DIRECTIONS IN .01mUVELCPf 26291 June 2003 ''RW. . P *~~~~~~~~~ N i . I . -.,~~~~~~~~~~~~~~~' ~~ctped- - * * -- 2629 1 FOREWORDJun BYPESDNTOCA ;l Contents Foreword vii Preface ix Acknowledgments xiii Authors and Task Team xvii Acronyms and Abbreviations xix Introduction 1 PART I: LESSONS FROM THE FIELD 13 1. Facets of Participation 15 The Impact of Participation 18 What Is Participation and Who Benefits from It? 19 Levels and Degrees of Participation 22 Motivations for Urban Upgrading and Housing Programs 28 Some Considerations Regarding Poverty and Social Capital 36 Sustainability and Local Initiative 42 2. Case Summaries Statistical Comparisons 47 Case Study #1. Bolivia: The People's Participation Law 56 Case Study #2. Brazil: The Guarapiranga Program, Sao Paulo 61 iii iV CONTENTS Case Study #3. Costa Rica: FUPROVI's Habitat Popular Urbano Program, San Jose 65 Case Study #4. Mexico: Community Upgrading Programs, Tijuana 69 Case Study #5. Peru: The Self-Managed Urban Community of Villa El Salvador, Lima 73 Other Relevant Cases 76 3. Organizing Participation: The Project Level 95 Development Projects and the Social Process 95 The Significance of a Strong Social Intermediary 97 Community Organization and Level of Participation 118 Community Organization: Area-Based, Interest Group- Based, or Some Combination Thereof? 128 The Issue of Gender 133 Looking out for Vulnerable Groups 136 Mobilizing Local Knowledge and Resources 138 hiformation and Communication: Social Marketing Strategies 142 Participatory Area Development Planning 146 Creating Incentives for Landlords and Tenants 150 Privatized Utilities and the Urban Poor 152 4. Focusing on Process: Program Design and Rollout Strategies 155 Stage 1. Preidentification and Consensus-Building 157 Stage 2. Prefeasibility Studies and Program Identification 163 Stage 3. Feasibility Studies and Program Design 193 Stage 4. Establishing a Program Monitoring and Evaluation System 200 Stage 5. Rolling out the Program 208 5. Scaling Up: The Policy Level 227 Political Will 227 Policy Environment and a Citywide Upgrading Strategy 230 Area-Based Needs Assessment, Planning, and Implementation 232 Subsidy Structures and Cost Recovery Strategies 236 Legal and Regulatory Framework 243 Ensuring Land Availability and Security of Land Tenure 248 Strategic Alliances 253 Institutional Arrangements and Decentralization 266 Development of a Critical Mass of Local Capabilities 276 The Role of Microfinance in Community Infrastructure 279 CONTENTS V PART II. VOICES FROM THE FIELD 6. Bolivia: The People's Participation Law 289 The Importance of the Bolivian Experience 290 Background 292 Participatory Process: Law 1551 294 Legal and Regulatory Framework 313 Resource Mobilization and Financial Sustainability 316 Actors, Alliances, and Institutional Arrangements 318 Organization and Implementation 325 Scale and Sustainability 326 Conclusions 327 7. Brazil: The Guarapiranga Program, Sao Paulo 329 The Importance of the Guarapiranga Experience 331 Background 332 Participatory Process 335 Legal and Regulatory Framework 342 Resource Mobilization and Financial Sustainability 346 Actors, Alliances, and Institutional Arrangements 350 Organization and Implementation 354 Scale and Sustainability 358 Conclusions 361 8. Costa Rica: FUPROVI's Habitat Popular Urbano Program, San Jose 365 The Importance of the FUPROVI Experience 365 Background 366 Participatory Process 372 Legal and Regulatory Framework 379 Resource Mobilization and Financial Sustainability 381 Actors, Alliances, and Institutional Arrangements 385 Design and Technology 386 Scale and Sustainability 388 Conclusions 393 9. Mexico: Community Upgrading Programs, Tijuana 397 The Importance of the Tijuana Experience 398 Background 398 Participatory Process 407 Legal and Regulatory Framework 411 Resource Mobilization and Financial Sustainability 414 Actors, Alliances, and Institutional Arrangements 417 Vi CONTENTS Organization and Implementation 420 Scale and Sustainability 423 Conclusions 427 10. Peru: The Self-Managed Urban Community of Villa El Salvador, Lima 431 The Importance of the VES Experience 432 Background 436 Participatory Process 439 Legal and Regulatory Framework 441 Resource Mobilization and Financial Sustainability 445 Actors, Alliances, and Institutional Arrangements 450 Design and Technology 458 Scale and Sustainability 466 Conclusions 468 Appendix A. Sample Strategic Plan Outline 471 Appendix B. Sample Operating Manual Outline 475 References 479 DIRECTIONS IN DEVELOPMENT Slum Upgrading and Participation Lessons from Latin America Ivo Imparato Jeff Ruster THE WORLD BANK WASHINGTON, D.C. © 2003 The International Bank for Reconstruction and Development/The World Bank 1818 H Street, NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org E-mail feedback@worldbank.org All rights reserved 123406050403 The findings, interpretations, and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data induded in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Library of Congress Cataloging-in-Publication Data Imparato, Ivo, 1959- Slum upgrading and participation: lessons from Latin America / Ivo Imparato, Jeff Ruster. p. cm. - (Directions in development) Includes bibliographical references. ISBN 0-8213-5370-5 1. Urban poor-Housing-Latin America. 2. Community development, Urban-Latin America. 3. Slums-Latin America. 4. Urban poor-Housing-Latin America-Case studies. 5. Community development, Urban-Latin America-Case studies. 6. Slums- Latin America-Case studies. 1. Ruster, Jeff. II. Title. III. Series. HD7287.96.L29146 2003 307.3'44'098-dc2l 2003050072 Foreword Oscar Arias Decent shelter is a basic human need and a basic human right. But as Latin America's urban population continues to grow at a rapid rate, pro- viding safe, sanitary, affordable housing and basic infrastructure for all city-dwellers will become an increasingly serious challenge for the region's policymakers. Already, tens of millions of Latin Americans live precariously in informal settlements, often lacking access to basic social services. In the years ahead, the demand for housing will rise further as Latin America's children reach adulthood and start families of their own. While today 60 percent of the region's population is between 15 and 65 years of age, it is estimated that that figure will rise to 70 percent within the next 20 years. Unless the increasing demand for housing is met, the slums and shantytowns of our region will continue to expand, contrib- uting to the rise of such social problems as crime, violence, poverty, un- employment, and disease. Moreover, unless Latin America's slums are replaced by improved settlements, another generation of our children will grow up without the education that they will need to be productive contributors to the global economy, without faith in democratic institu- tions, and without hope for the future. As president of Costa Rica from 1986 to 1990, I made the provision of housing a top priority of my administration. At a time when our urban population was expanding rapidly, I pledged to oversee the construc- tion of 20,000 housing units per year. In a small country like Costa Rica, which had just over 500,000 units of housing in the mid-1980s, such a program was truly ambitious. In the end, we were able to provide many more than the promised 80,000 housing units during the four years of my presidency. Indeed, on a per capita basis, we built more houses than any other country in Latin America. The energy that was invested in the vii viii FoiEwoRD provision of housing and basic infrastructure during those years gave rise to several innovative initiatives, including one that is described in this book. These efforts reflected a desire on the part of my government to meet the most pressing needs of the Costa Rican people, but these programs also reflected my conviction that the availability of decent shel- ter is an essential precondition for social stability and economic growth. As I said when I received the Nobel Peace Prize in 1987, "We are con- vinced that a land free of slums will be a land free of hatred." This publication is intended to help Latin American leaders confront the growing need for housing and basic infrastructure in the cities of our region. Recognizing that traditional public housing policies are unlikely to meet the needs of the urban poor, the authors of this work have sought out successful examples of "participatory urban upgrading." This ap- proach to the provision of shelter calls for the improvement of the built environment within existing settlements, and it calls for the active in- volvement of members of the community in the enhancement of their neighborhoods. To be sure, implementing participatory urban upgrading on a scale large enough to transform all the slums of our region will be a major challenge, but the case studies included in this book provide a useful "road map" for policymakers interested in this promising approach. This book also shows, through some remarkable Latin American ex- amples, that it is possible to make a difference in the lives of hundreds of thousands of people through large-scale slum upgrading. This idea is one of the conceptual underpinnings of the "Cities Alliance for Cities Without Slums" action plan, launched by the United Nations and the World Bank in December 1999, under the patronage of President Nelson Mandela. This initiative is the most ambitious attempt to date to face up to the challenge of scaling up slum upgrading and fighting urban pov- erty worldwide. In his report to the Millennium Assembly of the United Nations, Secretary-General Kofi Annan urged all UN member states to endorse the Cities Without Slums initiative. The world leaders who gath- ered together in New York for the Millennium Assembly in September 2000 heeded his call and integrated the central aim of the Cities Without Slums action plan-to have achieved a significant improvement in the lives of at least 100 million slum dwellers by 2020-into the United Na- tions' Millennium Development Goals. It is a pleasure for me to add my own voice to President Mandela's and Secretary-General Annan's rally- ing cry to the international community for a world free of slums. I hope that this book will prove to be a useful tool in this crucially important endeavor. Preface This book talks about participation, from the first to the last page. And that is its strength, for participation is a road leading to democracy. The true participation it talks about does not rely on hours of compulsory labor or imposed levies; there is nothing forced about it. Rather, it is a process in which men and women engage their will, their sense of re- sponsibility, their abilities, their dignity. It is a vital participation, be- cause it affects much of what makes for a better life in a poor neighborhood: water supplies, sanitation, electricity, roads, drainage, public spaces, housing. For some, participation creates risks, whether of popular protests, mismanaged conflicts of interest, or mounting expectations that are dif- ficult to meet. But, in reality and above all, participation creates oppor- tunity. It favors civic learning and people's empowerment. It opens the way to alternatives. It enhances the quality of projects and the continu- ity of development. It enables an escape from rigid control or populist clientelism into a practice of strategies of negotiation. And it does this without naivete, because it does not address ideal communities of 21st century bons sauvages. Instead, it creates informed and responsible citi- zens. Therefore, the participation of the urban poor and disadvantaged should be seen as evidence of a new path to development. Equally important, this book is the testimony of voices from the field- a direct product of participation. The field is Latin America, the most urbanized developing continent, today experimenting with decentrali- zation, democratization, and participation. Among numerous and di- verse experiences, this book zeroes in on five cases, examining in detail their weaknesses, constraints, and successes. This analysis is undertaken with a deep understanding of the local contexts, relations among social ix x PREFACE actors, institutional arrangements, and financial mechanisms that make up the complexity of an urban upgrading program. The result is a set of rich, interesting, living lessons that may be transposed to other conti- nents when adapted to their particular local contexts. Above all, these voices from the field come also from the poor and the excluded. They tell us that the poor are active, dynamic, creative. In- stead of seeing themselves as victims of some societal ill, they want to fill roles as responsible and committed partners. It is time to drop our negative stereotypes surrounding poverty and social exclusion. The poor need social justice, democratic legitimacy, respect, and dignity. More- over, as strongly expressed in the Recife Declaration of 1996 on urban poverty: "Each one of us wants to be considered by what he is and what he can do, and not for what he lacks." The inhabitants of Guarapiranga's favelas, in Sao Paulo, Brazil, confirm this idea. As described in chapter 7 of this book, they began to feel like ordinary citizens once they had an address, with a postman coming to their home and bringing them bills for water and electricity. Among the poor, women are often on the frontlines. Because they are concerned with the survival of their home and of their neighborhood, they prove themselves to be innovative and committed. These voices from the field are calling forth a new culture of rights and responsibili- ties to be shared among all social actors-from the poor themselves to local political leaders-so that they may all coexist and interact in more democratic cities. Furthermore, this book is a road map indicating the route ahead. Through hundreds of lessons learned in communities, municipalities, and favelas, it gives us the rules of the road, complete with road signs- "no entry," "danger," "one-way street," "speed limit." A slum upgrad- ing program is not a collection of technical actions to be performed independently of each other. It is an integrated and comprehensive in- tervention aimed at improving the physical characteristics of a neigh- borhood and its inhabitants' quality of life. This is very clearly stated and described. What is more, the book offers many tools-multidisci- plinary tools-presented with the precautions to be taken and the vari- ety of paths that can be followed. Social tools are presented first; these range from identifying key con- ditions to strengthening community organization, building strategic al- liances, and communication strategies. Next, institutional arrangements to be invented to meet local conditions and expectations through-as demonstrated by the FUPROVI experience in Costa Rica-a combina- tion of political will and social vision on the part of civil society actors. Financial tools are presented and discussed at length. But in spite of the innovations applied in some programs, the importance of cost recovery PREFACE Xi and payment for services is still little understood in a paternalistic po- litical culture where hidden subsidies prevail over transparent ones. As to political tools, participation and decentralization trends create room for negotiation and encourage new approaches, such as tenure regular- ization, which is considered a precondition for infrastructure investments in Mexico and for housing subsidies in Costa Rica. All these tools may be scaled up to have a significant impact citywide. The great diversity of projects to be implemented demands an equally diverse set of tools; these will be created by drawing lessons from the past and innovating on them. And all of this without utopian naivete- we know that some local people may oppose an upgrading project, block- ing the streets or refusing to pay their bills-but with the social conviction of helping the disadvantaged and building a project with them. Finally, this book is a future-building tool. Participation is a long trip with many obstacles, but, as a famous Chinese philosopher said, "A jour- ney of a thousand miles begins with one step." So many pilot projects and urban programs have taken this first step, but most of them have not gone farther. Participation, undertaken as a continuous process, should lead to the continuity and sustainability of initiatives-to social, institutional, technical, and financial sustainability. Too often still, vis- ible public works are favored to the detriment of social components or environmental education essential to sustainability. Also too often, in- terventions are designed for the short life span of a project and not for a continuous long-term process of development after the project. Development needs innovative mentalities and new forces. A new generation of community leaders is emerging with high ideals of demo- cratic participation. A new generation of politicians, too, is aligning it- self against traditional paternalism and for a culture of responsibility and transparency. As observed by a neighborhood committee president in Tijuana, Mexico, "It means that this is a government that believes in its people." New forces are also emerging in civil society. Participation is no longer seen simply as a tool, but rather as a philosophical approach benefiting all concerned. Such participation is built upon social responsibility, and is reinforced by the sense of belonging created through a participatory project. As Bolivia's Carlos Hugo Molina says of his country's People's Participation Law, "An essential objective of the people's participation process was to create the possibility of the exercise of citizenship." As states redefine their roles, a greater civic awareness together with a greater sharing of responsibilities and access to rights give shape to a true urban governance. The young mayor of Villa El Salvador, Peru, confirms this: "True participation and democracy demand transparency." xii PREFACE This book gives us lessons for life and hope for the future. I visited Villa El Salvador. Like the inhabitants who made this place, I believe in the construction of a real city with its schools, an industrial park, and its Internet cafe, called Tinkuy. They had a vision of this city, and they turned it into a sustainable project. The numerous lessons of this kind through- out Latin America send out some key messages: * A participatory partnership between all public, private, and com- munity stakeholders, as a new model to jointly manage the inter- ests of the citizenry * Shared democratic rights, in particular for the excluded, creating citizen responsibility * New forms of "social contract" allowing citizens to better plan their neighborhoodneighborhoods and live better lives in their cities. To believe in a democratic culture is to oppose a mentality of submis- sion or dependency. To rethink social solidarity is to leave behind the pessimism of poverty, defending the dignity of the poorest in partner- ship with an active citizenry in multicultural, tolerant 21st century cit- ies. To build these cities is a courageous challenge. It is also our human duty. FRAN5oisE LIEBERHERR-GARDIOL Senior Advisor and Head, Urban Section Swiss Agency for Development and Cooperation Acknowledgments This book is the result of a study of community participation in urban upgrading and low-income housing in Latin America which was under- taken and funded by the Private Sector Advisory Services Department of the World Bank and the Swiss Agency for Development and Coop- eration, with additional support from the Government of Japan. The study was carried out by the Brazilian consultancy Diagonal Urbana, under a contract with the World Bank. The book is being published with support from the Cities Alliance and Diagonal Urbana. In developing the book, the task team benefited greatly from the assis- tance of many people and institutions. First of all, we would like to thank the many residents of favelas and barrios who gave freely of their time and told us their stories with enthusiasm and candor. Their names are given and their stories told in the case studies in part II of this book. The voices transcribed here are representative of entire communities; each interview has been a valuable testimony for which we are grateful. We are especially thankful to Magdi Iskander, formerly the Director of the Private Sector Advisory Services Department, who supported the concept from the start and provided unfailing support to the develop- ment of the study, as did Francoise Lieberherr-Gardiol, of the Swiss Agency for Development and Cooperation. We are also indebted to those who made the publication of the book possible: Mark Hildebrand, Man- ager of the Cities Alliance, and Kevin Milroy, of the Cities Alliance Sec- retariat; Katia Mello and Alvaro Juca, partners of Diagonal Urbana; and Valentina Kalk, Paulq McClure, and Thaisa Tiglao, of the Office of the Publisher of the World Bank. The comments and guidance received from fellow practitioners throughout the development process have been a vital resource. We are xiii xiv ACKNOWLEDGMENTS especially thankful to Dean Cira (World Bank), Robert Daughters (Inter- American Development Bank), George Gattoni (World Bank), Eduardo Perez (CDM International and Environmental Health Project, USAID), Omar Razzaz (World Bank), M. Vitor Serra (World Bank), Teresa Serra (World Bank), Tova Maria Solo (World Bank), Kevin Tayler (formerly with GHK International, UK), and Victor Vergara (World Bank), who gave much of their time to help this project take shape. John Abbott (University of Cape Town), Alex Abiko (University of Sao Paulo), Fernando Avila Cortes (PRIMED program, Medellin), Marcello Balbo (University of Venice), Denise Bennett (World Bank), Jose Brakarz (Inter-American Development Bank), Chanya Charles (Program on Participation, USAID), Rafael Del Cid (ESA Consultores, Honduras), Richard Clifford (World Bank), Maria Correia (World Bank), Ilias Dirie (DfID-UK), Alain Durand-Lasserve (CNRS-Interurba, France), Ingrid Faulhaber (Ford Foundation), Elisabete Franqa (formerly with the mu- nicipality of Sao Paulo, now with Diagonal Urbana), Maria Emilia Freire (World Bank), Pietro Garau (formerly with UN-Habitat, now with the University of Rome), Alan Gilbert (University College, London), Reinhard Goethert (Massachussetts Institute of Technology, School of Architec- ture and Planning), German G6mez Vasquez (PRIMED program, Medellin), Carmen Gonzalez (FUPROVI, Costa Rica), Camilo Granada (World Bank), Fabrice Henry (Inter-American Development Bank), Lane Hoffman (WASTE International, The Netherlands), Giuseppe Imbesi (University of Rome), Priscila Izar (formerly at the Sanford School of Public Policy, Duke University), Audra Jones (Inter-American Founda- tion, USA), Christine Kessides (World Bank), Arnold van de Klundert (WASTE International, The Netherlands), Kristin Little (Massachusetts Institute of Technology, School of Architecture and Planning), Peter Lo- ach (Cooperative Housing Foundation, El Salvador), Joyce Malombe (World Bank), Meera Mehta (World Bank), Abel Mejia (World Bank), Roberto Mingucci (University of Bologna), Josefina Ocanto (formerly FUNDACOMUN, Venezuela, now with Diagonal Urbana), Laura Petrella (UN-Habitat), Paula Pini (World Bank), Martin de la Rosa (formerly with the municipality of Tijuana, now with SEDESOL, Mexico), Anne Scheinberg (WASTE International, Eastern Europe office, Sofia), Gabriel Schor (Frontier Finance International), Hernando de Soto (Instituto Libertad y Democracia, Peru), Loredana Stalteri (Ministry of Foreign Affairs of Italy), Eloisa Ulibarri (FUPROVI, Costa Rica), Keshav Varma (World Bank), Erik Vittrup (UN-Habitat), Eric de Vries (International Labor Organization), Ian Walker (ESA Consultores, Honduras), and Anna Wellenstein (World Bank) also provided valuable input. While the present document owes much to the comments and insights of this distinguished group, it goes without saying that any errors and ACKNOWLEDGMENTS XV omissions the reader may find in the book are the sole responsibility of the authors. The study also owes a great deal to the institutions that provided us with information, suggestions, and logistical support during our field work. Among the many institutions that helped us along the way, we would like to single out the Vice Ministry of People's Participation of Bolivia; the municipality of Sao Paulo, Brazil; the Fundaci6n Promotora de Vivienda (FUPROVI) in San Jose, Costa Rica; the municipality of Tijuana, Mexico; and the municipality of Villa El Salvador, the Escuela Mayor de Administraci6n Municipal, and Desco, in Lima, Peru. Last but by no means least, the authors would like to dedicate this book to their families: to Vania, Vasco, and Tomas, and to Claudia, Jef- frey, and Sofia, with great love and appreciation. Ivo IMPARATO and JEFF RUSTER Sao Paulo, Brazil, and Washington, D.C. May 2003 Authors and Task Team Ivo Imparato coordinated this study at Diagonal Urbana. He is an engi- neer and planner who has worked in local government, housing, slum upgrading, provision of services for the urban poor, and their linkages to social policy in most of Latin America and the Caribbean, as well as sub-Saharan Africa. He has worked in municipal and state governments in Brazil, with the Italian Ministry of Foreign Affairs' development aid pro- gram (based in Rome), with the United Nations Habitat program (based in Nairobi), and was Director for International Operations of Diagonal Ur- bana Consultants. He currently is the Cities Alliance Regional Advisor for Latin America and the Caribbean, and a Senior Urban Specialist with the World Bank's Regional Urban and Housing Group. He is based in Sao Paulo. Jeff Ruster was the Task Manager for this study at the World Bank. He is Lead Specialist - Private Provision of Social Services for the Private Sector Advisory Services Department of the World Bank. He has worked in over 25 countries on a wide variety of slum upgrading, infrastructure, social services, and economic and workforce development projects. He has worked with the U.S. Department of Housing and Urban Develop- ment, where he oversaw a $5.5 billion low-income housing and economic development loan and grant portfolio. He has served as Director of Project Finance for Sumitomo Bank and Banco Nacional de Mexico and has an M.B.A. from UCLA and a B.A. in economics and political science from Stanford University. He is based in Washington, D.C. Katia Mello, Alvaro Juca, Vilma Dourado, Lticia Cavendish, Jose Geraldo Sim6es, Joao Jaime Almeida, Mauricio Vieira, Elza Braga, Eliana Cruz, and Djanyse Mendonca, directors and field managers of Diagonal Urbana Con- sultants, provided essential support and inputs. The field experience of Diagonal Urbana in socio-technical support to participatory slum upgrad- xvii xviii AuTHoRs AND TASK TEAM ing and housing projects provided an understanding of the key issues in- volved and the basis for many of the study's recommendations. Anna Conigliaro Michelini and Enrico Novara of Associazione Volontari per il Servizio Intemazionale (AVSI), Italy, helped develop the approach and methodology of the study, contributed initial drafts of analytical material, and worked as lead consultants for the Brazil and Costa Rica case studies, respectively. Through them, the study drew freely on the knowledge and experience of AVSI, which has been responsible for some of the most innovative and successful approaches to participa- tory social development and slum upgrading in the region. Each of the case studies required extensive field work, which involved site visits, focus groups, and interviews. Studies typically took about six months, including field work and preparation of the field report that was the basis for the book's case study chapters. The organization of our study of Bolivia's People's Participation Law reflected the complexity of a national-level process that affects every municipality in the country. We studied the mechanisms of the law's implementation in the four larg- est urban areas in Bolivia: La Paz, El Alto, Cochabamba, and Santa Cruz. Bolivian consultants Luis Ramirez and Guillermo Bazoberry worked with Ivo Imparato in the four cities. For the study of Brazil's Guarapiranga program, AVSI's Anna Conigliaro Michelini and Brazilian consultant Ana Luicia Cameiro Leao were responsible for the field work in Sao Paulo, with supervision from Ivo Imparato. In Costa Rica, field work in San Jose and surrounding areas was conducted by AVSI's Enrico Novara, with Costa Rican consultants Zaritza Cavallini and Roy Umafia, and supervision from Ivo Imparato. For the Mexican case, Ivo Imparato worked in Tijuana with Mexican consultants Sheila Delhumeau and German Vega. In Villa El Salvador, field work was organized and conducted by Peruvian con- sultant Gustavo Riofrio, who was joined in Lima by Ivo Imparato. The authors are particularly indebted to Gustavo Riofrio and Luis Ramirez, who, beyond acting as lead consultants in Peru and Bolivia, offered the study unique insights deriving from their experience of many years in participatory urban development. Gabriele Quinti, of CERFE, Italy, contributed the initial drafts of the sections on vulnerability, social initiative and social capital, decentrali- zation, and monitoring and evaluation. Lupita Gonzalez of Asesorias Organizacionales, San Jose, Costa Rica, provided editing services for the Spanish originals of case studies. Nita Congress, as the editor of the suc- cessive versions of the study report and of this book, contributed greatly to its structure and presentation. Violeta Vidal (World Bank, Washing- ton) provided logistical support, and Miriam Calland (Diagonal Urbana, Recife) assisted in many ways, including travel organization, contract- ing of needed services, document storage, and version control. Acronyms and Abbreviations ABCO Area-based community organization ACAT Asesoramiento, capacitaci6n, y asistencia tecnica (support, training, y technical assistance), Costa Rica AOISPEM AutoConstrucci6n de Obras de Infraestructura de Servicios Publicos con Entrega de Materiales (Self- Construction of Public Service Infrastructure Works with Delivery of Materials), Colombia AOP Annual operating plan APEMIVES Asociaci6n de Pequefios y Medianos Industriales de Villa El Salvador (Small and Medium-Sized Industry Association of Villa El Salvador), Peru AVSI Associazione Volontari per il Servizio Intemazionale (Association of Volunteers for Inter- national Cooperation) CAMEBA Caracas Mejoramiento de Barrios (Caracas Slum Upgrading), Venezuala CDHU Companhia de Desenvolvimento Habitacional e Urbano (Housing and Urban Development Com- pany), Brazil CECOPRODE-VES Centro de Comunicaci6n Popular de Villa El Sal- vador (Center for Popular Communication of Villa El Salvador), Peru CEDURE Centro de Desarrollo Urbano y Regional (Center for Urban and Regional Development), Bolivia CESPT Comisi6n Estatal de Servicios Puiblicos de Tijuana (State Commission for Public Services of Tijuana), Mexico xix xx ACRONYMS AND ABBREVIAnONS CFIA Colegio Federado de Ingenieros y Arquitectos (Fed- eration of Engineers and Architects), Costa Rica CIF Community infrastructure fund, Mexico CIPRODEC Centro de Investigaci6n y Promoci6n del Desarrollo Economico y Comunal (Research Cen- ter for the Promotion of Economic and Commu- nity Development), Bolivia CNR National Committee for Reconstruction COELBA Companhia de Eletricidade do Estado da Bahia (Bahia Light and Power Company), Brazil COFOPRI Comisi6n de Formalizaci6n de la Propiedad (Com- mission for the Formalization of Informal Prop- erty), Peru CONALJUVE Confederaci6n Nacional de Juntas de Vecinos (Na- tional Confederation of Neighborhood Associa- tions), Bolivia COPLADEM Comite de Planeaci6n Para el Desarrollo Munici- pal (Planning Committee for Municipal Develop- ment), Mexico CORETTE Comisi6n para la Regularizaci6n de la Tenencia de la Tierra en el Estado (State Commission for the Regularization of Land Tenure), Mexico CUAVES Comunidad Urbana Autogestionaria de Villa El Salvador (Self-Managed Urban Community of Villa El Salvador), Peru Desco Centro de Estudios y Promoci6n del Desarrollo (Cen- ter for Development Studies and Promotion), Peru DESOM Desarrollo Social Municipal (Municipal Adminis- tration of Social Development), Mexico EMCALI Municipal Public Works Company of Cali, Colombia EXPOPYME Exposici6n de Pequefias y Medias Empresas (Expo- sition of Small and Medium-Sized Businesses), Peru FEJUVE Federaci6n de juntas de vecinos (neighborhood as- sociation federation), Bolivia FEPOMUVES Federaci6n Popular de Mujeres de Villa El Salvador (Women's Federation of Villa El Salvador), Peru FUNAPS Fundo de Apoio a Participacao Social (Social Par- ticipation Support Fund), Brazil FUNDACOMUN Fundaci6n para el Desarrollo Comunitario y Mu- nicipal (Municipal and Community Development Foundation), Venezuela FUNHAVI Fundaci6n Habitat y Vivienda (Habitat and Hous- ing Foundation), Mexico ACRONYMS AND ABBREVIATIONS xxi FUPROVI Fundaci6n Promorora de Vivienda (Foundation for the Promotion of Housing), Costa Rica GDP Gross domestic product GNP Gross national product GTZ Gesellschaft fur Technische Zusammenarbeit (Ger- man Technical Cooperation) HDI Human Development Index IDB Inter-American Development Bank IFAD International Fund for Agricultural Development IFFI Instituto de Fomento y Formaci6n Femenina (In- stitute of Integrated Training for Women), Bolivia IIPLAM Instituto de Investigaciones y Planificaci6n (Mu- nicipal Research and Planning Institute), Bolivia IMAS Instituto de Asistencia Social (National Social Wel- fare Institute), Costa Rica INETT Inmobiliaria del Estado (State Real Estate Board), Mexico INVERMET Fondo Metropolitano de Inversiones (Metropoli- tan Investment Fund), Peru INVU Instituto Nacional de Vivienda y Urbanismo (Na- tional Housing and Urban Development Institute), Costa Rica MDP Municipal development plan, Bolivia MFI Microfinance institution MIS Management information system NGO Nongovernmental organization OSC Obra Social Comunitaria (Social Community Works), Mexico PAN Partido Acci6n Nacional (National Action Party), Mexico PAP Participatory Action Planning PLN Partido de Libertaci6n Nacional (National Libera- tion Party), Costa Rica PREZEIS Projeto de Interesse de Zonas Especiais (Plan for the Regularization and Urbanization of Special Zones of Social Interest), Brazil PRI. Partido Revolucionario Institucional (Institutional Revolutionary Party), Mexico PRIMED Programa Integral de Mejoramiento de Barrios Subnormales en Medellin (Medellin Integrated In- formal Settlement Upgrading Program), Colom- bia XXii - ACRONYMS AND ABBREVIATIONS PROSANEAR Programa de Saneamento em Areas Urbanas de Baixa Renda (Low-Income Urban Areas Water and Sanitation Program) PUSC Partido de Unidad Social Cristiana (Social Chris- tian Unity Party), Costa Rica PYME Pequefias y Medias Empresas (Small and Medium- Sized Businesses), Peru RFP Request for proposals SABESP Companhia de Saneamento Bfsico do Estado de Sao Paulo (Water and Sanitation Company of Sao Paulo), Brazil SFNV Sistema Financiero Nacional para la Vivienda (Na- tional Housing Finance System), Costa Rica SINAMOS Sistema Nacional de Apoyo a la Movilizaci6n So- cial (National Support System for Mobilization), Peru SPCO Specific-purpose community organization UMU Unidad Municipal de Urbanizaci6n (Municipal Urbanization Unit), Mexico U.N. United Nations UNCHS United Nations Centre for Human Settlements UNDP United Nations Development Programme URBEL Companhia Urbanizadora de Belo Horizonte (Ur- banizing Company of Belo Horizonte), Brazil UTP Uniao dos Trabalhadores da Periferia (Union of Peri-Urban Workers) VES Villa El Salvador VPPFM Viceministerio de Participaci6n Popular y Fortalecimiento Municipal (Vice Ministry of People's Participation and Municipal Strengthen- ing), Bolivia ZEIS Zonas especiais de interesse social (special social interest zones), Brazil Introduction A growing body of analytical work undertaken in recent years by aca- demia and development aid institutions has quantitatively explored and documented the link between community participation in development projects, overall quality of project implementation, and project impact. Although this literature has also made some attempt to outline method- ologies for projects incorporating direct beneficiary involvement, it has not provided a full range of project design options and operational strat- egies to address key issues or to form partnerships with the private sector and other local stakeholders. This gap is partly due to the fact that most of these studies have looked at various programs in different sectors (e.g., health, education, water and sanitation, rural development, housing and urban upgrading) in an effort to understand and quantify the impact and cost of participation rather than study each process in detail. In the urban development field, however, going into process details is particularly necessary and worthwhile, since it is well known that the development of low-income settlements is based to a great extent on a process led by the urban poor themselves. It is also well established that the cost-effectiveness of the process and the quality of its results leave much to be desired in the absence of external support. What is not al- ways recognized, however, in upgrading an existing settlement is that the residents usually have been building their homes and the settlement itself over the years, and that therefore they already have a "project" of sorts under way. Such a project is composed of repeated requests to the authorities for improvements and many small, incremental steps of the residents' own making. Residents have priorities and visions for the fu- ture, but usually these have not been conjoined with those of other resi- dents and other stakeholders in an organized way and coalesced into a 1 2 SLUM UPGRADING AND PARICIPATON coherent plan. The external project promoter needs to be able to under- stand the process and interact with the residents when exploring ways to support them, helping the community sharpen the focus of its vision. Participation Improves Project Implementation and Impact The strong link between community participation and project impact and sustainability in urban upgrading and housing,' coupled with the need for operational strategies for participation based on a better under- standing of process, led the Private Sector Development Division of the World Bank to undertake the present study. Its objective is to help local policymakers, officials, and practitioners identify policies, procedures, and program investment strategies that are appropriate to the local con- text as they design and manage urban upgrading and shelter projects at the local level. The value that this book intends to add to the body of existing literature on urban upgrading and low-income housing is there- fore to facilitate the promotion of participatory projects by helping those responsible for their formulation and management address significant social, institutional, financial, and procedural issues. The book is particularly relevant for people and organizations attempt- ing to answer the following questions: * How can we increase service provision to low-income areas? * How can we increase the impact of projects and the continuity of the improvements they bring about? * How can we increase private sector participation in this kind of initiative? * How can we enhance projects' financial sustainability? * What are the key issues this kind of initiative needs to address? The book aims to provide local decisionmakers with options for set- ting up a successful project by focusing on the key features of the supply structure and enabling framework and by describing the strategic alli- ances that lead to their establishment. A major part of the business-and the challenge-of upgrading programs or projects is to set up just such a supply structure, but relatively few have succeeded in doing so. Many urban upgrading projects have faced severe sustainability problems or have not been able to reach significant scale. 'The terms shelter and housing are used interchangeably throughout this book to mean both the housing unit and the related basic infrastructure. Also, for simplicity, we here use the term project to refer to both program and project. See chapter 1 for a discussion of the use of these terms in the remainder of this book. INTRODUCTION 3 The book also clarifies key concepts, establishes a nomenclature, and draws from recent examples to illustrate key process issues, such as part- nership strategies for working with civil society and the private busi- ness sector, the importance of participatory information gathering and area-based planning, and the need for competent social intermediaries. The underlying premises of the study are as follows: * On the demand side, there exists a strong desire and powerful po- tential within low-income communities to take care of their own affairs, manage financial matters, and create sustainable assets in infrastructure and shelter. * On the supply side, with the appropriate enabling environment cre- ated by a strong and demand-responsive supply structure, this po- tential can be realized,2 deeply influencing the impact and sustainability of development initiatives and allowing upgrading and housing programs to go to scale. This book illustrates and details the above premises by: * Providing direct project participant feedback from recent Latin Ameri- can experience through detailed investigations in five countries * Identifying the key components of a supply structure and enabling environment * Identifying key process issues and questions that need to be asked at each stage of a project Exploring key process issues to provide policy options and opera- tional guidance to both the program cycle and the project cycle. The literature shows that participation is beneficial to a project-and that its benefits extend well beyond the project. But costs and risks are also involved. Our goal is to help the reader negotiate a complex subject and understand the many alternatives that are available in developing a tailor-made participatory strategy. The ultimate objective is not to achieve the maximum possible level of participation or to replace the state, but to achieve the level of participation that is appropriate to the circumstances, taking into account project objectives and local constraints and opportu- 2One of the fundamental lessons of our study is that major progress can be made in urban upgrading and shelter for the poor through a strong, demand-responsive supply structure and enabling framework to aid community participation, which will allow a program to reap the benefits associated with participation. These benefits include the development of demand-responsive solutions, efficient use of benefits, a sense of owner- ship, and development of a culture of rights and responsibilities conducive to durable, long-lasting project benefits and to future development initiatives. 