Evaluation of the first Lusaka upgrading and sites and services project

DRAFT II THE WORLD BANK U?(?) - 13 DEVELOPMENT ECONOMICS DEPARTMENT URBAN AND REGIONAL ECONOMICS DIVISION URBAN AND REGIONAL REPORT No. 80-13 EVALUATION OF THE FIRST LUSAKA UPGRADING AND SITES AND SERVICES PROJECT Volume 1: EXECUTIVE SUMMARY BISH SANYAL NELSON VALVERDE MICHAEL BABERGER November 1980 This report was prepared as part of a program of Monitoring and Evaluation of urban shelter programs which is being conducted by DEDRB. The views reported here are those of the authors and they should not be interpreted as reflecting the views of the World Bank or its affiliated organizations. TABLE OF CONTENTS ,Preface Chapter One: THE PROJECT AND ITS CONTEXT Chapter Two: ADMINISTRATION Chapter Three: OPERATIONS Chapter Four: PROJECT IMPACT This report was edited by Tonia Aminoff. Preface The First Lusaka Upgrading and Sites and Services Project was a type of development program new both to the World Bank and to the Zambian government. It was a striking departure from traditional Zambian housing policies and one of the World Bank's first efforts to finance low-cost urban housing on a vast scale. Among the program's innovative aspects was the commitment to conduct a systematic and long-term evaluation of its effects, funded by the International Development Research Center and the World Bank. The evaluation was conducted by the newly established Lusaka Housing Project Unit Evaluation Team, with a predominantly Zambian staff and technical assistance provided by the World Bank's Urban and Regional Economics Division. This document is an Executive Summary of the results of the evaluation research. A Main Report, presenting the results of the evaluation in more detail, will be published shortly. The authors wish to acknowledge the cooperation of Mathias Banda and Richard Singini at the Lusaka Housing Project Evaluation Team who directed the research program on which this report is based. C%apter One: THE PROJECT AND ITS CONTEXT In December, 1974, The Government of Zambia and the World Bank signed a loan (Loan 1057 - ZA) and project agreement designed to improve the living conditions of more than 145,000 urban Zambians. When the Project began, Lusaka was facing an acute shelter shortage. The rapid urbanization of the post-Independence decade created the need for a new approach to the shelter problem. Due to their design and level of services, public housing was unavailable to the poorest half of the population, most of which was scattered around the periphery of the city in illegal, unsafe, and unserviced shanty compounds. Between 1963 and 1974, the population of Lusaka more than tripled, rising from 123,000 to 401,000, an addition of 5,000 new households annually. During the same period, the legal housing stock of Lusaka increased by 19,434 units, less than 2,000 per year. As a result, the proportion of the city's population living in unserviced squatter areas rose from 15% to 42%. The $42.1 million Project, aided by a $20 million loan from the World Bank, was aimed at absorbing these marginal city dwellers into a coherent urban services system. The Project would offer its beneficiaries formal leasehold titles for pieces of urban land, and such services as piped water, paved roads, health clinics, and in some cases water borne sewerage. 1-2 Due in part to the illegal status of so many poor residents, as well as to economic adversities facing the country, the city's revenue failed to increase at the same rate as the population. In fact, per capita, city revenue decreased steadily from 3.57 Kwacha in 1966 to 1.38 Kwacha in 1972. The situation of the housing revenue account was even worse; there were indications that by 1977 the net housing revenue might have reached a deficit of 500,000 Kwacha. During the first ten years of independence, prior to the World Bank Project, the Lusaka City Council had tried a housing policy based on structural specifications, rather than on estimates of effective housing demand.1 This policy resulted in the production of a small number of units, all of which were too expensive for the majority of the population. The observed effect of designing public housing to such high standards was to skew the Lusaka City Council's meagre resources toward the higher income groups. According to the second housing program of 1968-71, the sum of 6,370,000 Kwacha was allocated for the building of 2,840 conventional houses, while 1,630,000 Kwacha were made available for the servicing of 13,000 plots. But by the end of 1. See R. Martin, "Housing in Lusaka," in Local Government in Zambia, Nigel R. Hawkenworth, Ed., Lusaka City Council, 1974, p.58. According to Martin, a standard low-cost house during this period had "large windows all around and a small porch at the front, and generally one at the back as well. Besides having water borne sanitation, usually with a conventional type WC, they also had electricity, and often tarred road access. The insides of the houses were normally plastered, and the ablutions included a shower room. The kitchen was sometimes spacious enough to be used also as a dining room." 1-3 the two housing programs (1965-71), only 3,071 of the targeted 6,790 conventional houses had been built, and only 7,850 of the 14,710 targeted plots had been serviced. Economic reversals made the situation dramatically worse. The simultaneous rise of oil prices and fall of Zambian copper prices