Más contenido relacionado Similar a Results-Based Financing in Housing (15) 5. 5
Executive Summary
For the second time in thirty years Ukraine finds itself dealing with hundreds of thousands of her
citizens, in a rolling instant, suddenly without a home. While a communist government was previously
able to address the needs of those left homeless by the Chernobyl disaster, those affected by the
current conflict now rely on a limited government, the international community and the free market to
provide solutions.
The problem is this: Most Internally Displaced Persons (IDPs) have decided never to return to the homes
they once owned.1
Many now live in overcrowded rental accommodations, paid for with the dwindling
savings they managed to bring with them. Meanwhile, the most vulnerable live in two hundred and fifty
collective centers, intended as temporary solutions that are now becoming permanent ghettos.2
IDPs
are looking for homes and livelihoods with which to restart their lives in the cities of western Ukraine.
The longer they look, the more they lose hope.
Ukraine’s construction industry has the capacity to build affordable homes for these people. However,
with an economy wracked by double-digit recession and triple-digit inflation, and banks collapsing two-
a-week, there is no financing to enable them to do so.3
While the ultimate solution to meet these housing challenges is controlled inflation, a recovered
economy and a successful mortgage market, these are a long way off. In order to prevent a generation
from becoming entrenched in wretchedness, or adding to the number of those migrating to the
European Union for salvation, a response to more than just the immediate crisis is necessary.
That response should include Results-Based Financing.
Since 2010, Results-Based Financing (RBF) has grown in popularity as a tool used by the development
community to achieve the outcomes they want. Rather than focusing on how money gets spent, this
new approach focuses on what that money accomplishes. From London to India, the US to Colombia,
RBF has been used to improve failing services. However, while it has successfully achieved better results
for citizens and their governments, the use of RBF in addressing issues faced by refugees, IDPs and other
conflict affected populations is relatively untested. Additionally, most RBF has tended to focus on areas
such as, Maternal Health, Water and Sanitation Health (WASH), or Homelessness, with no significant
pilots as yet in the housing sector.
However, given the successes that RBF projects have experienced with other populations and in other
sectors, it is necessary to explore whether a RBF project focused on housing displaced peoples could
provide unique additional value to the response in Ukraine. Despite a number of challenges present,
1
Consultant Interviews (2015)
2
UNHCR Shelter Cluster (2015)
3
Consultant Interview (2015)
7. 7
Introduction
Results-Based Financing projects, such as Social Impact Bonds, Pay-For-Success or other Results-Based
methods, are united by their use of a financing mechanism where at least a portion of funding is tied to
results. These approaches can be uniquely suited to finding durable solutions because payments are not
focused on inputs, but on outcomes. This allows those who are most informed and most impacted, local
individuals and companies, to make risk and value decisions about how to achieve those outcomes,
which in turn gets more value from international donors’ precious funds while catalyzing markets to
achieve those results in the most efficient and economic way possible.
Traditional housing responses are littered with examples of interventions that focused on product rather
than process, on outputs rather than outcomes. Examples include cash payments that lasted only as
long as the outside world’s attention, housing parks built on donated land, far from cities and jobs, that
were never occupied, and expensive housing options that were developed but unaffordable, helping the
well-off but missing the targeted population.
This paper will do the following:
● Provide an in depth explanation of the housing situation as experienced by IDPs in Ukraine, up
to the summer of 2015.
● Outline characteristics present that will impact an RBF project.
● Provide sample payment-triggering indicators tailored to the housing market.
● Highlight some of the challenges and opportunities of an RBF housing project.
The general findings, while focused on the situation in Ukraine, are not exclusive to that context. They
provide new information and lessons for all situations where governments and donors seek to better
address the housing needs of refugees and IDPs. Furthermore, they also represent a high level analysis
of the role that Results-Based Financing can play to bridge the gap between immediate humanitarian
responses and longer-term development results.
9. 9
Part I: Background
Housing & Population Context
For historical reasons relating to the impact of communism, Ukraine’s housing market is incredibly
unique. In seeking to examine the role that Results-Based Financing (RBF) can play in providing durable
solutions to the challenges faced by IDPs in the housing sector, it is first necessary to understand these
singular attributes.
The dissolution of the USSR and the end of communism in Ukraine can still be felt today in many parts of
Ukraine’s housing sector: Laws from the era of communism remain on the books; Khrushchev era
apartment projects, know as “Chruschtschowkas”, dominate the skyline and; according to official
records, nearly 95% of all homes are owner occupied, a relic from the transition to a market economy
when home ownership was transferred from the government to the occupant.
Since independence in 1991, the population of Ukraine has decreased by over six million people, or
12%.5
This is the result of both emigration and declining birth rates, both of which reveal a general
gloom about the country’s situation.6
This decrease has left a sizable portion (3%) of Ukraine’s housing
stock unoccupied. However, this stock tends to be in rural areas where economic poverty has been
advancing at a rate of 0.5% a year since independence (see Figure 1 below).
Percentage of Population in
Poverty
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Nationally 27.8 26.4 27.2 27.2 26.6 27.3 27.1 28.1 27.3 27.0
Rural Population 29.2 28.7 32.2 34.4 36.7 35.0 35.2 38.4 37.9 38.2
Urban Population 27.1 25.4 24.7 23.6 21.5 23.5 23.2 23.0 22.1 21.5
Figure 1: Growing disparity between urban and rural wealth.
