A house of my own

Mega projects and Nawaz Sharif seem to be made for each other. Sharif has to his credit a 16-billion-rupee yellow cab scheme and a 40-billion-rupee Lahore-Islamabad motorway. And now he has come up with Mera Ghar (My Home), a project so big that his two previous ventures stand dwarfed in comparison.

Estimated at PKR 400 billion (c. USD 8 billion), Mera Ghar is one of the largest development schemes in Asia. It envisages constructing 500,000 housing units for lower and middle-income groups on 20,000 acres of state land in different cities within the next three years. According to the plan, the government is to provide land free, while the buyer has to come up with 25 percent of the cost of the house, with the remaining 75 percent to be paid in installments spread over 15 years. Sounds grand indeed, but economists fear that if the scheme flops it will take the whole banking system of the country and the economy, along with it.

Officially inaugurated in August, the programme is running with the unholy haste that has almost become the hallmark of Sharif's style of governance. No less than 300 sites have been identified, and preliminary development has already begun on 120 of these sites. The housing authority says that contracts for construction of 100,000 units, amounting to PKR 50 billion, will be awarded within the current financial year.

The government is optimistic that the sheer size of the project will help jump-start the sluggish economy. Since the housing sector has no less than 40 other industries attached to it, it says the project would help three million people find work. Consider the other merits touted: helping overcome the massive housing shortfall; introduction of industrialised construction; promotion of mortgage culture for housing loans; checking unplanned urban growth; and so on.

A tall order, but made taller only by Sharif's earlier mega-follies. The yellow cab scheme, initiated during Sharif's first prime ministerial tenure (1990-1993), was to provide employment to thousands and a decent means of public transport. Instead, it left banks reeling under unpaid debt as the well-off made off with the taxis for private use. And, the Lahore-Islamabad motorway, begun in the same period, promised the sky to all those living in the areas it cuts across. But in its third year of operation, the majestic highway is not generating the revenue to pay off the investment.

Now with Mera Ghar, the government is thinking big once again. And as usual, proper methods and procedures are being ignored. No laws are yet in place to monitor the newly formed Prime Minister Housing Authority (PMHA). "Much to the people's dismay, the newly established PMHA is fast emerging as the biggest and most powerful land grabber in the country," commented an editorial in the daily Dawn.

Almost everyone outside of the ruling party is certain that the project will be shelved once the government falls, a fact that is driving fear into most would-be investors. But even if it were to be a success, some economists are afraid that it will ring the death knell for the banking sector. This is because the PMHA is adamantly keeping the mark-up on the loans at below 10 percent. Since this is lower than what it costs the Pakistani banks to generate the money, a whole system of cross-subsidies will have to be devised. "Private banks will be unwilling to give soft loans while government banks are already very weak," says Shahid Kardar, a well-known economist from Lahore. "If soft loans are taken out of government banks, the government will not be able to privatise them as it intends to do and the whole banking sector as well as the State Bank of Pakistan will be in serious trouble."

If one were to ignore the economic niceties, the programme seems quite impressive. Pakistan has a backlog of 6.5 million housing units required, and a shortfall of 150,000 pile up annually in a country where affording a house is becoming increasingly difficult. "This scheme brings housing to the people who can't afford it otherwise," says Lahore-based Nayyar Ali Dada, one of the country's leading architects and a consultant to the project.

Even if one were to grant Dada's argument, it would be true only for the middle classes. The debate so far has not addressed the increasingly shelterless poor. Less than 5 percent of the housing units appear to be in the reach of the low-income group. (The cheapest is priced at around PKR 100,000.)

Activists like Karachi-based Tasneem Siddiqui, a well-known expert for low-cost housing, hold that the poor do not need built-up units. What they need is a piece of raw land with the minimum of services where they can build their house with their own resources incrementally. "Our planners," says Siddiqui, "are woefully ignorant about the economics, culture and sociology of low-income people. Their approach lacks the human angle, rather than trying to bring about a qualitative change in the lives of the target groups, they lay emphasis on physical outputs and quantitative results."

Someone should try telling Sharif that. Megalomania without merit is just that and nothing more.