4 SLUM UPGRADING AND PARnCIPAnON nities.3 Using a qualitative and process-oriented approach, we have tried to provide information and examples that will help project designers identify the level and modalities of participation that will work for them and the components of the environment that they will need to set in place to do so. Since the study's primary objective was to provide practical, hands- on guidance to local officials and policymakers, the perspective taken here is not tied to the requirements or procedures of any particular do- nor agency, development aid institution, or government. A Qualitative Approach We have used a qualitative approach to gather information on how key issues were addressed-and with what results-in five geographically and institutionally diverse Latin American cases with a wide variety of funding and donor involvement arrangements: * The People's Participation Law, Bolivia, which links, in a national le- gal framework, participation to decentralization and resource allo- cation through local level participatory budgeting * The Guarapiranga Program, in Sao Paulo, Brazil, a large-scale up- grading initiative with an area-based horizontal institutional ar- rangement and innovative participation mechanisms * FUPROVI's Habitat Popular Urbano Program (Urban Low-Income Housing Program), in San Jose, Costa Rica, where community man- agement of mutual-help construction is made possible by intense capacity-building and socio-technical support * Community upgrading programs, in Tijuana, Mexico, where commu- nities operate at a very high level of cost consciousness and cost control, with transparent subsidies and an upfront financial contri- bution from the community * The Self-Managed Urban Community of Villa El Salvador, in Lima, Peru, where participation with state support and an area development plan has permitted the gradual development of a new town of 350,000, which is still in process, with remarkable advances. 3Meaningful participation is not restricted to community management approaches. Even at a consultation or negotiation level, participation will have a profound impact on a project and can produce good results, if the job of organizing it is well done. According to the United Nations Development Programme (as cited in IDB 1997b), "People may, in some cases, have a high degree of control over the project. In other cases, control may be partial or indirect. The important thing is that people have constant access to decisionmak- ing and power. Participation in this sense is an essential element of human development." INTRODUCrION 5 Each of these locations was visited by a team of experienced interna- tional and local consultants who have been involved in significant ur- ban upgrading and low-income housing projects in Latin America and elsewhere, including urban planners, local government specialists, mu- nicipal engineers, housing specialists, and sociologists. Information was also collected on several other participatory shelter and urban develop- ment projects elsewhere in Latin America to illuminate specific aspects of key issues.4 To uncover the reasons behind the success or failure of various project design approaches, we needed to gain an understanding of the relation- ships among stakeholders and the key process issues entailed in design- ing and implementing a successful participatory project. Because project success often hinges on the perceptions of the local people and other key stakeholders involved-and their decision to buy into the project or not- we adopted a qualitative, first-hand approach for collecting informa- tion. The team gathered information through in-depth interviews and focus group sessions with all stakeholders, and especially with field tech- nicians and residents of the study areas, compiling anecdotal evidence on matters that seemed particularly germane and significant to the people who took part in each local upgrading and shelter process. People inter- viewed also included central government officials, local authorities, poli- ticians at various levels, neighborhood associations and their federations, nongovernmental organization (NGO) staff, private sector representa- tives, donor country representatives, local staff of aid programs, and aca- demics. This method has yielded a vast reservoir of anecdotal evidence and local insights from which to draw broad and informed lessons. The basic raw materials of the study consequently consist of personal state- ments, which has provided us with a better understanding of the inter- action between people and groups at the local level. The material was collated and analyzed to produce the field reports and analytical chapters that make up this book, which were then read by a peer review group comprised of professionals from donor agencies, local gov- ernments, local and international NGOs, research institutions, and con- sultant groups. Their feedback was then incorporated; thus, many of the 4Chapter 2 presents brief descriptions of the following programs and projects: PROFAVELA program, Belo Horizonte, Brazil; AOISPEM program, Cali, Colombia; Catuche Social Consortium, Caracas, Venezuela; community upgrading programs, Ciudad Juarez, Mexico; El Mezquital project, Guatemala City, Guatemala; PRIMED program, Medellin, Colombia; PREZEIS program, Recife, Brazil; Favela-Bairro program, Rio de Janeiro, Brazil; Novos Alagados project, Salvador, Bahia, Brazil; and the mutirdo programs in Sao Paulo, Brazil. 6 SLUM UPGRADING AND PARTCIPAnON insights and recommendations in this book derive from first-hand expe- rience of consultants and peer reviewers as well as of our study subjects. A Broad Range of Projects Because the present analysis is based on the qualitative elements that arose from interviews and work with focus groups, it is not our inten- tion here to compare quantitative data in a statistically representative way. We therefore did not choose projects of comparable dimensions or with similar institutional arrangements. Even though all the cases stud- ied are slum upgrading and / or shelter programs or projects in low-in- come areas in large cities in Latin America, their dimensions, intervening agents, and institutional arrangements vary widely. In this way, we hope to give the reader an idea of the range of different approaches and ar- rangements being used in Latin America in participatory urban devel- opment and housing. Latin America was chosen for several reasons, most notably for its high rates of urbanization, its changing demographics, its move toward decentralization, and the broad range of participatory urban develop- ment processes that are taking place in the region. Although the cases chosen are very diverse, studying five cases in the same region allowed us to detect issues influenced by common trends-such as democratiza- tion and decentralization-and to compare process issues in a more meaningful way. A Tool for Project Design Throughout this book, we have tried to identify the most significant ar- eas of concern involving impact and sustainability and to provide: * An analysis of the pros and cons of different project options and ap- proaches, since awareness of these options may enhance flexibility and the ability to adjust a project to changing needs and circumstances * Strategies to increase financial sustainability through enhanced cost recovery and linkages with the private sector, including an explo- ration of the potential of innovative arrangements such as partner- ships between local governments, microfinance institutions, local businesses, private utilities, and urban upgrading funds * An overview of the policy environment, the legal and regulatory framework, and other requirements for scaling up a project * An overview of the need for, and the implications of, area-based urban planning and management, including the preparation of par- ticipatory diagnoses and participatory area development plans INTRODUCrION 7 * Strategies for the provision of social intermediation (also known as socio-technical support) services' * Options for monitoring and evaluation and for adjusting a project to changing circumstances. For the purposes of this study, the physical assets generated by urban upgrading and low-income shelter projects include, among others: * Provision or improvement of access roads, stormwater drainage, water supply and sanitation, and electrification and public lighting * Improved physical planning (i.e., settlement layout improvements, improvement of access to individual plots and vehicle access, pro- vision of open spaces and space for public facilities) * Establishment of cadastral registers and land tenure regularization * The building of new housing and / or the gradual improvement of existing structures. In dealing with project costs, we have chosen to convert most cost figures into U.S. dollars at the exchange rates that prevailed at the time the costs were incurred. Thus, dollar figures throughout the book refer to U.S. dollars. This was done to give readers-especially those unfamil- iar with the ups and downs of Latin American currencies in recent years- a better idea of the order of magnitude of project costs. These figures, however, should be treated with caution, since all costs were incurred in local currencies, and significant exchange rate movements have taken place in some of the countries studied. Since these movements were not necessarily matched by an alignment of each economy's intemal prices, it could be misleading to try to estimate current project costs in local currency by simply converting at the current rate the dollar figures herein presented. Our Perspective and Basic Assumptions We now attempt to clarify some of the basic assumptions of this study. * Intrinsic value of participation. Our study does not seek to prove that participation improves project performance-rather, for rea- sons that are explored in the first chapter, that is our point of depar- 5We use the terms social intermediation and socio-technical support to refer to the set of services that provide intermediation between the community and other project actors and provide technical assistance to communities, establishing a link between community social processes and the technical and administrative requirements of a project. Social engineering is another term used in the literature that covers this concept. 8 SLUM UPGRADING AND PARnCIPATION ture. We instead seek to explore different options for the organiza- tion of participation in urban upgrading and shelter projects to en- hance their long-term impact. * External support perspective. Our perspective is that of the exter- nal project promoter operating from local government, who is con- cerned with the identification, formulation, and implementation of urban infrastructure and housing policies, programs, and projects with a focus on the poor. Although our primary audience is com- posed of such local operators, this book should also prove useful to others, such as consultants and professionals operating at various levels from within development aid organizations, NGOs, central or provincial governments, academia, and the for-profit private sec- tor. * Participatory, area-based planning. A broad long-term vision of the development of the settlement or area of intervention, rather than the particular requirements of any single type of infrastruc- ture, needs to be the axis for the planning of an urban upgrading project, especially in the context of squatter settlements. A partici- patory, integrated, and area-based approach to planning supported by participatory information gathering and analysis is critical. * Appropriate level of participation. We do not agree with the idea that "the more participation the better" is true in every case. Low- income communities do not have unlimited time, and the circum- stances of project formulation and implementation vary so much that aiming for the highest level of participation may not be benefi- cial, or even practical or feasible. Our goal is thus not to achieve maximum participation, or replace the state or the private sector in their-roles. Participation may be limited in some cases to informa- tion and consultation in decisionmaking; in others, to consultation on some aspects of the project and shared control over other as- pects. There is also the possibility of full control of some aspects of a project by the target group. * Focus on support to participatinn. We of course recognize fhat par- ticipatory processes are often spontaneously generated and exist independently of any externally initiated project. Experience shows, however, that participatory initatives face an uphill battle in the absence of external support and find it difficult to attain meaning- ful results or scale. The subject of this book is thus not "spontane- ous" participation as such, but rather how development programs and projects may strengthen and interact with it, or help bring par- ticipation about when it is not already there. Cases in which there is full community control over every aspect of a process, without any external assistance, are not covered by this study. INTRODUCTION 9 * A role for the for-profit private sector. Community actors, govern- ment, and the not-for-profit private sector have traditionally domi- nated the scene in slum upgrading, whereas for-profit private actors have almost always been absent. Innovative arrangements are open- ing new avenues for for-profit private sector participation in up- grading. Examples like Guarapiranga and the new project structure that was proposed for Tijuana (see chapters 7 and 9) show that the right incentive structure may favor for-profit private sector partici- pation, with gains in service quality, efficiency, and effectiveness. * The focus is not on emergency situations or the destitute poor. We have not dealt with the direct support required by the destitute poor or with emergency situations, such as those requiring emer- gency shelter and food relief. Our focus is on improvements in in- frastructure and housing that depend on functioning institutions and a capacity to organize and participate-a capacity that is often absent in emergencies or among the poorest residents. The projects under consideration have taken place in countries with function- ing institutions; in many of them, there has been direct support and even direct financial contribution by the beneficiaries. Although some project beneficiaries (e.g., some of those of the Guarapiranga program) are certainly destitute, they are a minority. * An opportunity to overcome paternalism. The process of partici- pation offers an opportunity for the community and public institu- tions to interact in a new way and to overcome the paternalism in their relationships in favor of a culture of rights and responsibili- ties on both sides. An important part of this is the improvement of cost consciousness, leading to clear subsidy structures and socially sustainable cost recovery mechanisms that improve the financial sustainability of upgrading and housing projects. * Recommendations, not prescriptions. Our recommendations throughout are not prescriptions. They are based on good practice and are meant to be used with discernment according to local needs and conditions, which obviously vary a great deal. Sometimes a suboptimal solution is the best possible one under the circumstances, given time, resource, and monetary constraints. * Stakeholder participation. Stakeholder participation entails much more than just the relationship between the agency promoting the project and its beneficiaries-a point emphasized in The World Bank Participation Sourcebook (World Bank 1996). In the complex urban realities we are studying, there exists a multiplicity of actors and stakeholders, all with important roles. Therefore, although our main 10 SLUM UPGRADING AND PARTICIPAMON focus is community participation, we acknowledge the importance, and explore the role, of the participation of all stakeholders.6 Structure of This Book This book is comprised of two parts: Lessons from the Field and Voices from the Field. The first part contains the main lessons from the experi- ence of participatory urban upgrading and shelter programs in Latin America. Our focus, as explained above, is on the workings and organi- zation of participation, and on how it relates to the other spheres of a program or project. Part I begins with a conceptual framework (chap- ter 1) that defines and discusses the key terms and concepts used and drawn upon throughout this book. Chapter 2 provides concise versions of the five main case studies, including essential information about each case as well as key conclusions and recommendations. The subsequent chapters in part I deal with the key issues of process in participatory urban upgrading and housing, starting at the project level (chapter 3), and moving up to the program design and rollout strat- egy level (chapter 4), and the policy and general framework level (chap- ter 5). This is not a typical order of presentation; information is usually presented in a top-down fashion, beginning at the policy level and mov- ing down to first the program and then the project level. Our order of presentation reflects the domain and aim of this study, in which the pri- mary idea is to move from the bottom up. Chapter 3 thus begins with a discussion of the project level, covering its operational requirements, key project roles, and ways of fulfilling them. The chapter explores the project cycle, providing alternatives for design- ing and organizing participation at the various project stages-i.e., in- formation gathering and analysis, planning, implementation, and post-implementation. Requirements for socio-technical support activi- ties and issues of sustainability and scale are discussed. Discussion of the program formulation level follows, exploring ways to set up a program structure that is conducive to participation and able to deal with its requirements. Chapter 4 looks at the program design 61n addition to local residents and other target groups, stakeholders in an urban develop- ment process may include public authorities with jurisdiction over the area, public or private utility companies, formal landowners, formal and informal land developers, own- ers and managers of area businesses, managers and staff of public or nongovernmental facilities in the area (such as health centers, schools, daycare centers), politicians and political party activists, development NGOs, religious groups, and private firms provid- ing services in the context of a program or project. INTRODUCriON 11 cycle, providing altematives for designing and organizing key program features, consensus-building among stakeholders, prefeasibility and fea- sibility studies, project identification, and monitoring and evaluation. It also discusses and provides altematives for program rollout strategies. The discussion in chapter 4 of program features (type, scope, format, and structure) and how they relate to the challenges posed by each par- ticular local situation is of particular relevance to program design. Chapter 5, the last chapter in part I, deals with the factors that are required for ensuring the success of an urban upgrading and shelter ini- tiative and for scaling it up; this includes the policy, legal, and regula- tory frameworks as well as institutional and technical factors. The information presented is based on the cases studied and on previous experiences of the study team members. Part II presents the five cases in detail. Each field report is based on edited transcripts of interview responses and is structured to provide an analysis of key issues in program and project formulation, implementa- tion, and results. Chapters 6 to 10 each present a qualitative assessment based on the views of actual project participants and aim to provide an understanding of the relationships among stakeholders and the ways in which participation mechanisms and institutional arrangements influ- ence project implementation and outcomes. The wealth of material collected and the complexity of the subject matter have turned this into a lengthy volume. We have tried to orga- nize the material in such a way that readers may locate specific informa- tion quickly and easily. This book offers a panorama of participation in urban upgrading and low-income housing projects in Latin America based on field experience and a wide range of proven approaches. We hope that this material may contribute to the design of effective participatory initiatives to provide basic infrastructure, services, and shelter for the urban poor in Latin America and elsewhere in the years to come. Part I Lessons from the Field 1 Facets of Participation PARTICIPATION IS ESSENTIAL FOR SUSTAINABLE DEVELOPMENT. IF STAKEHOLDERS HELP MAKE DECISIONS AT ALL STAGES OF THE PROJECT CYCLE, THEN DEVELOPMENT PROBLEMS ARE MORE LIKELY TO BE UNDERSTOOD IN THEIR ENTIRETY AND SOLUTIONS ARE LIKELY TO BE MORE EFFECTIVE. HOWEVER, PARTICIPATION IS NOT A PANACEA; IT CANNOT SUBSTITUTE FOR SOUND TECHNICAL AND FINANCIAL PROJECT DESIGN. -Inter-American Development Bank, "Why Is Participation Important?," Resource Book on Participation (1997) In this chapter, we analyze concepts related to the importance of partici- pation and what it can do in urban upgrading and housing projects, and briefly examine the current debate on the subject. We discuss various definitions of participation, the levels and degrees of intensity of partici- pation, and the entry points for participation-always in the context of slum upgrading and low-income housing development. We also briefly discuss key concepts such as social exclusion, poverty, vulnerability, civil society, and social capital. The debate about participation has been so intense and partisan in the last decade or so that it will be helpful to clearly state here the concep- tual underpinnings of our analysis. What kind of participation are we talking about? Why is it so important? How does it fit in with the other dimensions of a program or project? What are the key factors at work? The benefits of participation that are repeatedly mentioned in the lit- erature can be summed up as follows: 15 16 SLUM UPGRADING AND PAR1ICIPATION * It improves project design and effectiveness through (1) organized expression of demand, which allows a project to provide what people want at a price people are willing to pay; and (2) access to local knowledge, which helps take all relevant factors into account in the solutions proposed by a project. * It enhances the impact and sustainability of projects through (1) de- mand-responsiveness, which is key in enhancing financial sustain- ability; (2) local ownership of projects, which is crucial to impact and social sustainability; and (3) an enhanced sense of responsibil- ity toward facilities and services on the part of local people. * It contributes to overarching goals such as good governance, de- mocratization, and poverty reduction by (1) building local capacity to interact with authorities and other stakeholders to further com- mon goals, (2) establishing clear channels for community partici- pation in decisionmaking, and (3) giving people the opportunity to influence the actions that shape their lives. The cost of participation is associated with the time and expense en- tailed in setting up participatory mechanisms, the procurement of spe- cialized services such as socio-technical support, and the additional staff time required in the program formulation and preparation phases. On the other hand, although there certainly is a cost associated with partici- pation, the evidence so far shows it to be compensated-beyond all the benefits cited above-by more cost-effective project implementation, higher accountability of project promoters, and even faster disbursement. The risks of participation are basically associated with poorly conceived or poorly managed participatory initiatives. Without competent inter- mediation, for example, the conflicts of interest that arise during a project may paralyze it. Poor intermediation and poor management of the project cycle may mean that stakeholders' expectations are first raised and then frustrated by long delays or changes of approach, compounded by lack of information on their cause or discussion of alternative remedies to the situation with the stakeholders. This situation is unfortunately all too common and leads to a severe loss of credibility. Another risk is loss of focus, which happens when a project becomes bogged down by discus- sions about issues that are outside its scope. Yet another risk is that a project may be hijacked by political parties or special interest groups. Most of these risks are associated with undue interference in the pro- gram or project, or the lack of one or more of the key conditions for success discussed in chapter 5. Suffice it to say that if a conducive envi- ronment for participation is competently created by a program or project (see box 1-1), most of the risks are minimized. FACETS OF PARTICIPAMON 17 Box 1-1. What Do We Mean by Program and Project? A sometimes confusing question of terminology is the distinction be- tween program, project, and subproject. In the development field, all of these terms denote an initiative to reach a series of predetermined devel- opment goals through an organized series of actions undertaken by an appropriate institutional structure. The difference between program, project, and subproject lies principally in the initiative's scope and scale. Although the word project is usually employed for an initiative that is smaller, shorter term, and more narrowly focused than a program, differ- ent institutions use different terminology which is largely a matter of the convention each adopts. We thus find it necessary to clarify here what we mean by program and project. For example, the Guarapiranga program is often referred to in English as a project, although it is a complex undertaking that involves many quite different types of actions, such as the building of primary and sec- ondary infrastructure for wastewater collection and treatment, informal settlement upgrading, the development of a legal and institutional model for the management of a metropolitan water catchment, and the prepa- ration of a long-term physical and economic development plan for the area. We prefer to follow local usage and see Guarapiranga as a program, i.e., as a number of diverse but coordinated sets of actions that all support a common goal. We see each of these sets of actions that deal with a particular problem as a project. Therefore, the convention we have adopted is that the settlement upgrading component of the Guarapiranga pro- gram is called a project, and an upgrading intervention in a particular settlement in Guarapiranga is called a subproject. In Tijuana, Manos a la Obra (Let's Roll up Our Sleeves) and its succes- sors are referred to as programs. Each separate intervention in a low- income area is a project. We agree with this terminology, since we find that Tijuana's community upgrading programs define broad general goals and a framework for action-funding mechanisms, project identification procedures, requirements for project management-to be followed by component projects. In sum, then, what we refer to as a program may be called a project in other contexts; similarly, what we refer to as a project may be called a subproject elsewhere. The terms are often used interchangeably; we have tried to maintain the distinction where it is necessary for reader under- standing to do so. 18 SLUM UPGRADING AND PARnCPAnON The Impact of Participation Participation, arguably the most powerful idea and trend currently shap- ing development cooperation thinking and practice, has been the sub- ject of intense international debate in recent years. Between 1991 and 1994, an institution-wide learning process was un- dertaken by the World Bank, with support from the Swedish International Development Agency, in which the experience of the Bank itself and other agencies in supporting participation was investigated. In this context, 45 studies were commissioned to investigate participation-related issues, drawing lessons from participatory projects in many fields. The costs and benefits of participation, as well as the factors enhandng participation or limiting its implementation, were studied. Options open to donor agencies and client governments for supporting participation were outlined. Overall, the studies found that participation improves project perfor- mance and increases project impact and sustainability. There are also risks and costs of participation (touched on above) that, although normally out- weighed by the benefits, do need to be addressed. This is illustrated by the studies of Hentschel (1994) and Schmidt (1996), among others. In sepa- rate empirical studies undertaken during the Bank-wide learning pro- cess, these authors came to a number of important conclusions, among which we can single out the following (Reitbergen-McCracken 1996). * Beneficiary participation is the single most important factor in de- termining overall quality of project implementation. Quality of project implementation refers to the efficiency, effectiveness, time- liness, responsiveness, and accountability of the mechanisms set up to implement a project. * Apart from better project performance, there are clear examples of participation leading to strengthened capacity of community-level groups and empowerment of beneficiaries, as witnessed by their capacity to undertake development initiatives on their own in a project's aftermath (see the examples of Costa Rica and Peru in chap- ters 8 and 10, respectively). * Overall, the elapsed time from identification to the start of disburse- ments was not significantly longer for participatory projects than for nonparticipatory ones. In some cases, in fact, the participatory projects were actually quicker to disburse, due to increased stake- holder commitment and better project performance. * Participatory projects cost the World Bank 10 to 15 percent more, on average, than nonparticipatory projects in terms of staff time spent in preparation and appraisal. This is because these projects need to devote time and effort to the involvement of more stake- FACFIS OF PARnCIPATION 19 holders and to the development of a project structure that incorpo- rates the necessary channels and support services for participation. Although Hentschel (1994) does not mention any impact on super- visory costs, it could be inferred from better project performance that they may actually be reduced relative to conventional projects. Participation costs incurred by beneficiaries and borrowers related to lost wages and transaction costs, as well as the costs of the support ser- vices needed for participation, can be considerable. Moreover, they can severely hamper the successful implementation of a participatory initia- tive if not adequately addressed. In this context, it is important to be able to quantify the cost of participation, an issue covered in more detail in chapter 3. In cases such as Sao Paulo's Guarapiranga program in which slum upgrading projects are part of a broader program, participation costs may be significant in the context of each upgrading project but limited in the context of the program as a whole. What Is Participation and Who Benefits from It? The development literature offers several definitions for participation, notably-and representatively-the following: * Paul, in a World Bank paper on Community Participation in Develop- ment Projects (1987), calls community participation "an active process whereby beneficiaries influence the direction and execution of devel- opment projects rather than merely receiving a share of the project benefits." The key concept is that beneficiaries influence the project. * In Participation in Practice, Reitbergen-McCracken (1996) defines the term as "a process through which stakeholders influence and share control over development initiatives, decisions, and resources that affect them." The key concept is that stakeholders influence and share control over development initiatives. The Inter-American De- velopment Bank's Resource Book on Participation echoes this defini- tion almost verbatim. * Schmidt, in "Popular Participation and the World Bank: Lessons from 48 Case Studies" (1996), cites "a process by which people, especially disadvantaged people, influence policy formulation and control design alternatives, investment choices, management and monitoring of development interventions in their communities." The key concept is that disadvantaged people influence policy and control the project. * The Canadian International Development Agency refers to the par- ticipatory approach in many of its policy statements as "a self-help approach characterized by the involvement of target groups in 20 SLUM UPGRADING AND PArIlaPAnION project design, implementation and evaluation, which aims to build the capacity of the poor to maintain structures created during project implementation and continue their own development." The key concept is the involvement of target groups in the project cycle with a view to sustainability (IDB 1997a). * The International Fund for Agricultural Development (IFAD) de- fines a participatory process as "a democratic process in which people, particularly the weak and the poor, are not passive receiv- ers of a development project at the end of a top-down approach, but are requested to identify their needs, voice their demands, and organize themselves so as to improve their livelihood with the help of the financial, technical, and human resources offered by the de- velopment project, as well as their own" (IDB 1997a). * The United Nations Development Programme (UNDP) takes a broader view, seeing participation "as an overall development strat- egy-not just as people's involvement in certain projects or pro- grams. Participation means that people are closely involved in the economic, social, cultural, and political processes that affect their lives. People may, in some cases, have complete and direct control over these processes-in other cases, the control may be partial or indirect" (IDB 1997a). * In his preface to the evaluation of the first three years of implemen- tation of Bolivia's People's Participation Law, Rene Mostajo Deheza, formerly Bolivia's deputy minister for people's participation and municipal strengthening, wrote that "participation is not only an instrument for the creation and modification of reality, but also a philosophical approach that is destined to all people. It is a mode of thinking that should touch everyone, but which takes on different forms according to each person's level of awareness and knowl- edge" (our translation; Deheza 1998). Our Definition Drawing on the above, we now attempt to formulate our own working definition of participation for the purposes of this book: Participation is a process in which people, and especially disadvantaged people, influence resource allocation and policy and program formulation and implementation, and are involved at different levels and degrees of intensity in the identification, timing, planning, design, implementation, evaluation, and post-implementation stages of development projects. In our definition, we owe something to each of the preceding ones. We favor a dynamic definition of the process of participation, since the fea- FACETS OF PARnCIPATION 21 tures of a participatory process, and the level of development of the par- ticipatory potential of a community, will depend on local circumstances and program objectives and may change over time. To the UNDP defini- tion, we owe the idea that participation is an involvement in processes, not just projects, and that the level of people's control may vary accord- ing to circumstances. To the IFAD definition, we owe the idea that the development project offers resources and an enabling environment for disadvantaged people to attain development goals through an organized expression of needs and demands. From all of them, we derive the ideas of involvement, influence, and control. Our definition also incorporates the idea of influencing policy and resource allocation, which, as we will see, is a very important dimension of many participatory projects and one that enhances cost consciousness and responsibility all around. Finally, we stress the need for people's involvement at all stages in the project cycle. People, Beneficiaries, Community, or Target Group? The different definitions of participation suggest that there are different kinds of actors in a participatory process, including people in general, the community, the poor, target groups, beneficiaries, stakeholders, and the disadvantaged. The differences in terminology reveal very real differ- ences in perception that influence the formulation and implementation of projects. Beneficiary or target group, for instance, has a very passive con- notation; the stakeholders in a project are more than just the local residents. Throughout this book, we use the terms people, local residents, user or client group, and community. We have tried to avoid beneficiaries and tar- get group because of their passive connotations, but we have used the other terms freely when we felt they were appropriate. For instance, it makes sense to talk about local residents in the case of settlement upgrad- ing; whereas in the case of a housing project involving people who origi- nally came from different areas, it makes more sense to talk about the client group. Use of the word community requires a caveat, since it so often accompa- nies the idea of participation and is perhaps the single most ideologically charged word in the development literature. It is common to see it used with a sort of romantic aura attached to it, as if local communities were the 21st century bons sauvages. In fact, communities, in the traditional sense, are becoming rare in today's world. Even in its most remote corners, the world is experiencing a process of "cognitive revolution" (CERFE 1995). Radio and television have sprouted up across the globe, as have cellular and conventional telephones and computers, faxes, and Internet access. Educational levels and technical capacity have increased everywhere. 22 SLUM UPGRADING AND PARTCIPATON These factors, among many others, have generated sharp social and cul- tural differences all around the world. Nowhere on earth-not in a rural village, much less in an urban slum-can local people any longer be con- sidered homogenous in their interests, values, motivations, or culture. Even when we refer to a rural village or a favela, it is becoming in- creasingly difficult to talk about community. More often than not, when we say "community," what we really are referring to is a group of people who happen to live in a certain place, each with different points of view, interests, and goals. Any specific place, therefore, is not really home to a community, but to a multiplicity of actors, be they collective bodies or individuals. Some are stronger and some weaker; each has different needs, views, and political ideals. There is normally a degree of conflict, and sometimes even violent opposition, among them. Rather than look- ing for a nonexistent community, it is therefore crucial to identify who these individual and collective actors are-to determine their culture, interests, views, potentials, constraints, and opportunities. The word community as used here should be taken to mean the group of residents of a particular settlement or the membership of a housing association and not, as the word usually implies, a body of people who constitute a homogeneous whole with shared traditions and outlook. Levels and Degrees of Participation The definitions of participation suggest that it comes in different levels. Here again the terminology is revealing: people influence, share control over, or control the process or project. To influence is not the same thing as to share control or to exercise full control. These differences in percep- tion translate into different approaches, and the idea of different levels of participation comes to the fore, as shown by Goethert (1998). As well as having different levels, participation may also have different degrees of intensity, as we will see below. Levels of Participation Goethert sees five different levels of participation (figure 1-1): * None * Information, or indirect * Consultation * Shared control * Full control. The first level of participation in the figure (none) corresponds to the absence of all three dimensions of a participation strategy described be- FACETS OF PARTICIPATION 23 Figure 1-1. Levels of Participation Level of Participation Community Role Outsider Role NONE t SURROGATE Levels of the Matrix INDIRECT 1|| < r * Levels indicate relationship of community to CONSULT INTEREST GROUP * < t ADVOCATE outsiders * Levels range from SHARED STAKEHOLDER - t STAKEHOLDER no community CONTROL control to full , t RESOURCE CONTROL RIlt, Source: Goethert (1998). low (absence of participation). The second and third levels (indirect/ consult) correspond to communication and negotiation strategies. The fourth and fifth levels (shared control / full control) correspond to com- munity management strategies. In Goethert's scheme, the importance and control exerted over the process by external support agencies' and their representatives (techni- cians) decrease with each step; and community information, ownership, and control increase. At the level of shared control, the community and external actors interact as equals. Goethert's matrix is a useful instrument for examining the phases of the project in which community inputs are introduced, with what de- gree of community control, and with what kind of relationship between the main parties involved (public sector organizations and the local resi- dents or client group). 