7
As Figure 1 illustrates, while rural populations decline, cities are rising as centers of economic
opportunity. In the face of this economic pull, there has been a large migration to cities, and as of 2012
almost 70% of Ukrainians live in urban areas, with nearly a quarter living in the five largest cities.8
Even before the current conflict, Ukraine’s economic epicenter had been moving West. The industries
that supported the Donbas region during the communist days, namely metallurgy and aerospace, dried
up after the fall of the USSR. Decreasing economic opportunities led people to abandon the region.
5
UNECE (2013)
6
UNECE (2013)
7
UNECE (2013)
8
UNECE (2013)
10. 10
While Kyiv's population expanded, all of the East’s cities saw their population decrease by 13% - 16% in
the period after independence.9
As mentioned previously, official records show that 95% of all homes are owner occupied. This is the
result of the end of communism, when residences were privatized and became the property of those
who were living in them at the time.
However, this number obscures the truth. While official records state that only 3.4% of housing is
currently associated with rental agreements, the informal rental market is in truth much larger. Experts
estimate that between 13% and 30% of Ukrainians are currently renting their homes.10
Regardless of these unofficial numbers, for historical reasons the cultural expectation in Ukraine is that
people own their homes outright. Renters, if they rent for five years or more, by virtue of this fact are
considered to be vulnerable populations by the government11
and entitled to social assistance programs.
However, these programs vastly underperform. There are currently over a million state-identified
vulnerable households entitled to government help, and the expected wait time for assistance is over
100 years.12
Moreover, Ukraine’s housing stock is past its prime. 42% was built before 1960 with a planned lifetime
of 25 years. Estimates are that up to 10% of Ukraine’s housing stock is dilapidated and in need of repair
or replacement.13
Under these conditions one would expect that the construction industry would be booming. However,
the global economic crisis and subsequent economic troubles have left the industry struggling to
respond to paralyzed financial markets. Housing output is only one-third of the regional norm. Demand
for new, affordable housing is extremely strong, however the supply is far outpaced due to a lack of
financial tools to support the market. Residential construction therefore is financed mostly from the pre-
construction sale of housing units, which means that most new construction is only available to wealthy
customers who can pay cash upfront, leaving no beneficial impact on the overall market. Simply put, the
financial mechanisms and stability necessary for a normal construction market don’t exist.
Internally Displaced Persons
Following the ousting of President Viktor Yanukovych in February 2014, fighting broke out in the Donbas
region of eastern Ukraine (Donetsk and Luhansk) between Russian sponsored armed groups and
Ukrainian government forces. This, in combination with the Russian annexation of Crimea, led to
hundreds of thousands of Ukrainian citizens fleeing their homes in search of safety and shelter.
9
UNECE (2013)
10
Amman (2015)
11
UNECE (2013)
12
UNECE (2013)
13
UNECE (2013)
11. 11
Of the 5.2 million people impacted by the crisis, approximately 1.4 million have registered as internally
displaced persons (IDPs) with the Ministry of Social Policy as of June 2015.14
However, evidence from
local authorities and Non-Governmental Organizations (NGOs) suggest that these numbers paint an
incomplete picture of the actual situation, with some estimates indicating that there are as many as 1.8
million IDPs.15
The UNHCR’s Shelter Cluster has targeted 473,000 people for housing assistance, for which it estimates
82 million USD will be needed.16
Until now the primary focus of assistance has been to provide
emergency relief, in the form of supplies, cash assistance, and collective centers where people can seek
refuge. However, with the crisis entering its 18th month, groups involved with the response are starting
to think about infrastructure and what should be done to address the evolving needs of IDPs and society
in the long term. Discussions have already begun at the NGO level with regards to contingency plans and
a comprehensive strategy, but they will require a government response in order to be deemed effective
over the medium and long term.
Moreover, no two IDPs have the same search for “adequate housing” - the current accepted term put
forward to replace “shelter.”17
However, there are some broad categories that highlight common
circumstances. These distinctions show how different interventions can be expected to impact these
different categories of individuals (Figure 2).
Population Characteristics Comments
IDP Displaced from place of
origin
May have experienced multiple displacements.
Conflict-Affected
Population
Non-displaced, dwelling
damaged
Addressing shelter needs may reduce likelihood
of additional displacements.
Host Community Non-displaced, dwelling not
damaged
According to local context the living conditions
of host communities similar to IDPs
Returnees
(sustainable return)
Formerly displaced, dwelling
uncertain
Return process may induce direct expenditure
(repairs if house is damaged)
“Commuters” Frequent displacement
between several dwellings
Population commuting across the contact line
might need. temporary base instead of durable
solution
Figure 2: Table of different populations related to displaced persons.
18
14
UNHRC Shelter Cluster (2015)
15
Misto Reform and Consultant Interviews (2015)
16
Ukraine Humanitarian Country Team (2015)
17
Internal Displacement Monitoring Centre (2015)
18
UNHCR Shelter Cluster (2015)
12. 12
Figure 3: Map showing the UNHCR’s data on IDPs in Ukraine as of June 8, 2015.
