Algeria - Housing Sector Report

Document of The World Bank FOR OFFICIAL USE ONLY MICROFICHE COPY CONFIDENTIAL CONFIDENTIAL Report No. 10435-AL Report No. 10435-AL Type: (SEC) CHOUCAIR, / X32434 / H7083/ EMTIN DEMOCRATIC AND POPIMAR REPUBLIC OF ALGERIA HOUSING SECTOR REPORT April 14, 1992 Infrastructure Division Country Department I Middle East and North Africa Region This document has a restricted distribut*on and may be used by recipients only in the performance of their officiax huties. Its contents may not otherwise be disclosed without World Bank authorization. DEMOCRATIC AND POPULAR REPUBLIC OF ALGERIA HOUSING SECTOR REPORT CONTENTS EXECUTIVE SUMMARY .............................................. I INTRODUCTION ............................................ 1 II OVERVIEW ................................................ 2 A - Background ....................................... 2 B - Current status of the sector ..................... 2 C - The transition to a market economy ............... 3 D - Impact of economic reforms on the housing sector . 3 III HOUSING SECTOR REFORMS .................................. 5 A - Objectives ....................................... 5 B - Constraints on achieving objectives .............. 5 C - Recent reforms ................................... 5 D - Assessment of the housing reform program ......... 8 E - Sequencing further action.........................20 List of Tables: Table 1: Status of housing reforms and further action proposed .......... 9 Table 2: Coordination of housing reforms with macroeconomic adjustments . 11 Annexes: ANNEX 1 The current status of the housing sector ANNEX 2 References This report was prepared by Yousset Choucair (Senior Urban Specialist) with the assistance of Dominique Achour (Consultant) and Catherine Farvacque (Urban Planner). Hanna Matras (Consultant) provided technfcal editorial support. Eileen Fredriksen res responsible for translation Zrom French of background reports, and for the typing and presentation of this document. DOC. J/K:\CBOUCAIR\GRENCV.ALG\EE\AX1\AY2\ YChoucair:EF (4.13.92) LIST OF ACRONYMS AADL: (Agence de l'am6lioration et du d6veloppement du logement) - Housing Improvement and Development Agency APL: (assistance personalisde en logement) - personalized housing assistance CNEP: (Caisse nationale d'6pargne et de pr6voyance) National Savings and Reserve Fund CNL: (Caisse Nationale du Logement) - National Housing Fund EFSAL: Enterprise and Financial Sector Adjustment Loan EPIC: (6tabliss ment public A caract&re industriel et commercial) - industrial and commercial public establishment EPLF: (entreprise de promotion du logement familial) - family housing development enterprise ERSL II: Second Economic Reform Support Loan OPGZ: (Office de promotion et de gestion immobilibres) - public housing and development agency Background 1. Shortly after Its independence in 1962, Algeria experienced massive rural-to-urban migration which rapidly consumed its urban housing stock. Since 1962 the country has developed an acute housing shortage, which has been worsening over the past several years. The explosive population growth during the period 1962-1990 - 2.9% overall and 5.4Z in urban areas - exacerbated housing shortages; low capital Investment in public housing and legal constraints on the private sector supply side have suppressed the response to the growing demographic pressure and urbanization. 2. Since the end of the 1970s, the Algerian government has attempted to address the problem by a significant increase in investment in public rental housing which, since 1979, has accounted for up to 15X of the total public investment portfolio. In spite of these efforts, housing shortages persist and are esp9cially acute in urban areas. The annual housing output, at 3.3Z of the existing housing stock, is well below the level required to reduce the existing housing backlog; moreover, the existing stock has been deteriorating rapidly. 3. For the past thirty years, the State-controlled housing allocation system has not attached proper weight to the economic cost of the resources used and household preferences, which led to inefficiencies in all components of the sector, from land management to housing production to maintenance of the existing stock. This has resulted in shortages and distorted housing price-to-income ratios while costly subsidies continue to consume a substantial share (5.6X in 1989) of the national budget. Housinq and the Economy 4. Algeria is in transition to a market economy. The economic reform program, under implementation since 1986, has successfully reduced macro Imbalances and established a legal framework for the restructuring of existing institutions. Public enterprises are being prepared to become financially independent, the Central Bank has become an autonomous body dealing with monetary policy, and commercial banks can lend to any sector and, at the end of the transition period, will manage their budgets without Intervention by the Treasury. 5. The economic reforms incorporated into the Government's economic transformation program will, in the long term, have a positive impact on the structure of the housing sector. However, during the transition period the macroeconomic stabilization measures have exacerbated existing problems. The liberalization of prices has induced a dramatic rise in construction prices, while real wages have fallen, thus resulting in increasingly unaffordable price-to-income ratios. At the same time, interest rates on mortgages are being raised to reflect inflation, causing the cost of housing finance to increase substantially, well beyond the means of most households. 6. Given the extensive linkages between the housing sector and several other sectors of the economy, housing can contribute significantly to the success or failure of economic stability and economic growth programs. The Algerian Government, recognizing both the economic and social dimenslons of the housing sector, has launched a major housing reform package to be Implemented in tandem with the on-going transition to a market economy. The short-term goal is an increase in housing construction which would also help absorb some of the unemployed workers (in 1989, unemployment was at 23%). Problems in the Current System 7. The housing supply: The supply system is dominated by inefficient State-owned enterprises. Because of legal constraints, there are no incentives for the private sector to develop housing for sale and rent. Land and housing development systems are over-regulated, and the provision of infrastructure highly deficient. 8. &using finance: A distorted and unsustainable mortgage finance system is monopolized by one State-owned institution. The system's restructuring is constrained by a lack of clearly defined and protected property rights. With increased Lnterest rates, the cost of finance has become prohibitive for all but the most affluent households. While high inflation persists, no mortgage instrument that would be appropriate in such conditions has been developed. 9. Subsid1gs: Mortgages are supported by a highly regressive interest rate subsidy system that is inequitable and unsustainable. The national budget also finances the deficit incurred by State-owned housing establishments (OPGI) in the maintenance of the public rental stock. Housing Sector Reforms 10. Housing reforms were initiated in 1990, but the main legislative package for the sector was enacted in May of 1991. In transforming the sector to a market-oriented system, the Government's long-term objectives are: (1) to develop a housing system where most households pay the full cost of their housing while government assistance is clearly targerted to those with special needs and at least cost to the economy, (11) to create an environment where suppliers of housing are responsive to demand thereby providing households with a greater choice of dwelling types and prices. The new laws address the main constraints to achieving thess objectives and introduce the following reforms: - 111i 11. State withdrawal from housing producrIon and raintenance: The newly autonomous State-or-ned housing establishments (OPGI) are being transformed into financially autonomous enterprises and have been made owners of the public rental stock; they are also expected to repay their outstanding debts to the Treasury and the national Housing Bank (CEP). 12. Gradual liberalization of the rental market: Rents in the public rental stock will be increased to cover capital investment and maintenance costs. The law now allows for eviction of non-paying tenants. New legislation encouraging the emergence of the private rental market is being drafted. 13. Restructuring of the re=essive subsidX system: The generalized, regressive Interest rate subsidy for public developers and home buyers and maintenance subsidy for renters have been restructured and replaced with a new, more targeted Housing Assistance scheme. Government's income-related assistance to home buyers will include up-front grants, extended repayment period or interest rate subsidy. The Housing Assistance provides reimbursements of rental charges exceeding 15X of a tenant's household income. 14. Liberalization cf the housing finance system: The division between the housing bank (.;2F?) and the newly created housing fund (CNL) establishes the institution separation of the subsidy functions from the credit function of the CNEP. VL will be the Implementing agency of the the new Housing Assistance program. 15. Liberlizatio of the land markets: The monopoly of local government over !and transactions has been eliminated. The new law allows for free private-to-private transaction. among land owners, with local government preemption righrs in exceptional cases. Land management and all functions pertaining to real estate will be performed - on behalf of local governments - by local land development agencies. 16. Ratlonalization of urban land use planning and management: The previous inflexible, costly and cumbersome land-use and planning regulations and practices have been replaced by regulations of the new 1990 Town Planning Act. In 1991, further regulations were introduced, including new building standards, a simplified development permit procedures and a cost-sharing formula for the provision of trunk infrastructure. Recommendations for Further Action 17. Creation of mortgage markets: The commercial banks should be encouraged to compete with CNEF for mortgage lending. Liberalization of interest rates would remove the first constraint to such competition. The Government should also ensure that the legal system permit the enforcement of * foreclosures in cases of default on loan payment. The credit system as a whole should be supported by a Mortgage Guarantee Fund, which would become the resource fund to mortgage lenders. Finally, mortgago lenders should plan on introducing a mortgage instruAent appropriate in an inflationary environment. - 1v - 18. Targeting subsidies: The new Housing Assistance scheme comprises, among other elements, preferential interest rates for households with incomes up to 4 times the minimum guaranteed wage. In addition to th-ir regressive character, Interest rate subsidies are an unpredictable, long-term budget liability. It is recommended that the Impact of the Housing Assistance program on the government budget and all affected parties be carefully assessed. Another element of the existing subsidy system, the below-market sales of State-owned rental units, will likely be curtailed by the racently announced financial autonomy of State housing enterprises (OPGI). 19. Pro2erty rights development: More attention will have to be focused on (1) further clarification of property rights, and (11) the restructuring of tenancy rights. The first issue, will help e-Pierate regularization of the large stock of informal housing. T .we, I issue will address the transferability and mortgageability of occupancy - ficates introduced in the 1990 law. Unclear ownership and property use rights and strong tenancy rights effectively prevent 4he emergence of a private rental sector. 20. Reoranizatio._of the State rental sector: The role of the newly restructured OPGI in the management of the rental stock is not as yet clear. Given the weak revenues from the sale of rental units, rdoayment of their outstanding debt to CNEP is likely to be a problem. To facilitate the further divestiture of the State-owned housing stock and maintenance of what remains, the OPGI should consider selling entire apartment blocks to new, cooperative or private maintenance organizations. Also, alternative types of rental housing, which avoid the spacial concentration of low-income tenants, should be encouraged. 21. Provision of Infrastructure: In order to Implement the new legislation on cost-sharing for trunk infrastructure, it is necessary to identify the financial and fiscal instruments which would ensure a profit on investment in services. Consideration should also be given to reinforcing the management and implementation capacities of the local government land development agencies and to reducing the cost of servicing plots of land by relaxing the present standard for plot subdivision and infrastructure. 22. Land and housing develoment: Local governments, with no proper mandate and largely inadequate capacities, have been given increased responsibilities for land use management - responsibilities that will multiply with the liberalization of land markets. Therefore, they will need considerable technical assistance and institutional strengthening to ensure efficient implementation of the new legislation. The mandate of the newly created land development agencies should be clarified. In terms of the new land use regulations derived directly from th; French system, we recommend that a careful assessment of their applicability and costs to developers be performed. -v - Reform Implementation and Seaencing 23. The main thrust of the housing reforms has concentrated on modifying the legal and institutional framework with a view to (1) facilitating State withdrawal from the direct supply of housing units and housing credit, and (11) creating an enabling environment for private sector development. The impressive legislative effort mounted by the government has encompassed most relevant sectoral issues. However, since most of these reforms enacted in 1990 and 1991 have not been Implemented yet, significant action is now required to Implement them. Moreover, additional reforms are also required to achieve the ultimate objective of a well functioning housing me, xet. 24. To ensure their success, the reforms should be properly sequenced. Analysis clearly indicates that priority should be given to unblocking the supply response prior to stimulating demand. Further action should therefore aim at removing impediments to the supply of housing units, with particular emphasis on promoting the role of the private sector. I. INTRODUCTION 1.01 This paper is intended to describe and assess the progress made in reforming the housing sector in Algeria and propose a framework for possible Bank assistance in the sector. It is based on discussions initiated with the Algerian Government in November 1990 and reflects the status of regulatory and legislative reforms enacted up to May 19911. After its discussion and clearance within the Bank, this paper will be discussed with the Algerian authorities in early April, 1992. 1.02 The overall assessment of the reform process is made with particular reference to the seven compon-nts considered as key elements of an enabling strategy for the housing sector2, namely: (a) the development of mortgage finance; (b) the targeting of subsidies; (c) property rights development; (d) the provision of infrastructure for residential land development; (e) the regulation for land and housing development; (f) the organization of the building and land development industry; and (g) coordination with macroeconomic adjustment programs. 