http://www.developments.org.uk/data/10/credit.htm
CREDIT WHERE IT'S DUE
Ruth McLeod
Inhabitants of
Bombay’s Dharavi slum are becoming property developers in their own right,
building houses and infrastructure to meet their needs, and forging urban
partnerships to gain access to credit. Ruth McLeod,
Chief Executive of Homeless International, reports on this innovative approach.
Mumbai (Bombay) is perhaps best-known as the home of “Bollywood”,
India’s hugely profitable movie-making industry, but look beyond the glamour
and you will find a city which is bursting at the seams. In this huge, densely
populated conurbation, more than half the people are squeezed on to less
than one twentieth of the city’s land – in slum settlements, by the side
of railway tracks and on the city’s pavements. Mumbai boasts what is reputedly
Asia’s largest slum, Dharavi, where over half a million of the city’s 12
million inhabitants live.
It is on the edge of Dharavi – within a kilometre of the site of
a new diamond exchange – that a medium-rise building is pushing its way up
on this urban horizon. The developers are not the conventional businessmen
or women responsible for other urban developments in Mumbai, but members of
the Rajiv Indira Co-operative Housing Society, a group of slum dwellers who
earn their livings running small informal businesses, or as factory workers
or government employees.
How did poor slum dwellers become property developers in their own
right? The story begins with the passing of a new Slum Rehabilitation Act
(SRA), which granted land development rights to slum and pavement dwellers.
A slum landowner, a co-operative society of slum dwellers, an NGO, or any
real estate developer which has individual agreements with at least 70 per
cent of eligible slum dwellers is now entitled to become a developer.
Under the Act, property developers who implement projects must provide
self-contained rehabilitation tenements free of charge to people already
living on the land. The incentive to do this is that, under certain conditions,
developers obtain land development rights which they can use elsewhere in
Mumbai and its suburbs, where high profits can be made building commercial
or residential buildings. The mechanism by which this operates is complex
(see box below), but it results in a lucrative market for the sale of transferable
property development rights which arise from the development of slum areas.
Space not needed to house slum dwellers can also be developed and sold on
a commercial basis.
Until recently, however, only conventional developers had been able
to take advantage of the new opportunities. All this changed when the Rajiv
Indira Cooperative linked up with an Indian NGO, SPARC (Society for Promotion
of Area Resource Centres), and two organisations of the urban poor, Mahila
Milan and the National Slum Dwellers Federation (NSDF) (see page 30). All
three are members of an Urban Alliance developed over the last 15 years
and now working in 32 cities in India.
The 48 members of the Rajiv Indira Cooperative were living in very
poor conditions on a plot sandwiched between other settlements, accessible
only on foot through narrow passageways. In the monsoons, flooding was common
and effluent from the inadequate drains poured into people’s houses. Not surprisingly,
children and other inhabitants were frequently sick with diarrhoea and other
illnesses. The co-operative had tried to get help from many different sources
but to no avail. Their employment in informal businesses and their lack of
clear land title meant that banks and mortgage lenders were reluctant to
lend them money to build better houses and infrastructure. This is where the
Urban Alliance was able to help.
In 1997, Rajiv Indira began discussions with the Alliance on how they
could take advantage of the new Act to build housing to meet their own needs,
as well as property to sell which, together with the sale of ‘excess’ property
rights to other developers, would cover the cost of their own housing.
As plans moved forward, a number of clear principles were agreed.
The scheme would be used to test the new Act and so transparency would be
of major importance. All agreements would be “public”, no negotiations would
be carried out behind closed doors, and no “hidden” money would be used.
The learning would be shared with any interested organisations and individuals,
and visitors would be welcome. Most importantly, the scheme would be managed
and led by the Rajiv Indira Co-operative on a day-to-day basis.
The Alliance brought four key partners into the discussions:
• Citibank, which provided the loan needed for the development to
go ahead;
• the Slum Rehabilitation Agency, whose Chief Executive, Guatam Chatterjee,
was keen to see a community-led scheme developed;
• Homeless International, a UK charity which guaranteed a part of
the Citibank loan, and provided grant funds to SPARC to develop new approaches
to slum rehabilitation;
• local engineering and architectural consultants with whom the Alliance
had worked in the past.
