Mauritius, Social Housing: Social Movement and Low Income Housing in Mauritius Essay

Social Housing Social Movement and Low Income Housing in Mauritius Abstract: The Republic of Mauritius has been a model success story in both economic and social progress among both the African nations and the whole world. Despite many odds, the country has made tremendous economic progress and has succeeded at the same time to uplift significantly the living standards of the population in general. This paper gives an overview of the matter of the low-income housing in Mauritius. The first part of the paper gives the economical background and the evolution of the social movement in Mauritius. The second part introduces the current housing conditions and the situation of poverty and low-income groups in Mauritius. Finally the strategy of social housing is discussed. The Mauritius social housing strategy is discussed in terms of the changes in the institutional structure, and policies. Then the types of social housing and their financing are introduced. Keywords: Mauritius; Welfare State; Social Housing; Low Income Households AUTAR Bhotish Awtar | | Matric No: 2011280122 | Masters Candidate Tsinghua University | School of Architecture | Department of Urban Planning Please submit any feedback to bhotish@hotmail. om Submitted to: |dengweizyh@mail. tsinghua. edu. cn | Submission date: 17th June 2012 Introduction At independence, Mauritius did not appear predestined for the progress that followed. Challenges included: extreme cultural diversity as well as racial inequality; power concentrated in a small elite (of French & British colonial descendants); high unemployment; and high population growth. The country suffered from an economic crisis throughout the 1970s, was remote from world markets and was commodity dependent. It also exhibited low initial levels of human development. Nobel Laureate for Economics, James Meade even said in 1961, as quoted below: â€Å"It is going to be a great achievement if Mauritius can find productive employment for its population without a serious reduction in the existing standard of living†¦ The outlook for peaceful development is poor† Despite multiple factors stacked against it, Mauritius has achieved stellar progress in economic conditions, and has been unique in its ability to take advantage of privileged access to international markets to develop in a sustained and equitable manner. This has been enabled and complemented by effective poverty reduction and equitable improvements in human development. These achievements have been made by means of: a concerted strategy of nation building; strong and inclusive institutions; high levels of equitable public investment in human development; and a pragmatic development strategy (Vandemoortele, 2010). This success against all odds was coined as the ‘Mauritian Miracle’. In independence year of 1968, the country’s GDP per capita was US$ 2601, and in 2010, the figure rose to around US$ 14,0002 in 2010. Comparatively, in 2010 the average GNI per capita (PPP) for Sub-Saharan Africa stood at 2,1083. During the same period of 1968 to 2010, population rose from 787,000 to 1,281,0004. In 2011, an expectancy of life of 73 years5 at birth and the country had a Human Development Index (HDI) score of 7. 26, compared with an average of 4. 6 in the Sub-Saharan African region. The country was also ranked highest on the Earth Institute’s World Happiness Index among the Sub-Saharan African countries7, leaving behind Botswana and South Africa, other regional economic champions. Socialist movement in Mauritius Mauritius is a welfare state. It has a comprehensive social security system for the whole population and various other social protection schemes. Education is free from primary to university level, with 1 2 Source: IFAD, 2005 For 2010, GDP per capita (PPP) of US$ 14,194, according to IMF, 2011 World Economic Outlook, and GNI per capital (PPP) of 13,960 (units International Dollar) according to World Bank, 2011 3 (units International Dollar) according to World Bank, 2011 4 Figures for population for Republic of Mauritius is from various open source, such as Mauritius CSO, World Bank and other online open data sources. Source: UN Statistics, from WorldBank. org 6 Source: http://hdr. undp. org 7 Mauritius Ranking 64th out of 156 countries with 5. 