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Carrying It Out
Does the Project/Program support Local
Initiatives in Construction?

Improvements in the physical infrastructure and in housing provides employment opportunities and can have a beneficial impact on the economic situation of families and communities. What are appropriate strategies that promote the construction and materials supply sector toward local income enhancement and the broader development agenda?

General guidelines are offered at the government level and for aid agencies which consider job creation and wealth generation. Considering the informal sector as ‘hidden consumers’ suggests that they are best served by the formal private sector, with a materials and tools ‘supermarket’ as interface.

Jobs From Housing Improvement

Excerpt from:
Jobs From Housing: Employment, building materials, and enabling strategies for urban development. Spence, Robin; Wells, Jill, and Dudley, Eric. 1993. Prepared by Cambridge Architectural Research, Ltd. for the Overseas Development Administration of the United Kingdom.

The building of housing is also an act of wealth generation. The role of the building industry, the building materials producers and the informal sector creates both wealth and income through housing activity. Housing is generally not the major focus in upgrading, and indirect measures are useful to assure sufficient materials at reasonable prices when families upgrade their dwellings. General objectives and action proposals for governments and aid agencies are suggested to address these issues with the local development agenda as priority.


1. Increase and diversify the supply of building materials. At present the range of materials available for housebuilders is very limited, and is becoming still narrower as local organic materials become scarcer. Action is needed both to increase the supply of organic materials and to widen the range of manufactured materials available. In particular, more use needs to be made of available agricultural and industrial wastes.

2. Disperse production. Many building materials use energy intensive technologies and have low value for weight. Production in large-scale centralized plants can create problems both in the level of technology employed and also in management, transportation and distribution. These problems can be much reduced by use of small-scale, dispersed production close to the raw materials and fuels and the point of use.

3. Create jobs. The process of housing and community building has the potential to create an enormous amount of employment in the production of building materials. Creation of local employment has important multiplier effects for the local economy.

4. Reduce imports. The level of imports of building materials or of imports needed for building materials production is very high and hard to sustain, particularly in debtor economies. In many countries, action needs to be taken in such a way as to reduce or avoid increasing imports.

5. Consider sustainability. All actions taken must recognize the need to minimize irreversible damage to the environment, through deforestation, loss of agricultural land, and in air and water pollution.

6. Promote respect for local building traditions. Some well-established traditional building technologies using earth and organic materials are falling out of use, partly because they lack the prestige value of modern materials. A resurgence of respect for these traditional ways would do much to stimulate better use of local materials.


1. Promote forestry and tree planting. Growing trees (and bamboo) is by far the most efficient way of converting energy and mineral matter into building materials. Loss of trees is one of the main factors causing the upward spiralling of building materials prices. Tree planting in all community development schemes, in small-scale commercial lots and large-scale forestry is the most cost-effective action which could be taken to stimulate building materials supply. A tree tax on building materials imports could be used to help finance the planting and the treatment and processing technology needed.

2. Be a client for new and low-cost materials. The models presented by official building programmes have a large influence over people’s perception of which materials are respectable and desirable. The purchasing power of governments and the spending departments under their control have great potential for the promotion of appropriate materials and technologies. Governments should look for ways to demonstrate a commitment to indigenous materials by using them on all building projects for which they are clients.

3. Remove price controls. Experience shows that price and distribution controls on conventional building materials, such as cement and roof sheets, reduce the incentive for new producers of alternatives to become established in areas remote from the point of manufacture. Removal of price controls would put up materials prices in some areas initially, but may help stabilize them in the long term by bringing forward new small-scale locally produced alternatives.

4. Improve technical education and training. With the widespread breakdown of the traditional apprenticeship system there is a growing need for governments to encourage technical training for schoolchildren and young adults. Vocational training is often perceived as being of second rate quality. The educational system needs forms of positive discrimination which place real social and monetary value on technical skills.

5. Control foreign investment. Governments need to strike better deals with TNCs investing in materials manufacture. Large-scale technology packages and turn-key projects have repeatedly been shown to lead to long-term dependency on imports and skills and thus to higher prices. Foreign investment is needed but government must improve its ability to select and control technology acquisition. Technologies suitable for small-scale production should be favoured if possible because they can be managed locally.

6. Support small-scale producers. Small-scale producers are commonly handicapped by lack of access to improved technology and by very high interest rates. Many work in the informal sector. Apart from buying what they produce, governments can support small producers by establishing a technical support service (perhaps extending existing research units), and by finding ways to meet their needs for short-term credit, particularly working capital.