'External support agencies are institutions or organizations that promote development initiatives in an area. They may be any of the following or any combination or partner- ship thereof: * Public sector agencies at the national, provincial, or local level * Not-for-profit private organizations such as foundations, development nongovern- mental organizations (NGOs) or institutions providing social services such as edu- cation and health * Private for-profit organizations such as those providing services in the context of an upgrading project (e.g., planning and engineering firms, contractors, providers of socio-technical support) * International development aid agencies such as development banks, agencies of the U.N. system, bilateral aid agencies, and international NGOs. 24 SLUM UPGRADING AND PAIRlCIPATION As will be seen in discussing our case studies (summarized in chapter 2 and individually detailed in chapters 6 to 10),2 there are three levels of participation in the examples we have studied: 1. Information and communication, which are present in all the cases 2. Debate and negotiation of options, which are also present in all the cases 3. Partnership-in management, as in the San Jose case, and in man- agement and financing, as in the Tijuana case. We found no cases in which there is no participation or in which the community exercises full control (the lowest and highest levels of Goethert's matrix). The very first level we have seen is information; par- ticipation in decisionmaking follows; at the highest level, the commu- nity manages project resources, but control is shared with the institution promoting the program or project. All the cases we have studied include the first two levels listed above; in Bolivia and Brazil, participation is limited to these two dimensions. In Costa Rica and Mexico, the element of partnership in management is also present, as in some of the initia- tives that make up the development of Lima's Villa El Salvador in our Peruvian case. The three levels can apply together or separately in different combi- nations to various activities in the scope of a project. For instance, the design of a program may be done at level 1, participatory planning of projects at level 2, and implementation of works at level 3. As will be seen, this is roughly the distribution adopted by the Foundation for the Promotion of Housing (FUPROVI) in our San Jose case. The three levels are also the three dimensions, or components, of a participatory strategy. Overall, a project has a higher level of participa- tion when the community and external actors are involved in each of the three components, though in most cases participatory strategies are lim- ited to levels 1 and 2. It is evident that in a project where strategies are not developed for any of the three aspects mentioned above, there is no participation. This idea accounts for the variety of approaches found in practice and for the possibility of a project's gradual development toward a more participatory approach, an outcome often seen in the field. 2These case studies examine Bolivia's People's Participation Law (chapter 6); the Guarapiranga Program in Sio Paulo, Brazil (chapter 7); the Habitat Popular Urbano Pro- gram conducted by the nonprofit foundation FUPROVI in San Jose, Costa Rica (chapter 8); community upgrading programs in Tijuana, Mexico (chapter 9); and Villa El Salvador, Lima, Peru (chapter 10). FACETS OF PARTCIPATION 25 Degrees of Intensity of Participation There are two elements that we can add to Goethert's scheme to com- plete our conceptual framework of participation: * Highlighting the role of other actors, besides the public sector and the community, such as nongovernmental and for-profit private or- ganizations, in the design, planning, implementation, and mainte- nance of projects * Refining the concept of levels of participation to include the idea of degrees of intensity of participation within each level. All levels, except that at which there is no participation, may favor the establishment of significant partnerships. The quality of participation depends not only on the level but also on the degree of intensity of partici- pation. Even though it is true that the majority of development projects do not reach the highest levels of participation, sometimes the levels of communication and negotiation already imply a great intensity of partici- pation and deeply influence projects' progress, impact, and sustainability. If we were to apply Goethert's classification to the Guarapiranga pro- gram, for example, it would not reach the fourth level, since at no time was the community directly responsible for the management and con- trol of project resources. However, participation in Guarapiranga influ- enced urban design decisions more than in the San Jose example, for instance, where the community had an important role in resource man- agement but not in urban design. In San Jose, participation is intense through community management and mutual-help construction, but decisions on urban and building design are made within a rather rigid framework set by FUPROVI. Therefore, it may be said that participation in Guarapiranga in terms of urban design is more intense, although the all-around level of participation of FUPROVI's projects is higher. Another interesting comparison is that between the San Jose and Tijuana cases. Although both are cases of community management, simi- lar in terms of the high level of responsibility assumed by the commu- nity and the high levels of cost consciousness and cost recovery that prevail, they differ markedly in terms of intensity of participation. In San Jose, people are directly involved in a complex set of activities over an extended length of time (typically 18 to 24 months). In Tijuana, there is only a small works committee that takes active part in the process, which is much shorter (6 to 8 months) and less complex, and most resi- dents limit themselves to paying their share of the community contribu- tion. This difference of intensity leads to different levels of local initiative and resident motivation to promote improvements in the aftermath of the project. Whereas in the Mexican case the paving of a road is usually 26 SLUMh UPGRADING AND PARnCIPAnON not followed by any other community-led improvements, in the Costa Rican case housing associations, following an initial period of down- time upon project completion, usually become a vehicle for further im- provements over the years. One of the key features of the development of Villa El Salvador has been a high intensity of participation throughout the process. In some areas, such as infrastructure development, it was the intense and orga- nized pressure of the residents that led to gradual service extension over the years. The level of local resident participation in such service exten- sion, however, was relatively low, since decisions and investments were made by government and utilities, and there were no instances of commu- nity management. In the area of economic development, however, the Villa El Salvador case combined a high level of participation with the usual high degree of intensity, leading to one of the settlement's biggest success sto- ries: the development of its industrial park. The participation of local microentrepreneurs and their associations in the design and execution of a bold and innovative plan, in partnership with government and with inter- national technical assistance and financial aid, has resulted in a thriving industrial and commercial hub that has changed the local economic scene. These examples and comparisons show us that participation may take many forms, and that not only are there different levels of participation, but also different degrees of intensity within each level (see table 1-1). Each particular combination has different results and different opera- tional implications. Broadly speaking, increases in either the level or degree of participation require that more resources be devoted to the design of a participatory strategy, to social intermediation services, and to supervision and monitoring of the process of participation. For ex- ample, in Tijuana and San Jose, where the levels of participation are simi- lar, the higher degree of intensity of participation in San Jose is reflected in a much stronger supply structure in terms of technical assistance, su- pervision, and monitoring. Different Levels of Capacity to Participate Different communities have different opportunities and different levels of capacity to participate. Communities vary greatly in their degree of organization and capacity, which is usually witnessed by the extent of their achievements over the years in advancing such matters as land tenure regularization and access to infrastructure and services. They also vary in terms of their: * Size * Wealth FACETS OF PARTCIPATION 27 Table 1-1. Levels and Degrees of Participation in the Cases Studied Level of Degree of Case Stage in project cycle participation intensity Bolivia Identification Consultation High Planning Consultation Medium Implementation Shared control Medium Conservation of benefits Indirect Low Brazil Identification None Planning Consultation High Implementation Consultation High Conservation of benefits Indirect Low Costa Rica Identification Consultation High Planning Consultation Medium Implementation Shared control High Conservation of benefits Consultation Medium Mexico Identification Consultation Medium Planning Consultation Medium Implementation Shared control High Conservation of benefits Consultation Low Peru Identification Consultation High Planning Shared control High Implementation Consultation Medium Conservation of benefits Consultation Medium Source: Authors' construction from field study data. * Distribution of wealth * Willingness and ability to pay for services * Age of settlement * Degree of informality and consolidation * Composition in terms of gender, age groups, income levels, and vulnerable segments * Degree of information * Access to education * Existence of skilled resource persons within the community * Patterns of representation and leadership * Political influence * Access to credit and savings schemes and business services * Job opportunities. Participation does not depend only on the initial degree of organiza- tion and / or other characteristics of a community. Organization and par- 28 SLUM UPGRADING AND PARTICIATION ticipation can be developed, as shown by the Tijuana and San Jose ex- amples. With the appropriate enabling environment, the potential that exists within low-income communities to take care of their own affairs may be mobilized. Anecdotal evidence shows that initiatives that may entail an improvement in people's lives have a mobilizing potential. Encouraging participation is therefore a matter of creating the appropri- ate channels and an overall enabling environment, and allocating the needed resources to promote participation. In this context, a develop- ment project may be seen as an externally generated enabling frame- work for harnessing and building people's capacity and resources. This can be summed up in one phrase: a demand-driven project needs a strong and specialized supply structure. Generating an enabling environment for participation requires technical assistance and specialized services such as socio-technical support, as well as a sound management framework and seed money to leverage local resources. These are the essential com- ponents of the required supply structure. Level of participation thus depends greatly on the will of external project promoters3 to plan and budget for the capacity-building and tech- nical assistance required for the intended level of participation. This is- sue is explored in detail in chapter 3. Motivations for Urban Upgrading and Housing Programs In all five of the cases covered in our field reports, the original motivat- ing force for the program, project, or process was found in a government response to specific problems such as: * Demand for housing * Lack of sanitation * Environmental/ health risks * Demand for consolidation of infrastructure (road paving, etc.) * Response to a force majeure situation (e.g., Tijuana's 1993 flood) * Demand for land tenure regularization. Government response is generated and shaped by the political con- text and, as we will see, can be heavily influenced by competition among 3The degree of control exerted by outsiders over the process may give rise to certain negative outcomes, such as political manipulation of participation, but it is not necessar- ily a bad thing in itself. We have seen that the resources, technical assistance, and coordi- nation provided by outsiders create an essential enabling framework for participation. In the cases studied, the supply structure set up by external support agencies has ensured that the level of participation would at least reach a certain minimum defined by the project design In many cases,.the level and degree of participation have exceeded what was originally envisaged by project promoters. FACETS OF PARnCwPATION 29 political parties and larger processes such as democratization and de- centralization. The problems that initiate a project may be located inside or outside the project area. We have seen that government action originates either from (1) local demands / local problems or (2) problems outside the com- munity (e.g., Guarapiranga, which originated from a metropolitan envi- ronmental sanitation issue). Government response may vary greatly in nature, from comprehen- sive upgrading projects to sectoral or piecemeal interventions, from projects aimed at solving the most urgent problems of an area with an emergency perspective, to projects that generate a long-term vision for the settlement and initiate a gradual process of development. As we will see in the following chapters, partnerships with community-based organizations and for-profit or other private sector actors such as nongovernmental organizations (NGOs) and foundations may be involved in various ways. In Latin America, as in other regions, there are many upgrading projects that do not result from government response but are initiated by NGOs or other civil society organizations. Such projects often achieve positive results and represent methodological advances. However, unless they succeed in attracting government support in the long run, they seldom reach an appreciable scale and tend to remain in the category of pilot projects, with varying degrees of success. An example of a project that was initiated by an NGO, in alliance with local residents' organizations, and succeeded in attracting government and development bank sup- port is Novos Alagados, in Salvador, Bahia, Brazil. Government and development bank support has given the project the critical mass it needed. Another example of an upgrading project generated by an alli- ance of civil society and community-based organizations is the Catuche Social Consortium in Caracas, Venezuela. Both of these examples are discussed in chapter 2. Types of Upgrading and Low-Income Housing Projects The main types of programs and projects in urban upgrading and low- income housing are given in table 1-2; box 1-2 discusses related terminology. Other Approaches to Participation Two authors, Peter Schuebeler and John Abbott, working from Asian and African experiences respectively, have in recent years proposed typologies of approaches to participation that are related both to the idea of levels and degrees of participation and to the different types of urban upgrading and low-income housing initiatives explored in the last sec- Table 1-2. Main Types of Urban Upgrading and Low-Income Housing Initiatives Type Mainfeatures Examples Sites plus development plan Settlements are planned and surveyed, lots allocated * Villa El Salvador, Lima (and gradual implementa- and occupied, infrastructure gradually implemented * INETT land subdivision program, Tijuana' tion of services) Sites and services Mass production of serviced sites in large schemes for * Integrated Serviced Land Project, South resettlement of urban squatters, usually in peripheral Africab land in city outskirts; variant: sites and services with * Seaview Gardens, Kingston, Jamaicac basic starter housing units Comprehensive upgrading Wide range of improvements involving different types * Guarapiranga, Sao Paulo of existing settlements of infrastructure according to predefined area plan; * Favela-Bairro, Rio this is integrated upgrading but undertaken in one go, * Alvorada, Belo Horizonte, Brazil CD usually in a two-year time frame * Novos Alagados, Salvador, Brazil Piecemeal upgrading of Improvements gradually added over long-term process * Community upgrading programs, Tijuana existing settlements but without an integrated area development plan * People's Participation Law, Bolivia Technical assistance and Organized support to self-help housing efforts; may be * Cooperative Housing Foundation, credit for home expansion combined with upgrading programs Ciudad Judrez, Mexicod and improvement * Desco Densification Program, Villa El Salvador Development of new New infrastructure and housing units are built on * FUPROVI's Habitat Popular Urbano, housing in new settlement empty land; variant: new housing on available land in San Jose existing serviced areas * Mutirdo programs, Brazil Type Main features Examples Redevelopment of degraded Agreement reached with landlords for building * Don't Move, Improve program, the existing structures renovation Bronx, New York' 'INETT is Baja California's State Real Estate Board, which pursues an active policy of land delivery to the poor through subdivision of land located in the desert around Tijuana, Rosarito, Tecate, and other major cities. The plots are sold below market prices, the urban layout is well-defined, and infrastructure provision is gradual. bAn ambitious undertaking to deliver serviced plots at scale on the outskirts of the country's major cities in post-Apartheid South Africa, this , initiative faced some of the same dilemmas as similar projects in other developing countries. Driven by the availability of inexpensive land, these projects have delivered serviced plots in locations that are generally not very desirable in terms of access to services and jobs. Their impact on poverty reduction is therefore questionable. 'This is a large 1970s project built in Kingston's western outskirts, close to the city's main industrial area. Like some of its contemporary projects, it included starter housing units. dThe U.S.-based Cooperative Housing Foundation, which is present in many Latin American and African countries, supports the local NGO Habitat and Housing FoundatJorn_FUNHAVI) in Ciudad Juirez in implementing the foundation's trademark approach to home improvement in developing countries based on a combination of lending, technical assistance, and deals with materials suppliers to lower construction costs. 'This type of program is common in industrialized countries, many of which have degraded inner cities with crumbling tenements (examples of the many developing country versions are the corticos of Sao Paulo, the conventillos of Buenos Aires, and the casas de vecindad of Mexico City). Source: Authors' construction from field study data. 32 SLUM UPGRADING AND PARnCIPAnON Box 1-2. The Many Names of Informal Settlements "Informal settlement" is a generic and technical term that seeks to cap- ture the many different features of those settlements that house many of the urban poor in developing countries. The name implies that the domi- nant feature of such settlements is their informality-the fact that they develop outside the existing legal and regulatory framework. They are sometimes called "unplanned" or "spontaneous" settlements, which is misleading, since many informal settlements are planned, albeit not in a conventional way, and are not at all spontaneous. Two main types of informal settlements exist: squatter settlements and informal subdivisions. Typically, a squatter sefflement is a chaotic, unplanned, "spontaneous" occupation; an informal subdivision is an informal commercial operation in which the entrepreneur-the informal sector land developer- provides a surveyed plot and proof of purchase, but usually no infrastruc- ture and no common space for public uses. Informal settlements have different names in different countries. Here is a small selection from Latin America: * Argentina-villas miserias * Brazil-favelas or invasoes (squatter settlements) and vilas (informal subdivisions) * Chile-poblaciones callampas (squatter settlements) * Colombia-barrios piratas (informal subdivisions) and invasiones (squatter settlements) * Costa Rica-precarios (squatter settlements) * El Salvador-tugurios (squatter settlements) and colonias ilegales (in- formal subdivisions) * Mexico-colonias populares (informal subdivisions) * Paraguay-rancherios pobres (squatter settlements) * Peru-barriadas or pueblos jovenes (informal subdivisions) * Venezuela-barrios de ranchos (squatter settlements). tion. Schuebeler (1996) suggests the following typology of four partici- patory approaches: Community-based support strategies. These are appropriate for community-based strategies in which the main objective of partici- patory activities is to enhance the community's capacity to manage the development and operation of local infrastructure services. The orientation of the public-private partnership is from the govern- ment toward the community, and support normally takes the form of organizational and technical support to community groups. The initiatives involved are usually fairly small-scale and relatively simple. The Tijuana community upgrading programs are an example. FACETS OF PARTlCIPAT1ON 33 * Area-based involvement strategies. These are normally govern- ment-led; the aim is to mobilize the community to make specific inputs into government-managed activities. This approach is fairly common in externally funded integrated upgrading projects. The Guarapiranga program is a good example. * Functionally based collaboration strategies. These occur when responsibilities are "unbundled," with each stakeholder taking re- sponsibility for a particular aspect of service provision. The divi- sion of responsibilities is linked to on-plot or household facilities, local or tertiary facilities, secondary or secondary level facilities, and trunk facilities. A functionally oriented NGO is a common par- ticipant organization, and building community management capac- ity is normally an important objective of the approach. Pakistan's Orangi Pilot Project is an example. * Process-based decentralization strategies. Suggested by the au- thor as the ideal, these aim to bring infrastructure management closer to users and to increase responsiveness and accountability. Schuebeler sees this as going beyond individual projects to operate at a citywide scale. He also sees public-private partnerships as im- portant components of decentralization strategies. John Abbott (1996) cites two main approaches to participation: com- munity development approaches, which he links to modernization theory; and empowerment approaches, which he links to dependency theory. He suggests the need to go beyond both, to what he calls negoti- ated development, when the issues to be addressed are anything other than fairly simple. The State: Different Roles and Levels of Involvement Although the state is behind almost all urban upgrading and shelter initiatives, its role and level of involvement vary significantly. For in- stance, we will see examples in the following chapters in which the state generates and coordinates a program (e.g., Brazil, Mexico, and Bolivia) with local community participation and varying degrees of involvement of external donors and other actors. We will also see a case (Costa Rica) in which the state created favorable conditions for a private organiza- tion to become an effective tool for shelter delivery to the urban poor. This was done both through the establishment of a national housing sub- sidy program and by targeting the organization-FUPROVI-as the re- cipient of a foreign grant and technical assistance. In the case of Villa El Salvador, the state, using the Peruvian formula of sites plus a develop- ment plan to cater to a burgeoning housing demand, created the condi- 34 SLUM UPGRADING AND PARICIPATION tions for a long-term development process. In this context, community organizations, the state itself, and other organizations have interacted for almost 30 years in the improvement of shelter and the provision of services, in a process that is still ongoing. Motivations for Participation The rationale or opportunity for participation in urban upgrading and shelter projects varies significantly according to the situation. Broadly speaking, the participatory approach is directly linked to the very na- ture of urban upgrading and shelter projects, and to the reason for un- dertaking such projects in the first place. Projects stem from needs and demands to be fulfilled through state intervention and/ or collective ac- tion, and such needs and demands must be organized. Problems must be clearly identified and understood; priorities established; and the groundwork for sustainability laid by securing stakeholder ownership, responding to effective demand, and clearly defining stakeholder roles and responsibilities. Motivations for designing participation into a project may stem from any combination of the following reasons: * Enhancing project feasibility by ensuring stakeholder collaboration through demand-responsiveness and open channels for communi- cation of grievances * Overcoming resource constraints through community labor or fi- nancial contributions * Making use of local information and know-how to ensure that the project management unit makes better informed decisions * Improving targeting by knowing more about beneficiary commu- nities and the needs of the various groups that comprise them * Improving the odds for future cost recovery by promoting stake- holders' cost consciousness and fostering in them a responsible re- lationship to urban services and infrastructure * Enhancing sustainability by ensuring stakeholder ownership, mak- ing information available, and developing local capacities, which will strengthen the odds for further development initiatives in the aftermath of the project * Enhancing transparency and accountability in the management of public funds * Promoting democratization and decentralization of resource allocation. In practice, as shown in table 1-3, the perspectives of external support agencies vary greatly. As we will see in our case studies, participation is sometimes introduced in response to specific problems in a reactive man- FACETS OF PARnCIPAnON 35 Table 1-3. Approaches and Motivations for Participation Case Approach Motivation Bolivia Proactive (policy and Democratization and decentraliza- methodology focus) tion by establishing resource flows to the local level and community partic- ipation in resource allocation and expenditure control Brazil Reactive (project focus) Feasibility of project implementation (i.e., ensuring project achieves colla- boration of local residents by cater- ing to their needs and demands) Brazil Proactive (policy and Community input in subproject for- methodology focus) mulation ensured through participa- tory information gathering and area development planning Costa Rica, Proactive (policy and Overcoming resource constraints Mexico methodology focus) (i.e., achieving cost reduction through community labor or upfront commun- ity contribution) Costa Rica Proactive (policy and Targeting of program (self-help con- methodology focus) struction as a targeting filter) Costa Rica, Proactive (policy and Ensuring ownership and sustainabil- Mexico methodology focus) ity through community management and related capacity-building Mexico Reactive (project focus) Political pressure by communities and competition between rival political parties Mexico, Proactive (policy and More effective and transparent man- Costa Rica methodology focus) agement of public funds Peru Reactive (project focus) As a result of organized political pressure, community participates in decisionmaking Peru Proactive (policy and Participation in planning is seen as methodology focus) key to achieving sustainable devel- opment (participatory area develop- ment planning is a tradition and a key development tool) Source: Authors' construction from field study data. 36 SLUM UPGRADING AND PARTICWATION ner; sometimes, it is incorporated into project design proactively to make use of local information and resources, ensure stakeholder ownership, de- velop local capacity, and-ultimately--enhance impact and sustainability. The reactive approach tends to have a narrow project focus, while the pro- active approach usually has a broader policy and methodology focus. The Guarapiranga program shows us that usually in urban upgrad- ing, when a project is not built around participation from the start, ele- ments of participation need to be introduced at a later stage to ensure feasibility of project implementation. Indeed, especially in the case of squatter settlements, the specific requirements of urban upgrading make it difficult to imagine implementing a project without participation. This is explored in more detail in box 1-3. Although participation can have many motivations and many entry points, as will be seen in the following chapters, it is always a very im- portant force in a program or project, even when it is introduced in a reactive manner. Furthermore, the effects of participation usually go beyond its immediate motivation to an extent determined by its level and degree of intensity. Some Considerations Regarding Poverty and Social Capital4 The strong links between urban upgrading and low-income housing on the one side and the enhancement of social capital and poverty reduc- tion on the other mean that concepts such as poverty, vulnerability, so- cial risk, social exclusion, and social capital recur throughout this book. This section defines and briefly discusses these concepts, exploring the policy implications of each. Social Exclusion, Poverty, and Vulnerability Social exclusion may be defined as a process of impoverishment brought about by the simultaneous action, in relation to a person or group or to the area where they live, of various factors of social risk such as the following: * Inadequate shelter and a degraded living environment due to the lack of basic infrastructure and / or exposure to waste loads gener- ated by nearby traffic or industry * Lack of access to adequate health care facilities * Lack of access to adequate educational opportunities * Lack of access to adequate work opportunities * Presence of criminal activity in the area and a consequent lack of security 4This section is based on CERFE (1998). FACETS OF PARnCIPATION 37 Box 1-3. Why Squatter Settlement Upgrading Cannot Be Done without Participation The "spontaneous" or "unplanned" pattern of land occupation of squat- ter settlements is characterized by narrow and tortuous access routes, occupation of areas of risk (e.g., landslide or flood-prone areas) and, per- haps most of all, by the lack of a precise definition of public and private spaces. In a typical squatter settlement, such as those in Rio's Favela- Bairro or Sao Paulo's Guarapiranga, many plots lack direct access to a street or lane, forcing people to cross other plots to get to their own. The first task to be contemplated in upgrading a squatter settlement is therefore a physical planning task. This entails improvement of settle- ment layout to define public and private spaces, provide a means of ac- cess to all plots and open roads to improve circulation, find routes for storm drainage, provide pathways for infrastructure, and connect the settlement to the surrounding urban fabric. It is also necessary to remove the structures occupying risk areas and give these areas over to a socially defined use. Both Guarapiranga and Favela-Bairro have contributed im- portant methodological advances in these physical planning tasks. Even though the first duty of the planner of in-situ upgrading is to preserve the existing stock of shelter and infrastructure as much as pos- sible, the conditions outlined above mean that a certain number of struc- tures will need to be removed and relocated. Depending on the extent of such removals, some families will need to be resettled in other areas. During the implementation of the works, some structures need to be partially demolished and rebuilt; and some kinds of infrastructure, like condominial sewers, need to be built inside private plots. These are com- plex operations requiring technical skill, ingenuity, and patience. All this is next to impossible to do in an effective way if the people concerned-the people whose lives will be disrupted by removal, relocation, and partial demolition of their homes-do not take part in the discussion of alterna- tives and do not agree that the goals to be reached justify the disruption they will suffer, and, ultimately, that the end result will benefit them as well. This sort of consensus and collaboration is essential for the success- ful implementation of such a complex operation and can only be achieved through participation. The municipality of Sao Paulo realized this during the pilot phase of the Guarapiranga upgrading project, which caused it to adopt a much more participatory approach in its subsequent phases. * Lack of mobility through lack of access to affordable and efficient modes of transportation * Gender imbalance, characterized by a lack of opportunities for women and a lack of specific measures to address this imbalance 38 SLUM UPGRADING AND PARnaCPATION * Lack of family stability, leading to deteriorated conditions for the care and socialization of children * Lack or low quality of services provided by the state in the area * Lack of access to communication and information * Situations of conflict or violations of basic political and human rights * Lack of social sector policies that may translate into appropriate assistance from the state or civil society organizations to help miti- gate the above factors of social risk. The combined action of these social risk factors, characterizing a situ- ation of social exclusion, pushes the excluded toward a condition of pov- erty. The excluded, in some cases, are not yet poor, but they will become poor in the near future if the situation of exclusion does not change. Poverty, therefore, is a condition or situation that results from a combi- nation of factors and not only from lack of income. When poverty is not extreme, it leads to a lack of opportunities for personal, family, and so- cial development, but it does not destroy the capacity to organize, to exert political pressure, or to interact with public and private sector bodies in development initiatives. In many situations, as will be seen in the examples in chapter 2, the poor display a remarkable capacity for self- help and great resourcefulness. In the cases we have studied, as in most low-income settlements in Latin America, all or almost all the factors of social risk mentioned above were present in varying measures. The only factor that was absent in all cases was the existence of a conflict situation or serious violation of po- litical rights, since all the countries we visited are democracies or have made progress toward a democratic form of government in recent years. In the Peruvian case, the serious conflict situation of the early 1990s was a major factor of social risk and a major obstacle to progress. The re- moval of such an obstacle has meant that the difficult journey to progress could be resumed. Extreme poverty, or indigence, is a different matter. It entails a total lack of access to opportunities over an extended length of time, and it brings about severe psychological and social damage, frequently leading to the desocialization of the persons or groups involved. This involves not only a lack of capacity for organization or self-help, but also means that sig- nificant and long-term assistance must first be given to mitigate the situ- ation before these groups may be expected to develop capabilities for self-help. The cases we have studied have dealt with people living in poverty, but seldom with those in extreme poverty. Vulnerable groups are those that not only find themselves in a situation of poverty, but that face particularly serious social risk factors that they cannot overcome without outside help. They may not be in a condition of FACETS OF PARTICIPATION 39 indigence yet, but they will be relentlessly pushed toward it if they do not receive specific attention and assistance. Vulnerable groups usually include: * Women who are heads of households and their families * Youths who are unemployed or employedinlow-productivitysectors * Working children and adolescents * People with handicaps or illnesses * Elderly people. In the cases we have studied, one of the recurring shortcomings was the lack of specific attention to the needs of vulnerable groups. Programs and projects tended to lump them together with the rest of the poor, putting them at further disadvantage. Civil Society, Social Initiative, and Social Capital Current definitions of social capital often have a problem when it comes to specifying the locus to which the concept of social capital refers. They usually consider it as an expression or dimension of society or of a com- munity in general. Society (or even a specific community), when taken as a whole, is too broad and vague a concept; thus, the notion of social capital runs the risk of remaining vague, ambiguous, and of little utility. It is therefore better to consider, not society as a whole, but only civil society, the segment thereof that is empirically detectable and that can be mobilized to assume social responsibility. Civil society may be defined as the set of collective and organized actors that exhibit the intention to enter the public arena to tackle the problems that afflict society. It is this entity that can be taken as the empirical reference or locus for the notion of social capital. To find a stable linkage between social capital and civil society, we must focus on the composition of civil society. There is a tendency to iden- tify civil. society with a very small number of collective actors, usually citizens' groups, at times businesses, and-on rare occasions-govern- ment agencies. In reality, the kinds of actors that enter the public arena are much more numerous. Moreover, the types of actors that exhibit an orientation toward social responsibility vary considerably over time and with.the changing social context. Civil society is thus richer and more articulated than had been assumed. It is a dynamic element of society, the features of which must be discerned empirically. This is the way to avoid an abstract or rhetorical view of civil society and instead view it as a circumscribed, quantifiable social reality. It may be argued that the concept of civil society thus defined includes government agencies, since they are organized actors that play a very important role in the public arena, and the state is after all an expression 40 SLUM UPGRADING AND PARTICIPATION of society. However, for didactic reasons, it is important for us to be able to distinguish between public and private actors in this book; we there- fore use the expression civil society to refer only to nonstate actors. The study of low-income areas shows that there is a link between civil society and social protection. Different kinds of collective actors seek to protect people from existing social and environmental risks (which, ob- viously, are exacerbated by the difficult conditions of low-income settle- ments). The ability to produce significant effects in terms of providing people with social protection seems to be an attribute of civil society, and one that is gaining increasing recognition in planning public poli- cies. For example, the Glass of Milk organization and the community- run soup kitchens in Villa El Salvador have played an essential social safety net role during Peru's structural adjustment. The term we have used to describe this function is social initiative, which conveys the idea of a concretely measurable quality specific to civil society that involves taking an active attitude to controlling risks (and thus a tendency to op- erate in the welfare sense). Sometimes, as in the case of Peru, civil soci- ety is found to be particularly active, due to the limited action of the state. In other cases, as in Costa Rica, the existence of well-structured public institutions that tend to be adverse to grassroots mobilization re- duces civil society activity. Several factors are usually involved when there is a high level of social initiative: * The quality of the collective actors in terms of culture, orientation to change, and ability to mobilize resources * The tendency of civil society actors to work in partnership and form networks of mutual cooperation * The substantial involvement of public administration in forging partnerships with civil society actors to implement systems to con- trol social risks. Now the issue becomes the relationship between this quality in civil society and social capital. There is a strong tendency to identify or su- perimpose these two elements, on the notion that a society that can ef- fectively control the risks to which it is exposed must have substantial social capital. We see the matter slightly differently. Social initiative seems in fact to be a self-defense mechanism of civil society, pertaining mainly to the domain of social reproduction when threatened by social and environ- mental risks (health crises, illiteracy, unemployment, no access to higher education, geographical isolation, conflicts, etc.). Conversely, social capi- tal, at least by current definitions (and the one adopted in this study is no exception), is aimed at growth and expansion rather than the control of risks. In this context, again in the example of Villa El Salvador, the abil- FACETS OF PARTICIPATION 41 ity of microentrepreneurs to create trade associations and negotiate with the state-a key feature of the creation of the area's industrial park- should be seen as a feature of social capital. Social initiative and social capital thus appear to be two autonomous dimensions of civil society. To be sure, a high level of social initiative in civil society fosters the production of social capital, but it does not pro- duce it directly. There are in fact groups (rural communities, for example) that have a great capacity for managing risks but exhibit little capacity for development. Therefore, social initiative is not in itself sufficient to produce social capital; there are other factors. But what are they? Social Capital as the Measure of Civil Society The question we have just posed leads us to consider how to define and use the concept of social capital. If civil society is the referent of any discussion of social capital, then the latter can be considered a measure of civil society. Yet, having clarified that social capital does not measure civil society's inclination toward social protection (nor, as some suggest, the generic "good functioning" of a group), we must then ask what exactly it does measure. For the purposes of our study, social capital can be usefully viewed as the measure of the capacity of civil society (using the definition provided, including those economic actors showing a tendency to assume social re- sponsibility) to bring about economic growth. Thus, while social initiative describes the reproductive function of civil society, social capital has to do with another of its functions, namely, the productive function. Social capital represents an interaction between civil society (and thus its social initiative) and certain elements external to it-in particular three important local factors that can favor its action (confidence in social re- lations, opportunity, and the existence of cognitive capital) and a num- ber of obstacles (legal, regulatory, social, cultural, and organizational) that can reduce its impact. All things being equal, the higher the social initiative levels, the greater the probability of the implementation of social protection measures. Simi- larly, the higher the social capital index, the greater the probability of economic growth. When both indices are high, as in the Villa El Salva- dor case in Peru, there is more likelihood that we will see greater overall social and economic development. The above definitions may be encapsulated in the following points: * Civil society does not comprise all collective actors, but only those characterized by an orientation toward social responsibility. * Civil society is the locus of both social initiative and social capital (both are attributes of the former). 