5 points, on a 0-10 scale, 0 being extremely unhappy and 10 being extremely happy compulsory education up to age of 16. Health care including tertiary care, like heart surgery) is also free. Basic foodstuffs (rice and flour) as well as housing for lower middle-income group are heavily subsidized. Income support is provided to household with low income. The government provides nnual grants to a number of NGOs that cater for the specific needs of handicapped persons and vulnerable groups (Deerpalsingh, 2011). There are also price controls on some other commodities such as cement, petroleum products, bread, onions and edible oils. The state plays a key role in social welfare and security. In fact, expenditure on community and social services attracts the largest share of total government expenditure. The percentage out of total government expenditure spent on health, education, social security and welfare, and housing, over the period 1980 to 1988 averaged 43% and by 1999 was as high as 52%. Preferential access to markets in the European Union and the USA has facilitated this strong welfare state (Bundoo, 2006) The construction of a comprehensive welfare state in Mauritius did not emerge out of a smooth and steady process. Each of the three episodes of welfare reform – the formal introduction of noncontributory old-age pensions in 1950, family allowances in 1962 and social insurance in 1976-1978, were borne out of long-periods of deliberation and procrastination from the colonial officials (Phaahla, 2000). It took riots by unorganized sugar estate workers in the late 1930’s and strong trade unions today, to obtain and maintain a particularly socialist environment in the country, despite, a very open and capitalist market economy in Mauritius, it has been succeeded to preserve a considerable labor protection and benefit to the workers. In the more modern times, the social movement is directly related to the democratic governmental system. Around every five years general elections are held, and the public’s voting of a certain party is very sensitive to the economic and social conditions of the country. In many instances in the history, after independence, the government has been ‘overthrown’ out of office, as sanction voting by the population, due to bad economic and social performances. The most popular example, would perhaps in the 1982, elections when the government in office, with the ‘father of the nation’ as the head of the country, faced the worse possible defeat. This was because the unemployment and other economic and social indicators were all in the red. In terms of social services, Mauritius has been practicing a s ‘five pillar’ model as advocated by the World Bank in a report in 2005. But, it is worth noting that the five-pillar system in Mauritius was completed as far back as 1994. So, Mauritius had already been implementing the social model for 11 years (Deerpalsingh, 2011). Providing decent shelter for low-income groups has been another major social priority of the government. In the face of the rising price of rented accommodation, the government initiated projects for the construction of working-class flats in different parts of the country. The National Housing Development Corporation (NHDC) was set up in order to expedite large-scale construction of low-cost housing. House ownership grew from 66 per cent in 1983 to almost 93 per cent in 20018. Current Housing Conditions To understand the access to housing to the low income household, it is important to understand the general housing condition of the Mauritian. This helps in explaining the ownership policies and housing types that are provided to those who have financial difficulty in possessing a shelter comparable to his fellow countryman. With around $ 14,000 per capita GDP (PPP), Mauritius currently has a relatively high housing quality. In the 2011 Housing survey, it was noted that around 89% of the building stock in the country were residential building (with 85% wholly residential). Of which, 77% were separate housing units, 12% were semi detached or apartment types and 5% are mixed residential-commercial. In Mauritius, traditionally the houses are self-constructed by assigning small contractors to the job, who solely rely on their experience and owners design expectations. For medium and large projects, bigger contractors and construction specialists like architects and engineers are employed. The construction of houses were 92% of concrete walls and roof, 3% concrete walls and iron sheet roofs, and 5% were made out of wood and iron sheets. Although the human settlement patterns in Mauritius is quite dispersed, in terms of basic amenities, almost all (more than 99%) of the houses were connected to nation electricity grid and water systems. 96% of all the housing units had running water in the bathrooms and had modern flush toilets facilities. 8% had their waste collected regularly by municipality or other authorized companies. Almost all the housing units in Mauritius are privately owned, 99% in 2011, among which only 12% were reported to be mortgaged. An astonishing low percentage of 0. 