Community Development Fund in Thailand: A Tool for Poverty Reduction and Affordable Housing

Boonyabancha, Somsook for UN-HABITAT. Community Development Fund in Thailand: A Tool for Poverty Reduction and Affordable Housing, Nairobi, 2009.

(http://www.unhabitat.org/pmss/getElectronicVersion.asp?nr=2782&alt=1) Accessed 31 January 2011.

Summary:

The report conveys the emergence of the Community Development Fund in Thailand. It talks about the development of CODI from the merging of two organisations; UCDO (Urban Community Development Office) and the Rural Development Fund in 2000. The relations with various actors in the field and the various types of funding available are highlighted. The case of the Baan Mankong Program is discussed in terms of the types of upgrading programs, how to implement the program, different funding options, how Baan Mankong differs from other upgrading approaches, how it improves people’s assets, and its achievements to date.  The document culminates with the results and impacts of the Community Development Fund generally for communities at large but focuses on the case of Ruam Samakee Reconstruction Project in Bangkok

Notes from the text:

“The Community Development Fund model supports poor communities in organizing savings groups and improves their capacity to manage their fund or the loans for community development activities” (p1).

Background:

In the early 1980’s Thailand was going through transformations due to rapid economic development; the private sector was booming, bank loans and finances were accessible, many construction and infrastructure projects were implemented and the services sector and middle class was growing.

But income share was widening the gap between the rich and the poor; the top 20% had 60% while the bottom 20% only had 3% of the total income. “Poor security of land tenure and the lack of infrastructure resulted in a deteriorating living condition for the urban poor” (p4). Approximately 20% were living in low income settlements in 1990 with 13% facing eviction, 3,500 informal settlements had formed with insecure tenure and poor services, infrastructure and living conditions. They had no legal protection.

The National Housing Authority (NHA) planned relocation of the urban poor was only partially successful as it did not secure livelihood opportunities without which many couldn’t afford to repay the loans/costs of the new homes. Therefore many tended return to the squatter areas.

Urban Community Development Office (UCDO):

The Urban Community Development Office (UCDO) was set up in 1992 by Thai Government to address urban poverty. It was initially under the National Housing Authority (NHA) during its early stages although its administration and development processes remained independent.

UCDO had an initial capital fund of Thai Baht 1250 million (US$ 35.7 million) to provide loans to organised communities for housing, land acquisition and income generation; these were available for community-based savings groups able to manage community finances; the loans would respond to particular needs and have low interest rates (lower than market rates). It was important for the funds to be flexible to the needs of the community.

Communities formed savings and credit groups which UCDO facilitated and “also supported communities in a particular city or province to form networks, to negotiate as a block with city or provincial authorities, or to work together on shared problems of housing, livelihoods, basic services and community enterprise, according to their needs, situation and changing context” (p2). Community networks were formed.

Larger scale community networks led to community-led development and UCDO formed links with other governmental and bilateral agencies. The Danish (Danish Cooperation for Environment and Development) and Japanese Governments, and the World Bank (Social Investment Fund) have funded programs. Welfare funds were established to further support the poorer communities gain access to grants for education and income generation.

The two important elements of the UCDO are institutional development and administrative strategy. The factors that supported the creation of the UCDO were the availability of Government finance, Government Policies, experiences from the past and from other countries, and rural community savings groups. The aim of the program was to “improve living conditions and increase the organizational capacity of urban poor communities through…community’s savings and credit groups and…integrated loans at favorable interest rate” (p7). This would also be promoting communities’ capability to be self-sufficient by drawing out existing skills and knowledge.

By 2000 (8 years of operation): there were 950 community savings groups supporting 53 out of 76 Thai provinces. Although it was becoming clear how limited the activities were under the admin system of the NHA.  So UCDO merged with the Rural Development Fund (which was in a similar position with the National Economic and Social Development Board (NESDB)) to form Community Organisations Development Institute (CODI) in 2000.

Community Organisations Development Institute (CODI):

Royal Decree enabled CODI to be a new public organisation under the Ministry of Social Development and Human Security thus enabling it to have “its own legal entity to apply to the annual government budget directly” (p3). The merger meant that CODI’s initial capital fund was Thai Baht 2.899 billion (US$ 82.85 million) combining UCDO’s Thai Baht 2.156 million and Rural Development Fund’s Thai Baht 734 million.

In 2003 CODI proposed the Baan Mankong Program to the Thai Government that would “address land and housing problems of low-income sectors which targeted 2000 communities in 200 cities” (p3). The government allowed a budget for the “infrastructure and housing loan interest subsidies” (p3).

