engagement. The lekgotla called for

• Produce informal settlement upgrading plans in the 45 large metropolitan areas and large towns and cities

• Projects will cover security of tenure, water, sanitation, public transport, area lighting, electrification, waste management. Where appropriate, other social services and amenities such as public open spaces and recreational facilities will also be included

• Joint national task team (NDHS & COGTA) to receive integrated project plans for each area

2.3.10. Division of Revenue Act The Division of Revenue Act (DORA) provides for the Integrated Housing & Human Settlement Development Grant (Conditional Grant) for housing programmes against the submission of approved national and provincial business plans. 2.4 Regulatory Instruments 2.4.1 Planning Tools The new programme requires that both broad and detailed planning for the upgrading of informal settlements take place in provinces and at municipal level. Outcome 8 indicates that all provinces will be required to have in place informal settlement upgrading programmes, and project plans will need to demonstrate the eventual transformation of the informal settlement into a sustainable human

settlement. These integrated and comprehensive development plans will be included in Municipal IDP Housing Chapters, Multi-Year Delivery Plans and Medium Term Expenditure Frameworks. The requirement for comprehensive provincial programmes and project plans is specifically intended to ensure that the qualitative and livelihoods aspects of the upgrading programme are not squeezed out by the quantitative and service delivery emphasis inherent in the delivery target. It ensures that these programmes and plans also act as a key performance indicator in the early establishment of the upgrading programme. (Annexure A For Outcome 8 Delivery Agreements) 2.4.2 Housing Sector Plans The Municipal Systems Act (Act 32 of 2000) formally introduced Integrated Development Plans (IDP’s) as the primary form of planning to be adopted by all metropolitan, district and local municipalities throughout the country. Furthermore the Act specifies that the planning undertaken by a municipality must be aligned with and complement the development plans and strategies of other affected municipalities and other state organs / government departments. Within the IDPs the practice of developing Housing Sector Plans at local government level has increased. The National Housing Code 2009 requires municipalities to include a Housing Chapter in their Integrated Development Plans (themselves mandatory under the Municipal Systems Act 2000). The national department has provided both financial and capacity building support to local municipalities in order to assist them in drafting these plans. Housing sector plans are the ideal vehicle for the recording information relating to the municipalities informal settlement programme. The regulatory mechanisms available for upgrading informal settlements The key instrument for delivery against the target is the Upgrading Informal Settlements Programme (UISP).

2.5 State role vs. others The emphasis on the scale of delivery of units has in the last 18 years eliminated the role of social contracts and of NGOs and localized community based processes that are instructive and crucial in informal settlement upgrade. This has contributed to a reduction in experience and capacity in facilitating informal settlement upgrading (email communication Susan Carey, 28 July 2012). The mass housing approach that has prevailed in South Africa offers very limited opportunity for individual households earning less than about R15000 (accounting for 85% of the population) to address their housing needs independently in a way that would meet national standards for adequacy, and

which are legal. The role of the private sector and of NGOs and CBOs is also limited. The state driven approach excludes the possibility of the population (either beneficiaries or target market households) and the market taking a leading role in housing delivery and improvement. The programme has reduced the housing profile of 85% of the populace to being either state housing beneficiaries or on a waiting list for state housing. This situation has been criticized for creating passive 'beneficiaries' for whom it is more rational to wait for subsidised houses than to take action to improve their housing situations (email communication Kecia Rust, 28 July 2012) BNG shifts this emphasis and the UISP focus on participatory planning intends a different approach. These offer a real potential role for CBOs and NGOs who know how to facilitate authentic participation of the poorest households. But the approach still needs to be tested in practice (WCSHSS, undated). 2.6 Housing and the economy Two-tiered market: The conventional state driven housing approach creates a two tiered housing market- the subsidy market and the normal market. Nowadays people talk of the gap market as a third tier, but even there, the state has created an environment with its FLISP subsidy that the market relies on government to deliver for 85% of the population. Government housing efforts have to date been dominated by the delivery of housing units and the effective linkage between housing and the economy has not been adequately conceptualized beyond the limits the role that housing plays in the production of ‘shelter’. The shift towards sustainable human settlements is an important one and opens the debate also in thinking about the asset value of property and housing in a more holistic manner. The public housing programmes have funded some 3 million housing units since 1994, constituting around 24% of the registered housing stock in the country. The economic impact of this achievement was the creation of 1.3 million jobs nationally. But for municipalities the housing programme had the unintended consequence of increased costs for operating and maintaining infrastructure without getting sufficient additional revenue. The economic impact at household level has been interpreted differently. Many households have higher costs after moving from informal to formal housing but gain economic assets that are used for income generation by a significant portion of households. Policy and programmes need to embrace that people use their houses to participate in the economy - whether by renting out their homes, or running a small business; or perhaps more significantly for people living in informal settlements, by using their location to gear better access to various sorts of opportunities: work, schooling, the urban environment, etc. In pursuing a shelter-driven agenda, the conventional housing approach underplays the asset