3% of housing units was reported to be public housing in the same year. In terms of the tenure rate of the housing in 2011, 89% of the residents were owner of the hous e they were living in, compared to 8% who were renting or sub-renting. Another 3% were living for free in the housing provided by relatives or employers. It is interesting to note that the average monthly rent in 2000 was Rs 2,300 and increased to Rs 4,400 in 2011, however after adjustment for inflation, the housing rent actually remained the same as 2000. Poverty in Mauritius In 2010, the National Empowerment Fund that was created in 2005 to reduce poverty had enumerated around 70009 households in 225 regions of the country. These represented the families that were most in need of social help. But, the definition of poverty in Mauritius is quite versatile. 8 Bundoo 2006, p175 Exactly 6983 families that lived under national poverty line; According to NEF, Poches de pauvrete, downloaded from http://nef. mu 9 Using the poverty line $1. 25 Purchasing Power Parity (PPP) per person per day, and data from the 2001/02 and 2006/07 Household Budget Surveys, the proportion of poor people in Mauritius is estimated by the Central Statistics Office to be below 1% in both 2001/02 and 2006/07. For developing countries like Mauritius, the $2 a day poverty line is more relevant. Even, using this line, the proportion of poor people is estimated to be less than 1. % in 2001/02 and 2006/07 household income surveys. So, the concept of ‘extreme poverty’ (as internationally defined) is not used in Mauritius. Instead, the concept of ‘relative poverty’ is used. Relative poverty is assessed using data collected at Household Budget Survey (HBS) and a relative poverty line defined on the basis of median household incomes. Household income c omprises income from employment, property, transfer, income from own produced goods and services and imputed rent for non-renting households. Data published by the CSO in the 2001/02 and 2006/07 Household Budget Surveys indicate that the percentage of households having income below the half median increased from 13. 1% in 2001/02 to 14. 3% in 2006/07. Average monthly household income for the poor is estimated at Rs 7,055 against Rs 22,242 for all households. The poverty line was fixed at Rs 3,821, which is the half median monthly income per adult equivalent. So, the official figure for poverty in Mauritius in 2007/07 was 26,400 households, or 7. 9% of the total 335,000 households in Mauritius. This concerned 8. 5% of the national population. From the 2007 Poverty Report, it can be also seen that 55% of the total government expenditure went to ‘Community and Social Services’. Monthly public transfers (social security benefits paid by government) derived by the poorest decile group of households was estimated at Rs 1,367 per household in 2006/07. Public transfers for poorest decile represented 22% of their total household disposable income against 2. 4% for the richest decile. Public transfers were found to be significant on bringing down poverty; it is estimated that if public transfers would have been discontinued, the overall household poverty rate would be 15. % instead of 7. 9%. Characteristics of Low Income Household Understanding the particularities of the poor or low-income households, are very important to know their economic strength and lifestyle. This would help to understand the type and cost of social housing that is offered to them. Again, in 2006/07, the average of ‘low income’ hou seholds in Mauritius was calculated to be around Rs 7,000 (compared to Rs 22,200 for all household), with an average expenditure on Rs 6,500 (compared to Rs 14,300 for all households). 1% of the income came from paid employment, 24% from government support, and the rest from self-employment and odd jobs. In terms of employment, where the national share of employment by sector in 2006/07 was as followed: Primary sector- 9%, Secondary sector- 32% and Tertiary sector- 59%; the structure was a little different for the poor families, as followed: Primary sector- 21%, Secondary sector- 37% and Tertiary sector- 42%. So, it can also be noted that the poorer people were more dominant in agricultural and manufacturing industries, and less present in the service industry. This explains partly, their low income. This phenomenon is also related to their level of education. The study has shown a very clear correlation with the distribution of income and the education level of members aged 20 and above. The higher the incomes, the proportion of the members having passed the primary and secondary education are larger. The share of expenditure on basic items such as food, clothing and housing over total expenditure was 65% for poor households, against 48% for all households. Figure 1 shows the detail expenditure of the poor against all households. It is interesting to note in the report that the average monthly loan repayment10 was Rs 1400 for poor housing, against Rs 4,353 for all indebted households. The highest loan repayment for poor households was on housing11. Figure 1: Expenditure habits of poor households, 2006/0712 As mentioned above, according to the 2010/11 Household survey, 8% who were renting or sub-renting. In 2006/07 the figure was 8. 