“The major lesson is that there is a need to support the poor themselves in becoming important players in the development process. The poor must be involved in decision making processes and in control of the activities that follow” (p3).

Urban Community Development Fund

“The Urban Poor Development Fund (UPDF) was governed by UCDO’s Board of Directors which had full power over all UCDO policies” (p8). This comprised four representatives from the government, four elected community members, and three professionals from NGOs and the private sector. It was important to emphasise the importance of communities as the key drivers of programs and initiatives; to have equal level of influence in decision making.

The UPDF is a revolving fund which allows flexibility in the management of the process by community members. It reduced bureaucratic processes and supported communities directly. It reduced time and was more efficient in supporting the needs of the community while also creating links between the community and other actors in the development process. “Income earned on the fund would cover the administrative and development costs of all activities” (p9).

The types of loans offered comprised revolving funds, income generation, non-project based housing improvements and project based housing. There are four types of project based housing loans; purchasing land of an existing settlement or land, relocation, housing construction on leased or occupying NHA resettlement projects and infrastructure improvement. The conditions for loan applications included having organised savings activities within a community and an accurate and reliable accounting and financial management for at least six months. This meant that the more a community saved, the more it could borrow.

The various roles included UCDO providing technical support, the community networks supporting workshops for learning and capacity building, and the community collecting repayments and managing development processes. There were three parts of obtaining a loan firstly after applying through eligibility the loan has to be approved, the community needs to have collateral and then negotiate the repayment terms.

UCDO/CODI performance

General approach: drawing people together through community savings and loan activities, ground daily activities through financial mechanisms, provide opportunities for the urban poor through savings and loan activities, and create ongoing learning enabling involvement of all members of the community.

Community networks: UCDO needed to find a way to revive capacity of communities to repay loans and transfer this responsibility from individuals to communal level. The process resulted in the creation of community networks to “work and share responsibilities in the form of a network” (p16) with linkages through district, city or national scale or sector based. These connections enabled communities to deal with issues such as housing, infrastructure, land, education, health and planning. The community networks share “common rules, norms, and simple coordinating structure and taskforce bases on various activities that are planned and agreed together” (ibid). The community networks enabled a platform for communities to learn from each other’s experiences and strengthen community relations.

The community networks and linkages with existing development agencies and other actors assisted in forming the Local Development Committee in each city. Other organisations encouraged to form links with included local authorities, NGOs, professionals, federations, and the government. In urban areas these groups were called the Urban Community Development Committees. Development activities were subcontracted to municipalities and NGOs. NGOs, community networks and local authorities were given direct financial support to undertake development projects.

The Baan Mankong Program

The Thai Government introduced two new programs to address issues of housing for people in the low income band; Baan Mankong (secure housing) Program and the Baan Ua Arthorn (we care) Program in January 2003. Baan Mankong deals with government funds being directly channelled to urban community organisations for issues such as infrastructure, land and housing. In the Baan Ua Arthorn Program the NHA designs, constructs and sells ready-to-occupy flats and houses at reduced rates to low-income households.

“The Baan Mankong Program was specifically set up to support upgrading processes that are designed and managed by existing low-income communities and networks” (p19) that work with universities, professionals and local authorities to implement upgrading initiatives. The Program has a target of “improving the housing, living conditions and tenure security of about 200,000 poor households, in 2000 poor communities in 200 cities, within five years” (ibid, as of 2009) and is a demand-driven approach.

The Baan Mankong Program is implemented in the following stages:

1. Identifying relevant stakeholders and explaining the program
2. Organising community meetings for stakeholders to take ownership of the program
3. Establishing joint committees to manage the implementation process
4. Creating joint mechanisms to collectively plan and implement housing development
5. Gathering information
6. Creating an improvement plan
7. Establishing collective community savings and loans groups
8. Selecting and assigning pilot projects
9. Developing plans for launching the program

The types of Baan Mankong Upgrading Program are:

• On-site Upgrading (improvements to settlements without changing layouts and plot sizes)
• On-site Reblocking (infrastructural improvements and lay-out of housing in existing settlements)
• On-site Reconstruction (existing settlements completely demolished and rebuilt on the same land through a long-term lease or community ownership)
• Land sharing (both landowners and communities share land, e.g. Ruam Samakee, Tung Wah and Klong Lumnoon)
• Relocation

There are three main types of funding available through the program:

1. Government subsidies (housing, administrative and capacity building subsidies)
2. Long-term loans for housing development
3. Household savings

How is it different from conventional upgrading approaches?

