A Success Story in large-scale Informal Settlement Upgrading : Learning from Thailand | FUTURE CAPE TOWN

“The key thing is to bring all actors to work together… Let poor people at a big scale be the key actors to make a big change”

Read how the Thai government is collaborating with cooperatives to upgrade informal settlements. Can South Africa take a leaf out of Thailand’s book?







In early May, the South African SDI Alliance together with Shack / Slum Dwellers International(SDI) had the pleasure of hosting Somsook Boonyabancha, the founder and former director of the Community Organisations Development Institute (CODI).

CODI is a finance facility of the Thai government that has facilitated community-led informal settlement upgrading in more than 250 cities and towns in Thailand. This is an impressive feat not only because the model focuses on pro-poor, in-situ development, but more importantly, because the model has scaled institutionally so successfully. During her visit, Somsook gave a seminar in Johannesburg and Cape Town called ‘Scaling up informal settlement upgrading: The CODI model, Thailand’, additionally she visited Kayelitsha, where ISN and FEDUP coordinators shared institutional challenges they have faced, and she interacted with representatives of the South African National Treasury, who hoped to learn about CODI, the approach and its potential value within South Africa.

From left to right: Representatives from the World Bank, Cities Support Programme (Treasury), CORC, Somsook, Western Cape Human Settlements HoD and ISN Coordinator

From left to right: Representatives from the World Bank, Cities Support Programme (Treasury), CORC, Somsook, Western Cape Human Settlements HoD and ISN CoordinatorHow CODI Works

How CODI works

CODI functions as a revolving loan fund that enables direct access to grants for upgrading and loans for housing. It was formed in 2000, when the Thai Urban Community Development Office and the Rural Development Fund merged, and is an independent public organisation under the Ministry of Social Development and Human Security.

As a national implementing agent, CODI manages the Thai government’s Community Development Fund that engages urban poor communities and networks who are organised in housing co-operatives and informally recognised community based savings schemes. CODI supports the building of community cooperatives, through sub-group clusters that manage community grants and wholesale loans. Such subgroups bring about collective action through group trust, helping each other, and collective repayment.

In her presentation, Somsook highlighted the following as significant requirements for a scaleable approach:

  • Active communities: support for urban poor communities as owners of projects
  • City-wide approach: changes at the real scale of the problem (i.e. that affect all poor communities in the city) will link scattered communities and their priorities to each other, contributing to a more systematised and sustainable approach
  • Building strong communities: through secure housing and integrated development that includes:
    • collective land ownership or lease
    • community savings and fund (acting as a community bank)
    • welfare activities
    • activating the link between community networks and city organisations in regular meetings
    • collective management
  • Building partnerships: between community networks, local authorities and other development actors that enable deliberation and negotiation
  • New finance systems: active community savings and credit, City Development Funds

Read more about CODI here.

Another area of Thailand which will benefit from the CODI model.

Another area of Thailand which will benefit from the CODI model.

An example of CODI success: Baan Mankong

The Baan Mankong City-Wide Upgrading initiative is one of CODI’s most notable programs. Introduced in 2004, it focuses on poverty alleviation, community welfare, technical support and tenure security by supporting and enabling sound financial practices (promoting savings and credit, providing well justified loans and financial planning assistance). Baan Mankong (which means “Secure Housing” in Thai) facilitates capital transfers through; an infrastructure/upgrading grant from central government, and, a housing loan for participants of housing cooperatives.

Baan Mankong’s successes have been numerous and measurable. Since 2004, Baan Mankong has approved a total of 850 projects in 1660 communities and benefitted about 90 000 families. Geographically, its reach covers 286 cities in 71 of 77 provinces. The average housing loan per family amounts to US$ 5000 while the average upgrading subsidy grant averages about US$ 2500 per family. The total loans granted by CODI’s revolving fund (at 3% interest) amount to about US$ 185m with a repayment rate of 97.5% (Figures drawn from Somsook’s presentation).

Somsook Boonyabancha, Former Director of CODI

Informal Settlement Upgrading in South Africa: Issues we face

The upgrading context in South Africa is marked by a tension between policy and practice. South Africa’s policies regarding informal settlement upgrading are sound, however implementation of these policies is hindered by inadequate municipal capacity to manage these participatory processes, and secondly, the inability of successful projects to scale beyond isolated settlements.

The National Housing Code states that the Upgrading of Informal Settlements Program (the national policy and finance instrument for upgrading) set out to “facilitate the structured in situ upgrading of informal settlements as opposed to relocation(s)”. The aim was to achieve tenure security, deliver basic services and build ‘social capital’ in communities through participatory processes.

Inadequate municipal capacity to manage meaningful government/community engagement has crippled the implementation of these policies, and consequently, municipalities have defaulted to relocating shack dwellers to greenfields sites (see the Joe Slovo judgement) or repackaging reports on greenfield relocations as UISP projects (see State of Local Governance, p.64-65). Even after the National Upgrading Support Programme (see NUSP) was introduced in 2010 to support municipalities in addressing these shortfalls, the lack of meaningful community engagement or in-situ upgrading of informal settlements persisted.

Where the SA SDI Alliance has implemented participatory upgrading projects in partnership with a local municipality (such as the City of Cape Town), these instances remain limited to a handful of settlements. Avenues for scaling up meaningful participatory practice in South Africa are rare, if not non-existent. In the experience of the Alliance, key challenges to scaling up relate to the disjuncture between lengthy bureaucratic processes and the pace of community preparation in informal settlements. For example, party political frictions may extend the time required to mobilise a community while lengthy municipal procurement processes regularly stretch project timeframes beyond the designated one year budget allocation period. When budget allocations are annulled or project dates postponed, it is twice as difficult to restart and remobilise the community. Tools that intend to support community-led action (such as the UISP), can therefore have the opposite effect: they are often not flexible enough to adapt to project preparation and social facilitation processes in informal settlement communities.

 Scaling Up: Could the CODI model work in South Africa?

As an alternative, the CODI model offers relevant insights for the South African context. With more than eighty representatives from NGOs, media platforms and think tanks in the sector, academic partners in planning and architecture and the Head of Department of Human Settlements in the Western Cape, the closing session of the seminar offered an opportunity for discussion. How does CODI straddle the tension between private and collective land ownership? Is collective land ownership/lease possible in South Africa? Is there government appetite for alternative finance mechanisms? While engaging with these points, Somsook continually pointed to the value of collective action:

“The key thing is to bring all actors to work together. Community is important to support each individual for a certain period of time. And land is an important factor [so we need] collective land as a project. Poor people will be weak otherwise. Its insufficient to just do one or two projects here and there… Let poor people at a big scale be the key actors to make a big change”

Similarly to CODI, a co-finance facility in South Africa has the potential to locate poor people at the heart of upgrading interventions. Where urban poor communities shift from beneficiaries to activated citizens that identify, plan and implement development priorities, informal settlement upgrading can become more nuanced, responsive and participatory. For a co-finance approach, community saving is a valuable mobilising tool, an enabler for meaningful participation and an indicator of household buy-in at settlement level. A co-finance mechanism that is institutionalised in local government but not subject to its bureaucratic process can enable flexible time frames for project budget allocations that are not constrained by annual provincial or municipal allocations. In this sense, innovation and meaningful participation occur only when community members become significant actors in the upgrading process.

Article adapted from Scaling Up Informal Settlement Upgrading: The CODI Model Thailand published May 13, 2016.

Read more about informal settlement upgrading:

Image credits:

  1. Images: South African SDI Alliance 1, 2