Private sector low cost shelter

PES covers the period 3/83-9/86 and is based on document review and interviews with project staff and SNAP personnel. Although only about 50% of project outputs have been achieved in 79% of the allotted time, the project has enabled SNAP (which is comprised of six nonprofit S&L"s and a central regulatory agency - the Departamento Central de Ahorro y Prestame del Banco Credito Agricola de Cartago, or DECAP) to mobilize a great deal of private capital and domestic savings and thereby recover from the financial crisis it faced during the early 1980"s. The project has also helped to revitalize the construction industry, as evidenced by the widespread participation of private developers. The implementation delays were due mainly to two major constraints: (1) legal restrictions on S&L collection methods and interest rates; (2) slow acceptance on the part of beneficiaries of project-funded houses, which are substantially smaller (30-36 sq m"s) than the Costa Rican norm (circa 60 sq m"s). Still, over time SNAP has had good success in promoting and financing the smaller homes; as of 9/86, 4,081 new home loans had been processed, and mortgage financing is now being done exclusively from the 35th income percentile down. Efforts to improve the productivity of S&L"s have included training, TA, computerization of some S&L"s, and the revision of some procedures, but have been hampered by lack of personnel expertise and experience. Despite much progress, serious deficiencies remain in asset and liability management, credit management, and administrative skill. The project has had both good and bad effects. For instance, the degree to which Costa Rican law would restrict the actions of SNAP was underestimated, but this led to the adoption of new legislation, enacted in 1986, which created the Banco Hipotecario de la Vivienda (BANHVI). Since BANHVI is capitalized mostly by mandatory social savings plans, significant new resources are being infused into the shelter sector. On the other hand, lack of insight into the structure of SNAP and the limitations placed on it under the law caused indecision on the part of SNAP and DECAP, and retarded efforts to reform the S&L system. Clearly, the legal and political/economic constraints the shelter sector operates within must be given more consideration during the planning phase of projects such as this, which seek to greatly expand the sector"s operating capacity. The project should be extended 18-24 months to enable it to reach its targets. A number of recommendations are made for BANHVI/DECAP and SNAP to tighten financial controls and increase liquidity.