"We identify with the laudable initiatives of the UN-HABITAT, through its various programmes such as the Global Campaign on secure tenure and Good urban Governance, the technical cooperation programmes and initiatives such as the Slum Upgrading Facility which should be effectively utilised to support African states to achieve the MDG targets on slums, safe drinking water, basic sanitation and infrastructural development." - Olusegun Mimiko, Minister of Housing and Urban Development, Nigeria

The global Slum Upgrading Facility (SUF) is designed to mobilize domestic capital for urban upgrading activities by facilitating links among local actors, and help prepare local projects for potential investment by international donors and financial institutions, and, potentially, investors in the global capital markets – with the specific intent of leveraging further, domestic capital for slum upgrading. Its key clients are municipal authorities, civil and non-governmental organizations, central government departments, as well as the local, private sector, including retail banks, property developers, housing finance institutions, service providers, micro-finance institutions, and utility companies. It was established in 2005 in response to General Assembly Resolution A/56/206 of 2001 strengthening the United Nations Habitat and Human Settlements Foundation. Endorsed by UN-HABITAT Governing Council at its 20th Session by Resolution GC20/11.

The SUF comprises a small team of specialists on international and domestic financial institutions and financing models. Their task is to seek out and develop mechanisms to mobilize domestic savings and capital for affordable housing, and to liaise between financing institutions and the normative and technical cooperation activities of UN-HABITAT.

The Human Settlements Financing Division works with the Cities Alliance, a collaborative initiative of the World Bank Group and UN-HABITAT, to improve conditions of cities in the developing world. SUF works with international donor facilities such as the Private Infrastructure Development Group, international financial institutions including the World Bank Group, International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), Asian Development Bank (ADB), and others, such as United Cities and Local Governments (UCLG), Slum and Shack Dwellers International, and the UN­HABITAT Governing Council. With initial funding of 11.8 million dollars from the Governments of the United Kingdom and Sweden, the SUF has identified potential operations in ten cities in Africa and Asia will conduct a pilot programme in selected locations.

The Facility is being designed to work with governments, people living in slums and local financial institutions to mobilise investments for slum upgrading. Its objective is to develop, test and apply new and innovative means of financing pro-poor urban development with a strong emphasis on the mobilization of domestic capital.

SUF’s work programme is set by a Consultative Board. Chaired by the Executive Director, the board includes representatives of federations of slum dwellers (SDI), UCLG, financial institutions (HFC Bank Ghana, Stanbic Bank), local capital markets (the Dar es Salaam Stock Exchange), development cooperation agencies (United Kingdom, Sweden, and Norway), and the World Bank Group.

Implementation of a pilot credit guarantee scheme started in Tanzania, for example, with women’s housing cooperatives. Under this scheme, a high leverage 1:4 ratio has already materialized. Thus, for every 1 US dollar equivalent guaranteed, a commercial bank has agreed to give loans of 4 dollars to the low-income borrowers supported by the project. This is very promising and indicates a huge potential ahead.

Field projects are established in three other countries – Ghana, Indonesia and Sri Lanka. In Accra, Ghana, the city council has agreed to work with SUF and local bank to secure a loan that will enable the council re-assess property rates throughout the city. In Sri Lanka, the Moratuwa Municipal Council (MCC) has agreed to partner with Women’s Development Bank Federation (WDBF) Shack/Slum Dwellers International (SDI) and SUF to develop three slum locations in the city. In Indonesia, work has been agreed with the Ministry of Housing and the Ministry of Public works on the introduction of SUF to a variety of city-based projects. The Memorandum of Understanding was signed with the Indonesian ministries on World Habitat Day 2005 in Jakarta.