potential and in some cases, even undermines this (email communication Kecia Rust, 28 July 2012).

3. South African context: Constitutional / federative system: Institutional arrangements in and between levels / spheres (national, state, local), including issues such as legislative mandates and financial flows 3.1 A complex shift from top structure to human settlements; The human settlements mandate versus housing / top structure mandate. The ‘new’ human settlements mandate is proving too big / too over ambitious / too complicated for one Department to achieve. The balance of dealing with direct housing and shelter concerns vs dealing with broader urban development concerns is unresolved. Since 2011 the DHS has taken over the responsibility from COGTA of funding of that infrastructure in large cities that is funded through the USDG funding. Cities rely on other and own resources for the major portion of infrastructure funding. The expanded conceptual scope of the DHS from housing to human settlements has broadened expectations and demands on what the DHS should do. Although the Department has expanded its responsibilities, many functions necessary for human settlement development fall under the jurisdiction of other departments. Housing is a line function. There are great difficulties integrating the non-shelter components. Efforts to do so are undertaken through grant mechanisms and urban planning tools.

The human settlement mandate has complexified the institutional arrangements for delivery – it is highly complicated (email Communication, Susan Carey, 28 July

2012).

The accreditation system is currently being implemented (where metros / local government being accredited to deliver housing directly) but process been complex but is now on track. Accreditation of large cities seeks to strengthen the metros and secondary cities and to restrict the responsibility of provinces to working in smaller municipalities. There exists a lack of clear distinct roles and there are many legislative and institutional bottlenecks which stall the delivery of housing – housing delivery process can take longer than three years which escalates costs. The delays in transfer of property to beneficiaries is an area of enormous concern. Many of the houses delivered through the state subsidy machanism have after several yaers still not been transferred to beneficiaries. (email Communication, Susan Carey, 28

July 2012; email communication Kecia Rust, 28 July 2012).

4. South African context: Integration of slum upgrading: The relationship between slum upgrading and the city, both sectorally and spatially

4.1 Poor urban integration under conventional housing programme In surveys conducted of the housing benefit the number of residents reporting improved access to social facilities and public transport is only slightly higher than the number of residents reporting poorer access. It appears that for most, while housing quality has improved, residential location has not improved significantly.

With the local interpretation of MDG was intially a misinterpreation and led to calls for the elimination of informal settlements, it has been revised and a more incremental and holistic view and policy position has evolved. There are varying degrees of tolerance at municpal level for informal settlement upgrading, and this is unsurprising given the policy and porgrammes that have prevailed, wit their focus on formal houisng delivery. Cities are however adjusting their programmes to focus more on informal settlemtn upgrading and the UISP traget of addressing the upgarding needs of 400 000 households willl be a significant contribution to the MDG goal.

4.2 Meeting the objective of upgrading 400 000 households in well located informal settlements The Upgrading Informal Settlements Programme (UISP) is conceived in Part 3 of the National Housing Code. This programme emphasizes in situ upgrading over relocations and emphasizes an incremental, infrastructure-led approach. The policy intent of the programme is as follows:

Facilitate structured in situ upgrading of informal settlements as opposed to relocation

Recognise and formalise the tenure rights of residents within informal settlements

Promote health and security by providing affordable and sustainable basic municipal engineering infrastructure, that allows for scaling up in the future

Address social and economic exclusion by focusing on community empowerment and the promotion of social and economic integration. Build social capital through participative processes and address broader social needs of communities.

(Department of Housing, 2009) This Programme only finances the creation of serviced stands. Beneficiaries may then apply for housing construction assistance through the other National Housing Programmes (eg. Individual subsidies, Enhanced People’s Housing Process, Social Housing, etc.).