19
Figure 3 shows that the great majority of IDPs (77%) are registered in the five most eastern oblasts of
Donetsk, Luhansk, Kharkiv, Zaporizhzhia and Dnipropetrovsk. Those registered in Donetsk and Luhansk,
while officially registered as IDPs, may also fall into one of the other categories outlined above. Leaving
those two regions out, the primary destination for IDPs are Kharkiv and the capital, Kyiv.
A recent REACH report in to the disposition of IDPs presented the following information:
● 60% of IDPs live in rented apartments or housings, 4/5ths without a formal contract.
● 70% of IDPs report rents below UAH 2000, or $80 per month, far below market value. This is due
to their rental of summer homes, rural units or shared apartments.
● 20% of IDPs are hosted by family or friends
● 80% left behind owner-occupied apartments, now worth much less.
In the meantime, 90% of all IDPs are staying in urban private accommodation. This has lead to a growing
concern of the pendulum effect - IDPs experiencing an increased risk of eviction as the conflict drags on
and their personal resources run out, leaving them no option but to return to collective centers or their
homes in the conflict zone. In a few short months, the conflict has erased a million jobs, wiped away
19
UNHCR Shelter Cluster (2015)
14. 14
In places where the ravages of the conflict seem to have passed, NGOs are providing more permanent
material resources - cement, brick, corrugated roofing panels, and wood. With these supplies people are
able to make permanent repairs to their homes. One NGO reports that, of the nearly thousand homes
they have provided with supplies for repairs, only six have been re-damaged by shelling.21
Finding able bodied people to carry out repairs, even in areas where the conflict is deemed to have
passed, has proven difficult. For this reason, a focus of the current response has included a cash for work
program to enable the elderly and disabled to pay for the labor necessary to carry out repairs.22
Collective Centers
For those who have moved further from the line of contact, there are a number of interventions
currently being provided by the government and international NGO community.
For the most vulnerable populations, and those coming directly from the conflict area, collective centers
have been set up to provide the most basic level of shelter. These centers are often in rural or remote
areas and were re-purposed from their previous use as summer camps, sanatoriums, or similar
government buildings. Research shows that approximately 10% of all IDPs are currently housed in
collective centers.23
These buildings were not intended or ideally designed for use as year round homes. Many were summer
camps and therefore not insulated or heated for winter use. Nearly all require the use of shared sleeping
quarters and bathroom facilities. Most significantly, many are located far away from cities and the
employment prospects available there. This leaves their inhabitants unable to find work or resume a
normal life. Instead, they are almost entirely dependent on aid. This situation causes negative
psychological effects, in addition to those already sustained in the conflict zone. An MSNA study has
shown that compared with IDPs in other shelter arrangements, those in collective centers report higher
concerns in terms of food and health, and of children showing signs of stress.24
As the NGO Misto Reform reports:
IDPs living together in large groups in places like hostels, sanatoriums, summer camps,
etc. for a period of longer than 3 months result in personality decay because of the loss
of motivation to look for jobs, housing and decent living. Observing such compact
settlements in Kyiv for 4 months during November 2014 to April 2015 indicated changes
in the priorities of IDPs, who had been constantly taken care of by volunteers. Whereas
in November, 2014 86% of surveyed IDPs put finding jobs as a top priority, by April 2015
21
Consultant Interview (2015)
22
Consultant Interviews and UNHCR Shelter Cluster (2015)
23
UNCHR Shelter Cluster (2015)
24
Ukraine NGO Forum (2015)
15. 15
the top priority got switched to humanitarian aid availability and only 14% of the
surveyed IDPs were bothered by looking for jobs.
They summarize their report saying that living in collective centers, “reduces social status of an IDP and
doesn’t correspond to the right of dignified living.” For this reason, combined with the loss of economic
opportunities by living far from city centers, nearly all those who can, whether through financial or
social capital (i.e. spending savings or staying with relatives or friends), seek some other shelter- rather
than live in the collective centers.
Cash for Rent
As mentioned previously, an estimated 90% of all IDPs are trying to address their need for adequate
housing with market based solutions. Some are living with family or friends, many are pooling their
savings to rent apartments in conjunction with other IDP families, and some are able to rent apartments
on their own. It is estimated that currently half of all IDPs are searching for accommodation, adding
greatly to the demand side of the housing situation in Ukraine’s bigger cities.25
For this reason, Cash for Rent interventions have been implemented to assist IPDs in finding new homes.
The Shelter Cluster has overseen this process and, as of the beginning of June, 2015, had provided cash
to between 20,000 and 50,000 households, or roughly 5% of IDPs, with the aim of securing access to
adequate shelter for 6-12 months. The IDPs targeted through this program were those who, while of
some means, possessed insufficient financial resources to rent a place on their own.26
Fortunately, because of the previous emigration from Ukraine, the massive migration flows following
the conflict in the Donetsk and Lugansk Oblasts have been relatively easy to address in the housing
sector. NGO employees report feeling astonished “that the huge number of IDPs would have no bigger
impact on society and housing conditions in Ukraine.”27
Government
In addition to the aid being provided by international NGOs, the government of Ukraine has sought to
assist IDPs in meeting their need for adequate housing. While government housing programs are not an
option due to the one-hundred year wait time, the government has voted, under Resolution 505, to
provide several months’ worth of unconditional cash transfers to IDPs, which many use to partially meet
their needs, including that of housing.