Homeless International’s Guarantee Fund provided the collateral for
the Co-operative to secure the loan. The fund guaranteed to pay the first
20 per cent of the Citibank loan in the event of non-payment by Rajiv Indira.
Rajiv Indira and the Alliance forged ahead with the new building,
pulling down their old dwellings and moving into transitional accommodation.
As the building began to emerge, so the belief that this people-led process
might really work strengthened. Soon an adjacent co-operative, Suryodaya,
joined the scheme, after Guatam Chatterjee of the Slum Rehabilitation Agency
suggested a joint development. If the two co-operatives collaborated, a proper
access road could be included and the properties to be developed for sale
could be located on the road frontage, making them far more marketable.
Within a short period the whole scheme was being redesigned – the
building as well as the financing arrangements. People began to talk of an
area development plan. Suddenly this “pilot” scheme was beginning to grow.
As I write, we envisage that 267 units will be built, including a
total of 208 units for those who previously lived on the land. The first building
is almost complete and a second has begun, and the total cost of the scheme
is now anticipated to be 106,600,000 Rps (£1.5 million) with a peak
cash requirement of 70,000,000 Rps (£1 million). The sterling guarantee
provided by Homeless International will increase to £200,000. The costs
are expected to be met from
• sales of transferable land development rights (34 per cent);
• sales of apartments (51 per cent); and
• sales of commercial space (15 per cent).
Rajiv Indira and Suryodaya, the Alliance and the diverse range of
support agencies continue to develop the scheme and, in doing so, learn more
and more about how a complex urban partnership can accommodate change, respond
flexibly and ensure that, in time, schemes to benefit the urban poor can
also be led by them.
The experience has created a learning spiral in which many are involved.
Perhaps the most important lesson, however, has been that the members of
the co-operatives involved have not entered the process of slum rehabilitation
as beggars. They have come with a huge resource base – of commitment, ideas,
labour and hard-earned savings. The challenge is to ensure an urban settlements
policy and delivery framework in which others can do the same, so that the
scaling up of sustainable solutions can become a reality.
Transferable
development rights
As an incentive to
encourage the development of slum areas, the authorities allow developers
to transfer property development rights, under certain conditions, from slum
areas to other areas. Each eligible slum dweller is entitled to a residential
floor space of 225 square feet from the developer. However density standards
restrict how much floor space can be developed on a particular site. If the
number of people living there means that people are entitled to more than
it is permissible to develop on that particular site, the excess can be sold
as transferable development rights. These rights can be used, according to
specified ratios, in other parts of Mumbai. Transferable Development Rights
(TDR) have become a commodity which is bought and sold according to current
market forces in Mumbai.
NSDF
The National Slum
Dwellers Federation acts as an umbrella organisations for slum dweller federations
based on cities (eg the Dharavi Slum Dwellers Federation) or land occupied
(eg the Federations of Railway and Airport Slum Dwellers). The NSDF has begun
a dialogue with government on policies relating to slums and informal settlements.
SPARC
SPARC is an NGO staffed
by professionals, established in 1984 to:
• create and strengthen people’s organisations to focus on priority
issues identified by local communities;
• find solutions to address poor communities’ priorities in a way
which ensures that they are driving the solution;
• engage the State, the City and others in the strategy to bring in
resource and policy changes for sustainable solutions.
Mahila
Milan
Mahila Milan, meaning
“women together”, grew from a group of pavement dwellers who began working
with SPARC in 1984. It is composed of collectives of women from the slums
where NSDF has membership. Most groups start by beginning a daily savings
scheme, then lend money to members, account for transactions and gradually
begin to absorb more households into their activities.
Eventually, they take on loans for housing and income generation
which SPARC negotiates for Mahila Milan and NSDF from external sources.
Through NSDF, Mahila Milan collectives are able to gain recognition in their
settlements. They manage community processes in co-operation with traditional
male leadership, to strengthen their joint capacity to face the outside
environment. Over time, women in communities are able to manage assets owned
and controlled by the community and are able to re-negotiate their relationships
with other, more traditional, leaders.
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Developments- the International Developments Magazine