Abstract
Cities remain hostile environments for the urban poor. The poor are seen as second-tier citizens blocked by a ‘ceiling’ of what they can access educationally, financially and in terms of home improvements. This ‘ceiling’ is created by the institutional structure of cities that include planning regulations, resource flows, financial lending restrictions and political decision-making mechanisms. Based on the experiences of the Urban Poor Fund International (UPFI), this article will explore the range of slum upgrading possibilities that Shack Dwellers International (SDI) affiliates in different countries have undertaken. The Indian and South African cases discussed highlight housing and infrastructure-financing models that are sustainable, pro-poor and not completely dependent on donor grant capital. The examples analysed are drawn from SDI’s internal documentation, reporting and materials. The article begins with a brief introduction to SDI and its work around incremental housing improvement; followed by an oversight of the UPFI, stressing key conceptual points before exploring practical examples.
1. Introduction
This article describes the nature and impact of Slum/Shack Dwellers International’s (SDI’s) Urban Poor Fund International (UPFI) with specific focus on housing upgrading.Footnote1 Central to this article’s vision is that the UPFI should be understood as a key financial vehicle through which poor communities can access finance (loans and grants) on terms determined by their ‘on the ground needs’ – not the stricter top-down rules of formal financial institutions. The history and details of the UPFI are summarised in Section 2 of the article.
The Indian and South African case studies discussed in Section 3 are drawn from SDI’s internal documentation, reporting and experience. The author provides analysis and framing to these examples, situating them within the context of housing and infrastructure debates, especially those focused on innovative financial mechanisms for slum upgrading. In the concluding section, the article outlines not only the intrinsic value of the UPFI’s approach but also the challenge of long-term financial sustainability.
1.1. Background of SDI
Shack/Slum Dwellers International (SDI) is a network of community-based organisations of the urban poor in 33 countries in Africa, Asia and Latin America. It was launched in 1996 when ‘federations’ of the urban poor in countries such as India and South Africa agreed that a global platform could help their local initiatives develop alternatives to evictions while also impacting on the global agenda for urban development.
In each country where SDI has a presence, affiliate organisations come together at the community, city and national level rooted in specific methodologies. SDI’s mission is to link urban poor communities from cities across the South that have developed successful mobilisation, advocacy and problem solving strategies. SDI is focused on the localised needs of slum dwellers and advances the common agenda of creating ‘pro-poor’ cities, addressing the pervasive exclusion of the poor from the economies and political structures of twenty-first-century cities. SDI believes that the only way to manage urban growth and create inclusive cities is for the urban poor to be at the centre of strategies for urban development. Concurrently, there is no government that can hope to stop or ignore the challenges of urbanisation.
SDI uses its global reach to build a platform for slum dwellers to engage directly with governments and international organisations to develop new strategies, change policies and increase understanding about the challenges of urban development. Forward-looking cities prepare for the urban population growth, and work with their citizens to harness the social, technological and economic benefits of urbanisation.
1.2. Incremental housing and shelter improvement
Over the last decades, SDI affiliates have gained significant experience in shelter improvements both in situ and through the development of Greenfield sites. Often operating in the context of limited government financial support and working with the poorest of the poor, SDI affiliates are anxious to ensure solutions that include all stakeholders and can reach meaningful scale. Partnerships with authorities are essential to unlocking resources and delivering at scale. These engagements illustrate the challenges faced by the urban poor under current ‘formal’ policy, planning and regulatory frameworks. The experience of poor communities shows that the most cost effective and responsive shelter solutions emerge from local processes, controlled by communities and facilitated by the state. Achieving these solutions requires organised communities with clear priorities, sustained engagement with government at multiple tiers and the de-construction of perceptions that the poor are incapable of driving their own development. It is through this process, backed up by tangible precedent setting projects such as those funded by the UPFI, that the capacities of communities are demonstrated and common ground for collective action can, and frequently has, been found.