The following targets have been set for 2014:

Province Informal Settlement Households Share of National Target

Estimated Cost: R000

Eastern Cape 59 400 1 813 546

Free State 26 400 806 021

Gauteng 96 800 2 955 409

KwaZulu-Natal 76 200 2 326 468

Limpopo 31 200 952 570

Mpumalanga 46 480 808 463

Northern Cape 9 320 285 466

North West 28 840 880 516

Western Cape 45 360 1 384 890

Total 400 000 12 213 349

Cost based on UISP subsidy quantum; supported by bulk, connector and land costs were necessary (Source: Topham, July, 2012) 4.3 Institutional arrangements Municipalities will carry out UISP project implementation, with support from provinces as appropriate. Where municipalities are unable to act as developers, provincial departments of human settlement are empowered to take over that role. (Annexure A For Outcome 8 Delivery Agreements) 4.4 NUSP- Dealing with capacity constraints The state recognises that there are major human resources needs at provincial and local level – provincial informal settlement units are generally small and under-staffed. They will require increased capacity in order to implement the UISP. To this end a National Upgrading Support Programme (NUSP) has been designed. NUSP supports municipalities. It is focused on livelihoods- based approaches that integrates human settlement planning and housing activities and that are centred on participatory planning in the upgrading of informal settlements. It has been created to support the implementation of the large-scale programmatic approach required to achieve the delivery target, particularly where partner municipalities are weak. Provincial support for municipalities, especially in relation to planning and packaging of projects, and monitoring and feedback, remains an essential role for provinces. Technical support will be provided from existing provincial consultant teams and project management offices, although these may need to be expanded or redirected to the UISP. Municipalities face the challenge of implementing UISP projects as part of transformation towards sustainable human settlements. Officials are likely to need regular and consistent project management support, as most will be unfamiliar with incremental upgrading processes (Topham, 2010; Topham, interview 2 Aug 2012). The NUSP has been designed to improve the state’s performance and results in

Upgrade 400 000 households: provincial targets

informal settlement upgrading via the UISP in two ways: First, by increasing the emphasis on incremental in-situ upgrading as an objective of the UISP, and stressing the requirement for plans to be in place for the transformation of informally settled communities into sustainable human settlements Second, by working to overcome the prevailing orthodoxy of state-subsidised provision and greenfield site development and changing the behavior, attitudes and organisational culture of housing officials and professionals to embrace incremental upgrading, participatory planning and livelihoods-based approaches. The NUSP target is to support 49 municipalities nationally, covering the eight metropolitan municipalities and all major urban areas. In total these 49 municipalities contain around 70% of all the informally settled households in South Africa. The NUSP core activity streams are:

Technical Assistance – the appointment of service providers to support provincial and local government and community-based structures for the development and implementation of upgrading programmes and projects

Capacity Building – roll-out of incremental upgrading workshops for officials, politicians, human settlements practitioners and community representatives in the field of informal settlement upgrading

Partnerships and Forums – establishment of NUSP forums at provincial and national level and formation of partnerships with other government departments and programmes, non-governmental organisations, community-based organisations, professional bodies and higher education institutions. This task includes the provision of Knowledge services and information dissemination to the upgrading community of practice

Policy Refinement – Feeding back practical experience into existing policy as the programme progresses and projects are rolled-out

In addition the Housing Development Agency activities on upgrading are coordinated by the NUSP Core Team

(Topham, 17 Nov 2010; Topham, 12 May 2012) The National Upgrading Support Programme is focusing initially on municipalities that have a degree of human resource capacity for such a programme and where there is a political will and endurance to implement the programme. Initially, some 49 municipalities have been targeted in such a way as to focus on as many informal settlements as possible – possibly up to 60 to 65% of all informal settlements. The final selection of 49 municipalities identified as areas of highest informal settlement pressure, have been briefed about the programme and invited by the NDHS to participate. The selection includes five municipalities in each province to ensure national coverage of the programme (Topham, interview, 2 Aug 2012).

These municipalities have been categorised for targeted assistance: – Metros (demand-responsive) to support current upgrading

activities (8 metros) – Municipalities with upgrading strategies to receive support to

produce detailed project plans (13 municipalities) – Municipalities with no upgrading strategies to receive support to

develop baseline data and classify settlements for intervention (28 municipalities)

4.5 Funding framework Finance issues in the conventional housing approach:

At current costs, eradicating of the backlog of 2.1 million units and coping with current growth in need, would cost R300 billion. At an assumed annual delivery rate of 250,000 units this would require R35 billion per year, which is beyond the state’s fiscal capacity according to the Financial and Fiscal Commission (2012). The FFC states the need for a complete rethink of how housing is financed in South Africa with the expectation that private financial institutions and households must contribute more. This understanding has been confirmed in statements by the Minister of Human Settlements on the need to open the debate on stopping the provision of free houses at some point. The housing subsidy policy is also being considered for review.

