* DOCUMENT : 2

INDIA

In seeking to develop solutions appropriate to the scale of need in urban India, an NGO called SPARC invested increasingly in an alliance which was started several years after it was formed (1984). The other members of the alliance are the National Slum Dweller's Federation (NSDF) and Mahila Milan. The formation of Mahila Milan was a result of the partnership between NSDF and SPARC: NSDF agreed to help create a sister organisation whose role and function would be complimentary to its own, and whose processes would encourage more women to enter leadership roles in the Federation. In this partnership, NSDF organises and mobilises as many communities in as many cities as it can. It helps them to become articulate, explore new alternatives and begin negotiation with municipalities on issues of urban equity.

Mahila Milan assists collectives of women - already deeply involved in managing community strategies of basic amenities - to get recognition for this role in their settlements; learn to develop skills to be able to develop consensus for priorities of communities; and expand assets owned by communities.

Wherever possible, when the alliance of the three organisations does manage to gain resources, these are given to local Mahila Milan collectives to manage and nurture for the community.

Over the years, the NSDF/Mahila Milan alliance has developed a familiar style. Large numbers of groups within communities are encouraged to articulate their problems. They get support from Mahila Milan and experienced NSDF members to design solutions to their problems, a process in which women play a central role. Once they have done this, the NGO and NSDF assist the Mahila Milan to present these solutions to the relevant local and state authorities.

Thus, the alliance seeks to ensure that women are central to the process, that they are given an opportunity to experiment with possible options and that they are able to negotiate with city officials and other resource-holding agencies to develop solutions to their problems. The target communities identify themselves, since only those who are determined to go through the process volunteer to be 'pilots' for the Federation. The alliance then works with them through the process, regardless of how long that may take.

The first communities involved in the process contribute in turn to the alliance by becoming the trainers of other communities. Through community-to-community exchanges and training sessions, other groups can examine the solution developed by this group, and incorporate what suits them. Whilst some groups may find the entire process replicable, others adopt only parts of the previous experience. These modified solutions are then further disseminated through the Federation.

The alliance started work in Bombay and is now operating in 21 cities throughout India. In each city, several local Federations have been formed; groups are divided according to who owns the land on which they live. For example, there will be one local Federation for pavement dwellers, another for those squatting on land owned by the railway, another for those squatting on airport land. Each local Federation is divided once more by location, and residents within each neighbourhood form housing co-operatives. In some settlements this process is strong, in others it is much weaker. A critical component of this process is that it provides an organisational form through which to engage municipal and state government. Development of these contacts allows poor people to participate in every discussion that affects their lives.

Savings and credit is the basic element in the development strategy. The process starts with a crisis credit fund established from the small change available to most households, collected in daily visits by treasurers. Women who are interested in taking part are drawn into the training process and shown how such crisis credit funds work in other communities.

Within three months, most settlements are able to understand, agree and manage the rules and regulations to make the crisis credit fund operational. Although groups are free to modify the model, nine out of ten groups end up with similar rules within six months of beginning the fund.

The savings groups are encouraged to be comprehensive and cover as many residents as possible in the settlement. If many women in each settlement wish to be involved, it is proposed that they divide into groups of about 10 households. Within each of these groups, one women is identified as a treasurer and the savings groups are linked to one another through these treasurers. Although most of the women are illiterate, they have very good oral memories. Through working with school children the treasurers learn sufficient skills to be able to keep written records of savings and loans. The savings groups and their treasurers are all members of Mahila Milan. Most Federations have a central meeting place which is called the community resource centre. This centre becomes the place where most financial transactions take place with savings being deposited and loans collected.

Within Mahila Milan networks, there are three kinds of savings schemes operational: the crisis savings and credit scheme, the income generation scheme, and the housing savings schemes. Each community begins with crisis credit. Women save very small bits of money kept aside from the change from daily purchases, sometimes as little as Rs1 or 0,50 paise (1$US = Rs35). This process is often set up by the poorest women in the community.

Even when the savings fund is only Rs 200, women begin to borrow small amounts. This could be for medicines, to purchase a bus ticket to find work, or to give money to children for school books. These small loans are repaid very quickly. Women are encouraged to make their own rules about this fund, and Mahila Milan ensures they know how others do this rule-making for themselves. This consolidates the women's collectives. Despite the small amount of the money, it fulfils crucial crisis needs, and women get community acknowledgement for having created these resources. Groups vary the interest they charge. Initially there was a wide variation; now its either 1% per month or a flat service charge is levied.

