History

Co-operatives were introduced, in what is today the Pakistan Republic, by the adoption of the Co-
operative Credit Societies Act of 1904. Their aim was to finance Indian small farmers before the
partition of India and Pakistan. The promotion of co-operation was done exclusively by the
government in the sub-continent, since there was no other civil organisation dedicated to the cause.
The act authorized provincial governments to appoint Registrars of Cooperative Societies and
allowed for only registered co-operatives to provide credit. The act was changed with the Co-
operative Societies Act 1912 permitting the registration of co-operatives that had objects other than
the provision of financing. Under the Government of India Act of 1919, co-operatives were
transferred to the provinces giving them the power to make laws regarding the administration and
development of co-operatives.

The Malagan Committee Report on Co-operation published in 1915 provided substantial and
constructive proposals for co-operative development. This report played a vital role in governmental
and civil thinking. Various provinces established committees of enquiry which ultimately promoted
the co-operative movement and led to the passing of Co-operative Acts in several provinces.

When Pakistan was created in August 1947, housing was a major problem for millions of people.
Independence had created a large influx of migration into the new state. As the state was unable to
provide adequate housing for its population, squatter settlements soon appeared and were largely
tolerated by government. Industrialization and urbanization accentuated the situation. Refugees and
rural migration contributed to the growing number of urban poor.

After the creation of Pakistan, a series of laws, mostly in the form of Governor’s Ordinances and
later in the form of Regulations of Presidential Ordinances, were promulgated with the aim to ensure
the security of public funds and properties owned by the co-operatives.

In the pre-partition days, housing co-operatives had had a modest start. In the province of Sindh
there were 46 housing co-operatives located in Karachi (22), Hyderabad (23) and Sukkur (1). In
1949, the Karachi Co-operative Housing Societies Union was founded as a central co-operative
organisation by 24 primary housing co-operatives. Co-operators took the responsibility of developing
much needed housing, using the township approach, as there was no governmental agency
equipped at that time to face the challenge. To support these initiatives, the state leased out more
than 1,200 acres of land to the union for township development. Other housing co-operatives such
as the Pakistan Employees Co-operative Housing Society Limited also received land from the state.
The housing co-operatives in the province of Sindh have played a vital role in solving the ever
increasing housing problems in the province, with particular emphasis in Karachi, the largest city in
Pakistan. Now, housing co-operatives can be found in every part of Karachi.

In the province of Punjab, housing was the responsibility of the government through Urban and
Housing Development and several trust organisations (LIT, RIT, etc.) until the 1970s at which time,
commercial and co-operative developers started to do business. However, in the mid-1990s a
corruption scandal involving housing co-operatives that deprived thousands of people of the money
they had invested in housing co-operatives forced the Punjab government, through the National
Accountability Bureau, to reimburse the swindled members. A ban imposed by the Chief Minister in
1997, stopped the registration of new co-operatives.

Even though co-operatives were introduced in the province of Baluchistan in 1950, no substantive
development of co-operatives was made until 1955 when a small amount of financial assistance was
provided with the Aid Program.
Housing co-operatives have also developed in the North West Frontier Province as indicated in the
statistics section below. In the Capital Territory of Islamabad, there are different types of
cooperatives but unfortunately there is no indication of the number of housing co-operatives.

The co-operative movement gained some momentum during the 1960s, the result of financial
assistance from the government. Cooperative Banks were established providing loans to agricultural
and non-agricultural co-operatives. Although progress was made, lack of supervision by the
authorities of some of co-operative societies and absence of specialized and trained individuals
caused co-operators to suffer very big losses, in some cases entire life assets, due to corruption and
fraudulent actions. The government imposed a permanent ban on various types on co-operatives
causing harm to the co-operatives that were acting properly and honestly and creating a climate of
mistrust about co-operatives. This serves to illustrate that co-operatives are not exempt from the risk
of poor governance, corruption, self interest and mismanagement.

In countries where co-operation took birth, the concept of co-operation continued to evolve for the
benefits of the people. Proper legislation, adequate supervision and recognition of people’s initiatives
are the basis of co-operative development. As indicated above, the legislation is in place in Pakistan
as well as co-operative ministries and authorities but they are often not taken seriously or are
pressured politically for personal advantage.

Context
Although Asia is considered one of the most fertile and rich regions in the world, lack of planning and
efficient technologies means it continues to have the lowest levels of per-capita income. Indeed,
most of the population lives below the poverty line level. There are a number examples of Asian
countries which have benefited well from the concept of co-operation and are considered as some of
the most developed nations – Japan, Malaysia, Singapore, China and Sri Lanka – but others
countries have most of their population living below the poverty level.

Pakistan is the seventh most populous country in the world; and fifth in Asia. The housing conditions
in Pakistan are, for the most part: overcrowded, have inadequate sewerage, pollution, poor building
construction (giving inadequate protection from weather extremities) and no security of tenure.
These problems are compounded by an annual population growth rate of 3%.

Housing remains under the jurisdiction of the provinces. Registration of housing co-operatives is
done through the registrars and the provincial co-operative housing authorities have the authority to
oversee and take control when co-ops fail to comply with their own bylaws.

