Development Ratings

Homeless International provides grants and advice to develop the ability of its local partners to support the homeless. The partners are helped to set up local associations of slum dwellers, establish savings schemes, help with eviction negotiations, collect housing data, and mobilise communities. The NGOs help community members lobby the local authorities, and develop housing and sanitation models. The grants also help start revolving loan funds to finance slum redevelopment projects. These can be used to develop demonstration projects that can be scaled up to extend the number of people that can be re-housed. HI has developed several financing instruments to help slum dwellers to redevelop the area they live in, such as:

• The Guarantee Fund: This uses donations and contributions mainly from the UK housing sector. It provides guarantees to encourage banks to lend to HI partners in local currency for housing and infrastructure development. The guarantee reduces the risk of lending to NGOs working for the benefit of the poor, or to individual slum dwellers directly, both considered high risk customers. It reduces the high interest rates that might otherwise be the only option for borrowers. Once the loans are repaid, fund contributions are returned to the lender, reinvested for a further 10 year term, or are donated permanently to the Fund. The Fund has been called on just once in its 15 year history.

• The Community-Led Infrastructure Finance Facility (CLIFF): This venture capital-type facility aims to close the gap between local organisations and finance providers. It helps develop model demonstration housing and sanitation projects. These can be used to influence banks, local authorities, development agencies, and the private sector to fund wider scaling up to increase impact. CLIFF was piloted in India (in 2003) and expanded into Kenya (2005) and The Philippines (2007). CLIFF covers technical assistance grants for professional fees, loans for project construction, implementation grants, and knowledge grants to share project information. Capital grants make up 75% of disbursements. Projects must be capable of being scaled up and influencing pro-poor policy, as well as being community-led, properly costed and managed, and financially viable and sustainable.

• The Africa Bond: Designed but not yet implemented, this will use contributions from the UK social housing sector to lend low interest rate funds to local partners for community-led housing and infrastructure projects in Africa. Contributors can receive an annual return of 3%, or may waive this to help cover operating costs. Partners will be charged 6% per annum, a much lower rate than would be available otherwise. The loans are on-lent to appropriate families or savings scheme organisations.

In Zimbabwe, poor households have formed together under a federation supported by HI’s partner. In the current economic circumstances there, the immediate priority is for work on improving livelihoods and health as well as housing. Support includes mapping out settlements, technical construction advice, and eviction negotiations. In Ghana, HI’s partner involves federations in the development of infrastructure and services to slums, and community savings groups. In Malawi, HI’s partner works in conjunction with a savings scheme organisation to increase access to resources, water and sanitation for poor communities.

Homeless International works with similar international organisations in the USA, Canada, Sweden, Norway and the Netherlands to multiply and measure its own impact on partners. HI helps local partners with internal organisation, monitoring and accounting systems, and developing self-supporting financing mechanisms. One of HI’s local partners has now become so well developed that it has influenced multi-city slum redevelopment and sanitation programmes in India. HI carries out research with partners to investigate and share pro-poor development strategies. The 2003 research project ‘Bridging the finance gap in housing and infrastructure’ became the impetus behind CLIFF. Partner loan requests are assessed by HI staff and Trustees.