Budgets are not always ring-fenced for houisng delivery in particular projects. This allows for politically driven prioritisation and budgets can be allocated away from areas of greatest need to priorities decided in the short term by politicians

The microloans sector and role in housing is poorly developed in SA. South Africa’s experiences of supporting finance institutions to on-lend to poor households has had mixed success, being constrained in its ability to reach ‘down market’ by the risk averse nature of some of the partner institutions. Funding of UISP: The cost of providing 400 000 well-located informally settled households with tenure and basic services is R12 212 432 000; this is based on the 2010/2011 UISP grant quantum of R30 531.08, and excludes relocation costs and emergency housing provision. Delivery costs vary in practice. The cost of providing a fully serviced site may go up to R33 000, with an average per household of R10 000 for bulk services and R 5 000 for electricity supply. In this case, the total cost of the programme would be around R19.2 bn. Through the delivery agreements, the provinces will be expected to reprioritize their budgets to meet the provincial targets and therefore to contribute to the target of 400 000 households with access to basic services and secure. The UISP is funded from an allocation made by the Integrated Human Settlements Funding Grant (IHSFG).

The USDG is a bulk grant directed from National Treasury. This instrument is constituted from a combined allocation of MIG funding and IHSG funding. It is directed from National Treasury to metropolitan councils. In this way it bypasses many of the delays and constraints that inhibit normal housing funding flows (Topham, interview, 2 Aug 2012). The Urban Settlements Development Grant (USDG) has been introduced in the 2011/12 national budget. The USDG retains the spirit and intent of the MIG-Cities Grant (now dis-established) but it goes much further in addressing the key challenges of the built environment. The USDG is a financial instrument – a direct grant from national government to Cities and Towns for the purpose of supplementing the capital investment programme to improve the performance of the urban built environment and thus contribute to the development of sustainable human settlements and improved quality of life for households. The strategic goal of the USDG will be achieved through accelerating the provision of serviced land with secure tenure for accommodation for lower-income households in large urban areas and simultaneously providing appropriately located serviced land to support economic development that results in job creation for the under-employed and unemployed urban dwellers. The balance between economic and social goals will be achieved through expanding access to land and infrastructure, and should be clearly reflected in the Built Environment Performance Plan (Capital Investment Programme) as informed by the approved spatial development framework of cities and towns and the alignment of the IDP

and Budget (Department of Human Settlements RSA, 2011c)

Other subsidy programmes, including the Integrated Residential Development Programme (IRDP) and social and rental interventions, may also be applied in an integrated fashion at individual project level. Various other existing programmes can also be applied to upgrading. The provision of community residential units (CRUs) as an option under Phase 4 of the UISP falls under Social & Rental Interventions of the National Housing Code 2009. The Enhanced People’s Housing Process as an option under Phase 4 of the UISP falls under the National Housing Code 2009. Individual and consolidation subsidies as an option under Phase 4 of the UISP fall under the National Housing Code 2009. Temporary shelter can be made available to households while services are being installed or formal houses are being built on sites previously occupied by informal structures. Such provision falls under the Emergency Housing Assistance Programme of the National Housing Code 2009. (Annexure A For Outcome 8 Delivery Agreements) 4.6 Developing Upgrading Plans - Process The NUSP indicative process for the production of upgrading plans includes the following stages (Topham, 30 July 2012; Topham, interview 2 Aug 2012):

• Confirm accountable officials at provincial and municipal level • Check and understand criteria for upgrading plans and categorisation of

projects • Review current information – informal settlements, current project lists

by province and municipality • Ensure alignment with national and provincial Delivery Agreement

targets • Establish participatory process for involvement of affected communities

in planning exercise, • Develop scope of work and specification for technical service providers,

(including specialist areas such as security of tenure, participatory planning, alternative services provision, food security, energy efficiency)

In detail, the planning for upgrading involves: Assessment and categorisation of settlements:

• Assess and categorise informal settlements (also using data gathered by the HDA and province), for example:

