uTshani Fund

Perhaps one of the most innovative and ambitious elements of Federation of the Urban Poor’s activities has been the establishment of a credit mechanism controlled by the homeless themselves.  This is called uTshani Fund (grassroots fund). uTshani Fund’s operating principles are that finance should be made available directly to Housing Savings Schemes on a collective basis, and that the groundwork of the Fund should be undertaken at community level.  Accordingly, uTshani Fund develops systems which dovetail with the emergence of practice rooted in daily savings and collective saving schemes.

The Fund’s initial capitalisation in 1995 consisted of a mix between donor funding and a R10 million pledge from the then-minister of Housing Joe Slovo. This was largely spurred by the successes of a national conference on housing finance in June 1994 where, in his closing speech, Slovo adamantly stated, “Look here! Give us a model and we will support you”. Since then, capital has been sourced from international donors with some small contributions by other government departments. uTshani also received certain fees from administering housing subsidies.

Initially the Fund’s priority was to use donated capital to pre-finance innovative community-based housing delivery and design (as opposed to developer-driven models) in order to provide examples of alternative, improved housing delivery along People’s Housing Process (PHP) lines. The intention was to recover bridging loans through successful subsidy applications, and to revolve these funds back into new innovations. In addition to providing low-cost housing finance directly to saving schemes uTshani Fund, as a revolving Fund, has pre-financed land purchase and infrastructure development. During the period 1995 to 1997 uTshani was a key contributor to the ideas and practices resulting in the PHP Program. uTshani remains the largest single PHP-oriented institution in South Africa and has facilitated more PHP houses than any other process.

Although uTshani works in the housing field, it is not a ‘housing delivery’ agency. We are actively involved in building better and more inclusive and integrated cities, socially as well as physically. The Fund supports sustainable uses of broader asset mobilisation, blending loans, savings, and social capital, and linking all this to the state housing subsidy system.

uTshani Fund has been a national and international pioneer in the field of tenure security, incremental housing development, housing finance innovation and creative utilisation of policy and subsidy instruments by building pragmatic partnerships with government. uTshani Fund is also one of many “Urban Poor Funds” (UPF) in the Shack / Slum Dwellers International (SDI) network.  The underlying premise behind the design of the funds is that lasting and substantive change requires more than just capital injection. Local government, together with urban residents, need to change their approach towards urban development and UPFs play a crucial role in strengthening the forms of social organization of shack dweller citizens to define and realize their own developmental agenda. Transformation occurs through design and operation and shifts urban development outcomes towards more inclusive and pro-poor systems. These innovative funds also interact with both private market and government institutions and introduce new options for a range of new agencies.

In line with the recent emphasis on informal settlement upgrading and building broad-based and issue-based networked coalitions of the urban poor, uTshani Fund has initiated the Community Upgrading Financing Facility (CUFF) which funds small community-initiated upgrading projects. These projects are identified by organized communities and have the potential to set a precedent in working with communities to upgrade informal spaces. CUFF’s goal is to demonstrate a model by which local and national government can capitalise the fund to a much larger degree. This will allow many more communities to access public resources for upgrading. CUFF is a flexible funding mechanism that responds to the demands bubbling from the bottom up, yet sturdy and creditworthy when incorporating the capital flows from subsidy and policy instruments from the top-down.