Life and Debt

Recent evaluations of housing reconstruction programmes in the Northern Province suggest a visible trend of increased indebtedness among housing beneficiaries.  This study attempts to better understand this trend by examining the socio-economic situation of housing beneficiaries and the extent to which the housing programme drives household debt. A survey of 347 households in Jaffna, Mullaitivu and Killinochchi, (with 2/3 of households participating in a housing programme) indicated that average debt among housing beneficiaries were higher than those that have been approved to participate, but have not begun construction of houses. Half of the sample reported inability to pay back debt; and increased debt leads households to coping strategies such as reducing food consumption that negatively affects the quality of life. Findings of this study indicate that participation in an owner-driven housing programme is not the cause of indebtedness, but is a catalyst that leads to higher levels of borrowing. The lack of sustainable livelihoods appear to be a strong factor leading households to borrow. Other factors such as the lack of financial literacy and the increased supply of debt also appear to be linked with indebtedness. Findings of this study will be useful to improve implementation of owner driven housing programmes.