The Human Settlements Financing Division is home to the UN-HABITAT Water, Sanitation and Infrastructure Branch, the Slum Upgrading Facility and the Urban Finance Section. These three distinct but inter-related branches all contribute to strengthening human settlements financing with the aim to improve access to finance for housing and infrastructure, particularly for the urban poor. This is done through innovative finance mechanisms and institutional capacity to leverage the contributions of communities, local authorities, the private sector, Government and international financial institutions.
The Water, Sanitation and Infrastructure Branch
The Water, Sanitation and Infrastructure Branch monitors the state of water and sanitation in urban areas around the world. Achieving Millennium Development Goal 7 targets 10 and 11 - to reduce by half the proportion of people without sustainable access to safe drinking water by 2015 and to halve, by 2015, the proportion of people who do not have access to basic sanitation – is a huge task. But it is also one that can be fulfilled – it is possible to improve provision of water and sanitation in low-income settlements.
The Branch promotes initiatives to improve service coverage by advocating policy formulation to promote pro-poor investments in urban water, sanitation, waste management and infrastructure. It encourages and supports institutional reforms at local government, national and regional levels for efficient and equitable service delivery, particularly in low-income peri-urban settlements. It also helps national governments and local authorities build capacity for effective and efficient provision and delivery of water, sanitation and infrastructure.
The Branch also manages the Water and Sanitation Trust Fund. Established in 2002, the fund provides a well coordinated, fast track programmatic approach working with cities and municipalities to enable them to reach out to the poorest of the poor. It also offers contributors an opportunity to target a high priority sector with maximum impact and a clear set of objectives. Countries that have contributed to the fund include Canada, Norway, The Netherlands and Sweden.
The Branch runs two special programmes: the Water for African Cities Programme to help African cities manage growing water demand and protect their fresh water resources from the increasing pollution loads from cities; and the Water for Asian Cities Programme in a region of the world where almost two-thirds of people lack clean water and adequate sanitation.
The Slum Upgrading Facility
The Slum Upgrading Facility is a technical cooperation and seed capital facility with a central objective: to mobilize domestic capital for slum upgrading projects and activities.
SUF operates under the premise that slums can be upgraded successfully when the existing slum dwellers are involved in the planning and design of upgrading projects. For the most part, slum dwellers have the ability to provide resources for the housing themselves, but want to be secure in their new or upgraded homes. Finance then becomes a matter of coordinating the expectations of residents, with the facilities made available by Municipalities, and the containment of risk as perceived by the financing institutions – banks, capital markets, etc. SUF expects to be able to help make slum upgrading projects come to the markets successfully.
SUF works with local actors to make slum upgrading projects “bankable” – that is, attractive to retail banks, property developers, housing finance institutions, service providers, micro-finance institutions, and utility companies. Commercial banks need to expand their markets, but to do this, they need very clear information on which to make their assessment of risk. Good information is key to ensuring that everyone understands the risks involved and how they have been assessed. This can only be achieved with communities, capital markets and local government working together. SUF is designed to promote the inter-relationship between people, finance, and politics for upgrading low income residential areas.
SUF does this using the four approaches of technical advisory services (working directly with low-income groups as they plan residential upgrading), referral services (to link local needs with local and international resources), financial packaging (because taking upgrading and low income housing projects to scale requires access to multiple forms of investment and financial instruments and products) and developing financial products (new instruments that will enable investors to work with and provide loans to various upgrading initiatives).
The Urban Finance Section
The Urban Finance Section promotes effective housing finance and urban finance systems, community-based and cooperative initiatives in mobilizing financial resources for the built environment. It has three main blocks of activities and initiatives – Housing Finance, Municipal Finance, and Community-based Initiative.
The Housing Finance Systems initiative focuses on efforts which assist member states to improve the effectiveness, efficiency and accessibility of the existing housing finance systems and to create and devise innovative housing finance mechanisms and instruments and to promote equal and affordable access to housing finance for all people.
The Municipal Finance Systems Initiative explores innovative mechanisms and instruments to finance urban development and basic urban services and infrastructure. Particularly it focuses on how to tap the private sector resources to provide urban services and infrastructure to the poor and how community-based organizations can participate effectively in urban development and urban services and infrastructure provision and management.
Across these three areas, the Section analyses and evaluates Human Settlements Finance Systems and Instruments, Human Settlements Finance practices and experiences. In order to improve the practical understanding of the human settlements financing processes, instruments and challenges. It documents innovative human settlements financing cases to share practical techniques, methods, and lessons learned; and encourage exchanges of local experiences and innovative practices.