on the world market meant that government funding for housing was drastically reduced or eliminated. Local authorities, vividly aware of the need for new housing, were being told to cut back on housing programs, and were thus seeking new approaches to urban shelter problems. This was the context within which the First Lusaka Upgrading and Sites and Services Project was proposed. Officials were already coming to believe that an increase in the housing stock must be organized around the principles of self-help and home ownership. The Project was seen as an opportunity to implement these concepts on a massive scale, and thus to test a potentially effective solution to the critical housing deficit. Self-help and home ownership were subsequently accepted as cornerstones of the Zambian government's Second National Development Plan of 1972-76. Chapter Two: ADMINISTRATION 1. Design The first project was located in the capital city of Lusaka. This simplified organizational arrangements and undoubtedly enhanced the project's demonstration of new design and policy principles, although it had the disadvantage of continuing the tendency to attract investments to the capital, contrary to the official policy of decentralization. Directly addressing the urban context, the project's seven major design components were developed specifically to improve the Lusaka housing situation. Upgrading The upgrading of existing squatter settlements was one of the most dramatic departures from the practice of established housing policy. The sections of the city called George, Chawama, Chaisa, and Chipata were selected for upgrading because they accounted for about 60% of the total squatter population. These districts were well located geographically for the kinds of changes the project involved and families in them had sufficiently stable employment to enable them to invest in house improvements. Upgrading was to include installation of piped water (one standpipe for 25 households), roads, and security lighting for 17,000 dwellings in the four major settlements. The upgrading component also provided for the preparation of 7,600 residential plots adjacent to the improved squatter areas, called overspill areas, 2-2 and for their servicing to the same standard. It was estimated that about 1,000 of these overspill plots would be needed for households displaced by the project. The remaining 6,600 were to be developed to allow for future growth. Sites and Services The sites and services component called for providing 1,200 plots with "basic" services: pit latrines and access to the standpipe water supply; and for providing 3,200 plots with "normal" services: individual water supplies and water borne sewer connections. Building Materials Participating families were to be allotted building materials to the level of 100 Kwacha for house improvement in upgrading areas, to the level of 250 Kwacha for house construction in overspill and "basic" sites and services areas, and to the level of 525 Kwacha per plot in "normal" sites and services areas, for the construction of a two room expandable dwelling, or core house. These loans were to be repaid by recipients at 7.5% interest over 15 years. Considerable debate was occasioned by the question of appropriate plot size. The World Bank stressed the effect of larger plot size on the cost of introducing services, while many government planners felt that plot sizes should be maximal to allow space for gardening and other activities. Because an unexpectedly large number of families were required to move, many plots in overspill areas had to be reduced to less than 2-3 210 M2. But even in George upgrading areas, where plot sizes were as small as 135 at least half of the families have been satisfied with plots considerably smaller than planners had anticipated. In both sites and services and overspill areas, about 90% of families have expressed satisfaction with plot size. The basic floor plan for project housing called for construction of two rooms and a kitchen, comprising an average floor area of 25.7 M a layout that seems to have satisfied the majority of project beneficiaries, as over 80% have built within its limits. Land Acquisition Out of an estimated 1400 hectares of land needed for all project sites, 800 hectares were to be acquired from private owners, after payment of fair compensation for the development of the land. 300 hectares were already owned by the government, and another 300 had been transfctred to the government from a tribal reserve. The choice of specific locations for sites and services was difficult. Unanticipated delays occurred in the land acquisition component, owing to a misunderstanding of the operative meaning of the government's ownership of land, although these delays did not influence the process of selecting project participants. Subsequent delays resulted from the need to reconsider initial project locations because of a high water table or rocky subsoil. 