Providing support to urban landless and homeless people

Urban Poor Funds are an institutional innovation. They support federations of savings groups formed by homeless people or residents of informal settlements. They are changing low-income households’ relations with government agencies, enabling legal solutions to housing problems, promoting cohesion, and providing access to public infrastructure and services.

The International Institute for Environment and Development (IIED), in the UK, reports on Urban Poor Funds, which are now replicated in more than ten countries by Slum/Shack Dwellers International (SDI), a transnational network of federations of landless and homeless poor people. SDI has affiliates in over 30 countries in the Global South.

SDI membership is made up of active citizens, saving in their local settlements. An Urban Poor Fund is a collection of financial assets that enables SDI members to access state finance and development aid. This money is combined with their own savings in a range of investments and associated activities that address their development needs, especially shelter. Money is used to secure land, housing, water and sanitation and support income generation. The funds are independent of the state but may be established with the support of governments.

SDI affiliates generally avoid work with the state to make changes, using practices developed by organised low-income communities with the experience of successfully putting savings together and accounting to lenders. Communities acquire the capacity to negotiate with powerful agencies. Each SDI federation works with a non-governmental organisation, whose staff assists with grant management, technical development and documentation for professional audiences.

Urban Poor Funds challenge existing financing strategies and provide accountability for financing collective activities. Locally-generated and externally-provided finance is managed by local grassroots organisations. Through the Funds, federations can learn about the market and what it can and cannot provide for vulnerable members.

Savings are central to the SDI approach:

• The emphasis on local savings emerges from a commitment to strengthen social relations and solidarity between disadvantaged urban dwellers without legal tenure.
• Women are particularly quick to see the multiple benefits from coming together in small groups and collecting available finance.
• The collective management of money, and the trust it builds within groups, increases the capacity of members to work together on development initiatives.

A gap almost always exists between the cost of a legal housing unit with infrastructure and what low-income households can afford. Reducing this gap almost always means incremental construction is necessary – whether for new housing or for upgrading. For new housing, affordable land sites that are close to existing livelihoods sources and income-earning opportunities are difficult to find or obtain. Securing subsidies is therefore essential to ensure adequate and affordable quality housing but many families have to manage without subsidies.

Common challenges include:

• balancing service to members in current savings groups with providing support for new members and savings groups to join
• confronting the stereotype that residents of informal settlements are a ‘nuisance’, responsible for poor-quality urban environments and creating their own problems
• persuading local authorities to accept that incremental housing improvement is the best strategy for households to consolidate their housing assets: politicians and officials often disapprove of the shacks that provide a temporary solution as investments take place

Source(s):
“Urban Poor Funds: development by the people for the people”, International Institute for Environment and Development, Poverty Reduction in Urban Areas Series, Working Paper 18, by Diana Mitlin, August 2008 Full document.

Funded by: Swedish International Development Cooperation Agency (Sida)

id21 Research Highlight: 1 April 2009

Further Information:
Diana Mitlin
Human Settlements Programme
International Institute for Environment and Development (IIED)
3 Endsleigh Street
London WC1H 0DD, UK

Tel: +44 20 73882117
Fax: +44 20 73882826
Contact the contributor: diana.mitlin@iied.org

Human Settlements Programme, International Institute for Environment and Development, UK

Urban Poor Fund International

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'Poor South Africans must be supported to negotiate in housing projects'

'Bridging the finance gap in housing and infrastructure'

'Decent homes in the city: managing Botswana’s informal settlements'

'Poor South Africans must be supported to negotiate in housing projects'

'Access to land in Uganda’s informal settlements'