• Full upgrading (full services, top-structures and tenure) where appropriate, affordable and viable

• Interim basic services for settlements viable for full upgrading in longer term but where this is not imminent

• Emergency basic services for settlements where long term upgrading is not viable but relocation is not urgent

• Relocations as last resort for settlements where this is an urgent priority The development of provincial and municipal strategies

• Develop Provincial Upgrading Strategy based on information gathered – Situation analysis – Responses and action plan – Funding and budget implications – Monitoring & evaluation framework

• Develop Municipal Upgrading Strategies (similar to provincial framework, but takes account of local aspects)

• Province and municipalities adopt strategies, include in respective business plans, IDPs and human settlement plans

• Guidelines are available for both from NUSP •

Develop Provincial and municipal level upgrading programmes • Develop Provincial and Municipal Upgrading Programmes - these will be

closely linked and need to be adopted • Municipalities need their own programmes:

– Need to build into Housing Chapters / IDPs – Respond to local issues and partnership opportunities – Build community participation into upgrading process

• Guidelines for both are available from NUSP • These programmes form basis of implementation agreements between

province and municipalities

• NUSP Forum will steer development of provincial and municipal strategies and programmes

Develop settlement level plans

• Once strategies and programmes are in place, can move on to develop detailed settlement-level project plans

• Further technical assistance can be made available from NUSP (three year programme and budget)

4.8 Challenges NUSP has encountered significant obstacles and challenges to the implementation of a support porgramme for the upgrading of informal settlements. These include: Shifting from mass based solutions to tailor made incremental upgrading approaches: Local authorities have been geared up to deliver mass housing projects. The

shift to tailoring and individualising settlements for varying upgrading solutions requires a mindshift, changes to resource allocation and modes of working.

Embeddedness of top-down approaches: Oppositional relationships between communities, municipalities and

provinces at project-level require considerable effort and commitment to overcome. There is little practice of participatory planning, and less understanding of the need for confidence-building measures to establish trust and viable partnerships.

Low level of buy-in to the conceptualisation of of the crisis There is little sense of an urban crisis among government practitioners.

Urbanisation trends and causes are poorly understood and frequently denied. Conflicting policy imperatives of urban and rural development allow human settlement departments to shift programmatic emphases for the easiest forms of delivery to meet expenditure targets.

Provincial and local level planning constraints: • Officials and private sector professionals locked into formal provision of

top-structures as only orthodox form of delivery • Very weak on community-led development, participatory planning and

empowerment • Focus on physical products rather than processes – need to understand

functions of informal settlements, livelihoods based approaches, interactions of multi-disciplinary teams

• Mind-set and attitudes towards informality need to change – the poor are seen as the ‘Other’, passive, problematic, uncooperative – rather than legitimate partners in the provision of shelter

• Many politicians and communities have high expectations of formal forms of delivery by the state

In addition NUSP recognises the need to mobilise partnerships with NGOs and higher education institutions and the private sector and community structures. Furthermore there is a concern that a community of practice needs to be connected, maintained and sustained – otherwise just isolated pockets of a few ‘enlightened’ practitioners and will whither away (Topham, 12 May, 2012, Topham, interview, 2 Aug 2012) 4.7 Achievements: Broad NUSP Progress The Delivery Agreement statement target sets out an unequivocal target for

incremental upgrading - 400 000 households is 33% of the estimated 1.2m households living in informal settlements. It encapsulates a major shift in emphasis in shelter provision.

The Upgrading of Informal Settlements Programme (in existence since 2004 but under-used) and the Urban Settlements Development Grant (established in 2011) and their budget allocations are potentially powerful instruments to achieve delivery at scale.

The National Upgrading Support Programme team has to date briefed 40 municipalities on incremental upgrading, produced a Resource Kit and established the Upgrading Knowledge Services Platform (online at www.upgradingsupport.org). The Upgrading Capacity Building Programme currently is under design and the roll-out to 20 municipalities is planned from October 2012

The NUSP budget is in place Some provinces are improving their information bases – Western Cape,

KwaZulu-Natal and North West have developed informal settlement datasets and categories as the basis for rational upgrading programmes.

There is a shift in attitude in favour of incremental upgrading among certain community groups – in particular, the Informal Settlements Network is proposing and piloting upgrading projects involving community enumeration, self-management, and participatory planning in partnership with municipalities.

