URBAN ECONOMY | Innovative Financial Mechanisms The documents included in this section draw our attention to the achievements of the urban poor in developing resources directly by building up their own capacities. Examples of micro-finance initiatives include new practices in savings and loan schemes, community asset management, and finance facilities. .

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local level

Boonyabancha, Somsook (2001) - "Savings and loans; drawing lessons from some experiences in Asia" - Environment & Urbanization, Vol 13 No 2, October 2001, IIED [pdf] Thailand - This paper describes the role of community-managed savings and loans schemes in poverty reduction and how these are best supported by external agencies. It draws particularly on the last ten years work of the Thai government's Urban Community Development Office including how the 1997 financial crisis and the difficulties this brought to low-income savers was turned into an opportunity to rethink how to support savings groups. Community savings and loan schemes bring people together, helping them learn how to develop and manage their own resource base. They reduce individual vulnerability by providing an immediate lending facility the poor can access. They strengthen community processes so that other key issues can be addressed - for instance, developing plans for housing and negotiating with external agencies for land and infrastructure. .

Boonyabancha Somsook - The Experience of the Urban Community Development Office (UCDO) in Thailand (2002) - SDI [pdf] Thailand - An urban poor development fund is a powerful development mechanism, allowing urban poor communities to organize themselves into saving groups and improve their financial and managerial capacity to manage the loans for community development activities for the members or for the community as a whole from the fund directly. It is a mechanism that enables urban poor organizations to tap development resources directly by building up their own capacities. .

D'Cruz, Celine (1999) - Basic Strategies that work for Urban Poor Communities - A reflection on Saving and Credit in Phnom Penh - ACHR [pdf] Cambodia - Daily savingsis a way of including the very poor within a given settlement. It is easier to put in small amounts of money every day that to try to put in a large sum at one shot once a week or once a month, which might be more convenient for the better-off in the community. All systems that get developed should work for the bottom ten percent of people in poor communities. .

Ghatate, Smita (1999) - The Development of HUDCO's Housing Loan Scheme to NGOs -SEWA / DPU [pdf] India - The case study describes the process of learning and negotiation that was central to bringing about a change in the lending policy of the Housing and Urban Development Corporation. Previously HUDCO funds for economically weaker sections and low-income groups of the population would be channelled only through state housing agencies, while Indian NGOs working with housing issues for the poor would find it difficult to access sufficient funds to scale-up their work. .

Homeless International - Dialogue - September 2002 -[pdf] This edition of Dialogue explores the topical issues of risk and investment. Looking at how communities take risks in practical terms as well as some of the theory behind it, we have tried to bring together a wide range of learning and experience. .

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city level

Tapananont, Nopanant et al. (1997) - A Case Study on Development Exaction for Collector Distributor Road Construction in Bangkok - Best Practice / UN- Habitat [pdf] Thailand-The paper will present the results of a case study undertaken to demonstrate a possible application of the development exaction technique to finance the construction of collectordistributor roads in newly urbanizing areas of Bangkok. .

UN-Habitat (2002) - CHF / Mexico Home Improvement Loan Program, Ciudad Juirez - Best Practice / UN- Habitat [pdf] Mexico - The purpose of the CHF/Mexico Home Improvement Loan Program is to assist low-income families along the US-Mexico border to improve their health and their living conditions. This is achieved through a loan program that provides education on credit and provides technical assistance of trained architects in the building of houses at affordable rates. .

UN-Habitat (2002) - Community Hours Bank, Capilla del Monte - Best Practice / UN- Habitat [pdf] Argentina - The Community Hours Bank is a financial institution system created for the purpose of supporting a Co-operative School and giving loans to the community members unable to access formal financial institutions. Small-scale enterprises can also access soft loans to improve their productivity. It is a way of promoting commitment of volunteers thus generating social and cultural capital by the practical use of "the institutional currency". .

Bolnick, Joel (1996) - "uTshani Buyakhuluma (The grass speaks): People’s Dialogue and the South African Homeless People’s Federation (1994-6)" - Environment & Urbanization, Vol. 8 No. 2, October 1996 - IIED [pdf] South Africa - The paper describes the growth of the People’s Dialogue/ South African Homeless People’s Federation alliance over the past three years including its housing savings schemes, exchange programmes, the uTshani Fund for housing loans, the land unit and its dealings with government. It also describes the remarkable community-based training and enumeration exercise which helps the residents in any settlement to develop their own plans for housing and priorities for action. The paper also describes the ineffectiveness of the Mandela government’s housing policies which thought that support for private sector “mass housing” was the solution, rather than support for people’s own processes, as advocated and demonstrated by the alliance. The paper ends with an account of how official support for the alliance has grown but also how difficult it is for any formal government structure to support community directed action. .

Cabannes, Yves (1997) - "From community development to housing finance: from Mutiroes to Casa Melhor in Fortaleza, Brazil" - Environment & Urbanization, Vol. 9 No. 1, April 1997 - IIED [pdf] Brazil - This paper describes two new approaches to financing and supporting the improvement of housing and living conditions for low-income groups in Fortaleza, capital of one of the poorest Brazilian states. The first is the comunidades programme which primarily supports the development of new homes, settlements and income-generating activities for the lowest-income groups through mutirão, mutual self-help (as the participants collectively build and also manage the building process). This is sometimes known as the mutirão programme. The paper presents a case study of one project within this wider programme, Parque Havaí, to illustrate how it works. The second programme described is the casa melhor (meaning "better house") which provides loans, subsidies and technical support to households living in squatter settlements or other poor quality settlements to improve, rebuild or expand their homes. .

Chitekwe, Beth & Diana Mitlin (2001) - "The urban poor under threat and in struggle: options for urban development in Zimbabwe, 1995-2000" - Environment & Urbanization, Vol 13 No 2, October 2001- IIED [pdf] Zimbabwe - This paper describes the development of savings schemes by urban poor groups in different urban centres in Zimbabwe and their negotiations with local authorities to allow them to develop their own homes and neighbourhoods. It also describes how these savings schemes developed the Zimbabwean Homeless People's Federation (now with 20,000 members), and the constant inter-change between different savings schemes as they learnt from each other (and from leaders of federations from other countries) and encouraged new savings schemes to be set up. Despite very difficult political circumstances and economic problems, there are housing and income generation schemes underway in many Zimbabwean urban centres, organized and managed by urban poor groups' own savings schemes. The larger ones are inevitably those where local authorities have recognized their potential and provided appropriate support.

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international level

CLIFF (Community-Led Infrastructure Finance Facility) - Homeless International [pdf] The CLIFF project has been designed to act as a catalyst in slum upgrading through strategic support for community-initiated housing and infrastructure projects that have the potential for scaling up. The overall goal is to reduce urban poverty by increasing poor urban communities’ access to commercial and public sector finance for medium to large scale infrastructure and housing initiatives.

Satterthwaite, David (2002) - "Local funds, and their potential to allow donor agencies to support community development and poverty reduction in urban areas: Workshop report" - Environment & Urbanization, Vol 14 No 1, April 2002 - IIED [pdf] This paper describes the growing number of local funds or local institutions through which international agencies or national governments channel resources to support community initiatives. It discusses the advantages that these can have over more conventional projects in reducing urban poverty (including their flexibility, fast response time, demand-driven nature and local accountability). It discusses how they differ from social funds, and points to their strategic value in changing official perceptions of “the poor”, in strengthening the capacity of urban poor organizations and in enhancing partnerships between community organizations and municipal governments. The paper ends with a discussion of the challenges that these local funds pose, both for the local institutions who manage them and for donors who fund them. .

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