42 SLUM UPGRADING AND PARnCIPATION * Social initiative is the measure of a civil society's capacity to control social risks and thus foster social development. * Social capital is the measure of a civil society's capacity to contrib- ute to economic development. * The overall quality of a civil society will be higher the greater the de- gree of social initiative and the quantity of social capital it possesses. Figure 1-2 illustrates these points. Sustainability and Local Initiative A program or project is sustainable when it generates a permanent im- provement in the quality of life of the people involved. A sustainable project is one that permanently augments a community's resources- and hence its social initiative and social capital-and thus reduces its vulnerability. As in the case of FUPROVI's work with the housing asso- ciations in Costa Rica, sustainable efforts permanently improve living conditions; perhaps more importantly, however, they start a long-term development process. Therefore, sustainability is the most adequate measure of the final success of a program or project. A successful project builds physical as- sets and capacity that endure after the external assistance is no longer Figure 1-2. Civil Society, Social Initiative, and Social Capital Measures a civil society's \ capacity to control CMVL SOCIETY Set of collective actors QUALITY OF A characterized by an C9IL SOCIETY orientation toward A social responsibility/\ SOCIAL AIA Measures a civil society's A capacity to contribute Source: CERFE (1998). FACEIS OF PARIICIPAllON 43 there. Designing for sustainability is an important part of the formula- tion of an urban upgrading or low-income housing program or project. Two Dimensions of Sustainability Sustainability has the following key dimensions: * Conservation of the benefits that derive from the project * Continuity of the development process after the project. Both dimensions depend on the community's motivation and techni- cal, organizational, and financial capacity. Following are some compo- nents of the two dimensions, which may be seen as stages of growth and change within the community: * Conservation of the benefits that derive from the project - Security of land tenure, which has important practical and psy- chological dimensions, as will be seen in the case studies - Clear definition of public and private spaces, which is one of the foundations defining the relationship of local residents to the city and to each other - Availability of basic infrastructure and services that perform well over time - Permanence of most residents in the settlement in the project's aftermath - Community knowledge of the nature and characteristics of the local infrastructure - Consciousness of the investment and operation and maintenance costs of infrastructure - The community's willingness and ability to pay taxes, service fees, and consumption tariffs and to repay contracted debt. * Continuity of the development process after project completion - Increased interest in achieving further benefits and in organiz- ing in order to obtain them - Capacity to improve and gradually expand shelter units - Increased entrepreneurship and economic activities stimulated by the upgrading process - Increased social mobility - Improved access to social services, a stronger solidarity network, and strengthened connections within and among households. Ultimately, the conservation of the project's benefits and the continu- ity of the development process lead to a reduction of the social risk fac- tors at work in a settlement and to the reduction of poverty. 44 SLUM UPGRADING AND PARTICIPAnON Stakeholder Participation and Sustainability Stakeholder participation in planning and decisionmaking related to the program or project has a positive impact on the conservation of project benefits. In this context, the following aspects may be highlighted: * Participation in information gathering and analysis raises the aware- ness level in relation to the area's problems and resources. * Participation in the analysis of alternatives for intervention and in area development planning allows the project to make better, more informed decisions and enables local people to get acquainted with the key concepts of planning and development in relation to their area. * Participation in the analysis of alternatives and in the decisionmak- ing related to the organization of construction activities offers op- portunities for community members to know and understand relevant details of the infrastructure being implemented. * Participation in the discussion of project costs and alternatives for cost recovery and operations and maintenance enhances cost con- sciousness and acquaints local people with the key issues involved in the conservation of the benefits generated by a project, laying the groundwork for a successful post-implementation phase. One way to help guarantee the continuity of the development process is the involvement-from the initial phases of the project-of private institutions and services, such as childcare, health centers, and schools that are run by churches or NGOs in the area. Such private intermediary structures constitute a social support network that can exert pressure to ensure the continuity of a development initiative. Especially in long-term projects, we have verified that private inter- mediary structures (and also public sector service units such as schools and clinics) represent a stable reference point and a series of stimuli for participation to the families that live in the area, even though they pro- vide specific services not directly related to the upgrading project. Fur- thermore, the staff of such organizations usually includes some of the most qualified human resources present in a low-income area; these per- sonnel can help in organizing and implementing participation in infor- mation gathering, planning, and other project activities. To stimulate continuity of development efforts, projects should: * Promote participation in information gathering and analysis, in the analysis of alternatives for intervention, and in area development planning FACETS OF PARTICIPATION 45 * Promote participation in the analysis of alternatives and in the deci- sionmaking related to the organization of construction activities (the same applies to public sector units such as local schools and clinics) * Promote the participation of private and public actors in the discus- sion of project costs and alternatives for cost recovery and operations and maintenance * Contribute to the strengthening of local private social service struc- tures that represent a resource in the network of community relations * Promote the involvement of these private actors in project develop- ment, even when their principal mission or mandate is not directly related to upgrading or shelter. It is necessary to pay attention to the time requirements of each action. The distinct nature of each component often imposes a distinct schedule for completion. We have verified on several occasions that the comple- tion time of a project in an often fragmented and unstructured context is insufficient to ensure the blossoming of subsequent development initia- tives. These efforts can and should, whenever possible, be made to move faster by incentives. But they need a longer growth period and should not be constrained by the time frame of an infrastructure project. These issues are explored in detail in the following chapters. Finally, it is worth noting, with regard to the relation between participa- tion and the continuity of the development process, that participation can generate significant political power. In a participatory process, new lead- ers emerge and make their political connections and often pursue a politi- cal career. Old leaders may have their power enlarged or eclipsed. Politicians who have their roots in community-based organizations, or in external support agencies that take part in upgrading projects, often build their political base through upgrading-related actions-which may have a posi- tive impact on the continuity of the development process. On the other hand, the close relationship between participation and politics can divert the process from its original aims and make it less representative, for in- stance when politicians try to strengthen their political allies by excluding opposition groups from participating. In our case studies, we have learned of examples of populist politicians creating this kind of situation in Mexico and Bolivia.s In the same countries, however, there are also examples of a new political ethos that is more respectful of democratic principles. 5Populism, in Latin American politics, refers to a way of governing that is character- ized by high-blown rhetoric about poverty and inequality, while govemment actions of- ten take the form of fiscally irresponsible handouts that are nominally targeted at the poor, but in reality most often end up being captured by the lower middle class and middle class. Populism is normally also characterized by clientelism or patronage, i.e., the allocation of public resources to groups that constitute a politician's power base. 2 Case Summaries This chapter begins with presentations of key statistics on the countries and cities we have studied, and goes on to provide a brief description and main conclusions of each of our case studies. Table 2-1 is an overview of key characteristics of these cases. A full-length version of each case, with extensive excerpts from interviews with project participants, is con- tained in part II of this book (chapters 6-10). Other relevant upgrading and housing programs and projects are presented at the end of this chapter. Statistical Comparisons Table 2-2 presents statistical comparisons among the countries of our study. We have chosen indicators that portray the respective demographic and social situations to provide some background to the reading of the case summaries. The statistics reveal that all the countries in our study are undergoing a process of fast urban growth. In all of the countries, the urban popula- tion far outnumbers the rural. Costa Rica is the only country in the study where the rural population is still growing at an appreciable rate-al- though at half the growth rate of the urban population. Peru, which is already over 70 percent urban, has similar relative rural-urban growth rates. The other countries-Bolivia, Brazil, and Mexico-have negative growth rates for rural population and high growth rates for urban popu- lation. In Bolivia, where 37 percent of the population still lives in rural areas, city populations are growing at an astonishing 4.5 percent per year. The poverty and income distribution data show that poverty is more extreme, and income distribution worse, in rural areas than in urban in all five countries. In Costa Rica, most of the poor still live in rural areas; 47 Table 2-1. Main Features of the Cases Studied Feature Bolivia Brazil Costa Rica Mexico Peru Type of action Urban upgrading; Urban upgrading; Low-income housing; Urban upgrading Urban upgrading; (i.e., physical social investment environmental sani- urban upgrading social investment assets built) (schools, clinics, tation (schools, clinics, community centers); community centers) rural infrastructure Scope Nationwide One water catchment Metropolitan Citywide One district of a metro in a metro area area (pop. 360,000) (pop. 600,000) Innovations National legal frame- Horizontal institutional Community manage- Communities operate State support and an work; mandatory arrangement; private ment of mutual-help at a very high level of area development m0 participatory budget- sector provides socio- construction made cost-consciousness and plan have made a ing at local level; technical support; possible by intense control; community great difference; transparent subsidies large-scale capacity-building and contribution; trans- participation has socio-technical support; parent subsidies let community make transparent subsidies the most of limited resources Duration 1994-present 1993-2000 1988-present 1991-present 1971-present Investment $100 million (yearly) $190 million $14 million (1987-98) $57 million (1991-98) $330 million Promoting National government Local government; National government; Local government National government; agency state government NGO local govermnent; community-based organizations Feature Bolivia Brazil Costa Rica Mexico Peru Funding sources National government Local government; National government; Federal government; National government; state government; bilateral donor state government; local government; multilateral donor local government; donor agencies community Participatory Participatory budget- Information; consulta- Community manage- Participatory budget- Participatory plan- strategies ing; community con- tion; negotiation; orga- ment of mutual-help ing; community man- ning; organized com- trol of local govern- nized community pres- construction agement munity pressure on ment spending sure on policymaking policymaking; com- munity control of local government Cost recovery High level of cost No explicit strategy High level of cost High level of cost Innovative strategies D strategies consciousness consciousness; com- consciousness; com- for land tax and ser- munity management munity management vice fee collection; of resources of resources; upfront metering and con- community financial sumption-based contribution tariffs for water, sani- tation, and electricity Gender Design included ex- No explicit strategy; Support to women- No explicit strategy; Very active, increasingly strategies plicit gender strategy, women normally take headed households women normally take influential women's but little evidence of the lead in commun- through World Food lead in community movement has a major its application ity organization Program packages, organization role in addressing issues National Social Wel- such as nutrition and fare Institute subsidies, basic education and group solidarity (Table continues on thefollowing page.) Table 2-1 (continued) Feature Bolivia Brazil Costa Rica Mexico Peru Resettlement Very little impact on Very elaborate strat- Not applicable Very little need for VES was a major strategies housing or resettle- egy, including tempo- (FUPROVI helps resettlement since the initiative to provide a ment; need for reset- rary lodgings, building associations build colonias are planned resettlement alterna- tlement is limited for of new units within new housing) informal subdivisions tive for families oc- reasons similar to settlement and hous- with a regular grid cupying other areas; Mexican case ing schemes outside pattern and access to planned as, and settlement all plots became, a city C) For-profit Limited (public Socio-technical sup- Limited involvement Currently, only public Public works contrac- private sector works contractors) port providers; project (providers of building works contractors; tors and providers of involvement management ser- materials and special- potential for partner- building materials; vices; public works ized building services) ship between local private electricity contractors businesses, maquil- utility adora firms, micro- finance institutions Note: Data are current as of field study conduct. Source: Authors' construction from field study data. CASE SUMMARIES 51 in Brazil and Mexico, poverty has already become a prevalently urban phenomenon. This is about to happen in Bolivia and Peru as well, due to rapid urban growth. The fast growth of cities in Costa Rica means that it is only a matter of time before a similar phenomenon occurs there as well. Of the five countries in our study, Costa Rica presents the most favor- able social picture. It has the highest life expectancy, the highest literacy rate, the lowest infant and maternal mortality rates, the lowest percent- age of households without access to basic services, the lowest disparity of income between men and women, and the highest Human Develop- ment Index (HDI). Costa Rica also tops the list in social expenditure as a proportion of gross domestic product (GDP). Highlighted characteris- tics for the other countries in our study follow: * Bolivia has the highest percentage of people with no schooling. Its income distribution is not as good as Costa Rica's or Peru's, but is much better than Brazil's or Mexico's. Its poverty levels are the high- est in the sample, but social expenditure levels have improved sig- nificantly following reforms. * Brazil has the second lowest indicators of schooling and the worst income distribution, but it is second lowest in both overall poverty and extreme poverty rates. Its social expenditure is high; a large proportion of this, however, is spent regressively on social security. Brazil is also the only country in the list whose HDI ranking is worse than its per capita GDP ranking. * Mexico has the second highest overall and urban poverty levels, and its overall income distribution and schooling indicators are al- most on a par with Brazil's sobering figures. The country's urban income distribution is much better, though; it is second only to Costa Rica's. Expenditure in human capital (education and health) as a proportion of gross national product (GNP) is higher than Brazil's and Peru's, but lower than Bolivia's and Costa Rica's. * Peru's income distribution is on a par with Costa Rica's, the best in the sample. Its social expenditure and human capital expenditure as a percentage of GDP and GNP, respectively, are the lowest in the sample. Its poverty and absolute poverty indicators are in the lower range of the sample. Social indicators for the cities in our study are consistently above their respective country's national average. Although these cities have a high percentage of their population living in poverty, they are clearly bea- cons of progress in their respective countries, not only in relation to eco- nomic dynamism but also in terms of social development. Table 2-2. Key Statistics of Countries Studied Indicator Bolivia Brazil Costa Rica Mexico Peru Population and demography Total population, 2001 (in millions) 8.5 172.6 3.9 99.4 26.1 Percent urban, 2001 62.9 81.7 59.0 74.4 72.8 Average annual rate of growth, 2000-15 2.0 1.1 1.8 1.2 1.4 Urban 4.5 2.7 3.3 2.7 2.1 Rural -0.2 -3.1 1.6 -0.6 1.0 Human Development Index (HDI) 0.653 0.757 0.820 0.796 0.747 HDI ranking, 2000 114 73 43 54 82 GDP per capita (PPP$, thousands), 2000 2.42 7.63 8.65 9.02 4.80 GDP per capita minus HDI ranking 6 -13 14 1 6 n Poverty and income distribution Human poverty index, 2000 Rank 28 17 2 11 19 Value(%) 16.3 12.2 4.0 9.4 12.8 Population below the income poverty line (%) $1 a day (1993 PPP $), 1983-2000 14.4 11.6 12.6 15.9 15.5 $2 a day (1993 PPP $), 1983-2000 34.3 26.5 26.0 37.7 41.4 National poverty line, 1987-2000 - 17.4 22.0 10.1 49.0 Poor households (% of total) Total - 29 20 38 37 Urban 47 25 17 31 25 Indigent households (% of total) Total - 11 5 13 18 Urban 19 8 5 7 7 Indicator Bolivia Brazil Costa Rica Mexico Peru Poverty and income distribution Participation in household income distribution (total) 40- 11.7 8.4 13.5 10.2 13.4 10+ 42.1 47.0 34.2 44.4 35.4 GINI coefficient 0.53 0.59 0.46 0.56 0.46 Participation in household income distribution (urban) 40- 13.6 10.5 17.3 17.6 - 10+ 37.0 44.3 26.8 33.7 - GINI coefficient 0.455 0.538 0.357 0.392 - Health Undernourished people (% of total population), 1997-99 22.0 10.0 5.0 5.0 13.0 Life expectancy at birth 62.6 68.1 77.5 73.0 69.3 Mortality rate for under age 5 (per 1,000 live births) 79.0 39.0 13.4 35.8 41.4 Probability of not surviving to age 40 (% of cohort), 1995-2000 18.4 11.3 4.0 8.3 11.6 Education Literacy rate, 2000 Adult (age 15 and above) 85.5 85.2 95.6 91.4 82.7 Youth (15-24) 95.9 92.5 98.3 97.0 89.9 Educational profile, 1995 No schooling 34.3 18.1 3.4 18.8 9.2 Primary 40.6 67.6 67.3 60.3 47.1 Secondary 16.1 5.6 15.2 12.5 28.2 (Table continues on thefollowing page.) Table 2-2 (continued) Indicator Bolivia Brazil Costa Rica Mexico Peru Urban households Children in urban households w / low-education environment 0-5 25.0 47.5 17.9 - - 6-14 24.3 48.7 15.1 - - Female-headed households in urban area (%) Total 21 24 27 18 - Indigent 24 24 51 17 - Nonindigent poor 22 22 36 15 - Nonpoor 19 24 24 19 - Access to basic services n Population using improved water sources (%), total 79 87 98 86 77 Urban 93 95 98 94 87 Rural 55 54 98 63 51 Population using adequate sanitation facilities (%), total 66 77 77 73 76 Urban 82 85 85 87 90 Rural 38 40 40 32 40 Access to electric lighting, 1999 (%) 67 95 - 95 69 Labor market Participation rate, 1999 (%), total 62.3 65.5 60.9 60.8 72.0 Men 65.1 79.8 79.0 80.6 82.9 Women 50.8 52.6 44.9 42.8 62.1 Open unemployment rate, 1999 (%), men and women 3.6 11.4 6.1 3.3 10.7 Men 3.7 9.4 5.3 3.7 8.1 Women 3.6 14.1 7.4 2.7 13.8 Indicator Bolivia Brazil Costa Rica Mexico Peru Labor market Disparity of men/ women (%) -40 -38 -22 -41 - Urban pop. working in low-productivity sectors (%), total 65.5 46.6 39.6 43.6 - Men 57.1 41.9 37.5 40.4 - Women 74.1 51.9 40.4 46.0 - Social expenditure Public expenditure per capita, 1997 (US$) 119 951 550 352 189 Education 59 164 153 153 - Health and nutrition 14 138 193 - @ Social security 27 487 146 Housing, water, and sanitation 20 162 52 - - Public expenditure per capita as % of GDP, 1997, total 12.0 19.8 20.8 7.8 5.8 Education 5.9 3.4 5.8 3.4 - Health and nutrition 1.4 2.9 7.3 - Social security 2.7 10.1 5.5 Housing, water, and sanitation 2.0 3.4 2.0 - - Human capital expenditure/GNP (%), total 9.4 7.1 11.3 7.7 5.1 Education 5.6 5.2 5.3 4.9 2.9 Health 3.8 1.9 6.0 2.8 2.2 Note: PPP$ means that GDP per capita is calculated at purchasing power parity; i.e., it is adjusted to reflect differences in purchasing power across countries, so as to allow direct comparisons among the various countries' income figures. Sources: ECLAC (1998, 2001), IDB (1998), Morley (2001), UNDP (2000), and World Bank (2002). 56 SLUM UPGRADING AND PARTICIPATION Case Study 1. Bolivia: The People's Participation Law IT IS TRUE THAT WHEN LOCAL PEOPLE HAVE THE OPPORTUNITY TO MAKE DECISIONS, THEY SOMETIMES MAKE MISTAKES AND CHOOSE APPLES INSTEAD OF ORANGES, EVEN THOUGH IT IS ORANGES THEY NEED THE MOST. OFTEN THEY WILL DECIDE TO GET THEIR ROADS PAVED, INSTEAD OF THINGS THAT ARE MORE IMPORTANT BUT LESS APPARENT. BUT IF THEY HAVE THE OPPOR- TUNITY TO DECIDE AND TO MAKE MISTAKES, IN TIME THEY LEARN AND BEGIN TO FIGHT FOR IMPROVEMENTS IN SCHOOLS AND OTHER THINGS THAT LEAD TO HUMAN DEVELOPMENT. -Germdn Maraiion, President, Surveillance Committee, Cochabamba A Major Legal and Institutional Reform In April 1994, Bolivia went through a major reform in its institutional structure. Up to that year, there were only 61 municipalities in the coun- try, which were confined to the major cities and towns. Municipal juris- dictions were limited to the urban areas. Most of the country's territory and population were directly administered by the central government. Law 1551, known as the People's Participation Law, changed the situa- tion radically by: * Creating 250 new municipalities, encompassing both urban and rural areas and putting the entire national territory of Bolivia un- der municipal jurisdiction * Establishing mandatory budget transfers, known as co-participa- tion, of 20 percent of the central government budget to municipali- ties-each municipality's share is proportional to its share of the country's population * Establishing participatory budgeting at the local level, whereby area- based community organizations (ABCOs) are involved in priority setting, as the mandatory mechanism for the allocation of co-par- ticipation resources, through annual and five-year investment plans * Establishing simple procedures for the legal recognition of ABCOs, known as juntas de vecinos (neighborhood associations) in urban areas and sindicatos rurales (village committees) in rural areas * Establishing a surveillance committee, a watchdog body composed of representatives of ABCOs, for the control of the allocation and expenditure of the co-participation resources in each municipality. CASE SUMMERIS 57 ABCOs have a long history in Bolivia. In rural areas, area-based orga- nizations and forms of mutual help date back to the Inca ayllus. In urban areas, the neighborhood associations, their local federations, and their national confederation have long been important political players. How- ever, both in rural and urban areas, organizations based on special inter- ests, such as professional associations and trade or industry groups, have traditionally been the main interlocutors of government. Before the ad- vent of the People's Participation Law, few area-based organizations had legal recognition, and none had a specified legal role assigned to it. The emphasis placed by the People's Participation Law on the recognition of area-based organizations and the role assigned to them was part of a specific intent to decentralize an important part of resource allocation and decisionmaking to the lowest appropriate level. In urban areas, co-participation resources are used for urban upgrad- ing and building of social equipment (schools, clinics, community cen- ters) in low-income neighborhoods. The yearly expenditure on these items in urban areas through the mechanisms of Law 1551 is roughly $100 million nationwide. Immediate and Far-Reaching Impacts The main achievement of Law 1551 was linking decentralization, bud- get transfers, and participation in a national legal framework. The im- pacts were far reaching and immediate in terms of the legal recognition of community organizations, the number of municipalities receiving budget transfers, the municipal share of public investment, and the amount invested in the social sector. This is clearly shown in table 2-3. A New Dimensionfor Participatory Budgeting: The Carrot and the Stick Establishing a national legal framework that associates decentralization to the establishment of a regular, predictable resource flow to munici- palities would have already had a major impact on the institutional and governance structure of the country. But Law 1551 went beyond that to mandate participatory budgeting and control of resource allocation and expenditure by community representatives. (See box 2-1.) These instru- ments are not new, but Bolivia, by adopting a nationwide legal frame- work for participatory budgeting and community control of expenditure, gave these instruments an entirely new dimension. By institutionalizing it at the national level, Bolivia has taken local level participatory budgeting one step farther. The limitations of the Bra- zilian model of participatory budgeting derive in great part from the fact that the initiative was taken by the municipalities, which makes it 58 SLUM UPGRADING AND PARTICWAION Table 2-3. The Impact of the People's Participation Law Impact Before the law (1993) After the law (1995) Number of legally recognized Less than 100 15,000 ABCOs has increased drama- tically Number of municipalities has 61 311 increased fivefold Budget transfers to municipal- 10% of central gov- 20% of central gov- ities have doubled emment budget ermnent budget Mechanism for allocation of Legal residency of Municipality's share transfers to municipalities has taxpayers of national population been changed Distribution of transfers has Three largest munici- Rural areas receive been made more equitable palities received 90% 50% of the total of the total Municipal share in total public 11% in 1993 39% in 1995 investment has more than trebled Social investment has doubled 1.72% of GNP in 1993 3.62% of GNP in 1995 ($90 million) ($180 million) Investment in basic education $10 million in 1993 $30 million in 1995 has trebled Source: Authors' construction from field study data. vulnerable to the ups and downs of local politics. As in Tijuana, in Brazil it is the municipality that decides the amount of resources to be allo- cated via participatory budgeting in a given year. By contrast, the Boliv- ian model mandates participatory budgeting at the local level through a national law which also establishes the level of transfers to be allocated by participatory budgeting. In doing so, the Bolivian state has launched a process that is nationwide and has built-in continuity and predictabil- ity. These are essential conditions for the development of methodologies and of a critical mass of qualified local actors to assume political and technical responsibilities within the process. While many feared that Law 1551 would be changed following Gen- eral Hugo Banzer's victory in the 1997 general elections, it has actually endured due to the incentive structure built into the law. At the local level, mayors are delighted to have new powers and resources (the car- rot), but they have to live with the fact that the community has a say in CASE SUMMARIS 59 Box 2-1. Bolivia's Six Steps of Municipal Participatory Planning Step 1: Preparation and Organization. Social and institutional actors are identified and their roles and responsibilities defined. Basic agreements are reached. The surveillance committee has a key liaison role vis-a-vis local authorities and community-based organizations. Step 2: Participatory Diagnosis. This step is divided into two activities. Community diagnosis, which identifies the needs, constraints, and opportu- nities of the communities and lists their demands, is carried out in all communities. In-depth diagnosis, which is used to check the information in the community diagnosis, is carried out in at least 10 percent of the com- munities in each municipality. The information from all communities is organized in a consolidated municipal diagnosis. Step 3: Preparation and Approval of the Municipal Development Plan (MDP). The MDP, which has a five-year horizon, is prepared through a series of local and district workshops on the basis of the priorities identi- fied in step 2. Each community is represented by two delegates, one male and one female. Step 4: Preparation and Approval of the Annual Operations Plan for the Coming Fiscal Year. The AOP is prepared every year by each municipal- ity. It is based on the MDP, but adjusted in light of new demands that may have surfaced in the interim. The surveillance committee is charged with ensuring that communities have a say in operations plan preparation and are informed about its contents so that they may monitor its implemen- tation. Step 5: Participatory Implementation of the MDP. The MDP is imple- mented through five successive annual operations plans. Its implementa- tion is the responsibility of the municipality under the auspices of the surveillance committee. Although Law 1551 envisages the possibility of community management of projects, most municipalities prefer to use their conventional investment and procurement procedures, working through contractors. Step 6: Evaluation and Adjustment of the MDP. At the end of each fiscal year, the municipality prepares a report on MDP implementation, identi- fying achievements and obstacles. The surveillance committee examines the report and presents comments and suggestions. The report is also submitted for approval to the town council, and the MDP is amended following the debate to provide solutions to problems that have been raised. 60 SLUM UPGRADING AND PARICIPAnON resource allocation (the stick). Communities, on the other hand, com- plain about flaws in the law's application, as we will see below, but up- hold their new rights with resolve. More Capacity-Building Is Needed to Support the Process In urban areas, mayors have sought to co-opt neighborhood associations and surveillance committees in an effort to adapt the mechanisms of Law 1551 to established political practices and assert their political pa- tronage over the process. By all accounts, the process has worked better in rural than urban areas. New municipalities in rural areas have relied on traditional forms of community organization to set in motion the mechanisms established by Law 1551, with good results. This was only to be expected. It would certainly be naive to imagine that a long tradition of populist politics and flawed governance could change overnight. However, analysis of the situation in Bolivia's four largest cities-Cochabamba, El Alto, La Paz, and Santa Cruz de la Si- erra-shows that, although the application of the law is influenced by the prevailing political culture, awareness of the new subjective rights that have been granted by Law 1551 is contributing to changes in that same political culture. The nationwide character of the process contrib- utes to this. There have already been three national meetings of surveil- lance committee presidents since 1994, for example, and a community of practice is beginning to take shape. This will certainly be a long-term process, but there are clear reasons for hope. Some communities are better informed than others about Law 1551. Some municipalities have done a better job than others at setting up information campaigns about the law's application; the central gov- ernment has organized training activities in some areas; and, in some places, there are particularly active nongovernmental organizations (NGOs) or donor-funded projects spreading the message. We have seen remark- able instances among community representatives of a high level of infor- mation about the provisions of the law, the cost and technical features of works, and the mechanics of resource allocation and expenditure. The high level of cost consciousness among some community leaders has struck us as a particularly favorable sign, but we have also seen cases in which the level of information about Law 1551 and its mechanisms was low. Private sector participation in the application of Law 1551 has so far been limited. The participation of NGOs, by providing technical assis- tance to community groups, is not institutionalized-and is even resented by some municipalities. As to the for-profit private sector, its participa- tion has not gone beyond the traditional roles of contractor and building materials supplier. Much more must be done to involve the private sec- CASE SUMMARIES 61 tor, inform and build capacity of communities and municipalities, and disseminate good practices and methodologies for community involve- ment in order to strengthen the process and allow people's participation in Bolivia to realize its full potential. Case Study 2. Brazil: The Guarapiranga Program, Sao Paulo WE HAD AN ENGINEER WHOSE ONLY DUTY WAS THE COORDINA- TION OF THE WORK WITH THE SOCIAL SUPPORT TEAM AND THE MUNICIPALITY. WE ARE FULLY CONSCIOUS OF THE FACT THAT, IF THE POPULATION DOESN'T PARTICIPATE AND COLLABORATE, THE WORK MAY BECOME UNFEASIBLE. THE SOCIAL SIDE IS FUNDA- MENTAL... THis KIND OF WORK INVOLVES A RADICAL CHANGE FROM ALL POINTS OF VIEW: THE TECHNICAL AND MANAGEMENT ASPECTS OF THE WORK ARE VERY DIFFERENT FROM WHAT WE DO IN THE FORMAL CITY. -Construction Firm Engineer Environmental Sanitation as an Entry Pointfor Urban Upgrading The Guarapiranga program is a large-scale attempt to deal with the pol- lution of the Guarapiranga reservoir, one of the key water sources of the sprawling metropolitan area of Sao Paulo. Uncontrolled informal settle- ment development in the water catchment area, which gained momen- tum in the 1970s and 1980s, was one of the key reasons for the deterioration of the quality of this reservoir which provides water for over 3 million people. By the mid-1980s, the water quality problems had become so serious that the Sao Paulo water utility, SABESP, sought the assistance of the World Bank in implementing a cleanup program. The program, which started in 1993 and was completed at the end of 2000, was comprised of a number of different projects, including the building of major primary and secondary infrastructure for wastewater collec- tion and treatment, comprehensive upgrading of squatter settlements and illegal land subdivisions, and the development of a new legal and regulatory framework to manage the water catchment. Upgrading was thus part of a regional development plan for a consid- erable part of a metropolitan area, involving the state and municipal levels. A large part of the Guarapiranga basin is in the municipality of Sao Paulo, but some small municipalities in the metropolitan area were also involved. The institutional arrangement adopted for the program was a horizontal one, in which each of the main actors was responsible 62 SLUM UPGRADING AND PARTICIPATION for a component or project, under a general coordination unit established at the state level. This horizontal arrangement was crucial to the program's successful tackling of a wide range of issues at scale. Recognition of Informal Settlements and an Integrated Upgrading Approach The urban upgrading component of Guarapiranga in the municipality of Sao Paulo, which was run by the municipality itself, was the object of our study. The scale of this project was impressive; investment made from 1993 to 2000 totaled approximately $190 million, benefiting almost 200,000 people in squatter settlements and informal land subdivisions. The entry point for urban upgrading in the case of Guarapiranga was environmental sanitation. It was recognized that the informal settlements of the Guarapiranga basin are a part of the city that is not going to be removed, and that therefore needs sanitation infrastructure for social and environmental reasons. Recognition of the importance of interac- tions between wastewater collection and other branches of infrastruc- ture, such as roads, storm drainage, and water supply, led to the adoption of an integrated upgrading approach rather than a sectoral approach. Although it increased per capita cost, this integrated approach was necessary to enhance the sustainability of the intervention, since the nega- tive impacts that lack of storm drainage and road paving would have had on the sewerage network, among other problems, were thereby avoided. It also provided an opportunity to boost demand-responsive- ness and community ownership of projects by involving local residents in participatory information gathering and area development planning. In spite of uneven implementation, this has represented a significant methodological advance over earlier upgrading projects in Sao Paulo. Insufficient Concern for Sustainability Although its integrated approach was based on a concern for sustain- ability, there were other aspects of the Guarapiranga program that did not contribute to this goal as much as they could have: Legal obstacles to tenure regularization. Security of land tenure, although recognized as a key issue, could not be addressed because of the legal situation of the Guarapiranga basin. Severe restrictions on land use and occupation in water catchment areas were enacted by the state of Sao Paulo in the 1970s, which ironically caused the price of land in the Guarapiranga area to fall, stimulating low-in- come informal occupation. The same restrictions that prevented legal land development and infrastructure provision also prevented CASE SUMMARIES 63 the upgrading project from tackling the issue of land tenure regu- larization. One of the outcomes of the Guarapiranga program was a sweeping change in the legal and regulatory framework for wa- ter catchment management for the entire state of Sao Paulo, which took place in 1997 and should open the way for land tenure regu- larization in our study area and elsewhere. * Low level of cost consciousness and lack of an explicit cost re- covery and subsidy strategy. Urban upgrading interventions in Brazil have generally not had a good track record with regard to the level of cost consciousness and the adoption of an explicit, de- mand-based cost recovery strategy. Guarapiranga is no exception to this. The long-time exclusion of the inhabitants of the area from the provision of services, their low level of income, and the desir- ability of ensuring a minimum level of consumption of certain goods and services (e.g., roads, water, and sanitation) to the population of the area justified a high level of subsidy. This was further reinforced by the relevance of the program to the entire metropolitan area. The problem was thus not the level of the subsidies, but the fact that subsidies were not transparent; there was -no attempt to target the poorest, most vulnerable groups, and there was no explicit cost recovery strategy. In our interviews, local residents expressed a wish to regularize their relationships with the municipality and with utilities, and there is a clear window of opportunity for water and electricity metering and land tax collection. The launching of a cost recovery drive, coupled with a transparent subsidy structure, would greatly contribute to the financial sustainability of the intervention. * Exclusive focus on feasibility of implementation. The motivation for community participation for Guarapiranga's sponsoring agen- cies was to ensure the feasibility of the project's implementation. In the initial formulation of the urban upgrading component, there was no explicit socio-technical support strategy. Although the municipality's small group of social workers did provide some sup- port to the communities, it fell far short of real needs. The problems in the implementation of the project's pilot phase were so many that the municipality decided to resort to the private sector to pro- vide socio-technical support services during implementation. This made a crucial difference in allowing the project to be implemented, but the feasibility focus prevented the project from going one step farther and ensuring socio-technical support to communities in the aftermath of the implementation of the works. Assisting communi- ties with organizational support and environmental education in the post-implementation phase would have contributed greatly to the conservation of the benefits and the continuity of the develop- 64 SLUM UPGRADING AND PARTICIPATION ment process. Box 2-2 provides a commentary on the reasons for this, concluding that the problem was a focus on project, rather than policy. For all its accomplishments, focus on feasibility of imple- mentation, rather than sustainability, has kept the project from re- alizing the full potential of participation. An Agile Implementation Strategy Helps the Municipality Get the Job Done The municipality was the institutional motor of the project, which was coordinated by a