4% for all households, but for the poor households, 16. 7% were renting their housing. The rest owned their houses or were provided free by relative or employer. The average poor household had a size of 4. 0 members, however the house had on average 3. 7 rooms, compared to average of 3. 7 members with 5. 2 rooms for all households. The amount poor households 10 11 Including, loans or purchase on credits, for housing, furniture, electric appliances, personal loans and other loans. 26% of the poor households had housing loans, which on average was Rs 2,491 12 Source: CSO 2007, Poverty Report 2006/07, p59 with two or less rooms accounted for 19%, against only 5% for all households13. There were more than one person per room in 63% of the households, against only 29% in all households14. This gives an idea of how poor households lived in a denser indoor environment than their other country man. Low Income Housing in Mauritius Strategies & Institutions Since the 1980’s Mauritius was still an economy based on mono crop agriculture. Sugar cane cultivation had been the economic backbone for centuries of colonization, and only in the 80’s the diversification help Mauritius get out of the trap. Saying so, after independence in 1968, all successive governments regularly reiterate their will to gradually dismantle the ‘sugar estates camps’, which were the housing provided by colonial estate owner to workers. It was important to do so, as they remain powerful physical and psychological symbols of the sugar plantations hierarchy of the 19th century. A study in 1990 revealed that there were still 125 such estates in the country, and on the basis of finding long term alternatives for such residences, the government put pressure on the sugar estates, to phase out these camps and develop housing programs for their workers. The options offered were either to resettle the workers on an alternative site, out of the master’s property, or to sell the land and house to the current resident on the estate (UN, 2000). As seen above, the poor are usually less educated and work in agriculture. And since the structuring of the sugar industry 15 in the last decade, more and more of these people are losing their job, and because of age and education level, they cannot find other jobs. So, an early retirement scheme, worked out by all concerned parties and government, and involves giving a lump sum and a plot of residential land to the worker. The land given to the worker, are usually sugar plantations16 that have been converted to residential with basic infrastructure of road, electricity and water supply. This helps in reusing the abandoned agricultural lands and reduced the pressure of cash reward to the estate companies. In 1983, the house ownership in Mauritius was 66%, and then it rose to 76% in 1990, rose again to 87% in 2000, to reach a high 89% in 201117. Although official figures indicate a very high rate of owner-occupiers compared with other countries, these figures hide other quite serious problems of housing which may culminate into a crisis in years to come if some issues are not addressed in time Social housing programs for low income groups which had begun in the 1960s, gave way to a new housing strategy based on cost recovery through the setting up of a public company, The National Housing Development Company Limited (NHDC) in 1991 (UN, 2000). 13 14 Author calculation from CSO 2007, Poverty report 07, table 4. Author calculation from CSO 2007, Poverty report 07, table 4. 7 15 which currently contribute less than 4% of the GDP and less than 8% of employment 16 Since restructuring, large areas of sugar plantation have been abandoned by the sugar estates 17 Various Source, Boodoo 2006 for 1983 & 1990; 2011 Housing Survey for 2000 and 2011 Until 1991 the Central Housing Authority (CHA) was responsible for the task of building and administering of the low income housings estates. Medium rise apartment type buildings were built and let to the low income groups. The system was not successful at different levels. Firstly, most of the units were rented to low income households, instead of been owned. So, rents were sometimes not been paid, and the residents paid little attention to the built environment. This lend to a rapid degradation of the buildings and amenities. Secondly, although targeted for low income earners, the middle income group could somehow buy the apartment units. Thirdly, due to the deplorable design and soft policy, the CHA estates turned into undesirable living places where social problems grew. In 1991, the responsibility of providing low income housing has been passed the newly established