1.03 The analysis contained in this paper also relates the elements of housing policy to the macroeconomic structural adjustment priorities with particular reference to reforms affecting foreign trade, price controls, the financial and enterprise sectors, as well as taxes and social policy. A complete list of references is included in Annex 2. , / Hvusin : Enabling Markets to Work, A World Bank Policy Paper, November 19, 1991 (third draft), nw. -2- II. OVERVIE A. Background 2.01 Soon after independence in 1962, Algeria experienced massive rural-urban migration which rapidly consumed the urban housing stock. Between 1962 and 1990 the pace of urbanization continued unabated and the population more than doubled tn reach 25 million, with 44% under the age of 15. During that period of rapid population growth most public investment was concentrated on industrial plant and infrastructure with minimal attention to housing. Also, private investment was negligible. Owing to the existence of legal anA fiscal constraints on private developers for rental dwellings, no private rental construction was carried out. The formal "self-help" construction3 activity did not develop since access to land and construction materials was controlled by public development agencies and public construction companies. Since 1979, the Algerian Government has attempted to boost housing supply by means of a major budgetary effort (up to 15% of the total public investment portfolio) in favor of public rental housing. However these measures had a very limited impact: acute housing shortages persist particularly in the urban areas, severely restricting labor mobility and creating social tensions. Moreover there has been a marked deterioration of the existing housing stock. B. Current status of the sector' 2.02 Housing shortages are amongst the prime instigators of political and economic reforms initiated in 1988. The present supply system is extremely inefficient: since 1980, it continues to consume 20% of total investments (4.7% of GDP), and delivers at best 3.3% of the existing housing stocks, representing only 56% of the goals set by the 1980-84 and 1985-89 five-year plans. At the same time the heavily regulated rental market exacerbates the housing shortage: rent controls for State-owned housing and strong tenancy rights - for private and public housing - including protection against eviction, constitute a serious deterrent to the private sector, which holds an estimated 18% of the housing stock vacant. The distorted pricing structure is reflected in the very high housing price-to-income ratios : the below-market administrative prices of publicly-produced units are in aggregate terms 8 times the average annual household incone. Considering that these units are adm.inistratively prices at below-marke,: prices, the real housing-to- Formal "self-help" construction refers to the construction by private individuals of dwellings for their own use on privately-owned land and in accordance with established zoning and building construction regulations. &/ A detailed description of the current status of the housing sector is included in Annex 1. Normally, an additional 4% of the existing stock is required to maintain a balancel housing stock in a stationary economy. However, it is not sufficient in an economy where population is growing rapidly (2.91 per annum) and is in clear imbalance with its real estate market. -3- income ratio would be at least three times higher if market prices were used6. Mereover, the subsidized mortgages at 6% interest rates (current controlled commercial rates are 15% and 20% for short-term and long-term lending respectively) made home buying affordable to only 54% of the -households. The remaining 46% of households have to rely on a public rental market also heavily subsidized and poorly managed. Total Government subsidization of the sector, which supportdd discounted interest rate financing of housing construction by the public housing agencies (OPGI) and mortgages by the national housing finance institution (CNEP), consumed 5.6% of the national budget (2.8% of GDP) in 1989. The national budget also financed the deficit incurred by th OPGIs in the maintenance of the rental stock, where rents are adminis- wIly fixed at below-cost levels. As ment..oned in para. 17 of Annex 1, the it subsidy level would be much higher if the hidden sources of subsidies were measured. C. The transition to a market economy 2.03 Algeria is in transition to a market economy. The first important steps towards a reduced Government role took place in 1986 when income from petroleum (95% of exports) dropped to a point where it was no longer possible to maintain the high levels of public investment in industrial and social programs. The macroeconomic adjustment program which has been under implementation for some years has successfully reduced macro imbalances7 and reorganized the institutional framework for economic management; public enterprises are now independent, the Central Bank has become an autonomous body dealing with monetary policy, and commercial banks, no longer specialized, are encouraged to diversify their activities and to manage their lending activities without intervention by the Treasury. D. Impact of economic reforms on the housing sector 2.04 Macroeconomic adjustment measures are expected to have a positive long-term impact on the housing sector8. However, in the short term - while these measures are being implemented - problems in both the supply and demand sides of the sector are expected to be exacerbated. In spite of the elimination of import licensing in March 1991, the supply system is constrained by the lack of foreign exchange required to import construction W See para. 12 of Annex 1. JZ/ Inflation has been maintained below 20Z in 1990; the budget deficit was changed to a surplus and the effective exchange rate was depreciated by 1131 compared to its 1987 level. Table 2 contains a sumary of the linkages between the adjustment measures provided for under proposed or actual Bank-supported programs (ESL II and EFSAL) and the housing sector policy elements. -4- materials which axe in short supplys. Consequently, construction output has dropped below the already low levels and housing shortages are escalating. The abolition of administrative price controls on inputs induces dramatic increases in costs while real wages fall thus causing an increasingly wide gap between incomes and housing prices. At the same time, interest rates which have b-en largely negative in real terms were raised to reflect inflatinn, therefore increasing the cost of mortgage financing to a level that exceeds the financial capacity of all but the very privileged income group. Institutional reforms affec-f.6 public banks and construction enterpriseF, provide for their financial autonomy and allow them to operate in a competitive environment but do not yet provide for their privatizationlo. Other reform measures designed to create an enabling environment ior the private sector are being implemented and are expected, over the next few years, to produce the supply response in the private sector that is needed to correct the market distortions in the housing sector. However, considerable work is required to translate the recently enacted legislation into an operational mechanism. 2.05 Macroeconomic stability is an essential condition for a well- functioning housing sector. For instance, high and unpredicable inflation will aggravate the affordability issue and will i=pede the development of marketable mortgage instruments. Also, private investment in housing development would be meaningful and effective only if market-priced foreign exchange and credit were readily available. Therefore, it is important to emphasize that the longer it takes to implement the economic reform measuras, the heavier the cost to the housing sector. 2.06 Reforming the housing sector is a particularly challenging task: for many years the limited resources devoted to housing investment were allocated without appropriate reference to price and cost and without sufficient regard for efficiency or cost-effectiveness. At the same time population has continued to grow at 2.98% annually (5.4% in urban areasN. The result is an extremely unbalanced system that is under significant demographic pressure. Against this background, the implementation of macroeconomic stabilization mepaures is temporarily reducing the construction of new housing while the regulations of the old system prevent the existing stock from being used more efficiently. 9,/ It should be noted that import ratios for the economy as a whole, though low vie-h-via the 1986 pre- reform period., are high in relation to comparable countries. In the housing sector, the high level of imports is largely due to the inefficiency of the local industry (e.g. cement and steel). ],O The existing banks and other public enterprises are now owned by eight holding companies which oversee their portfolio. However the 1990 Law on Honey and Credit allows the creation of privately- owned banks and enterprises, with either foreign, local or joint capital. -5- III. HOUSING SECTOR REFORMS A. QjectivU 3.01 Recognizing housing as a major component of economic reform, the Algerian Government would like to formulate a housing market reform and implement it in tandem with the on-going transition to a market economy. The long-term objectives of the housing reform are: (a) to develop a housing system where most households pay the full cost of their housing while government assistance is clearly targeted to those with special needs, and (b) to create an environment where suppliers of housing are responsive to demand thereby providing households with a greater choice of dwelling types and prices. The short-term objectives of the housing market reforms are: (a) to increave production and reduce housing shortages by eliminating the bottlenecks in the supply system, and (b) to minimize the short-term dislocative impact of the broader economic adjustment program on the already extremely constrained housing sector. B. Constraints on achieving obiectives 3.02 The supply side is constrained by: (i) the inefficiency of the housing production system dominated by State-owned enterprises; (ii) the lack of incentives for the private sector to develop housing for sale and the reutal market; (iii) the deficiency in the provision of infrastructure for residential land development; and (iv) the over-regulated land and housing development system. * 03 The demand side is constrained by: (i) a distorted and unsustainable mortgage finance system monopolized by one State-owned institution; (ii) a regressive subsidy system that is unsustainable and inequitable; and (iii) a deficient system of property rights registration and protection. In the short term, demand is also constrained by two concurrent affordability problems experienced by households: (a) a high and increasing house-to-income ratio (house prices are rising while real incomes are falling), and (b) increased housing finance costs (if interest rates are increased to reflect market conditions in a highly inflationary environment, and no appropriate mortgage instruments exist)"1. C. Recent reforms 3.04 In 1990 and 1991 the Algerian authorities adopted a number of administrative and legal reforms to address the main constraints affecting the sector. These reforms aim at: (a) withdrawing the State from the production and management of housing units; (b) liberalizing the rental market; (c) eliminating the regressive credit subsidies to public developers and mortgage in fact, in the short term a more rational pricing in the housing sector is expected to aggravate this affordability problem and would necessitate compensation to the very poor. -6- buyers; (d) reorganizing the housing finance system; (e) liberalizing the land market; and (f) rationalizing the urban land-use planning and management system. The Government is also preparing new legislation enabling housing development by the private sector. 3.05 A brief description of the above reforms is presented below, while an assessment of the status of the reform process in relation to achieving the objectives of a mAarket-oriented housing sector is presented in Tables 1 and 2, and sections 3.C7 to 3.41. A list of the legislation and administrative decrees related to these reforms is included in Annex 2. (a) The State's withdrawal from housing production: The Government publicly announced the State's withdrawal from the direct supply of housing and started implementing its new policy with the following actions under legislation enacted in May, 1991: (i) the State-owned national housing enterprises (OPGI) are transformed into industrial and commercial public establishments (EPIC)12, (ii) ownership of the existing housing stock - half of which is already sold to private occupants - is being transferred to the newly restructured enterprises which are expected to repay their outstanding loans to the Treasury and the National Housing Bank (CNEP) from sale proceeds of housing units, and which will finance their operations with loans from commerclal banks, and (iii) at the local level, communes have started to set up land development agencies (agences foncl6res) to provide serviced land for low-income housing on a commercial basis. (b) Gradual liberalization of the rental market: Rental charges for the existing public housing stock are being increased to recover the costs of capital investment, major repairs and recurrent maintenance and operation. These increases would eliminate the general subsidies provided by the Treasury to the OPGI. The same legislation allows owners to evict tenants who default on rent payments. Also, three new pieces of legislation aimed at encouraging private sector investment in the rental market are being drafted. The first recognizes housing development as a commercial activity and removes major obstacles to the financial aspects of investment activities". The second draft law defines new contractual relationships between developers/owners and renters with a view to reducing the need for litigation. A third piece of legislation will establish the regulatory framework for co-ownership. An EPIC is a public agency which is officially financially autonomous but does not have full decision-making autonomy. However, so EPIC is eligible for budgetary operating subsidies it it is subject to controlled prices below costs. 13./ Currently private developers' activity is restricted to one operation of units for sale only, and requires the developer to commit a minimum of 402 of '**oject costs in capital outlay prior to obtaining camercial loans to finance the r naining I -Aance. The new legislation will eliminate these obstacles. -7- (c) Elimination of the regressive subsidy system: The generalized, regressive interest rate subsidy for public developers (OPGI and EPLF) and home buyers1 and for tenants of public housing has been eliminated and replaced with a Personalized Housing Assistance (APL) scheme. For home buyers, the new scheme is to be administered by a newly created National Housing Fund (CNL) which provides financial assistance related to the income of the household. Depending on the level of income in relation to the Guaranteed Minimum National Salary (SNXG), Government assistance includes either a lump sum payment, extended repayment period for mortgage loans, or an interest rate subsidy. For tenants, the scheme provides for reimbursement from the State budget of rental charges exceeding 15% of the household income, and applies to units not exceeding 70 square meters within a built-up area. (d) Liberalization of the housing finance system: In May 1991 the national housing finance agency (CNEP) was restructured with the intention of transforming it into an economic public enterprise (EPE), and more specifically into an autonomous housing bank5. A large part of its liabilities will be transferred to a newly created housing fund (CNL) which is responsible for administering the new Housing Assistance scheme outlined in para.