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Pro-poor housing loans in the Philippines

Limited access to land in Philippine cities has been the greatest barrier to providing the poor with affordable housing. Since the end of the Marcos dictatorship however, state housing policy has moved from prioritising construction of middle-class housing and forcible eviction and relocation of urban squatters to engaging the poor in land-use and community planning. The innovative Community Mortgage Programme (CMP) offers subsidised loans for housing development and has allowed low-income families to legalise and upgrade informal housing.

A paper from the Ateneo de Manila University looks at the policy context from which the CMP emerged, reasons for its success and the constraints on its effectiveness. Of the many social housing finance programmes launched by successive Philippine governments, the CMP is the most responsive to the housing needs of slum and squatter communities.

The CMP targets squatter communities occupying public and private land and encourages beneficiaries to organise themselves into community associations. These associations then apply for a loan to the government’s National Housing Mortgage and Finance Corporation (NHFMC). Each application must be supported by an NGO, unit of local government or national housing agency prepared to take responsibility for ensuring documentation is in order and monthly repayments are made. Individual association members may obtain loans for land acquisition, house construction and improvements.

CMP is the only scheme that allows legalisation of the status of squatters without requiring them to provide collateral. Between 1991 and 2001 CMP helped over 100 000 poor families in 854 communities to secure rights to housing and tenure while achieving the highest collection efficiency rate of all government housing loan programmes. With an average loan amount of $665 per household, it is also relatively cost-effective.

Investment in social housing has had ripple effects. Access to housing has built community participation and solidarity among the poor. Gender relations have been transformed as women have managed housing and livelihood schemes, liaised with state agencies and highlighted planning issues of concern to women and children. Housing associations have addressed such non-housing community needs as income generation and launched schemes to mobilise resources to finance day-care and health centres, nurseries, parks and sewerage systems.

Although recent devolution of housing and land-use functions to local governments is presenting new opportunities for civil society actors and local government agencies, major challenges remain:

Agencies remain unresponsive to the housing needs of the very poor, especially families with irregular or inadequate income sources.
Housing associations are still confronted by problems of non-repayment, selling of housing rights and lack of affordable technical assistance when preparing site development plans.
The potential power of the CMP has not been realised due to its over-dependence on the government for financing.
The CMP has suffered from greater funding cut-backs than have schemes targeting better-off households: many politicians do not want to be seen by the private sector as encouraging the urban poor.
Rapidly rising land prices, especially within Metro Manila, are often beyond the CMP loan limit. CMP is more applicable and viable in cities and municipalities that are not highly urbanised.
Processing of CMP loans is complex and usually takes 18 months.

The authors recommend that:

The CMP should be re-organised as a relatively autonomous social housing corporation with minimum bureaucracy
Key CMP processes should be decentralised to the regional level
More must be done to develop the institutional capacities of national government housing agencies, local governments, NGOs and the CMP housing associations.

Government officials and NGOs mistakenly believe that the poor are unable to generate resources for their own housing needs. The absence of a broad-based movement for savings mobilisation for housing and other self-help initiatives among poor communities – of the kind now succeeding in Bangkok and other Asian cities – reinforces this view. Programmes such as CMP however demonstrate that in countries such as the Philippines, with appropriate support, the urban poor are able to pursue such activities.

Source(s):
‘The Community Mortgage Programme: an innovative social housing programme in the Philippines and its outcomes’ in ‘Empowering Squatter Citizen: Local Government, Civil Society and Urban Poverty Reduction’ edited by Dianna Mitlin and David Satterthwaite, Earthscan, pp54-81 by Emma Porio, with the assistance of Christine S Crisol, Nota F Magno, David Cid and Evelyn N Paul, 2004 Full document.

Funded by: International Institute of Environment and Development

id21 Research Highlight: 27 November 2004

Further Information:
Emma Porio
Department of Anthropology-Sociology
Ateneo de Manila University
Philippines

Tel: + 632-426-5990; 4266001
Fax: + 632-426-6008
Contact the contributor: eporio@ateneo.edu

Ateneo de Manila University

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