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Imagining a Social Enterprise Model for the Provision of Pro-poor Housing Solutions in the Philippines

DavidHoffmann7 December 2016

In November 2013, super typhoon Yolanda hit the Philippines in full swing. Fragile shelter structures across the archipelago’s coastal areas did not withstand the strong winds and storm surges brought about by Yolanda. In the aftermath of the disaster, the government launched an emergency programme with the mission to ‘build back better’ [1]. The government was supported by the international humanitarian community, whose swift response matched the scale of the disaster in its scope and ambition. Yet serious funding challenges were said to hamper recovery.

 

Budget shortfalls are one of the most pervasive barriers to the successful implementation of recovery programs and a constant challenge faced by traditional development models. The idea that social enterprises could offer an answer to this issue has gained traction in the past years [2]. Social enterprises are organisations set up as revenue-generating business with social objectives, which allows them to be financially independent. As part of DPUs Junior Professional Programme, I was lucky to work closely with one of them.

 

Founded in 2014, LinkBuild is a young Housing Development Enterprise (HDE) whose mission is to scale up innovative, low-cost, and sustainable shelter solutions and programs for and with the poor. LinkBuild was set up as the latest addition of the Philippine Alliance, a grouping of 5 organisations that has a long history of successfully mobilising communities around savings groups in order to achieve secured land tenure. Given the current housing context in the Philippines, the need for this kind of program has never been more urgent.

 

The Housing Context in the Philippines

 

A new day begins in Quezon City, one of Metropolitan Manila’s 16 cities. The streets have been buzzing since the early morning hours, the traffic slowly pulsating through their aching junctions. As I work my way through the streets, I walk past busy informal settlements. Some are squatter settlements, the result of spontaneous and unplanned occupation of land. Others are informal subdivisions. The residents here live on a surveyed plot and they usually have proof of ownership or land-lease rights.

 

Flooded downtown Manila during rain season.

Flooded downtown Manila during rain season.

 

In Metro Manila, one out of every four people resides in informal settlements, often within disaster-prone areas. As an alternative, several shelter programs are being implemented by government and non-government actors. Yet the delivery of these programmes has been unable to cope with the rocketing demand for affordable housing. Driven by natural population growth and rural to urban migration, the main urban areas in in the Philippines are growing at a breath-taking pace. The country is projected to be 80% urbanised by 2025 [2] – an increase of 30 points from 2015. Moreover, officials are talking of a housing backlog of 5.7 million houses of which 60% are believed to be economic and social housing [3].

 

Most worryingly, some of the latest government’s efforts to deliver shelter programs have been proven to be counterproductive. A recent operation plan that aimed to relocate over 104,000 informal settler families out of danger zones in Metropolitan Manila, relocated 67 per cent to off-city sites [4]. The programme beneficiaries call these off-city sites the ‘death zones’. They feel effectively disconnected from their earlier life as they struggle to deal with the loss of their livelihoods and networks. Reports show that up to 60% of individuals that were relocated out of Metro Manila eventually return to the city [5]. If given the option, many ISF would rather remain in the old site despite the immediate risks they face instead of moving outside of the city.

 

Informal subdivision in Valenzuela City, Metro Manila.

Informal subdivision in Valenzuela City, Metro Manila.

 

At the same time, the private sector has recognised affordable housing as a potential growth market, yet it is struggling to set foot in the sector. From a purely financial perspective, affordable housing provision is a cut-throat affair. In Metro Manila, developing affordable housing amounts to ‘financial suicide’, as a local housing developer recently put it. The high land prices, as well as the additional costs of building in a congested city mean that selling houses for less than 7.500£, the maximum unit price at which they are considered to be affordable, can only be achieved at a loss. Even the supply of houses within the ‘economic housing’ brackets, at a unit cost of no more than 19.000£, is a hard trick to pull off.

 

The fundamental problem with these government and private programmes is that they treat informal settlers as an issue that needs to be dealt with, or an opportunity that ought to be exploited. What they fail to see is that informal settlers can be actors in the housing delivery process.

 

Imagining a Social Enterprise Model for the Provision of Pro-Poor Housing

 

As a social enterprise, LinkBuild is set as a revenue-generating business with social objectives. This distinguishes it from traditional NGOs that rely on international aid and funding to run their programmes and operations. Historically, the Philippine Alliance members have operated as traditional NGO’s. However, the donor landscape is shifting as it tries to make its beneficiaries’ programmes more investor-friendly. As a result, donors increasingly treat capital disbursements to partners as an investment, which has important implications for organisations like LinkBuild. This new trend is pushing LinkBuild to imagine a business model that sits comfortably within the highly competitive real-estate sector while staying true to its vision of reaching and mobilising the marginalised communities.

