Government’s effort to provide affordable housing, using millions of dollars in Inter-American Development funding, has fallen short of expectations.
But the IDB says Barbados was not alone, as similar low income housing programmes it financed in Guyana, Suriname and Trinidad and Tobago, also failed in key areas.
As a result, the bank’s Office of Evaluation and Oversight (OEO) is urging Barbados and its neighbours to make several changes in order to secure future IDB support, including addressing “institutional constraints to project implementation”.
The OEO made the statements in a new report titled Comparative Project Evaluation Of IDB Support To Low-Income Housing Programmes In Four Caribbean Countries.
The IDB recalled that in 2008 it approved the first phase of Barbados’ Housing and Neighbourhood Upgrading Programme for US$30 million after having supported efforts to expand social housing through technical cooperation and technical assistance for ten years prior.
It said the programme’s goal was “improving the housing and neighbourhood conditions of low and lower-middle-income families in Barbados, and to improve and expand Government housing systems for households in the first four deciles of income distribution.” Government provided US$10 million in “counterpart contribution”.
The bank said the Barbados project faced several challenges which negatively affected execution.
“While the Barbados programme did not have a previous loan to build on, it did have a project preparation facility to finance the preliminary design of programme components and the pre-investment of proposed neighbourhood upgrading activities, which should have improved the relevance of programme design,” the report said.
“Unfortunately, the pre-investment plans developed under the facility were never used because the loan was approved just before Government elections. The resulting changes in the Government led to the selection of an entirely new set of communities for intervention, adding two years to the project.
“In Barbados, after more than US$1 million had been invested in project preparation and execution, only US$6.6 million was disbursed. Project preparation was not only long and delayed, it was also relatively expensive for IDB and the Government.
IDB’s loan preparation costs alone were close to US$330 000, in addition to funds obtained by the Government through technical cooperation (US$92 000).”
The bank also said all four housing and neighbourhood upgrading programmes were affected by political changes in Government.
Commenting on the Barbados situation, it said: “The timing of program approval had a critical effect on the implementation of the housing programme in Barbados. Despite significant pre-investment work, which was financed by a project preparation facility, prepared and detailed designs were not approved until the fourth year of programme execution.”
“This delay resulted from significant changes in the communities selected for upgrading, as requested by the new Government. The loan was approved one day before national elections.”
The report also identified “a lack of clarity about which agency had the mandate for the provision of affordable housing and neighbourhood upgrading created additional institutional coordination challenges”.
Affordability for targeted families was also a problem.
“In Barbados, long delays affected the cost assumptions established at project design, as the cost of new homes increased by 30 per cent. This led to an upward revision of the household income threshold, which increased by 22 per cent to include families that were able to afford the increased cost of housing,” it said.
For the future, in addition to implementing institutional improvements, the IDB advised Barbados and other countries to ground project design in a clear understanding of country conditions and trade-offs among options for expanding social housing; accompany short-term publicly-financed housing interventions with medium-term strategies to strengthen housing markets; and strengthen the long-term sustainability of housing benefits by integrating housing and neighbourhood upgrading projects within larger urban and economic development programmes. (SC)