There is experience from current projects and initiatives that can strengthen practice and support implementation

(Topham, 2011; Topham 2012) 4.9 Monitoring and Evaluation Monitoring and evaluation of houisng performance has not been undertaken effectively to date but is improving with invovement of Presidency on Outcome 8 performance. Provonces have often offered varying figures and are reluctant to commit to figures. The emphasis of assessment has been on delivery figures. But several current state driven evaluations of housing performance and reviews of approaches (FFC, Public Protector, Presidency, NDHS visioning exercise).

This approach envisaged for the roll out of the UISP will involve close coordination between the NDHS and provinces to ensure compliance with their share of the overall national target. The provincial household targets are derived from their respective conditional grant allocation percentage. The annual plans submitted by provinces to secure their conditional grant allocations will be monitored, and required to show viable programmes that meet the annual component of the provincial target.

5. South African context: Land markets: Land access and delivery systems, leverage of state, etc. 5.1 Access to infrastructure One of the main challenges in SA for affordable housing is the access to well located land and bulk infrastructure.

5.2 Access to land

The FFC indicates that 70 000 hectares of state owned land has been identified for housing developments, but none been made available for affordable housing.

The balancing of highest and best use in land value is an ongoing contradiction. And intensified by economic realities. Many local authorities / metros are cash strapped and reluctant to part wth land assets for purposes that are likely to increase their operating spending (email Communication, Susan Carey, 28 July

2012)

Where state invested in infrastructure, particularly transport infrastructure, land values alongside increased substantially. Investment in infrastructure therefore increases land values – how can this be used to work constructively for the poor.

5.3 Tools

Value capture is poorly understood and underexploited.

Mechanisms such as expropriation not exploited.

5.4 Valuing location, access and infrastructure

The broadening of housing definitions and delivery to ‘human settlements’ alters the way in which value is perceived. It opens the possibility of valuing services and access to opportunity over shelter. This is crucial. (email Communication, Susan Carey, 28 July 2012)

6. Existing learning networks with India and Brazil

A number of academic linkages exist between Indian, Brazilian and South African institutions. These include discussions and seminars focused on comparative research opportunities; individual academic visits, and graduate research studies and networks focused on various urban, sustainability and livability issues. A full audit of these will be important as the potential for the IBSA exchange to augment and strengthen existing relationships proceeds. Examples of current

linkages are: The goal of promoting South-South theory building as a means of contributing to a 'global learning process' and addressing imbalances in global systems of knowledge production and circulation has been discussed in Cape Town (hosted by ACC) by Indian, African and Brazilian urban academics under the ambit of IBSA. Here the educational and learning benefits of a collaborative and comparative case research, teaching, the sharing of curricular content and the arrangement of student and staff exchanges were highlighted. A comparative case study research is currently underway with University of Cape Town, the Indian Institute for Human Settlements and Federal University of the ABC Region, Brazil (UFBAC). University of Witwatersrand has a SA-Indian research focus in CISA that has so far not focused on human settlements but may well be a platform for extending collaboration in urban research and academic interactions. The University also has a relationship with the University of Sao Paulo for the purposes of knowledge exchange on architecture and urban concerns. A comparative conference in Rio in 2008 explored urban issues across the three countries. Individual academic relationships including visiting lectureships continue with a number of institutions. Leading academics including Edesio Fernandez and Ananya Roy have visited South African institutions and further visits are proposed.

Appendix One The NUSP Approach - Improving access to livelihood assets Source: Interview: Steve Topham, NUSP Technical Team Leader, 2 August 2012 The NUSP promotes a sustainable livelihoods-based approach to incremental upgrading. This is based on the core principles that upgrading should be people-centred, responsive and sustainable. Figure 3: The sustainable livelihoods framework

Adapted from the UK Department for International Development livelihoods framework

The framework demonstrates that livelihoods are the result of access to five capital assets: NUSP notes that informal settlements in South Africa are characterised by illegality and informality, restricted public and private sector investment, poverty and vulnerability, social stress, and in some cases, inappropriate locations. The effect of this is to restrict access to livelihoods assets across the board, locking households in informal settlements in a cycle of poverty. The approach adopted by NUSP breaks from a shelter led quantitative approach. Rather, incremental upgrading is intended to influence the sustainable livelihoods framework holistically: increasing access to assets, facilitating circulation of these assets and allowing people to devise strategies that best meet their livelihoods objectives. In practice this means a much greater emphasis on building human and social capital, combining tenure, services and empowerment, crowding in support services and affecting a lasting change in official and professional attitudes. The NUSP framework outlines how its chosen focus areas improves livelihoods:

Impact of Provision of Secure Tenure Recognition of tenure provides access to physical capital – land, which can be

used as a focus for investment allowing financial capital to be converted more easily.