National Development Company (NHDC), and the CHA was renamed the Housing Management Unit (MHU), which just left to administer these estates and collect rents. Another important institution was restructured shift to be noted during the same period. Since its creation in 1963, the Mauritius Housing Corporation, was governmental body was responsible to create housing for the middle income class, while the CHA was doing the same for low income class, financed by loans through the Mauritius Agricultural Bank18. In 1989, the Mauritius Housing Corporation (MHC) was incorporated and renamed the Mauritius Housing Company Limited, which then was more like a bank, to cater better to the need of the housing demands. Then the new MHC, no longer deals with the construction and policy of the social housing, it provides soft loans to those below a certain income level, and started the Plan Epargne Logement, PEL (in English, Housing Savings Scheme), that offer exceptional loan rates to anyone, who would deposit money in MHC bank. Nowdays, the MHC has developed into a one-stop shop for all need of housing services. In additional to loans, it deals with the providing of architectural, structural, legal, technical, insurances and project management services, at nominal or free of charges. Prior to 2006, the social housing responsibility lied solely within the hands of the government. But, as the demand was growing and the government could only built around 900 units a years, with a waiting list of 25,000 housing units, the private sector was called to participate through various PPP (publicprivate partnership) projects. The aim was to raise the rate of construction to at least 1500 yearly19. Another interesting fact is that as from 2009, the government established a policy of Corporate Social Responsibility (CSR) that requires profitable private companies to invest at least 2%20 of their profit, into social help, like donation to NGO, or other social and environmental programs, including housing for the poor. The CSR is the concept whereby companies act to balance their own economic growth with the sustainable social and environmental development of their areas of operation. A company performing highly in CSR is one that goes beyond compliance with the legal framework to actively pursue positive impacts on local communities and its environmental footprint. 18 19 Source: Mauritius Housing Company Ltd, website: http://www. mhc. mu/mhc/; retrieved June 2012 Speech of Minister of Lands and Housing, March 2006 20 Source: NEF, http://www. nef. mu/csr/, retrieved June 2012 Low Income Housing Types and Finance Up to date, there are five main players in the housing sector. They are the Commercial Banks, the Insurance Companies, the Mauritius Housing Company Ltd (MHC), the National Housing Development Company LTD (NHDC) and the Housing Division of the Ministry of Land and Housing (Joseph, 2007). The role of the commercial and insurance companies is to offer housing finance facilities, in addition of their usual core activities. However, the other three players have a very important role in the provision of housing to the general public of Mauritius, but to especially the low and lower middle income group. Even if the government continued to build some apartment types housing, single housing or duplex types were more and more practiced. These types of housing created a better environment for social diversity and were more inclusive in term of equality. It should be noted that in Mauritius, these units are not built in large numbers, but in small numbers between 50 to 100 units spread all over the island. This is due to the availability of land for development and the concentration of poverty in the region. The spread of the social housing and its small numbers help social integration and the balance of the local diversity. Currently, these locations are mostly located in the rural area, as part of the National Plan to increase rural population and develop and reduce the burden on the already dense urban regions. Figure 221 shows an example of a type of social housing units that NHDC are building with the help of the Export-Import Bank of China. Site Bois Mangue St Pierre (Circonstance) Dagotiere Highlands Bambous Montagne Blanche Mon Choisy Cottage La Cure Notre Dame Pointe aux Sables (A & B) Pointe aux Sables (C) Units 108 72 52 84 148 100 98 52 120 60 128 70 21 Source: Ministry of Lands and Housing, retrieved June 2012 Rose Belle Camp Levieux Trou aux Biches Mahebourg Total 76 152 76 78 1474 Figure 2: Example of 1474 housing units scattered into 18 sites around the island. The ‘Firinga Type’ is the one most currently built for the lowest income groups. These are semi-detached units of 40m2 each. It provides for bathroom with toilet and a kitchen table with sink. There are better duplexes types that are constructed for lower middle class. Some houses are spread on two stories and have 2-3 bedrooms with balconies. As the types of housing vary from one income group to another, the financing to these group are not the same. As for the Firinga units the interest rate is fixed at 6. 