The responsibility of the government to provide adequate housing solutions for IDPs is somewhat
overshadowed by the larger need to improve the housing sector for all middle and lower income
individuals.
25
UNHCR Shelter Cluster (2015)
26
UNHCR Shelter Cluster (2015)
27
Consultant Interviews and Amman (2015)
16. 16
Currently, the Ukrainian federal government wants to incentivize the construction of affordable housing
for low income families. It is interested in using its bulk purchasing position to provide incentives for
companies to undertake new housing construction and complete unfinished projects, which will then be
transferred to qualifying citizens. A recent agreement with the government of China sought to provided
USD 15 Billion to Ukraine for the construction of affordable social housing, however it came with the
caveat that a Chinese company must used, perhaps mitigating some of the potential benefits.28
Additionally, the federal government is also open to using alternative mechanisms such as public-private
partnerships to add to the stock of social housing. This possibility has been explored in detail and aided
by USAID’s P3DP.29
Some municipalities, such as Kyiv, have individually attempted to address the need for affordable
housing. They have initiated a number of housing regeneration programs on their own over the last
fifteen years. One project begun in 2008 in Kyiv led to a 60% profit for investors causing interest in
future projects. However, these were all social housing programs, and not specifically aimed at IDPs.30
Looking Forward
Despite the signing of the Minsk II Protocol in February 2015, which was aimed at resolving the crisis, no
political solution to the crisis has occurred. While opinions are mixed, it seems unlikely that any agreed
settlement to the crisis will occur in the near to medium term.
Despite this, evidence seems to indicate that direct kinetic relations between the belligerents are
currently at an ebb. NGOs have reported that, while irregular shelling is a constant concern, direct
combat is limited. Whether this is a lull between bloody battles or the establishment of a new normal
between entrenched sides remains to be seen. In any event, the crisis is beginning to demonstrate all
the characteristics of a protracted IDP event.
Data shows that the number of people registering as IDPs is still increasing on an ongoing basis,
reflecting the deteriorating situation in the conflict areas. Additionally, movement between Ukraine and
the Non-Government Controlled Areas (NGCA) has become increasingly restricted. There are a
decreased number of operating checkpoints, causing long waits to cross. Additionally, the de-facto
government of the Donbas region has stopped the operations of international NGOs in areas it controls.
A number of surveys have looked at the future intentions of Ukraine’s IDPs in an attempt to provide
more information to shape future strategy and decision making. In general, between 70% and 93% of all
28
Press service of the Vice Prime Minister of Ukraine (2015)
29
Amman (2015)
30
Amman (2015)
17. 17
IDPs surveyed have reported an intention to make their relocation permanent. On average only 10% to
15% have stated an intention to return home once the conflict ends.31
The reasons for these answers likely hinge on the historical economic decline of Eastern Ukraine, and
the subsequent physical and economic devastation. For those that have found new jobs, networks and
opportunities, there seems few compelling reasons to return.
Within those who don’t intend to return, there is a strong preference to integrate into urban areas such
as Kharkiv and Kyiv. Tellingly, a recent International Labor Organization survey asked, “If we were to
provide a house free of charge, a job and utilities in a rural area, would you move there?” The vast
majority responded in the negative, indicating an overwhelming preference for the urban areas over the
rural ones.32
Response Best Practices & Lessons Learned
In beginning to think about how to address the situation, it is important to incorporate recent advances
and best practices regarding IDPs in urban settings, given Ukrainian IDPs preference for urban solutions.
The crisis in Ukraine is, in many respects, past the humanitarian crisis stage. It is no longer “about saving
lives,” to the extent that this means preventing civilian fatalities. It has reached the point where
development actors need to start looking at medium and long term solutions. In this regard it is now
about “saving lives” by saving livelihoods and getting people’s lives back on track.
In doing this it is worth keeping USAID’s shelter equation in mind: S>4W+R or stated otherwise, shelter
is more than four walls and a roof. As IOM further illustrates, “Durable Solutions are always multi-
sectoral solutions.” Any successful intervention to provide adequate housing to IDPs will therefore have
to be part of a larger, contextually appropriate, response that includes other sectors.
Many best practices, such as recognizing informal tenancy, are of a legal nature and can only be carried
out by the government, with the encouragement and support of other actors. However other tactics,
such as increasing knowledge sharing and having greater cooperation amongst international NGOs, are
prudent for all actors.
Specific best practices for creating durable and sustainable housing solutions include:
● Targeting general social issues that will aid IDPs without singling them out.
● Treating housing of IDPs as a development issue that focuses, not on the IDP, but on broader
development plans that address structural issues, including challenges faced by the urban poor.
● Focus more on rent interventions, rather than ownership interventions.
● Address deeper problems related to affordability of housing stock.