Having a recognised address can improve access to: Social capital by increasing the sense of belonging to a neighbourhood. Improving access to financial capital when proof of address is required

for access to banking facilities. Physical capital by allowing greater access to municipal services.

Security of tenure also influences the vulnerability context by improving resilience to certain shocks such as forced eviction or by having a recognised claim for land after a fire or flood.

Impact of Provision of Basic Services Human capital through health improvements (or reductions in health risks)

from water and sanitation services and electrification (as an alternative to other fuels), which can in turn increase employment potential (financial capital)

Financial capital through access to employment or business opportunities from improved transport and social amenities.

Natural capital through improvements in natural environment from waste collection, sanitation services, and provision of public open space.

Community input into planning and design processes can also increase access to human capital through knowledge, skills and experience, as well as social capital through engagement in community processes with officials, community groups and human settlements professionals.

Crowding in of support services such as HIV/AIDS support or early-learning support would increase access to human capital through health and education and social capital through strengthened networks.

Impact of Community empowerment activities Participation and capacity building allows greater access to human capital

through increases in skills, knowledge and experience, which in turn can increase employment potential (financial capital).

Engaging in capacity building workshops and project processes provides access to social capital through building networks and trust relationships within the community and with officials and professionals, which can increase employment potential (financial capital)

More integrated and cohesive communities may also be more resilient to shocks and trends such as disasters or in-migration, so reducing vulnerability.

Impact of Capacitating officials, professionals and politicians Capacitated and responsive officials can influence transforming structures

and processes in a way that facilitates access to assets through development of pro-poor policies, and greater institutional understanding of informal settlements and livelihoods-based approaches.

Changes in officials and professional mindsets can also influence the

vulnerability context through more careful consideration of alternatives before making development decisions that could impact negatively on community livelihoods strategies.

References Department of Human Settlements (2011a) A Development Finance Strategy for the Human Settlements Sector: Proposed Strategy and Institutional Implications, prepared by Shisaka Development Management Services Department of Human Settlements RSA (2011b) Human Settlements Progress Report: Implementation of Cabinet Lekgotla Decisions Department of Human Settlements RSA (2011c) Urban Settlements Development Grant Policy Framework Kithakye, D (undated): Housing the Nation- South Africa's National Housing Strategy ww2.unhabitat.org/mdg/.../Vol7_No1_UN-Habitat_Activities6.doc, accessed on 5 Aug 2012 KZN Dept. Human Settlements (Feb. 2011): Municipal Resource Pack Informal Settlement Eradication Strategy for KwaZulu Natal prepared by Project Preparation Trust of KZN National Department of Housing (2004): Breaking New Ground – the Comprehensive Plan for the Development of Sustainable Human Settlements 2004 National Department of Housing, RSA (2009) National Housing Code: Part 3: Incremental interventions: Upgrading Informal Settlements

National Upgrading Support Programme (3 Feb 2009) NUSP Assessment Final Report President J Zuma: State of the Nation address, 11 Feb, 2011 Topham, S., NUSP Technical Team Leader (30 July 2012): National Upgrading Support Programme, presentation to northern cape NUSP forum Topham, S., NUSP Technical Team Leader(12 May 2011): Informal Settlements: SA Cities 2025 Creative Visioning and Reality Checks. Presentation to National Planning Commission Material Conditions Working Group Topham, S., NUSP Technical Team Leader (17 November 2010) Informal Settlement Upgrading and the National Upgrading Support Programme, presentsation to Sustainability Institute Annexure A For Outcome 8 Delivery Agreements: Sustainable Human Settlements and Improved Quality of Household Life, www.info.gov.za/view/DownloadFileAction?id=135746, accessed on 5 Aug 2012

WCSHSS - Western Cape Department of Local Government and Housing, Isidima: Sustainable Human Settlement Strategy (undated): The Roadmap to Dignified Communities Interviews and email communication Kecia Rust, Centre for Affordable Housing Finance in Africa, 28 July 2012, email communication Steve Topham, National Coordinator: NUSP interviewed on 2 August 2012 Susan Carey, independent housing and planning consultant, email communication 28 July 2012