• Allows urban poor communities and networks to be the main actors (control funding, manage projects, implement improvements, and undertake building activities)
• It is community demand-driven with priority given to communities ready to execute their own improvements
• Variety of solutions to fit the particular needs of communities
• Allows flexibility for communities to coordinate with local partners and agencies
• CODI acts as facilitator
• It enables the changes to community social structures
• Helps to trigger acceptance of the low-income communities once changes have been implemented
• Secure land tenure negotiated for most communities by individuals with emphasis on collective rather than individual land tenure

So far 1,250 community initiatives are in operation, 76,792 households have been improved and the program is working in 237 cities in Thailand.

Interesting quotes:

“As a result of settlement upgrading, the issue of land tenure has been resolved, shacks and makeshifts are replaced by permanent housing and necessary utilities and basic services are put in place” (p24).

“Secure land tenure is essential in allowing this development to happen and opens up the gate for additional energy, development resources and investment to flow into these communities” (ibid).

“Property rights bring with them a sense of legitimacy, infrastructure improvements, while creating a much-needed capital, and the participation of the poor” (p25).

Conclusion

The general impacts on UPCD:

• Increase in community organisation and networks
• Increase in community assets and direct financial resources
• Increased community management and entrepreneurship skills
• Development of more diverse housing solutions from individual projects to city processes
• Development of large scale community welfare activities
• Communities have stronger status and can develop better partnerships with local authorities and other development actors
• Changing the way how development institutions are managed

Case Study: Ruam Samakee Community

Squatter community comprising 124 families on 0.89ha of swamp land in the Ramkhamhaeng Soi 39 in Bangkok owned by the Crown Property Bureau (CPB). The community comprised of migrants from north-eastern Thailand such as vendors in unregulated factories and labourers from the Ramkhamhaeng business area.

CPB initially wanted to lease the land to a private developer with the permission to evict the occupants. However the Ruam Samakee Community organised themselves into savings groups and set up a welfare program and through lengthy negotiation processes managed to obtain a long-term lease of the land, returning 0.16ha of land and rebuilding houses on the remaining 0.73ha plot on a collective long-term lease.

After the initiation of the Baan Mankong Program, the Ruam Samakee Community was selected as one of the pilot projects. Two young architects from the Community Organisation Development Office “began working with the people to help develop a new layout plan, with three lines of row-houses arranged along two lanes, a small community center and a playground” (p28).

The upgrading program comprised creation of new housing (detached-twin houses, row houses and flats for rent), land and tenure status, management of housing construction costs, creation of housing standards, provision of basic services and enabling the housing to be affordable. By 2008 all 124 units had been constructed, with a raised level of land to prevent flooding and new infrastructure. These pilot projects influenced the initiation of development projects of seven other informal settlements on CPB land in the area.

The financial sustainability of the program can be observed through three indicators; community savings activity, community investment in their housing and social contract binding the community together.

Actors:

CODI (Community Organisations Development Institute), Rural Development Fund, UCDO (Urban Community Development Office), Crown Property Bureau (CPB), DANCED (Danish Cooperation for Environment and Development), the Duang Prateep Foundation, Human Development Center, Human Settlement Federation, NESDB (National Economic and Social Development Board), NHA (National Housing Authority), POFD (People’s Organisation for Development), UNESCAP (United Nations Economic and Social Commission for Asia and the Pacific), Urban Community Development Committees, Thai Government, Municipalities, Local Authorities, NGOs, Federations, Professionals, Savings Groups, Community Networks, Local Academics/Universities, Ruam Samakee Community

HOUSING BY PEOPLE IN ASIA

Asian Coalition for Housing Rights (ACHR). ‘ Housing by people in Asia’, No 13, June 2001

Asian Coalition for Housing Rights

‘HOUSING BY PEOPLE IN ASIA’

Newsletter June 2001

This newsletter show different examples In Asia how bad situations can became an opportunity for communities, it is a matter of organization and positive approach instead of weeps and hopeless standing.

The newsletter is divide in four theme:

Development funds – examples how the development money got into the poor hands

Informal settlements along railway tracks – few examples of community and state working together in relocations

Poor in historic cities – example how the historic revitalization works better if the poor participate in the process.

Natural disaster– examples how bad events had became an opportunity for secure land and decent homes.

Natural disaster cases studies

Philippines – Slum in garbage dump collapse

The largest slum in Manila is in garbage dump with 25000 households. In 2000, after a storm the dump collapsed causing huge damage. Just after the fact the government announced the closing of the dump and the relocation of the people to the outskirts.