In response, communities contribute savings supplemented by affordable UPFI loans, and sometimes government finance, to build houses incrementally. Incremental housing provision is more accessible and practical for the poor and the financial challenges that they face. Since the UPFI is ‘built from the bottom up’ and financially responsive to local circumstances loans are based on what is affordable to the community as a collective. The challenges are significant and finding options that are affordable, inclusive and of acceptable standards to the community are particularly difficult in contexts of limited state support.
The next section of the article provides a background to, and analysis of, the UPFI focusing on the nature of the fund, its achievements to date and an analysis of how it functions to augment and complement the community-based social process advocated by the SDI network.
2. Background and nature of the UPFI
The UPFI was established in 2007 through funds provided to SDI by a number of donors.Footnote2 It has both a grant and a loan component. Grants are disbursed to mature FederationsFootnote3 for housing and other upgrading projects (e.g. sanitation) and then repaid or ‘revolved’ into national Urban Poor Funds within each country. Although repayment is never 100%, national funds are measured not just in terms of repaymentFootnote4 (or sustainability) but also in terms of the pro-poor political impact the projects make on the city, and sometimes at the national level. UPFI funds can also be disbursed as loans to fund precedent-setting projects that aim to shift urban policy and recover full costs. When federations motivate for funds from the UPFI, and when projects are evaluated, four basic criteria are used:
Does the project create conditions for pro-poor policy change?Footnote5
Does the project leverage further funds from external actors, especially the State?
Does the project have a repayment mechanism and/or encourage savings?
Does the project demonstrate a precedent that can be taken to a larger scale?
From its inception in 2007, the UPFI has provided grants and loans to countries in Southern Africa (Namibia, South Africa, Zimbabwe, Malawi and Zambia), East Africa (Kenya, Uganda and Tanzania), West Africa (Ghana) and Asia (India, the Philippines and Sri Lanka).
2.1. Why the UPFI?
SDI created the UPFI in order to create a platform for urban poor federations to access funds at the international level. Providing direct control of capital enables communities to negotiate as an acknowledged partner with formal bodies (e.g. government, banks). When federations strike deals at the national level, it can take time to receive funds from government or certain regulations may hold up project implementation. The UPFI can help bridge this gap strengthening the hand of the Federations in these negotiations.
2.2. How does UPFI invest?
The autonomy of SDI affiliates is enhanced by the liquidity of the UPFI and its affiliated national-level urban poor funds. Different federations have different expectations of capital recovery, so in the aggregate, the UPFI makes net cash outflows. These are matched by inflows from donors. The Fund is managed via a capital allocation strategy whereby the mix of distributions will be adjusted based on repayment results and available inflows.
As noted earlier, capital recovery through loan repayments flows to national urban poor funds, not the UPFI. This ensures that national federations have enough capital to leverage resources from government. It also eliminates international currency challenges. The end result will be an increasing number of national-level urban poor funds that are autonomous and self-sustaining (with top-up inflows from the UPFI).
UPFI funding enhances local accountability to SDI’s international agenda allowing for the development of common goals and approaches to slum upgrading. This is enabled by UPFI’s governance structure with a council of mature federations (14 countries) approving fund allocations and evaluating project progress.
2.3. Achievements to date
By the end of 2014 the UPFI had:
Funded the building of over 4000 homes in Southern and East Africa (e.g. South Africa, Zambia, Malawi, Namibia, Kenya and Uganda) and Asia (e.g. India and the Philippines).
Secured tenure for 30,000 families
Used USD6.3 million for over 100 projects in 16 countries.
Changed policy through precedent-setting upgrading projects. Examples include: reductions in minimum plot sizes; shifts in building regulations to enable low-cost materials and/or designs; land sharing with the original land owner; allowing community groups to build for themselves using state housing subsidies; invitations to joint committees for improving informal settlements and the first-time provision of emergency relief to urban communities.
2.4. Core principles of the UPFI
Most governments do not provide money for informal settlement upgrading – and certainly not directly to slum dwellers. Very few formal finance facilities provide project capital to the poorest 25 percentile or urban residents, especially when these residents use their collective social, financial, and political capital as their primary guarantee.