(c) above. The restructured CNE" will have to compete for financial resources with -ther commercial banks which were authorized under the 1990 legislation on Money and Credit to engage in housing finance operations. (e) Liberalization of the land market: New legislation (Lol d'Orientation Fonci)re) enacted in November 1990 abolished the monopoly of local government authorities over land transactions and allows urban land owners to trade their land freely, with local authorities maintaining a right of expropriation to be exercised in exceptional cases where land expropriation is required for. implementing projects of public interest. Also land management responsibilities related to vacant urban land nationalized in 1974 are shifted from local government to local land agencies (Agences Fonci&res; Agences Locales de Gestion et de Regulation Fonci&res Urbaines). These agencies are also empowered to buy and sell real estate on behalf of local governments, classify titles to land holdings and undertake land development for low-cost housing. Local governments are made responsible for creating and maintaining an inventory of private and L4J The previous subsidy to interest rates of mortgage loans was applied an a regressive basis, i.e. the bigger the loan, the greater the total amount of subsidy, irrespective of the beneficiary's income. A detailed description of the housing finance mechanism prior to the 1991 reform is included in paras 38-46 of Annex 1. 5 The Algerian Treasury has requested the World Bank's assistance under the ongoing Enterprise and Financial Sector Adjustment Loan CEFSAL) to facilitate the transformation of the E. -8- public land and for issuing occupancy rights. Plans to update the cadastral system as the legal framework for land registration, are underway with World Bank assistance. (f) Rationalization of urban land-use planning and management As stated in the 1990 land legislation, full responsibility for land-use management was given to local governments. A separate Town Planning Act passed in 1990 introduced new urban planning instruments to replace the old, rigid and costly instruments of zoning and land use controls in urban areas. New standards for urban land use and buildings were introduced in 1991, together with simplified procedures for development permits. The latest legislation also introduced a cost sharing formula for the provision of trunk infrastructure. D. Assessmant of the housing reform program 3.06 The Algerian reform program for the housing sector would undoubtedly advance the transition to a market-oriented supply and financing system. Although it is too early the assess the impact of the recent reforms on the sector, it is possible to guide the reform process towards achieving its ultimate objectives on the basis of experience in other countries and by reference to a related analytical framework for a well-functioning housing sector. In this context, this section of the report describes the recently enacted reforms and makes recommendations on further action to be implemented. The following analysis relates the reform process to the seven components considered as key element-s of an enabling housing strategy" and comprise: (i) the creation of a mortgage market; (ii) the targeting of consumer housing subsidies; (iii) property rights development; (iv) the reorganization of the construction and housing development industry; (v) the provision of infrastructure for residential land development; (vi) the regulatory framework for land and housing development; and (vii) coordination with the macroeconomic adjustment program. 1_6 These components are identified in the World Bank Policy Paper: "Housing: Enabling Markets to Work", November 19, 1991. -9- Table 1: STATUS OF HOUSING REFORMS AND FURTHER ACTION PROPOSED Actions implemented by Further action Reform Component the Algerian authorities proposed (1990.1991) (1992-1994) 1. CREATION OF - Creation of the National Housing Fund - Transform the CNEP Into an EPE A MORTGAGE (CNL) to provide personalized subsidy with status of an autonomous bank MARKET - Restructuring of ONEP as a provider - Restructure CNEP's assets of housing credit, not subsic* - Establish a diversified network for the attraction of savings - Establish a guarantee fund - Introduce new mortgage instruments that are self-sustaining - Monitor the restructuring of the CNEP and the new Housing Fund (CNL) 2. TARGETING - Substitution of general interest rate - Reexamine the impact of new SUBSIDIES subsidies with a personalized housing conditions on buyer credit with assistance program (APL) particular attention to the redistributive - Elimination of the cap on rents so that effects of the different solutions, to at least, operating costs are recovered. accessibility for lowest income groups A 15% effort ratio of the household and the consequences on the income Is still applicable to housing accumulation of household savings measuring less than 70m2 - Assess the impact of the new subsidy system on the govemment budget 3. DEVELOPMENT OF - Preparation of new draft legislation to - Reevaluate the needs and PROPERTY RIGHTS govern the contractual relationship constraints that a redefinition of between owners and tenants ownership rights would entail - Preparation of a new regulatory - Reorganize the land registration framework for co-ownership process - Develop and apply the concept of cooperatives for buyers - Develop and apply the co-ownership formulae to facilitate the sale of OPGI dwelling units - Resolve disputes over ownership rights related to land nationalized since 1974 - Assess the value of the proposed Certificate of Occupancy, as an instrument for mortgaging and transferring property ownership. - 10 - 4. RATIONAUZATION - Transformation of the statute of the - Create mechanisms to implement OF THE OPGI to public industrial and and follow up decrees promulgated, CONSTRUCTION commercial establishments (EPIC) to redefine the role of the OPGI with AND HOUSING - Creation of the Agency for Improving greater detail INDUSTRY and Developing Housing (AADL) - Provide technical assistance to the OPGI to facilitate and accelerate their financial restructuring program * Pursue efforts to privatize the supply system. including the production and distribution circuits for construction materials - Implement financial technical assistance required for the AADL - Coordinate with the construction Industry project being prepared for World Bank assistance 6. PROVISION OF - Responsibility for planning, - Introduce fiscal instruments to INFRASTRUCTURE Implementing and financing finance the provision of infrastructure FOR RESIDENTIAL Infrastructure services is shifted from - Design and implement action on a LAND central to local government agencies cost recovery mechanism for site DEVELOPMENT - Local land agencies made responsible development services (local for servicing low-cost residential land improvement taxes) - Strengthen management and execution capacities of local government agencies 6. LEGAL AND - New property legislation (1990) - Study the impact of standards and REGULATORY - A new land management law (1990) regulations on the cost of services FRAMEWORK FOR - New legislation on land development plots LAND AND and urban planning (1990) aiming to - Assess the efficiency gains in the HOUSING simplify the procedures for land proposed procedures for land-use DEVELOPMENT subdivision and development including management building construction - Create mechanisms to implement legislation Introduced In 1990 7. COORDINATION (see Table 2) WITH STRUCTURAL ADJUSTMENT PROGRAMS - 11 - Table 2: COORDINATION OF HOUSING REFORMS WITH STRUCTURAL ADJUSTMENT PROGRAMS PRIORITY EFSAL and proposed ERSL II HOUSING POLICY Elements and Unks 1. EXTERNAL TRADE Convertibility for merchandise - Reorganization of networks for the import transactions importation of construction - Tariff simplification and reduction materials including an Increased participation of the private sector 2. PRICE DEREGULATION - Increase to 90% of the weight of - Removal of rent caps the CPI of products with - Removal of the protected housing deregulated prices savings circuit 3. REFORM OF THE FINANCIAL - Restructuring the non-performing - Establishment of sources of funds SECTOR loans to local and regional public and operating procedures for the enterprises CNL - Reorganization of the CNEP into CNL and autonomous Gaisse d'Epargne (CE) 4. TAX REFORM - Creation of a VAT system and - Clarification of the impact of corporate taxes indirect taxation on housing supply - Creation of a system for land - Use of tax incentives to stimulate evaluation and taxation investment in the rental sector - Land value evaluation for placing tariffs on investments in site development - Establishment of a data base on real estate transactions 5. REFORM OF ENTERPRISES - Transformation of the statute of - Clarification of the mandate of the the OPGI to that of an EPIC restructured OPGI and their - Restructuring of loss-making operating procedures public enterprises - Auditing of the OPGI and - Establishment of performance establishment of performance criteria for public enterprises standards for the newly established - Establishment of a stock CNL and AADL exchange 6. SOCIAL REFORM - Reform of the consumer subsidy - Improved targeting of programs system for housing assistance - Studies of the redistributive effects of the different forms of assistance - including their budgetary cost- aimed at improving housing affordability for lower-income households - Assessment of consequences of the new credit system for home buyers - 12 - (i) Creation of a mortgage market 3.07 The financing mechanism which existed prior to the decrees of 199117 is described in Section IV of Annex 1 to this document. This circuit was based on a system of protected credit which was extremely effective in attracting savings but exceedingly limited in its household lending activities. The lack of effectiveness and the regressiveness of this form of distribution of credit resources had been its main weaknesses. 3.08 It had however been noted" that the establishment of a system of mortgage credits does not call for urgent measures, but rather for the progressive setting up of a diversified network for attracting savings and for the distribution of housing credit. Indeed, the CNEP still has sufficient accumulated savings to provide as many loans as immediate demand can sustain. Counting on the leverage effect of this mass of deposits and on the reconciliation of the accounts of the OPGI, the CNEP could easily assume the role of lender to households on condition of course that its reserves no longer be depleted by financing the OPGIs or, as is now the case, the CNL. However, the high inflation may absorb household savings for non-housing expenditures, and therefore reduce the liquidity available for housing credit. 3.09 The creation of the CNL in May 1991 could rationalize the allocation of resources if it separates the subsidy from the credit functions. CNL would therefore finance the subsidy element through a direct budgetary contribution, while CNEP functions as a bank and not as a welfare institution. 3.10 The new CNEP's status as an autonomous bank would allow an appropriate intermediation mechanism since CNEP was extremely successful in attracting household savings (against promises to provide housing) while the commercial banks still do not have the networks, and qualifications, which would permit them to prepare themselves to become major mortgage lenders. These institutions could be utilized to create, in tandem, acceptable intermediation mechanisms. As a first step the CNEP could continue to play alone the role of attracting small savings by means of its extremely well established national network, while the commercial banks could place with the CNEP part.of their longer-term deposits coming from enterprises, from insurance companies and from social works funds. Then the commercial banks, too, should expand their regional coverage. 3.11 However, to make mortgage financing attractive to the autonomous CNEP, and to the commercial banks who would otherwise engage in commercial lending, two conditions will have to be satisfied: the mortgage rates should reach market rates, and, the legal system should permit the enforcement of foreclosures in cases of default on loan repayments. / The relevant pieces of legislation are listed under Item 1.1 of Annex 2. 168/ See section IV B in Annex 1. - 13 - 3.12 Pooling of mortgage risks could help encourage commercial banks to grant buyer credit -nd to lower their credit costs by reducing the risk level. A Mortgage Guarantee Fund, funded primarily by insurance premium paid by the participating lending institutions in return for reimbursement of delinquent loans is a possibility worthy of analysis. 3.13 It is also recommended that the authorities envisage the introduction of new mortgage instruments which would be appropriate in an inflationary environment. For example, the "double indexation" model which reduces the risks of loan default by keeping the payments affordable to borrowers, should be encouraged. (ii) Targeting subsidies 3.14 Prior to the May 1991 reforms, the housing subsidy system supporting demand was based on three elements19: - capped rents; - discounted interest rates; - sale of State-owned rental housing at lower than market prices. In view of the regressive character of a number of these elements and the difficulty in evaluating the redistributive effects as a whole, it is necessary to review all incentive measures to evaluate their overall economic consequences and redistributive impact. 3.15 The new personalized housing assistance (APL) announced in May 1991 is adjusted according to household income as described below: Household Income Form of Assistance (by CNL) Income lower than twice the minimum - Up-front lump sum financial guaranteed wage assistance - Extension of the loan amortization period - Reduction of interest rates income between 2 and 3 times the - Extension of the loan amortization minimum guaranteed wage period - Rediction of interest rates Income between 3 and 4 times the - Reduction of interest rates minimum guaranteed wage 19/ See Annex 1 for a more detailed descript. a of ..be diverse measures in force before May 1991. - 14- These measures are also accompanied by a lifting of the cap on rents to enable these rents to cover at least OPGI operating expenses. A ceiling of 15% of a household's income devoted to rent is still applicable to housing units measuring less than 70m2. 3.16 It is not yet clear how the resale prices of housing units sold by the OPGI will be determined. It is however likely that their new status of public industrial and commercial establishment (EPIC) will oblige them to adjust resale prices to market prices. 3.17 Though the concept of this reform is sound, it seems potentially very expensive: it uses 15% of income for household contributions which is half the rate used in OECD countries, and it continues to provide interest rate subsidies. 3.18 To clarify the real impact of this reform, a study of the fiscal, redistributive and allocative effects of the proposed measures should be prepared urgently. The study would clarify how the new scheme would be funded and administered, including the form, degree and duration of subsidies. Such a study should clearly identify both winners and losers from all the measures envisaged, and should differentiate between the various actors (consumers, producers, financial institutions, local and central authorities). In particular, the study would assess the compatibility of the proposed interest rate subsidy with the objectives of the financial sector reform calling for the liberalization of financial market instruments and their separation from other transfer mechanisms. (iii) Property rights development 3.19 Two decades of nationalization, the administrative allocation of land often not recorded, the sprawl of informal settlements have contributed to a situation of unclear property rights. Regularization efforts had been launched by the government without much success in 1985. The 1990 Lands Act ("Lol d'Orlenratlon Fonci6re") again attempts to address this issue by proposing the delivery of occupancy rights - or certificates - if proof of occupation can be given. However, issues of transferability and mortgageability of these rights have to be addressed. Also, the inadequate procedures for property transfer and compensation under the old system have generated a large backlog of unresolved disputes and the existing judicial institutions need to be strengthened in order to process these claims. 3.20 For a price system to fulfill its principal function - the efficient allocation -if scarce resources - property rights on these resources must be clearly identified for the benefit of other consumers and of the public authorities. This is a fundamental requirement which is rarely sufficiently clarified in housing policy statements. Ill-defined property and use rights for private owners and lenders as well as for different levels of government, result in innumerable difficulties which hinder the implementation of the new market oriented policies and instruments. - 15 - 3.21 Aware of the need to strengthen the legal base for issuing certificates for property registration, the Algerian Government is embarking on a major operation to update and extend the coverage of the national cadastre, with World Bank assistance. 