31
Consultant Interview (2015)
32
Consultant Interview (2015)
19. 19
PART II: Opportunities for Results-Based Financing
Results-Based Financing
Background
Results-Based Financing refers to any financing mechanism where at least a portion of funding is tied to
results. Generally speaking, in a Results-Based contract, an “outcome payer” (a foundation,
international donor, or government) conditions the payment of money (typically a grant) to a
service provider (an NGO, private company, or governmental body) on the achievement of pre-agreed
social outcomes. A variety of actors use Results-Based Financing to pay for outcomes. In particular,
governments in developing countries and international donors are increasingly making use of RBF.
There are many potential benefits of Results-Based Financing, including more flexible funding and
improved delivery of services. Moreover, it has the potential to bring in new players (i.e. private
investors) and motivate markets through the use of a Social Impact Bond, in which impact investors
finance the initial cost of operations on project they deem will see a social and monetary return on their
investment.
Indicators
The key “trick” to an RBF project is defining clear and applicable indicators that allow for all parties
involved to understand what is expected, and whether outcomes are being met.
Outcome metrics should:
● Be strongly linked to the change being incentivized.
● Provide an incentive to focus on sustainable success for the target population.
● Minimize the potential for perverse incentives and ‘gaming’ the system.
As explained by the organization Social Finance in a white paper on an RBF in London:
“When designing outcome metrics, simplicity, ease and cost of accurate measurements
are key considerations. The objective measurement and internal monitoring required
for outcome metrics is not without cost. Additional complexity can reduce transparency
and increase the potential for ‘gaming.’ When designing outcome metrics, the aim is to
identify the smallest number that incentivizes the right behavior.”33
Ideal indicators generally have the following twelve characteristics (figure 5).
Objective Clear, well-defined, precise and unambiguous, simple to understand
Measurable Able to be quantified easily
33
Social Finance (2012)
20. 20
Verifiable Able to be verified by an impartial third party
Economical Relatively inexpensive to collect
Standardized Able to be used again elsewhere and provide a clear picture for comparison
Flexible Can accommodate continuous improvements and “stretch” to apply to different
places
Predictive Able to be extrapolated from to predict outcomes in similar situations
Effective Provide a good tool for policy making
Relevant Directly related to the desired outcomes of the project
Representative Represent the results without neglecting major points
Interrelated Interconnected to provide a holistic picture
Sustainable Able to be sampled frequently, regardless of external capacity or funding support
Figure 5: Characteristics of good indicators.
34
Use in Housing
The use of RBF in the housing sector is completely new and untested. It is necessary therefore to
consider whether Results-Based Financing provides new or unique tools to the international NGO
community to carry out housing interventions. Either way, its newness means there is an increased risk
associated with an initial project. Given this risk it might seem like an RBF housing project is not a
desirable option, however, the opposite is in fact the case.
Using RBF to carry out a housing project is a very attractive option, even with the increased risks for an
initial project. This is because international NGOs and donors have experienced numerous challenges
and failures with traditional housing interventions and a new methodology has a greater chance of
succeeding.
For example, the International Red-Cross recently received scathing publicity for having received 500
million USD for its housing program in Haiti, and only constructing six houses.35
With difficulties such as
those experienced on this project, it is natural that these organizations should begin to look for
alternative models, and shift their focus from spending on inputs and begin to instead spend on
outcomes.
A fundamental aspect of RBF, an ongoing process or relationship that can be improved through
incentives that emphasize outcomes rather than outputs, is already a part of the housing sector. For this
34
Adapted from The World Bank Group’s Indictors - World Bank Group (2007)
35
Propublica (2015)
21. 21
reason, RBF is a suitable tool that the international NGO community should hone for use in future
housing interventions.
Possible Indicators
Since an RBF housing project has never been undertaken before, it is impossible to borrow indicators
from previous projects. However, similar projects undertaken to address homelessness provide
potential indicators for this context, and there are classic indicators that most RBF projects utilize.
Additionally, there are a handful of indicators that refer to the physical characteristics of the property
that must be incorporated to ensure decent housing standards that conform to a country’s laws and
internationally agreed norms. Beyond these, which don’t measure outcomes but are necessary for legal
reasons, an ideal intervention is one that doesn’t take an overly sectoral approach but instead strives to
be a part of an “overarching reintegration approach”. For this reason, many potential indicators should
only tangentially touch upon housing. Additionally, while IDPs are used in the examples below, they
could just as easily apply to refugees or other populations.
Possible indicators include:
• Percentage of target population in the housing solution is less than fifty percent.
o This prevents the housing solution from being over IDP centric. It prevents ill will toward
the IDP community and ensures a degree of integration. Additionally, it means that
utilities and services provided by the municipality must cater to the needs of the local
population and avoids the temptation to marginalize the community.
• Percentage of units occupied in the housing solution by the household prescribed in writing is
greater than seventy percent.
o This helps avoids the possibility of attempts to game the system by ensuring that those
listed on the lease or tripartite agreement are actually inhabiting the unit.
• Percentage of the target population in the housing solution current on their payments is greater
than eighty percent.
o This ensures that solution is more durable than temporary, by showing that IDPs in the
solution are able to afford it.
• Percentage of income that the target population in the housing solutions spends on housing is
less than thirty percent per household.
o This along with the above indicator, helps to ensure the durability of the solution.
• Percentage of turnover in the housing solution is less than fifty percent per annum.
o Ensures a degree of stability, as high turnover could be an indicator of underlying issues.