The fund provides loans to organised communities rather than individuals. The financial burden is hence shared encouraging cooperation around repayment and fostering capacity through shared responsibility for deliverables. Communal financing allows for collective planning for, and ownership of common goods (e.g. infrastructure) that cannot be financed individually because of acute income poverty. In this manner poor communities become directly involved in the development process as planners, financial stakeholders and resource managers – not merely as stakeholders to be consulted or beneficiaries to receive end products. Increased capacity leads to a more serious engagement with local government and the potential for co-production, scale and replication. Project finance can be a blend of community contributions, loan finance from the UPFI and local government investment. Shared financial responsibility can solidify a partnership with local government.
It is the social processes associated with the UPFI that enhances sustainability and project impact. The UPFI works to marry a ‘bottom-up’ community-led process with a workable fiscal tool that can be responsive to the needs of the urban poor and attractive to potential funders and government. The parameters of the fund are hence determined, not by external actors and market forces but by the poor themselves. Inclusion is not solely based on an ability to pay while affordability is contextually determined. The next section presents examples from India and South Africa of how SDI affiliates provide incremental housing and in situ upgrading through the UPFI.
3. Incremental housing upgrading
3.1. Pune, India
3.1.1. Brief history of the Indian federation
The Indian movement began with the creation of the Mumbai Slum Dwellers Federation in 1969, founded by representatives of local slums on the initiative of Mr Jockin Arpurtham, who had been organising slum dwellers against poor services and evictions since 1963. In 1978, after Mr Arpurtham had travelled across India and visited movements in other countries, he founded the National Slum Dwellers Federation (NSDF). In 1984 Sheela Patel founded the Indian NGO, SPARC (Society for the Promotion of Area Resource Centers), which became the prime provider of technical support to the Federation.
At the core of the movement is ‘Mahila Milan’ (‘Women Together’), an association of women’s savings schemes whose first members were female pavement dwellers in Mumbai. Members save daily and can remove their savings at any time. Once members have saved 200 rupees they may borrow 10 times that – this amount increasing as their creditworthiness increases. Loan interest is 2% per month, instead of the commercial charge of 10% per month. The Federation is responsible for organising and leading the processes of enumeration and surveysFootnote6 and has roughly 1.2 million members in 70 cities across India. There are 350,000 savers in Mumbai alone. Mr Arpurtham notes that 70% of all information on Mumbai’s slums is owned by the slum dwellers themselves (Sokupa & Adlard Citation2010, p. 5).
3.1.2. Incremental housing in Pune
Pune is one of four Indian citiesFootnote7 in which UPFI funds have acted as ‘bridging finance’ for community-driven incremental housing construction under the government’s Jawaharlal Nehru National Urban Renewal Mission’s (JNNURM) Basic Services to the Urban Poor (BSUP) scheme. In this case, UPFI funds were used in two ways. First as start-up capital and second when there were gaps in municipal cash flow leading to delayed payments from municipalities. This has allowed housing construction to continue even when bureaucratic delays, exasperated by elections, held up municipal cash flows. The BSUP in Pune started in May 2009 and is expected to end in March 2015. To date 937 units are in progress or have been completed out of an expected total of 1050. Approximately $3.65 million has been spent on the project. $2.79 million has been recovered from the Pune Municipal Corporation, residents have repaid $152,000 and other funders have contributed $1.27 million. UPFI ‘bridging finance’ (as described above) totalled approximately $100,000 and was vital in ensuring project continuity and leveraging other financial resources. The funds recovered will be revolved to seed new projects, deepening the impact and financial sustainability. The incremental housing upgrading process in Pune was focused in the locality of Yerwada,Footnote8 and is now unpacked in further detail.
In Yerwada, old tin shacks have been replaced with multi-story single and multiple household homes in the style of townhouses and small apartment blocks. The process of demolition and reconstruction requires the facilitation of intense negotiation by MM’s members and leaders. The ways of negotiating such grievances highlights MM’s integral role in the upgrading process. MM has led all aspects of the project including community mobilisation, design of re-blockingFootnote9 plans, housing upgrades and negotiations with city government around building regulations and provision of infrastructure and basic services.