3.22 The negative effects of the insecurity of housing ownership rights are described in Annex 1. From these effects it can be concluded that the creation of a private rental sector would need to be preceded by a complete rethinking of the framework of residential rental contracts. This is a prerequisite for the emergence of new suppliers of rental services (new stock, stock under construction), for a more profitable use of the assets of local public bodies and for investing in the maintenance and renovation of existing stock. 3.23 In response to these concerns, the Algerian authorities have prepared a draft law to help improve the management of relations between owners and tenants. For this draft legislation to provide a sufficient basis to undertake the fundamental reform required, it should aim at providing the private investor with adequate assurances that market rents can be charged and evictions will be enforced if renters default on payments. (iv) Reorganization of the building and housing development industry 3.24 The construction industry plays a major role in the Algerian economy. In 1988, its represented 16.6% of GDP - compared with 8% in the other Maghreb countries *, 70% of the national GFCF, and employed 16% of the national work force20. However, the industry suffers from serious inefficiencies in the use of resources and in the manufacturing process which cause excessive costs of housing units. Aware of the need to rationalize the construction industry within the framework of economic reform, the Algerian Government is preparing, with assistance from the World Bank, a Construction Industry Project with the following objectives: (i) to ameliorate the operational environment of the construction industry; (ii) to increase the industry's capacity to respond economically to the demand for construction services and materials; and (iii) to facilitate the introduction and development of private firms in the sector. 3.25 Most of the public housing development activities are still the responsibility of the OPG121. Howeyer, it is recognized that the roles and functions of the OPGI would need to be redefined to identify the market windows which could result in a profitable diversification of their activities (maintenance units, consultancy firms, promotional services, construction yard management, management of real estate). By means of this diversification, A detailed description of the construction industry is contained in the report prepared by "C" in 1990, as part of the preparation of the Construction Industry Project and entitled: "Etude des pergpectives de d6velonpement du secteur do la construction en AlSOrie et des mesures do Zationalisation de aon environnement". A description of the production mechanisms is found in Annex 1. - 16 some of the OPGI could be progressively privatized and qualified personnel would be redeployed to perform the new activities being spun off. 3.26 In partial response to these preoccupations, two decrees have been adopted22. The first modifies the status of the OPGI (which now become industrial and commercial public establishments - EPIC), while the second creates a new agency for the improvement and development of housing (AADL)23 The nature, method of financing and precise mandate of the AADL have yet to be clarified. The future of the OPGI is also unclear. They must now repay their considerable debt to the CNEP and their autonomous financing must come from other loans from the bank system (sic), from the greatest possible profit on their rental stock of commercial properties (sic) and particularly from the sale of the units they own. However, given the weak buyers' response already experienced when the present stock was offered for sale at considerably discounted prices, the OPGI should not expect a greater response - and sizeable revenues - when their units are offered for sale at market prices. 3.27 Transforming the OPGI into EPIC does not appear to be sufficient to resolve the problem of management of the remaining stock. To facilitate the divestiture of public stock and the maintenance of a profitable number of rental dwellings, OPGI should consider selling apartment blocks to new cooperative or associative groups who would buy and jointly manage rental units. These groups would become private legal entities whose role would be: (a) to manage unsold rental units. Profit from these rentals would cover some of the expenditures on building maintenance. The rate of rent payment would be considerably improved by the pressure and control being placed in the hands of the co-occupants of the building; (b) to manage the sale of these units and to use profit on these sales to contribute to the fund used for the upkeep and renovation of the building. These sales transactions would no longer be public but private transactions and would therefore be guided by profitability; (c) to create inter-cooperative agreements in order to establish joint plans for the management of groups of buildings, sectors or districts (cleaning, security, improvement) in cooperation with the municipal authorities). Decentralized.and released from the restraints which handicap the OPGI, these new private landlords (who would not be in competition with a public rental market) could more easily adapt rents to production costs and thus create a private sector for the supply of residential rental services, there being no such sector on the Algerian market at present. 2V These decrees are listed under item 1.2 in Amex 2. 2./j hML_ sianifies equity in Arabic. - 17 - 3.28 In cases where the proposed sale to cooperative or associate owners is not feasible due to the dilapidated condition of the blocks, the OPGI should consider, as an interim measure, the contracting out of management of the units to a private enterprise. 3.29 The co-ownership model for housing management is not particularly difficult to set up since legislation concerning cooperatives for ownership and construction has been in place since 1976 and there is also extremely detailed legislation on the management of co-ownership groups. At present the cooperatives would seem to have been used to form groups of workers from one particular enterprise (e.g. railway workers) to acquire land for self- construction. But it is conceivable to adapt this concept to create a more interesting formuls of association for the management of residential blocks. 3.30 Beyond this legal consideration, new types of housing should be encouraged. Rental housing need not be modeled on the 35-units-per-hectare (HLM-type) council housing in Europe. This type of rental services supply is expensive, it involves extensive action on the part of developers (public or private), it leads to spatial concentrations of low-income tenants and, last but not least, it rarely results in a pleasant urban environment. Alternative types of rental housing should be considered and encouraged - the construction of duplexes and triplexem occupied by a mixture of tenants and owners, the construction of small "walk-ups", the subdivision of large single-family units, etc. This alternative type of rental property development can be established quickly, is extremely flexible and can easily be integrated into the urban fabric. Above all, it allows investor households to accumulate net assets by recovering the cost of finance through rental charges. 3.31 Construction and Financing. The construction and housing development sector as a whole should be supported by new ways of financing their activities. The creation of financial instruments to support supply seems more urgent than those supporting demand. For stimulation of demand not to find itself confronted with the inelasticity of supply, action should be taken in an orderly fashion beginning, as a priority, with ensuring that investors and developers can count on financing sources which adequately meet the specific conditions and risks of construction and development activities. 3.32 Development and construction credits differ from the usual commercial credits in that they do not offer the same guarantees. Banking organizations (with the possible exception of the CPA - "Crddit Populalre d'Alg6rie") have little incentive to accept this kind of activity which they deem to be too risky. In order to encourage them to become involved in these types of lending (which can be extremely profitable), a self financed fund could be created to guarantee the risks of financing construction, renovation, maintenance and management activities. The proposed fund would operate like the Mortgage Guarantee Fund (see para 3.12), and is worthy of further analysis. 3.33 This guarantee program would be limited to coverage of risks incurred in bank loans to enterprises or individuals whose functions are described below: - 18 - (a) construction and development enterprises as defined by the new legislation on housing development. These enterprises could be either private or mixed enterprises which could emerge from the reorganization of the housing production sector as a whole; (b) private enterprises devoted to the renovation and maintenance of existing stock. The aim here is to encourage the creation of small, low-capital enterprises employing large numbers of young people; (c) private enterprises dealing with housing management. Here again the aim is to promote the creation of small new enterprises specializing in housing management activities; (d) individual investor-landlords managing private rental units. (v) The provision of infrastructure for residential land development 3.34 The supply of serviced plots of land constitute major constraints to the supply of affordable housing. The responsibility for the financing and provision of infrastructure has always been a source of conflict between central and local authorities and developers. It is estimated that 250,000 plots - representing 20% of the total subdivided plots which were privatized in 1988 have not been developed because local governments were unable to provide the primary infrastructure services. In response to these difficulties the Government adopted in 1991 a number of fundamental legal texts that introduced the principle of cost-sharing for trunk infrastructure and the obligation for the developer to ensure maintenance of common facilities. 3.35 In order to implement the new legislation which aims to finance infrastructure without constant recourse to funds from central budget or to external funds, it is necessary to identify the financial and fiscal instruments which would ensure a profit on investment in services. This analysis could result in a proposal to experiment with taxing land services (local land improvement taxes). Consideration should also be given to reinforcing the management and Implementation capacities of the local government land agencies and to reducing the cost of servicing plots of land by means of relaxing the present standard for plot subdivision and infrastructure. 3.36 Aware of the need to address these issues, including the provision and maintenance of city-wide trunk infrastructure which, under the 1990 legislation, became the responsibility of the local government (i.e. communes and Wilaya), the Algerian Government is preparing a pilot project for Local Government Development for possible Bank financing. This project, conceired as a pilot operation affecting four Wilayas, would provide technical assistance - including training - and financial support to strengthen local governments' capacity in the areas of: land management, financial and local resource management, management of public services, and investment planning, - 19 - budgeting and implementation. The proposed pilot project, expected to be implemented in late 1993, will have an important long-term impact on the city- wide infrastructure. However, the project is unlikely to have an early impact on the provision of serviced land in the priority cities where housing shortages are particularly acute and require immediate action increase the availability of land for housing development. (vi) The legal and regulatory framework for land and housing development 3.37 The new land and town planning legislation of 1990 and 199124 is likely to have considerable effects on the supply of land for housing. The positive elements of this legislation comprise: - the end of State monopoly over the access and transfer of urban land; - the deregulation of land prices; - the abolition of inadequate and rigid planning tools and practices; - recognition of the importance of clear property rights; - recognition of the necessity to improve the financing of serviced land. However, at every step of the way there are serious potential problems which may jeopardize the reform process. Among the most important are the following: 3.38 Local authorities, who are deprived of their initial mandate as managers of urban land are now given increasing responsibility in terms of land use management including: (a) the development of urban plans (SDAU and POS); (b) the approval of development permits; (c) the preparation and maintenance of an inventory of public and private lands within their jurisdiction; and (d) the delivery of occupation certificates. Given the inadequate management capacity of local government even prior to the increase in their responsibilities, considerable technical expertise and institutional strengthening will be required to ensure efficient implementation of the new legislation. 3.39 The management of vacant land already included in land reserves is expected to fall under the responsibility of either the ALGRFU (Agences Locales de Gestion et de Regulation Foncl6res Urbaines) or newly created land agencies (AFU). It should be recalled that of the twenty such agencies that have been created since 1986 only a few are actually operational, largely because they were not approved by the local councils (APC). If such agencies are to function efficiently, careful consideration should be given to: (a) their mandate, (b) their clients, and (c) the instruments to be put in place to ensure their financial and technical viability. International experience shows that the functioning of such agencies is problem-ridden. 3.40 On land use management: it is important to insert a word of caution on the adoption of planning tools and practices directly derived from the French system. The urgent need in terms of land use management is to set 2_4/ The legislation related to land and urban land use management is listed in Annex 2, sections 13 and 14. 1 1 I I I I" II - 20 - up (a) a monitoring tool and (b) a set of operational tools for land development. Similarly, it is also important to review the newly passed decree on land use and building regulations in order to assess (a) their cost to public and private developers, (b) their affordability and applicability to the needs of the urban population, and (c) the capacity of local governments to prepare and use these tools efficiently. 