The case was constantly in the media at that time so the community organize a public event and manage do set meetings with the government. They proof to the state that they could build their own house and plan their community cheaper and according to their needs. They just need land. Government and community worked together to find solutions.

If the community is organized when a bad event takes place they can better receive the resources and aids and they can take advantage of the media to negotiate and manage their re-development.

India – Earthquake in Gujarat January 2001

Two million people were homeless. The first group to help was a poor women village that had experienced an earthquake in 1993 with the help of a NGO.

The reconstruction was used to “build local capacities and skills, and by doing so, to reform and strengthen their social and political structures.”

Nepal – Federations

In this case, networking between different federations help to create others federations and share knowledge, it is a way of scaling up.

“If by working alone you managed to get into 70 communities, what if you now used those 70 communities to go into 700 communities?”

There are all others cases studies in Asia but the abstract will focus on Thailand and/or CODI.

Thailand – Ayuthaya

Ayuthaya is the old capital of Thailand and it was designated World Heritage Site.

Squatter settlements were located between the ruins and if the announced as Unesco site the community were afraid of evictions. 80% of the land of the informal settlements was government land.

Community organized to maintained the monuments but keep living in the area and be the provider of services as drink vendor, transport…

CODI worked together with National Housing Authority, the Municipality and the Department of Fine Arts to create a pilot project where the community would take parte in the restoration.

Codi provide loans for the community and they worked with two young architects of Bangkok redevelopment the plan and realigned the plot sizes.

 “poor communities and historic monuments can make good neighbours.”

Housing problem in two different cities in Thailand

Nakhon Sawan is a small city but an important junction therefore a lot of poor migrants arrives everyday.

The constant threat of evictions brought up the land use in discussion.

The community collaborate with National Housing Authority, the municipality and UCDO to find a solution. The first step was survey done by the community, then prepared a city strategy, following by deciding who stay and who would be relocate, then look for land and at least develop a plan.

Uttaradit

Not all the community participate in the saving schemes and could benefit of the loan. The development process was stagnated since the UCDO team started meeting with these people and helped them to set up a saving groups.

Heroine

The King of Thailand appointed ten members for a Human Rights Commission. One of them is Aporn Wongsan who is a community senior leader who faced several evictions and relocations. He set up an ‘Evcition Hotline’ that gives support, advice and help to the communities.

Community welfare

UCDO proposed to link the Social Investments Fund with the communities’ networks, in a way that communities had a direct route to resources and could decided how to take care of the themselves in a welfare system.

 “By making them the basic unit of a social safety, the poor’s communities can take care of the most vulnerable members of their group.”

The formation of CODI

On October 2006 UCDO merged with the Rural Development Fund and create CODI with the intention to follow UCDO development activities but with some changes.

CODI is an autonomous organization that gives him flexibility and possibility to work together with social groups but is also a public organizations, the government status is crucial for its role.

Codi is governed by a mixed board: poor communities representatives, government, NGOs, academia and private sector. People should select their representatives to sit on the board and this is the Community Advisory Committee. The Committee meet before every month Board meeting to discuss and revise CODI performance.

Codi had set up different coordinating teams for every region.

“None of us have the answer to these problems! We’re not very good with many different issues, but what we are good at is linking people together, finding ways that people can discuss together and fins solutions together. We can provide back up, financial assistance, provide some status which gives formal clout to whatever solutions you develop-that’s what we’re good at.” (Somsook Boonyabancha, page 17)

“Codi is a new and potentially powerful tool which networks and people’s organizations can use as they see fit. There are, though, two crucial conditions for support from CODI, which everyone has agreed are most important: the community has to be the key actor and the process and activities should try to link with others.”(Somsook Boonyabancha, page 17)

UCEA – Urban Community Environmental Activities

Boonyabancha, Somsook. ‘The Urban Community Environmental Activities Project and its Environment Fund in Thailand’, in Environment and Urbanization, Vol. 11, No. 1, April 1999, pp. 101-115.

The article is written before the formation of CODI, when it was called UCDO (Urban Community Development Office). Under that name, Thai Government with the help of Danish[1] Government provided a grant called UCEA (Urban Community Environmental Activities). This article explains how UCEA grant works, the benefits of it and the lessons learned.

The grant is for low-income communities that need to improve environmental conditions in their neighbourhoods; those improvements can be garbage managements, tree plating, landscape recovery, walkways, canal-cleaning…

The amount of  the grant is very low to make big transformations but the intention of the grant is “to stimulate a process of change, to start a chain reaction of developments.” (p.102)

“These small grants support small, concrete improvements but they can show communities that change is possible” (p.102)

The UCEA is driven to empower the community and share the responsibility with local authorities:

–       mutual decision making

–       self-managed development in the communities

–       community participatory process in urban development and environmental management

–       community cooperation with other communities – networks

Descentralization!