There are five provinces and three territories in Pakistan: the provinces of Baluchistan (Quetta),
Punjab (Lahore), Sindh (Karachi), Khyber Pakhton khaw KPK (Peshawar) and Gilgit &Hunza
province, Islamabad Capital Territory, Federally Administered Tribal Areas, and Federally
Administered Northern Areas.

In 2008, the yearly estimated housing demand was 570,000 units. Actual supply was 300,000 units
leaving a shortfall of 270,000 units every year. The consequences of this situation is that almost half
of the total urban population now lives in squats or informal settlements as it was already indicated in
the National Housing Policy 2001. These slums and squatter settlements (also called “Katchi
Abadis”) can be divided in two types: “settlements established through unorganized invasions of
state lands” that happened at the time of partition for which most have been regulated in the 1960s,
and; “informal subdivisions of state land (ISD)”. The ISD’s are further subdivided into two categories:
the notified Katchi Abadis that have been earmarked for regulation and can obtain a 99-year lease
and the development of infrastructure, and the non-notified Katchi Abadis also referred to as slums
that will not be regularized because the state either wants the land back for development or deems
the land to be ecologically unsafe.
Katchi Abadi Departments were implemented in the provinces of Sindh and Punjab to regularize the
phenomenon of informal settlements but have not achieved much success. In Karachi alone, 650
Katchi Abadis are listed. Moreover, according to UNESCAP, the United Nations Economic and
Social Commission for Asia and the Pacific, nearly 180,000 households in different parts of Pakistan
are facing evictions due to several infrastructure projects, such as roads and highways.

The problem is too big to be solved by the government alone. A concerted effort must be made
involving legislative reforms and providing adequate support to housing co-operatives. Measures
that have been identified include: legislative reforms to provide security of tenure by conferring title
to people living in slums and informal settlements and conferring ownership rights to women;
reasonable building costs through market regulations; financial assistance through grants; mortgage
facilities and financial mechanisms such as micro-credit in place to help low-income families;
adequate environmental measures to ensure a healthy and safe place to live such as roads, water,
sewage, drainage, electricity.

As indicated, housing co-operatives have played a vital role in many parts of the country and their
work has brought better living conditions to thousands of people. As an example, 5,853 acres
(Karachi Development Authority Scheme # 33) have been allocated to 130 housing co-operatives
and societies. At completion, the land will provide homes to 3 million people in addition to
commercial facilities. Other similar projects are currently taking place in other cities of the Sindh
province, such as Hyderabad and Sukkur, as well as in other provinces.

But despite real and considerable progress, the co-op housing movement is confronted by serious
challenges to be able to effectively improve the quality of life of Pakistanis, challenges that come as
much from inside the movement as from the difficult socio-economic conditions facing the country.

The rapid population growth makes any development plan obsolete very soon after its completion.
This forces organisations and the state to remain constantly vigilant to the situation. New
development approaches are not always well received and changing the mentality can be a lengthy
process, particularly in rural areas. This can create serious setbacks for any new undertaking. The
lack of money remains a real barrier to development. The lack of funding is a consequence of two
things: no capital availability and a real difficulty of ensuring the local population understands the
benefits of saving. The scarcity of urban land results in vertical developments, which must be
promoted and supported by the state. Finally, the current political instability disturbs the affairs of co-
operative organisations adding to the difficulty for their development.

In addition to these difficult socio-economic conditions, the co-op housing movement is confronted
by serious internal problems. Some leaders have indicated that the following weaknesses have
slowed down the progress of the co-op movement in the country: the absence of strong leadership,
the inability to maintain standards of business efficiency, illiteracy, the lack of education facilities,
including management and accounting education. These deficiencies have contributed to some
housing co-ops being motivated by self-interest to sully the name of housing co-operatives in
Pakistan, along with other examples of bad administration and illegal acts from unscrupulous board
members. Good ethics and management practices are essential to see the housing co-operative
movement grow.

Any developed society should work at increasing the literacy level of its citizens. Everyone ought to
follow and feel proud of their culture, tradition and norms. Society should act responsibly and do
everything with its own resources independently without any external help. Co-operation teaches
self-help and responsibility and society in general would benefit in applying this concept.

The United Nations declared the year 2012 as the International Year of Co-operatives and
International Co-operative Alliance (ICA) and Karachi Co-operative Housing Societies Union limited
has planned and is preparing for several events to be conducted in the year 2012 making this year a
milestone in co-operative development in Pakistan. Ideas and proposals are under consideration by
the Union’s management hoping that the government authorities and associated bodies will support
these initiatives.

Housing Co-operative Project from the Karachi Co-operative Housing Societies Union

Description
Housing co-operatives in Pakistan are developed under the township model where large pieces of
land are provided by the state to the housing co-operatives or the Union. The housing co-operatives
or the Union carve out plots, develop the land and lease the land to the members. Commodities
development such as water and roads are undertaken by the Province/City Development Authority
or by the Union for which the housing co-operatives have paid a fee. Commercial buildings are also
constructed. The size of housing cooperatives varies according to the land available.

