Posted on April 10, 2019
Housing solutions for the urban
poor in Bangladesh
by Ashekur Rahman
The article was first published in the NEWSHOUR online
Low-income communities are struggling to find affordable
urban housing in Bangladesh’s cities. Millions are heading to
cities to tap into economic opportunities, causing booming
urban growth. But many of them are facing skyrocketing
property prices, a dysfunctional rental market, and limited
public housing. Local authorities are falling behind on
delivering affordable housing schemes. The outcome: lowincome communities pay exorbitant rents to live in slums
with poor services and no tenure security.
Take Dhaka, the world’s most crowded city. Over 17.4 million
people reside in Dhaka and more are moving in. At least
one in every three people live in informal settlements. The
situation is rooted in a fragmented housing delivery system:
the government meets only 7 percent of the annual housing
demand and relies heavily on the private sector to fill in the
giant gap.
Formal private housing supply is also limited, forcing lowand middle-income families to resort to costly informal
arrangements. According to a 2017 study by Bangladesh
University, on average, slum residents pay BDT 47 per
square foot; this is twice the amount tenants pay for decent
housing in areas such as Dhanmondi.
THE OVERLAPPING CHALLENGES
Bangladesh has been putting needed policies in place. For
example, national development plans such as the
Government’s 7th Five-Year-Plan (FY 2016-2020) emphasize
affordable urban housing. Moreover, the Government has
approved the ‘National Housing Policy 2017’ to address the
fragmented policy response to housing challenges.
Despite progress on the policy front, the housing delivery
system remains highly uncoordinated as public and private
developers tend to work in silos. Moreover, in urban
projects, private developers focus on upper- and uppermiddle-income groups and public land allotments for the
poor are negligible. RAJUK has reserved only 1.2%, 4.3%
and 7.5% of land for low-income groups in the Purbachal,
Uttara (3rd Phase) and Jhilmeel projects respectively.
Complicated land and titling procedures, registration
procedures and costs make accessing these allotments
even more difficult.
Additionally, housing finance is limited, short-term and
expensive given the absence of a well-functioning mortgage
market. The market is small despite demand for low- and
middle-income housing finance and it caters to affluent
groups only. Also, state-owned finance providers often lack
fund for their schemes in urban areas. Factors like these are
feeding into challenges for developing affordable housing
for low-income urban communities.
Some of these issues become more apparent when wellintentioned efforts backfire. Bhashantek Rehabilitation
Project is such an example. In 1998, the Government
undertook the BDT 341 crore project in Mirpur, Dhaka to
build 7,560 flats for slum residents and low-income groups.
The Government fixed flat prices at rates that families could
pay off in 10 years in monthly installments. Yet, the project
got mired in irregularities and mismanagement. The private
developer that won the construction contract sold of a
section of the flats at higher prices to an affluent group. The
Government eventually scrapped the costly project.
World Bank estimates that Bangladesh will need to build at
least 8.5 million new houses in the next five years to
overcome the existing shortage in urban areas. Most of the
demand is expected to come from lower and lower-middle
income groups. Given Bangladesh’s commitments to
provide housing for all by 2021, how can Bangladesh
overcome these challenges for providing affordable housing
in urban areas to the poor?
WHO BELONGS TO THE HOUSING DELIVERY SYSTEM IN
BANGLADESH?
The housing delivery system in Bangladesh consists of 1)
Public Housing 2) Autonomous Bodies 3) Cooperative
Housing 4) Private Formal Housing 5) Formal Individual
Housing 6) Private Informal Housing 7) Slums 8) Squatter
Settlements 9) Informal Accommodation in Non-Residential
Spaces and 10) Homeless or Pavement Dwellers.
Public and private sector institutions conducting housing
functions include: a) Ministry of Housing and Public Works
(MoHPW) b) National Housing Authority (NHA) c) House
Building Research Institute (HBRI) d) Real Estate & Housing
Association of Bangladesh (REHAB) and e) House Building
Finance Corporation (HBFC). In addition to HBFC,
commercial banks and financial institutions provide housing
loans to individuals and development companies.
SUCCESSFUL EXPERIMENTS WITH LOWINCOME HOUSING
Despite the dismal situation, Bangladesh’s NGOs,
universities and development partners are successfully
testing small-scale and low-cost urban housing schemes.
Take ARBAN, one of the first NGOs to pilot a low-income,
urban housing project in Bangladesh.
By tapping into its micro-credit savings deposits and loan
assistance, ARBAN built an apartment complex for 42member households in Mirpur, Dhaka. The apartments
were handed over in 2012. Building on success, ARBAN
is taking on another housing project to construct
apartments for 85 households on a 1 bigha plot at the
city’s Rampura Banasree area.
In Jhenaidah, BRAC University collaborated with the
Municipality, architects and a local NGO to build
affordable homes through the ‘Jhenaidah Citywide
Housing Process’. Through this community-led initiative,
people identified their housing challenges, mapped out
what they wanted to see in their neighborhoods and
helped in the construction process.
The initiative was financed by using seed funding and by
setting up saving groups in the community. Women in the
community took leadership throughout the initiative.