• Percentage of the target population using the housing solution for more than X number of years.
o This with the above indicator helps to establish longevity and stability.
• Percentage of households of the target population in the housing solution with at least one
member currently employed is greater than seventy-five percent.
o This ensures that the current generation is achieving livelihoods and is integrating in its
new location. Unfortunately, this indicator is difficult to measure given the challenges of
defining employment.
22. 22
• Percentage of children of the target population in the housing solution enrolled in ongoing
schooling in a school system ranked in the top two-thirds nationally is greater than seventy-five
percent.
o This ensures that next generation is engaged in the process of integration, with a
reasonable education, creating a long term durable solution.
• Percentage of target population households reporting personal savings greater than $100 USD
equivalent is greater than fifty percent.
o This measures household resilience, and ability to weather unanticipated financial
difficulty.
• Ratio of visits to the emergency room over elective hospital admissions in target population
shows continual improvement over time.
o This measures the healthiness of household, and often shows cost saving for local
municipalities in single-payer health care systems.
• Ratio of acrimonious interactions with the criminal justice system to control group or over time.
o This measures many things and shows the progress toward durable solutions. It can also
highlight municipal savings. Given the broad number of actors affecting this indicator, it
is difficult to include since no one group can be responsible for impacting it.
• Percentage of target population registered to vote and/or having voted in past local election is
greater than X percent.
o This measures the target population’s role in decision making, and level of integration.
• Percentage change in sale price of housing units in housing solution over time.
o This measures the value that those who are participating in the program receive over
time.
• Percentage of properties meeting or exceeding standards outlined by national housing law is
one hundred percent.
These indicators can be measured at the individual level, or at the cohort-wide level. Moreover, each
indicator can be manipulated numerically to provide optimized outcomes depending on which level is
targeted. Given these variables, it is clear that there are a lot of options at hand to help properly target
an intervention towards the results desired. It should also be noted that this list is by no means an
exhaustive one.
Adding even more flexibility is the timeline by which these indicators are sampled and payments are
made. For example, payments are often made once a year over the course of five or ten years. This
limits the need to sample the indicators to a manageable frequency but also allows for the normal
financial functioning of the organizations involved.
Lastly, while it is necessary to tie some indicators to trigger payments, that does not necessarily limit the
ability to measure other indicators. This might be done to get a larger picture of the impact of the
intervention, compare given indicators with those used elsewhere, or experiment with indicators for
potential future projects.
23. 23
Applicability to Ukrainian Context
The Need to Act
The benefits to the government of having a long-term and sustainable response to the IDP housing
situation are significant. The lack of adequate housing has been tied to a vast number of social ills, and
can have expensive long term psychological effects on its citizens. Moreover, for a country such as
Ukraine, which has an established history of emigration, there are now over a million more of its citizens
with additional reasons to leave the country. Already local NGOs are reporting increased asylum and
resident permit requests to the embassies of European Union countries in Kyiv.
Given these facts, as well as others laid out previously, there is a clear benefit in acting to introduce
some sort of housing related intervention.
Intervention Scope
The next question that must be examined is to what degree the specific on the ground situation in
Ukraine offers fertile soil to try the first ever RBF housing intervention.
First, there is a clear population for an intervention. The situation in Ukraine has a defined population
(IDPs) whose outcomes can be measured as compared to varying control groups, such as unregistered
IDPs, host communities, and historical IDPs (from the Chernobyl disaster).
Second, there are a number of clear locations where an intervention can be undertaken. In Kharkiv
region, the city of Kharkiv remains the top destination for new IDPs, with 180,000 IDPs officially
registered there, and as many as half a million in fact living there. Additionally, Kyiv has also been a
preferred choice for IDPs. These two cities provide ideal locations for an intervention.
Construction and Financing
As previously mentioned, the government of China has sought to provided USD 15 Billion to Ukraine for
the construction of affordable social housing.36
While this loan may or may not be the program
necessary to meet Ukraine’s social housing needs, given the conditions attached, it does highlight the
fact that the problem of social housing in Ukraine is a problem of financing.
While much of the developed world has a sound financial and banking system that it can rely on to
provide credit, Ukraine does not. With nearly fifty banks going bankrupt in the past six months, interest
rates at 40% and unstable rates of inflation, the typical tools for placing low income households on the
path to homeownership through mortgages and the like are not options.37
Without these financial
36
Press service of the Vice Prime Minister of Ukraine (2015)
37
Consultant Interview (2015)
24. 24
incentives and tools, the construction industry has very little reason to build housing stock targeted to
these categories.
The ideal solution to this situation is for the economy of Ukraine to recover, inflation to return a healthy
rate, and a sound mortgage system to be established. However, this is obviously many years, if not
decades, away.
Fortunately, with the right financial tools in terms of Results-Based financing, incentives can be created
to engage financial markets and the construction industry in building affordable housing. An
international donor such as Germany’s Gesellschaft für Internationale Zusammenarbeit (GIZ), America’s
US Agency for International Development (USAID), or even China, could provide the prospect of an
improved return, enticing actors to build or invest in social housing that could be affordable to rent or
buy for lower income customers.
