Upgrading Informal Settlements in South Africa: Policy, Rhetoric and what Residents really Value

Abstract

A billion persons live in slums worldwide, and 2 million households live in informal housing in South Africa. The stated goal of the South African government is to overcome this housing backlog by 2014; but doubling the budget will achieve this by only 2030. Current policy is to deliver a choice of housing alternatives; but in practice ‘a house on a fully serviced property with freehold title’ is seen as the only alternative. This paper describes a model that estimates the value that residents of an informal settlement place on aspects such as level of municipal engineering services, location and type of upgrade, and the size of the dwelling. The model was applied to three issues in the current debate on informal settlement upgrading in South Africa; namely: whether to upgrade by relocating all residents to a ‘greenfield’ site or upgrading ‘in situ’? Whether to upgrade incrementally across many settlements or upgrade fully one settlement at a time? Whether to offer residents more than one upgrade alternative? The stated choice approach provides a method to develop and test many housing alternatives as part of involving the community in the upgrading of an informal settlement.

Keywords:

• Informal settlement upgrading
• stated choice
• housing choice
• housing finance
• urban regeneration

Acknowledgement

The data on which this paper is based were collected by Ms Chintu Lingomba.

Notes

¹ Mail and Guardian (21 April 2008) Lenasia-service delivery protest turns violent. Available at http://www.mg.co.za/article/2008-04-21 (accessed 17 October 2008).

² The Mercury (28 July 2008) Ntuzuma residents protest against housing. Available at http://www.themercury.co.za/?fSectionId = &f ArticleId = nw20080728091105971C573977 (accessed 2008).

³ IOL (12 May 2008) Orange Farm residents barricade road. Available at http://www.int.iol.co.za/index.php?set_id = 1&click_id = 13&art_id = nw20080512154233670C917910 (accessed 17 October 2008).

⁴ Outcry over new Slums Bill. Available at http://www.iol.co.za/index.php?set_id = 1&click_id = 13&art_id = vn20070513085035657C939324 (accessed 17 October 2008).

⁵ Except that the upgrading produced social housing which they cannot afford and therefore have not returned.

⁶ At the same time, Berrisford et al. (2008) ask for larger land area to accommodate the rural-urban transition of immigrants.

⁷ In the theory of discrete choices, an essential departure from traditional micro-economic theory is the postulate that utility is derived from the properties or characteristics of things, rather than the goods per se. Discrete choice theory incorporates the work of the standard Lancaster-Rosen model, but modifies this approach further by assuming that individuals maximize their utility on the basis of their perceptions of characteristics, rather than the characteristics per se.

⁸ Random utility theory (RUT) is a very general theory of how the analyst represents the preferences of agents, where elements of information (known to the agents) are not observed by the analyst. While RUT has gained particular recognition within discrete choice theory in recent years, it is not restricted to choice theory and can be implemented in a wide range of possible decision contexts.

⁹ IID is potentially restrictive in that it does not allow the error or random component of different alternative outcomes to have different variances (i.e. degrees of unobserved heterogeneity).