Show me the money!

Ahead of a side event at Habitat III, Anna Walnycki highlights how funding is needed for grassroots upgrading of informal settlements in the face of evictions.

A slum is upgraded in Zambia. Local urban poor organisations are working with local governments to solve problems, but need financial support (Photo: Shack/Slum Dwellers International (SDI), via Google licence)

This week, national and local governments, development agencies, NGOs and civil society gather in Quito for the third vicennial UN Habitat conference.

The 'New Urban Agenda' – a globally negotiated document intended to steer urban policy and practice for the next two decades – has been agreed. Now, discussion in Quito is turning to how the agenda can be implemented to achieve Habitat's vision of creating global cities that are sustainable and inclusive and that truly benefit the people living in them.

Communities and local governments drive solutions

Inclusive urbanisation means improving access to adequate housing and providing basic services for the millions living in informal settlements.

Innovations to tackle the most pressing problems faced by people living in slums are often found at local level where organisations of urban poor work with local government to co-produce solutions. But this community-led action needs finance to support it.

Truly transformative development is often sparked by mobilised communities with access to development finance. Low-income housing tends to be built by low-income individuals and households, but there are many examples of organised groups of urban residents working on upgrading programmes with municipal governments, significantly improving housing and access to services.

These partnerships have increasingly been useful to promote in situ upgrading rather than forced evictions, as urban areas become denser due to the escalating risk of climate change.

Local processes need support

This week in Quito, community leaders from informal settlements have been calling for political and financial support to enable communities to expand upgrading programmes through partnership with municipal governments.

One way to do this is to examine current flows of development finance, and the role that urban residents and municipal governments play in planning and development.

Shack/Slum Dwellers International (SDI) is a global network of federations of the urban poor that has been engaged in upgrading projects and which seeks strategic partnerships with local municipalities to achieve scale.

Collaborating in this way ensures the needs of low-income urban residents (employment opportunities, adequate sanitation, and environmental quality) are central to planning and development. It is often more cost-effective to upgrade existing settlements than to evict communities and construct new settlements with basic services beyond the city.

Although low-income communities have successfully used savings and development finance for upgrading programmes, securing international development finance to support these local processes remains difficult.

Most development finance flows bilaterally between nations or through multilateral banks, and consequently it is international agencies and national governments that shape the programmes. Although this is an effective way to fund certain interventions, this approach can be unresponsive to the needs of the lowest-income and most-marginalised communities.

IIED's event in partnership with SDI at Habitat III brings together speakers from communities and governments to hear the strategies grassroots federation leaders have adopted when faced with eviction and forced relocation, and how community-based groups and municipal authorities have managed escalating risks of climate change as urban areas become increasingly dense.

These include financing mechanisms where community savings are blended with development agency and state contributions to maintain and improve informal settlements. By contributing their own savings in this this way, communities are active players in their own development.

IIED has recently summarised the learning from over 25 years of work with partners on localised development funds which forms the basis for a new cross-institutional Local development with global finance programme at IIED. We also produced a Working Paper: Local development from global finance: how to extend and deepen the impact of 2030 development finance.

IIED's experience demonstrates how development finance can be effectively channelled to the local level to support grassroots initiatives that respond to local needs.

Moreover, this process has successfully leveraged partnerships between communities and local government for a more participatory planning process.

These local processes, if properly resourced and supported, are key to realising global goals such as the SDGs and commitments such as the New Urban Agenda.

Anna Walnycki (anna.walnycki@iied.org) is a researcher in IIED's Human Settlements research group.