UNDP in Montenegro has an innovative approach to the legalization of informal settlements

Feb 13, 2013

Infographic: UNDP in Montenegro

Can we help citizens get an ownership title to their house, save money on energy bills and at the same time generate income for local administrations through real estate taxes? UNDP and Government of Montenegro think so.

The World Bank’s Doing Business Report for 2013 ranked Montenegro 176th among 185 countries of the world when it comes to dealing with construction permits. The unofficial country data indicate that there are some 100.000 illegally constructed buildings in Montenegro. Rapid urbanization during the past decade, mainly fuelled by foreign direct investments boom, has indeed significantly increased Montenegro’s GDP. However, one of the consequences was increased number of informally built constructions.
The costs of living in Montenegro are significantly above the disposable budget of many households, while high electricity price pose additional burden on average citizens. Moreover, most of the illegal objects have very low energy efficiency characteristics, resulting in an overall increase in CO2 emissions and increased electricity consumption. It doesn’t take a scientist to conclude that both the country and its most vulnerable citizens suffer the most.

For nearly a decade now, UNDP has been making efforts to help the country advance its spatial planning. Now, we have some new, innovative proposals to tackle this challenge. The results of our innovative method showed that 63% savings in energy consumption is possible; an amount that can later be used to finance the costs of legalization, with 6-7 years long period for the return of the investment.

Besides the measures taken to ease the doing business procedures and to pass new and improve the existing construction legislation, together with the partners from relevant institutions UNDP is now looking into opportunities to decrease the environmental and economic damage caused by the illegal settlements.

Energy audits conducted in 2011 on 30 illegal houses in three pilot municipalities (Žabljak, Bijelo Polje and Bar), along with the prototype performed on 4 selected houses in the Municipality of Bijelo Polje, showed that €5,000 investment in average is needed to retrofit a 100 m2 house, which generates approximately 63% of annual energy savings. The calculation indicates an investment payoff period of around 6,1 years.

UNDP now advocates for an integrated approach that would include an increased level of energy efficiency in buildings, while financial resources made from savings in energy consumption could be used to finance the process of legalization. Our experts tested the idea in the field and discovered that this innovative approach may at the same time result in an increased revenue for the central and local budgets; increased employment; reduced negative environmental impact; reduced electricity consumption and thus reduced need for its import and, ultimately, in an improved living standard.

In the interim, together with UNDP, the Government of Montenegro has designed and adopted the National Formalisation Program (NFP) and a corresponding action plan. The document incorporates mandatory requirements and financial support package for proposed energy efficiency improvements.

On the legal side, the Government of Montenegro is continuously moving forward. A new Regularization Law has been adopted, waiting to be enforced by the Parliament. This law will enable paying of legalization costs for a period of minimum 20 years, and local governments will be able to apply different modalities of legalization.

These novelties in the field of legalization of informal settlements, as well as innovative approaches and a comprehensive study on illegal settlements in Montenegro were presented at an international conference that gathered representatives from line ministries of Montenegro and the region, as well as international experts in this field. On that occasion Mr. Branimir Gvozdenović, Minister of Sustainable Development and Tourism in Montenegro said: “Legalization is one of most important projects that the Government will be implementing in the near future. It will last 7-8 years, and is expected to bring some €400 million income from communal and other respective taxes. That money will then be reinvested to improve the living conditions in illegal settlements through new infrastructure and energy efficiency measures. Ultimately, the whole entrepreneurship will create some 20,000 new jobs for Montenegrin citizens.”

Illegal construction is a challenge not only in Montenegro but in the region, too: “There is around one million illegal buildings in Serbia, and hundreds of thousands in the other countries of the region. Albanian authorities are now facing a challenge, as there is no interest among citizens to legalize their homes. However, some of the countries in the Western Balkans found efficient solutions that can be applied in Montenegro and elsewhere,” said Mr. Helge Onsrud, Director of the Norwegian Mapping Authority ‘Kartverket’.  

Mr. Rastislav Vrbensky, UNDP Resident Representative and UN Resident Coordinator to Montenegro reminded that UNDP supported the development of spatial and detailed urban plans in 12 northern municipalities, assisted in strengthening of the legal framework, and facilitated transfer of best international practices in this field. “Montenegro’s economy is based on natural resources; therefore green economy is not a choice but a necessity for the country. Having this this in mind, over the last year and a half UNDP invested technical and financial capacities in testing the energy efficiency based approach to legalization. These approaches will not only help Montenegro decrease the number of illegal objects, but it will increase employment and GDP, and it will boost economic activities. We believe that the results of this pilot project clearly indicate that it’s time to take it to the next level, to direct implementation.”

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