These units were built on an in-city relocation site identified by the local government. It also facilitated negotiations with the landowner and landfilled 6.5 hectares of land. Seventeen (17) of these plots were allotted to one of the communities associated to the Philippine Alliance

The units pictured above were built on an in-city relocation site identified by the local government.  Local government also facilitated negotiations with the landowner and landfilled 6.5 hectares of land.

 

To achieve financial sustainability, LinkBuild’s latest wave of housing projects is being conceived as mixed-income developments. The idea is to make a part of the 670 units fit for middle-income clients. The units, which will be more spacious, will be sold at a price surplus, effectively subsidising the construction of the more affordable units. While this new approach seems like radical change in direction, it does have a compelling argument in its favour. It offers a possibility for the organisation to become financially independent over time.

 

In the short run, LinkBuild’s operations would still heavily rely on the access to a starting capital. LinkBuild has therefore partnered with Real Equity For All (ReAll – former Homeless International), one of the few investors who are venturing into the housing market at the bottom of the pyramid. The capital enables LinkBuild to cover the costs of ‘hard investments’ such as purchasing and developing land, as well as the construction of the housing units; and thus, LinkBuild cannot be thought of as a stand-alone organisation, at least not for the time being.  However, in the medium run LinkBuild is hoping to achieve financial sustainability sustaining through the profit generated by the sales of surplus houses.

 

Chart 1: LinkBuild’s Social Enterprise Model

Chart 1: LinkBuild’s Social Enterprise Model

Strong Communities Make a Difference

In line with the tradition of community-oriented organisations like the Community Architects Network and the Asian Coalition of Housing Rights, LinkBuild works closely with the communities that it seeks to reach. The Philippine Alliance is the main enabler of this process. Each organisation in the Alliance plays a strategic role in delivering LinkBuild’s housing projects, as their active networks and expertise allows them to mobilise and engage communities through participatory processes. For example, through the Homeless People Federation Philippines, Linkbuild is able to link with strong communities (see Chart 1) in different regions. After connecting with the communities,  LinkBuild conducts market research and hosts workshops with clients and communities to ensure that it is able to reach target clients; that it meets their specific needs; and that the project is financially viable. In the end, the gathered information directly feeds into the architects’ final project design.

Chart 2: What defines a Strong Community?

Chart 2: What defines a Strong Community?

Moreover, the close ties of the Philippine Alliance with the local government units help to navigate the hurdles that land acquisition and development may pose. For example, in Mandate City, local government identified land and facilitated the negotiations for acquisition. Given the competitive nature of the sector, this form of support is crucial.  Least but not last, LinkBuild also follows international best practice of developing in-city projects. By purchasing land that is centrally located, the organisation hopes to deliver projects that actively contribute to the integration of marginalised communities to the existing city fabric.

 

Participants of the Bago Gallera Site Planning Workshop in Davao City last September.

Participants of the Bago Gallera Site Planning Workshop in Davao City last September.

All of the above factors allow LinkBuild to distinguish itself from the traditional housing developers that tend to have a top-down approach to housing delivery and are primarily concerned with meeting sales objectives.

Ultimately Linkbuild’s model still remains to be tested since the mixed-income housing projects are yet to be completed. As the organisation enters unexplored waters with the Philippine Alliance, it will continue to learn by doing. And there remains a lot to be learnt. Given the housing sector’s state of permanent emergency, planning for the future of the countries’ urban poor is crucial. Despite the scale of the problem, there are only few organisations bold enough to offer an alternative. As it paves its way to sustainability, LinkBuild might well be leading the path towards the ‘imaginative reformulation of the systems by which we manage change’ [7]. And it is leading the change by asking the right question – how do we build forward better?

