Tag: Bolivia

City Finance That Works For and With The Poor

By Mara Forbes, Ariana MacPherson, and Noah Schermbrucker, SDI Secretariat

Flows of finance and the systems that perpetuate resource distribution are inherently weighted against inclusion of the poor. The inequality of rapid urban development in developing countries is a clear demonstration of this phenomenon.  Banks do not supply loans on terms affordable to slum dwellers, cities sink budgets into formal taxpaying areas rather than informal settlements while policies, rules and regulations prop up a grossly uneven distribution of wealth. Traditional market finance does not work for the poor on a city scale – slums continue to grow, as does the gap between rich and poor.

Finance for the poor demands flexibility. It demands understanding how poor people save money, how piecemeal incomes fluctuate, what interest rates and loan amounts are really affordable and what investments make sense locally. It also means understanding how to incorporate community-based financial systems, in addition to those pitched at individuals and households.

Flexible citywide urban poor funds need to change existing systems of exclusionary finance.  Local government is a change vector that cannot be dismissed and their inclusion in these funds has the potential to create citywide political impact. Organized communities, who can clearly articulate their demands and the rationale for their financial decisions, can negotiate this space ensuring that funds remain relevant to the poor.

Community-based urban poor federation members and support professionals from South Africa, Malawi, Zambia, Zimbabwe, Uganda and Bolivia came together in late 2013 to discuss citywide models for urban finance. They drew on extensive experience in managing urban poor funds in their various contexts to explore the design, political impact and practical slum upgrading benefits of flexible pro-poor finance facilities.

South Africa

The context in South Africa is one of at a subsidy-based development state, where many urban poor communities’ – and governments’ – mindset is one of state delivery. This, despite the fact that evidence shows that government is incapable of delivering housing or infrastructure services at the scale necessary. This challenge is central to the experience of informal settlement upgrading, both at the level of the community and in relating to government around new practices and policies that are seen to undermine the government’s responsibility to provide subsidized housing and basic services to the country’s informal population. Despite the available subsidies, much of South Africa’s population continues to live in insecure conditions without access to basic services, secure shelter or economic opportunity[1]. To date, there have been few alternative solutions to informal settlement upgrading in the South African context, but it is clear that new political and financial systems are necessary for the nation’s urban poor to become active participants in the development of inclusive, equitable cities. Central to this is the need for an alternative financing strategy – one that is sensitive to the needs and daily realities of the urban poor.

These issues were addressed at length during the South African delegation’s discussions of the formation of a citywide upgrading fund in Cape Town. Although the South African SDI Alliance[2] has adopted the Community Upgrading Finance Facility (CUFF), it has faced challenges in rolling it out as tool for informal settlement upgrading at scale and with support (financial and political) from local government. CUFF was created with the aim of providing a platform for informal communities to “engage government more actively around collaborative upgrading & livelihood projects” (CUFF Project Report 2013). The Fund does this by providing seed capital for settlement improvement projects that are proposed by communities. At the same time, communities must provide a 20% contribution to the total cost of the project, demonstrating their willingness to take ownership and participate in the co-production of their settlement’s upgrading and development.

During the recent exchange in Cape Town, the South African SDI Alliance had an opportunity to reflect on the implementation of CUFF to date. The Alliance emphasized that CUFF is not just about implementing projects, but about influencing policy. The Alliance stressed the significant value of community-based finance facilities like CUFF as learning instruments designed to change the mindsets of communities and governments – to change the mindset of communities away from dependency on the state, and to chance the mindset of government towards considering that communities may be able to offer in-situ solutions to their infrastructure and housing needs.

CUFF in its current incarnation is not set up as a citywide fund to which a broad base of stakeholders, including local government, other community-based organizations and non-government organizations contribute and access resources. The inclusion of a wider base of stakeholders is critical in order to moves from a fund that is only for federation members to a collective fund that allows for loans for entire settlements. This critical point motivated the South African delegation to discuss how to move CUFF into a position where citywide scaling up becomes a real possibility.

Uganda

The situation in Uganda contrasts sharply with South Africa, leading to a different thinking and organization around finance facilities. There are no government subsidies so the poor have had to find alternative ways to finance upgrading initiatives.