small, highly qualified unit at the Department of Hous- ing. It was decided to contract out all the specialized services needed. Competitive bidding was used to select planning, engineering, subproject management, construction quality control, and building firms. Socio- technical support was included in the construction contracts and was also provided by a private firm, which was selected and hired directly by the construction firms involved. The active involvement of the for- profit private sector in the provision of most of the services required by the urban upgrading component enhanced the efficiency, timeliness, and flexibility of the project; it also created relevant capacity in a number of firms. The level of private sector participation and influence in the Guarapiranga upgrading project surpasses anything seen before in Bra- zil. It may be considered to be, along with the horizontal institutional arrangement, one of the reasons for Guarapiranga's achievements. Box 2-2. Socio-Technical Support in Guarapiranga: A Typical Project Cycle Issue The municipality: * Acknowledges the need to involve communities * Acknowledges its limitations to carry out some tasks directly * Has the capacity to coordinate the process * Has the capacity to hire the needed expertise. However, the municipality: * Doesn't go the whole way (it stops short of post-implementation socio-technical support) * Is more interested in feasibility of implementation than in sustain- ability * Takes this approach because its focus is on project, not policy. CASE SUMMARIES 65 Case Study 3. Costa Rica: FUPROVI's Habitat Popular Urbano Program, San Jose FUPROVI COMPLEMENTS STATE ACriviTy THROUGH A CLOSE RELATION TO THE STATE.. .BECAUSE THE STATE IS SLOW AND INEFFICIENT IN THE RESOLUTION OF URGENT PROBLEMS SUCH AS HOUSING, THE IDEA IS TO CREATE NONGOVERNMENTAL TOOLS THAT CAN PROVIDE A MORE FLEXIBLE AND EFFICIENT RESPONSE TO THE DEMANDS OF THE MOMENT. -Jose Manuel Valverde, Applied Research Coordinator with CERCA, a UNCHS (Habitat) Program for Central America An Ambitious Housing Subsidy Policy Costa Rica's burgeoning shelter deficit and the appearance of large num- bers of urban squatter settlements in the 1980s led to the adoption of an ambitious housing subsidy policy. In 1986, during the administration of President Oscar Arias, a national housing finance system was created, channeling public funds into subsidies that were targeted to low-income households and complemented, for households in all but the lowest in- come brackets, by private institutions such as commercial banks, sav- ings and loan institutions, and cooperatives. This was matched by an intense movement within civil society, which led to the establishment of myriad housing associations among low-in- come people. These were groups comprised of families from different locations, usually formed on the basis of political or work connections, and with a very clear goal in mind: obtaining a house. Housing associa- tions immediately set about finding suitable plots of land, often aided by political connections. Since Costa Rica's Central Valley, where the capital city's metropolitan area is located, is not as densely populated as many other Latin American urban areas, many groups did succeed in finding suitable land with reasonable access to infrastructure for an af- fordable price. There was usually an element of subsidy involved, since many plots were on public land that was released for sale, at a low price, due to the housing association's political connections. In many instances, the land could be bought for a low price because it lacked a legal title deed. A New Kind of Actor Is Needed to Reach the Poor Although households in the lowest income bracket-up to two mini- mum wages, or roughly $350 per month-were entitled to a full subsidy (up to $4,000, depending on the prevailing exchange rate), they tended 66 SLUM UPGRADING AND PARnCIPATON to be excluded from the benefits of the subsidy program. This fits a pat- tern seen in the national housing finance systems established by most Latin American countries. Although theoretically targeted at the poor, these systems were hijacked by the middle and lower middle classes, while the poor continued to resort-in ever-increasing numbers-to squatting or informal land subdivisions. In Costa Rica, it quickly be- came apparent that regularizing land tenure, lowering building costs, and providing credit and technical assistance to households in the infor- mal sector were the keys to allowing poor families to gain access to the housing subsidy program. The Foundation for the Promotion of Housing (FUPROVI) was founded in 1987 as a not-for-profit independent institution with this aim in mind. The institution was singled out by the Costa Rican government to be the recipient, in the following year, of a development aid package from the Swedish International Development Agency. FUPROVI received $14 million in Swedish grants over the following years; it used these to establish its longest running and most successful program, Habitat Popu- lar Urbano. This program aims to systematically tackle each bottleneck of the housing subsidy program that prohibits access by the poor. Specifically, Habitat Popular Urbano provides assistance to housing associations and single families in planning and implementing housing projects. FUPROVI provides planning, engineering, and land tenure regu- larization services; socio-technical support to project implementation through the application of its assisted mutual-help construction meth- odology; and a bridge loan to allow households to implement their projects while their housing subsidy applications are being processed. Assisted mutual-help construction lowers costs significantly so that the subsidy often covers the full cost of a house and related infrastructure. When it does not, FUPROVI prequalifies project participants for a loan from a private institution to cover the difference. Mutual-help construction also serves as a targeting filter. Only poor families that could not have access to a house by any other means sub- ject themselves to FUPROVI's requirement of 30 hours of labor a week for an average of 18 to 24 months. By any measure, this is a tough regi- men, which places a particular burden on households that have only one adult. This also ensures the demand-driven nature of the projects, since the communities only make a commitment after a thorough analy- sis of all the implications, and, when they do, they are required to sign a formal contract with the institution. In the FUPROVI system, the institution provides intensive assistance and supervision in technical, organizational, and administrative mat- ters. The community manages funds, procurement of materials and spe- cialized services, warehousing and stock administration; organizes and CASE SUMMARIES 67 keeps track of the contributions of community members; sets up sup- port services such as soup kitchens and daycare; and-last but not least- performs the building. These functions mostly cover project implementation rather than planning. FUPROVI, in order to optimize the use of available land and lower the cost of construction, does most of the planning itself. As a result, compared to the other cases we have seen, there is not much community participation in area development planning or discussion of urban and architectural design options in the FUPROVI model. A Demand-Driven Approach Needs a Strong, Sustainable Supply Mechanism FUPROVI's approach is demand driven and based on community man- agement. Its assisted mutual-help methodology represents the meeting point between supply and demand. The technical assistance and capac- ity-building activities required by FUPROVI's system are intense, show- ing that a demand-driven program needs a strong and well-organized supply mechanism to succeed. In this context, continuity is essential, and FUPROVI has sought to ensure from the start that it would be a viable and sustainable institution that would not be perpetually depen- dent on donor grants. FUPROVI charges between 16 and 23 percent of the cost of a project for its services; these services include preparation of all necessary contracts and documentation; intermediation between hous- ing associations and the national housing finance system; assistance in land tenure regularization; urban planning, architecture, and engineer- ing services, including obtaining all necessary permits; training activi- ties required by the assisted mutual-help construction system; and technical assistance and supervision of the building process from tech- nical, organizational, and administrative points of view. FUPROVI makes a point of negotiating the services package and its price with its clients before embarking on a project. This contributes to the institution's finan- cial sustainability and its ability to attract and retain qualified personnel without having to rely on grant funds alone. Close to full cost recovery is thus one of the pillars of the FUPROVI system. The rationale for this is that FUPROVI provides a mechanism to allow the poor to access the government housing subsidy scheme, but FUPROVI's services them- selves cannot be provided on a grant basis, since the institution is not likely to receive any grant funding beyond the original Swedish grants. FUPROVI has sought to preserve as much as possible of its seed capi- tal of $14 million, which has been kept in a rotating fund, part of which is loaned out to project participants and part of which is invested. The institution has thereby helped families build 15,000 houses over 10 years with a high degree of cost recovery and client satisfaction. (See box 2-3.) 68 SLUM UPGRADING AND PARTICIPATION Box 2-3. The Four Pillars of the FUPROVI Model FUPROVI has demonstrated the important role the private sector may play in delivering housing to the poorest groups. Currently, there are no other institutions in Costa Rica capable of providing similar services in urban areas. Replication of the FUPROVI model elsewhere would prob- ably require building the capacity of a number of institutions, especially considering the much larger scale that would be necessary in other Latin American countries. This is an issue of concern in analyzing the FUPROVI model, particularly since the Costa Rican government has strongly re- duced the scale of its housing subsidy program in recent years, reducing the incentives for the creation of new FUJPROVIs. The four pillars of the FUPROVI model are as follows: * A generous housing subsidy program, which covers up to 50 per- cent of the market cost of a house and related infrastructure, and frequently-because FUPROVI manages to cut market cost roughly in half thanks to its assisted mutual-help system-ends up covering the full cost of the house for the lowest income bracket * Availability of suitably located land-which in Costa Rica is an im- portant requirement, given the country's tradition of detached or semi-detached houses and strong cultural resistance to densification * A motivated and relatively well-educated clientele * Intensive assistance and capacity-building provided by a strong, motivated, well-organized, and sustainable institution. Operating at Scale Is Difficult without the Subsidy With the woes of the housing subsidy system in recent years,' a critical pillar of the FUPROVI model is at stake. Without the subsidy scheme, the bridge finance FUPROVI provides needs to be transformed into a long-term loan, with the consequence that the institution's resources re- main tied up, and the rotating fund mechanism has a much slower cycle (15 years instead of 2, on average). FUPROVI's ability to leverage funds, one of its key assets, is thus jeopardized. FUPROVI has been able to survive the impact, but it has had to reduce its output strongly, drop- ping from the 4,000 units per year it had reached in 1996 to about 1,500 units per year in 1999. It has also had to trim its workforce, which has meant a loss of qualified and specialized staff. 'The administration that took office in 1997 halted the subsidy scheme at first, due to Costa Rica's difficult fiscal situation, and later resumed it under roughly the same rules and procedures as before but at a far smaller scale. CASE SUMMARIES 69 FUPROVI is managing to cope with the situation, however, and to survive. Perhaps most importantly, it is exploring new alternatives to increase the scale of its operations. It is launching a savings and loan scheme in partnership with a private commercial bank which could pro- vide the key to both sustainability and scale in the long term, building on the tradition of on-time repayment of its client base and moving to- ward market-based interest rates. Capacity-Building Is Goodfor Sustainability Another key aspect of sustainability is communities' ability to under- take further development initiatives on their own. The sustained com- mitment FUPROVI requires of communities takes its toll; normally, there are no further community initiatives for the first two or three years fol- lowing completion of the works, during which time people focus on improving their homes. After that, community organization slowly re- sumes to deal with issues such as street paving and bus routes. Such long-term participation seems to benefit greatly from skills ac- quired during the construction process. However, the lack of socially meaningful post-implementation community development activities such as soup kitchens and daycare facilities seems a missed opportunity to work on area-based development and ensure continuity of participation in the mid-term. The exclusive focus on housing of FUPROVI's projects, while it helps people concentrate their energies, also has its disadvantages. Case Study 4. Mexico: Community Upgrading Programs, Tijuana I BEGAN TO WORK ON THE PROjECr ALONE, AND MY NEIGHBORS THOUGHT I wAs CRAZY. THEN I WAS JOINED BY ONE OF THE NEIGH- BORS, AND THEY SAID THAT WE WERE TWO LUNATICS. GRADU- ALLY, ALL THE NEIGHBORS JOINED IN: NOW WE ARE ALL CRAZY. -Lucio Quiilones, President, Works Comrmittee of Huejotzingo Street Political Competition as an Entry Pointfor Participatory Upgrading The 1990s have seen significant reforms in Tijuana's municipal govern- ment. An overhaul of the municipal cadastre, the enhancement of local revenue generation, and the involvement of civil society and the private sector in the city's strategic planning have been some of the advances made. Further, in the area of informal settlement upgrading, Tijuana has 70 SLUM UPGRADING AND PARTnCIPATION pioneered an approach that couples participatory budgeting with com- munity management of small local works projects (most frequently, street paving; improvement of sidewalks, public places, and school buildings; and sports facility construction), to which the community makes an upfront cash contribution averaging 30 percent of the cost. The govern- ment subsidy, averaging the remaining 70 percent of the cost, is paid directly to a community works committee that manages the resources, hires the contractors, and oversees the work. Tijuana's community upgrading programs have made significant progress in the city's colonias populares (informal settlements) between 1991 and 1998, during which time the municipality spent $40 million in small-scale local infrastructure works to an upfront contribution of roughly $17 million on the part of the local communities themselves. These programs have successfully challenged conventional assumptions about what poor urban communities are willing and able to do. Community upgrading initiatives, which had already been in place for some time, were intensified in Tijuana by the Solidaridad program, a federal social investment fund launched by the Salinas administration in 1989. Solidaridad was initially managed by local social development department offices, which, as delegates of the federal government, by- passed the municipalities. The program was a key political instrument for the ruling Institutional Revolutionary Party. When the rival National Action Party was voted into office at the Tijuana municipality later that year, the program was modified to reflect the principle that the state is not particularly effective at delivering certain types of infrastructure and services and should consequently move away from direct service provi- sion and toward an enabling role. Methodology Has Improved over the Years As decentralization has taken root in Mexico, the management of com- munity upgrading programs has increasingly shifted to the purview of local municipalities. One of the results of this trend has been the decen- tralization to municipalities by the Zedillo administration of the man- agement of Solidaridad itself. Additionally, while participatory budgeting in Tijuana was initially conducted through large community gatherings, over the years, delegations and subdelegations-decentralized offices of the municipality-have become the preferred channels for presenta- tion of community requests. An institutional structure for participatory budgeting has been established whereby delegational committees ana- lyze community requests, select projects for the coming year, and present a project list to a citywide committee for approval. The Tijuana program has also introduced community management of project resources, com- CASE SUMMARIES 71 munity procurement, and the requirement of an upfront community contribution to the cost of works as well as adoption of more stringent technical standards and project supervision routines. Decentralization of program management, technical assistance, and outreach to the del- egations and subdelegations were introduced in 1998. A new, direct re- lationship with the community has taken shape through the mechanism of participatory budgeting. This participation has ushered in a new gen- eration of active community leaders, although some residents have con- tinued to plead for projects in the old "handout" tradition. The improvements in methodology introduced by the Tijuana pro- gram are related to Mexico's ongoing process of democratization and decentralization. A Response to the Infrastructure Deficit Tijuana is home to 711 maquiladora factories which employ 147,000 people. Unemployment is very low here, and the city's proximity to the United States and its booming economy have made it an attractive destination for migrants. Migrants who arrive in Tijuana usually settle in one of the colonias in the eastern part of the city. These colonias are usually infor- mal land subdivisions where public and private spaces are clearly de- fined but basic infrastructure and services are lacking. Over a period of years, these are gradually installed in response to community pressure, with electricity provided first, since it has fewer constraints than other types of infrastructure and lower cost, followed by water and sanitation. Tijuana's community upgrading programs have been an attempt to respond to the needs that arose as a result of such large-scale informal subdivision of land. To the uncontrolled dynamics of urban develop- ment were added the city's irregular topography, the great number of inhabited areas of risk, and the fact that 46 percent of the land area was dedicated to low-density residential use. These factors all exacerbate the infrastructure deficit and make it expensive to reduce. The community upgrading programs aimed to construct basic works that are in the municipality's sphere of competence to respond to the direct demand of the sectors of the population living in colonias populares. In general, these requests have primarily involved the paving of streets (48 percent), the improvement or construction of schools (16 percent), and the introduction of storm drainage infrastructure (15 percent). (See box 2-4.) The Project Cycle Orientation Prevails This perhaps excessive emphasis on one type of infrastructure-pav- ing-reflects a lack of structured, area-based participatory planning 72 SLUM UPGRADING AND PARICIPATON 2-4. Street Paving Projects Predominate in Tijuana According to the operating manual for Tijuana's community upgrading programs, program funds may be applied to paving, sewers, electricity, storm drainage, earthworks, foot and vehicle bridges, containment walls, perimeter fencing, stairways, ramps, stream fords, sports fields, educa- tional infrastructure, maintenance and restructuring of pathways, basic health infrastructure, and community centers. In the face of all these options, why does street paving predominate in Tijuana? For one thing, since many colonias already have land tenure regularization, electricity, water, and sanitation, it is logical for them to request the paving of their streets as a next step in infrastructure exten- sion. Also, paving works are simple and not very expensive, and they are a municipal responsibility. Street paving is also a solution to unfavorable soil and terrain conditions (clayey soil and steep slopes) and the conse- quent difficulties of access during the rainy season and presence of dust during the dry season. Street paving has symbolic value as well. The status of an area changes overnight with street paving, since it is thence- forth perceived as part of the "formal" or developed portion of the city. Finally, though, the prevalence of street paving reflects another, more negative, circumstance: a lack of a concerted, coherent, and comprehen- sive approach to community upgrading. In short, the process sees the trees very well, but not the forest: it lacks a systemic vision. which has in turn led to a piecemeal approach to upgrading, and has meant that the significant mobilization generated by the programs has not been channeled into a long-term development process for Tijuana's colonias populares. In Tijuana, as in Guarapiranga, a project cycle orientation prevails over a long-term policy vision, and the opportunity to ensure sustainability is missed. The municipality, which is responsible for street paving, has not coordinated with the state and federal levels to include other types of infrastructure in the community upgrading programs. Moreover, par- allel state programs, such as the one for water and sanitation service extension, are still run in a populist manner and do not benefit from the innovative and effective mechanisms the municipality has developed. In Tijuana, civil society organizations are very active in the traditional social sector fields (health, education, assistance to vulnerable groups), but have so far been absent from the housing and urban development field. Although some in the for-profit private sector have started to think about ways of improving their employees' quality of life, the potential for cooperation with the maquiladoras and other private sector firms in CASE SUMMARIES 73 community upgrading and shelter improvement projects has not been tapped. The current community upgrading programs lack a channel for civil society and private sector involvement. Case Study 5. Peru: The Self-Managed Urban Community of Villa El Salvador, Lima LAST NIGHT, I WAS TALKING TO SOME OF THE FOUNDERS OF VILLA EL SALVADOR. THEY FEEL THAT THE MOST IMPORTANT THING IS THAT THE TOWNSPEOPLE MAY DECIDE WHAT TO DO. IT DOESN'T MATTER IF THEY MAKE MISTAKES. EVEN IF THEY DO, THEY WILL LEARN FROM THEIR MISTAKES. -Juan Arbaiiil, Villa El Salvador Leader A Different Paradigm: State-Assisted Barriada Development Since the end of World War II, the urban share of Peru's population has gone from 30 to over 70 percent. The bulk of this phenomenal growth has taken place in Greater Lima. The capital's share of Peru's popula- tion, which was 5 percent in 1905, is now about 30 percent. Lima is 10 times bigger than the country's second largest city, Arequipa. The informal settlements known as pueblos jovenes or barriadas, where 30 percent of the capital's population now lives, have accounted for much of Lima's growth in the postwar years. Peru's informal settlements have developed against a backdrop quite different from the circumstances existing in the rest of Latin America. For one thing, the desert surround- ing Lima represents a vast amount of unused available public land. For another, the region has a long tradition of mutual help, dating back to the original Andean migrants. Further, as early as 1961, legislation (Law 13517, the Law of the Barriadas) has been in place that sets forth guide- lines and procedures for orderly informal settlement development, with the state taking a key role in guiding this development. Villa El Salvador (VES), founded in 1971, is the epitome of state-assisted barriada development. (See box 2-5.) The development of VES was initi- ated to accommodate 4,000 families that had begun to occupy land in one of the southern suburbs of Lima; the government soon came to see this as an opportunity to provide land to more migrants who wanted it. The reformist military regime of General Velasco Alvarado, which was in power at the time, adopted a collaborative stance vis-a-vis the grass- roots organizations that were demanding a solution to the housing prob- lem in Lima. With the mediation of the National Support System for 74 SLUM UPGRADING AND PARnCIPATION Box 2-5. Villa El Salvador in the Context of Lima's Barriadas Villa El Salvador (population 350,000), with more than 50,000 lots, is part of the vast area of barriadas known as Lima's Southern Cone, occupied in all by some 900,000 people. As of the late 1990s, throughout Lima: * There were about 370,000 plots in barriadas. * Of these plots, some 220,000 had been in existence for more than 20 years. * An additional 90,000 had been in existence for at least 10 years. * Only 50,000 plots lacked a property title, thanks to Peru's innova- tive approach to land tenure legalization. Source: Desco (1998). Mobilization (SINAMOS), the central governrment social development agency, the government and grassroots organizations worked together on an ambitious plan to develop VES. The government chose a relatively flat area of desert near the southern exit to the Pan American Highway in Lima's Southern Cone, and, in a process organized by SINAMOS, laid out a city plan in a neat grid pattern and began allocating plots to settlers. At first, infrastructure and services were nonexistent. The first settlers received a demarcated plot, built straw huts, and moved in as community leaders began the long process of negotiating with the government to ob- tain improvements. Under the Velasco administration, the government was very responsive and took it upon itself to provide access routes for tank trucks to deliver water, to bring in electricity, and to build the first elemen- tary schools. One year after its foundation, the population of VES was al- ready 70,000. Over the following years, infrastructure and services were extended to most of the settlement. People improved their homes, and many started businesses. Children went to school, and a thriving industrial dis- trict developed. In light of this development, VES was made a district with its own municipality. Today, Villa El Salvador is a bustling city, de- spite the fact that most of its residents are still in the low-income bracket. VES: Planned Informal Development VES is very similar to all the other barriadas in Lima in terms of the makeup of its population, its level of organization, and in the fact that it started out as demarcated plots in the desert. Yet VES has been able to go much farther in its three decades of existence than most other barriadas, primarily for the following reasons: CASE SUMMAItES 75 * The central government provided strong support from the very start; the settlement was planned and built as a partnership between the community and the state. Although state support decreased with the fall of the Velasco regime in 1976, VES leadership by then had a knowledge of the workings of government and a command of po- litical mechanisms that allowed it to lobby every subsequent ad- ministration very effectively. * The street layout adopted for VES had a city, not a slum, in mind, and, in terms of street width, plot size, and space reserved for pub- lic uses, it was conducive to quality development and densifica- tion. It also defined a basic neighborhood unit, the residential grouping, whose configuration and size make it a natural unit for area-based community organization. The residential grouping is a neighborhood complete with its own square and space for local sports and elementary school facilities. * Along with its layout, VES had from the beginning an area devel- opment plan developed with the participation of ABCOs. The plan was such a powerful instrument that the land it reserved for the industrial park was successfully defended by the community for 15 years from occupation by squatters, until the industrial park was finally implemented. The VES development plan was revised in the mid-1980s and went through an extensive revision in 1999, with support from, among other NGOs, Desco (the Center for Develop- ment Studies and Promotion), a Lima-based NGO that has provided support to the VES leadership since the early days. The new VES development plan is an effort to understand the prob- lems and potential of the area in a systematic way and establish a com- mon vision for the future. The process of its preparation, through thematic working groups and general meetings at certain milestones, generated intense community interest and participation, and built on the many participatory initiatives under way in VES. As discussed in chapter 10, these include a scheme to improve property tax collection, a street pav- ing scheme very similar to Tijuana's, and an Internet cafe that provides a range of online services and is attracting many of VES's youth. Meaningless Alone: Participation and Initiative While it is true that urban upgrading projects do not work without par- ticipation, the VES experience over the last 30 years proves the reverse to be true as well. Participation does not often produce meaningful re- sults without the support structure provided by a project. For example, as will be seen in chapter 10, although some of the microenterprises for 76 SLUM UPGRADING AND PARTCIPAnON solid waste collection that were set up in the early 1990s managed to survive the municipality's withdrawal from the program, many did not. On the other hand, sustained state support to the development of the industrial park allowed community hard work and resourcefulness to produce impressive results in a short span of time. Villa El Salvador is a testimony to what communities can achieve when they are given a long- term enabling framework. Further, the area's remarkable history allows us to understand the components and nature of the kind of enabling framework that needs to be in place for participation to produce results. Other Relevant Cases Throughout this book, we make reference to examples from other pro- grams and projects in Latin America that have used important method- ological innovations or reached appreciable scale. Information on these initiatives was obtained through desk research, our peer reviewers, and our own previous experience. Brief descriptions of the following pro- grams and projects are presented below: * The PROFAVELA program, Belo Horizonte, Brazil * The AOISPEM program, Cali, Colombia * The Catuche Social Consortium, Caracas, Venezuela * Community upgrading programs, Ciudad Juarez, Mexico * The El Mezquital project, Guatemala City, Guatemala * The PRIMED program, Medellin, Colombia * The PREZEIS program, Recife, Brazil * The Favela-Bairro program, Rio de Janeiro, Brazil * The Novos Alagados project, Salvador, Bahia, Brazil * The mutirao programs in Sao Paulo, Brazil. PROFAVELA Program, Belo Horizonte, Brazil2 Belo Horizonte, the capital city of the state of Minas Gerais, has a popu- lation of 2.5 million. Of these, it is estimated that 400,000 people live in roughly 200 squatter settlements known asfavelas which occupy public and private lands in many parts of the city-sometimes quite near the city center. Generally, the land that has been occupied by the favelas is less suited to urbanization than the rest of the city, since it tends to be situated in flood-prone or high-slope, landslide-prone areas. The favelas may therefore be considered high-risk areas. 2This section is based on information provided by the Association of Volunteers for International Cooperation (AVSI) and the Urbanizing Company of Belo Horizonte (URBEL). CASE SUMMARIES 77 Until 1974, the government followed a repressive policy aimed at the removal of favelas from urban and suburban areas. From 1974 on, how- ever, as the military regime began to weaken, community organizations began to be formed within the favelas with the aim of obtaining security of land tenure and improvements in infrastructure and services. This community movement was particularly well-organized in Belo Horizonte. With the gradual return of democracy, the proposals of the commu- nity movements began to be taken into serious consideration. A new expression, planejamento participativo (participatory planning), was coined to describe a method of intervention in low-income areas that involved their inhabitants in the choices to be made and entailed the contribution of their labor. After the first free elections were held at the state level in 1982, the new government began studies aimed at changing the existing legislation in recognition of squatter settlements and to lay out proce- dures for land tenure regularization. The debate was intense, for the new PROFAVELA law was very innovative. Recognizing the favelas was a profound and far-reaching change, not only in the existing legislation, but also in the very conception of the city and its development that was behind the legislation that had prevailed until then. The Belo Horizonte PROFAVELA law was passed in 1983 and was widely hailed as a major breakthrough, the first legal instrument of its kind in Brazil. The law changed the zoning status of the 120 favela areas that were then identified, creating the concept of special social interest zones (SE4). Designation as SE4 was a precondition for land tenure regu- larization, which was given a set of well-defined rules. The PROFAVELA law also set forth planning criteria for SE4s, eliminating the unrealistic standards (plot sizes, width and slope of streets, etc.) that had for so long helped keep favelas illegal. Even with the necessary legislation and political will in place, munici- pal inexperience in dealing with the regulatory, administrative, institu- tional, financial, and technical problems of informal settlements impede implementation of a land tenure regularization and settlement upgrad- ing policy. Belo Horizonte therefore initiated a PROFAVELA program to foster institutional capacity-building. Soon after the PROFAVELA law was enacted, two international de- velopment partners-the German governmental development aid agency GTZ and the Association of Volunteers for International Cooperation (AVSI), an Italian NGO-signed agreements with the municipal gov- ernment and initiated upgrading projects in the favelas. These partners structured their projects around the idea of participatory planning, con- tributing 50 percent of the cost of the projects and asking the municipal- ity for the remaining share. While GTZ concentrated its interventions on 78 SLUM UPGRADING AND PARTCIPATON infrastructure upgrading of the informal settlements, AVSI additionally focused on the recognition and legalization of land tenure in favelas and settlement layout improvements. Contemporaneously, the Urbanizing Company of Belo Horizonte (URBEL) was established to tackle the various technical problems in- volved in settlement upgrading. In this capacity, it coordinates with the various municipal departments and public utilities involved, and works with the community in defining priorities, choosing alternatives, and mediating conflicts. Capacity-building was a feature of URBEL's work from the start. It addressed the main issues arising from the participa- tory process, such as the integration of the operational units and the community associations, which was made possible by the creation of joint working teams. Other activities undertaken by URBEL and its de- velopment partners were joint preparation of instruments for data col- lection and project management, periodic joint evaluation seminars, and specialized courses in the use of computer mapping and planning tools. In the 1980s, the achievements of the PROFAVELA program included legalization of land tenure and issuance of title deeds to 120,000favelados in 22 settlements; infrastructure upgrading and establishment of basic social services in five favelas with a population of 30,000; implementa- tion of a pilot project for solid waste disposal, reaching 25 percent of Belo Horizonte's favelas; and the establishment of various initiatives for poverty reduction and promotion of the socioeconomic and cultural development of favelados. These results were so encouraging that the Brazilian federal govern- ment requested the support of the government of Italy for a second project phase implemented in the mid- to late 1990s. It replicated previous AVSI interventions in 10 favelas with a population of roughly 50,000. The fund- ing that was made available for upgrading in the Belo Horizonte metro- politan area in the 1990s totaled about $30 million, about 25 percent of which came from the Italian government, with the rest from municipal and state sources. A significant portion of the funding package came from Belo Horizonte's participatory budgeting scheme. Today, settlement upgrading and land tenure regularization are part of Belo Horizonte's planning process and the object of a specific invest- ment policy and methodologies for intervention. Although an explicit strategy for subsidy targeting and cost recovery has been lacking, as in other Brazilian cases, much has been achieved. Notably, one of the inno- vative features of the PROFAVELA legislation and the municipal pro- grams that derived from it has been the special attention paid to the rights and needs of women. PROFAVELA gives preference to women in the issuance of property title deeds and removes all previous legal, regu- latory, and customary obstacles to the issuance of title deeds to women. CASE SUMMARIES 79 This was a way of recognizing the role of women as organizers and mobilizers in upgrading projects, as well as their role as the mainstay of a high proportion of favela households. Unfortunately, budgetary constraints have so far prevented the PROFAVELA program from fully living up to the expectations it gener- ated at the time of its inception and operating at the large scale that would be needed by the city's favelas. AOISPEM Program, Cali, Colombia3 Santiago de Cali, in the southwestern part of Colombia, is a city of roughly 1.8 million people. One of the four largest cities in the country, it is an industrial center which, since the 1940s, has been a magnet for Colombi- ans seeking to escape the violence and backwardness of rural areas. As in many Latin American cities, rapid growth outstripped the municipality's capacity to provide infrastructure and services, and the lack of affordable serviced land resulted in the emergence of informal settlements with a severe infrastructure deficit. In Cali, the highest con- centration of these is in the Aguablanca district, where 140,000 people lived in such settlements in 1996. The AOISPEM program (Self-Construction of Public Service Infrastruc- ture Works with Delivery of Materials) is an attempt to answer to this problem. Initiated in 1990, the project relies on partnership, which en- ables both operational efficiency and successful cost recovery. In. the project, a nonprofit foundation (Carvajal Foundation) provides manage- ment skills, community contacts, and credibility; a municipal public works company (EMCALI) provides technical skills and financial re- sources; the community provides engagement, labor, and monitoring; and building materials companies provide materials at a reduced cost. The communities pay EMCALI for the cost of a construction foreman and materials. The cost of the materials for mutual-help construction of the water supply and /or sewer systems is initially covered by EMCALI and charged to the beneficiary community over a 48-month period, with a 24 percent annual financing rate on the debt and a 36 percent annual interest rate on arrears. Because the participants involved in the project are willing to keep their costs low enough to enable full repayment of the loans provided, it is estimated that costs are some 60 percent lower than those for private contractors. The initiative came from EMCALI, which approached the Carvajal Foundation for an estimate of the costs of meeting the demand of local residents for water supply and sewerage services. Carvajal's budget was 3This section is based on World Bank (n.d.). 