Housing partnerships are a mechanism for addressing the 'needs/demand gap' in shelter provision between what people can afford and what the market can provide. They involve linking the various sectors – public, commercial, private and 'third' (people and their organizations) – together in the interests of better provision of housing so that the strengths and weaknesses of each can be related and harmonized. The goal of such partnerships is to make the different by the equally viable roles of the sectors complementary and mutually supportive. In the right circumstances, they can also provide an effective mechanism for improving the shelter options of low-income groups.
The following factors reappear in effective housing partnerships despite wide variations in context: (1) strong municipal and national government is essential to oversee partnerships and prevent excesses; (2) competent third-sector organizations are required to mediate between the interests of different partners; (3) popular participation is essential to ensure accountability; (4) integrated partnerships (which address different aspects of shelter simultaneously) are often more effective than partnerships which focus on land, finance or other components in isolation; (5) it is vital that each partner received concrete benefits; (6) macro-level economic, political and cultural conditions are crucial in determining the effectiveness of partnerships; (7) programme-based partnerships, which aim to change policies, attitudes or flow of resources across a city or sector, are more cost-effective than heavily-administered project-based partnerships, which limit their impact to a single settlement; (8) the commercial private sector is best if limited to operational decision-making in the production of shelter, rather than decision-making over shelter policy and urban planning.
The potential of housing partnerships is huge, but thus far they have been limited in scale and reach. Very few public/private partnerships in either industrialized or developing countries have managed to achieve results on a significant scale. Replicability and sustainability have been limited, and the administrative costs of partnership are often too high to be sustained by resource-poor governments. Politicization often undermines the success of partnerships, but by far the most serious problem is affordability. Very few partnerships have been able to guarantee access to land, housing, finance or services among the urban poorest, and most (at least those involving the commercial private sector) focus on lower-middle income groups).
In the land markets of developing country cities, public/private partnerships are rare, though land-sharing/land adjustment and public intervention to support third-sector organizations have considerable potential. The potential for partnerships involving commercial private interests is limited by the gains that can be made in the land market from higher-income residential and commercial development, relative to the returns which can be generated from low-income housing. In housing finance, partnerships have demonstrated that viable systems can be developed on a small scale, but often these systems are not affordable to the urban poor. Various models have been tries: extending formal financial services to the informal sector; integrating groups of low-income borrowers into formal financial systems; and using public funds and institutions to increase the accessibility of housing finance to the poor. A similar story emerges from the evidence on public/private partnerships in the production of low-income housing. Here partnerships involving the commercial private sector are increasing, but they are rarely able to produce housing which is affordable to the poorest 30% of the income distribution. Even in the case of 'successful' partnerships, such as the Philippines Joint Venture Programme and cooperative housing production in Turkey, affordability has become a serious problem because of the need to repay funds borrowed from private and external sources.
In terms of shelter for the poor, the most important partnerships are those between the public and third sectors. They can facilitate the supply of housing inputs, especially land, and enable non-governmental organizations (NGOs) and community groups to mediate between government and people. Governments also need NGOs to be involved in the development of shelter policy if it is to be relevant and effective, but the third sector requires support from government to flourish. Partnership is therefore essential to both. Usually people and their organizations take the lead in the active components of the shelter process (land development, construction and improvement), while the public-sector a partner facilitates access to land and finance, security of tenure and basic services. Commercial private interests may be involved when adequate returns can be guaranteed (in the city centre, for example) or when private companies adopt a more philanthropic attitude.
Because of the difficulties of generating adequate returns from credit to lower-income households, there is more potential in partnerships between third-sector organizations and government than in links with the commercial private sector, though with government guarantees the latter can also be effective. The key to partnership in the production of low-income housing remains the development of an enabling environment which can support the third sector to do what it can do best, but do it more effectively. In terms of returns to investment, these public and third sector partnerships are likely to yield higher benefits than incentives to the commercial private sector, and it is here that governments and donor agencies should focus their attention.