3.41 On the liberalization of land markets: it is more or less assumed that the market will establish land prices which will fall halfway between the grossly under-market value as previously stated by regulations (170DA per n) and the inflated prices practiced on the informal private market. However, it is important to stress that as land markets are liberalized, the demand for land management services will drastically increase. These services include mechanisms for the recognition of occupancy rights, the registration of deeds and titles, information on land availability, and other functions related to the functioning of land transactions. The support system for the operation of such a market is not yet in place and there is a need to identify the scope for privatization of some of these functions which were previously entirely carried out by the public sector. This will imply the stimulation of new private professions such as surveyors, notaries and real estate brokers to name but a few. E. Sequencing further action 3.42 Housing policy is being fundamentally reorganized in line with the global transformation of the centrally planned economy into a market-based one. The main thrust of the housing reforms concentrated on the changes in the legal and institutional framework to enable the State to disengage from the direct supply of housing units and credit, while economic adjustment measures are contributing to the creation of an enabling environment for private sector development. This new, fairly coherent development seems to be going in the right direction. However, significant action is required to translate the reforms from texts to ground work. 3.43 To achieve real and tangible progress, the reform process should, at this stage, adopt an appropriate sequencing of further action required to address the priority constraints in the sector. The analysis contained in this paper clearly indicates that priority should be given to unblocking the supply response prior to stimulating demand. This is derived from the observation that affordable demand - i.e. formal liquid household assets - is capable of absorbing most new production for several years to come at the current rate of construction25. 3.44 Further action should therefore aim at removing impediments to the supply of housing units, with particular emphasis on the private sector role in the sector. Consequently, the reform program should be phased to address the following priorities: _/ For a justification of this conclusion, refer to pares 50 and 51 in Annex 1. I 1 I I I -l | II 1 - 21 - (a) the provision of infrastructure for residential land development; (b) reorganization of the construction and housing industry; (c) the legal and regulatory framework for land and housing development; (d) the development of property rights; (e) the reduction and targeting of subsidies; (f) the creation of a mortgage market. HOUSING SECTOR REPORT ANNEX 1 A DESCRIPTION OF THE CURRENT HOUSING SECTOR IN ALGERIA TABLE OF CONTENTS I THE GENERAL FRAMEWORK .................................. i1 II THE GOVERNMENT'S ROLE AS HOUSING SUPPLIER AND LANDLORD ... Iv III THE MARKET EQUILIBRIUM AND THE SEQUENCING OF AC7IONS ..... V A. The supply situation B. Needs and demands: the extent to which needs arg satisfied IV THE HOUSING FINANCE SYSTEM ............................... Xll A. The general framework B. The housing finance circuit V THE LAND MARKET AND LAND MANAGEMENT SYSTEM ................ xx VI CONCLSIONS .............................................. xv iii Box 1: Some Data on Housing In Algeria --m-memem---m-m-me-memm----mmemew-mm--o-m--emem-emmem---------- Total population (1990) 25,174,000 Growth rate (1990-1994) 2.96% Z of population in urban areas 45X Number of people per household 7.33 Housing stock (units) 3.6 million % of new housing / stock 3.3X X of households who are owners 64X X of public rental stock 12% % of unoccupied housing 18% Average annual (declared) income 33,000 DA * Price of a "public" unit / annual income 8 times Price of a "private" unit / annual income 80 times? GNP (1991) $38 billion * --mme--mme--eme-----m-w-----m--ome-o-m-m-mm---o-m--me---------- * The average exchange rate of the Algerian Dinar (AD) was 1 AD - $19 in 1991 and 1 AD - $10 in 1990. I. THE GENERAL FRAEWORK 1. For some years now, Algeria has been moving from a centralized and planned economy to one that is more decentralized and market-oriented. This action has been introduced into legislative and regulatory texes,but has not as yet resulted in major structural adjustments nor, in particular, in behavioral changes on the part of the economic actors. The first important steps towards a reduced Government role took place in 1986 when income from petroleum (95% of exports) dropped to a point where it was no longer possible to maintain the high levels of Investment in industrial and social programs. 2. In concrete terms, this transition is translated (Insofar as the legislative texts are concerned) by a complete reorganization of the institutional framework. Public enterprises are now independent, the Central Bank (Banque Centrale) has become an autonomous body dealing with monetary policy (April 1990), and commercial banks, no longer specialized, are encouraged to diversify their activities and to manage their lending activities without intervention by the Treasury. In 1991, recognizing housing as one of the priority sectors of the reform process, the Algerian Government issued a series of decrees aimed at: (1) restructuring and Increasing the private sector participation in the supply of housing; and (11) improving the management of the existing rental stock and accelerating its divestiture (see Box 2 for a summary of these measures). iv Box 2: Recent Decrees affecting Housing Policy - ---------mm ------------------ m---------------------- --- --- ---- --- Recent provisions affecting housing policy 1. Partial withdrawal from the supply sector with the restructuring of the OPGI (public housing agencies) which now become autonomous, responsible for their own financing and for repayment of their debt to the CNEP national housing finance institution). The CNEP is being restructured to become a banking institution in competition with the other banks for long-term housing savings. In addition, a new institution has been created which is responsible for renovation and maintenarce activities: the AADL (Housing Improvement and Development Agency); 2. Municipel land development agencies are now able to develop building sites for residential promotion projects; 3. The lifting of rent caps: rents should now be adjusted to cover operational and maintenance costs. These rents must however remain below 15% of household incomes for apartments measuring less than 70 m2. The management of relations between owners and tenants should be adapted so as to facilitate rent adjustments and avoid the abusive occupation of housing. 4. Draft legislation to recognize housing development as a commercial activity; to remove restraints on developers and to establish a new framework for co-ownership. 5. Substitution of the general subsidies to interest rates with a system for personalized housing assistance for housing. This new item would be administered by a new institution: the CNL (National Housing Bank). 6. Simplification and rationalization of the site development process (land development, plot subdivision and servicing) of land suitable for construction. II. THE GOVERNMENT'S ROLE AS HOUSING SUPPLIER AND I.NDIORD 3. At the time of its independence, Algeria had an abundant stock of housing and urban infrastructure which was sufficient to meet initial demand. Afterwards, and simultaneously: - the Algerian population doubled from 1962 to 1987, to more than 24 million. The natural growth rate is slowing progressively, but as of the latest -- 1987 -- census, it remained at 2.7%. At this date, 44X of this population was under 15 years of age; V - the urban population increased by an average of 5.4% per annum and now represents more than half the total population. 20% of this population is to be found in cities of over 100,000 Inhabitants. The urban hierarchy is, however, relatively well balanced, and the role of Algiers as a dominant city is much less pronounced rhan is the case with most African capitals. The Government has made major efforts to promote decentralization and the development of remote regions; - most public investment has been concentrated on infrastructure and industrial plant, while until 1980 expenditure on housing was minimal; - private investment was almost non-existent. Owing to the existence of controlled rents well below minimum operational limits, no private rental construction was carried out. The "self-help" construction marketi, however, has begun to develop only recently and with some difficulty since access to land and to construction materials has long been controlled by public development agencies and public construction companies. 4. The predictable result of these developments has been a marked deterioration in the urban housing stock, increased housing shortages and reduced household mobility. 5. Since 1979, the Algerian Government has attempted to address the rapidly growing demand for housing and low construction levels by increasing the share of housing investment to 15% of total public investment. This construction for the most part comprises rental housing allocated and managed by public agencies - the OPGI. Part of the public investment is in "promotional" housing (I.e. housing put up for sale) built by the OPGI and EPLF. This budgetary effort, facilitated by substantial petroleum income, has not however resulted in increasing the level of housing construction. 6. Households which do not meet public housing income requirements cannot afford the scarce private rental housing either, nor can they acquire housing privately. Moreover, private transactions are handicapped by inadequate land records and by deficiencies in the registration process. This lack of real estate guarantees is reflected in the almost complete non-existence of mortgage credit instruments. 7. In the period 1980-89, about 800,000 public and private housing units were built. This volume of construction represents 56% of the goals set by the 1980-84 and 1985-89 five-year plans. Official annual construction has never exceeded 120,000 units, or 3.3Z of the total 1/ The term "self-help" construction does not have the same meaning in Algeria as in most other developing countries. In this context. "self-help" construction. unlike public construction, includes extremely varied activities which, more visibly in Algeria. can relate to upDarket housing units. It would be more appropriate to speak of "individual" contracting. Generally, the expression "sel-help" construction applies to small-scale construction by the occupant, assisted by sub-contractors. vi Algerian housing stock (about 3.6 million units). However, 4% additional construction is normally required to maintain a balanced housing stock in a stationary economy; this rate is not sufficient to adjust the stock of an economy which has a rapidly increasing population (3.2% per annum) and is in clear Imbalance with its real estate marketl. 8. In accordance with the principles of a centrally planned economy, the heavy government involvement in the sector included extensive budgetary subsidies and capital grants to public development and construction agencies (OPGI and EPLF). 9. Public stock at present represents less than 12X of the housing stock, but its production during the last 20 years has constituted most of the additional stock. The principal actors in this production are listed in the following chart: The Rublic production circuit Financing Production or Stock Households agencies vending agencies elements ------------------1----- - ------------- ---------------------- OPG ---Rtal stoc Income lower than ----- ------------ tice the SNMG Treasur--CNEP -- Assignment [Income lower than ------ - of social four times the SNMG housing -------------------- APC --- Promotional (municiP) stock -J direct management - 2/ A first estimate puts annual Algerian demand at least 235,000 units : 120.000 units to meet the demands of new households; 56,000 to reduce the occupation rate from 7.5 to 6.5 people per unit; 64,000 to replace dilapidated or demolished units; 10,000 (minimum) to ensure the temporary availability of vacant housing. These are minimum figures and do not take account of imbalances in the allocation of the housing stock betwoon urban and other areas; they include an extremely conservative replacement or temporary vacancy rate; and they are based on a household size of only 6.5. vii 10. The OPGI are Government housing agents. Created in 1976, these regional agenciesi manage the real estate stock (residential and commercial) Inherited in 1962, as well as the additional stock built since then. 11. In 1981, to meet the demand for home ownership and to unload a costly asset, the Government (through the intermediary of the OPGI) began to sell off its rental stock. In 1991, less than half the stock had actually been sold; the OPGI remain responsible for the management of 400,000 housing units. Their transformation into a public Industrial and commercial enterprise (EPIC) in May 1991 should in principle make it easier to manage the rental housing units and, eventually, to sell more units. 12. The public rental units are still sold at standardized and administratively fixed prices which depend on the date of construction and to a small extent on their location. In November 1990, sales prices appear to be nearing administrative construction costs (4,000 DA/mg) but in no way reflect the market value of the housing unitsi. Again, in principle these price cellings should be lifted in 1992, and pressure to sell will be increased by the fact that the OPGI are now responsible for their own financing and for repaying loans from the CNEP. 13. In spite of the deeply discounted prices and a major marketing effort, nearly 50% of OPGI housing units remain available. This residual, which has various causesl, is a problem of some delicacy for the OPGI. 3/ There is one "gGX per Wileya Ci.e. 53) and 5 urban offices per Datra for the Algiers Wileya. These agencies still control about 400,000 units, nearly 85Z of the residential rental housing stock and about 12 of the entire housing stock. The average age of the housing stock is fairly high since 1/3 of the units are more than 40 years old and 20Z have 20-40 years' wear. A staff of about 12.000 carries out management and development functions. 4/ Sales prices vary according to the date of construction of the building (before or after 1981) and as a function of fairly complex locational parameters set out in the legislation. Bousing built before 1981. for the most part units dating back to colonial days, was selling at 1,800 DA/m2 (reduced to 1,200 DA for purchases made before 30 June 1989). The going rate for housing built after 1981 is 3,500 DA/m2* These prices do not include land and site development costs. Prices for cash sales (10%) are reduced by 10% -- twice the amortization for short-term (less than 5 years) credit, and accompanied by other rebates (for example, 40S for war veterans and their parents and descendants). In Algeria private resale prices 3-10 times higher then purchase prices were frequently mentioned. It was not, however, possible to verify these claims. Long-term credit sales are amortized over 30 years at 1 Interest for housing built before 1981 and over 25 years at 21 for housing built after 1981. 5/ Unsold units are, depending on the case, unsalable because of their extreme dilapidation, the difficulty identifying legitimate tenants, or because of technical constraints (e.g.: zones being redeveloped, units affected by alignment, etc.). Fairly reasonably, too, many households prefer not to buy the housing they currently occupy (at a low rent) either so as not to increase their recurrent expenditure or because they hope to be able to benefit fram access to other, more interesting, public housing. Last, but certainly not least, part of the most recent stock has been put up for sale only since May 1989: these units seem to have been selling fairly well recently. viii 14. At present, not only must the OPGI manage the unsold rental units at a loss, but, as co-owners, they also have some responsibility for maintenance charges in partially sold buildings. If only one housing unit or shop in a building remains unsold, the other co-owners continue to leave responsibility for maintenance to the OPGI. It has long been taken for granted that the OPGI will provide p.actically free housing products and services; this Image is perhaps the worst and most costly of the OPGIs' problems! 15. Rents that are currently being charged (on average, 270 DA a month) are substantially lower than the operation and financing charges of the unitsf and recovery rates are disturbingly lowZ. There is still a ceiling on rents in spite of passage of a bill which, in 1989, made provision for rent adjustments according to household income, the size of housing units, their location and their facilities. These adjustments were to extend over four years. This legislation has never been fully Implemented. Instead, in 1991 a new legislation was adopted to allow rental charges to be increased to cover maintenance costs. 