Most of the homes’ footprints are no bigger than 250 square feet. By adding a second floor, this footprint is nearly doubled, allowing extended families to live comfortably together. One woman’s home in Pune is a narrow triangle of only 170 square feet. The second story nearly doubles this, and MM has ensured that she has permission from the municipality to build a third story once she can afford it. In addition to reconstructing the homes, MM worked hard to realign structures – widening pathways and making space for municipal water, sewerage and electricity connections.
Prior to MM’s involvement in slum upgrading in Pune, city government had experienced local resistance largely due to a lack of community involvement in the development of upgrading plans. The state was proposing high-rise housing projects or individual subsidies and loans, neither of which appealed to communities. Once Pune’s MM got involved, they were able to assist the wider community to develop housing solutions for in situ development and relocation, an alternative that government felt viable. So far MM has constructed almost 1000 houses in situ across Pune using a blend of subsidies, loans and community contributions.
Groups of slum dwellers, support professionals and government officials from across India and the developing world frequently travel to Pune to learn from the experiences of the Pune MM and city officials. In addition, students from Pune University, as well as universities in Sweden, Australia and the United States, have held urban planning studios related to the upgrading projects.
The upgrading experience in Pune clearly disputes claims that slum dwellers are not capable of conceiving and implementing their own solutions. Professional expertise is often necessary in implementing large-scale upgrading projects, but it must be deployed in ways that support the experience-based knowledge of slum dweller communities. Informal communities in Pune are politically, socially and economically linked to the city and in situ housing solutions retain rather than sever these links. Such solutions also challenge traditional planning standards (e.g. minimum floor indices, appropriate building materials and contractor rates). However, it is important to note that this Pune project took place in the context of a developmental state where subsidies are available.
3.2. Re-blocking in South Africa
Another example of an incremental upgrading strategy is ‘re-blocking’ employed in South African informal settlements and funded through the UPF. The process of re-blocking begins with community-led profiling and enumeration of settlements. Community members are then trained in GIS mapping and planning using these skills to create maps of their community. The community then plans how they will rebuild each section to best fit the needs of residents. This process opens up safer and more dignified public spaces (called ‘courtyards’). The re-arrangement of space also creates the opportunity for municipalities to provide services, as the excuse that settlements are too dense for bulk infrastructure is no longer valid.
While the South African context is that of a developmental state with significant resources available, the end product of a formal house for all those in need is impossible. In this context incremental approaches such as re-blocking, that generate social and political capital, are imperative to improving the lives of the poor within realistic time frames. As the South African government moves beyond a singular model of housing provision, incremental approaches such as re-blocking are starting to gain traction within policyFootnote10 as viable medium-term approaches to urban informality. The examples of Mshini Wam and Langrug illustrate some of the advantages of the re-blocking process.
3.2.1. Mshini wam and Langrug
2009 marked the start of the partnership between the Mtshini Wam community, the South African SDI AllianceFootnote11 and the City of Cape Town. To date, this partnership has allowed the community to carry out a settlement-wide enumeration and re-blocking process, installation of chemical toilets and water taps, and upgrade their shacks using durable, fire-retardant material. Both the City and the community agree that this would never have been possible without a strong and dialogic partnership.
Initial funding for upgrading activities was accessed through UPFI as a grant. As upgrading activities rolled out, and the partnership with the City was deepened, additional fundsFootnote12 were leveraged from the city for the installation of sanitation infrastructure (pipes and toilets) to the newly re-blocked settlement. The city is now responsible for the maintenance of this infrastructure.
In Mtshini Wam the social process begun with the formation of seven teams comprising entirely of community members. Each team was responsible for different aspects of settlement upgrading (technical support, gardening, carpentry, cleaning, compacting, demolition and building). Members of the technical team designed housing models that illustrated the community’s hopes for permanent, brick houses and their determination to continue upgrading their settlement. Klaas, a community member, notes, ‘It does not end with iKhayalamiFootnote13 [upgraded] shacks. The community was able to move from wooden shacks to safer structures, and now they want to continue to move up to more liveable structures for themselves – brick houses.’