To summarize, Ukraine has construction companies with expertise able to carry out successful
construction projects. While proper financing tools are lacking, this is the fault that RBF is aiming to
address. If handled correctly, a housing project could kick start the lives of all involved in the process,
creating jobs, demonstrating successful financing structures, and providing hope.
Rental Approach
Under the circumstances, a strong intervention would likely focus on constructing new social housing
units for rent. Anecdotal data shows that, while almost every IDP would like to someday own their
home (for historical and cultural reasons), today they are more likely to look for rental options - perhaps
waiting for the conflict to end and their home in the Donbas region to regain some of its lost value so
that it might be used to establish value in a loan or down payment. This follows established historical
patterns – when displaced populations first relocate, they, for readily apparent reasons, look to the
rental market, rather than the property market, to address their housing needs.
Data from a survey done by the NGO Misto Reform indicated that, “86.9% [of IDPs] can afford monthly
payment of UAH 3,000 to UAH 5,000, 9.4% can afford UAH 5 000 to UAH 10 000.”38
While this is not a
sufficient amount to be able to access the mortgage markets as they currently exist, it is enough to be
able to afford rental prices on social housing units.
As previously stated, there is currently a deficit in affordable housing to rent. According to sources, in
government controlled areas the main shelter related issue reported per household by IDPs is the lack of
resources to rent housing (55%). Key informants also report that in some areas there is insufficient
housing available for rent (12%). Eight percent reported problems with landlord/risk of eviction.39
Constructing new units for rent, that are at the affordable end of the market, addresses these issues.
38
Misto Reform (2015). UAH is the symbol to represent Ukraine’s currency, the Ukrainian hryvnia.
39
Misto Reform (2015)
25. 25
An RBF project aimed at increasing the supply of affordable housing, especially for IDPs, would
accomplish a number of objectives. It boosts the incentives for housing supply to meet demand while
making IDPs more attractive tenants, while avoiding the pitfall of placing IDPs in housing that they are
unable to sustainably afford, as a credit guarantee-based intervention might. Because it is a market
based intervention it incentives “realistic housing construction,” meaning companies will build based on
their internal analysis of the likelihood of overall long-term profitability – with RBF outcome payments
factored in - and not just build to meet the potentially distorting immediate desire of international
donors.
Challenges
It has been shown above that the situation in Ukraine provides a number of circumstances that make it
ideal for an IDP housing intervention. It has a defined target population and location, with strong control
groups for comparison. There is a clear methodology, constructing new social housing units and renting
them, with actors able to carry it out. There is obvious demand for what such an intervention would
provide, and evidence that it would address the needs of those it targets. Lastly, there is sufficient
information regarding the indicators to be used in such an intervention. However, despite these positive
conditions, there are nonetheless a number of challenges, both in general, and specific to the Ukrainian
context, that are worth taking note of.
Overall Challenges
In all housing interventions there are numerous challenges. Some challenges are very situation specific,
with their roots in the cultural, legal and historical narrative of the location where the intervention takes
place. Others challenges are broader, tending to show up in numerous interventions. RBF tools are able
to address some of these challenges, and are unable to address others.
● Land – What governments have to offer to housing interventions is generally a donation of land.
However, governments hesitate to donate valuable land in desirable locations such as city
centers, preferring to sell this land to developers for a profit. This means that NGOs are often
donated land that is far from jobs and services, and housing interventions based in these
locations fail to reach their desired outcome. This has been seen repeatedly in housing
interventions around the world. By not necessarily relying on the donation of land, RBF avoids
this issue, and even in locations where land is donated, if it is so remote as to not allow for the
necessary outcomes, RBF projects have an incentive not to make use of it.
● Expertise - In most post-crisis situations there are no large scale providers of permanent
housing. Not many professional NGOs build housing as a program and when they do, it
frequently does not work. Because NGOs are not construction companies or real-estate
developers, they can’t adequately address risks in the housing market. Yet it can often be the
case that donors have given them money that must be spent for the purposes of housing. RBF
addresses this challenge by moving these decisions, and the attached risk, from the NGO to the
26. 26
construction company that is better able to assess them. It is this issue that a RBF project best
addresses.
● Financing – Housing interventions require lots of upfront financing in order to be carried out. In
the case of RBF, this can sometimes mean relying on the Social Impact Bond (SIB) as the
mechanism by which that financing is secured. This bond relies on private sector investors to
finance the upfront cost of a project, which they recoup with profit if the project successfully
meets its target indicators. However, there is the risk that, despite the opportunity to turn a
profit, during uncertain times investors might be shy about taking the risk financing anything. In
cases such as these it can be difficult to secure the necessary financing for a successful
intervention.
● Corruption – In any intervention, housing or otherwise, corruption can be a serious challenge. It
creates significant additional costs and uncertainties throughout the process. This is a burden
for all actors. RBF in some ways addresses this because it must be factored into calculations of
those companies or organizations who are looking at whether they will be able to turn a profit
under a given set of parameters. However, it would obviously be ideal if corruption were not an
issue.
● Sectoralization – In all housing interventions there is a risk of providing a roof but failing to
provide something else, which ultimately dooms the project, because that wasn’t part of the
housing sector’s responsibilities. More than what is provided as a structure, the path to recovery
is based on a lot of other factors, of which housing is just one. “People can’t eat their house,”40
RBF brings this into focus, however, it can also make housing a more risky sector to carry out an
intervention in, depending what other factors might be at play.
