How can local institutions contribute to urban poverty reduction? Can housing and loan schemes strengthen community organisations and boost their capacity to negotiate with urban authorities? Can community savings and credit activities power a community’s own holistic development and empower them to gradually erode the causes of poverty?

A report from the International Institute for Environment and Development (IIED) takes a detailed look at the history of a major state-sponsored urban poverty scheme. The Urban Community Development Office (UCDO) was set up in 1992 by the Thai government in response to recognition that economic growth was bypassing the urban poor, who were at risk of eviction as land prices and the demand for central city sites increased. In 2000, the UCDO merged with a rural development funding organisation to become a new semi-public entity organisation called the Community Organizations Development Institute (CODI). The CODI board of directors, like that of UCDO, brought together representatives from poor communities, the government, universities and civil society.

The UCDO was provided with a capital base equivalent to US $30 million to allow it to make loans to organised communities to undertake activities relating to land acquisition and housing construction, housing improvement, community savings, credit groups and income generation. Any community able to demonstrate the capacity to manage savings and loans was eligible. Loans were made at much lower interest rates than was otherwise available to poor urban households, but they were sufficiently high to allow the initial fund to be sustained and to cover administrative costs.

As the UCDO got bigger, and came to support 950 community savings groups in towns and cities in 53 out of Thailand’s 75 provinces:

• Its role switched from providing direct support for individual savings groups to facilitating emerging networks or federations.
• A small grants programme was established for community-managed environmental improvement projects.
• It co-ordinated state-supported intervention to assist savings groups badly affected by the 1997 financial meltdown.
• It co-ordinates with World Bank funds available to communities for use by vulnerable households as grants and loan for education, income generation and payment of school fees.

Communities have found that solidarity is an alternative strategy to reducing their vulnerability and one that may be more effective than loan capital. Community networks are now involved with government agencies and other actors in proactively developing answers to problems. The key change is from seeing the fund as the solution to housing and land problems to recognising the need for the fund to support community networks that change the way that cities are planned and managed.

The UCDO model for building participatory development in which the community is at the centre has been picked up and expanded on by initiatives in Cambodia, Laos, Vietnam, India and South Africa. The UCDO has demonstrated that:

• Community-based savings and loan activities can be developmental stepping-stones, building community capacity to determine priorities, transparently manage finance, negotiate with other powerful local groups and plan and reformulate their own strategies.
• Funding can go a long way if it is organised and managed by transparent community organisations or networks.
• A surprisingly large number of community-managed activities can achieve cost recovery.
• Individual projects cannot be ends in themselves, but part of a more comprehensive plan that is driven by the poor.

Source(s):
‘A decade of change: from the Urban Community Development Office (UCDO) to the Community Organizations Development Institute (CODI) in Thailand’, IIED Working Paper 12 on Poverty Reduction in Urban Areas, by Somsook Boonyabancha, 2003 Full document.

Funded by: DFID (SSRU R6859) and Swiss Agency for Development and Cooperation (SDC)

id21 Research Highlight: 7 November 2003

Further Information:
Somsook Boonyabancha
Community Organizations Development Institute
2044/31-32 Petchburitatmai Road
Huaykhwang, Bangkok 10320
Thailand

Tel: +66 2 716 6000
Fax: +66 2 716 6001
Contact the contributor: achr@loxinfo.co.th

Community Organisations Development Institute (CODI), Thailand

Human Settlements Programme IIED
3 Endsleigh Street
London WC1H ODD
UK

Tel: + 44 207 388 2117
Fax: + 44 207 388 2826
Contact the contributor: urban@iied.org

Human Settlements Programme IIED, UK

Other related links:
'Safe as houses? Securing urban land tenure and property rights' Insights #48

'From work to well-being'

'Poverty busting in Central America: where do we go from here?'

See id21's further links on urban housing and land tenure

'Escaping poverty: Can policy reach the chronically poor?' Insights #46

See id21's further links on chronic poverty