2-4 Primary Infrastructure Construction of the primary infrastructure was to include installation of water distribution mains, modification of pumpsets at the reservoir expected to supply project areas, and construction of trunk and secondary sewers, pumping stations, and stabilization ponds. This component also provided for the building of access roads, and for the purchase of garbage trucks and other equipment necessary for a garbage removal system. Community Facilities The other construction component covered community facilities. It included the building and equipping of 18 primary schools, 17 multi-purpose community centers, 3 health centers, 17 markets, and 11 demonstration houses for the four upgraded and overspill areas and the six sitec and services areas. This component also included provision of sites for the stablishment of small industries. Technical Assistance Along with detailed engineering of primary infrastructure and community facilities, provision of technical assistance was to include an organization and management study of the Lusaka City Council, and project preparation for future squatter upgrading and sites and services schemes. This component also included financing of staffing and operating costs of the Lusaka Housing Project Unit - the implementing agency - for the executing period of 3 1/2 years. Basic and in-service training of community 2-5 development workers were also integrated into this component, with the assistance of UNICEF and the American Friends Service Committee (AFSC). The creation of an autonomous executing agency was one of the respects in which the World Bank program challenged existing and conventional housing policy concepts. 2. Organization and Administrative Costs The Lusaka Housing Project Unit was established as an implementing agency by the Zambian government to permit greater flexibility of management and to avoid some of the administrative constraints under which the Lusaka City Council operates. The core of the operating method was the Management Team and Field Team approach, and it attracted highly qualified staff. This contributed substantially to the Project's exceptional record. A najor early concern arising from this approach was that the Project would become so isolated as to be difficult to integrate into normal government structures after completion of the Lusaka program. The independence of the Housing Project Unit, and the fact that it was responsible only for the capital project caused problems in setting up collection systems and in ensuring adequate maintenance of project infrastructure. Progress is being made in these areas, though satisfactory solutions have yet to be achieved. Still, despite initial problems, the Housing Project Unit now appears to be in the process of successful integration into the Lusaka City Council. Most Zambian staff have been transferring 2-6 to the Council, taking with them many of the new organizational concepts. The concept of a Management Team, with its interdisciplinary approach, has proved to be a very effective organizational scheme, ensuring that a wide range of viewpoints, both social and technical, were taken into account in project implementation. This approach seems to have been more efficient than the traditional segregation of activities where they are coordinated only sporadically. The Field Team approach seemed to work equally well, being an effective link between management and community, though running the risk of making frequent management visits to project sites seem unnecessary. Grass-roots participation in planning and implementation was a high priority objective in the view of the Zambian government, and observers consider the very high level of community participation achieved by the Project to have been one of its most successful aspects. An indicator of this success was the ease of convincing 8,000 families to leave their homes and move to overspill areas where they would build new houses at their own expense. Very little resistance accompanied this transition, even in settlements with a history of social and political unrest. Good relations with the community were further evidenced by the e2fective community Road Planning Committees. Many of them have worked so well that the groups involved spontaneously decided to maintain themselves as community organizations after their initial functions were fulfilled. The cost of administrating a project like the Lusaka Urban Shelter Program usually accounts for about 20% of total project expense. This fairly high proportion was the estimate at the 2-7 design stage. (It is within the limits experienced in the Botswana SHAAs.) In fact, when the additional investment made by project participants is included, the proportion of total project investment represented by administration falls to an acceptable 17%. 3. Selection of Participants and Affordability One of the main problems in selecting participants was a steep inflation rate that meant income limits specified in 1973 to ensure access for the poorest families were no longer appropriate by 1977. For this reason, a delay occurred whenever it was found that very few applicants had incomes below the median target income - initially 70 Kwacha. Each time this happened, the selection process was held up while income limits were redefined, because every effort was being made to ensure the project's accessibility to the lowest income families. In Lilanda, a typical sites and services project, about 58% of selected families come from the poorest 30% of urban families; in Matero, a more expensive project, 36% of families are in the lowest 30% of the urban income distribution. An administrative difficulty that caused delays in selection was a lack of coordination between the Project staff and government officers responsible for approving selections. The government review committee's schedule was not sufficiently flexible to mesh with the Project's ongoing selection process. Although income distribution data for Zambia is not very reliable, Table 1 provides estimates of family income distribution in Lusaka by deciles for 1980. 