Ukraine-Specific Challenges
● Land - Within Ukraine, government land has already been donated, which an international
donor used to make an “IDP camp” out of shipping containers. However, local actors report that
there have been difficulties filling these shelters.41
As mentioned above, RBF provides some
relief from this challenge, letting private companies decide if a location will be able to produce
the desired outcomes and be profitable or not.
● Expertise – Ukraine has, until recently, largely been considered a middle income nation that
does not require the attention of international aid organizations. While the U.S. Peace Corps and
USAID have put effort into helping it develop institutions following its independence from the
Soviet Union, most aid agencies have been more occupied in Africa and the Middle-East. This
40
Consultant Interview (2015)
41
Consultant Interviews (2015)
28. 28
Summary
For the second time in thirty years, hundreds of thousands of Ukrainians suddenly find themselves in the
desperate search for somewhere they can call home. The violence and insecurity that has descended
upon Crimea and the Donbas region has driven as many as 1.8 million people from the homes and lives
they knew. Most of those who have left, especially the younger generations, will never return.43
The situation is looking increasingly entrenched, with ever worsening conditions for those still
inhabiting conflict areas. Collective centers, set up at the start of the crisis, are at risk of turning
from emergency way-stations into permanent ghettos, devoid of opportunities and with ever
lower morale. The estimated six to twelve months of assistance that the government and
international NGOs are planning to provide to targeted IDPs looks insufficient in comparison to
the likely duration and outcome of the conflict.
It is difficult to overstate the importance of housing. From the Great Depression to the Great Recession,
almost all major financial crises of the last one hundred years have some of their roots in the housing
market. Ukraine’s housing market is frozen in time, burdened by its communist past and hobbled by
financial disaster. It is unable to meet the needs of her citizens. If those searching for new homes are
ever to find them, “Long-term housing strategies and policies, including financial mechanisms that
would support residential construction, are needed.”44
A new financial tool is the best way to address the current housing situation. With the number of IDPs
growing weekly as the conflict drags on there is increasing interest in finding a response that addresses
more than just the immediate crisis. It has been observed recently that “there seems willingness of the
donor community to support initiatives targeting at housing solutions [sic] for low income households
and IDPs in Ukraine.”45
Time will reveal when that support actually arrives, and what form it will take.
43
Consultant interviews indicate that a very high percentage of IDPs have no intention of returning home, this is
particularly true of the younger generation.
44
Amman, (2015)
45
Amman, (2015)
29. 29
Conclusion
Results-Based Financing in and of itself is a relatively new innovation, and its use in the housing sector is
untested. While this presents significant risk to anyone contemplating its use in this sector, it also
presents an opportunity for those seeking to have a groundbreaking impact.
RBF has the potential to serve this sector as a much needed link between humanitarian aid and
development solutions. Because of the unique characteristics of RBF, it can energize local markets while
leaving risk assessments to those who are best informed and have the most at stake. These features
make RBF better suited to provide a bridge over the gap between humanitarian aid and development
solutions than any of the other interventions currently available.
While Ukraine doesn’t necessarily provide a picture-perfect testing ground for such a project,
given the challenging legal framework, cultural norms and its perception as a developed
country, the clear target populations, comparison groups, market actors and, most importantly
need, provide a unique opportunity. It seems only a matter of time until RBF is put to work in
the housing sector; while it remains to be seen what country that first intervention will take
place in, the housing situation for IDPs in Ukraine offers a compelling case.
Though this discussion has focused on the use of RBF to provide housing solutions to IDPs, such
interventions are equally suitable to other populations. From refugees to the urban poor, RBF projects
have a lot to offer those struggling to find adequate shelter. It has been noted by the UN special
Rapporteur for IDPs and others that housing solutions will achieve more when they focus on low
incomes and disadvantaged situations, rather than simply registered status.46
From Germany to
Colombia, the UK to Cambodia many populations stand to benefit from such projects.
Like all interventions, RBF is not a silver bullet. Nonetheless, the strategies and methodology of this new
approach provide valuable tools to help improve the lives of refugees and IDPs everywhere. Ultimately
though, it is still up to governments, communities, companies, NGOs and individuals to ensure that the
search for adequate housing is not in vain.
46
IDMC (2015)
32. 32
Organizations Interviewed
1. People in Need (PIN) - August 3, 2015
2. Norwegian Refugee Council (NRC) - August 4, 2015
3. United States Department of State - August 4, 2015
4. Adventist Development and Relief Agency (ADRA) - August 5, 2015
5. Ukrainian Red Cross Society - August 8, 2015
6. FHI360 - August 11, 2015
7. International Organization for Migration (IOM) - August 11, 2015
8. Social Partnership - August 12, 2015
9. United Nations High Commissioner for Refugees (UNHCR) - August 14, 2015
10. Misto Reform - August 18, 2015
11. InterAction - August 20, 2015
12. German Corporation for International Cooperation (GIZ) - August 20, 2015
13. United Nations Development Program (UNDP) - August 21, 2015
14. Internal Displacement Monitoring Center (IDMC) - August 25, 2014
33. 33
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