Uganda has set up a national urban poor fund and used lessons learned to think through and design potential citywide funds. The goal of the fund to is to provide capital in the form of loans to members of the National Slum Dwellers Federation of Uganda (NSDFU). The decision to only provide group loans from the fund is deliberate. These funds are intended to benefit the larger community through group upgrading projects that set precedents for community urban development projects.  Loans are given out for housing, sanitation, and group livelihood projects. To date the fund has extended loans for 44 projects in Kampala. The fund is designed as a sustainable revolving basket fund. It receives funds from a variety of sources, including contributions from NSDFU and community saving groups, fundraising activities, government contributions, donations from local and international institutions, subscriptions fees, and UPFI loans. Particular to note about Uganda’s fund is that loans are not available to individual members, but to savings groups for community upgrading projects.  

Although the fund provides alternative financing solutions to the poor in Uganda, it has a larger purpose and vision. The federation uses the fund to build precedent-setting pilot projects that will attract government and other urban development stakeholders. It is not just about urban poor participation and decision-making but about using the fund as a tool to push an urban poor agenda, with sanitation being the key issue advocated in the Ugandan context. The community is able to demonstrate they are able to contribute savings to grow the fund which allows them to access a group loan to build a community sanitation unit. This process demonstrates the community’s ability to prioritize, contribute, and implement slum-upgrading projects. This work has altered the city government’s outlook on sanitation, the first step to effecting policy change.

The Ugandan federation has been able to use the urban poor fund not only to pilot community projects but also to shift the mindset of local government to eventually bring change in city policies. They have connected the role and strength of women-led savings schemes to each level of the fund.

Why is a city fund needed if a working national urban poor fund is in place? These were some of the questions examined during the exchange. Delegates were convinced that a citywide fund moves from a fund that is only for federation members to a collective fund that allows loans for entire settlements. This would allow local governments and other urban development stakeholders to channel money directly to communities to support infrastructure and upgrading projects that benefit whole communities and cities.

Zimbabwe

The Zimbabwean context is one in which the state has practically no internal resources available for the urban poor. Donor funds are channeled through departments at the local government level, but this is not a sustainable means of income. Despite acute resource scarcity the Zimbabwean federation has forged deep and meaningful partnerships with local government, changing attitudes towards evictions, introducing new sanitation technologies and leveraging technical and political support.

A dearth of government finance motivated urban poor communities to organize their own savings, not just for daily needs but also nationally through the Guungano Urban Poor Fund. The fund not only provides low interest rates on loans for the upgrading needs of poor communities but also has a political agenda that opens space for negotiation with local governments. Ideally the fund would like to attract government finance, but this has not yet been the case. The overly bureaucratic and politicized nature of government institutions undoubtedly contributes to the difficulties associated with accessing government funds.

Based on their experiences of administering an urban poor fund at the national level, the Zimbabwean federation decided to decentralize the fund to regional (Bulawayo & Matabeleland South) and citywide scale (Kariba and Masvingo). This speaks to the differences between national funds and citywide funds at a larger scale – a strategic move that is beginning to play out across the SDI network in divergent contexts.

In Harare, the Zimbabwean federation is in the advanced stages of negotiating a fund with city authorities. The lessons learnt through the administration of the Guungano fund both nationally and in its newer regional structure come to bear on these negotiations. The fund will become part of the implementation strategy of the cities new slum upgrading policy. The federation will contribute $25,000, the UPFI $50,000 and the City $125,000. The fund will not be housed in either the federation or the City Council and will focus on slum upgrading (incremental housing, water & sanitation and other infrastructure). Projects will be determined through community profiles and enumerations and loans will revolve. The city pushed for the fund to be registered as a microfinance institution, however the community was adamant that this would lead to systems that excluded the poor. The city has now agreed to register the fund as a trust. 

While negotiations continue it is clear that an organized community who can clearly articulate the rationale (the why) behind a city fund can have significant traction in shaping its structure and mechanisms. If these regulations are entrenched in a constitution the potential for a new type of financial instrument is created.