5% per annum, for other types, the finances vary according to the cost of the housing and household income (that is total income of husband and wife). The current loan scheme from the MHC is as below: For household earning up to 7,500 per month: ? ? ? Long term credit repayment period up to 20 years, depending on the age of the applicants; Subsidized rates of interest of 6. % during the first five years, 8. 0% during the next five years, and 10. 0 % during the remaining years of the repayment period; and A non-refundable Government grant equivalent to 20 % of the gross credit amount subject to a maximum of Rs 30 000. For households earning more than Rs7 500 and up to Rs 10 000: ? ? Long term credit repayment period up to 20 years, depending on the age of the of the applicants; and Subsidized rates of interest of 10 % d uring the first five years, 12 % during the next five years, and 14 % during the remaining years of the repayment period. And finally for those earning more than Rs 10 000: ? ? Long term credit repayment period up to 25 years, depending on the age of the of the applicants; and Rates of interest of 13 % during the first five years, and 14 % during the remaining years of the repayment period. To protect those in the most needs, there are strict eligibility criteria to obtain a NHDC unit like they should not be owner of a housing unit or of a plot of residential land, have made regular contributions o a PEL savings account for a period of at least six months; and priority is given to applicant that reside in the region where the house has been constructed. It should be noted that, in order to relief the burden on the government to provide affordable housing, the MHC provide loans at favorable rates to low and lower middle income applicants who want to construct their own house or want to buy a plot of land. A subsidy for the concrete roof construction, which is considered one of the most expensive parts of the construction, and to prevent the houses have iron sheet roofing. Conclusion: We have seen in this paper that the social movement has been present since before the independence and the movement was stronger after the independence, by the pressure of strong trade unions, and the strong democratic system, where the public opinions and demands could not be undermined. In the welfare state of Mauritius, the government has done greatly in terms of policies and investment to provide decent housing not only for the poor, but also for the less poor. In 2011, the housing ownership approached the 90% and the private sector was also made part into the responsibility to provide housing for all Mauritian, in the way the Mauritians like it. The institutional and financial structure in Mauritius is quite mature after evolving for around 50 years now. It is important to note that Mauritius has a large lower middle and middle class population and that housing benefit are also given to them, in terms of favorable loans rates, and subsidies. References: Websites: Mauritius Housing Company Limited, MHC: www. hc. mu Ministry of Lands and Housing, Housing Division: www. gov. mu/portal/site/housing/ National Empowerment Fund, NEF: www. nef. mu National Housing Development Company Limited, NHDC: www. nhdc-online. com Literature: Bundoo S. K. (2006); Financial and Trade Reforms and Impact on Poverty and Income Inequality: The Case of Mauritius; from Pro-Poor Macroeconomics- Potentials and Limitations, Chapter 8; edited by Cornia G. A. CSO (2009) ; Poverty Report 2006/07 CSO (2011); 2011 Housing Census Main Results Deerpalsingh N. 2011); Access to Social Services for Non-Citizen and the Portability of Social Benefits in Mauritius; From Assess to the Social Services for Non-Citizen and the Portability of Social Benefits within the SADC; Chapter 3, edited by Mpedi L. G. & Smit N. Joseph Mathew (2007); Mauritius Housing Company Limited; AUHF AGM Conference, 17th -21st September 2007 in Ghana Ministry of Housing and Land (2006); Speech of Minister A. Dullul; Government Social Housing Projects on a Private Public Partnership Basis; on 1st March 2006 Phaahla L. E. (2000); Development with Social Justice- Social Democracy in Mauritius; Master’s Thesis presented at Stellenbosch University United Nations (2000); Common Country Assessment, Mauritius; Office of the UN Resident Coordinator, Mauritius, May 2000 United Nations Habitat (2004); Human Settlements Country Profile, Mauritius Vandemoortele M. and Bird K. (2010); Progress in economic conditions: Sustained success against the odds in Mauritius; for Overseas Development Institute