“Somsook Boonyabancha is the Managing Director of the Urban Community Environmental Activities Project (UCEA) and the Urban Community Development Office (UCDO), and is also the Secretary-General of the Asian Coalition for Housing Rights (ACHR)”

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[1] DANCED – Danish Cooperation for Environment and Development

Baan Mankong: going to scale with “slum” and squatter upgrading in Thailand-by Somsook Boonyabancha

Abstract

• National slum and squatter upgrading program by Thai govt. in 2003 , implemented through Community Organizations Development(CODI)
• Centers on infrastructure subsidies and housing loans to low income communities to- in situ upgrade or develop new houses.

 

Introduction

• Need to improve all slum and squatter settlements to meet MDGs.
• In Thailand, there have been partnerships between govt. agencies and CBOs for a while.
• In 1992, the Thai govt. set up the Urban Community Development Office to provide housing loans.
• In 2000 the Urban Community Development Office merged with Rural Development Fund to form the Community Organizations Development Institute (CODI).
• Aim of CODI in implementing the Baan Mankong- improving housing, living and security of tenure for 300,000 households in 2,000 poor communities in 200 Thai cities within 5 years.

The Urban Community Development Office (UCDO)

• The UCDO was set up by the Thai govt. to address urban poverty.
• There was recognition of the need to develop more participatory models of support for low income groups through CBOs and credit groups.
• UCDO had a good capital base from which it provided loans to communities to undertake common needs. It tried to strengthen bonds between communities and the state.
• The difficulty in managing various savings groups among the community encouraged UCDO to establish networks among them.
• These network organizations later even linked together to negotiate problems with authorities on various levels.
• Since this decentralization was working very well, UCDO implemented many more activities to its loan activities in future.
• By 2000, UCDO integrated its work with CODI- this aided wider linkages, greater flexibilities and newer collaborations.

Baan Mankong(secure housing)

• This program was set up to reach the objective of reaching 1 million low income households in 5 years.
• Implemented by CODI,Baan Mankong- first to channel funds from govt. as subsidies and loans directly to poor communities.
• Second program- Baan Ua Arthorn (‘we care”) – national Housing Authority designs, constructs and sells ready-to-occupy flats.

 

 

 

 

Methodology

Fig 1 shows the first method employed.

 

 

 

How this process differs from conventional approaches.

• Urban poor community organizations and their networks are the key actors and they control funding and the management.
• It is “demand –driven by communities” rather than supply-driven as it supports communities who are ready to implement improvement projects and allows great variety of responses.
• The program does not specify physical outputs, but provide flexible finance to allow community organizations and local partnerships to plan, implement and manage directly.
• Stimulates deeper but less tangible changes in social structure, managerial systems and confidence among poor communities.
• It triggers acceptance of low-income communities as legitimate parts of the city and as partner’s in city’s larger developments.
• Secure tenure is negotiated, but locally.
• Focus is city-wide development with aim to reach all low-income communities.

 

Learning from pilot projects.

To explore new approaches, 10 pilot projects were supported initial. 6 of these pilots projects were:

a)      Land purchase and re-blocking

b)      Relocation to nearby land

c)       Scaling up pilot projects

d)      Land sharing

e)      The relocation of mini squatters and long term lease

 

Supporting decentralized actions within cities.

Six techniques to scale up Baan Mankong upgrading process:

• Pilot projects
• Learning centres
• Big events
• Exchanges
• Sub-contracting
• Constant meetings

 

FIG 2 shows the program mechanism



 

Lessons learnt:

• The importance of city wide programmes in which urban poor organizations are fully involved.
• The importance of horizontal linkages between peer groups in the city.
• The process of choosing the pilot projects in a city must belong to the urban poor groups and their networks.
• The importance of learning by seeing change being made by urban poor groups themselves in pilot projects.
• How not to manage the selection of pilot projects.
• From vertical links that divide urban poor communities to horizontal links that bind them
• It is not difficult to get urban poor communities to agree on pilot projects.
• “slums” are not an aberrations, but a normal part of existing city structures
• The physical form of the upgrading is not the issue or the problem
• Supporting city wide and nationwide upgrading will mean a lot of clumsiness at start of upgrading.
• How to manage the lack of experienced professionals to support this.
• The importance of doing things collectively
• Unleashing community creativity
• Reviving culture of poor communities
• Developing new kinds of upgrading