Bolivia

Despite attempts by Bolivia’s central government over the past decades to implement a social housing policy that addresses the country’s growing housing deficit, little progress has actually been made in providing a housing and infrastructure finance system that is accessible to the country’s urban poor population.[3]  It is estimated that about one third of the housing constructed each year in Bolivia is informal and largely illegal, with urban poor families occupying self-constructed, insecure structures with little or no access to basic services like water, electricity and sanitation.[4]

In light of this it becomes clear that an alternative solution is necessary to begin to meet the growing demand for affordable housing finance and informal settlement upgrading at a scale that can adequately address these needs in light of Bolivia’s rapid urbanization.[5]

At the exchange the Bolivian delegation spoke about their own solution to some of the housing and basic service challenges faced by Bolivia’s urban poor. The Fondo Para Vivienda Popular (Popular Housing Fund) was created in 2011 with a small donation of only USD 160 to be used for loans to assist with the costs associated with regularization of shelters in informal settlements in Cochabamba, Oruro and Santa Cruz. After about a year of operating as a national fund it was decided to split the fund into three localized city funds. Now, only two years later, the fund has grown to USD 10,000 through a combination of community savings and donations from individuals, the private sector and donor agencies. The objective of the Fund is to serve as a tool for the federation of women’s savings groups, Tejiendo Ciudades (Weaving Together Cities), to provide low-interest loans[6] for the needs and demands of savings group members. These include: housing repairs, regularization papers, water, electricity, sanitation, furniture and appliances.

In 2012, the Federation disbursed twenty individual loans and one collective loan. In 2013, these numbers rose to thirty individual loans and two collective loans with all loans in both years having been repaid in full. While the Fund is off to a steady and impressive start, there is a need to involve a wider network of stakeholders, including local government, in providing capital for the fund, if it is going to become a scalable solution to housing and basic service finance in Bolivia’s urban sector.

Zambia

The Zambian federation has two funds, an urban poor fund and a city fund. The urban poor fund currently operates regionally and is controlled and managed by the federation. The urban poor fund has been working at a larger community level with both federation and non-federation members.

The city fund emerged from a need that was generated by profiling and enumeration in Lusaka. A potential commitment from the Lusaka City Council to contribute 35% to the fund has been tabled.

One of the crucial learning’s from the Zambian federation is the need for a citywide fund to be accessible and benefit not just federation members, but all of the urban poor. The fund can also then be used as an advocacy tool that introduces communities to savings culture and rituals of the federation. In order for a citywide fund to go to scale alignments and partnerships with other actors, such as local government, must be made. The Lusaka city fund has demonstrated how federation rituals (profiling and enumerations) can be used to get the local governments attention and bring them into the process. The Zambian example demonstrates how a fund was used to change the way government relates to and includes the poor.

Malawi

The Malawian context is one in which government has made limited investment in slum upgrading. Foreign NGO’s and donors have invested in the various facets of the development sector but foreign aid is not a long term and sustainable solution, and the donor community is beginning to pull out of Malawi as well, further highlighting the need for a sustainable source of funds for slum upgrading projects. 

Daily savings for basic needs is the core strength of the Malawian federation. At a larger scale, the Mchenga urban poor fund has allowed community members to take out loans to build eco-san toilets and water connections. A community contribution of 10% is required and all community members, not just the federation, can access loans. Loan repayments are revolved back into the fund and used to provide further loans and attain maximum scale.

More recently citywide funds, and the challenges that they can present, have come into focus in Lilongwe. Donor finance was used as seed capital for a citywide fund for slum upgrading activities. The fund was envisioned as one in which the city and communities would collectively plan for slum infrastructure improvements. However the communities found it difficult to engage the city and access the funds – or even have a significant role in decision making around their distribution. The city only began to include communities in decision-making processes when the donor threatened to take the money back. The fund has since been used to construct markets, install water points, improve drainage, install water tanks and build roads and bridges.  Funds were distributed as grants and not loans, prompting the question, “If communities don’t have to repay the funds, how do they influence government to use funds to their advantage?”

Conclusion

The introduction to this report stresses that new types of finance are needed to make affordable capital available to the poor. A concomitant political shift at the local government level has the possibility to entrench these new modes of financial distribution at a city scale. However this can be a double-edged sword, with government retaining de-facto control of city funds and communities relegated to the role of passive beneficiaries. Strong and organized communities are able to negotiate the terms of funds clearly articulating structures and rules that make sense on the ground. Thus while citywide funds need local government participation to reach scale, they often do not need the traditional systems through which state funds are distributed and managed.