 

References

 

[1] National Economic and Development Authority, 2013. Reconstruction Assistance on Yolanda:  Implementation for Results. [online] Available at: http://yolanda.neda.gov.ph/wp-content/uploads/2015/11/RAY-2.pdf

[2] Overseas Development Institute, 2013. Why and how are donors supporting social enterprises? [online]. Available at: https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/8894.pdf

[3] The World Bank, 2016. Closing the Gap in Affordable Housing in the Philippines: Policy Paper for the National Summit on Housing and Urban Development. [online] Available at: http://documents.worldbank.org/curated/en/547171468059364837/pdf/AUS13470-WP-PUBLIC-Housing-Summit-Policy-Paper-has-been-approved-P155561.pdf
[4] Lorenciana, C.R. (2013). Philippine housing backlog is 5.5M SHDA targets to build a million units by 2016. [online]. Available at: http://www.philstar.com/cebu-business/2015/07/13/1476445/philippine-housing-backlog-5.5m-shda-targets-build-million-units

[5] The World Bank, 2016. Closing the Gap in Affordable Housing in the Philippines: Policy Paper for the National Summit on Housing and Urban Development. [online] Available at: http://documents.worldbank.org/curated/en/547171468059364837/pdf/AUS13470-WP-PUBLIC-Housing-Summit-Policy-Paper-has-been-approved-P155561.pdf

[6] Housing and Urban Development Coordinating Council. 2014. Developing a National Informal Settlements Upgrading Strategy for the Philippines (Final Report). [online]. Available at: http://www.hudcc.net/sites/default/files/styles/large/public/document/NISUS%20Final%20Report_July2014.pdf

[7] Sumsook, B. 2016.  Cities for People and by People. [online]. Available at: https://unchronicle.un.org/article/cities-people-and-people

 


 

David Hoffmann is an alumna of the MSc Urban Economic Development and a participant of the DPU/ACHR/CAN Young Professionals Programme. He currently works at LinkBuild, where he is involved with the design and implementation of organisational development strategies. Amongst others he organised workshops to encourage the knowledge exchange between community associations in Cebu and Davao.

 

*All pictures taken by D.H.

 

CAN Co-Creation: Reflection

LuisaMiranda Morel5 September 2016

In July 2016, the 4th Community Architects Network (CAN) Regional Workshop brought together community action practitioners from countries all over South East Asia. The first day was spent in Bangkok, Thailand, introducing the participants to the work done and challenges faced by CAN members in Thailand, China and India. The following five days were spent in groups – each focusing on a different sector of city development, for example the transport group, which I was part of – doing fieldwork alongside local communities in Chumsang City of Nakornsawan Province, Thailand.

 

Today is just about listening

 

“Today is just about listening,” we were told. That was how we started our fieldwork on the 16th of July. Focusing our attention on understanding the local communities of Chumsang, listening to their ideas, concerns and how they wished their city to be in the future. This was a challenge, particularly as most of us had spent the first two days of the workshop meeting and exchanging with many different people from Sri Lanka, Nepal, India, China, Thailand, Indonesia, Philippines, Vietnam and Cambodia. So by the time we arrived in Chumsang, my mind was already full of questions and ideas. I was excited and a little rushed to quickly understand the context of Chumsang, considering we had very few days to do so and then to, somehow, ‘co-create’ something.

 

Co-Creation was the theme of the workshop. It was described in the introductory programme as the “co-creation and design between man and nature through a process of understanding and respect”. Understood in this way, co-creation was very representative of the dynamics and needs of Chumsang. Like other similarly sized cities in Thailand, Chumsang faces many concerns related to its natural resources and landscapes, the loss of its cultural traditions, the changing dynamics of migration in its young and old populations and as a result the increasing day to day challenges in making the city livable, sustainable and lively.

Mapping people’s routes to the community hall

Mapping people’s routes to the community hall

Following this theme, the workshop in general had a loose structure that allowed space for conversations to evolve, take different directions and reveal those elements that were not immediately obvious about the city and its people. At first this way of working felt uncertain, unfamiliar and risky but as we were immersed in to the fieldwork, the friendly people and the excitement of it all, it became easier to go with the flow and allow our ideas and projects to develop in a very organic way.

 

Our behinds were burning but our faces were bright

 

As the transport and cycling group, we happily spent a lot of time on our bicycles, visiting the city and using any excuse to get on the saddle. By the end of the first day, it was harder to walk straight and our faces were quite pink from the sun, but it was through these rides around the city that we found inspiration to work. We even wrote a song!

One of the cycling groups meet at 6 a.m. every morning to ride around the city

One of the cycling groups meet at 6 a.m. every morning to ride around the city

Within the transport group, I felt very connected to my colleagues, not only by being part of CAN, which encouraged us to work together but also through our other interests, in my case cycling. In other cases, photography, culture, music, heritage and ecology brought people together to share ideas on making the city. These elements, represented through our different interests and hobbies, are also an important part of what makes cities vibrant and CAN Co-Create seemed to build on this synergy very well. It took a wholesome perspective toward community architecture and in this case, for the first time, at the scale of the city. I think this was one of its greatest strengths.