Partnership and Community-Driven Cooperation
Approach: The Gopalganj Model
From 2008 to 2015, the Government of
Bangladesh, UNDP and DFID ran the flagship initiative,
“Urban Partnerships for Poverty Reduction (UPPR)’’ project,
to meet the needs of marginalized and poor urban
communities. In 2009, with UPPR’s support, Gopalganj
municipality undertook a housing programme through which
the municipality collaborated with the private sector and
community to offer tenure security to 346 evicted families.
The families, alongside stakeholders, identified vacant
government land in the Pourashava for resettling them. In
2010, following negotiations, the Ministry of Land allocated
4.16 acres on a 99-year lease to the Gopalganj Pourashava.
The urban poor communities, in collaboration with the
Pourashava and with the technical assistance of UPPR and
other partners, developed low-cost housing model through
rigorous consultative and participatory processes.
The development of Community Housing Development
Fund (CHDF) was one of UPPR’s key outcomes; this is
city/town-level community based specialized institution that
supports tenure security and addresses housing finance
challenges of the poor. For example, as noted in the
Gopalganj, the CHDF was instrumental in negotiating the
long-term lease on government land for 99 years with
support from the local government institution. CHDF
provides loans to target households at 10-12% interest rates
and with a payback period of 5-7 years. CHDFs in
Gopalganj, Sirajganj, Rajshahi, and Chittagong have already
invested BDT 90 million and supported 300 households in
their communities.
Bringing Affordable Housing to Urban Poor
NEW INITIATIVES
NUPRP: Empowering communities with access to social housing and affordable finance
Building on UPPR’s successful experiences, Govt. of
Bangladesh has recently approved the next generation
urban poverty reduction program named ‘Livelihoods
Improvement of the Urban Poor Communities’ popularly
known as NUPRP. For the first time, the project will build
5000 new housing units for extremely poor families in
secondary cities with GoB and UNDP’s support. Another
15000 families will receive financial support to build their
houses through a housing finance facility that the project
will help establish with UK aid’s support.
NHA’s Low-Income Community Housing Project
NHA Housing Model National Housing Authority (NHA), with
the World Bank’s support, is undertaking a USD 50 million
project to develop housing for the urban poor by 2021.
24,000 urban poor who live in informal and low-income
settlements will directly benefit from this project. Using a
community-driven approach, the Project will help lowincome communities access infrastructure grants, and
housing loans to improve housing and living conditions.
Further, the Project will finance a credit line within PKSF to
provide access to Partner Organizations (POs) for investing
in the shelter in urban areas and to address the current gap
in shelter lending programs among qualified microfinance
institutions (MFIs), lenders and/or NGOs.
Housing for garment workers
Through its “Subarna Prangon” project, Mohammadi Group
(a leading RMG manufacturer) has been building housing
facilities for 1200 garment workers in Dongri, Gazipur.
The facility will consist of two types of units: family and dorm
units. Each unit will have an area of 619 square feet. The
family units will have two double room living space, a shared
kitchen, and toilet; 2-4 people will share rooms with
common toilets in the dorms.
Design of housing model for the garments workers
The Project will cost an estimated BDT 31.61 crore and 1.7
acres of land has already been purchased. Bangladesh
Bank is supporting the Project with loans at a nominal rate
that can be repaid in installments.
A WAY FORWARD
The experiments in low-income housing provide some
obvious answers for overcoming challenges. Bangladesh
needs a strong policy framework and transparent
institutions. Projects need to be well-monitored and
innovative initiatives must be widely replicated for which
partnerships among government agencies, the private
sector, and development partners are critical.
But housing initiatives for the urban poor, big or small, will
be difficult to run without introducing affordable housing
finance schemes.
Vasantek Rehabilitation Project
Here, community-managed savings groups (formed by
CHDF) show great promise. In Rajshahi, the CHDF helped
201 families benefit from housing support well after UPPR
ended in 2015. The community-based housing finance
institution has distributed BDT 3.25 crore in housing loans.
Moreover, when supported, poor communities are highly
capable of improving their own conditions.
For example, more than 55,000 slum residents have
accumulated BDT 12 crore in anti-poverty savings schemes
through community development committees (CDCs) that
UPPR helped establish. Further, the community members
are running micro-businesses with the collateral -free loans
that they took against the accumulated savings.
The newly launched ‘Build Bangladesh-UNDP SDGs Impact
Fund’ can be another potential source for accessing urban
housing finance for the poor. Unveiled at a joint event on
the sidelines of the 72nd United Nations General Assembly
in New York in 2017, the Fund aims to raise over USD 100
million from private investors willing to back profitable
ventures that create positive social and environmental
impacts in Bangladesh.
As a part of UNDP’s initiatives in Asia-Pacific to mobilize
capital markets to fund development projects with
competitive returns, the Fund started with a seed
investment of USD 3.5 million to build affordable housing for
urban migrants. It is a bold leap forward to engage capital
markets to create positive social impacts such as offering
affordable housing finance for the urban poor in
Bangladesh.
Filed under:
Bangladesh
Governance and peacebuilding
Goal 11 Sustainable cities and communities
Press release