Housing co-operatives members are tenant owners. When the land development is completed, the
allotment is handed over to the individual member upon payment. The individual member builds the
house themselves following the co-operative/Union site plan and other relevant regulations.
Members continue to pay nominal renting fees to the Union. The paying of rent is a condition
imposed by the Central Government and is contained within the land transfer agreement. Even
though members own their own houses, any transfer of units remains with the housing co-operative.

Generally, the ongoing maintenance of the plots and the houses are the responsibility of individual
members and the housing co-operative is not involved. The management of the housing co-
operative is under the Managing Committee elected among and by the members.

Financing
Apart from making land available at affordable cost to the housing co-operatives or the Union, the
state does not provide any other financing to the development of housing co-operatives.

Since the development is financed exclusively by member contributions, the development process
closely follows the ability of members to provide funds. This means that when the cash flow stops,
the development halts and quite often the members lose confidence in the process. This vicious
circle could be eliminated by adequate financial mechanisms.

Co-operatives have struggled with this situation in the past but committed individuals and competent
societies have helped rebuild the trust of the general public and Pakistan government in co-
operatives. A general education/information campaign and encouragement from Ministry of Co-
operatives and other authorities would greatly help the work done by the Housing Co-operatives
Societies and would demonstrate that co-operation works against inflation and poverty and create
good social conditions.

Karachi Co-operative Housing Societies Union Limited has planned and proposed a Housing/Shelter
program for the low-income community to the higher authorities for approval. The proposal is under
examination. It is hoped that the authorities will seriously consider supporting this initiative. If
implemented, KCHSU Limited will be allotted land. KCHSU will contribute with its own financial
means and social interventions to provide upgraded facilities to lower income persons. KCHSU
believes the major element for creating a positive and trustworthy development climate with national
and international organisations willing to finance housing projects is the implementation of a proper
financing framework. The Housing/Shelter program proposed by KCHSU, a credible and reputable
organisation with proven records, pursues this objective.
 Karachi Co-operative Housing Societies Union has also offered to Sindh provincial authorities to
rehabilitate and reactivate the Sindh Provincial Co-operative Bank (SPCB), once the main co-
operative lending institution in the province. KCHSU has offered to the authorities to introduce the
concept of consumer financing, to modernize the institution through several mechanisms, policies
and guidelines ensuring effective recovery of loans and a transparent administration. KCHSU is
ready to provide sufficient funds for the working capital and loan requirements.

Legal Framework
The legal instruments for the housing co-operative sector applicable to all provinces of Pakistan are:

• The Co-operative Societies Act 1925 (which is the extension of the Sindh Co-operative Societies
Act of 1925 to the country from the end of April 1965).

• Co-operative Societies Rules 1927.

• An ordinance was promulgated in 1982 in the province of Sindh under the name Sindh Co-
operative Housing Authority 1982, to ensure the proper functioning of housing co-operatives.

The Co-operative Housing Movement

There is no national organisation of housing co-operatives in Pakistan and the scope of co-
operatives vary widely from province to province. However, housing co-operatives do get together
on some occasions and it should be noted that each province and territory have co-operative
departments with the responsibility to promote as well as to monitor any type of co-operative
development. Provincial statistics of co-operatives are indicated in the table below.

Co-operatives (all types) Members Housing Co-ops Members Houses/Units built

Pakistan 8,073 26,69,605 2,687 1,955,190 2,274,276
Sindh 3,605 15,46,545 1,275 855,989 1,050,000
Punjab 2,570 8,26,626 669 647,635 725,000
Baluchistan 1,236 1,47,341 511 311,250 311, 250
N.W.F.P 662 1,49,093 232 140,316 188,026
A pioneer of the co-operative housing movement in Pakistan and a member of ICA, The Karachi Co-
operative Housing Societies Union Ltd (KCHSU) is a major player in the province of Sindh whose
mandate includes:

• To acquire land from the government and other agencies on lease and to sub-lease to members.

• To develop the land such as site design, building of roads, water sewage lines, electric lines etc.

• To provide and maintain sanitary and other services and levy charges on the member societies and
individual plot owners until the land is transferred back to the local authority.

• To design and/or construct necessary facilities such as school, stores, etc.

KCHSU is a credible co-operative Union having a reputation extending to more than 6 decades. In
addition to being involved in housing co-operative development, KCHSU is pursing the
establishment of credit unions; stimulating the involvement of youth; promoting co-operative
education and literacy; working toward women’s empowerment for safeguarding the rights of women
and removing gender discrimination.

KCHSU is a member of the International Co-operative Alliance (ICA).

Today, the Union has 1,200 housing co-operative members. So far, the Union has developed land
for 4,800 residential units, 84 public amenities, and 750 commercial amenities. 2,500 houses and 8
schools have been built. KCHSU does work in Katchi Abadi by financing housing co-ops to build
houses.

The Union went into a very difficult period where its resources were dilapidated and the democratic
functioning was corrupted. After 3 years of hard work (2004–2007), under the supervision of the
Registrar Co-operative Societies and the support of its members, the Union is back working with the
same principles of its founders.