16. According to rough estimates, the level of direct Government subsidies was at about 20 billion dinars (i.e. 2.8% of the GDP) before the Treasury terminated its program of direct OPGI financing in January 1989. This amount covers only the explicit subsidies: Injection of Treasury funds for OPGI programs, subsidization of the discounted L;NEP interest rates and maintenance cost subsidies. 17. In fact, the real subsidy level would be much higher if the hidden sources of subsidies were taken into account: the administrative nature of all the construction costs, site development and land, the calling Imposed on resale prices of OPGI units and on prices for promotional units, the provision of obligatory housing (logements d'astreinte), the initial unaccounted and un-amortized input of the colonial housing stock of 1962, the defiscalization of numerous real estate sources of taxation, etc. 18. In the context of international comparisons, however, it would be wise to treat this ratio of housing subsidies to the GDP with caution, not only because it is extremely difficult to measure these subsidies, but also because they do not make much sense when, in a country like Algeria and in numerous previously socialist countries, the substantially 6/ Minimum maintenance costs are estimated at 2,500 DA per unit ("Etude du Narch6": gNT, 1990). The cost of financing is estimated at approximately 10,000 DA per annum for one 250,000 DA unit with 01M1 financing conditions (22, 40 years). It would thus require a minimum rent of 1,000 DA to cover minimum costs. To these must also be added management costs, non-payment of rent, amortisation costs and major repairs, and in particular costs and financing charges must be adjusted to take account of their real costs instead of basing calculations on administrative costs which bear no relationship to opportunity costs of land, materials and, especially, financing. 7/ Below 50% for the OG of Algiers, but over 852 for that of Tizzi-Ouzzou. We received no official data for other Wilayats. ix subsidized supply of housing serves essentially as compensation for a policy of low salaries. In fact any true measure of housing support Implies a global consideration of support to other areas of consumption and to general income policy and the transfer of income. Analysis of the framework mentioned above should be seen in this macro-perspective. 19. Executing powers for "social" housing put up for sale (known as "promotional" housing) are entrusted to the OPGI, the EPLSA, the Municipalities (via the APC) and directly to the CNEP. Implementation is then entrusted to a large number (about 1,200) of public construction enterprises and private sub-contractors. It is not yet clear how the 1991 reforms will concretely affect the organization of production and distribution of new housing units. 20. Until 1990 when the Land Law was adopted, the only officially available land was public land which could only be allocated by the municipalities (APC) and which can be developed only in line with the standards and programs of the ministry responsible for housing (currently the Ministry of Equipment). III. THE MARKET WOUILIBRIUM AND THE SWOUENCING OF ACTIONS A. The supply situation: The supply of housing should be broken down into two parts: (1) the supply of housing units (the real estate stock) and (11) the supply of housing services (the service flows drawn from this stock). 21. The suDly of housing units: stocks and flows: The housing stock is made up of about 3.6 million units. At the time of the 1987 census Individual or traditional houses represented 77% of the stock, rental units 14Z and temporary housing 7X. Almost 18X of this stock was vacant (see below). More than 64% of households own or co-own their housing, 24X rent and 13Z are housed free of charge in company housing. 22. The production of new housing is described in the following table which clearly Illustrates the gap between construction programs and their completion rate. 8/ The MZ replace the former Office national du laxement familial (WNLF) which was dissolved in 1984. They are established locally on the decision of the Wilayat councils and given responsibility for the construction of social housing. Only 23 ZPLF have been created, and these have became actively involved in construction only since 1986. They have since built about 100,000 housing units as well as conmercial areas. The = are treated as auton ous entities whose operations should be cost- effective. Their purchasers are eligible for non-discounted CKEP credit (6.5% and 25 years for depositors and 9t for non-depositors). Here again we have been assured that "the money is not a problem!": many purchasers pay casb X Units in Average cost Average cost Completion 70 ml per unit in per aA 1989 (units) equiv. 1988 DA (1988 DA) Current programs (12/31/89) Urban social housing 107,926 228,564 3,265 49,150 Rural social housing 61,076 69,323 990 Public promotional housing 137,899 296,448 4,234 6,905 Private promotional housing 9,197 272,371 3,891 735 Self-help construction 263,524 191,000 2,728 162,495 Sub-total 579,662 219,285 New construction programmed for 1990-94 231,810 211,574 3,022 Total to be delivered before the and of 1994 811,472 Source: CNAT "Etude du marchd, septembre 1990" will be noticed that public completions in 1989 remain well below program objectives and that over 75X of effective Implementation of the preceding program is to be found in the self-help construction sector. 23. Vacant units: according to the results of the census, more than 500,000 housing units (I.e. 18X of the stock and 8 years of average production) are completed but vacant or only partly occupiedi. Several circumstances contribute to this situation: - owners of housing units keep these units aside for their descendants or ascendanes (patrimony), owners are emigrant workers maintaining a housing unit in reserve (mobility), - owners have managed -- through various and sometimes illegal circumstances -- to be allocated several housing units and they are waiting for market conditions that will permit them to profit from appreciation (speculation)12. 9/ ofinistry at Eiunent Total housing stock : 3,602,146; Tents : 36,702 Occupied housing units : 3,054,292 Vacant housing units : 547,854 (16%). 10/ This trend is encouraged by the way profits on real estate appreciation are taxed: -- xi 24. Having established the probable causes for private units remaining vacant, it would be natural to ask why owners do not try to make a profit by temporarily renting out their properties. The answer is very simple: as soon as a tenant enters the door, it becomes Impossible to evict him for defaulting on rent payments. Therefore, owners prefer a vacant apartment to a blocked apartment. 25. This situation explains the extremely detrimental absence of a private rental sector in Algeria. Such a sector will not emerge under present conditions where: (1) it faces copetition from a public sector where rents do not reflect construction costs or even maintenance or management rosts; and (11) strong tenancy rights are protected by law and public opinion. 26. The development of commercial rents contracts which would balance the interests of owners and renters will likely meet strong populist opposition. Only a redefinition of contractual agreements and a reinforcement of the position of owners will permit the currently vacant stock to be unblocked and a private rental market to be developed. In 1991 the Government started to draft a new legislation to address the contractual arrangements. 27. The sugply of housing services: It is increasingly obvious that the old (pre-1962) and even the more recently built housing units after years of poor maintenance, no longer provide quality housing services. Deterioration of the stock continues to increase; it affects both structural elements (waterproofing, foundations, stairwells) and more costly Items of equipment (plumbing, electrical circuits, elevators). This deterioration affects public rental units the OPGI are unable to maintain and OPGI-owned buildings In which some units have been sold where the definition of rights and responsibilities of the partners is either not established or not respected. B. Needs and the demand for housing: the extent to which needs are 28. Although stock needs can be roughly estimated at 235,000 annual units, barely half these needs can be transformed into financially affordable Duration of ownership Tax rate on appreciation 3 years 50% 3-6 years 40% 6 years 30% 9 years exemption Like many well-intentioned fiscal mechanisms. this tax scale can be counter-productive. It can result in fraud on declared prices and transaction dates and contribute to a further increase in the viscosity of the market. Xii demand, even under current conditions of major price and Interest subsidization. According to a recent CNAT study, barely 9% of total demand requires no financial assistance, fewer than 45% of households can afford to buy their dwellings with government assistance (in the form of Laterest rate subsidies amounting to 5.2X of the Government budget) and, in particular, nearly half of new households cannot afford home ownership. 29. The underlying assumptions of the above analysis seem to be very optimistic: the hypothesis on which they are based assumes that admini&trative prices and discounted interest rates will be maintained. Under present conditions, it is expected that well over half of households will remain fVnancially incapable of buying housing. This proportion will be higher in urban areas, and higher still if the administrative price controls in the sector are eased. Note should also be made of the inaccuracies on which these estimates are based,,: they use the average distribution of household income instead of the distribution of incomes of new households and those who share an apartment with parents. The difference between these distributions is considerable since new potential households are younger and not necessarily employed. It is not however possible to improve the accuracy of the above analysis since data on the age and income characteristics of these new households are not available. 30. Moreover, it should be noted that these estimates are based on declared annual monetary income. They do not take into account undeclared income of which we do not have estimates, nor accumulated savings. As will be seen below, these sums are considerable. 31. Irrespective of the hypotheses chosen, it is clear that market equilibrium would not be reached unless major bottlenecks on the supply side are eliminated. This would require the creation of appropriate mechanisms for the Implementation of the legislation adopted in 1990 and 1992 to: liberalize land markets; facilitate the private sector's access to Inputs (land, constuction materials, infrastructure), and create competition among private and public producers. 32. Therefore special attention should be paid to the problem of sequencing interventions. Bottlenecks in the production of materials, of serviced plots of land, and units built, must be cleared before setting up mechanisms to support demand (assistance programs for financing and for capital outlay) and even attempting to respond to the need for social rental housing. 33. Contrary to conditions prevailing in certain Socialist countries undergoing similar transition but which are not under the same demographic pressures as Algeria, simultaneous tackling of both the demand and supply sides of the houping problem is bound to result In 11/ The same erroneous type of analysis and comparable results are to be found in Piet NanlVnan, ABT- USAID Report 1990. xiii failure. Firstly, the rhythm of housing production should be substantially increased before any effort is made to increase the affordability of demand; in addition, different production methods and products should be chosen: usage of "artisanal" construction and more basic types of housing. 34. In effect, longer-term sequencing should also take account of the fact that the production reforms and financing mechanisms should be in place in order to cope with demand peaks of the demographic cohorts aged 25-35 years which will weigh heavily on the market before the end of the decade. IV. THE HOUSING FINAKmCE SYSTEf A. The general frmework 35. In principle the financing of investment programs should rely on borrowing from abroad, long-term Treasury loans and bank credits to be raised from the BCA. In practice, most financing of public investment in Algeria and the massive supply of public housing, were based on fiscal resources derived from petroleum and from the creation by the BCA of cash. 36. Until 1990 the Treasury automatically provided funds to housing suppliers, via the CNEP, without consideration of the cost of capital nor, in particular, the financial return on funds allocated. The fact that until 1986 the Treasury was the only financial intermediary explains the absence of a monetary and financial market, of real banking, of a credit policy and, consequently, of control of the flow of capital through variations in credit costs. 37. The absence of this regulatory role as far as rates are concerned has been particularly evident in the housing finance sector since: - Treasury funds are allocated to public construction agencies at negative real rates over extremely long amortization periods (1% over 40 years), - the accumulation of savings deposits and the attribution of funds to borrowers is carried out using the protected circuit of the CKEP network. This protected network is based on the accumulation of cash resources in the form of savings bank accounts (5% borrowing rate) and on the allocation of loans at extremely reduced rates. We do not yet know how the new CNL will be financed. * 38. The new legislation on currency and credit which was implemented in 1990 extends the modifications undertaken by the 1986 and 1988 reforms. The principal provisions of this reform are the following: xiv (a) The Central Bank of Algeria (SCA), completely separate from the Treasury, becomes an independent body for money supply, control of the banking network and management of foreign exchange transactions. (b) The BCA controls banking operations by fixing base lending rates (set at 15%-20X for 1990), by the Imposition of minimal reserves, management and l1quidity ratios (as yet unregulated) and by the selective usage of the rediscounting of bank loans. (c) The Central Bank may also authorize the establishment of foreign banks in Algeria under reciprocal conditions. (d) Commercial banks become autonomous and entirely responsible for their own profitability. At the same time they are no longer restricted to one particular area of operations, and the principle of domiciliation of client enterprises no longer applies,2. (e) The CNEP will eventually achieve banking status but will remain a savings Institution specializing in housing credit and with no access to other areas of lending. (f) Insurance companies1l are also "de-specIalized" and are now authorized to develop all Insurance products competitively. They are furthermore requested to place their reserves on the emerging monetary and financial markets. The Insurance companies should be able to become important sources of long-term financing for the construction Industry and for credit to buyers. This role was identified by several of our contacts in Algeria, but here again, regulation of these activities has yet to be redefined in the general framework of institutional reform. 12/ The specialization of the tcur comnercial banks was approximately the following: anaue NationaLe d'Alggrie (IRA): financing the manufacturing industry as well as transport and distribution activities. Banque ExtArieure d'Alsgrie (BEA): financing the energy sector, chemical industry and maritime transport. Le Cr6dt Populaire d'Alx6rie (CPA): financing small-scale iudustries, tourism, light industry, fisheries and retail trading. The P is also the principal source of finances for the construction industry. Moreover, the system Includes two specialized "banking" institutions: The Algerian Development Bank (Banaue Alg6rienne de d6velonmement) whose decentralized network is to be responsible for the development requirements of local government (excluding agriculture and housing). The anticipated network of local institutions has not yet materialized. The , whose role is limited to the accumulation of househoid savings and to management of home purchase savings. 