Brazil: Support of National Housing Plan and National Housing Subsidy Policy

Project

At-a-Glance

Approval Date
Actual Completion Date
Proposal Focus
1472
Core Focus
Secondary Cities
Country Type
Brazil
Lesson Learned for Cities Alliance Members and Partners
Participation It is important to ensure participation of all sectors. The National Housing Plan engaged an extremely lengthy consultation process, and many different actors truly participated in the process starting from the beginning, including civil societies, state and municipal governments in different regions, community groups, labor unions, private developers, construction companies, banking and other financial institutions, government banks, and other related government agencies. This enabled the alignment of a diverse range of stakeholders (from private sector to social movements), and was essential to creating the basis for promoting change in the way of thinking and prioritization of investments. Government Commitment The government commitment to change is critical. The Grant supports the National Housing Secretary’s highest priority (instead of proposing separate priorities), and therefore played an instrumental role in guiding and shaping the policy formulation process, which eventually would lead to significant changes on the level of investments for housing, and recognition of housing as a core issue for economic development (and therefore a crucial stimulus measure). Aligning Interests and Priorities The process of aligning interested around the following issues was extremely important: (i) housing needs (established backlog and future formation of new housing units); (ii) menu of housing products, vertical and horizontal solutions, site and services and construction materials; (iii) cost of land, materials and services; (iv) affordability of the beneficiaries; (v) role of the three government levels; (vi) need for structuring a unified database for planning and monitoring; (v) need to improve operational capacity of the whole system to deliver subsidies and credit; and (vi) need to set a foundation for the future expansion of formal construction and credit markets. Overcoming the Bottlenecks There were numerous difficulties faced during the Plan development process, including: lack of an integrated database of all the existing registered beneficiaries, which would enable better systems of controlling and monitoring subsidies and establishing criteria for the selection of beneficiaries and regional allocations; operational and cultural bottlenecks to integrating private financial institutions with public subsidies and financing; legal and institutional framework of the Guarantee Fund for housing finance which still needs to be further reviewed and enhanced; and mechanisms of transitioning the new subsidies policy into a permanent one, rather than one focused on overcoming the international economic crisis. These need to be addressed during the implementation phase of the Plan.

Detail

Summary
Brazil has approximately 80% of the population living in urban areas and 90% of the country’s GDP generated in cities. The biggest challenge this rapidly urbanizing country faces is inadequacy of housing. The government has recognized that access to housing and reliable urban services is essential to poverty reduction and growth in Brazil. The government has demonstrated their commitment to the housing sector by number of measures that have been taken including creation of new Ministry of Cities. The funding requested from Cities Alliance would be designated to a consultant to provide technical assistance to the Ministry of Cities in support of the development of a National Housing Plan and National Housing Subsidy Policy. The National Housing Plan would also include National Urban Upgrading Strategy with time bound objectives and targets. The National Housing Subsidy Policy would rationalize the myriad of subsidies embedded in housing programs supported by the Government.
Objectives
The objectives for this grant are: (i) Support the development of the National Housing Plan —a concrete action plan with time-bound targets, policy actions, and investments— with particular emphasis on the design programs for social interest housing, including a National Urban Upgrading Strategy. (ii) Provide technical assistance to MoC in the preparation of a proposal for a National Housing Subsidy Policy. The proposal will be based on baseline data and analytical work underway to identify and map the existing housing subsidy policies in Brazil. The objective of the national housing subsidy policy would be to develop a well-targeted program to benefit the poor while making the most effective use of public resources (i.e. rightsizing subsidies and leveraging subsidies to maximize owner contribution and market-based lending). (iii) Support the preparation of a publication with the highlights of topics, conclusions and suggestions for follow-up debated at the September 2007 National Event to discuss the new urban upgrading strategy.
Activities
During a 12 month period, a consultant will support the following activities: (i) Elaboration of a National Housing Plan inclusive of a Slum Upgrading Strategy with time-bound action plans (ii) Preparation of a National Housing Subsidy Policy Completion and dissemination of the documents is expected to go beyond the 12 month period. (iii) A publication with the highlights and conclusions of the national event to debate the new urban upgrading strategy will be written and produced by the event organizers, supported by the Cities Alliance project office at the University of São Paulo.
Expected Impacts and Results
The Housing Plan and Subsidy Policy represent a major step forward in the Government’s policy objective to guarantee the right to adequate housing for all Brazilians. The main impact is the development of the National Housing Plan, and its pending implementation by the Brazil Government as the main economic emergency measure (stimulus measure) to address the global financial crisis. The Government has committed to a very large investment amount to support the implementation of the policies. These measures are expected to lead to considerable housing investments, especially for low income households in Brazil in the next few years, and it is envisioned that one million new houses will be provided in the market through these measures.