80 SLUM UPGRADING AND PARnCIPATION some 25 percent below that of the municipality because of its long expe- rience in the field and its well-established contacts with private con- struction firms that were willing to offer significant discounts to support social projects. AOISPEM benefited some 5,000 families from 1990 to 1997. The cost recovery mechanism worked well. Despite its small scale, AOISPEM's demand-responsive formula, promoting affordability, cost consciousness, and cost recovery, is a promising altemative for small community upgrading works. Catuche Social Consortium, Caracas, Venezuela4 Catuche is one of 115 squatter settlement units that were identified and delimited by the Plan Sectorial, a study of the Caracas metropolitan area's informal settlements undertaken in 1993-94 by a team from the Central University of Venezuela. In addition to delimiting the informal settle- ment areas, the plan also undertook to propose an integrated upgrading methodology. It addressed the issue of access routes as well as all types of infrastructure, and provided preliminary cost calculations to upgrade all the barrios in Caracas. Catuche was selected as the site for a pilot project to test the plan's upgrading methodology. The Catuche settle- ment is composed of 11 barrios that occupy high-slope areas along a ravine near the old city center. Its total land area is 28.3 hectares, almost all of which belongs to the municipality. Its population is about 9,000 and consists of some 2,100 households. The cost of the upgrade was estimated at an average of $3,500 per household, for a total cost of $7.35 million. Factoring in the high slopes and need to create access routes resulted in a cost breakdown of 31 per- cent for roads and storm drainage, 29 percent for other infrastructure (water supply, sanitation, and electricity), 28 percent for resettlement and relocation, and 12 percent for community facilities and urban equipment. The municipality accepted the proposal and funded the preparation of a detailed, integrated, and participatory area development plan for Catuche, taking the work of the Plan Sectorial one step farther. The next steps were then spearheaded by a social consortium made up of an NGO, a local ABCO, and a group of engineering and planning professionals. Operationally, the consortium is structured in three units: a technical unit, an administrative and management unit, and a community organi- zation unit. The consortium's governing body is the community's gen- eral assembly. Between 1993 and 1997, this consortium succeeded in raising a total of about $2 million from the municipality, the central gov- 4The information in this section is based on Brandt and Ayala (1996). CASE SUMMARIES 81 ernment, and the United Nations Development Programme and under- taking a series of works envisaged by the area plan. Although it was concluded that the cost savings secured by the consortium and its effi- cient coordination arrangements would have allowed it to complete the upgrading works in three years, the consortium's limited fundraising capacity has meant that in reality the project will take a much longer time frame-seriously compromising the momentum that is an impor- tant feature of successful projects. Besides providing essential social support, social intermediation, and administrative and technical assistance services, the consortium coordi- nates and manages the upgrading project and is responsible for raising the necessary funds. In many ways, it replicates an organization like FUPROVI at the settlement level. Several other consortia have since been organized in Caracas along the Catuche model at the initiative of vari- ous NGOs. Each has its own built-in assessoria, as in the Brazilian mutirao model (see below), plus an NGO for social and political intermediation. The community is one of the partners in the consortium, which contrib- utes to a high level of participation. Naturally, the number of consortia that is feasible to implement depends on the critical mass of available local capacity. If the organization of consortia could be stimulated and promoted by a program with the adequate resources to subsequently fund upgrading projects, this model could yet prove to be a good alter- native for large-scale urban upgrading. Community Upgrading Programs in Ciudad Judrez, Mexico5 Like Tijuana, Ciudad Juarez, in the state of Chihuahua, looked to imple- ment community upgrading programs through participation and cash contributions from the beneficiaries. In the period 1995-98, the municipality's Let's Pull Together program completed 580 works, 70 percent of which are in the Zona Poniente, the city's most backward and marginal area. About $4 million was invested, with approximately equal contributions (of 33 percent each) coming from the municipality, the state, and the community. The program was managed by the Social Develop- ment Department. Its priority works included paving, water supply, sew- erage, and electrification. As in Tijuana, paving is the type of work most requested by the communities; unlike Tijuana, the water and sewer works in the colonias are built by the municipality's community upgrading programs, although the water board participates in a technical assis- tance and regulatory capacity. 5This section is based on information provided by the municipality of Ciudad Juarez and on-site interviews. 82 SLUM UPGRADING AND PARTIOPATON A parallel program managed by the Social Development Department executes works with federal funds from a local government transfer mechanism known as Ramo 33. An average cash contribution from the communities of 33 percent is also applied to these works, which address electrification, school improvements, and housing improvements. From 1995 to 1998, 64 low-income settlements were electrified, with an invest- ment of about $1.8 million. The relationship between the municipality's Social Development Department and the Federal Commission of Elec- tricity is not as good as with the water board; the commission selects contractors and manages contracts, and some conflicts have arisen. In 1992, the first properly constituted neighborhood committees were formed, according to the regulations on neighborhood committees that were adopted by the municipality. At that time, there were 120 commit- tees; six years later, in 1998, there were already 276. The municipality has 23 community development workers, each of whom covers about 13 committees (each committee represents between 35 and 500 families). There are still many areas in which there are no neighborhood committees. Concurrently, the Social Development Department launched a suc- cessful credit program for the purchase of construction materials for hous- ing improvement using a revolving fund mechanism. In the 1995-98 period, $360,000 was invested, and 1,824 loans were granted. The recovery rate was 85 percent; the loans were paid off in 6 to 48 months, without inter- est, and were adjusted according to variations in minimum wage. The methodology followed in Juarez is similar to that in Tijuana, with some important differences. The municipal Social Development Depart- ment has the mission of assisting local people in identifying priority works. For each work, a specific file is opened. The municipality handles design, prepares the budget, selects the contractor, supervises the work, and makes payments. In the case of water and sewer works, it is the water board that handles design and supervises the work. The commu- nity contribution is received by the municipal treasury, into which each community's members make direct payments. All residents affected by a given project must deposit their individual contributions in the trea- sury; those who do not pay do not receive water or sewer connections. Residents who have not made their deposits by the due date are forced to pay their entire share of the cost of the work when they pay their debt-including the government contribution. Those communities that pay on time are rewarded; for example, the municipality often begins follow-up works before the community puts together all its share of the funding. The most evident differences from the Tijuana model are the following: * The lack of an institutionalized structure of participatory budgeting CASE SUMMARIES 83 * The fact that the community doesn't manage the selection of the contractor or the resources * The individualized relationship established between each resident and the municipality for the payment of the contribution and the consequent qualification to receive benefits * The centralized management of the entire program, since the mu- nicipality of Juarez is not decentralized into delegations. According to a municipal official, it is very difficult to convince com- munities to dedicate funds to less immediate problems. This official also notes, however, that, civic participation is higher in Juarez than for the community upgrading programs in Tijuana, and that committees here receive more support. Although he is happy with the progress that has been made in Juarez, he acknowledges that there is still much to do: "How good it would be if the entire city was organized in committees, if no works were made without going through a participatory process, and if there were more activities that go beyond infrastructure provision, such as environmental and health education." El Mezquital Project, Guatemala City, Guatemala6 Exploiting a newly opened window of opportunity for municipal re- form in the mid-1980s, a team of World Bank and Guatemalan officials began to design a municipal development project, components of which addressed urban upgrading and road maintenance. Unfortunately, al- though the project was approved by the World Bank in 1988, the country's situation, undermined by decades of civil strife, was a major obstacle. The Guatemalan government's serious difficulties in financing project counterpart funds and the suspension of all World Bank disbursements to the country from 1989 to 1992 led to a long delay in project start-up. Moreover, when the project finally could begin, the Guatemala City ad- ministration then in office did not favor municipal reform. The World Bank and the Guatemalan government considered cancel- ing the loan altogether, but a Bank mission in 1993 saved the situation by deciding to refocus the project entirely on the urban upgrading compo- nent. This decision was reached through a careful and insightful read- ing of the local situation and the opportunities it offered. In particular, it was the level of organized demand for improvements in low-income urban areas that caught the mission's eye. In the interim, the UNICEF Urban Basic Services Program had been working with low-income communities in and around Guatemala City 6This section is based on World Bank (1998) and Bravo et al. (1997). 84 SLUM UPGRADING AND PARTCIPAnON to develop participatory approaches to urban upgrading and housing development building on previous NGO experiences. The National Com- mittee for Reconstruction (CNR) had already envisaged funding urban upgrading in the El Mezquital district through the World Bank loan, and when the 1993 Bank mission visited the area and learned about the ex- isting plans and level of community organization, a partnership began to take shape. Subsequently, local community groups-under the supervision of CNR, representing the Guatemalan government, and with UNICEF-pro- vided technical support and financial management-launched an inno- vative upgrading project in El Mezquital, which coincided with the main objectives of the peace process.7 The project included land tenure regu- larization, new settlement layouts and street and footpath networks, storm drainage, street paving, new water supplies, sewerage networks and wastewater treatment, paving of access roads, new housing con- struction, home improvement, and new community facilities such as schools and clinics. The total project cost was about $14 million, with 37,600 beneficiaries, for a rough per capita cost of $370. The project was implemented between 1993 and 1997. Some of the most interesting fea- tures of the El Mezquital experience were as follows: * Community participation. The project's beneficiaries participated intensively in planning and executing upgrading works in their areas. The project had a high level and degree of intensity of par- ticipation. * Community organization. The project provided the necessary sup- port and incentives for communities to organize, which bodes well for its sustainability. * Complementarity between the World Bank and UNICEE While the Bank provided resources and overall supervision, UNICEF pro- vided technical assistance and day-to-day project coordination and management on the ground, compensating for the weaknesses of Guatemalan institutions. * Importance of intensive supervision and socio-technical support. The intensive support of UNICEF and some NGOs, working closely with local community groups, was a key success factor. * Dedication of key individuals. Some highly qualified and experi- enced personnel from UNICEF, CNR, and some NGOs worked zeal- ously to organize the process and support communities; their efforts had a major impact on the process and its results. 7Guatemala's civil war ended with a cease-fire in March 1996, followed by a peace accord in December of the same year. CASE SUMMARIES 85 * Emphasis on cost recovery. From the start, the project has promoted the principle of cost recovery and has established various mecha- nisms for cost recovery, such as metering and billing service con- sumption. For example, all the water connections provided by the project are metered. Community acceptance has been good: resi- dents pay their community-based organizations a monthly water bill, and delinquency is practically nonexistent. * Wastewater treatment. Unlike many other projects in poor and nonpoor areas alike, the El Mezquital project included both waste- water collection and wastewater treatment. As with paving and drainage, low-cost solutions were adopted for wastewater treatment. El Mezquital's is a success story that began in very unfavorable cir- cumstances but went on to become a practical lesson on the importance of flexibility, a good eye for local demand, and the ability to set up mean- ingful partnerships in which each partner's comparative advantages are fully put to use. PRIMED Program, Medellin, Colombia8 Medellin has gone through a process of rapid urban growth similar to Call's. The city's population jumped from 170,000 in 1940 to almost 2 million by the end of the 1990s. Growth rates went down to about 2 percent per year in the 1990s, down from a 1960s high of almost 6 per- cent, but the rapid population growth has left its mark. The city has 104 officially recognized informal settlements, with an additional 25 settle- ments appearing after 1990. The total population of Medellin's informal settlements is 250,000, or roughly 13 percent of the city's population. The violence and lawlessness that have plagued Colombia in recent de- cades are present in the city to a high degree. Armed groups control many of the informal settlement areas, and Medellin's homicide rate, which hovers around 200 per 100,000, is one of the highest in the world. The Medellin Integrated Informal Settlement Upgrading Program (PRIM1ED) is working to improve the situation in the city's informal settle- ments through an integrated approach. The program's key components are the following: * Land tenure legalization * Home improvement * Removal and resettlement of families occupying areas of geologi- cal risk 8This section is based on information provided by PRIMED management and on Medellin Municipality (n.d.). 86 SLUM UPGRADING AND PARTICIPATION * Settlement upgrading, including improvements in the road system, storm drainage, consolidation of slopes and earthworks, water sup- ply and sanitation, and community facilities such as schools, health centers, and leisure areas * Support for community development and participation. The program's first phase began in 1993 and was completed in mid- 1999; the second phase is planned for completion by 2004. PRIMED has intervened in 15 settlements in its first phase and will reach 15 more in its second. During the program's first phase, about 11,000 families ben- efited. The total invested was $15 million, and the average cost per fam- ily was approximately $1,400. The sources of funding were the GTZ (31 percent), the municipality of Medellin (30 percent), the national govern- ment (27 percent), and community contributions (12 percent). The pro- gram also received technical assistance from the United Nations. During the program's second phase, it is expected to invest roughly $82 million, benefiting 25,000 households. The municipality intends to contribute 55 percent of that amount and sees PRIMED as a long-term effort, with a clear mission and conceptual basis. The principles under- pinning the PRIMED methodology are as follows: * Area-based, integrated planning and execution. A horizontal in- stitutional arrangement and the use of integrated and area-based, rather than sectoral, planning and execution have been adopted. This has allowed PRIMED to lower the cost of its interventions by 15 to 25 percent, mostly by consolidating project management, instead of hav- ing different parallel projects in the various infrastructure sectors. * Stimulating community ownership of the new infrastructure and services. PRIMED conducted an interesting comparative study that shows that the degree of deterioration of public works undertaken in other poor settlements of Medellin, as well as their maintenance costs, is much higher than in PRIMED areas. This is attributed to the intensive community development and social support provided by the program. * Participatory planning of urban development. The program seeks to enhance the effectiveness of its investments by promoting par- ticipatory area-based development planning in its areas of inter- vention and making sure that every initiative it funds is included in the settlement's area plan. As we will see in later chapters, this is the best way to avoid spending a program's resources on ephem- eral, poorly planned works. * Focus on governance and governability. The program has sought to revert the situation of lack of govemability generated by the de- cades-long absence of the state from the informal settlement areas of Medellin. This was achieved through mutual recognition of the CASE SUMMARIES 87 local government and local residents, and a program design that encourages shared power and responsibility. The PRIMED literature stresses that these four principles enhance the impact of the program's interventions, which is not measured solely in terms of physical improvements, but rather as a broader transformation that affects relationships within communities, between communities and government, and between the different branches of government, all of which have had to learn to work together in an integrated program. PREZEIS Program, Recife, Brazil9 Recife's PREZEIS program ranks with Belo Horizonte's PROFAVELA as one of Brazil's first and most important attempts at creating a citywide framework for urban upgrading. In 1983, a key year for the country's transition from military to civilian rule, Recife's new zoning law insti- tuted special social interest zones (ZEIS), thereby legally recognizing the existence of the city's favelas for the first time. The new law called for the establishment of special planning standards to promote legal regu- larization and physical integration of the informal settlement areas. This was accomplished in 1987, when, at the initiative of local commu- nity organizations and NGOs, a proposal was presented for a new law to institute the Plan for the Regularization and Urbanization of Special Zones of Social Interest (PREZEIS); this was a comprehensive framework for in- formal settlement regularization and upgrading in Recife. PREZEIS was explicitly recognized as a key urban policy instrument by the Lei Organica Municipal, a kind of municipal constitution, in 1990, and by Recife's 1991 Master Plan. In 1993, a new law instituted the Municipal PREZEIS Fund, a dedicated vehicle for settlement upgrading investment. In 1995 and 1996, respectively, a new PREZEIS law and a new land use zoning law were enacted, updating the delimitation of the favela areas and improving the mechanisms for community representation and participatory planning. The PREZEIS law contains several innovative and ingenious instru- ments. Its merit resides in establishing a well-defined institutional struc- ture for resource allocation and decisionmaking regarding settlement regularization and upgrading. One of the principles of the PREZEIS law is to respect and build upon the characteristic features of each settle- ment and preserve what has been built by the community, limiting re- movals and resettlement to the minimum required to open access routes and deal with risk situations. 9This section is based on information from the Recife Municipal Urban Development Company. 88 SLUM UPGRADING AND PARnCIPAnON Although the law defines the areas to be considered ZEIS, it also es- tablishes procedures for the creation of new ZEIS, so that the municipal- ity may keep up with the growth of the informal city. Once it is officially created, the first step for each ZEIS is to establish a five-member legal- ization and upgrading committee, composed of two community repre- sentatives, two municipal representatives, and one representative of the organization providing socio-technical support (usually an NGO). This last is called an assessoria, as in the Sao Paulo mutirao projects (see be- low). Committee meetings take place every two weeks. The community representatives are chosen in a democratic election. Representatives of all the ZEIS legalization and upgrading commit- tees, plus government and civil society representatives, congregate in the PREZEIS Forum, the program's steering committee, which has real decisionmaking power and legal responsibility over the management of the Municipal PREZEIS Fund. The forum has a five-member coordinat- ing group composed of three community representatives, one munici- pal representative, and one representative of the assessorias. One of the community representatives is the general coordinator of the forum, which operates through three thematic committees: an upgrading committee, a legalization committee, and a budget and finance committee. Overall technical assistance and supervision of the program are provided by the Recife Municipal Urban Development Company. As in the PROFAVELA program, PREZEIS has set up a comprehen- sive and participatory legal, regulatory, and institutional framework for settlement upgrading. This is a remarkable achievement. However, weak political will and inadequate funding-about $2 million per year in re- cent years-have kept the program from fulfilling its promise of pro- moting citywide settlement upgrading. It is estimated that at least 30 percent of the Recife municipality's 1.2 million population-or around 360,000 people-live in squatter settlements. At the current rate of in- vestment, it could take almost a century for PREZEIS to cater to them all.10 Favela-Bairro Program, Rio de Janeiro, Brazil" Favela-Bairro is one of the largest and most ambitious urban upgrading programs ever undertaken. The program's first phase was implemented from 1994 to 1999, at a total cost of $380 million. Of that amount, the Inter-American Development Bank (IDB) provided a loan for $180 mil- lion, and the rest was provided by the municipality of Rio itself. '°At an average per capita cost of $500, it would take $180 million to upgrade all of Recife's existing informal settlements. At $2 million a year, this would take 90 years. "This section is based on IDB (1997a), IPLANRIO (1996), and Sekles (2000). CASE SUMMARIES 89 Rio's landscape is dotted with over 500 favelas which house almost a million people, one-sixth of the city's population. Favela-Bairro set out in 1994 to upgrade 105 settlements which are home to about 400,000 people. The cost limit per household was set at $4,000. The favelas cho- sen for upgrading were consolidated settlements, ranging from 500 to 2,500 households in size. The services included in the projects were ac- cess roads, storm drainage, consolidation of slopes, water and sanita- tion, and electricity. In 1993, the mayor of Rio created a committee to develop a new hous- ing policy. The committee concluded that the city needed to focus atten- tion and resources on the favelas, acknowledging and complementing the effort and investment already made by their inhabitants. The city lost no time in approaching the IDB, which at first thought the plan too ambitious. Urban planner Jos6 Brakarz, the IDB team leader for Favela- Bairro, said that this impression soon changed: Once in Rio, however, we found that the concept of transforming favelas into neighborhoods was indeed viable. We met with the local technicians, very motivated people who had been put down by their colleagues as the .engineers of the poor." Together we developed a plan to upgrade not only the favelas but also the low-income, "irregular" subdivisions. Work- ing together, we learned a great deal, such as the need for a very capable executing agency to manage this kind of project. We helped them to orga- nize their unit and develop a methodology, an important part of which was a system of indicators for selecting the favelas to be upgraded. We set very strict cost control measures.. .to keep the project within budget. We also required that all the improvements for a given favela be carried out by a single contractor. At first the bigger contractors didn't want to work in the favelas. But now that the program has proven itself, they are eager for the business (IDB 1997a). The program was launched in 1994 with a public competition among Rio's architects to select the best proposals for upgrading. Compared to other upgrading initiatives, Favela-Bairro pays particular attention to urban design and urban form, and to the quality of public spaces and urban equipment. Contrary to what was done in Sao Paulo for Guarapiranga, the municipality of Rio decided to use its in-house ca- pacity to manage the program and provide socio-technical support. According to Sergio Magalhaes, Rio's secretary of housing, the program's cost limit of $4,000 per household is about a fifth of the cost of building new housing on the city's outskirts, not induding indirect costs. He notes, "Relocating them to another site where everything has to be built costs about five times more just for construction. If we add the indirect costs such as expanding public transportation, water and sewerage services, health and education, who knows how much it would cost" (IDB 1997a). 90 SLUM UPGRADING AND PARnCIPAnON The improvements have encouraged favela residents to invest in home improvement in their turn, as Maria Licia Petersen, manager of the Favela-Bairro program, explains. "The project is founded on the premise that the city pays for the common services, and the residents are respon- sible for improving their own houses. We are seeing that when we put in the services, the residents lose their fear of being uprooted from the favela, and they begin making improvements with their own money" (IDB 1997a). Phase II of the program, which is now under way, has almost the same amount of funding as the first phase. By the end of 2004, it is expected that 70 to 75 percent of Rio's favela population will have benefited from the program. Favela-Bairro suffers from some sustainability-threaten- ing problems-problems it shares with other Brazilian initiatives includ- ing Guarapiranga-such as a lack of emphasis on cost recovery and weak social support after project implementation. At the same time, Favela- Bairro and its impacts reveal the promise of urban upgrading and show that it can be done at a scale that makes it possible to think of improved living conditions for all slum dwellers in a large developing country city in the foreseeable future. Novos Alagados Project, Salvador, Bahia, Brazil"2 Salvador, the capital city of the state of Bahia, is, with a population of 2.4 million, the fifth largest city in Brazil. It has 357 favelas, where almost 29 percent of the total population lives. It is a dynamic economic and cul- tural hub, located on the scenic Baia de Todos os Santos, on the country's northeastern coast. Novos Alagados is a settlement of pile-dwellings situ- ated in an inlet of the Bafa de Todos os Santos. At the beginning of the upgrading operation, 13,100 people lived in this settlement, in subhu- man conditions. To mitigate the problems of living on water, the families tried to fill the area underneath their dwellings using mud and solid waste. In this manner, some of the shacks came to rest on dry ground, while the settlement kept expanding toward the bay with the addition of new pile-dwellings. The average family income was $87 per month in the pile-dwellings and $184 per month among the inhabitants of the huts on dry ground. In July 1989, an initial memorandum of understanding was signed between the Italian NGO AVSI and the government of the state of Bahia, through which the parties committed themselves to seek funding for an upgrading project in Novos Alagados. The project began in 1992 and "2This section is based on information provided by AVSI. CASE SUMMARIES 91 was completed at the end of 2000. The total cost was set at $10.8 million. Funding was provided by the government of Bahia, the World Bank, the government of Italy, the European Union, Swiss Caritas, and AVSI itself, from its private sponsors. A second phase of the Novos Alagados project is now under way in a neighboring area. The project originated from an alliance between AVSI, the local Ro- man Catholic archdiocese, and the local community. It is a good example of how civil society and community-based organizations can organize to promote a project idea and get local and provincial authorities and international aid agencies to buy into the project and provide funding and technical assistance, while still maintaining a strong role in project planning and execution. The main actions promoted by the project were the following: * Urban upgrading of the zone on dry ground, with the provision of basic services and creation of a road system combined with the ex- isting urban road network * Creation of a coastal scenic pathway which delimits the settlement and makes new pile-dwelling occupations very difficult, by giving a socially recognized use to the coastal strip in terms of access, pub- lic spaces, and services * Building of three council housing complexes in an adjoining area on dry ground for the residents of the pile-dwellings who cannot be accommodated in the new coastal strip and for the residents of the dry ground zone who had to be resettled * Environmental education activities * Training on building techniques to support home improvement ef- forts * Creation of a housing, production, and services cooperative that generates jobs for its members, provides microenterprise loans, and develops business to build homes and provide services in the ex- ternal market * Incentives to income generation and job creation through the cre- ation of a job search office and the provision of training aimed at young people involved in micro-units of manufacturing and trade * Establishment of basic social services such as daycare centers, pre- schools, and health clinics * Development of social organizations centered on the artistic and cultural traditions of the population, particularly in music, dance, and the martial arts. Community participation in the Novos Alagados project was intense, although mostly confined to the information and negotiation level, ex- cept for some initiatives (such as social service and cultural activities) 92 SLUM UPGRADING AND PARnCIPATON that were managed by the community. The project's integrated method- ology and horizontal institutional arrangement made it possible for the various public and private participants to cooperate. The participation of the NGO was key to speeding up the bureaucratic process and in- creasing accountability in resource management: A geographic information system was used to plan and control project activities; this encouraged communication between experts and area resi- dents, making it easier to share an overall vision of the area's problems and reducing the time needed for planning while improving project quality. Mutirao Program, Sdo Paulo, Brazil'3 One alternative that has been used in Sao Paulo in the last two decades to step up housing delivery for the poor has been the provision of fund- ing and technical assistance to mutual-help housing construction. Mutirao, as mutual-help construction is known in Brazil, is a traditional practice in rural areas and in urban informal settlements: Typically, it is used for small-scale expansion or improvement of individual homes. The idea of organizing and focusing this traditional practice to mass produce new units, providing technical assistance and financial support, came from the experience of the housing cooperatives in Uruguay. In 1982, the mutirao-based Vila Nova Cachoeirinha housing project in Sao Paulo was launched. Starting that same year, several other Brazilian municipalities-Sao Joao da Boa Vista, Penapolis, Bauru, Americana, Goiania, Angra dos Reis, Lages, Vila Velha-began their own mutirao projects. Sao Paulo's mutirao program of the 1990s evolved from these experi- ences, and has moved toward a format similar to that used by FUPROVI. As in Costa Rica, organized community groups deal with an organiza- tion that provides them with technical and financial assistance, while the actual building is done by the communities themselves, with sup- port from contractors for some specialized services. In Brazil, however, the housing associations approach the government and apply for its sub- sidies directly, instead of using the intermediation services of an NGO, as in Costa Rica. Another difference is that in Brazil the land is included in the subsidy package, whereas in Costa Rica the housing associations usually approach FUPROVI after they have secured a suitable plot. Tech- nical and administrative assistance is provided in much the same way in both cases-that is, by an organization outside the government that "3This section is based on information provided by Prof. Alex Kenya Abiko, Depart- ment of Urban Engineering and Civil Construction, Polytechnic School, University of Sao Paulo. CASE SUMMAIES 93 possesses the necessary technical capabilities. In Costa Rica this organi- zation (FUPROVI) is also the external support agency responsible for the project as a whole; in Brazil, there is a roster of qualified organiza- tions (called assessorias) from which communities may choose. The units produced by the Brazilian system tend to be more sophisticated than the very simple units produced by FUPROVI projects. Many of the Brazil- ian projects produce apartment buildings, while FUPROVI's are always horizontal. One of the most innovative and promising features of Sao Paulo's mutirao programs is the role of the assessorias. They are basically groups of professionals-architects, planners, engineers, social workers-that are organized as NGOs but operate more like small consulting firms. They have to go through a screening process to be included in the ros- ters maintained by the municipality and the Housing and Urban Devel- opment Company of the State of Sao Paulo (CDHU). Once they are part of the roster, they may start to compete for business. The key feature of the process is that the decision on which assessoria to hire is made by the housing associations, not by the project sponsors. Therefore, although they are also accountable to CDHU or municipality technical supervi- sors, the assessorias' clients are actually the community groups. This demand-based and commercially oriented system has led to the acquisition of a critical mass of socio-technical support capacity, outside the public sector, that can be mobilized for urban upgrading and low- income housing initiatives in Sao Paulo. It has also provided the incen- tives for lowering costs, increasing efficiency and effectiveness, and enhancing client orientation in the provision of services. Although they operate commercially, the NGO roots and legal status of the assessorias provide flexibility and community contacts. The fact that the capacity exists outside the public sector means that the assessorias suffer less of an impact in times of political transition. The municipality of Sao Paulo practically discontinued its mutirao program when a new administra- tion took office in 1993, but the assessorias continued to exist and were there to help CDHU when it started its own program in 1995. The exist- ence of the assessorias in Sao Paulo can be seen as a key enabling factor for future large-scale urban upgrading and low-income housing initiatives. The two main mutirao initiatives of the 1990s were the Municipal Community-Managed Social Housing Fund (FUNAPS Comunitario) program of the municipality of Sao Paulo and the state's CDHU Mutirao program. The municipality's program had great momentum from 1989 to 1993, when a new municipal administration's housing policy veered away from mutirao and toward favela upgrading and new housing con- struction. The state program, which started in 1995, is partly based on the municipality's experiences. 94 SLUM UPCRADING AND PARnCIPAnON The key features of the FUNAPS Comunitario program were the fol- lowing: * Housing units had a cost cap of $6,000 for houses or apartments of up to 60 square meters. * Of the program's costs, 4 percent goes for technical assistance, 4 per- cent for setting up the building site and buying tools, 10 percent for specialized building services, and 82 percent for building materials. * The program's funding source is a municipal fund called FUNAPS, which is specifically targeted to informal settlement residents. * The program has about 15 assessorias in its roster. The key features of the CDHU program are the following: * The program basically produces apartment blocks. * The amount financed for a 48-square-meter apartment is about $7,600, not including the cost of land and infrastructure. This is 30 to 45 percent less than the cost of building through conventional methods. * Of the program's costs, about 3 percent goes for the building site, 6 percent for technical assistance, 24 to 40 percent for specialized services, and the remainder for materials. * The program is funded through a state tax. * The program has 30 assessorias in its roster. .Recent research has shown that the cost of units built through Sao Paulo's mutirao program is about 30 percent lower than current market costs (as a point of comparison, the cost of units produced through FUPROVI's mutual-help system is 50 percent lower than market cost). The program's lower costs are partly due to the use of community labor, but lower indirect costs are a factor as well. Some items, such as contrac- tors' profit margins and financial costs, simply do not exist in mutirao; others, such as central administration costs, do exist but are much lower. One disadvantage of mutirao is the longer time frame of projects, which take at least 24 months to be completed. This is due to the lower level of training and lower productivity of mutirao workers, and to the fact that they generally work on weekends or after hours, during what would normally be their free time. On the other hand, initial concerns about working conditions and worker safety have proven unfounded. Overall, assisted mutual-help housing construction is a methodology that requires great dedication from the communities involved and high quality socio-technical assistance and supervision to succeed. It does lower cost and helps ensure project feasibility, though, and the effort required and learning opportunities created during construction are a definite plus for project sustainability. 