2-8 TABLE 1. ESTTNATION OF THE LOCATION OF -PROJECT PARTICTPANTS ON TIlIE LISAKA INCOME DISTRIBUTION Cumulative percentage of project particpants 1n cach decile Monthly Income decile MATERO (typical LILANDA (typical GEORGE (typical. of urban Upper limit of the normal sltes and Basic sites and upgrading household decile (Kwacha) service project) service project) projecc) 0 -10 74 6.3% 19.0 % 34A 11 - 20 100 16.9 36.4 59.8 21 - 30 126 32.8 . 55.1 70.3 31 - 40 150 48.8 65.4 78.9 40 - 50 183 59.7 76.2 86.8 51 - 60 218 69.2 83.5 90.4 2-9 Table 1 also presents the estimated distribution of family incomes of beneficiaries in George - considered as a typical upgrading project; in Lilanda - a typical basic sites and services project; and in Matero, a typical normal sites and services project. It is evident that the George project is serving the lowest income groups, as 70% of its participants are among the poorest 30% of urban families, and 60% fall within the poorest 20%. In Lilanda, which is expected to attract a slightly higher income group, 55% of the families are in the poorest 30%, and 76% are in the poorest half of the population. Matero incorporates a wider range of income groups, with only 60% of its beneficiaries falling in the lower half of the income distribution. These different income distributions in the various types of project mean that the total program offers a wide range of options, and consequently appeals to a substantial proportion of the urban population. 4.Mutual Help and Community Involvement in Planning and Implementation The project design attached gZeat importance to community participation in all stages of planning and implementation, and invested considerable resources to this ened. It is difficult to evaluate systematically the costs and benefits of this effort, so only a few key indicators suggested by the research will be mentioned here. First,community involvement seems to have minimized opposition 2-10 to the project in squatter areas that were traditionally centers of unrest, and the site of many riots. The potentially disruptive nature of the project, its displacement of so many families to overspill areas, meant that it ran the risk of meeting active community opposition. However, such opposition was rarely seen, and the whole movement to overspill areas proceeded smoothly. Second, a high level of genuine community participation at the planning stage, particularly in Road Planning Committees, resulted in modifications in planning and layout of the roads. Many of the original Road Committees have since taken over other decision-making functions and continue to play an active part in community life. Mutual help construction projects appear to have been less successful. There have been several cases where considerable sums were earned by the community and used to build community facilities, such as clinics. But in most cases, community involvement did not facilitate the execution of small projects. An area where a more considered committment should have been made to community involvement was that of ensuring monthly payment of service charges. The community was involved only at a late stage, when problems had already arisen. Closer cooperation between local politicians and project administration might have eliminated these difficulties. Chapter Three: OPERATIONS 1. Use of Self-Help in Housing Construction and Upgrading The original intent of the project was that families would do most of the house construction themselves. It was assumed that a large pool of surplus labor existed, and that participants' potential earning power was low. In fact, with the exception of upgrading projects, where the amount of physical work is minimal, most families have hired labor to carry out at least part of the construction work. Participants commonly act as their own contractors, directly hiring and supervising workers, rather than subcontracting the whole process to a commercial contractor. There are several reasons for the general use of hired labor. First, unemployment is low enough that most people have employment constraints on their time. Second, many families knew they did not possess the skills to construct their entire house by themselves. Finally, the Housing Project Unit created an incentive to hire labor by encouraging families to move into their new dwellings as quickly as possible. Although initially considered a weakness of the project, the extensive use of hired labor became a positive factor, generating a substantial demand for labor and producing substantial income for small building contractors. 