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Research Report

Local-level finance:: improving the accountability and effectiveness of urban development programmes

Wayne Shand
Copyright Date: Jan. 1, 2017
Pages: 56
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Table of Contents

  1. (pp. 7-7)

    In setting a new agenda for international development policy, the Sustainable Development Goals (SDGs) recognise the significant challenges of urbanisation and the need for major investment in cities of the global South. For the first time, an international target has been set for urban development (SDG 11) to ‘make cities and human settlements inclusive, safe, resilient and sustainable’. The achievement of this goal will be measured through 10 targets that range from the provision of safe and adequate housing to reduced mortality from disasters and the effectiveness of urban planning.² The urban targets are reinforced by other SDGs concerned with...

  2. (pp. 8-12)

    There is a vast academic, policy and practitioner literature discussing savings, credit, community finance, participatory and devolved budgets, and infrastructure investment published in the last 20 years. This extensive body of information generates different definitions of local-level finance that are related to specific activities and interpreted from disciplinary perspectives – an economic analysis of local savings gives weight to different characteristics than sociological or anthropological insights. In order to explore the potential contributions of local-level finance to development, this section aims to position local-level funds within complex systems of development finance and then examine some of the key ideas that...

  3. (pp. 13-26)

    Local-level finance takes a number of forms, when defined as monetary-value resources that are created and managed with the involvement of communities. Three types of local-level finance are suggested, reflecting differing scales of operation, which range from individualised household savings to citywide development funds. The following section identifies the key characteristics of each type and how they are used to support housing, basic service infrastructure and environmental improvements. Local-level finance is categorised, broadly, into three types:

    Individual/household finance and savings schemes: where input and benefit is individually accrued,

    Group savings and credit schemes: where individuals make contributions as members of...

  4. (pp. 27-34)

    As highlighted in Section 3, the creation of savings groups and mechanisms to manage various types of local-level savings can make positive contributions to addressing the needs people living in situations where many aspects of life are characterised by instability. A lack of housing tenure, reliance on casual employment and unstable social relations undermine the ability of households to build assets and create lives they value. However, creating and sustaining community structures is not without difficulty: it relies on the broad-based commitment of people to champion the creation of new initiatives and to contribute time and energy to forging the...

  5. (pp. 35-40)

    As described in Section 3, there are a number of forms of local-level finance that are, in different ways, making a contribution to the sustainable development of cities and the well-being of poor communities. While there is evidence that locally (through national federations and international support structures) people in poverty are working collectively to realise development goals, this effort is infrequently recognised, with policy and delivery often bypassing organised communities (Satterthwaite et al., 2011). The following section discusses issues of the management and organisation of local-level finance in relation to the power structures that govern development activity. Drawing from case...

  6. (pp. 41-44)

    The cost of delivering the SDGs can appear overwhelming when viewed at a macro level, but addressing aggregate need is not the only way to understand and plan for implementation of development targets. The examples of various forms of local-level finance described in Section 3 highlight two important points. First, resources (cash and capacity) are available within communities to contribute to development, and in many respects public investments become more sustainable when local people are supported to meet a commensurate portion of the cost of physical developments and adaptations. Second, the challenge for international development is perhaps not just about...

  7. (pp. 45-45)

    While there is a strong argument to be made, in principle, for the benefits of recognising local-level funds as a key source of development finance, there are a range of attitudinal and evidential gaps in building an effective and alternative narrative. A primary challenge is shifting the perception of local-level finance as being limited both in significance (value) and scope (application) to household issues. Evidence from SDI and ACHR programmes demonstrates clearly that the creative use of small-scale funding, distributed amongst a large number of beneficiaries, can have an important developmental impact. Investments in land, housing, livelihoods and environments have...