7. Encourage entrepreneurs in medium-sized plants. Many building materials production processes which are relatively small in scale have a capital investment which is outside the reach of small-scale producers. And, because of the fluctuations in demand for building materials, investors tend to look for safer investments. Governments can help in identification and testing of raw materials, securing equipment and technical know-how and preparing feasibility studies.

8. Support for technological innovation. In most countries there are new or improved technologies available which are both appropriate in scale of production and use available raw materials. In individual countries, these may involve use of agricultural and industrial wastes as well as plentiful local resources such as soil. Bringing them into use requires a long-term commitment to a number of actions, such as: surveying resources; making available extraction permits; researching performance; investigating alternative manufacturing technologies; and developing technology profiles.

9. Develop standards. Action to develop standards not only helps manufacturers, but can offer householders using indigenous or new materials the opportunity to have their housing officially recognized by local authorities and lending agencies. It is also necessary to enable building professionals to specify them for use in formal sector housing programmes. Standards are often lacking for soil-based materials, and for new products developed from agricultural and industrial wastes.

10. Protect the environment. Rising demand for building materials is potentially one of the most serious sources of environmental damage as forests and plantations are cut, beaches and river banks are exploited, quarries are opened, agricultural land is devoured. Government responsibility is both to make available the needed raw materials and to prevent long-term environmental damage. There will inevitably be conflicting interests. This may need to involve closer co-operation between different branches of government than practiced in the past.


1. Study and work with the existing agents of change. Householders are rightly cautious about accepting new technologies for housing. They will want to see that they demonstrably work well and are acceptable to others before adopting them. Only by recruiting the power of the indigenous agents of change can aid projects, whether of NGOS, or international organizations, hope to make a significant impact on the decision-making processes of the majority.

2. Assist appropriate technology transfer. Through working in many countries, international aid organizations are able to develop a better understanding of the range of options available and reasons for success and failure of technologies and programmes. Thus they are better placed than individual governments to support innovations. This can most effectively be done by strengthening support to international appropriate technology groups.

3. Support local NGOS. Local NGOs involved in housing and community development are often much more effective than national governments in identifying suitable technologies and stimulating small producers. This is because many of these operate in the informal sector, which is often invisible to government organizations. International aid agencies should look for ways to increase support for the activities of these local NGOS.

4. Offer technical support to small building materials producers. Banks and international aid agencies have tended to confine lending to large-scale technologies for building materials production such as cement plants, offering them capital at much lower interest rates than those faced by small-scale producers. There is a need for a decisive shift in the balance of support towards small-scale technologies. Banks and international lending agencies must take the lead.

5. Promote responsible technical aid deals. Project aid has often been made available for buildings and infrastructure using specifications which require building materials to be imported from the donor country. This both misses the opportunity to stimulate local industries and increases dependency. Aid agencies should insist on the maximum realistic utilization of local materials in every capital project and take the opportunity to establish local production.

6. Promote tree planting. Where at all possible, every type of construction, education and welfare project should include a tree planting component. Roads, schools, health and irrigation and water supply projects can all be used to plant trees and to develop a culture of tree planting and plantation management in countries where timber supplies are dwindling. Aid agencies of all types and at all levels can contribute to this aim and should set it high among their evaluation criteria for support of new projects.

7. Make use of management contracting. Institutions often feel obliged to turn to large urban-based contractors for the execution of any substantial building works. In many instances the skill and manpower to carry out the work exists in the local community. If institutions had the necessary management skills they could manage a group of small local contractors and so keep the benefits within the locality. Apart from being good for the community and for the institution’s relations with the community, it may also be more economical for the institution. Aid agencies can help to develop these managerial skills in local NGOS.

8. Support long-term programmes. Past attempts to introduce new building materials by international aid agencies have often been ineffective because the commitment has been too short-term. Introduction of new technologies is unlikely to succeed within the two to three year lifetime of a single project. International agencies must be prepared to embark on a much longer term commitment which will not only demonstrate the feasibility of a new material but support its promotion and marketing until it is widely accepted.

9. Support the development of local institutions. Changes in the patterns of building materials production and use require coordinated action by many local institutions: government organizations such as research institutions; survey organizations; standards institutions; technology support organizations; local government organizations; and NGOS. Support for the building of effective institutions is an effective way for aid agencies to assist in bringing these changes about.

