The Costs and Benefits of Interventions to Increase Compliance with the Construction Permits Process in Malawi: Ensuring the Benefits of Urbanization

More than half of urban residents live in informal settlements or in informal dwellings in areas designated for housing. While regulations and housing permits are critical, compliance with these regulations is of equal importance. In the case of Malawi, if the costs or burdens associated with compliance are too high, non-compliance grows. Excessive costs of compliance can include: inaccessible or highly priced building materials; cost of engaging the requisite experts (architects and engineers); and high time-costs associated with compliance. A high burden of compliance placed on owner-developers flows on to consumers and can effectively price poorer communities out of the formal housing market, making informal settlements or dwellings the only available option. Guidance on lower-cost and sustainable building materials, which would be more appropriate for owner-developers who are targeting lower-income residents, further compounds this issue. Non-compliance in Malawi’s construction sector is rooted in three challenges: poverty; the costs of compliance imposed on the private sector; and a lack of transparency in the permit-provision process. The proposed interventions reduce the costs of building low-income housing: they create access to architectural plans that make houses more resilient; they reduce the direct cost of the construction permit process, and they reduce the time associated with engaging with public entities. The first intervention focuses on making prototype plans available for owner-builders with a view to substantially reduce the cost of architectural plans at the approval stage of the construction permit process. This intervention alone would yield 3.3 kwacha for every kwacha invested. The benefits principally accrue to the private sector in the form of avoided technical consultation costs and time saved, as well as avoided damage of sub-quality housing. Part of these benefits would flow to consumers and homeowners, primarily in the form of lowered housing costs and avoided costs associated with repairs over the longer term. The second intervention is the integration of ICT in the construction permit process, or e-permits, which would improve local council productivity and workflow and render the process more transparent, which yields 3.2 kwacha for every kwacha invested. Benefits of this intervention are primarily expressed in time saved from reduced transaction costs and shorter waiting times.