13/ All insurance companies are State-owned and comprise: MAR, , l | the mutual insurance companies and GM - the reinsurance agency. Xv (g) The different social security and retirement schemes should also take over the financial management of their surpluses. Here again the extreme fluidity of the situation limits the assessment of this sector. The long-term resources of these schemes could perhaps be mobilized by the intermediary of the mortgage market, either directly by the institutions concerned or, preferably, by the intermediary of the CNEP or the commercial banks. B. The housing finance circuit 39. The CNEP, the principal household savings institution since 1964, has, since 1971, been the only institution offering home-purchase savings accounts. A part of CNEP's assets is to be recuperated by the CNL but we do not yet know how the savings funds will be utilized. xvi The financing circult 1rior to the 1991 refom Financing Production or Units of Savings and repayment agencies vending agencies housing sold conditions Households IX, 40-year loans ---------------- 4 year grace period ***** Before 1981 annual payments amortized over ------ -------------- 25 years 3% net rate 0.5% ---------------- advances ---------* After 1981 --------- - amortized over PPGI Social housing 30 years --- - [*L--- --- 2Z net rate ITreas. ---CE *----------------- --- --J L. .. .3.----- - - ------ . . ----------- - - EPLF Promotional WIsavings alc --------- ------ housing 6.5% amortized development --------- ---------------- over 25 years bonds max. age 65 subscription 2 yrs seniority ----- Post ------ ---------------- ---- - No savings al ------------------------------- 9% amortized ---------*------------------- over 25 years home-purchase savings a/c's max. age 65 5% borrowing rate ---------------- exempt of taxes ------------------ ---- --- --- --- ---- --- --- -- ---- --- --- --* xvii 40. Credit to suppliers. Until 1990 the CNEF and the Treasury shared between them the contributions to the construction of rocal housingU, but since 1979 the Treasury has taken total responsibility for financing OPGI, advancing funds to the CNEF at an Interest rate of 0.5%. These funds were then on-lent to the OPGI at 1% over 40 years with a four-year grace period. In return, the CNEP subscribed Treasury bonds at a borrowing rate of 7% (about 50 billion DA In 1989). 41. This transfer of public funds to the OPGI came to an end in 1990 when the Treasury announced its withdrawal from the financing of housing production. Ongoing projects will continue to be funded until they are completed, but the CNEP has no further obligation to subscribe Treasury bonds. It is now the CNEP which must finance the OPGI directly from its reserves and up to a ceiling of 10 billion DA. In 1990, only half this amount had been used. Conditions for advances to OPGI were then 2.5% (7.5% - 5% discount) over 30 years with a four-year grace period. 42. The reorganization of the OPGI announced in 1991 should put an end to preferential credit conditions extended to OPGI's by CNEP. The OPGI must now reimburse about DA 80 billion of its total assets of 140 billion DA to the CNEP. It would be interesting to know how this debt will be shared between the CNEP and the CNL. 43. The EPLF receive financing (at a rate of 7.5% over 25 years and with no grace period) from the CNEP for their development projects. They may also take out bank loans but as a general rule do not appear to do so. The EPLF receive no assistance from the Treasury. Apparently the fate of the EPLF was discussed in 1991. It is not yet known whether CNEP's financing conditions have been maintained. 44. Credit to home-buyers: The protected home-purchase savings system is based on demand deposit savings accounts receiving 5k untaxed interest-M whose accumulation over a minimum period of two years may allow access to s mortgage at an interest rate of 6.5k discounted, in 1990, according to the following schedule: 14/ From 1970 to 1973, the respective participation was: Treasury: 50Z at 1% over 30 years CNEP: 50% at 4.75Z over 20 years From 1974 to 1978, the resnective participation was: Treasury: 751 at 1 over 30 years CHEP: 25Z at 4.75Z over 20 years Since 1979: Treasury: 1001, 1 over 40 years. 15/ The C also offers savings bonds at rates of 61 for three-year fied deposits and 6.5% for five- year deposits. In 1988, funds from these fLied-term savings plans amounted to only 106 million DA. In comparison, demand savings accounts acc-mlated 58.6 billion DA for the same year. xviii Discounting of interest rates for the construction or acquisition of housing Loan amount Discounting (based on R rate of 6.5%) CNEP savings a/c holders 400,000< 4% >400,000 and 600,000< 2% >600,000 Ox Non-savers 400,000< 1.5% Further conditions for access to credit: a deposit history of at least two years, a minimum capital outlay of 20k, amorrization over 25 years with a maximum age limit of 65. 45. From 1980 to 1990 barely 6,000 promotional housing units and 13,000 social housing units sold by the OPGI were financed by CNEP accounts. In all, the CNEP has granted only 49,500 loans over the last ten years, i.e. less than 5,000 per annum. This very small number of loans granted does not appear to discourage savers since savings surpluses continue to accumulate, reaching about 65 billion DA in 1990. 46. In fact, the CNEP is not truly a housing finance fund. Until 1990, household home-purchase savings were utilized almost entirely to finance the Government by the purchase of Treasury and development bonds. Since 1989 the CNEP is no longer obliged to buy these bonds, but for a limited period, must use accumulated savings to finance the OPGI directly. Also, it is not clear yet how the CML will organize its savings and loans network and how the CNEP will adapt to Its new banking status. 47. The savings situation: The level of Algerian savings remains extremely high (112 billion DA in 1989, or 31% of the GDP) and in 1988 household savings represented over 20% of total savings. As in other Socialist countries, households accumulate savings because of the impossibility of consuming or of investing in housing, which is not available. 48. The level of this forced saving dropped in 1988 when, following the uprising of the fall of 1988, the Government made certain consumer goods more easily accessible. Consequently, annual savings by households dropped to less than 10% of domestic savings. Today the level continues to drop, this time because of increased economic difficulties. The savings rate which represented 12.9% of household income in 1987 appeared to have dropped to 2.7% in 1993. 49. Negative Interest rates do not seem to discourage savings efforts, but saving is increasingly limited to demand deposits. However, household demand deposits at the CNEP are fairly stable since priority for xix obtaining a loan la given to savers with a two-year deposit history. In any case, the real waiting period for a loan is much longer due to the Impossibility of finding housing units for sale. Development in interest rates and demand deposits Billions of Algerian dinars 1985 1986 1987 1988 1989 1990 Real Interest rate -4.9X -6.6X -2.2% -0.9% -3.9Z -7.1% CNEP demand deposits 32.0 39.0 48.3 58.6 68.4 70.0 Commercial bank demand deposits 104.6 95.9 103.8 115.5 112.4 Treasury and postal account demand deposits 21.0 19.5 23.2 26.9 28.6 Fixed-term deposits, commercial banks 21.2 22.0 34.0 40.8 51.7 Demaed deposits as K of deposits 13.4K 14.2% 19.4K 20.3% 24.7% Deposits in commercial banks result from the domiciliation of liquid assets of public enterprises and from the transaction requirements of private enterprises. Source: CNEP, Banque Centrale d'Algdrie and Nancy Northrop, ABT-USAID report, June 1990. 50. During the course of the last six years, the Algerian Government has absorbed fluctuations in the economic situation by expanding Its money and quasi-money supply at a rate higher than that of GDP growth1. As a result, the liquidity of the economy continues to increase, which explains the persistence of inflationary trends. The liquidity rate of the Algerian economy is now double those of its two Maghreb neighbors. In this context, it should above all be remembered that "formal" liquid household assets are extremely high (nearly 80 billion dinars) -- sufficiently high to absorb the entire additional stock under construction (at administrative prices) by paying cashl And naturally informal savings are not even taken into account. 16/ The ratio of money-supply to GDP has been decreasing since 1989 when the Government started implementing the macroeconomic adjustment program. xx 51. This remarkable situation demonstrates the need for sequenc action, first unblocking supply before attempting to stimulate dema. since as can be seen, immediately affordable demand is capable of absorbing most new production for several years to come at the current rate of construction. V. T E AND HARET AND LAND MANAGENET SYSTEN This section presents the land market and land use management system that existed from 1974 when land was nationalized, and describes the recent (1990 and 1991) reforms of land liberalization. 52. An Increasing Demand for Urban Land Algeria, with an area of 2,381,741 kag, is the second largest country in Africa (after Sudan). Paradoxically, with a large area and a limited population, Algeria has consistently suffered from a lack of land availability. Historically, the population has been concentrated on the coastal zones and on the pledmonts, both with limited potential for expansion. About 7/8 of the national territory is not suitable for conventional agricultural activities, nor for urban development. At the time of the latest survey (March 1987) the population was estimated at 23 million inhabitants and is expected to increase to 35 million by the year 2000 with an annual growth rate of 2.9Z. The increasing concentration of the population in the urban centers compounds the existing regional Imbalance. The urban population, which amounted to barely 2,100,000 in 1954, or 25% of the total population, was estimated at 11 million in 1987 or 48X of the total population. It is estimated that between 1990 and 1994 the demand for land for urbanization needs will be 57,320 hectares. 53. Nationalization Policy and its Impact on the Functioning of Land Markets Until November 1990, land policy in Algeria was based on 1974 legislation which promoted both the nationalization of all lands and a highly decentralized land management system to the benefit of local governments. All lands "exceeding the personal needs criteria" were nationalized and local governments were given the full control over land transactions. The Implementation of this policy has proven to be problematic. Although the policy was designed to meet the increasing demand for land, reduce speculation, control urbanization and preserve rural lands, the impact has not been that expected: (a) Local governments did not have the expertise nor the long-term management concerns that were required to carry out this policy. The Communal Popular Assembly (APC) and its executive council were. until June 1990, elected on the basis of a list proposed by the party. The president of the Local Assembly was himself elected by the council. The institutional and political organization preempted any control over elected local officials regarding their mismanagement of state lands. xxi (b) Land reserves were often wasted and given away to Individuals according to allocation procedures which were not accompanied by legal property transfer deeds. This explains the lack of accurate and complete information on land reserves transactions. (c) Local government functions regarding urbanization control and the application of existing planning documents proved to be non-existent. (d) Inequitable features related to the nationalization of lands, the creation of land reserves and the reallocation of state lands to individualA became quickly apparent. While inappropriate compensation fees (when given) went to people whose land was nationalized, the amount of land that could be acquired by individuals through the public allocation of land reserves was not limited. 54. Price distortions Under the 1974 legislation, local governments could acquire land from the state and allocate it to private individuals according to regulated prices. Prices were last updated in 1986 and varied in relation to the location within urban areas, the topography and the level of services. Prices at which land was purchased by the local governments from the central government ranged between .7 dinars per m (less than US$1) to 52 dinars per mA (US$5.5). Sales prices by local governments to private individuals ranged from .7 dinars per ml to 171.6 dinars per ml (US$17). The direct effect of this land policy where prices for urban land did not reflect market values can be summarized as follows: - private owners have been very reluctant to sell to the state; - demand for state lands increased drastically and lagged behind Government's capacity to service land. A great deal of demand for land by the private sector was satisfied through informal channels. 55. The Production of Urban Land: Main Chamels (1) L.and reserves and subdivisions According to a 1988 inventory carried out by the Directorate of Local Development of the Ministry of Interior, 60,000 hectares have been integrated into communal land reserves, among which 40,000 came from the public sector and 20,000 from the private sector. Only 40% of these reserves were subdivided by local governments. These subdivisions produced a total of 467,619 plots with 68X allocated to private individuals. (11) ZHUN ("Zones d'Habitat Urbaln Nouvelles") According to the Algerian government, one of the successes of the land reserves has been the supply of land for ZHUN. ZHUN were introduced in 1975 as an operational Instrument for developments exceeding 1,000 housing units, to induce a better integration of social housing programs within cities and to create functional and well integrated high-density residential neighborhoods. The implementation of ZHUN has traditioanally been the responsibility of the xxii regional government (wilaya), the major decisions regarding their creation and approval being handled by ministerial decree. The local governments have not been directly involved in their Implementation, nor in their maintenance. This system changed drastically since January 1989 when local governments were assigned the responsibility for the management of ZEUN. The expansion of ZHUN has been largely motivated by concerns of quantitative production of housing. The result has often been non-functional neighborhoods which are under- equipped and poorly integrated in the urban fabric. In total, 256 ZHUN with a capacity of 660,000 housing units have been developed in 180 cities. 180,000 housing units have been delivered and work on the remaining 136 ZHUN has been initiated. (111) Informal markets The legal supply of land has been so limited that the demand has been met through through Illegal channels. In 1985, the number of illegal housing units was estimated at 320,000. This is probably an underestimat.ion. Such transactions are conducted illegaly through "Acres sous seing-prive". Prices on the informal market are very high. The following ar) indications of informal market rates in 1991: - City center of Algiers: 30,000 to 50,000 dinars per ma (US$3,800 to US$6,300); * Residential neighborhoods in Algiers: 2,000 to 4,000 dinars per m (US$250 to US$500); - City center, medium-size cities: 15,000 dinars per ma (US$200); - Perl-urban areas in Algiers: 1,600 dinars per na (US$75); - Perl-urban areas, secondary cities: 150 to 250 dinars per ma (US$19 to 32). These land prices compare with a minimum monthly salary of 1,400 dinars (US$180) and an average monthly salary of 3,000 dinars (US$380). 