Urban Poor Fund

Monetizing the Social and Political Capital of the Poor

Once Federations begin to negotiate with local governments around secure tenure and basic services, the next step is always to find the finance for the actual implementation and delivery. Very often the lack of access to funds delays projects and results in a loss of morale for the communities involved.

These constraints have prompted many SDI affiliates to build new institutions, called Urban Poor Funds, which monetize the social and political capital of savings groups to leverage additional resources from formal banking institutions, the State, and international donor agencies. By combining the savings of the poor with external contributions, Urban Poor Funds gear up capital for large-scale construction and infrastructure development.

SDI's Urban Poor Funds are meant to reinforce cooperation between Federations and more powerful players in the development sector. Through the participatory design and implementation process, communities learn to build transparent, accountable finance systems, create responsive allocation mechanisms, and accommodate increases in scale and volume.

When external partners see that these Federation-led financial facilities have the capacity to resource target groups (which have been unreachable by other mechanisms) and recover costs, then mutual trust is built and ongoing relationships are established for future investments. Urban Poor Funds, therefore, fulfill a critical monetary gap for Federation communities and, more importantly, begin to build more equal relationships between external partners and the poor.

Some of these Funds have emerged "bottom up" from the communities: uTshani (SA), Twahangana (Namibia), Guungano (Zimbabwe), Akiba Mashinani (Kenya) and Phnom Penh Urban Poor Fund (Cambodia); and others have come "top-down" from the state: CODI (Thailand). All however have given communities a chance to have a voice in the development politics of their cities. As the South African Federation of the Urban Poor says: "Power is Money and Knowledge."