COVID-19 and beyond: Adequate shelter and housing needs must inform Human Settlements budget.

Forthcoming budget adjustments in response to COVID-19 will shift additional resources to the health sector. There are a number of important questions that must be asked in anticipating the forthcoming budget adjustments in and beyond that sector. How the budget is spent, on what programmes and whether the budget addresses the most pressing needs of the people during the pandemic and beyond. Although it is clear that the health, education and social development sectors require increased spending in response to COVID-19, where additional funds will be allocated within relevant departments matter and whether the allocations will best respond to challenges emanating from the pandemic and to ensure the sector can respond adequately to COVID-19.

 Public budget analysts and open budget advocates ask critical budget related questions that are not only centred on the common questions of what the budget tells us about national priorities in terms of figures. Beyond that they ask more on what and how budgets should adequately address the various needs of communities through service delivery. Based on needs assessments at national, provincial and local government level, budget advocacy informs budget processes.

Where the money goes between provinces and municipalities and where money goes within departments must be informed by a proper articulation of the extent of need within specific sectors and programmes. The upgrading of informal settlements is a fundamental service delivery need and as such, the Department of Human Settlements, Water and Sanitation must be scrutinised given its mandate for the delivery of basic services and housing. In South Africa an estimated 43% of the population does not have access to clean water. More than 3 million people are estimated not have access to a safe and reliable water supply and an estimated 14.1 million people do not have access to safe sanitation.

The budget tabled in February 2020 indicates through a heightened budget towards informal settlements that the upgrading of informal settlements is considered a priority area as the government shifts emphasis of housing policy from building subsidized units to providing serviced sites where residents can invest in improvements. A total of R2.3 billion was ring-fenced for the informal settlements upgrading components of the Urban Settlements Development Grant in 2020/21 with the Informal Settlements Upgrading Partnership Grant introduced in 2021/22. R2.4 billion would be a component of the Human Settlements Development Grant in 2020/21 and R16.1 billion in cities and provinces would be funded through the Upgrading Partnership Grant in 2021/22 and 2022/23.

The Breaking New Ground (BNG) policy was introduced in 2004 with a focus on in situ upgrading of informal settlements. The policy was a shift from providing housing units as a way of eradicating informal settlements as the backlog for housing continues to grow and housing supply cannot meet demand. In situ upgrading of informal settlements involves the provision of water, sanitation, electricity and infrastructure in order to ensure healthy living environments for the those living in informal settlements. Where in situ upgrading is not possible, relocation is done. Previously housing policy aimed at eradication through relocation to newly constructed houses. Informal settlements were considered temporary shelter, spaces for waiting for proper housing. Unwittingly the in situ upgrading of informal settlements is making informal settlements permanent. This begs a number of questions regarding policy and budgeting for informal settlements in particular and human settlements in general.

Two key questions are important to ask which when adequately addressed help inform long term policy on housing/human settlements and provide guidance on budgeting processes. 

1. In what ways will the upgrading of informal settlements allow the state meet the standards for adequate shelter in a manner that is economically and socially sustainable for the people living in informal settlements
2.. What are the short-term and long-term socio- economic benefits derived from upgrading informal settlements and who benefits?

Informal settlements require water, electricity and good sanitation in order to create healthy living environments. The COVID-19 crisis has revealed the issue of spacing in informal settlements as important for purposes of exercising social distancing. Spacing between each shack matters but more so during a pandemic where the spacing of individuals within the shack is of critical importance in maintaining a healthy distance between people where some members of the households get the infection. 
The Department of Human Settlements, Water and Sanitation announced plans to decongest informal settlements; relocating some informal settlements residents to new shelter. The question that follows is whether the new shelter provided becomes a permanent structure or temporary. If the latter applies, the housing solution is not a long term one as the people would be moved again in the future as the temporary structures do not provide adequate shelter.

One criticism of the provision of low-cost housing in South Africa is the location on the outskirts of town, far from economic hubs making it difficult for the poor to access employment opportunities. Residents in informal settlements choose where to put shacks for their convenience. This is one reason why relocation for purposes of reducing congestion has to be done with caution as people in informal settlements give priority to other factors like access to jobs apart from having a place to stay. Adequate shelter in this sense relates to other socio-economic factors like access to employment and cannot be met by simply providing a roof over one’s head. The extent of need in informal settlements should therefore incorporate the socio-economic aspects of the poor and the budget should be formulated in a manner that takes cognisance of such factors.
The Human Settlements Budget is decreasing and hence the Department should prioritise programmes and allocate resources where they are needed most. Should more funds be channelled towards upgrading and less to provision of low-cost housing? When the people living in informal settlements have been provided with water and sanitation in informal settlements, they will not consider informal settlements to be permanent and adequate housing spaces. If their perception of a shack in an informal settlement continues to be that of ‘a waiting place’ then upgrading of settlements remains a temporary solution. That influences the decision on whether to reduce or increase the supply of houses to people living in informal settlements.

The budget for Human Settlements has been reduced over the years. In nominal terms, R33.9 billion was allocated and spent in 2019/20.  In real terms the amount remained the same  while in 2020/21 R31.3 billion was allocated in nominal terms, R30 billion in real terms  Over the next two years, R29.1 billion and R28.7 billion is projected. Human settlements budget reductions over the years means there are less and less resources available for the implementation of programmes. It is therefore essential that the resources are used where they are needed most in order to improve human settlements delivery.

When considering human settlements budget and allocation for programmes, it is important to understand the specific needs of residents of informal settlements. It is also important to consider the provincial and municipal disparities of the extent of housing needs and allocate the budget accordingly. It is indubitable that the government should focus on addressing the needs of informal settlements in order to improve the living conditions of the poor. The Department should however consider whether the upgrading of informal settlements meets the housing/shelter, economic and social needs of the poor in addition to providing long term housing solutions. Making such effective needs assessment will ensure budgeting aligns to housing needs of the people and policy align with those needs. 
Esteri Msindo: Human Settlements Researcher-

[1] International Budget Partnership, 2020. Let’s protect Each other: IBP South Africa’s COVID-19 response. Online:
[2] Division of Revenue Bill, 2020. National Treasury
[3] Division of Revenue Bill, 2020. National Treasury
[5] BNG, 2004 pg 18
Date published: 
Thursday, 25 June, 2020

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