3 Organizing Participation: The Project Level This chapter discusses some of the key issues involved in designing and implementing a participatory initiative from the specific point of view of the organization of participation. Issues such as the different levels and degrees of participation, what to do when the community is not organized, and the need for good intermediaries between different stake- holders involved in the project are discussed. The key role of women in infrastructure and shelter projects is highlighted, as is direct community participation in project management-a feature of some very successful projects. The chapter is organized according to the order in which these, and related issues, typically present themselves in actual projects. Development Projects and the Social Process Recognizing the benefits of participatory approaches, local governments and development aid institutions are faced with the challenge of design- ing development programs and projects that are built to encourage par- ticipation. To do this, they need to provide an environment that is conducive to the articulate expression of community demand and to active community participation in decisionmaking. They also must de- sign for efficiency and effectiveness, and avoid the risks and excessive costs sometimes associated with poorly conceived participatory initiatives. At the heart of these challenges is the need to match two very differ- ent things: a development project or program and a social process. The diffi- culties involved in such a match may be part of the reason why relatively few projects can be considered truly participatory, in spite of the wide- spread recognition of the advantages of participatory projects. A program's funding, technical assistance, operations, and procedures must 95 96 SLUM UPGRADING AND PARnCIPAnON be able to interact with a community and its complex demands, expecta- tions, levels of understanding of the project and its requirements, willing- ness to participate, trust in the process, vested interests, and internal power disputes-in short, all that constitutes the social process of participation. Projects, the usual instrument of development initiatives, create an environment with a variety of external actors, each with its own priorities and hidden and/or explicit agendas, rules and regulations, knowledge base, management styles, and so on. Projects also have their funding mechanisms, with the different conditions that may apply. They have a timeframe, which is influenced by fiscal years, elections, and other politi- cal and institutional constraints and events; and a system for measuring success, whose indicators are often based on easier-to-measure means rather than ends. Rates of disbursement or lengths of pipe are therefore the most common yardsticks, rather than such items as improvement of health indicators, time and cost savings accrued to households due to more efficient infrastructure services, or the level of a community's so- cial capital. Subjective, hard-to-measure improvements, such as added convenience, self-esteem, or better quality of life, are included even more rarely in performance ratings. This serves to divert resources from any- thing that is not directly part of the physical works. Moreover, such as- pects of the project environment often deflect attention from the real objectives of a project and serve as justification for introducing approaches and management styles that are focused on the short term-and which are often not conducive to participation. The key elements needed to bridge the gap between a program or project and the social process, all of which are linked to the structure of the organization, may be summed up as follows (see figure 3-1): * Information on the process needs to be available to the community, disseminated by a good communication strategy. * Adequate participatory planning tools need to be used, based on participatory information gathering and analysis, so that the com- munity may influence the process and planning may benefit from local knowledge. * A strong intermediation structure must exist, capable of establish- ing links across disciplinary areas and between the community and other stakeholders. * A change of attitude on the part of the staff of the agencies promot- ing projects needs to be actively sought and promoted by project organizers by creating an appropriate incentive structure. Such an incentive structure should include the provision of adequate re- sources, time, and recognition to socio-technical support tasks. It also requires appropriate rewards for performance and career ad- ORGANIZING PARTICIPATION: THE PRoJEcr LEVEL 97 vancement possibilities to staff who work directly with the com- munity. * The quality of the participatory process becomes as important a success criterion as the rate of disbursement. To provide incentives for demand-responsiveness, project promoters need to demonstrate through their actions that they value participation. * An institutional arrangement (project coordinating unit, its links to its parent institution, and coordination arrangements with other institutions involved) must exist that is integrated, flexible, and demand-responsive; this again requires the correct incentives. * The appropriate skills and capacity to establish links between the social and technical spheres must be available. The Significance of a Strong Social Intermediary In the absence of a tradition of participation, what mechanisms need to be set up for local people to participate actively in a project? And how is it possible to reconcile the timing and rhythm of longer term community participation processes with the-often very different and shorter term- project objectives and time frame? The answers to these questions can- Figure 3-1. The Seven Pillars of Participation RESPONSIVENESS OWNERSHIP IMPACT SUSTAINABILITY THE PARTICIPATORY PROCESS rz J i . _ Source: Authors' construction from field study data. 98 SLUM UPGRADING AND PARnCIPATION not be left to chance. They depend on the crucial function of intermedia- tion, which is intrinsically linked to the relationship between the project and the social process described above. Encouraging participation in a project is a matter of creating an en- abling environment and appropriate channels for participation, and al- locating the needed resources to its promotion. Intermediary organizations,' as will be seen in the course of this chapter, may belong to the public or private sector and may take various forms. The impor- tant thing is that they have an appropriate set of procedures-a method- ology-and the skills and knowledge to apply it. Appropriate intermediaries between project promoters and beneficia- ries are one of the critical components for the success of a project involv- ing community participation. From an operational point of view, the key factors that influence the effectiveness of these intermediaries are: * The existence of organizations qualified and willing to act as inter- mediaries * The allocation of sufficient resources to cover the cost of such inter- mediation. Intermediaries are particularly critical where community-based orga- nizations are weak or not sufficiently representative at the outset of a project, or where there is a high potential for conflict within the commu- nity or between the community and the project promoters. Intermediaries in Action: Case Study Actors In all of the cases we studied, we found at least one actor among the project participants that carried out the strategic function of articulating and mediating between the requirements of the project's promoters and those of the community. Table 3-1 identifies this social intermediary or- ganization and summarizes its key features for each of the cases stud- ied; the following provides a more in-depth examination of the social intermediary role in each case. In Bolivia, this function is partially carried out by the municipali- ties themselves through the staff of their own social development departments. Since municipalities often try to co-opt community 'Although in reality, intermediary organizations offer much more than social interme- diation, it is common to see the terms social intermediation and socio-technical support as equivalents. Although the latter term is certainly more exact, we use both interchange- ably in this text. We prefer not to use the term social engineering, since some feel that it has overtones of social manipulation. ORGANIZING PARnCIPAnON: THE PROjECr LEVEL 99 Table 3-1. Identification and Key Features of Social Intermediary Organizations in Cases Studied Case Organization Keyfeatures Bolivia Municipality social develop- Technically weak and vulnerable to ment departments political manipulation; attempts by national government to build capa- city of intermediaries and ABCOs Brazil Private contractor providing Rapid mobilization for recruitment, socio-technical support training, and placement of social services workers, engineers, architects, and administrative staff; ability to meet stringent performance requirements; flexibility (ability to increase or re- duce numbers of staff according to pace of works) Costa Specialized NGO promoting Offers social, technical, and admin- Rica low-income housing istrative assistance services to com- munity groups in exchange for a fee; ability to provide and coordi- nate full range of services efficiently and effectively; emphasis on training and capacity-building for own staff and client groups Mexico Decentralized governmental Effective mechanism to support agencies operating from yearly works programs; insufficient municipal offices staff to support a long-term develop- ment process; decentralization has brought the process closer to com- munities but has weakened coordi- nation and peer review process Peru Various NGOs, municipality, Lack of adequate socio-technical ABCOs, and SPCOs support for many initiatives has been a key limiting factor leading to varying degrees of intensity of participation in relation to the amount and quality of external support provided Source: Authors' construction from field study data. leadership and manipulate participation, the quality of the inter- mediary is often poor. Improving the quality of intermediation, perhaps by entrusting it to organizations like the Participatory Ac- 100 SLUM UPGRADING AND PARTICIPATION tion Planning (PAP) project,2 would do much for the quality of the entire process in Bolivia. * In Brazil's Guarapiranga program, the intermediary role was per- formed by Diagonal Urbana, a private company hired to provide this service, mobilizing a team of specialists. * In the San Jose case, the Foundation for the Promotion of Housing (FUPROVI), the nongovernmental organization (NGO) that pro- moted the projects mobilized social workers as well as technical advisors. * In Tijuana, the social workers and engineers mobilized by the mu- nicipality were indispensable intermediaries, bridging the gaps between the demands and schedules of the project and those of the population-so much so, that when their numbers and availability began to be reduced, this resulted in complaints from the commu- nity members about the inconveniences and delays. * The case of Villa El Salvador (VES) is a very special one in this re- gard. The quality of the community organization in VES and the dynamics of the relationship between the VES-wide area-based community organization (ABCO)-the Self-Managed Urban Com- munity of Villa El Salvador (CUAVES)-the local specific-purpose community organizations (SPCOs), the local government, the vari- ous central government bodies involved, and support organizations such as NGOs have produced different arrangements for different projects.3 Sometimes ABCO leaders have acted as organizers and mediators; on other occasions, NGOs or the local government have done so. The strength of community organization has allowed for a sharing of responsibilities. Other Functions of Intermediaries: Socio-Technical Support Intermediation is just one of the dimensions of the activity of intermedi- ary organizations. The ACAT concept-asesoramiento, capacitaci6n, asistencia tecnica (support, training, technical assistance)-practiced by San Jose's FUPROVI nicely sums up the functions of such organizations. A wide array of skills needs to be mobilized in order to fulfill this role, 2Funded by Dutch development aid, PAP promotes participatory action planning in Bolivia in low-income urban areas of Santa Cruz and El Alto. As discussed in chapter 6, PAP provides important skills and capacity-building for participation, but unfortunately does not enjoy sufficient support from its partner municipalities. 3Throughout this book, the term ABCO is used to mean a variety of area-based com- munity organizations, including neighborhood associations; SPCO refers to a variety of specific-purpose community organizations, including special interest groups. ORGANIZING PARICIPAnON: THE PROJECT LEvEL 101 which is described by some as socio-technical support and by others as social engineering. The key areas of competence of intermediary organi- zations are the following: * Coordination and project management. The complex processes we are talking about involve many stakeholders both at the commu- nity and institutional levels, and the ability to coordinate diverse inputs (e.g., technical, administrative, financial) and different time frames is crucial. Project management skills are needed to keep track of planned and actual resource use, time frame, and results achieved. * Social intermediation and community mobilization. The complex- ity of the social process of participation requires that organizations know how to talk to community organizations and individual local residents to obtain their organized cooperation. Consensus build- ing, negotiation, conflict resolution, and grievance management are all important skills in this regard. * Planning, engineering, and architecture. These skills are required to provide technical assistance to the participatory planning pro- cess and to be able to interact productively with the various line agencies and public sector entities involved. * Training and capacity-building. Social intermediary organizations need to be good at providing training and other capacity-building activities-a very important dimension of the participatory process. Socio-technical support provides information and interfaces between the community and the authorities and between the community and the technical and administrative functions of the project. Such support en- sures that information flows smoothly and creates a channel for discus- sion and negotiation of alternatives, organizing and clearly expressing demand. It provides a guaranteed source of information for the commu- nity, dissipates rumors, and reduces the level of confusion. It plays a fundamental role in mediation and conflict resolution and constitutes a vehicle to facilitate the community's access to the different actors in- volved in the project. In fact, one of the most important functions of social intermediaries is providing local residents with a single, clearly identified, and easily available access channel to the project and all its partner organizations (note the "on-call" socio-technical support pro- vided in the Brazil and Costa Rica cases). In some projects, socio-technical support is provided by the same or- ganization that provides engineering, planning, project management, and construction management services. When this is the case, all of what is usually considered project software-i.e., all of the nonphysical com- ponents of a project, as opposed to its physical works components, or hardware -is provided by the same organization, which enhances coor- 102 SLUM UPGRADING AND PARTICIPATION dination, ensuring that all project design and management functions are responsive to participation. (See box 3-1 for an example of the power this arrangement can wield.) However, while this would be a desirable situation, there are few organizations that can cover the full range of project software services; thus, the key focus from the point of view of project sponsors should be coordination. Nowadays, acknowledgment of the importance of socio-technical sup- port is widespread, and it comes even from some unexpected corners. The traditionally minded management of the construction firms that were involved infavela upgrading works in the Guarapiranga program were initially reluctant to accept the need for this function-and loath to pay for it-but are now the first to admit that nothing could have been done without it. According to the coordinator of the Guarapiranga program, Dirceu Yamazaki, "Social support and technical assistance to communi- ties in projects such as these is fundamental before, during, and after the physical intervention. To meet these demands, which had not initially been taken into account, we found a way of including a clause in the contract with the construction companies that required them to hire sup- port services for the population. They must have found the demand strange in the beginning, but I am sure that they now understand the importance it has." When the initial project budget does not provide for the necessary socio-technical support, a makeshift solution is necessary. As we saw in Guarapiranga, the social intermediation provider was hired by each con- struction firm, and, from the point of view of the project, the cost was Box 3-1. Introducing Participation into Project Design and Management: The FUPROVI Program in San Jose Socio-technical support and a conducive environment with the right in- centives help stimulate participation. In FUPROVI's projects, for example, individual homes are not assigned until after construction. This means that all participants work on many different homes and have an incentive for doing quality work, since each home they are working on might tum out to be their own. This system of house assignment adds further incen- tives to participation. Points are awarded to participating households on the basis of transparent criteria such as their punctuality, number of hours contributed, etc. Households are ranked according to the sum of their points, and their turn to choose their home only comes after all the better ranked households have chosen theirs. The fact that in any project some homes are better finished or better located than others tums this into a powerful incentive to do a good job. ORGANIZING PARICIPATON: THE PROJECT LEVEL 103 considered part of the construction costs. In this way, provision of socio- technical support was included in the program budget under the "con- struction" heading. In spite of this, socio-technical support is a clearly identified cost item of the project, since it is provided by a private com- pany under market conditions. The Cost of Socio-Technical Support This brings us to the issue of cost. Such delicate and complex tasks as the ones described here require time, specialized personnel, and money. The cost of socio-technical support is part of what may be called "the cost of participation." This may represent a significant portion of project cost. In Tijuana, socio-technical support was provided by the municipality, partly by its own permanent staff and partly by professionals hired spe- cifically for this purpose. In practice, the cost is added to the subsidy the municipality gives each project. Although the subsidy given for the works is totally transparent-the community manages those funds and has to account for them-the part of the subsidy given as technical assistance is not made clear to the community. In fact, it is not even clear to the municipality itself, since most of the staff, who are on the municipal pay- roll, are also involved in other activities, and the costs that accrue to each activity are not tallied. The same thing goes for other costs such as the use of equipment, office space, etc. Roughly the same situation pre- vails in the cases of Bolivia and Peru. We will here try to clarify the cost implications of socio-technical sup- port and project software, using the case studies from Costa Rica and Brazil as these are the only ones in which the full costs of project soft- ware were provided. Cost of Project Software in the San Jose Case. In San Jose, FUPROVI's approach to cost recovery has changed with experience. The institution used to assess the cost of its services (i.e., the full range of project soft- ware services, including socio-technical support) for each project, and charged the client group for them. This approach had several disadvan- tages. Notably, communities did not know, at the outset of a project, how much socio-technical support would cost. Additionally, there was much bickering over the cost attached to specific services, and even more regarding indirect costs related to FUPROVI's general management and administration. Therefore, the institution changed the system to apply a flat rate to all its projects. FUPROVI now charges its client-the group known as a housing association-a price for its services equal to 12 percent of the estimated cost of the housing units as assessed by the Costa Rican Fed- 104 SLUM UPGRADING AND PARnCIPATION eration of Engineers and Architects (CFIA), including basic finishings and infrastructure. The use of the CFIA parameters, which are some- what lower than actual market costs, provides the community with a clear benchmark before a project even starts. The price of socio-technical support is made clear to the client group, which recognizes its value and agrees to pay for it. This is part of FUPROVI's policy of maintaining clear contractual relations with its clients and ensuring the financial sus- tainability of its operations. With the new system, FUPROVI may incur losses on some projects that are particularly complex, but to compensate for these losses, it makes a "profit" on projects that require comparatively less input. Through practical experience, FUPROVI found that 12 percent of CFIA-assessed cost was an adequate margin for ensuring its continued economic sus- tainability. As a percentage of the actual cost of the houses it helps people build, however, the cost of FUPROVI's services ranges between 16 and 23 percent (see table 3-2).4 This variation is linked to the location and complexity of each project. The easier the project, the higher the percent- age, since the CFIA estimated cost-and FUPROVI's 12 percent of it- are the same per square meter, if the type of building is the same, anywhere in the country. In reality, prices are lower outside of San Jose, and the characteristics of the building site and available infrastructure have a big impact on the cost. Cost of Project Software in the Guarapiranga Upgrading Project. Table 3-3 presents the cost of project software for seven favelas of the Guarapiranga upgrading project. The project software package considered includes: * Engineering and planning * Project coordination and management * Information gathering and diagnosis * Construction management and quality control * Socio-technical support * Technical assistance for land tenure regularization. The figures in table 3-3 are almost all actual figures, drawn from ac- tual project expenditures and provided by the Coordination of the Guarapiranga Upgrading Project at the Municipality of Sao Paulo. Cal- culations were made by Diagonal Urbana to establish average values and to add an important item that was missing from the Guarapiranga 4Even when the price of FUPROVI services is added to the other cost items-land, mate- rials, specialized workmanship-the total cost of its housing units is significantly lower than either the CFIA estimated cost or market cost. Indeed, table 3-2 shows that it is usually less than half the cost of a similar unit built by a private company at market cost. ORGANIZING PARnCIPATION: THE PRojECr LEVEL 105 Table 3-2. House Cost Comparison: FUPROVI versus Private Companies Project 21 de Nueva Lomas de Valle Los Comparison item Noviembre Primavera Parita Escondido Parques Plot surface (m2) 154 164 333,250 120 182 House surface (m2) 45 45 42 42 60 FUPROVI Cost per m2 139 113 118 95 102 Total cost of housea 6,260 5,068 4,947 3,983 6,099 Cost of FUPROVI services 985 928 1,050 913 1,114 Services as % of total cost 16 18 21 23 18 Private companies Cost per m2 228 231 304 205 211 Total cost of house' 10,275 10,390 12,772 8,626 12,638 Marginb 3,550 3,609 4,551 2,958 4,348 Margin as % of total cost 35 35 36 34 34 Notes: This cost comparison regards the total cost of identical homes with basic finishings and infrastructure. FUJPROVI costs are those for houses built with the FUPROVI assisted mutual-help construction system. Private company costs are FUPROVI estimates of the cost of houses built by a private company at market prices and conditions in the same locations. 'These costs include the cost of FUPROVI's services and the private company's mar- gin, respectively. bMargin indudes indirect costs (6 percent), pretax profit (15 percent), and discounts obtained from contractors and materials suppliers (10 percent). Source: FUPROVI, 1999. project, namely technical assistance to land tenure regularization. The original calculations were made in Brazilian currency (reals), and the results were converted into dollars at the November 1999 rate of R$2 per US$1. The figures in table 3-3 are all in U.S. dollars for comparison pur- poses. However, it should be borne in mind that the Brazilian real was worth significantly more against the U.S. dollar at the time the expendi- tures were actually made. The sample selected for table 3-3 includes favelas representing a range of sizes, degrees of consolidation, levels of organization, population den- sities, and geomorphological features-all factors that influence the cost of project software. The selected favelas and their key features at the start of the project were the following: * Nova Guarapiranga I and II. These are small favelas, located in low-lying, flat areas on the banks of the Guarapiranga reservoir. Table 3-3. Cost of Project Software in the Guarapiranga Project Density Total Project Project Software Software Area No. of (householdsl project costl software as % of cost/house- Favela (hectares) households hectare) cost ($) household ($) cost ($) project cost hold ($) Nova Guarapi- ranga I & II 1.90 261 137.4 671,754 2,574 142,341 21.2 545 Jardim Manacas 1.27 288 226.8 1,066,667 3,704 170,644 16.0 593 Jardim Floresta 1.60 234 146.3 586,646 2,507 129,735 22.1 554 C) Parque Amelia 5.89 736 125.0 1,684,402 2,289 365,632 21.7 497 Santa Tereza 0.60 101 168.3 256,699 2,542 51,304 19.9 508 Jardim Dionisio 5.00 549 109.8 1,145,653 2,087 242,601 21.2 442 Jardim Iporanga/ Jardim Esmeralda 17.60 2,074 117.8 8,342,468 4,022 1,267,864 15.2 611 Total 4,243 137.5 13,754,289 3,242 19.2 589 Note: The totals for columns 3 (density), 5 (project cost/household), 7 (software as % of project cost), and 8 (software cost/household) are weighted averages per household; weights used are number of households per favela. Source: Diagonal Urbana from data supplied by the Coordination of the Guarapiranga Urban Upgrading Project. ORGANIZING PARTICIPATION: THIE PROJECT LEVEL 107 There was a high degree of consolidation (i.e., most homes were built of durable materials) and partial water and sanitation net- work coverage. The works consisted of minor layout changes, wa- ter and sanitation network repairs, extension building of infrastructure networks, and paving of main roads. The main cost item was soil replacement for the main roads. * Jardim Manacis. This is a small favela on a high-slope area, very densely occupied, with a medium level of consolidation. The project included the opening and paving of streets and pathways, and the building of infrastructure networks, storm drainage and protection, and consolidation of slopes. The high cost per household is due to this last item, a very costly one in a high-slope area. * Jardim Floresta. This is a small favela, very dense, with a medium level of consolidation. A small risk area required removal and re- settlement, as did significant layout changes and the opening of new roads and footpaths. Infrastructure networks had to be built from scratch. * Parque Amelia. This is a mid-sized favela, densely occupied and not very consolidated, with shacks interfering with the area's main drainage. The project had a major storm drainage component and included the building of infrastructure networks, the reduction of density through removal and resettlement, and the opening and paving of streets and footpaths. * Santa Tereza. This very small and highly consolidated favela re- quired the building of infrastructure networks and the paving of streets and footpaths. * Jardim Dionisio. This is a mid-sized favela, densely settled and highly consolidated, with interferences between the settlement and the area's main drainage. The intervention included, besides the usual infrastructure networks, a major storm drainage component, with the building of a covered drain along the valley's floor, which also serves as the new main access. * Jardim Iporanga/Jardim Esmeralda. This is a large, dense, and highly consolidated favela, with major interferences between exist- ing structures and drainage. The works here were the costliest in our sample, since they included the building of major drainage works and the removal and resettlement of almost 25 percent of the households, mostly to new units built within the area itself. Table 3-4 gives suggested parameters for the various software compo- nents, expressed as percentages of total project cost. These are based partly on the weighted average costs of the different services in our sample and partly on the broader experience of Diagonal Urbana. Note 108 SLUM UPGRADING AND PARTCIPATION Table 3-4. Structure and Cost of Project Software by Type of Service (As percentage of total project cost) Weighted Suggested Type of service average cost parameter Engineering and planning 3.33 3.25 Project coordination and management 4.08 3.75 Information gathering and analysis 0.44 0.50 Construction management 3.18 3.00 Socio-technical support 2.43 4.50 Land tenure regularization 5.77 5.00 Total 19.24 20.00 Note: Weights used are number of households per favela. Source: Diagonal Urbana from data supplied by the Coordination of the Guarapiranga Urban Upgrading Project. that the average cost of socio-technical support in the Guarapiranga project was lower than Diagonal's experience in other projects, partly because some activities normally carried out by socio-technical support providers were distributed among other items in Guarapiranga. Figure 3-2 provides a curve that relates the cost of project software, as a percentage of total project cost, to total project cost per household. The curve is based on the Guarapiranga figures, and we feel that it provides a reasonable first guess, or ball park figure, in the range that goes from $2,000 to $7,500 of total project cost per household. In plotting the curve, we needed a point corresponding to a higher total cost, since in the Guarapiranga data, the cost only ranges from approximately $2,000 to $4,000. Therefore, point A in the curve was drawn from a project of Sao Paulo's Housing and Urban Development Company, in which the de- gree of removals and resettlement is very high, the cost per household is $7,500, and project software cost is just over 11 percent of total project cost. The curve loses practical significance beyond that point, since it is not realistic to expect the cost of project software to move to under 10 percent of the total project cost per household. Another caveat is that these figures were drawn from a project that included simultaneous in- terventions in many areas, which generated economies of scale. Experi- ence shows that economies of scale lower the relative cost of project software as the total project cost per household goes up; it also shows, however, that the cost of project software rises significantly in isolated interventions, especially in small areas. ORGANIZING PARTICIPATION: THE PROjECr LEVEL 109 Figure 3-2. Cost of Project Software as Percentage of Total Project Cost and Total Project Cost per Household y = Cost of project software as percentage of total project cost 30% y = 18.597X4.576 25% 20% $ $2,541 15%0\ ............ .............. .....,, 10% Asym tWfN Z 5% 0 2,500 5,000 7,500 10,000 12,500 x = Total project cost per household (dollars) Source: Authors' construction from field study data. Alternativesfor Organizing Socio-Technical Support There are many effective alternatives for organizing the provision of socio- technical support. Table 3-5 highlights some examples from the projects covered in chapter 2. Let us explore for a moment the pros and cons of the different arrangements cited in this table and summarized in figure 3-3. In Tijuana, socio-technical support is organized and provided by the decentralized offices of the municipality In Ciudad Juarez, in the Mexi- can state of Chihuahua, it is also organized and provided by the munici- pality, but by a centralized social development department. Tijuana's decentralization brought the program closer to the communities, but it also had a negative impact on coordination and professional exchange among the technicians. The centralized model in Juarez has avoided these problems, but in neither city has the municipality given due importance to the nonphysical aspects of the community upgrading programs. This is at once a missed opportunity and a risk to sustainability. In the Boliv- 110 SLUM UPGRADING AND PARTICIPATION Table 3-5. Types of Providers, Contractual Arrangements, and Compensation Structures for Socio-Technical Support Contractual Compensation Project Provider arrangements structure Tijuana Decentralized Contract between Service provided by munici- offices of the a community works pality as (hidden) subsidy; staff municipality committee and the are employees of or work under municipality contract with the municipality Ciudad Central social Same as above Same as above Juarez devel. dept. of municipality San Jose FUPROVI Contract between All staff are permanent em- (local NGO) a housing associa- ployees of FUPROVI; housing tion and FUPROVI associations pay for services a percentage of estimated con- struction cost Guarapi- Diagonal Contract between Diagonal is paid a fixed per- ranga Urbana (pri- construction con- centage of construction costs; vate consult- tractors and all staff are Diagonal ing firm) Diagonal employees Cinga- Diagonal Contract between Diagonal is paid according to pura Urbana municipality and staff time employed and ex- Diagonal penses incurred; all staff are Diagonal employees Mutirao, Assessorias, hy- Contracts between Assessorias are paid accord- Sao brid structures housing associa- ing to staff time employed and Paulo (consulting tions and expenses incurred; all staff are firms/NGOs) assessorias assessoria employees ian case, some cities are organized along decentralized lines similar to Tijuana's (e.g., Cochabamba), while others follow a centralized model similar to that of Ciudad Juarez (e.g., Santa Cruz). In San Jose, socio-technical support is organized and provided by a private nonprofit organization; in Guarapiranga, it is organized and pro- vided by a private consulting firm. In the mutirdo projects in Sao Paulo,' which are based on successful experiences in Uruguay, socio-technical support is organized and pro- 5The mutirao is a tradition of mutual-help housing construction which is common in rural areas in Brazil and was brought to low-income areas in Brazilian cities by migrants. Two examples of mutirao-based housing projects in Sao Paulo are described in chapter 2. ORGANIZING PARTICIPATION: THE PRojEcr LEVEL 111 Contractual Compensation Project Provider arrangements structure Novos AVSI (inter- Contract between AVSI is paid for services at cost, Alagados national state government partly with resources it helped NGO) and AVSI raise; subsidy element, since AVSI's indirect costs are not covered; all staff are AVSI employees Cocha- Decentralized No contract as such; All staff are employees of or bamba, offices of the relations between work under contract with the Bolivia municipality communities and municipality socio-technical sup- port providers con- form to rules laid out by Law 1551 Santa Central social Same as above Same as above Cruz, devel. dept. of Bolivia the municipality Catuche Fe y Alegria Contract between NGO is funded by other Social (local NGO) Fe y Alegria, sources and recovers only Consor- and techni- co-op, and ABCO part of its cost from the tium cians' co-op project; the rest is provided as a subsidy; technicians charge modest fees Source: Authors' construction from field study data. vided by assessorias (advisors); these are hybrid structures (NGOs orga- nized as consulting firms) hired by the communities to provide techni- cal assistance and intermediation services for mutual-help construction. In Caracas, the Catuche Social Consortium-which is both a project pro- moter and service provider-is made up of three partners: the commu- nity; an NGO that provides administrative support, handles public relations, and raises funds; and a group of engineers, architects, and plan- ners who provide technical assistance. The Catuche structure is like that of Costa Rica's FUPROVI, only set up at the level of one settlement. A common characteristic of the above formulas is the interdiscipli- nary nature of the socio-technical support teams. These teams are nor- 112 SLUM UPGRADING AND PARnCIPAnON Figure 3-3. Various Scenarios for Provision of Socio-Technical Support 1. Project promoter is provider of socio-technical support (e.g., San Jose, Tijuana), and community has a direct contractual relationship with other service providers. Promoter/Soci- - * Community 9 Tech Support Contractual ovide relationship Supervision, Contractual coordination, relationshp joint work Oter Seices 2. Socio-technical support is hired by construction contractors (e.g., Guarapiranga) Project Contractual WPromoter Links defined by local relationship,, > ovemance mechanisms v | Supervision, Providers of * coordination Community Other Services' Contractual i joint work ~~~ zsabtonship+ f Supervicion" ~ hsSupervision, coordination,r Socio-Technical Acoordination, joint work Support joint work 3. Socio-technical support is hired by the project promoter (e.g., Cingapura) Contractual P Links defined by local relationship 4Prmoe >ance mechanisms tContractual C u Other Services0 rrelationship Superison vi, Socio-Technical ' Supervision, coordination, Support coordination, joint work joint work 4. Socio-technical support is hired by community (e.g., Mutirao project,Sio Paulo) Supervision, coordination, Project Contractual joint work- . Promoter renationship Contractual Supervision, Provider ofCrelationsap t coordination S Providervices' of elatioshi joint work Superion, Socio-Technical ' coordination, CSu ort ) lContractua joint work Sp relationship 'May include engineering, urban planning, project management, construction con- tractors, quality control, microfinance, etc. bAnother possibility is for the community to enter into an agreement with an NGO to prepare and present a proposal that is later supported by a project promoter. Source: Authors' construction from field study data. ORGANIZING PARTICIPATON: THE PROJECT LEVEL 113 mally made up of sociologists, social workers, engineers, architects, plan- ners, communication experts, and administrative and technical support staff. When community management is utilized, these last two groups are responsible for providing training to community members in ad- ministrative and technical areas. As the cases we have studied show, economists are conspicuously absent from many socio-technical support teams, which is probably part of the reason why cost recovery and economic sustainability issues and the targeting of subsidies are often not given the attention they deserve. Despite the variety of models developed by the above institutions, the socio-technical teams have the common task of untangling difficult situ- ations and problems in their daily work in the field. They play a natural coordination role and end up serving as the interface among all the dif- ferent actors involved, not just between the community and each actor. The different types of organizations involved in socio-technical support have different incentives, and a profit motive may or may not be present, but most share a commitment to local development and a belief in the potential of low-income communities. We have seen that it is easier to find distortions in their role when they are part of the municipal admin- istration. Outside organizations, although often working under a con- tract with the municipality, usually manage to retain a greater degree of autonomy and independence from political pressure. Selecting a Social Intermediation Organization. Socio-technical sup- port is a crucial project component, but it takes an organization that is capable and has the right kind of motivation to do it well. Results there- fore depend primarily on who does it. The nature of the organization is not the deciding factor: we have seen that NGOs, for-profit private op- erators, municipal departments, public sector line agencies, statutory bodies, utility companies, and even university groups can be effective at it. The overall approach, the level of capacity, the motivation, the resources available, and the methodologies used are what make the difference. The examples we have seen are very eloquent in this regard. In Mexico, the Solidaridad program did have a socio-technical support strategy, but its underpinnings and results were very different from what the municipality of Tijuana set in motion with the Manos a la Obra pro- gram. The institutional reforms Tijuana undertook included the creation of mechanisms to allow the citizenry to participate in the definition of priorities, as well as a measure of democratization of community repre- sentation. A specific innovative feature of Manos a la Obra is a show of confidence in the community by directly handing over to it the resources for project execution. All these features of the project had repercussions on the nature and organization of socio-technical support. 114 SLUM UPGRADING AND PARnCIPATION In the early stages of Sao Paulo's Guarapiranga project, the munici- pality had a unit charged with social support, but means, methods, and results changed overnight when adequate resources were allocated and a private firm was hired for the job. The municipality's social workers were too few and thinly spread, and they had been working with scarce resources and limited recognition of their efforts. Once it became clear that this situation was jeopardizing the very feasibility of implementa- tion of the works, the project promoters exercised their creativity to find adequate resources to devote to socio-technical support. Hiring a pri- vate firm allowed the municipality to address the problem without hav- ing to hire and train staff directly. In sum, the organizations that are qualified to do this job may be of several different kinds, but must meet the following criteria: * Background and attitude of genuine interest in the urban poor, demon- strated by a track record of development activities in low-income urban areas permitting them to understand and adjust to community dynamics * A strong professional team with all the necessary skills: social work- ers, social scientists, engineers, architects, planners, economists, project managers, and communication experts * Strong conflict resolution and negotiation skills on the part of all team members, regardless of their professional background * A culture of interdisciplinary teamwork * Specific experience in and access to the necessary methodology and tools (or willingness to hire specialists with the requisite know-how and experience) * Knowledge of the local cultural and political context and ability to partner effectively with its key actors * A proactive, problem-solving attitude and mental and organiza- tional openness and flexibility to accommodate changing needs and circumstances. Another option in organizing social intermediation is to have sepa- rate organizations provide different parts of the socio-technical support package. In the social consortium model of Caracas, for example, social support is provided by an NGO, while technical support is provided by a cooperative of engineers and architects. The Caracas model works well, because the NGO and technicians have close links and are jointly an- swerable to the community. There are, however, certain inherent risks in awarding separate contracts for tasks that are so intimately connected. Contracts with separate organizations may lead to coordination diffi- culties and finger pointing. Therefore, although separate organizations may very well team up to provide socio-technical support, separate con- tracts should be avoided. ORGANIZING PARTICIPATION: THE PROJECT LEVEL 115 Can the Community Itself Provide or Hire Socio-Technical Support? In Tijuana, one of the ideas under discussion for the future of the Obra Social Comunitaria (Social Community Works) program is hiring social workers who are local residents themselves. This has been done in the past in certain instances, but as a rule the social workers have been out- siders.6 The proponents of this idea believe this brings the program closer to the people and to their needs and aspirations. The social workers who took part in the workshop we organized in Tijuana opposed the idea because they think that the role of the social worker is to represent the agency and channel its support to the community. Experience seems to confirm this view; the case for the outsider seems indeed stronger than that for the local in the intermediation role. The outsider stands a better chance of being recognized as a reliable intermediary, a recognition that is often an important asset. The ability to have a broader outlook-to see the forest and not just the trees-may be one reason; another may be the advantage of a trained professional who is less personally involved, less prone to political interference, and better able to evaluate a situation. In fact, there is much to be said for a professional organization with a pro- fessional team in this role. A compromise solution offering the best of both worlds would be to hire outsiders as social intermediaries, but to have them work in two-person teams with local individuals. This solu- tion would allow an unbiased and objective outsider to work closely with someone who is local and therefore able to provide an insider's knowledge and insights. Another approach is for a community itself to hire an external socio- technical support provider; this bottom-up approach was successfully taken by FUPROVI, the social consortium in Caracas, and Sao Paulo's mutirao. In these three examples, the social intermediary is chosen and hired by the community-a bottom-up approach. The community's choice may sometimes be guided to some extent by the agency promoting the project. In Sao Paulo's mutirao, for example, the community may choose from a roster of competing assessorias, or socio-technical support provid- ers. This method promotes healthy competition, providing an incentive for competing firms to keep their costs down, be innovative in their approaches, improve their services, and develop a true client orientation. Obviously, for a number of providers to exist in a market, there needs to be a steady flow of work opportunities, a point discussed in more detail in chapter 5. Competition and a direct contractual relationship between a commu- nity and a socio-technical support provider can combine to create a truly demand-driven approach. Since technical assistance to community 61n this context, we use the term social workers because of the role that is played, even though many of Tijuana's promotores sociales are not trained social workers. 