The Karachi Development Authority: Failing to Get the Prices Right

Abstract

This paper, like other studies of land development agencies, describes the problems of pricing and cost-recovery, allocation, and targeting (Van Meurs 1986; Baker and Kampholpan 1987; Cohen 1983; Dowall 1989b). It focuses on the Karachi Development Authority (Dowall 1989a), but it could have just as easily been written about any of the numerous land development agencies operating in the Third World. Karachi is one of the fastest-growing cities in the world. At its current compound annual growth rate of 4.7 percent per year, Karachi will grow to 13.5 million persons by the year 2000, making it one of the world's 35 largest metropolitan areas. The pressures on Karachi's housing and land markets have been enormous, and fewer and fewer households can afford housing produced by the formal sector. As a result, squatter settlements in Karachi are growing rapidly. As this paper illustrates, the formal sector (particularly the Karachi Development Authority), has failed to meet the housing needs of its growing population. Karachi's housing shortage is caused by an inadequate land development and disposal system and a lack of finance capital to support house purchases. Despite the fact that over 90 percent of the land in Karachi is publicly owned, the Karachi Development Authority (KDA), by pursuing inappropriate policies, is failing to provide sufficient quantities of serviced residential plots. By vastly underpricing residential plots it offers for sale, the KDA is chronically short of finance capital for infrastructure development. The very low prices for initially allocated plots also generates tremendous speculative demand for plots by the middle and upper classes. Unless the KDA either improves its performance and expands production of affordable, fully-serviced residential plots, or completely turns over the production of residential subdivisions to numerous private-sector enterprises, shelter and urban service conditions will continue to deteriorate, as more and m re residents seek shelter in the katchi abadis.

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