3-2 2. Material Supply Stores and Material Loans Supply Stores Studies conducted in 1977 identified various problems with the operation of material stores. Families were having to wait an average of three hours per visit, and were spending up to 25 hours per week queuing in shifts to obtain materials. There were problems with staffing: not enough people working during peak hours and idle capacity the rest of the time. Staff were often not well briefed on the objectives of the program. Materials were often in short supply or unavailable, and there was inadequate transport for their delivery. Because of these factors, a lack of publicity, and the small scale of the loans available, a high proportion of families initially did not apply for building material loans. Recommendations made on the basis of the 1977 studies included the reorganization and briefing of staff, provision of transport to deliver materials to groups of five or more families, faster preparation of invoices, and more regular working hours. These recommendations were implemented and, according to follow-up studies, produced considerable improvement in the operation of the program. Theft, including armed robbery, has been a continuing problem. One possible solution might be to centralize the stores so they can be better guarded. Such a move would also reduce costs by reducing the number of stores to be built, but it would also have 3-3 the disadvantage of making some families travel further to collect materials. Material Loans Despite administrative difficulties in the operation of the material stores, the loan program tied to it proved to be a key part of the Project. Most families demonstrably had no access to alternative sources of finance, and without loans would probably not have been able to complete or consolidate their houses. Upgrading ,loans were terminated when it was found that not much could be done with a 100 Kwacha loan. The adequacy of that figure was a design assumption rendered inappropriate by progressive inflation. As the amount of these loans could not be increased without substantially limiting the number of beneficiaries, it was finally decided to restrict loans to those in overspill areas. 3. House Construction and Consolidation Despite the lack of experience among projlact participants and even staff, despite rising costs, unstable incomes, and continual shortages of materials, the house construction program progressed very smoothly. As of March, 1980, approximately 7,600 houses have been built in the overspill areas. This figure is impressive in light of the previous history of house construction in Lusaka. 3-4 The construction of a new house has taken on average two months time, at a cost of about 600 Kwacha (compared with 6000 Kwacha for the cheapest contractor-built public housing). Including the average of one month in which families lived in temporary shelter before beginning construction of the regular house, the whole process of moving from an original dwelling to a new house took only about three months. The speed, economy, and smoothness of this transition was truly impressive compared with the results of most slum clearance programs. One component that did not operate well was the use of self-made materials. It was expected that extensive use would be made of soil and cement blocks produced by families themselves. Such activity was expected to contribute to a reduction of costs. In fact, very few families made their own blocks. Most preferred to buy more expensive ready-made elements from the material store in the project site. In some cases, this preference was due to problems with the production and quality of blocks people attempted to make. More often, it was the result of pressure to complete houses as rapidly as possible, and of the fact that families had less time available for block-making than had been estimated. In any case, many preferred to pay more and be sure of better quality, and a more permanent house. Another factor was that the additional cost of higher quality blocks can often be recouped through higher rents. Thus the use of relatively expensive ready-made blocks does not seem to have resulted in affordability problems. Despite problems in the operation of material stores, virtually 3-5 all families obtained materials from the stores. The slowdown in the rate of house consolidation after the discontinuance of the loans proves the necessity of adequate funding as a stimulus to the construction process. Chapter Four: PROJECT DVACT 1. Impact on Families, The Community, Employment Families and Community Zambian government planners early expressed concern that the Project might have the negative effect of encouraging economically marginal groups to c ntinue in the city, attracting migrants from rural areas and adding potential slums to the city's already inadequate housing stock. All available evidence runs counter to these concerns. Most Project beneficiaries had lived in Lusaka a long time before it was begun. When asked their reasons for moving to Lusaka, the vast majority of migrants indicated a search for better employment as the principal reason. Almost no one cited better housing as a factor in the decision to migrate. Unemployment levels are very low in all project areas, and the occupational distribution appears to be similar to that in other areas of the city. Project areas are economically very dynamic, with income being generated both through house construction and through rentals, the latter being an indication of high-quality housing. The Project has produced a considerable improvement in the quality of housing and in access to basic urban services. Although no systematic survey of roads have been conducted, there are a number of indicators of the impact of improved roads. The volume of travel from such areas as George and Chawama to Lusaka has increased 4-2 considerably. Small businesses now find it easier to be supplied with goods that are in demand because delivery vehicles have better access. An increasing number of employers are willing to provide transport for their employees now that access is easier. Where