Click here for the full report, and here for the City Funds Manual that came out of this exchange. 

Weaving Cities: Creating a National Voice of the Urban Poor in Bolivia

By Celine d’Cruz, SDI Secretariat 

Planning for the National leaders meeting in November began in June 2012. This was a gradual outcome of several exchanges to and from Bolivia over the last three years by SDI. In June 2012 the Government of Bolivia came out with a regularization law, which created a lot of commotion amongst the informal communities. There were many rumors spreading and the leadership did not understand the implications of this new law for the land that they occupied. There are informal settlements on municipal lands, state lands, private lands and so on. Ownership for much of these occupied lands is unclear, creating numerous complications as the law has different implications for those residing on different types of lands. 

For the Bolivian support NGO, Red de Accion Comunitaria (RAC), the first response was to strengthen and consolidate the slum enumeration process in District 8, a settlement in Cochabamba, which started long before the law was in sight. This settlement data proved to be mouth watering to both the national and local government who have no information at all. The local officials in District 8 are in dialogue with the community leaders who are mostly men. District 8 was one of the first settlements to respond, but similar concerns were raised by informal settlements in other cities.  This prompted the need to plan for the November meeting in Cochabamba where the leadership – both men and women – from the four cities would have the space to discuss the law and its implications for residents of informal settlements across Bolivia.

During the planning phase it was decided that the objective of the November meeting was 1) To understand the new regularization law and its implications for informal settlements with regard to issues of land ownership, and 2) To consolidate the voices of the leadership from the four cities to create a national federation of the urban poor. 

Participants at the conference included about 150 community women from the 4 cities in Bolivia, 4 representatives from neighboring countries of Brazil, Ecuador and Columbia with three representatives from SDI including SDI Coordinators Celine d’Cruz (India) and Rose Molokoane (South Africa) and SDI Board member Sonia Fadrigo (Philippines). 

In addition to these participants, about 7 – 8 local government officials (men and women) and one representative from the National government (also a woman). This configuration ensured maximum participation from women during the course of the conference. It was amazing how well some of the women narrated their stories about issues around the regularization of their land, their collective savings, and how their experiences with banks and micro credit institutions captured the attention of the both the local and the national government officials present. This is something all the officials will take back home. For the community leaders it was the first time they had the chance to speak in public; this event was a good opportunity for them to understand their own capacities and skills. 

This conference was the first time that the leaders from the four cities were meeting each other. In her introduction, Sonia Fadrigo said, “You are all women and are all saving. You are clearly on the right track.”

There are signs of a relationship being formed between communities, local governments and national government in all four cities. This needs to be pursued consistently and strategically.

The two women leaders from Brazil were very motivated after this meeting. For example, they asked Maria Eugenia Torrico of Bolivia if they could come for 15 days in January to spend time with the community leaders to learn and go back home and strengthen their own community savings.

Rose felt that SDI was doing so much good in all these places around the world especially with these very poor women from Bolivia.

The woman from Ecuador had a lot of experience with housing and had come to both share and learn. Their community-based organization is free to learn about the SDI rituals and replicate them in their context.

Adriana from Colombia plans to take some of the lessons and test them out in Colombia with the agency working on poverty issues. We also started a dialogue on possible ideas of strengthening a people’s process within a national government program.

The Peruvian women did not arrive as one of them was sick and so the other did not want to travel alone. This would be their first time out of their country without any NGO support and this may have caused its own set of dynamics within their community and with their men. Eli and Maria will follow up with them and understand better what transpired. It has been a struggle finding a support NGO in Peru.  It was decided that if the community leaders who are saving do not want to continue then we may want to stall Peru for awhile till we find an individual or an NGO willing to walk through this path. SDI needs to review this. 

There were a number of key outcomes of the conference. There was an MOU signed between the Director of Housing from the national government and RAC. However, with no federation in place yet none of the community leaders could sign this MOU. Government, community leaders and RAC are learning to work with each other while building their separate capacities.

This meeting enabled both the local and national government representatives to better understand the community building process through community savings, slum enumerations and slum upgrading works. The Villa Vista upgrading was a good example to the all present.

