Currently, an estimated one billion people worldwide live in informal settlements where they lack access to basic services and infrastructure and are often threatened with forced eviction. While the overall proportion of the world’s urban population living in informal settlements has decreased in recent years, the absolute number is expected to increase to 3 billion by 2050 due to rapid urban population growth mainly in South Asia and sub-Saharan Africa—the world’s poorest regions.

Last month in Pretoria, South Africa, governments, NGOs, academics and members of informal communities convened for the UN Habitat thematic meeting on informal settlements. The Pretoria Declaration, which emerged from the discussions, stresses the importance of empowering the poor, upgrading settlements in place rather than relocating people, developing a range of tenure arrangements and establishing new financial mechanisms.

This is easier said than done. Cities often struggle to address the challenge of informal settlements. However, some initiatives, like Thailand’s Baan Mankong program, offer a glimpse of an instructive and locally-adaptable solution that can work at scale. The Bann Mankong program improved the lives and living conditions of more than 90,000 households in 1,546 communities across Thailand between 2003 and 2011 while spending the equivalent of just $570 per family. Urban decision makers can learn a lot by looking at Baan Mankong’s story

Thailand’s Baan Mankong Program Empowers Poor Communities to Take Ownership of Their Own Housing Development

Traditionally, slum upgrading is planned, administered and funded solely by the government or a third party. As a result, the community is often excluded from the planning and implementation process, leading to fragmented improvements in a few targeted slums.

Instead of treating residents as just beneficiaries of government aid, the Baan Mankong program (“secure housing” in Thai) facilitates a process that is entirely community driven. The program supports networks of poor communities to survey and map all the poor and informal settlements across the city and develop plans for comprehensively upgrading them. Residents partner or consult with experts from local governments, NGOs and academia, but it’s the members of individual settlements that take the lead in surveying and mapping the community, developing plans and budgets for upgrading housing and infrastructure and negotiating some kind of secure land tenure—the ability to live somewhere without fear of eviction. Once the communities have reached an agreement on the land tenure and have completed their upgrading plans and budgets, the implementing agency, Community Organizations Development Institute (CODI), issues infrastructure subsidies and/or subsidized loans directly to the community. This empowers the poor to determine where and how they want to improve their community.

When it comes to housing, this means putting communities in charge of identifying land and building their own homes. Through the Baan Mankong program, communities have full authority to negotiate land deals and tenure directly with public or private landowners, including the owner of the land they currently occupy. These negotiations can be difficult, as the community is forced to prioritize their tenure, spatial and geographical preferences, given the constraints of available land and limited resources.

For example, communities may accept less secure tenure arrangements, such as long-term leaseholds, in order to remain in an area near jobs. A community that wishes to remain in an area where land is in short supply may decide to forgo development of larger, detached homes, opting instead to build denser communities of smaller two or three-story row houses.

While every project is different, Baan Mankong’s community-driven process empowers communities to determine how best to meet their unique needs. Between 2003 and 2011, more than 60 percent of the households involved were able to negotiate land deals that allowed them to remain in place and more than 78 percent were either able to negotiate a long-term lease (43 percent) or cooperative land ownership with title (35 percent).

A Closer Look at Why Baan Mankong’s Approach Works

The success of the Baan Mankong program is the result of the financial capacities and social support networks it creates. To qualify for the program, communities must first establish a savings and loan group and register themselves as a cooperative—bringing them together financially and politically. The combination of these two requirements brings a number of benefits.

First, individuals within informal settlements often have very little in terms of equity or assets. They often face unemployment or irregular income, which can make traditional loans and rigid payment deadlines unviable. By pooling resources together within a savings and credit group, the community is able to unlock new financial options—like small emergency and livelihood loans for members who would never qualify for formal bank loans otherwise.

Second, the combination of these two requirements allows residents to function as one and support one another, signaling the community’s ability to effectively organize and manage themselves and their finances. Because loans are issued directly to the cooperative, the burden of repayment falls on the entire community. If one family becomes unable to make a payment on its housing loan, the community has a vested interest in finding a solution. In this way, the community serves as a social and financial support network for members.

Third, the government-subsidized loans allow cooperatives to charge a slightly higher, yet still affordable, interest rates. This additional money is placed in a reserve fund that the cooperative can draw from to cover late payments and community managed welfare programs—another form of protection to ensure that the community does not default on its loan and that its most vulnerable members are supported.

Lastly, the program sets ownership requirements that overcome a common challenge to slum upgrading. Market forces often encourage the poor to sell their homes and return to slums, resulting in the gentrification of upgraded communities and eventual displacement of poor residents. The Baan Mankong program overcomes this by requiring the community to keep its land for a 15-year term. This long-term, obligatory commitment helps the community meet the often difficult process of loan repayment and adjust to functioning as a cooperative. After the loan is repaid, each community can then choose whether to maintain the cooperative or switch to individual ownership.

Inspiration for the New Urban Agenda

Community-driven upgrading initiatives that allow inhabitants to collectively manage their own funds, determine their priorities, negotiate forms of tenure and design and implement their own housing projects are achieving success at scale and offer insights for further exploration. Employing a similar model, the Asian Coalition for Housing Rights (ACHR) implemented a large-scale and ambitious five-year project, the Asian Coalition for Community Action Program (ACCA), which supported citywide slum upgrading in 215 cities in 19 countries throughout Asia.

Models such as ACCA and the Baan Mankong program reflect the Pretoria Declaration’s emphasis on community empowerment via control over the upgrading process, resource allocation decisions, collective financing mechanisms, and provisions of different types of tenure. While it is important for initiatives to adapt to the local context, aspects of these success stories in Asia are worth keeping in mind in the lead-up to Habitat III conference in Quito and the New Urban Agenda – the strategy document to guide urbanization across the world for the next two decades.

A forthcoming WRI working paper looks at informal housing in the broader context of access to affordable housing within the city and urban services challenges. This paper will be part of the next World Resources Report (WRR) on Sustainable Cities, which explores how cities can become more economically prosperous, environmentally sustainable and socially equitable.                                                                                                  

Special thanks to Somsook Boonyabancha and Thomas Kerr who spent several days with WRI staff sharing their knowledge and experiences.