roads have deteriorated, this appears to be due to construction and maintenance problems rather than to deficiencies of design. Complaints have been that too few lights have been provided and that they are not bright enough to provide security at night. Most families seem satisfied with communal water supply, and amoig poorer families especially, there seems to be little demand for individual water connections. Their only complaint is against the practice of cutting off the water when one or more families are in arrears. The installation of water borne sewerage does not seem to be a high priority among project participants. Garbage collection has suffered from the fact that the Housing Project Unit was originally responsible only for the capital project, there being no adequate provision for its maintenance of services and the infrastructure. The vehicles provided as part of the project component have deteriorated rapidly due to maintenance problems and the difficulty of getting replacement parts. In upgrading areas, there is the additional problem of no provision for inner roads, limiting garbage trucks' access. The question arises whether a simpler technology could be found to eliminate the need for inner roads as an essential 4-3 component of the garbage collection system. The inadequate provision of this service affects the willingness of families to pay charges for services. Businesses It was expected that the projects would generate income and employment both directly, through the provision of sites for light industry, and indirectly through the generation of demand for labor during the house construction process. The provision of plots for small industries overestimated the demand. Out of 100 commercial plots advertised in Chawama, George, and Matero, there had been only 31 approved applications, as of March, 1979. Of these, only 10 had completed their structures, a further 13 were in the process of building. There are apparently several reasons for the low rate of response to this program. The lack of business loans meant that business persons had to rely on their oiwn resources or solicit outside loans. The high building standards set by the Housing Project Unit and the Lusaka City Council discouraged many businesses, especially those without access to building material stores. Many plot locations were remote and lacking transport facilities to bring goods and customers to them. Finally, it seems that advertisements were not sufficiently detailed to explain to interested business persons exactly what was being offered. One type of business that has flourished is the market. 4-4 The question arises whether it was necessary to include the provision of markets in the Project. Studies show that markets have evolved spontaneously, without Project assistance, and that they constitute another area where costs might have been avoided without jeopardy to the economic activity within project communities. Employment Although formal generation of new employment has been very slow, a substantial amount of employment and income were generated by the hiring of labor during the processes of house construction and upgrading. In the sites and services projects, more than 85% of families hired labor, and even in upgrading areas, over a quarter of the families used some hired labor. It is estimated that the total project generated a demand for approximately 8,000 man/months of labor, and resulted in over $1 million of income to labor. There is also evidence that rental income has increased within projects, to the benefit of those poorer families who may get up to 25% of their income by sub-letting a part of their house. Many families' food expenses will have declined at the same time because of the widespread cultivation of gardens within the projects. 4-5 2. Cost Recovery Administrative Problems One area of difficulty has been the relations between the Lusaka City Council and the United National Independence Party structure. Initially, an attempt was made to organize upgrading areas through Ward Development Committees which would have been responsible to the City Council. In practice, the Party structure was much stronger and better organized in the squatter areas and the decision was made early on to work closely with it. This course had the advantage of promoting the projects' popular acceptance and the smooth transfer of families to overspill areas. The disadvantage was that the Lusaka City Council, responsible for cost recovery and maintenance of services, tended to be somewhat marginalized. It seems that conflict would be inevitable between administrative agencies and the political organization seeking to consolidate its power by siding with the community against local government authorities. At first the political situation made it difficult to apply sanctions to defaulters, but the City Council has since realized the need for systematic cost recovery and has been making impressive progress in putting it into practice. Although cost recovery is still regarded as one of the problem areas of the Project as a whole, the repayment record is already considerably better than that of many Lusaka City Council projects. (In some past cases, beneficiaries refused to pay at all.) One difficulty has been that of keeping records of which families are 4-6 in arrears and of providing offices or other convenient mechanisms for making payments. At first it was thought that the relatively high default rates were due to families'inability to pay, but a more detailed analysis showed this not to be the case. Research findings indicated that many of the defaulters had been paying much higher monthly rents before entering a project, and had private landlords who would evict them if they failed to pay. Future studies will reveal whether the new political committment to cost recovery will fulfill its current promise. Community Facilities Due to cost escalation, it has not been possible to provide all of the originally proposed community facilities. The community centers that were built have proved not to be very popular, and are generally underutilized. Given their high cost, it might have been better to have eliminated them in favor of more popular services such as schools and clinics. 