As a result of the conference, RAC better understands the need for a national level leadership that they will work in tandem with. The idea emerged to create and build a collective leadership, which is more horizontal, and not just a couple of leaders who have power on the top.

RAC will work in the coming month to select the national leadership from a locally driven process. RAC estimates that there are at least 20 leaders in the four cities who can take on the responsibility of national leadership. 

— 
A brief outline of the conference events is included below:

Day 1: After the inaugural speeches the group divided into ten groups according to their land titles and discussed issues relevant to their land ownership. There was a very good reflection within the groups, which the leaders presented at the end of the day. A lot of very important issues came up and the local officials sitting with these teams had a chance to respond or advise the group on how to take this forward. Maria and her team worked to  consolidate some of the important lessons for each of the groups and what needs to be followed up.

Day 2: The morning was spent on presentations by the women to the National government representative on their savings, their experience with the local banks and with micro credit. The government is planning to have a new bank law encouraging micro credit. Listening to the stories of the women pressed panic buttons with the Director for Housing who said she would try to see what she could do about this. There was an MOU signed with the Director before she left. She has promised to work on a couple of pilots with RAC so that they can refine their learning together.

The afternoon session was on slum enumerations and the leaders broke up into groups and discussed the progress of the settlement profiles in their respective cities. Sonia and Celine wrapped up by presenting the SDI perspective on slum enumerations. 

Day 3: Event planned at District 8 to inaugurate the slum enumeration process in one of the new settlements. Ended with a closing ceremony and street theatre. 

Day 4: Morning, reflection with RAC and the core leadership on the event and the future steps to be taken. Afternoon spent time with the core leaders and the some of the District 8 leaders on explaining some core ideas and concepts of savings and enumerations.

SDI Invited to Explore Links in Lima, Peru

By Anaclaudia Rossbach (Rede Interecao, Brasil), Celine D´Cruz (SDI Coordinator) and Maria E. Torrico (Red Interaccion, Bolivia)

Participants: (i) from Secretariat, Celine D´Cruz; (ii) from Bolivia, Maria Eugenia Torrico and Elizabeth Bustos; (iii) from Brazil, Eli Sandra Santana and Anacláudia Rossbach.

Municipalities visited: within Lima metropolitan area – Puente Piedra, San Juan de Miraflores and San Juan de Lurigancho

Institutions visited: Public Health projects lead by Joe Zunt and Silvia Montano and NGO KalLpa.

Context: This visit [06 – 09 September 2011] was the outcome of an invitation to Celine/SDI after she was invited to share SDI’s experience at Washington University, Seattle to a joint team of Neurologist and the School of architecture. This team of health, architectural professionals and students have been working on a joint project with communities in Lima. They invited Celine/SDI to explore the possibility of working with the mothers groups in Peru. What attracted the team was the idea that within SDI savings groups were more than just micro savings and extended to other parts of the communities life.

Meetings held:

Day 01

• Celine´s presentation for multidisciplinary students from Washington University was facilitated by Joe Zunt Neurologist affiliated to Washington University and Silvia Montano a local Neurologist in Lima. This was followed by a Visit to Pitagoras School, local partners for environment and public health projects by Washington University, Joe Zunt and Silvia Monano.
• Meeting with mothers from parents students association (APAFA) to present SDI methodologies and identify interests for a next day follow up, they are residents of a broader neighborhood called Lomas de Zapallal, constituted by several smaller settelements, located at Puente Piedra Municipality. Present: 12 mothers and APAFA President.
• Internal meeting in the evening with exchange team and hosts Joe Zunt and Silvia Montano. Introduction to Jose Vinoles who will be the local anchor for the rest of the week program, that should include follow up visits at Lomas de Zapallal and to KalLpa NGO, including eventual visits to communities were they operate projects related to public health, youth, income generation and improve of urban environment.