Gathering the cycling groups at the community hall

Gathering the cycling groups at the community hall

In this way, the opportunity that CAN workshops bring about by generating attention, bringing in professionals and practitioners from many contexts to work with local communities and catalyze change not only focused on one arm of city development but many. We established groups that addressed housing, mobility, politics, environment, culture, health and one that emphasized the connectivity and cohesion between these different elements at the level of the city. The workshop also became an opportunity for the mayor to come face to face with the energy of the city’s people, their desires and motivations and to engage in direct conversation with them about their different ideas for the future of Chumsang.

 

At the same time, this transversal approach also brought many communities to work together. We worked with two cycling groups, a group of elderly, the old market community, young school children, communities that were to be relocated and communities that had already been housed. Initially, it seemed that these different groups had their own motivations for participating in the workshop. However, at the end of each day, as we reviewed our progress and our findings, the work gradually demonstrated how intricately connected these different motivations and processes really were.

Policies group presenting outcomes: Chumsang’s journey

Policies group presenting outcomes: Chumsang’s journey

 

Although some groups progressed quicker than others during the five days of fieldwork, reviewing, changing and even starting over a couple of times; the level of involvement from community groups in the presentation of the outcomes, on the last day, was moving. It showed that these processes of participation intrigued people and invited them to feel part of something greater.

 

So although lengthy and sometimes frustrating, the time it took to build, validate and present ideas with communities, seemed to generate a collective sense of a ‘Community of Chumsang’. In a way, the notion of ‘co-creation’ really materialized through this challenging and timely process. Toward the end of the workshop, I increasingly noticed that people built on these connections and worked with them, moving around the room, between different groups, sharing information and presenting ideas in sync with each other.

Combining activities, processes and project ideas on the same ‘master plan’ for Chumsang

Combining activities, processes and project ideas on the same ‘master plan’ for Chumsang

Sharing is where everything starts

 

There were many things about the CAN workshop that motivated me but it is what happens after the workshops, which I find the most significant. How the transformative process that CAN workshops initiate, by bringing so many minds together in one place, can ripple out into a series of waves of transformation in other places; How those of us who attend the CAN workshop can carry our experiences and through them, diffuse the energy of CAN into existing and new networks. After the workshop I was left with this intrigue, excited to see what happens next.

 

The workshop produced Facebook groups [CAN Co-Create Chumsaeng City & Unsung Stories of Chumsaeng); brought cycling movements together to carry out a collective ride throughout the city with the support of the police; created brochures to promote tourism, made a song and proposed many other small achievable projects that the local communities could carry on after the workshop. I see these outcomes as small actions and tools that are practical and achievable in the short term but which have the potential to keep co-creation running by “people’s process”, as we like to say, in the long-run. If people follow up and use them.

 

Leader of ‘The Old Tigers’ cycles with other groups, as we invite people to join and advocate for cycle lane markings, cycle routes for tourists and greater safety for children and elderly who use bycicles

Leader of ‘The Old Tigers’ cycles with other groups, as we invite people to join and advocate for cycle lane markings, cycle routes for tourists and greater safety for children and elderly who use bycicles

A month later, I am visiting some of the CAN members in Vietnam. They have been great hosts, showing me around and teaching me about the beautiful city of Hanoi.

 

“Sharing is where everything starts” says Houng, one of my hosts and also a CAN member. Being back in conversations about community practices reminds me of my intrigue, what happens after the workshop? How does the transformative process of CAN Co-Create continue?

 

Still excited from the experience, I’ve noticed some signs that suggest the transformative process is still running. The actions that we took and the ‘web’ of tools that we began to create seem to have given the ‘network’ a potential to catalyze this process. Believing it all the more as I listen, discuss and exchange with people who, despite having returned to their busy lives, are still talking about visiting Chumsang again, strengthening the CAN network in Vietnam and even about extending the scope of the existing one.

 

 

[Video]

CAN Co-Create Workshop Teaser Video – Final Video will be published in October

 


Luisa is an alumni of the MSc in Building and Urban Design in Development at the DPU. Currently she is working in Manila, Philippines as a beneficiary of the DPU/ACHR/CAN Young Professionals Programme.