- Three East African members states are beneficiaries of the new project partnership signed by the UN housing agency. Kenya, Tanzania and Uganda will join project partners from Argentina, Bangladesh and Nepal, in a project aimed at providing funds for affordable housing and infrastructure.
The Executive Director of UN-HABITAT Anna Tibaijuka said the Experimental Reimbursable Seeding Operations (ERSO) initiative operates on the basic premise of providing loans, rather than giving grants or donations, as has been the norm in the past for the UN.
The loans, according to the agency, are provided to local financial institutions, rather than to end users, and these institutions will pass on the loans to the urban poor for house building, improvements and infrastructure upgrading.
Funded by Spain, Bahrain and the Rockefeller Foundation, the US$ 5 million under the Experimental Reimbursable Seeding Operations project will go to local banks which will in turn lend to the urban poor.
"It is designed for the poor with due diligence," Ms Tibaijuka said in a news release today, adding, "UN-Habitat is partnering with banks to ensure people don't fall into poverty."
She said the scheme would also provide low interest loans in local currencies to guard against foreign exchange exposure.
As of 2008, it was estimated that more than half the world's population (3.3 billion people) lived in urban areas. Over one billion of these lived in slums and squatter settlements.
The future of cities in developing countries depends on how the problem of slum upgrading and housing is addressed, UN-Habitat said.
The chair of the Committee of Permanent Representatives Jacqueline Mendoza thanked Spain, Bahrain and Rockefeller for the initiative, saying it would contribute towards availing affordable housing for the poor.
"The launch of the experimental operations marks a key step towards reviving the United Nations Habitat and Human Settlements Foundation, which was established in 1974 by the General Assembly to assist member states to mobilize resources for their shelter and infrastructure programs through technical assistance and seed capital," Ms Tibaijuka said further adding that the full potential of the Foundation was never realised because the lending function was never implemented.
In Kenya the partner is Housing Finance Kenya, a finance institution with over 40 years of experience in providing construction and mortgage loans to middle and high-income market segments.
With ERSO seed capital, the bank will now lend for construction of about 100 houses near Athi River and for mortgages to members of housing cooperatives.
"The target beneficiaries of the first 100 housing units are members of a cooperative society and our engagement with UN-HABITAT has so far been very fruitful," the firm's Managing Director Frank Ireri said during the ceremony.
In Tanzania, ERSO is supporting Azania Bank to loan to Mwanza City Council so that the municipality can implement a comprehensive resettlement plan using participatory urban planning processes benefiting over 600 low-income individuals.
"UN-HABITAT has been very supportive and we promise to deliver on our side," said Charles Singli, the managing director of Azania Bank.
The DFCU Bank is being helped to set up a loan facility of approximately 1.5 million dollars for local developers and low-income households belonging to the Kasoli Housing Association.
Managing Director of DFCU Juma Kissame said, "One of our biggest challenges has been where to get the funding for low cost housing and now we are very grateful for the help we have received from UN-HABITAT."
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