Langrug informal settlement is located in Stellenbosch, one of South Africa’s most picturesque and wealthy areas, and is characterised by endemic conditions of poverty and resource deprivation. The settlement is home to 2118 households – roughly 4700 people – one-third of who live without access to either sanitation or electricity. In January 2010, the Langrug community was introduced to the local Informal Settlement Network (ISN).Footnote14 By early 2011, the Stellenbosch municipality and the South African SDI Alliance – who had by then partnered with local community leaders from Langrug – agreed to work together towards informal settlement upgrading.
As was the case in Mshini Wam, a UPFI grant was used to ‘seed’ initial upgrading activities in Langrug. Through a partnership with the Stellebosch Municipality’s informal settlements unit, a further commitment of R1 million (approximately USD 100,000) per annum was leveraged. In addition, a further engagement with students and lecturers from the Worcester Polytechnic Institute (WPI) in the United States led to the leveraging of funds for the construction of two WASH facilities.
ISN mobilised the community to number and measure its own shacks, map physical infrastructure and create a socio-economic profile of the settlement through door-to-door enumeration. Concurrently, a relocation committee was formed to assist in the procurement and design of a new clusterFootnote15 of pre-fabricated homes at the foothills of the settlement. In November 2011, fifteen households were successfully relocated to make way for an access road. The municipality provided emergency housing allowances for the community to build high-quality, upgraded and fire-retardant shelters in a re-blocked layout plan.
The enumeration in Langrug highlighted the need for upgraded sanitation facilities in the settlement as the ratio of people to toilets was 49:1 and people to water 72:1. Access to service was unequal and service location disproportionately distributed throughout the settlement. To date a number of successful projects have taken place. These include the construction of a sanitation block (comprising toilets, basins and shower facilities), communal toilet blocks, foot-operated water taps, a play area for children, a community centre that is currently under construction and improvements to drainage to solve erosion and grey-water run-off challenges.
In partnering with the local government on the upgrading of 22 informal settlements across the city, the South African SDI Alliance has impacted the city’s approach to slum upgrading, integrating methodologies such as enumeration, savings and incremental in situ upgrading (e.g. re-blocking) into city policy. As has been noted, UPFI grants were used to initiate upgrading activities that were then able to leverage significant funding from government to scale up interventions. This demonstrates the value that UPFI seed capital can bring in, unlocking government budget lines and creating more sustainable revenue streams for long-term informal settlement upgrading.
4. Conclusion: sustainable cities for the poor
UPFI is more than just capital; it brings communities together to plan, design and implement projects with an emphasis on the collective. In doing so the federation re-defines the relationships within the settlement, with the slum dwellers’ network in their city and with their local government. Negotiations aim to create a city-level strategy for slum upgrading. Partnerships with authorities lay the foundation for institutional and financial arrangements for slum upgrading that are not contingent on external resources, making them more sustainable. Communities as development agents also create internal momentum that exists beyond project time frames, building community structures that influence the trajectory, and inclusivity, of citywide development.
The key challenge that faces the UPFI is sustainability. As discussed in the article, the fund is dependent on top-up donor finance that may fluctuate or even be discontinued. In order to meet this challenge, the UPFI has invested strategically in strengthening two areas. First, SDI affiliates will be supported to bolster their national Urban Poor Funds. More comprehensive project planning that leads to affordable infrastructure and housing loans for the poor will ensure greater rates of grant recovery while international support to deepen political engagement will be stepped up hoping to unlock government budget lines that can flow directly into national UPFs. Second, loans will be disbursed to larger capital projects administered by SDI affiliates (e.g. cross-subsidised housing developments in centrally located land) that have the potential to ‘re-shape’ cities in a pro-poor manner. These investments in slums are geared towards generating income streams for national Urban Poor Funds with loan capital being repaid to the UPFI. Clearly, these systems will take time to build momentum with donor funding being reduced over time as the UPFI refines its systems and strategic approaches.