Day 02

• Team meeting on LA Hub coordinated by Celine D´Cruz. Issues discussed: (i) exchange Brazil – Bolivia to take place on the first week of October. This exchange will have two objectives: a) A team led by Fernanda Lima and leaders from Brazil will support Bolivia on their internal planning process and setting up of goals and targets for short and medium term and b) to explore more about the savings instruments from Bolivian groups. (ii) Exchange to Philippines. Discussion on composition of the exchange teams and a subsequent stop over in Brazil for a small exchange of 2/3 days to consolidate planning and a broader discussion with Brazilian savers on savings schemes instruments adopted in Bolivia. The idea is to strengthen savings schemes capacity in Brazil. (iii) On LA hub expansion. We discussed open possibilities in Ecuador (M. Eugenia contacts) through a local social movement and Colombia through Architect Alejandro Echeverri (Sheela Patel contact). The approach will be narrowing the long distance relationship and evaluate after a couple of months the feasibility of exchanges. The idea of having more countries (poor) attached to Brazil, like Bolivia, Peru and Ecuador, could represent a window of opportunity to leverage international funds for the hub.
• Follow up meeting at Pitagoras Schooll with mothers from Lomas de Zapallal. The mothers from the previous day meeting weren’t present, but Jose Viñoles facilitated a meeting with other new mothers and just one of them was interested on a further visit at her small settlement. Her name is Sarita Garcia from the settlement called Eliseo Collazos Verde and a visit was scheduled for the following days.

Day 03

• Meeting with KalLpa President Alejandrina Zamora Pariona and team to exchange institutional information. KalLpa basicly operates in 4 regions in Peru: Ayacucho, Cuzco, Ichitos and Lima on community based projects related to urban environment, public health, youth and income generation (see more at HYPERLINK www.kallpa.org.pe). They invited us to visit one youth center on income generation and one community at San Juan de Miraflores. This community, called Minas 2000, would also be visited by a theater group, supported by Canyon Ranch Institute (US) and Jose Viñoles. We also had conversations with Canyon Ranch Evaluation and Program Manager Maura Pereira, present on the exchange.
• Visit to Youth Center at San Juan de Miraflores. Presentation of mutual programs and brief discussion of possible synergies between SDI methodologies and the purpose of the center located within the municipal offices of San Juan de Miraflores, it is a partnership between NGO, local and central governments.
• Visit to community Minas 2000 at municipality San Juan de Miraflores. Discussion about community issues like lack of water, infrastructure, risk areas, it is a very poor community with shacks in a private property (owner uwilling to sell and exploring rent). The settlement has a total of 200 families. After the presentation by Brazilian and Bolivian community leaders, the local women immediately reacted positively on incorporating SDI methodologies and 2 savings schemes were set. (i) group with 7 members, treasurers Hermila, Monica and Milagros; (ii) group with 20 members, treasurers Ester, Elva and Rosa.

Day 04

• Visit to community 24 de Diciembre at the Municipality of San Juan de Luricancho. Based on the success of previous day, KalLpa invited us for a meeting with another community, called 24 de Diciembre (estimated number of 200 families) located at the Municipality of San Juan de Luricancho. In the meeting we had the presence of about 8 women and 1 man, the “official community leader”. Besides the presence of the community leader we managed to set up a savings group with the 8 women present, 2 treasurers, Marta and Wilma.

• Conclusion meeting with KalLpa team. We agreed on a synergy between both programs, SDI and KalLpa and to stay together following up the savings groups located in their communities. For an initial follow up by KalLpa we will send material (savings books) and information, and Jose Vinoles and Stelita (from KalLpa team) will be our local anchors. A follow up exchange is planned by the beginning of December to set up broader institutional arrangements.
• Afternoon, meeting with Sarita Garcia and community women at Eliseo Collazos Verde (Lomas de Zapallal, Puente Piedra) to present SDI methodologies and discuss community issues. Also a very precarious settlement (90 families), with water, but no infrastructure, poor transport connections and shacks. They are located on public area and are already requesting land titling, what is very easy to get in Peru, even in precarious settlements. A savings group was set with 18 members, treasures: Sarita, Emilia y Mariluz. 

Next steps:

• Consolidation of Peruvian savings schemes under supervision of Jose Viñoles/KalLpa NGO.
• Follow up visit coordinate by the Brazilian team on December/2011 to: (i) institutionalize local partnerships; (ii) follow up of savings groups; and (iii) planning exercise with the communities for a long term vision with professional support form Brazilian team (in Peru there is no integrated slum upgrading project, the idea of this exercise is to engage communities on a common dream/goal).

 See more photos from the exchange to Peru on the Peru Flickr page.