Zimbabwe’s Citywide Upgrading Fund


By Noah Schermbrucker, SDI Secretariat

One of the major challenges faced by urban poor communities is unlocking finance for their upgrading needs. Formal financial institutions like banks are extremely reticent to provide finance to the poor. Although traditional micro-finance options have had significant traction, interest on loan repayments can be high and the transaction is purely financial without the added benefit of generating political capital. The formulation of a citywide upgrading fund that draws in government through financial commitment creates collective political and financial responsibility for slum upgrading.  It is hence a political indication of intent as much as a financial mechanism that the poor can access. Citywide upgrading funds are a “pot” of money that is attractive to other investors (e.g. funders) who can also contribute along the guidelines devised by all parties involved.

In Zimbabwe Dialogue on Shelter, an NGO affiliated with Shack/Slum Dwellers International (SDI) is in the final stages of negotiating the terms of such a citywide fund with the City of Harare. The fund is a practical financial instrument reflective of the partnership between the Zimbabwean SDI alliance and the city. Harare is the first city in Zimbabwe to adopt a slum upgrading strategy (HSUP- Harare Slum Upgrading Programme), a process facilitated by the work, and precedent setting projects, of the Zimbabwean alliance. The fund is seen as an instrument to achieve the goals of this policy and partnership. During negotiations around the structure of the citywide fund a team from Uganda supported the Zimbabwe Homeless People’s Federation (ZHPF) in their discussions with the City of Harare. The philosophy of the Ugandan federation is embodied by the following quote by Katana Goretti, a national leader of the Ugandan Slum Dwellers Federation (USDF).

“The federation in Uganda started in 2002. The central idea was how can the community be part of the city because we belong to the city” –Katana Goretti (Leader USDF)

The citywide fund will comprise of financial contributions from SDI, the City of Harare and the Zimbabwe Homeless People’s Federation. Other donors have also expressed an interest in contributing to the fund, making it a possible conduit for finances to flow from donors to urban poor recipients. Not only does this blending of finance create an attractive mechanism to which various parties can contribute but it is a manner in which the participating parties can hold each other accountable. A fund constitution that clearly outlines roles and responsibilities as well as the configuration of the fund allows progress to be checked against agreed upon rules and structures. Financial accountability is translated into politically accountability while enabling the flexibility needed for finance to be responsive to the needs of the poor, rather than determined by the strictures of policy.  Catherine Sikai, a leader from the Zimbabwe Homeless People’s Federation, summed up these principles during discussions with the city.

“We want to be together with the city-not just us accountable to the city. So we can learn from each other and that people are encouraged to pay back loans that can then revolve.  We want to work together-to disburse the loans.”

The negotiations about the funds financial structure reflect a concrete manner in which groups of the urban poor can influence financial flows that directly affect their lives. Opening this political space for communities to articulate their needs, at a citywide decision making level, is core to SDI’s role, and in the case of Zimbabwe, reflective of long term partnership building. One of the key issues discussed included the nature of loans. That is would loans just be for housing (as government officials advocated during the meeting) or would they cover a range of upgrading activities (sanitation provision, drainage, incremental housing construction, water provision). The Zimbabwean federation, given the political space, was able to present a rational argument based on why they believed a fund focused solely on housing would not reach scale, be sustainable or have meaningful impact. This is a clear example of how a voice of the urban poor can negotiate changes that have the potential for citywide impact in a manner beneficial to the poor and more reflective of local circumstances. The quotes below are recorded from the discussion with the City of Harare.


“Housing cannot be the greatest priority because you cannot build a house without land and services.  We want to address things incrementally and not start at the end. We need to address what people in the community need if that’s water then we must support that.”   Davious (ZHPF)

“Housing is not in isolation – it is complex. We look at land, water, sanitation and shelter. All of these 4 items contribute to housing.  How does the finance facility support WATSAN, land acquisition, superstructure and incremental housing?” – Shadreck (ZHPF)

The federation, based on their experience of savings, was quick to point out the benefits of loans being collective and extended to people outside the Federation (granted that they can prove an ability to save). The importance of reaching scale, and the financial mechanics of doing so, are captured by this position. Group responsibility for loan re-payments spreads limited resources to more people and creates collective impetus to repay loans taken hence diminishing risk. The political impact of wider “reach” is also of benefit to the urban poor, whose strength and ability to express their demands is often based on “collecting” large numbers of people. 

“We used to lend to individuals but there was no impact. We prefer a situation were small resources are used to benefit many and make a change within the community. We must bring a change within the slums themselves.” – Davious (ZHPF)

The Zimbabwean federation’s experience of providing loans, through the Guungano Urban Poor Fund, stresses the importance of an incremental approach to housing and infrastructure provision. An individual, supported by her savings group, will secure a loan to build a house to the slab level, once this loan has been repaid a loan is given, to build the walls and then finally the roof – with each step being paid off. Such an approach does not saddle the poor with a “once off” large debt that they are unable to pay. Building houses, or infrastructure, incrementally is far more affordable to the poor who generally have fluctuating and piecemeal economic circumstances. Thus when the meeting turned to the maximum loan amount, interest rate, grace period and systems of repayment the Zimbabwean federation leaders were able to provide concrete advice motivated by “on the ground” financial experience. 

“The reason that we disburse incremental loans is that the first projects disbursed by the Guungano fund had low rates of repayment. The loan becomes a burden and we making the members poorer. We then decided to structure our loans in stages-first you get the loan for land and you have to pay 75% and then you can apply for the second loan and so on… Over a period of 2 years you can still get USD 2000 by paying 6-month installments of USD500.”- ZHPF Member 

“We agreed to only lend to savings schemes that have saved for 6 months and more. For the loans given people have to raise a deposit of 10% of the total loan for which they would like to apply. We agreed already to lend to groups and not individuals. We agreed that the loan size (when we calculate per individual) should be a maximum of USD 500. Like in all other funds there is a grace period-for this fund there will be zero grace period. The repayment period will be between 6 months and 2 years. The interest rate must cover inflation, administration and capital costs. There should be an allowance for people to reschedule loans. – Davious  (ZHPF leader)


From the above quotes it is clear that the participation of Zimbabwean federation in discussions around the nature of a citywide fund adds significant value. The grounded suggestions they bring to the table help shape the nature of the fund in a pro-poor manner that would not be possible without their inclusion. Creating the organizational space for the urban poor to participate in financial decision-making at the city level is one of the key roles of SDI at the city and global scale. Changing policies are important statements of intent but this needs to be backed up by participation in mechanisms (such as financial flows) through which policy is implemented. Tracking these pragmatic changes, and the level of the poor’s participation in them, are essential to understanding the impact of SDI’s work.