This 'record' of successful savings and credit transactions is used by the network of Mahila Milan to seek external credit lines. Presently funds from Rashtriya Mahila Kosh extends a credit line of Rs50,00,000 a year to Mahila Milan through SPARC. The fund is used to offer credit for income generation only. This credit is available to the dispensing organisation at interest rate of 8% p.a., whilst the collective charges an interest rate of 12% p.a. for loans. Community collectives working in Mahila Milan have decided to charge a compulsory savings component of 1% per month additionally. This is kept as a community pool for consumption loans that all families need, but can get nowhere else. As a result, Mahila Milan achieves several benefits:

* Women in communities control the process, even though credit is dispensed to men and women.
* Members do not lie about what they want credit for.
* Consumption credit is always available.

Presently in India, conventional housing loans are almost non-existent. 90% of salaried and professional people borrow from non-housing finance related sources. Such facilities remain totally inaccessible to the poor. Without land tenure and without an institutionalised system of shelter construction for the poor this sector will take long to develop. In this situation, the Federation is working actively on many fronts to secure land tenure, to standardise house construction and design costs, and demand that housing finance institutions lend directly to organisations of the poor. This process moves at a snail's pace. It does move, however, and in the process the Federation explores various possible options. One is to assist communities to begin saving separately for housing so that the length of time between the initial commitment to save and actual construction is reduced. Savings also imply a reduced loan requirement for the household, and the savings record helps to create the track record to assure jittery bankers.

The management of the credit process serves many purposes. Most importantly, it creates conditions to ensure that women are central to the process. After starting with very small amounts, women gradually work with larger amounts. The Federation's involvement and the collective strength of the network ensure that women remain in charge. Through the process of savings and credit, women's role has increasingly become recognised by men. The financial management skills they have acquired and the increased access to financial resources have changed the role of women within the community and increased their status. Secondly, as more and more communities participate in and refine this decentralised, highly accountable and transparent process, they become attractive organisations to which to lend. This is because they absorb much of the administrative cost financial institutions say prevents them from serving the poor. In return for this 'community input', communities can demand interest rates that suit them. Finally, in order to create large-scale changes, very large numbers need to participate. Such a multi-tiered, decentralised savings and credit process creates the basis for such large participation.

As the demand for credit grows and the skills for managing credit increase, the local savings and credit groups come to SPARC to replenish their capital. SPARC maintains meticulous accounting systems and keeps records for individual repayments. With networking and constant communication a natural outcome of the community exchange strategy, it no longer matters that groups are located in several cities. Each group gets information about who has paid how much, and develops the skills necessary to manage larger amounts of money. Local residents see the acquisition of these financial management skills as essential to the process of housing development. There is little point in negotiating for land if the communities do not have the resources necessary to develop the land. The issue of land tenure is critical, but there is also a need for communities to be ready to respond with strategies for residential development as soon as tenure is obtained.

Once savings groups have been organised and gained some experience with credit for crises and income generation, their 'internal ' credit line begins. But that is not for housing: loans for housing emerge only when the co-operative obtains land. In this respect the Federation undertakes a very interesting exercise in collective action. Often a community gets land for external reasons other than their own preparedness to save and construct. Rather than refuse these groups assistance because other groups more prepared have not yet got housing, these groups are treated as flagships of the Federation. Those from other areas well-versed in the process participate in it. Credit-worthiness needed to access external finance is demonstrated by presenting the Federation as a whole which 'guarantees' the individual co-operative. And mistakes, however expensive, are absorbed by the Federation, rather than allowing them to increase the costs of housing. As training sites, these experiences are invaluable.

The Federations also make loans for house upgrading and refurbishing. Initially they were part of the revolving savings pool. Now organisations such as HUDCO are creating special funds that operate like RMK does, but focusing on housing. Here the advocacy work of the alliance has helped, by creating such a window to formal institutions. The Federation tries to encourage those who wish to reconstruct their dwellings to form co-operatives and seek collective funding rather than reconstruct their homes individually. This has many benefits: the work is cheaper, people get better materials, and collective construction works well when the group is organised. The difference in cost between individual building and collective housing development is so great that it does not make sense for households to build on their own.

The main sources of housing finance in India are the HDFC and HUDCO. Although these companies receive subsidies through bilateral development assistance, they have not been successful in addressing the housing finance needs of low-income communities. By and large NGO intermediaries are necessary to deliver funds, and given the small number of NGOs working in this sector, this often becomes a bottleneck. The Federation model, in which community organisations are empowered to act as intermediaries to their members, thus serves this purpose much better. Some important lessons have already emerged.

In any one given month, 20-30% of people cannot make their repayments. If allowed the space to be flexible, communities find a way to work through this problem. For example, when SPARC first insisted on regular repayments, communities coped by repayment-swapping between households. SPARC now understands more about these processes, and encourages them. Financial management within the Federation allows communities saving for housing to swop finance between branches of the Federation, if the trust between the two parties is sufficient and the will is there.