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A Home of Their Own
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Angeles City, Pampanga
Henry Peñaflor lives with his wife and four children in a rough shack on somebody else’s land in Angeles city, Philippines. The 45-year-old motorcycle taxi driver’s face lights up when he talks about the prospect of owning his home.
“This is my lifelong dream,” he says with a wide smile. “It is my chance to change the way my family lives, to pass something on to my children.”
More than 40% of urban families in the Philippines live in makeshift housing, according to government statistics. This figure is expected to reach 60% by 2010.
A housing assistance project, which is funded by an Asian Development Bank (ADB) loan of $30 million, is helping address the problem. Mr. Peñaflor and hundreds of other families throughout the country will get a chance to own their homes through the groundbreaking program.
The Development of Poor Urban Communities project involves various innovations, says Richard Ondrik, former senior programs coordination specialist in ADB’s Philippines Country Office.
Rather than simply give housing to people, the program helps them build their own homes. This increases their stake in maintaining the community.
“With many government-led mass housing programs, people are not asked what type of housing they want or what style of community they want to live in,” says Mr. Ondrik. “They are told, ‘you should be happy. We are going to relocate you to new housing.’” Often it is a high-rise flat, distant from their work and family ties, and with only about 9 square meters of space.
“With this project, we work with the community members to determine what they want,” Mr. Ondrik says. “When people get what they want, they care about it more. It is of greater value to them, and they are more likely to maintain it as a home for their family. This is a matter of responding to people’s housing needs and their sense of belonging to a community.”
The project also tackles head-on the perennial problem of how to collect mortgage payments from poor families who live in government-supplied housing. Simply put, when the government is the landlord, people often do not pay their rent or house payment, even when it is a small amount.
To solve the problem—called “cost recovery” by bankers and development professionals—the project is engaging micro- finance institutions to extend loans in ways that the commercial banking system will not. These include offering smaller loans, over shorter periods, for home improvement or building houses little by little.
“Public housing programs have fared poorly in their cost recovery efforts,” says Solomon Castro, a lawyer with the government of the Philippines who is working on the project. “Yet, microfinance institutions have shown that with financial counseling and collection programs tailored to their needs, the poor can in fact repay their loans.”
Other innovative techniques being tried in the project include titling the land that is offered to families in the program so that they are owners of their homes, not simply tenants. This gives them a greater stake in their community. It also involves local governments providing basic infrastructure, which gives more control to local communities, rather than offering infrastructure that the national government built.
“Some of these elements have been involved in other projects, but the idea of packaging them together is new,” says Mr. Ondrik.
The project is broken into three parts. In the first phase, the Development Bank of the Philippines (DBP) will lend funds from the ADB loan to city governments to develop basic infrastructure services in communities where the majority of people live below the poverty line. Money will also be used to distribute land titles.
In the second phase, DBP will establish microcredit facilities for home improvement, new housing, and small business loans. Many of the housing credits will be recycled through the microfinance institutions to more beneficiaries as borrowers become eligible for long-term mortgage loans under the government’s Community Mortgage Program.
About 10,000 loans will be provided for small enterprises, which could generate jobs for about 40,000 households and benefit as many as 100,000 people.
In the third phase, DBP and the Philippine government’s Housing and Urban Development Coordinating Council will train communities and local government officials on how to decentralize the process of addressing the housing needs of the poor.
“The three components of the project work together to offer people the opportunity to own and improve their home, and make a living,” says Michael Lindfield, ADB senior housing and urban development specialist. “This differs from previous slum-upgrading initiatives that have had limited success.”
" When people get what they want, they care about it more. It is of greater value to them, and they are more likely to maintain it as a home for their family "
- Richard Ondrik
former Senior Programs Coordination Specialist
ADB Philippines Country Office
The project is currently working to prepare sites and communities in Victorias, Mandaue, Bacolod, Passi, Bago, General Trias, Iloilo, Butuan, and Cadiz cities. It will be expanded later to about 20 cities and is expected to benefit more than 20,000 urban poor families.
A groundbreaking for the first subproject was held in October 2004 in Angeles city, the first urban area of the initial six communities where the approach will be tested. Philippine Vice President Noli de Castro, chair of the Housing and Urban Development Coordinating Council, and Mr. Lindfield were on hand for the event.
Mr. Peñaflor, who was left homeless more than a decade ago by the eruption of Mount Pinatubo, attended the ceremony, with many members of the 67 families who will take part in the pilot program in Angeles City. The families will move to a site not far from where they are living now, which is situated beside a furniture factory where many members of the community work.
The difference between their old neighborhood and the new one is that rather than living in makeshift shacks on someone else’s land, they will build and own their homes in a new community.
“After Mount Pinatubo, we didn’t know if we would ever have a place to live again,” says Mr. Peñaflor, standing outside the small store that his wife operates. “Now, we have a chance to own our home and pass it on to our children.”
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