World Bank

Assessing Colombo’s urban redevelopment projects

By Ravi Ratnasabapathy

There has been some controversy about the urban redevelopment that took place at break-neck speed in Colombo under previous regime. Visitors and casual observers were struck by the changes to the city; Colombo was looking a lot cleaner and smarter.

The criticism has focused on the human aspects: the plight of evicted residents, the loss of a certain way of life or the change in the character of the city. Little attempt seems to have been made to assess the financial costs and benefits, chiefly because the full costs remain unknown.

The World Bank funded a part of the project and has borne the brunt of the criticism, but many of the projects were carried out independently by the UDA, the military and other state agencies.

The World Bank provided a loan of US$213m of which US$148m was allocated to finance flood and drainage management, US$ 51m for infrastructure rehabilitation (mainly streets and drainage) and US$10m for implementation support.

According to the project brief, the World Bank funding is in two components; the first addresses the problem of urban flooding, which regularly affects economic activities of Colombo. The second aims to support local authorities to rehabilitate and manage their drainage infrastructure and improve the systematic collection of solid waste. 

What the World Bank has been funding is basic infrastructure, something that was sorely lacking. Some observers have conflated this with the high profile redevelopments such as The Dutch Hospital, Colombo Racecourse, Floating Market, and Independence Arcade which seem to have been done independently by various state agencies. The confusion is understandable, given the lack of information.

The most controversial projects involving the rehousing of the urban poor seem to have been carried out mainly by state agencies, with the World Bank involvement being limited to one project at St Sebastian's Canal.

For a proper assessment citizens should know all the facts but the costs of the projects were deliberately shrouded in secrecy. In the interests of transparency the Government should collate and publish the total cost of the regeneration projects and the means by which they were financed. Since some of the projects are largely commercial in nature it is also necessary to know the income earned and the costs of operation.

Pending the availability of hard financial data, we can look at some of the broad philosophical arguments for urban regeneration.

There are many positive things that can come from urban renewal, depending on what drives the programme. The earliest projects were carried out in Victorian London to provide social housing to the poor, replacing the terrible slums that they lived in. A similar justification was used in the case of some of Colombo's new projects but one must note two critical points: the terrible conditions in London at the time, and the underlying purpose of the exercise : to improve the lives of the poor by providing cheap housing for the poor.

In Colombo the impetus seems to be more modern, one of stimulating economic growth through urban regeneration. This is something that has also worked (with varying degrees of success) in many different places but success is dependent on the right policy and governance framework.

If the economy booms, consistently over a few years people will have money to spend and there will be demand for land: for shops, for business premises, for entertainment.

When the demand materialises it makes sense to redevelop older or decaying parts of the city, to improve land usage or ease congestion. If the economy were booming then the Town and Urban Councils would be flush with cash (from trade based taxes) and there would be less need to borrow money to redevelop. It would also be possible to get the private sector involved in the redevelopment process, minimising the need for debt funding.

Urban regeneration needs to go hand in hand with the right policy and good governance because this is what ultimately drives growth. Ideally these should precede the regeneration effort and will help overall growth and the building of confidence. Getting this right policy costs little money but requires enlightened leadership. Once in place, growth will take place overall and attention may be turned towards the more neglected or decaying parts of the city.

Unfortunately what appears to have happened is debt funded beautification for which there is scant demand. According to news reports the floating market in Pettah is deserted. The Racecourse and Independence Arcade fare somewhat better, but store owners have complained that traffic is limited. It is a nice place to wander around in but few people actually seem to buy anything, as indicated by a recent news report that the Ceylon Tea Board shop at the Racecourse is running at a monthly loss of Rs.1m.

The problem seems partly to be in the mix of the shops in the malls. The shops were not allocated on general commercial principles or through a transparent process. Most crucially the malls seem to lack a proper ‘anchor’ tenant. Typical shopping malls incorporate one or more anchor stores and a variety of smaller stores, an anchor tenant being the largest retail outlet in the mall, chosen on the basis of its potential to attract customers to the shopping centre in general.

Naturally, these are commercial decisions and are best taken by businesses, not the Government.

What the Government should have done with these prime locations is to have tendered for proposals for redevelopment and handed over the entire project to a commercial developer. The property would have been developed, the treasury would have earned some revenue, the Government would be less burdened with debt and citizens need not be concerned with the commercial risks and rewards of the restaurant and retail trade.

What was the final cost to the taxpayer and could the money could have been better spent elsewhere? These are fundamentals question which must be answered and it is imperative that all the relevant information be made public as soon as possible.

The townsmen and visitors may be delighted by the external appearance of the city, but let us just hope that we are not walking on streets paved with gold, as in the folk tale of Dick Whittington.