Project Overview
Between 1999 and 2003, Homeless International co-ordinated research into "Bridging the finance gap in housing and infrastructure", carried out in collaboration with our international partners across Asia, Africa and Latin America. The UK Government's Department for International Development (DFID) funded the research through its Knowledge and Research (KAR) programme. Homeless International worked particularly closely with DFID's former Infrastructure and Urban Development Department (IUDD), which was also concerned with the issue of slums in developing countries.
The research sought to document the slum upgrading initiatives that communities had developed, and to analyse those initiatives from a number of perspectives. What was the regulatory context in which the projects were developed? Who paid for the projects, and how? What were the risks involved and who took those risks? If successful projects were to be scaled up how could the necessary capital be mobilised and from which sources?
Homeless International and partners produced a series of country-based studies, and Homeless International produced a number of thematic papers bringing together the key findings, lessons and concepts which have influenced our work ever since.
The thematic papers highlighted a number of rather stark conclusions. The most important finding was the realisation that the urban poor were shouldering the major risks in developing innovative approaches to slum upgrading, and that many of these risks were associated with the relationships they had proactively developed with city authorities and with the commercial banking sector. As it happens they were managing these risks remarkably well but the investments they had made in managing and mitigating the risks had, with very few exceptions, not been recognised by the formal institutions with which they were dealing.
This lack of recognition had important consequences. Banks felt unable to lend to projects that did not fit into a predictable mould, and which were being implemented by groups that had no form of conventional collateral. The banks' risk assessment systems and mechanisms for extending credit had not been designed to reflect the complexities of community-led processes. It was also not clear that lending for slum upgrading fitted into their core business models, and, in some cases, they had plenty of unmet demand for their products from wealthier clients so why should they bother to lend to the poor? From the perspective of city officials, providing support for community led processes might be an attractive option but how could they be sure that communities could actually deliver? How would local politicians, developers and contractors with a vested interest in continuing "business as usual" respond to a new form of competition?
None of these questions could be effectively answered if the urban poor were unable to demonstrate in practice what they were capable of. This meant that projects had to be initiated on the ground, at scale, and that the processes involved had to be visible and understandable to both officials and financiers. The problem was that the NGO funding that had been sufficient to help communities to mobilise - to form savings groups, to carry out their own settlement mapping and surveying, and to build pilot housing and sanitation facilities - was insufficient to cover the costs involved in the first stage of scaling up. A larger level of capital was needed. This led Homeless International and partners to develop the Community-Led Infrastructure Finance Facility (CLIFF) concept, and the research convinced donors to commit millions of pounds to bring CLIFF to fruition.
The research also fed into a book written by Homeless International staff in 2006, which documents some of Homeless International's experiences in the area of urban resource mobilisation and management in association with partner organisations in Asia, Africa and Latin America.
Click on the quick links below to read or download the thematic and country papers produced for Bridging the Finance Gap. Alternatively, you can access each paper using the left hand menu, in which case you will also see a few sentences explaining the background to each paper.
