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Research Report


Copyright Date: Jan. 1, 2005
Pages: 27
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Table of Contents

  1. (pp. 1-4)

    Numerous agencies seeking to address housing need have recognised the importance of savings and loans. Many different approaches have emerged. Over time, some have evolved into complex financial institutions. For example, some of the major housing finance companies in the UK have their roots in small-scale informal lending established by industrial workers to improve their housing situation in nineteenth century. Clearly a multitude of efforts have sought to increase the availability of credit to the poor for land purchase, service provision and housing development.

    One distinct approach uses savings strategically to strengthen local community groups, thereby enabling a multi-stranded effort...

  2. (pp. 4-6)

    These approaches see themselves as very different from conventional micro-finance programmes offering individual loans (sometimes through collective management) primarily for enterprise development but sometimes for housing investment. It is believed that a major limitation of such micro-finance initiatives is that money may not be the major cause of poverty ― and it is lack of finance that they seek to address. Moreover, even if lack of money is a primary cause of poverty, it does not necessarily follow that more money is the solution.³ Where poverty is linked to exclusion from social, political and economic processes, micro-finance alone may be...

  3. (pp. 6-7)

    Despite the considerable interest in working with savings, many problems remain. One set of problems relates to banks and finance. Many countries have suffered from high inflation and, in some countries, bank assets have been frozen. In some countries, notably in Latin America, banks have a monopoly on collecting savings, and other agencies, such as community-based institutions, are simply not allowed to do this. Despite these rules, there are multiple reasons why the poor do not use the formal banking system. They may not even be allowed to enter such establishments because of discrimination against the poor, they may not...

  4. (pp. 7-9)

    A major question is how the practice of savings can be spread and multiplied. Some programmes working with innovative shelter finance have used community-tocommunity exchanges to achieve scale through strategies that reinforce the core approaches of these processes. People often accept their present condition as given until they realise that it does not have to be that way. When they see what other communities have managed to do, they re-examine their assumptions and begin to explore alternatives. Teaching from professionals reinforces the image that the poor cannot address their own problems and that they are not going to be the...

  5. (pp. 9-13)

    Several of the NGO programmes that participated in the meeting have secured some kind of state subsidy. A further two programmes, from Namibia and Thailand, are government programmes that incorporated a subsidy. The Thai programme, CODI, has been discussed above. In Namibia, community-managed savings and credit groups have developed since Independence in 1990. Housing has been a priority, and the government introduced the Build Together Programme to provide housing loans (with a subsidised interest rate) to communities willing to build for themselves. Initially, the Build Together Programme was run by central government, but this proved difficult. Different groups each had...

  6. (pp. 14-17)

    There are two issues with respect to innovative shelter finance and inclusion. First, there are issues of inclusion within the schemes themselves. Second, the process helps to build inclusive cities by creating opportunities for the urban poor to secure tenure, services and housing.

    Savings schemes may struggle to reach these groups and others who live in very distinct geographical areas or who do not have a permanent location. A major reason is that savings schemes build up links between neighbours in geographical areas. It is difficult for those who are working but not living in the city to join in,...

  7. (pp. 17-21)

    A challenge for many of those working with shelter finance is how to scale up the activities. This is more than simply raising additional finance to increase the scale of savings and loans. It also involves decisions about the optimum institutional relationship with the state in order to secure the redistribution of state resources and collaborative development partnerships in upgrading and redevelopment. In different countries, the administrative and public management systems are very different; for example, in Indonesia two-thirds of state finance is allocated to local government, whereas in Thailand, the equivalent figure is 35 per cent. Such differences point...

  8. (pp. 21-22)

    A number of roles emerged for NGOs during the process of growth and nurturing of innovative shelter finance.

    Guarantor of the system ⁴― SPARC: A role for SPARC emerged around maintaining books and sharing information. Community leaders were worried that they would be pressurised into giving loans, or that they would have other problems. So, as the NGO, SPARC set up a fund from our grants, and this fund operated like a guarantee for the savings. The money was with the community, but if there was stealing or thievery, then the community saving was supported. In effect, SPARC acted as...