The lack of affordable finance for the urban poor is a structural and policy failure at the city level that denies the poor resources with which to improve their lives. Creating truly sustainable cities demands solutions that include the poorest of the poor but many current financial and policy arrangements all too often exclude the marginalised. As the practical examples in this article illustrate, the UPFI is a fund that is determined by the contextualised needs of the urban poor and has the potential to embed new political alignments within city fabrics creating far more sustainable models for city development and upgrading.
Conflict of interest disclosure statement
No potential conflict of interest was reported by the authors.
Additional information
Notes on contributors
Noah Schermbrucker
Noah Schermbrucker is the projects officer at the SDI Secretariat in Cape Town, South Africa. Sheela Patel is the chair of the SDI board, as well as the founder and director of SPARC, NGO support to the National Slum Dwellers Federation and Mahila Milan in India. Nico Keijzeris in charge of SDI’s monitoring and evaluation programme based in The Hague, Netherlands.
Notes
1. The UPFI does not only support housing construction but also many other community-led incremental upgrading projects (e.g. communal sanitation blocks, water kiosks and points, drainage channels). However, as per the theme of this special edition, the cases explored in this article describe incremental housing projects.
2. For example, Gates Foundation, SIDA, Norway and Rockefeller Foundation.
3. SDI Federations that have achieved a significant degree of scale and proven their capacity to deliver precedent-setting projects, impact city change and leverage resources from government.
4. Repayment rates on grants vary according to the stipulations of the contracts that underpin each disbursement. In all the cases, the rates are far friendlier to the poor than traditional market institutions like banks.
5. For example, relaxed formal planning standards, recognition of incremental upgrading as opposed to eviction as a government slum reduction strategy, and budget allocations for community-driven development projects.
6. Enumerations, profiles and slum surveys are one of SDI’s key rituals. When slum dwellers collect data on, and map, their own settlements, they build a powerful understanding of the collective community challenges. Data can prevent evictions, lead to upgrading plans for which UPFI capital can be drawn down and be deployed as a powerful bargaining chip with city government (who all too often lack accurate slum data). The data collection process also enhances community capacity to plan for and implement upgrading projects.
7. Nanded (in the state of Maharashtra) and Bhubaneshwar and Puri (in the state of Odisha) are the three other cities where BSUP projects were/are implemented and supported by the UPFI.
8. Within Yerwada, incremental housing was built in seven informal settlements (Bhatt Nagar, Mother Theresa, Netaji Nagar, Sheela Salve Nagar, WadarWasti, Yashwant Nagar and Chandrama Nagar). As noted, 937 units have been built to date.
9. The re-blocking process refers to the re-configuration of structures to open space for housing and services and is unpacked in greater detail in Section 3.2 of this article.
10. A re-blocking policy was recently adopted by the City of Cape Town.
11. The South African Alliance comprises of several community-based organisations affiliated to SDI. Each organisation within the partnership has a different focus (e.g. technical support, community mobilisation, re-blocking). The alliance works collectively to promote projects and activities that place the poor as central actors in their own development.
12. Approximately USD 300,000.
13. Ikhayalami is a registered NGO and member of the South African SDI Alliance that provides technical support with a specific focus on re-blocking and shelter provision. Ikhayalami focuses on the design and manufacture of affordable, sustainable and socially acceptable shelter and infrastructural solutions that are durable, easy to transport and quick to erect.
14. The ISN is a member of the South African SDI alliance. It is a bottom-up agglomeration of settlement-level and national-level organisations of the poor at the citywide scale.
15. When profiling, enumerating and mapping informal settlements, communities often divide the area into ‘clusters’ of households. Information is then collected per cluster and the total is collated to form an overall picture of the slum. This approach makes it easier to make detailed upgrading plans while retaining an overall strategic vision.
References
- Sokupa M, Adlard G. 2010. Internal shack dwellers international documentation [Internet]. In: Report on Visit to Mumbai & Pune at the Invitation of the Community Organisation Resource Centre. [ cited 2010 Apr 14–21]. Available from: http://www.sdinet.org/media/upload/countries/documents/REPORT_ON_VISIT_TO_MUMBAI_FINAL1.pdf.