Public Agenda (Accra)
10 August 2009
opinion
Accra — A major component of UN-HABITAT's strategic vision is to mobilise domestic investment resources for the financing of cities and shelter. Hence as part of UN-Habitat's effort to attain the Millennium Development Goal 7, Target 11 (to improve the lives of at least 100 million slum dwellers by the year 2020), the Slum Upgrading Facility (SUF) was set up in 2004. The facility seeks to provide technical assistance and facilitate access to domestic capital by its clients for financing slum upgrading projects. Even though slum dwellers supposedly lack financial or material resources, evidence suggests that the general application of this notion is flawed. Opportunities for tapping the resources of slum dwellers largely have remained untapped.
SUF in its quest to help solve the incidence of slum operates on the premise that slums can be upgraded successfully when the existing slum dwellers are involved in the planning and implementation of upgrading interventions. Hitherto, upgrading interventions had minimal community involvement depending primarily on the capacity of technocrats in the public and private sector agencies. The lack of involvement of the poor disengages them from making inputs into the upgrading efforts since they are not the ones taking the technical and financial risk of the project. This makes it a supply-driven approach which is not capable of effectively addressing the needs of the poor. On the other hand, the SUF espouses a demand-driven approach in the belief that communities and resident are better placed to articulate and prioritise their own needs.
The key partners of SUF are Local Authorities, Community Based Organisations (CBOs) and Housing cooperatives, Non- Governmental Organisations (NGOs), and relevant departments of central and local government and the private sector. The local authorities facilitate and lead the planning for capital investment in land and services which are necessary for development of sustainable neighborhoods. The government's role at the national level is to engender an enabling environment conducive for undertaking innovative housing solutions especially for the poor.
The Private Sector
One critical partner left out of conventional upgrading practice is private sector. It has been recognised that donor and government funds, be it central or local, tend to be inadequate for sustaining upgrading interventions resulting in sporadic improvements that have little impact. On the other hand, private capital can go a long way to bridge the financing and sustainability gaps. According to UN-Habitat, "Private sector investment capital is consistently attracted to development projects with dedicated (ring-fenced) repayment schemes that generate attractive financial returns with manageable and acceptable credit risks that are operated outside mainstream government systems and control, but where regulated on a fair equitable basis."
In this regard, prospects for involvement of private capital are yet to be explored in the conventional upgrading schemes. However to attract private capital requires some assurances or securities that can lower the risk perception associated with the poor. The absence of such assurances is what obstructs commercial banks from engaging with low income households.
One means of assuring the repayment of loans can be found in communities that are organised and regularly contributing financially to meet the needs of their settlements. Well managed community savings provide a true record of the demonstrated capacity or ability of community groups to repay loans.
Community groups usually do not get easy access to loans from commercial banks as they often do not have any saving schemes. Hence when commercial banks interact with such groups, repayment is anticipated to be near-impossible. Thus for improved access to private capital by the communities (and also to meet the bank requirements), SUF facilitates the crystallisation of such inherent capacity of these local communities to demonstrate the requisite credibility that commercial financiers desire from prospective clients. SUF does this by sensitising low-income communities to such community mobilization and savings scheme. In addition, SUF assists in the designing of financial instruments and products that will enable investors to work with poor communities appropriately and thus provide commercial finance for upgrading initiatives. The assistance to poor community groups comes in the form of credit enhancement and other financial instruments.
The SUF project in Ghana is supporting slum upgrading in the Sekondi-Takoradi and Tema- Ashaiman Metropolis. In Sekondi-Takoradi, the pilot communities are Kojokrom and New Takoradi while Amui Djor is the pilot community in the Tema-Ashaiman Metropolis. The project in Sekondi-Takoradi is partnered by the Sekondi-Takoradi Metropolitan Assembly, Kojokrom Market Women Association, New Takoradi Market Vendors Association, African Women International, COLLANDEF and NGOs. In Tema-Ashaiman the SUF is partnered by Tema Metropolitan Assembly, Ashaiman Municipal Assembly, Amui Djor Development Association, Tema Traditional Council and some NGOs like People's Dialogue Ghana (PDG), Ghana Federation of the Urban Poor (GHUP) with the backing of Slum Dwellers International (SDI) and the Amui Djor Housing Cooperative as the local community group.
In order to achieve its goals, SUF Ghana has established a Local Finance Facility (LFF) which has its secretariat in Accra on the premises of the Institute of Local Government Studies (ILGS). The LFF will support area upgrading projects and individual home improvement programmes for cooperatives. Community Based Organisations aiming to assist their membership to improve their housing conditions are encouraged to get in touch with the secretariat.
The LFF Secretariat,
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