Small-scale building contractors play a pivotal role in production of housing for the urban poor in developing countries. Lack of access to equipment, skills and credit, constrains the builders involved to remain small and under-capitalised. Should they therefore be assisted, and if so how? Research in Brazil demonstrates that even in low-income settlements the process of construction is permeated with market relations. Assistance to builders to scale-up their enterprises along traditional capitalist lines, tends to drive them away from production of low-cost housing. Although contractors may benefit, the low-cost housing market does not. An alternative "post-Fordist" approach seeks technological upgrading while maintaining small-scale flexible modes of production.

The construction process in low-income housing settlements has frequently been regarded as entirely different from the formal construction industry. Frequently, the urban poor lack access to public or private housing schemes, and instead seek ways to build gradually, according to their resources. This has led to enthusiasm for "self-help" housing projects. However, lacking time or expertise, many poor people resort to small-scale private contractors to carry out part or all of the process. Small-scale builders are found to be pivotal in the production of low-cost housing.

Research by the Development Planning Unit of UCL, explored how small-scale builders in Belo Horizonte, Brazil produce low-cost housing despite an insecure and low-revenue generating market. The study also considered what constraints on capitalisation the builders experience, and how the removal of these constraints affects their participation in low-cost housing.

The main findings of the research were:

• Demand for low-cost housing is diversified, discontinuous and small-scale. Customers are often only capable of erratic payments. Small-scale builders have the flexibility to work under these conditions due to multiple skills, simple and general purpose equipment, low overhead costs and lack of profits.
• Small-scale builders are not a discrete sector, but part of a continuum of production ranging from low-cost housing construction through repair and maintenance of middle and high-cost housing to construction of complete housing using capitalist modes of production.
• Capitalist modes of production require specialised equipment, labour with specific skills, access to credit and managerial capacity. Lack of access to some or all of these is a constraint on small-scale builders expansion.
• Individual builders tend to occupy a strategic position in the continuum of production which cannot change quickly. A shift to a more capitalist mode of production requires a change in the characteristics of the business and entails a loss of capacity to produce low-cost housing.
• Given assistance to overcome constraints, small-scale builders will tend to move their business away from low-cost housing towards more lucrative and less insecure types of work.

The research gives rise to the following policy recommendations:

• In order to capitalise, small-scale builders need support in three areas: improved access to equipment, e.g. hire schemes; financial credit with flexible repayment regimes; and provision of managerial training.
• Supply-side measures such as assisting small-scale builders, are unlikely on their own to improve the housing conditions of urban poor. This goal requires measures to boost housing demand.
• Regulation of demand needs to be accompanied by support to builders to develop technologically along "post-Fordist" lines. In this way, technological upgrading may be achieved without losing the flexible small-scale characteristics which enable builders to satisfy the low-cost housing market.

Source(s):
1. Business as Usual, E. Werna, (1996) Avebury >
2. The Provision of Low-cost Housing in Developing Countries, Habitat International 18(3), E. Werna (1994) >

id21 Research Highlight: 1998-May-20

Further Information:
Edmundo Werna
Currently working as: Urban Development Specialist
Research and Development Unit
United Nations Volunteer Programme
Postfach 260, 111
D - 53153 Bonn
Germany

Tel: +49 228 815 2123
Fax: +49 228 815 2001
Contact the contributor: edmundo.werna@unv.org

School of Urban Development & Policy, South Bank University, UK

United Nations Volunteer Programme