56. The Challenge Ahead: Outstanding Issues (1) The servicina of land One major problem with the existing production channels is the lack of servicing of urban land. Legislation on where the burden of infrastructure financing should lie has always been a source of conflict between central and local public authorities and private developers. Until 1979, on-site infrastructure provision was mandatory before the sale of land by local governments to individuals, the costs of infrastructure provision being included in the sale price. Beginning in 1979, the sale of land has been authorized without the provision of infrastructure and the specifications ("cahler des charges") did not define the conditions of infrastructure provision by the subdivider nor his/her obligations in terms of delays. From 1982 to 1984, it was decided that in order to stimulate individual construction, the state would take full responsibility for infrastructure costs. In 1984, this policy was eliminated and local governments became responsible for the financing of tertiary infrastructure. Changes in regulations and the need to satisfy the demand have pushed local governments xxiii to focus their efforts on the creation of new subdivisions and the sale of plots rather than on the provision of infrastructure for subdivisions already sold. Consequent!y, only 20% of the 320,000 plots subdivided by local governments and sold to private individuals have been serviced with basic infrastructure. (11) The land use regulatory framework The problems related to the land use regulatory framework are not unique to Algeria. Existing regulations and development control mechanisms have proven to be both ineffective and costly due to their rigidity and lack of coordination with financial planning. Urban plannin: Urban planning was based on two major instruments and an array of operational tools often inherited from the French system. Among the major instruments are the "Plan d'Urbanisme Directeur (PUD)". Similar in nature to a traditional master plan, it includes zoning and has a constraining impact on the use/utilization of urban land. Many local governments have not been able to have a PUD and an intermediate instrument (PUP) has been introduced. As a consequence of the many difficulties experienced in carrying out the PUD - difficulties which have been exacerbated by the fact that in 1984 the number of municipalities was doubled - PUP have really become the prevailing planning instrument. A PUP typically provides a five-year framework which indicates development perspectives and land needs, defines the perimeter of land that can be urbanized over the next five years and regulates the use of land. Of 1,541 local governments, 1,238 have either 2 PUD (150) or a PUP (1,088). Building permits have become mandatory on the national territory since 1985. About 50,000 building permits have been issued per five-year period between 1970 and 1979 and 124,205 between 1980 and 1984. The number of approved building permit3 has been steadily increasing since 1985, reaching more than 100,00 in 1989. Obtaining a permit is seen as a necessary administrative step to gain access to purchasing building materials through public suppliers. Local governments and APCs are under pressure to satisfy loc.l demands and often lack tlie technical capacity to enforce permit regulations. No field inspection -: ever done to ensure conformity. The major bottleneck for obtaining a building permit is the need to show a title or "Acte Authentique". A large part of the country is not covered by a cadastre and landowners do not have this proof of ownership. In 1985, some revisions were introduced to allow building permit applicants who do not have a property act, to produce a statement delivered by the president of their APC and two witnesses, as a valid substitute to obtaining a building permit. (1ii) Pr nerty rIghts and the reistratIon of transactions Two decades of nationalization, the fact that the administrative allocation of land is often not recorded, and the sprawl of informal settlements, have contributed to a situation of unclear property rights. The procedures for property transfer and compensation under the old system have generated a large backlog of unresolved land disputes. Furthermore, the regularization efforts xxiv launched by the Government In 1985 have added another layer of complexity to an already complicated property rights system. Attempts to achieve comprehensive Improvement in the management of land information were initiated in 1975 with the introduction of a national cadastre. However, up to this date, cadastral operations have been limited to 61 municipalities (out of 1,541). The relationship between cadastral information and land registry was also formalized by decree the following year (decree 76.63 of March 25, 1976). According to the legislation, each notarized act ("Acre notarid") is to be sent to the Lands registry for publication along with cadastral information on the identification of the particular parcel of land. After publication, the information must be sent back to the cadastre office for updating the cadastral map. The sequencing of steps required to make the procedure effective and sustainable is often not respected. Beyond the problems of data collection and updating, institutional problems remain acute. Aware of the need to update and extend the coverage of the national cadastre, the Algerian Government is preparing a project to be financed under a proposed loan from the World Bank. 57. Recent Reforms Zn order to address the many problems mentioned above, the Government is presently undertaking major reforms of the land management system and supporting legislation. The reforms focus on the liberalization of land markets that would be supported by: - strong planning tools and documents such as PAUD and POS; - preemption rights for public authorities. A Land Law ("Lol d'Orientation Foncl6re") was enacted in November 1990 which represents a drastic departure from earlier (1974) legislation. The main features are the following: (a) It abolishes the total control local authorities had over all vacant urban land located within the urban perimeter defined by the town's master plan which means that local authorities have lost their monopoly over the transfer of urban land (I.e. from the state to local authorities/from local authorities to private individuals); (b) land transactions among private individuals are authorized; (c) existing land reserves acquired under the 1974 legislation will be placed under the management of land development agencies; (d) local governments, on the other hand, are given greater responsibility in terms of land use planning and control. 58. On the basis of the Lands Law, the following legislative measures were taken: - Creation and organization of land agencies: A decree was passed in December 1990 requesting that local and wilaya councils either create ALGRUs ("Agences Locales de Gestion et de Regulation Foncidre Urbaine") or affiliate with existing land development agencies created in 1986. These new agencies are to buy and sell real property on behalf of local authorities, carry out land *. xxV regularization and to assist in the implementation of urban development plans as well as to undertake land development. - Creation of an Inter-Ministerial Land CommIttee: The principal mandate of this committee, created by decree in April 1991, is to ensure coordination of government action with respect to land management and to assist in preparing further legislation. - Expropriation Act: Expropriation was the main Instrument of past policies of land nationalization. Since the decree on expropriation was passed in April 1991, expropriation is to be used in exceptional cases where public interests justify land expropriation. - Town Planning Act of December 1 1990: Two new urban planning instruments are introduced, the master plan (PDAU: "Plan d'Amdnagement et d'Urbanisme") and the land use plan (POS: "Plan d'Occupation des ScZs"), thereby replacing the old planning documents (PUD and PUP). - Land Use and Building Regulations: A decree was passed in May 1991 to define new standards for both land use and building regulations as well as to introduce a new principle for cost sharing of trunk infrastructure. - Planning certificates, subdivision permits, building permits: Another decree was passed in May 1991 to define the content, procedures and condLtionis of the various permits and certificates referred to in the Town Planning Act and thereby sets up a number of fairly complex safeguards against excessive private development. VI. CONC&WALUO: 59. The housing sector in Algeria suffers from the three charasteristics of the country's economy: (a) an 2conomic growth which is outpaced by population growth; consequently the accumulation of real estate capital is insufficient to meet global n -.ds and even less to meet the needs of those categories which are not assured income security; (b) administrative procedures which result in a sophirticated, formalist and above all, extremely costly regulatory environment of all the housing sub-sectors; (c) classic socialist management, whose heritage is now well kndownZ: an Imbalance between real prodtuction flows and financial flows, a 17/ Bertrand Renaud: Legacy of Central Planning se ransition issues in BousinS", World Bank, June 1990. xxvi rigid and distorted price structure completely disconnected from real costs of inputs, the existence of parallel markets which exacerbate the imbalances between consumption and savings behaviors, the excess liquidity of the economy which can result In extremely inflationary situations. 60. The dominant effects of the economic management practices on the housing sectors can be suLmarized as follows: (a) acute and increasing housing shortages: low production levels versus explosive population growth; lack of diversification in output to meet the population's needs; (b) regulatory environment: housing development, financing and management dominated by cumbersome, reztrictive and costly administrative procedures and regulations. In particular, definition of the standards for site development and construction, procedures for procurement and supervision of construction, mechanisms for home-buyer credit, land and real estate taxation, etc.; (c) public/private imbalance: housing supply system monopolized by public developers and public construction enterprises (if true); (d) substantial and largely regressive subsidies, still extended to households who could afford to pay (Instead of concentrating scerce resources on low-income groups); (e) severe price distortions. 61. However, in the context of the general reforms which the Algerian economy is undergoing, housing policy is also being fundamentally reorganized. These new, fairly coherent, developments seem to be going in the right direction even though there is still a significant effort to be deployed to translate the reforms from texts to ground work. The principal components of the ongoing housing reforms comprise: (a) approval of land development legislation which provides for the repeal of land reserves, the liberalization of land transactions and the creation of real estate agencies with a view to improving management of the existing housing stock; (b) approval of legislation on land development and urbanization which confirms the transfer of responsibility to local government with regard to urban land use and which questions the validity of existing urban regulations; (c) selling off of existing public rental stock to occupants at discounted prices; (d) transformation of the OPGI into EPIC; I6 xxvii (e) transformatlon of the statute of the CNEP to that of an EPIC, I.e. with banking status. This places the CNEP in competiticn with the other banks; (f) incentives for banks to become involved in financing housing development operations and in the attraction of housing savings by means of non-administered credit interest rates. HOUSING SC-TOR REPORT ANNEX 2 REFERENCES I - xiST OF N8ï LEGISMTION. AD REGUL&TORY TEXTS This list provides the title of the document - either a Law ("loi") or Regulatory Text ("Décret exécutif") in its original designation ln French, the date and page of its publication, in the official Gazette ("Journal Officiel" -i "J.."). 1. Financial System and Institutions (CNFP and CNL) Loi No. 90-10 du 14 avril 1990, relative à la Monnaie et au Crédit -- J.O. 16 du 18 avril 1990, p.450 Décret exécutif No. 91-144 du 12 mai 1991 portant restructuration de la Caisse Nationale d'Epargne et de Prévoyance (CNEP), distraction d'une part de son patrimoine et création de la Caisse Nationale du Logement (CNL) -- J.O. 29 mai 1991, p.728 Décret exécutif No. 91-145 du 12 mai 1991 portant status de la Caisse Nationale du Logement -- J.O. 29 mai 1991, p.728 Décret exécutif No. 91-146 du 12 mai 1991 portant modalités d'intervention de la Caisse Nationale du Logement, en matière de soutien à l'accès à la propriété du logement -- J.O. 29 mai 1991, p.731 Creation of the National Housing Agency (AADL) Décret exécutif No. 91-148 du 12 mai 1991 portant création de l'agence nationale de l'amélioration et du développement du logement -- J.O. 29 mai 1991, p.736 2. Reorganization of the Public 1ousing Enterprises Décret exécutif No. 91-147 du 12 mai 1991 portant transformation de la nature juridique des status des offices de promotion et de gestion immobilières et détermination des modalités de leur organisation et de leur fonctionnement -- J.O. 29 mai 1991, p.732 3. Gradual Liberalization of the Public Rental Harket Décret exécutif No. 89-88 du 20 juin 1989 fixant les règles régissant les loyers applicables aux logements et locaux appartenant à l'Etat, aux collectivités locales et aux établissements et organismes en dépendant. 4. Reorganization of the Land Management System Décret exécutif No. 91-117 du 27 avril 1991 portant création d'un comité interministériel foncier -- J.O. 1 mai 1991, p.558 Loi No. 90-30 du 1er décembre 1990 portant Loi Domaniale -- J.O. 18 novembre 1990, p.1332 -2 - Loi No. 91-11 du 27 avril 1991 fixant les règles relatives à l'expropriation pour cause d'utilité publique -- J.O. 8 mai 1991, p.577 Décret exécutif No. 90-405 du 22 décembre 1990 fixant les règles de création et d'organluation des Agences Locales de Gestion et de Régulation Foncières Urbaines (ALGRFUs) -- J.O. 26 décembre 1990, p.1534 5. Decentralization of Responsibilities to Local Governments Loi No. 90-08 du 7 avril 1990, relative à la commune -- J.O. 15 du 11 avril 1990, p.420 Loi No. 90-99 du 7 avril 1990, relative à la Wilaya -- J.O. 16 du 11 avril 1990, p.434 6. Rationalization Qf Urban Land-Use âanagement and Building Rezulations Loi No. 90-29 du 1er décembre 1990 relative à l'Aménagement et l'Urbanisme -- J.O. 2 décembre 1990, p.1408 Décret exécutif No. 91-177 du 28 mai 1991 fixant les procédures d'élaboration et d'approbaiton du Plan D8irecteur d'Aménagement et d'Urbanisme (PDAU) et le contenu des documents y afférents -- J.O. 1er juin 1991, p.808 Décret exécutif No. 91-178 du 28 mai 1991 fixant les procédures d'élaboration et d'approbation des Plans d'Occupation des scls (POS) ainsi que le contenu des documents y afférents -- J.O. 1er juin 1991, p.811 Décret exécutif No. 91-175 du 28 mai 1991 définissant les règles générales d'aménagement, d'urbanisme et de construction -- J.O. 1er juin 1991, p.788 Décret exécutif No. 91-176 du 28 mai 1991 fixant les modalités d'instruction et de délivrance du certificat d'urbanisme, du permis de lotir, du certificat de morcellement, du permis de construire, du certificat de conformité et du permit de démolir -- J.O. 1er juin 1991, p.797. -3- II - REFERENCES ABT ASSOCIATES: "Housing Finance and the Shelter Sector in Algeria", November 1990, prepared for USAID, Office of Housing and Urban Programs, Washington D.C. CAISSE NATIONALE "Etude des perspectives de d6veloppement du secteur de D'ANIMATION DES la construction en Alg6rie et des mesures de ENTREPRISES ET DE rationalisation de son environnement", September 1990, TRAITEMENT DES Algeria INFORMATION DU SECTEUR DE LA CONSTRUCTION (CNAT): LaNIER, Royce and "Assessment of the Impediments to the Private NANKMAN, Piet: Provision of Shelter in Algeria", March 1991, prepared for UJSAID/RHUDO, Tunis NANKMAN, Piet: "Sites and Services in Algeria", November 5, 1991, prepared for USAID/RHUDO, Tunis RENAUD, Bertrand: "Legacy of Central Planning and Transition Issues for Housing", seminar on housing reforms in socialist economies, the World Bank, Washington D.C., June 12- 13, 1990 WORLD BANK: "ALGERIA: Second Economic Support Loan (ERSL II)", October 1991 WORLD BANK: "ALGERIA: Enterprise and Financial Sector Adjustment Loan (EFSAL), May 31, 1991 WORLD BANK: "Housing: Enabling Markets to Work", November 19, 1991, A World Bank policy paper, by the Urban Development Division, Infrastructure and Urban Development Department