3. Impact on the City The Project has made a direct physical impact on the city by producing 12,000 new housing units and upgrading the services enjoyed by more than 30,000 families. Comparisons of Project objectives with results achieved are summarized in Table 2. TABLE 2. COMPARISON OF PROJECT OBJECTIVES AND ACHIEVEMENTS AS OF OCTOBER 1980 OBJECTIVE ACHIEVEMENTS COMMENTS Upgrading Provide basic services to 29,000 Basic services provided to families 30,770 families Provide communal standpipe water, 17,000 families are paying roads and security lighting to service charges for these 17,000 families services Service 7,215 residential plots 7,215 plots serviced in overspill areas Sites and Services Service 1,200 "basic" plots 974 serviced Intense inflation inhibited the participation of low-income Service 3,200 "normal" plots 2,687 serviced families and unanticipated laid acquisition problems produced - delays. Building Material Loans Provide 17,000 loans of K 100 1,710 improvement loans; The improvement loan component in upgrading areas; 8,800 loans 6,257 resettlement loans; was terminated because K 100 of K 250 in overspill and "basic" and 1, 025 sites and ser- was too small an amount to sites and services areas; and vices loans were provided cover rapidly rising improve- 3,200 loans of K 525 in "normal" ment costs, sites and services areas Community Facilities 18 primary schools 8 completed Delays were caused by infla- tion and cost escalation but 17 multi-purpose community centers 6 completed additional funds have been ap- proved for the HPU to complete 3 health centers none to date community centers, clinics, aid lighting components. The min- 17 markets 3 completed, 1 contract istry of Education has accep- defined ted responsibility for school construction within the projet. Source: HiU Quarterly Report, March 1980 and updated information. 4-8 The Project has had an important effect on the city's social fabric by locating project sites near middle and upper class areas. Within the projects themselves, social segregation based on income is also breaking down, as families with a wide range of incomes cooperate in matters of common interest. It was intended that the projects should produce a revenue surplus for the Lusaka City Council, but due to the default rates on loan and service payments, it has so far been a financial strain on the Council. The projects are producing an estimated 940,000 Kwacha per year in revenue, while the City Council is expected to pay back 1,900,000 Kwacha per year to the central government. Despite problems thus far, if cost recovery keeps improving at the current pace, the projects can become a major source of revenue for the City Council. The legalization of the squatter settlements has greatly increased the potential tax base for the City Council, something that will be of long-range financial benefit. The 0roject has also created the need and the conditions for more dynamic urban management. Because of their size, the city has been forced to approach the management of the projects in a highly systematic way. The current efforts being made to improve cost recovery are an indication of the Project's impact on city management. Even in sectors of the city other than the project sites, the Project's impact on transport is seen. The increased demand 4-9 for transport has outstripped the capacity of the public transport authorities and is thus encouraging activity in the private transport businesses. Finally, the Project can be said to have raised the level of political participation in communities without raising the political tension. Increased grass-roots participation in decision-making has had important effects on the organization of the Party and on the way politicians understand their roles. The Project has also made officials aware of the squatters as a political force, increasing the influence of these communities in local and national politics. 4. Impact on Housing Policy By producing a significant increase in the housing stock, the Project demonstrated the feasibility of providing low-cost housing the low-income population can afford. As a result of its performance, the upgrading and sites and services concepts have been widely accepted by policy makers. They now form a central part of Zambia's Third National Development Plan. The government is also using the upgrading model in a new project in Kalingalinga that is receiving financial support from the German government. At present, more tangible evidence of impact on housing policy is difficult to obtain because the economic crisis in Zambia is causing all housing projects to be curtailed.