10. Show the way in environmental protection. Use of new technologies and procedures by developing countries is often resisted as second best, unless it can be demonstrated that they are also in use in the industrialized countries. Following UNCED, this is especially true in the field of environmental protection and resource utilization. Firms in industrialized countries developing waste utilization and pollution abatement technologies should be encouraged to consider their adaptation and application in developing countries.

The Low Income as Hidden Consumers: Support and Promotion of Informal Incrementation Construction Through Large Manufacturers and Suppliers

Excerpt from:
The Hidden Consumer: A New Paradigm Using Materials Distribution and Manufacturers as a Bridge to Improved Housing in Emerging Markets. Crowley, John, and Goethert, Reinhard. 1995. Research Report, MIT Department of Architecture.

This approach recognizes the demonstrated capacity of the informal sector – the quasi-legal incremental builders, the ‘popular’ sector – who succeed despite financial, legal, and physical obstacles. It argues that this sector can best be assisted by targeted marketing and product reorientation by private industry. Finance issues, regulatory environment and institutional context are considered accelerators and not prerequisites. The current emphasis on skills training and promotion of small-scale materials suppliers can only have limited impact and has little chance of success in face of the growing demand.

The low income sectors should be viewed as consumers instead of welfare poverty clients. Widespread commercial materials distribution and reorientation of manufacturers are seen as the bridge to improved housing in emerging markets.

A ‘homecenter’ (a one-stop supermarket which offers building materials and tools) is suggested as the interface between the informal builder and manufacturers and retailers. Manufacturers and suppliers should be encouraged to reposition products and components to better meet incremental and informal construction demands and to be made aware that this is ‘good business’ as well as good for the family and the city.

‘Homecenters’ are increasingly found in developing economies and highly successful. San Paulo, Brazil, has several of these ‘building supermarkets’ and approximately 80% of their business comes from the low income incremental builder.

Focusing on the rapid improvement of ‘popular’ sector housing positively impacts urban development

- The rapid consolidation of dwellings improves family amenities and improves the urban cityscape
- Consolidation of dwellings allows addition of rental rooms which: 1) increase family income and purchasing power, 2 ) concentrate urban development and retard expansion, 3) mitigates ad hoc squatter development by offering alternatives, and 4) draws off population from overcrowded inner-city tenements
- Better materials and construction results in higher quality housing stock
- There is increased employment for the low income families
- There are increased tax opportunities for cities from the construction and from the value of property

Why should the private sector enter this market?

- The ‘popular’ low income groups comprise the largest market opportunity
- There is a very large unaddressed market for materials in the informal low income sector
- Low income is not the issue, the rate of construction is what determines the market
- Standard construction products are used throughout all sectors, low and middle and high
- Demand is expected to increase, as expectations rise: aspirations and expectations are similar to those of the higher income strata

= The private sector should be made
aware of this opportunity

Why has the private sector not focused on this low income market?

- There is a tendency to think of the low income market as individual families, not as an aggregate demand
- A development orientation toward construction projects has obscured market issues, and has been reinforced by:

    - vested interest of contractors, suppliers, and companies who make easy profit through projects
    - traditional bias of governments toward high visibility projects

- Legitimate concerns over income issues have led to narrowly conceived policies from their preoccupation with affordability issues which constrained other options

Not all cities are attractive to market driven ‘homecenters’

- There must be very large informal population concentration to assure sufficient aggregate demand
- There must be a large proportion of informal housing which implies a high demand for building materials
- The low income should be largely composed of working poor in a vibrant informal economy which implies sufficient resources for house improvement
- There must be a functioning formal housing sector and a functioning materials distribution system which can tapped into
- There should be relatively unrestricted or ineffective development controls which allow informal sector construction largely unhindered by regulatory bureaucracies

What are the tradeoffs?

The tradeoff is between localized small suppliers vs very large, less frequent 'homecenters'
- Small suppliers have difficulty in competing on cost, variety, and specialized support
- Many (most?) small suppliers of materials will be forced out of business, as seen from experience in the United States. Small supplier costs tend to be appreciably higher and they cannot offer the same range of materials and support
- Transportation will become a factor, since large 'homecenters' are located less frequently than small community suppliers. However, many 'homecenters' offer delivery or low-cost rental of small trucks
- Individual support to home builders may be less, but more so because of less accessibility. Homecenters tend to offer more institionalized technical assistance; i.e., courses; but they also offer more specialized support, for example, kitchen planning

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