UPFI loan to amplify work of Uganda federation

By Jack Makau, SDI Secretariat 

The Urban Poor Fund International (UPFI) announced that it intends to provide major support to Uganda’s new urban poor fund, named the Suubi Development Initiative. The Ugandan National Slum Dwellers Federation and its support NGO ACTogether established the fund, which will build on the experience of other such funds in the SDI network.

The four-month old Suubi fund already has a capital base of US$75,000, drawn from the savings of federation members in 75 saving schemes in Kampala and Jinja.  So far, the fund has given micro loans amounting to US$26,790 to its members in Kampala and Jinja regions. Suubi plans to extend its loaning to towns where the federation has spread within the past year, including the towns of Mbale, Arua, Mbarara and Kabale.

UPFI’s signficant contribution to Suubi is made amid the backdrop of a US$4.1 million Uganda government urban renewal initiative dubbed Transforming Settlement of the Urban Poor in Uganda (TSUPU). TSUPU was capitalized with a grant and support form the Cities Alliance. The government facility, which the Ministry of Land Housing and Urban Development is administering, seeks to work through the municipalities and community-based federation groups in the towns of Jinja, Mbale, Arua, Mbarara and Kabale.

“We are setting up the fund in the same five towns where the government facility is targeted in order to build slum dweller capacities to draw down resources for their development”, said Sarah Ibanda, CEO of ACTogether.  With the support of Cities Alliance, the government facility will avail US$1.1 million as capital grants for small slum upgrading projects in the five towns. According to Ibanda, the capacities of communities in partnership with local government officials developed through projects initiated through the Suubi Fund will have a strong bearing on the way these TSUPU small project funds will be used.

“UPFI’s investment in Suubi allows the Ugandan slum dwellers to go the negotiating table for government funds from a position strength, not only in terms of having their own funds, but more so with efficient loaning systems and ongoing projects that the UPFI capital will be used for ”, says Ibanda.

Though urban poor funds operate in different ways in various SDI federations, the basic idea is the same. Each federation member commits a non-refundable amount of money that will initiate the fund. For example, in South Africa, this commitment has a value of approximately US$100.

The idea is that these funds that come from organized communities of the urban poor will attract more from outside sources like governments, donors and the private sector. Then, the fund can begin giving out loans to federation members to build houses, start businesses, buy land, and install services. If the loans are repaid then the fund “revolves,” meaning that the money can be loaned out again to someone else. For an analysis of the range of existing urban poor funds in the SDI network, see this paper by the International Institute for Environment and Development’s Diana Mitlin.

 “Suubi in our local language means there is hope”, said Kyobe Mayanja, facilitator of the fund in Kampala’s Kawempe region. “As the federation, we have been working for eight years and now we have the fund — the hope”. The fund, Mayanja said, will act as a revolving microfinance facility and provide capital for infrastructure projects like communal sanitation facilities, as well as providing housing loans for its members. The fund draws its membership — currently 32,000 members — from the federation’s 227 saving schemes in slums in Kampala and the five towns targeted by TSUPU.

“Both UPFI and the Cities Alliance supported TSUPU’s draw from the Bill and Melissa Gates Foundation as base funders. This is significant in illustrating innovation in how development grants can bring slum dwellers and their governments together in a common effort,” said SDI’s Ben Bradlow.  The impact of development grants to the global south is limited because the support often focuses on single sector programs, either government or on the citizenry, and rarely in both.

Julian Baskin, the lead principal from Cities Alliance on the TSUPU initiative, said the Uganda program will serve as a model for subsequent “in-country” programs. TSUPU is the first of such initiatives. “Our next stop will be Ghana and when we move there, I believe it will be much easier because we will have gone through and established all the process steps in Uganda,” he said.