116 SLUM UPGRADING AND PARnCIPATION groups is often funded through grants, the situation would typically lend itself to the establishment of some sort of voucher system, in which vouch- ers issued by the project are exchanged for services from any one of a list of authorized providers. Another possibility is that an NGO may initiate a project upon the direct invitation of a community group. In this case, the NGO would operate under a direct agreement with the community. Local govern- ment may at first be indifferent to-or, in some cases, even oppose-the project. Experience has shown, however, that after a project has been planned through an open, participatory process, local administrations often become involved-and with good results. The NGO in this sce- nario fulfills an intermediary role, but its primary client is the commu- nity, not the municipality; an example of this approach is the Novos Alagados project in Bahia, Brazil. In the community infrastructure funds (CIFs) that were proposed as a promising way forward in the northern border of Mexico (see chapter 9), the idea is that intermediary organizations would receive technical assistance in project proposal preparation from the CIF, and subsequently compete for community contracts. In this format, only intermediary or- ganizations that succeeded in helping their client communities prepare a good proposal that was subsequently approved by the CIF would ac- tually have contracts. In this scenario, a project would set up a frame- work to create private capacity and would also create a market for such capacity, complete with bidding and contracting procedures. Organiza- tions that would receive technical assistance would be prequalified to compete for a share of the market, and communities would have access to a number of competing social intermediation organizations from which to choose. Should Community Organizers Be Paid a Salary? Participation is hard work, both for outsiders providing socio-technical support (who are normally paid for their efforts) and for community organizers, the people in the community who are most actively involved in meetings and other activities of the project. Should community organizers be paid for their efforts as well? In the FUPROVI example, organizers have their work contribution assessed and recognized-just like the labor contributions of other mem- bers of the community. The catch is that organizers need to work more than anybody else. In cases where no community labor is present, it is more difficult to ensure equity, since community organizers work hard while others work very little or not at all. In the San Jos6 case, the organizational work of the leaders is com- puted as time dedicated to mutual-help construction. The problem is ORGANIZING PARTICIPATION: THE PROJECr LEVEL 117 that those in this role tend to dedicate up to 50 hours a week to their tasks, rather than the agreed 30 hours, without any extra compensation. Furthermore, they incur extra expenses for which they do not receive any reimbursement. In Tijuana, there is neither compensation nor reim- bursement, and community organizers have to pay telephone expenses and transportation to city government or bank offices. This all-too-com- mon situation results in negative incentives for community organizers and is part of the reason why so many people play this role for a limited period-and why those who do stay on often do so to further their po- litical ambitions or for illicit personal gain. The usual situation, in which organizers are not paid, tempts them to secure undue advantages as compensation for their work. And they are suspected to act in this way even when they don't, which creates a lasting credibility issue. Rather than paying a fixed monthly salary to a leader or organizer, the equitable and transparent solution to this dilemma is to identify, with the assistance of the socio-technical support provider, tasks and specific activities that can be quantified in terms of time. The idea would be to pay the organizers an agreed flat rate or an hourly or daily fee for those activities. They should also be reimbursed for any expenses not included in the general obligations of all participating households under the project. For example, local residents involved in the collection of data might be paid an agreed fee per questionnaire. In addition, they might also be reimbursed for the food and allowances that they need to pro- vide during these activities. The problem of the remuneration of community leaders was discussed in our community focus groups in Sao Paulo. All agreed that their work often requires an enormous amount of time and energy over an extended period. The majority of those present believed that paid leaders could be constrained in their role by those who paid them, but also that the benefits of fairness and transparency are considerable. A clear and rea- sonable structure of compensation and reimbursement, paid for by the project, is a big step forward in avoiding corruption and the enlistment of community organizers by vested interests. As in the case of socio-technical support, compensation and reimburse- ment for community organizers are part of what may be called the cost of participation. As such, this is a cost that should be funded by the project and considered a legitimate project expense that needs to be budgeted for and whose expenditure needs to be monitored and accounted for. Influence of Participatory Strategies and Project Stages on Socio- Technical Support Services. Socio-technical support services vary ac- cording to the participatory strategy chosen and the ongoing project stage. At each stage, in fact, participation has specific objectives, involves dif- 118 SLUM UPGRADING AND PARTCIPATION ferent groups within the community to various degrees of intensity, and makes use of different instruments (see table 3-6). Different strategies, in terms of the choice of level and degree of participation, will also mean differences in services. Our field reports demonstrate the importance of continuing socio-tech- nical support work after construction in order to produce a more pro- found and lasting impact on the development process. It is wrong to believe that this process ends with the completion of the physical works, or that local communities can achieve sustainability of project outputs on their own. Approaches and strategies are needed for the provision of socio-technical support to communities for an extended period of time after project completion. Parameters in this regard are hard to come by, since this is a relatively new idea, and examples are few. Sao Paulo's Cingapura project is one example where up to 36 months of socio-tech- nical support are provided following completion of the works to assist communities in the organization and management of building mainte- nance, collection of residents' contributions, etc. In this context, FUPROVI's experience with sustainable development promoters is very in- teresting. FUPROVI does not provide post-implementation socio-tech- nical support, but it has set up a program to train people who have taken part in its projects to provide consultant services related to the sustain- ability of investments made in an area and its long-term development. These people go on to provide services to neighborhood associations or institutions such as Costa Rica's National Directorate of Roads, which recently hired a group of FUPROVI-trained sustainable development promoters to set up a system for the upgrading and conservation of land- scaped areas along national highways. Socio-technical support is one of the few instruments available to help overcome the limitations of the sectoral approach of most infrastructure and housing projects. Their proximity to social processes gives social inter- mediaries the opportunity to interact and exchange information with pub- lic and private institutions that can contribute solutions to other issues associated with poverty, such as education, work opportunities, and health. Community Organization and Level of Participation A weak community organization is not in itself an obstacle that cannot be overcome. Rather, the real problem is to create a participation strat- egy that can, on the one hand, make the project respond to the expecta- tions and needs of local people and, on the other, match operational solutions to the community's degree of organization. This latter does not always allow for the delegation of complex functions, under penalty of failing the project's objectives. ORGANIZING PARTICIPAnON: THE PROJECT LEVEL 119 Table 3-6. Socio-Technical Support and the Project Cycle Stage Focus Identification * Setting up participatory strategy, i.e., gathering basic information to define entry points for participation * Analyzing alternatives; developing participatory strategy Planning * Eliciting and organizing participation in planning, i.e., communication strategy * Participatory information gathering and analysis * Participatory evaluation of needs and demands * Discussing and negotiating alternatives * Participatory planning of proposed intervention * For community managemeht strategies: intense training activities Implementation * Handling problems related to construction work, e.g.: - organization of information flow - coordination with contractors and community to plan work phases - information and support to households affected by specific work fronts - support services to households affected by resettlement - arrangements for moving families to temporary shelter and later into their own homes - accident prevention and general troubleshooting * For community management strategies: technical and administrative assistance to works development Post- * Handling critical issues regarding sustainability: Implementation - monitoring use of project benefits and operation/ maintenance of infrastructure - health and environmental education - promotion of correct use of new infrastructure - awareness-raising regarding rights and access to appropriate authorities - promotion of responsible attitude toward consumption of water and energy, disposal of solid waste, and pay- ment of bills and taxes - prevention and control of new informal land occupa- tions in area, especially risk areas and land set aside for community uses - care and maintenance of public spaces and urban equipment - microcredit schemes and technical assistance for home improvement and generation of employment and income Source: Authors' construction from field study data. 120 SLUM UPGRADING AND PARTCIPATON Matching Level of Participation to Community Organization In defining the level of participation that will be attempted by a project, it is necessary to consider the requirements of difficult tasks-such as, for example, the management of financial resources-which demand more complex forms of organization. Next, it is necessary to verify if the capacity for undertaking these tasks already exists or if it can only be reached via a training effort to be undertaken by the project (as in the examples of Tijuana and San Jose). Otherwise, it is better to choose less ambitious solutions. This does not necessarily mean that participation will be less intense-the degree of participation may still be very high- but that its level will be more appropriate to the realities of the relevant community. Although it certainly has much to do with operational considerations, level of participation is also influenced by a fundamental political deci- sion by project promoters regarding their willingness to share decision- making powers and management responsibilities. What experience seems to indicate is that the conditions for community management in general are not given; it is necessary to build them. A clear decision must be made and resources allocated, as was done in Tijuana and even more in San Jose. In fact, one can observe from our field reports and other expe- riences that the practical solutions in terms of level and degree of par- ticipation are the fruit, not so much of what the sponsoring agency could do, but mainly of what it thought appropriate to the circumstances and wanted to do. This is clear from the cases we have studied: * In Bolivia, the level of capacity of the ABCOs varies greatly. Al- though some were capable of undertaking community management with a small amount of training, most required intensive training for them to be able to do so. The legislators who developed Law 1551 therefore decided to aim for a less ambitious level of partici- pation, in which organized communities take part in participatory budgeting and exercise control over project execution. With the experience that has accumulated since 1994, it has become clear that while the better organized ABCOs are capable of playing an informed and critical role in the process, many others still require significant capacity-building. The situation is bound to evolve, but for now the level of participation that was determined by the legis- lators seems to be in keeping with the circumstances. * In Guarapiranga, the level of community organization was very uneven in the 180 informal settlements involved. With some sig- nificant exceptions, associations dedicated to specific social pro- grams-e.g., the distribution of milk tickets-prevail. These are ORGANIZING PARTICIPATION: THE PROIECr LEVEL 121 obviously not prepared to give support to a vast infrastructure pro- gram. Since the infrastructure to be built in Guarapiranga included large works that have metropolitan relevance, it was not thought possible to resort to community management, not even for part of the works-even though there is in Brazil a certain community management tradition, an expression of which is the mutirao. There- fore, the preparatory work for community management that was carried out in Tijuana and San Jose had no parallel in Guarapiranga. * In Costa Rica, the groups that contacted FUPROVI had already been mobilized around the problem of housing construction, but initially did not have the capacity to manage the construction process. Since the assisted mutual-help methodology is central to FUPROVI's objec- tives, the foundation set up an intense-and successful-training pro- gram to reinforce the groups' organization and skill base. In the case of FUPROVI, the housing associations are representative of the group that constitutes them, and their leadership is democratically elected. It is clearly perceived that the role of the leaders in organiz- ing the community is critical to the successful implementation and completion of the project. The limits of their representativeness are clearly defined, and the contract the association signs with the foun- dation, being within those limits, is recognized by all parties. * In Tijuana, area-based community associations are almost nonex- istent. It was thus decided to create a new and specific organization to manage each project (the obra social committees). These were based on a specific short-term task that coincided with one of the community's main aspirations. Obra social committees are not par- ticularly strong or durable, yet they are recognized by the small group that they represent for the clearly defined objective of road paving or construction of a sports facility. These organizations are thus recognized by their members as being able to establish con- tracts with the municipality. The committees were provided with very focused training by the municipality, and people showed re- markable capacity for initiative and management. The high rate of literacy and low rate of unemployment in Tijuana also played a role in this favorable situation. * The community of Villa El Salvador has shown a particularly strong predisposition toward participation. Here, community management could have been adopted more often, since community organiza- tions have given proof of a high level of capacity on many occa- sions. Few places would have a better opportunity than VES for the successful application of community management models, due to the quality of its organizations. However, the level of participa- tion has seldom reached that of community management since the 122 SLUM UPGRADING AND PARTCIPAMON organizations promoting the projects have not been willing to pro- vide the necessary training and the intensity of socio-technical sup- port needed to promote the necessary enabling environment required for the higher levels of participation. In Guarapiranga, a conscious decision was made not to pursue a com- munity management strategy, due to the size and complexity of the in- frastructure. Although Sao Paulo does have experience in community management through the mutirao programs, it was thought that the approach was not appropriate for Guarapiranga. In the Bolivian case, it was probably believed that participation in participatory budgeting and expenditure control was already a sufficiently ambitious objective for a nationwide program in a country with a limited tradition of participa- tion. The cases of Tijuana and San Jose show that a high level of partici- pation may also be the object of a conscious choice by project organizers. In both experiences, advanced forms of community management were arrived at-although initially it was not possible to count on particu- larly strong and structured community organizations. The objective of community management was pursued through an appropriate partici- pation strategy, including training and socio-technical support. In our Peruvian example, the degree of participation was always high due to the predisposition of the community of Villa El Salvador, but the level of participation varied greatly according to the decisions of the organiza- tions promoting the various projects. When a more consolidated organization exists, there is a need to find adequate channels for the interaction between this organization and the project. The existence of a strong organization does not guarantee suc- cess: there are cases in which the participatory process doesn't work, because the project encounters constant conflict and opposition from a strong community organization that, for any reason, has not bought into the project. The Cingapura project in Sao Paulo is an example. When the program began, the umbrella organizations of the favelas were hostile, since the project's initial formulation had very limited room for dialogue and consultation with the communities and was seen merely as a re- packaging of the old mass housing formulas of the 1970s. The initial confrontation was followed by dialogue between the favela organiza- tions and the municipality and by the creation of avenues for consulta- tion and negotiation of options, along with a carefully designed socio-technical support component. These developments have reduced the obstacles to what has subsequently become a relatively popular, if still problematic, program. Although the level of participation of a project or program is normally defined by the promoter's strategy, this is a dynamic process and often ORGANZNG PARTICIPATION: THE PROjECr LEVEL 123 evolves over time. The gradual change in methodology promoted by FUPROVI, delegating ever-widening tasks to the community, is a clear example of this. The level and degree of participation a project starts out with may be very different from what exists two or three years down the road. As a FUPROVI engineer notes, "In the beginning, we were wor- ried that the communities would not be able to do certain things.. .We managed the supplies and the procurement, and the community did the construction work. Later, the management of the warehouses was passed on to the communities. They started to do all the handling, custody, and reception of materials. Then we saw that the communities had more ca- pacities than we had thought, and now they manage the procurement and all those tasks." The organization found it possible to match the level of socio-technical support it was able to give to a higher level of participation than had been originally envisaged-a clear gain for the program. The FUPROVI example shows that, although one cannot expect the community to participate beyond the limits set by the project, the group may sometimes push these limits and show project promoters it is ca- pable of and willing to operate at a higher level. Community Management Community management usually means shared control over the man- agement of a project between external actors and local residents. Full control, less common in practice, would mean placing control of the project entirely in the hands of local residents. Whether shared or full control, community management represents the highest level of partici- pation. Through community management, the poor are themselves par- ticipants in a poverty reduction strategy. Community management is feasible when: * There is a community organization that is recognized both within and outside the community, with representative leadership, that is able to negotiate in the community's name, to represent the com- munity as a party to contracts, and to help organize the community's inputs. * The community organization has the adequate level of training to be able to select and interact with service providers, understand design and construction issues, purchase and store building mate- rials, collect payments, keep accounts, etc. * The level of effort that will be required of the community is rea- sonable. Community management takes a great deal of time and energy. Poor people who need to earn a living in difficult circum- 124 SLUM UPGRADING AND PARTICIPAnON stances may not have the time and energy required, depending on project complexity and size. The relationship is based on a clear contract to allocate rights and responsibilities, define resource flows, facilitate accountability and transparency, define recourse mechanisms, etc. Reducing the vulnerability of a group may be seen as the product of interaction between a set of positive external actions and the group's existing set of assets, with a view to reinforcing the assets. The definition of the needed external actions depends, then, on a careful reading of a community's assets. Before the implementation of shelter and infrastructure improvements in a community management mode, it is usually necessary to improve the community's assets, in terms of organization and know-how, through training activities. Training is thus the usual starting point of commu- nity participation in project management. There are various possible entry points for community management. For example, in the FUPROVI case, the need to lower cost and to target the project to the poor were entry points for community management. Before committing to community management, however, the cost and time involved in preparing for it, the complexity of project tasks, and the level of effort required of the community need to be evaluated by project promoters and discussed with the community. Both sides need to be fully aware of the implications. Especially in large-scale or technically more complex projects, it may be risky to attempt community manage- ment, especially if there is no prior local experience to guide project par- ticipants. One formula that may be attempted is to entrust certain parts of a project to community management and expand the scope for it gradu- ally, based on a careful reading of the results. Community management is not attempted just to improve the quality of project implementation. The experiences of Tijuana and San Jose show that the practice of community management strengthens very tangible elements of a community's set of assets, with a special impact on project sustainability. Other positive effects of community management include: * High level of ownership of the project by local people, leading to better use of project benefits, better care of the new infrastructure, and an appreciation of the benefits of community initiative * The development within the community of a group of people who know the project down to its technical details and who thus may become a key resource for operation and maintenance * Enhanced trust between the community and the agency promoting the project ORGANIZING PARTCIPATION: THE PROJECr LEVEL 125 Significant development of capabilities at the commnunity level (so- cial capital), as well as at the level of the promoting agency and providers of socio-technical support. All the above benefits point to the two key dimensions of operational sustainability after closure of a project as mentioned previously in chap- ter 1. Specifically, these relate to the maintenance of the assets acquired through the project and the ability to generate further development ini- tiatives. Figure 3-4, taken from Goethert (1998), explores the different levels of community participation that may apply to the different stages of projects and programs. Contract-Based Relationships The decision to formalize community participation in a written contract is an interesting indicator of the level of participation chosen in the Figure 3-4. A Model for Participation Level of Stages of Projects and Programs Participation Initiate Plan Desirn I, : in k lunicipalities con- NONE tie-nu to handle - ma.nienance focused INDIRECT on large-scale, city- _ * fl fl wide services and otl < } - infrastructure CONSULTATIVE Involvement of local people offers oppor- | < _ _ _ tunity for innovation, income generation, SHARED CONTROL and training 0 = t_ FULL CONTROL , s Communities become aintenance mw~ ~~evl .1oml inovdi Communities assume some of the implemen- tation, either together Projects are initiated at all levels hared decisions are the with municipalities or by municipalities or as a result of most critical in effective with own community pressure. A community participatory programs. role is important to avoid unneeded or inappropriate projects. Source: Adapted from Goethert (1998). 126 SLUM UPGRADING AND PARTICIPAnON project's strategy. The higher the level of participation, the stronger the motivation to put into writing the responsibilities and obligations that sustain the relations between the parties. When participation reaches the level of community management, formalized contractual relations are particularly needed, especially with regard to the management of a project's financial resources. Legal recognition of the community organization is an essential re- quirement for it to be able to enter into a contract with the agency pro- moting the project. In the case of Costa Rica, this aspect is so important that FUPROVI routinely helps housing associations obtain legal recog- nition as a prerequisite for signing the formal agreement that is a corner- stone of the foundation's methodology. In Bolivia, one of the key achievements of the People's Participation Law is making it simple and straightforward to give a community organization legal recognition. Different approaches towards defining the legal agreement between the community organization and the agency promoting the project are observed in the different cases. * Bolivia. Law 1551 recognizes ABCOs or neighborhood associations and establishes the rights and responsibilities of all parties. In many respects, the procedures defined by the law play the part of a con- tract, but there is no contract as such between municipalities and neighborhood organizations. * Sao Paulo. The community has not signed contracts with promot- ing agencies. * San Jose. A legally constituted housing association signs a contract with FUPROVI. * Tijuana. The neighborhood obra social committee signs an agree- ment with the municipality. * Peru. There is a recognized ABCO structure with a clear institu- tional base. These organizations frequently enter into contracts with the municipality or other service providers. Programs such as the ones in San Jose and Tijuana normally create standard templates for a limited number of contract types as needed. This is made possible by having one standard type of community orga- nization and just a few types of interventions. Complex and large-scale projects like Guarapiranga present greater difficulties in this regard. It is certainly more difficult to define and administer contracts with a large number of counterparts that have different structures and levels of or- ganization. However, the many benefits of a contract-based relationship make it worth trying to overcome such obstacles. Not having just one clearly defined project goal and one clearly recog- nized organization that can sign for the community is another obstacle ORGANIZING PARTICIPATION: THE PROJECr LEVEL 127 to establishing a contract-based relationship. The Guarapiranga case is a clear example in this regard. In each settlement of Guarapiranga, there usually is an ABCO with broad developmental goals. This might be the natural vehicle for a contractual relationship with the community, but the degree of legitimacy and representativeness of such organizations is very uneven; also, in each area, there are special interest groups or SPCOs that carry as much or more weight than the area-based organization. This makes it difficult to sign a contract with any one organization that the community at large would recognize. And if the majority of local residents do not feel bound by a contract, it will not serve its purpose. A related issue is ensuring a straightforward distribution of tasks and responsibilities in a contract when project plans are complex and diver- sified and there is no clear community counterpart. Our suggestion is to use the preparation of the participatory area development plan (discussed later in this chapter) as an opportunity to identify tasks that might be matched to the broader area-based organization and to specific special interest groups, and to enter into different contractual agreements with each of them. The process of participatory information gathering and analysis and the subsequent area development planning process offer good opportunities for identifying specific development initiatives and their constituencies in a community. This may seem a rather complex route to follow, but the benefits of establishing clear contractual rela- tionships for subsets of activities of a development plan are well worth the trouble in terms of transparency, accountability, and capacity-build- ing. See box 3-2 for items to consider in designing a contract. Box 3-2. Key Specifications for a Well-Designed Contract * Goods and / or services to be delivered * Calendar of activities * Effective and termination dates * Rights and responsibilities of the parties * Reporting requirements and performance indicators * Price of goods and / or services and links between deliverables and payments * Payment and surety mechanisms * Dispute resolution mechanisms * Appropriate representatives of the parties 128 SLUM UPGRADING AND PARTICIPATON Community Organization: Area-Based, Interest Group-Based, or Some Combination Thereof? Nature of the Collective Actors in a Settlement The collective actors in a settlement can be subdivided into those that have a broad development agenda for the area (ABCOs) and those that focus on a special issue or interest (SPCOs).7 The design of a participa- tory strategy needs to consider the diverse characteristics of such actors in relation to the objectives of the project. ABCOs: * Are generally larger organizations than SPCOs, with a wider mem- bership base * Are formed with a view to the development of the neighborhood, with a wide range of purposes, and concern themselves with prob- lems that have a large constituency within the community * Have a longer term, and more broadly developmental, perspective * Have greater access to the authorities and greater political repre- sentativeness and legitimacy. SPCOs: * Generally are smaller and more agile than ABCOs * Are formed to act on a specific problem * Are normally more compact and have fewer internal conflicts, be- cause their sphere of action and interest is more limited. ABCOs, when they do exist, are important partners, since they are often legitimized by their previous history and are usually the main ve- hicle for wider community demands. At the same time, social cohesion tends to weaken when a community is large or dispersed, and the moni- toring of individual behavior becomes more difficult. For this reason, it is preferable to formalize rules to delegate decisionmaking or to create smaller working groups. SPCOs are effective partners for many specific matters within a project and are often easier to work with from an operational standpoint. The most interesting results are obtained when a project has the capacity to involve both types of organizations at different levels. 7Collective actors often are informal groups, which sometimes carry much more weight than formal groups, such as neighborhood organizations and associations of various kinds. Not all of these actors have a positive impact. Groups of petty criminals or drug traffick- ers are also collective actors that have to be reckoned with, as in the case of Guarapiranga. ORGANMNc PARnaCPATON: THE PRojEcr LEVEL 129 The examples we have seen work in different ways (see table 3-7). In the Bolivian case, all the mechanisms of the People's Participation Law entrust community representation to area-based organizations. This was done to encourage the emergence of area-based players, which had a limited tradition in the country's previous highly centralized system. One of the drawbacks of the new system has been that the contributions of the country's strong SPCOs, many of which could play an important role, are thereby foregone entirely. Reflecting on possible changes or im- provements to the legal framework for participation, Carlos Hugo Molina, one of the law's main architects, says that "There ought to be room in the surveillance committees for special purpose organizations, whose members are usually more politically aware and would be more difficult to corrupt. Plus, the middle classes have remained outside the law's framework, and they could become involved if we had people from professional associations, for example, in the committees." In Guarapiranga, a working partnership was established with the area- based organizations (neighborhood associations), while smaller work- ing groups were formed in parallel, founded on homogeneous needs or interests. They included families in temporary housing, representatives of each lane, mothers' groups, parents' school support groups, and groups for environmental education (a pilot project in this latter field was imple- mented in some areas of Guarapiranga). In Tijuana, the process began with general interest neighborhood de- velopment committees; later, smaller community upgrading committees were created, each based on a specific project. The neighborhood devel- opment committees were in reality superseded by the upgrading com- mittees, which served only a limited purpose. As a result, the long-term vision of development and wider range of activities that usually charac- terize neighborhood associations are missing from the colonias populares Table 3-7. Types of Community-Based Organizations in the Cases Studied Case Type of community-based organization Bolivia ABCO only Brazil ABCO and SPCO Costa Rica SPCO only Mexico SPCO only Peru ABCO (initially very important but declining in importance over the years) and SPCO (increasing in importance over the years) Source: Authors' construction from field study data. 130 SLUM UPGRADING AND PARTICIPATION (the low-income settlements of Tijuana). In this context, Tijuana social workers note that the program has worked well with the upgrading com- mittees, but that, since it didn't succeed in involving and strengthening the neighborhood committees, "it lost social energy." In San Jose, FUPROVI works with housing associations, 80 percent of which are already constituted before they contact the foundation. These associations are in fact special interest groups, since families associate themselves with a clear goal in mind, that of getting a house. Such hous- ing associations often have no real local basis, since they may gather groups from different places. In Villa El Salvador, the participatory ethos that led to a strong area- based development organization-CUAVES-in the early years, later fueled development of many strong special interest organizations, such as Vaso de Leche (Glass of Milk), which seem to have used up most of the available participatory energy, vast as it is. Through CUAVES, the settlers of Villa El Salvador had given themselves their own local gov- ernment, as it were. With the establishment of the District of VES, the municipality became the main political player, and CUAVES lost most of its weight. Area-based organization has survived, but at a level of mobilization that is not sufficient to ensure that it can fulfill its basic role of organizing demand at the grassroots level and negotiate with other public and private actors. The Dynamics of Leadership In order to choose between several options in the design of a participa- tion strategy, it is necessary, before anything else, to know the communi- ties and their forms of organization. As discussed below ("Participatory Information Gathering and Analysis"), some projects have developed innovative methods for this task, based on the simultaneous use of quan- titative and qualitative data, obtained with a mixture of techniques from traditional structured interviews to nonformal techniques of rapid valu- ation. When outlining a community's organizational profile, one of the es- sential points is to evaluate the quality and representativeness of its lead- ers. In fact, analysis of the communication flows and decisionmaking processes of our field reports clearly shows that almost everything passes through the mediation of community leaders. The behavior and moti- vating factors of the leaders condition, at least in part, the collective be- havior. Certain leaders are political influence peddlers. In the north of Mexico, the very word "leader" has that connotation. In programs that encom- pass large urban areas, as in Guarapiranga, we face diversified situa- ORGANIZING PARTICIPAnON: THE PROJECT LEVEL 131 tions. Some leaders, in the populist tradition, induce the community to wait for the government's favors. Others, more outspoken and politi- cally active, sometimes exert almost dictatorial control and get people accustomed to depending completely on their personal initiative. Yet others take advantage of their position to cater to the interests of strong pressure groups (for example, those involved in drug trafficking). Fi- nally, there are those who are able to distribute responsibilities, train others, and create incentives for local people to play active roles in the development process. In attempting to enter into a productive relationship with the commu- nity, a project cannot either choose new leaders or fail to reckon with existing leaders. Thus, systematic procedures are needed to identify lead- ership and verify their representativeness, modus operandi, and legiti- macy-in short, to know what to expect and how to deal with the different types of leaders. Such procedures will help avoid an all-too-common mistake, that of automatically and exclusively working with the people who are identi- fied by an external actor, such as local government, as the community leaders. It very often happens that such "leaders" are simply the most vocal, or the ones who make themselves most visible to outsiders, but who are not really legitimate and representative. There often are rival leaderships with a considerable following, as well as a significant num- ber of people who do not recognize any leaders at all. A project that associates itself exclusively with the leader who is most visible from the outside may risk attracting hostility and creating conflicts even before it starts. Few things can be as damaging to a project as working exclu- sively through a discredited leader or ignoring or slighting a leader with a large following who may then react in a hostile manner. Interesting examples of trying to address these issues are found in several Brazilian cases. The Guarapiranga and Cingapura projects in Sao Paulo, the Alvorada project in Belo Horizonte, and the Novos Alagados project in Bahia included structured questions about the leaders in the very first stage of information gathering, which aimed to find out: * Which persons among the local residents are known, respected, and recognized as leaders by their fellow citizens and what are their respective areas of influence * The institutions or groups to which the leaders are connected * The degree of correspondence that exists between the demands voiced by the leaders and the needs and aspirations of the community. The main features of quantitative socioeconomic surveys and instru- ments for defining the organization and leadership profiles, which have been developed in Brazil, are outlined in chapter 4. The output of such 132 SLUM UPGRADING AND PARTCIPAnON organization and leadership profiles is a short history of community or- ganization in the settlement, with a description and evaluation of the local organizations and of the local leaders, in terms of legitimacy and following, strengths and weaknesses, and capabilities and interests. Some leaders are influential in a specific sector of activity only, while others have a broader role. The territorial distribution and nature of leadership may be represented in thematic maps of the settlement. This will orient the participation strat- egy by identifying the main local brokers for participation who need to be encouraged to buy into the project, whose opinions need to be heard, and whose roles need to be clearly defined. Sections of the community that do not take part in any organization and that recognize no one as their leader will be identified in the thematic maps. These people will need to be brought into the project through direct participation mecha- nisms such as open meetings, or through participation in new bodies to be created for the purposes of the project. Defining the correct mix of participation mechanisms is directly de- pendent on a careful reading of the organization and leadership profile. The roles and responsibilities to be ascribed to the various leaders and organizations, the new area-based and special interest groups to be cre- ated, and the frequency of open meetings all vary according to the spe- cific nature of organization and leadership in a given community; they also vary over time. In this context, one of the primary functions of intermediary organi- zations is to monitor the implementation of the participatory strategy and adapt it to the changing nature of the project and its relationship with the community. The stage at which leadership problems are most intense is the implementation phase of the project. This is because the more the community has taken an active part in planning decisions, the more it will feel the need to reformulate its organizational structure to take an active part in the implementation process. Participatory information gathering and planning present many op- portunities for the emergence of latent leadership. New representation mechanisms arise, and delicate situations and conflicts can come up be- cause new leaders often emerge. Throughout this process, it is necessary to clarify the decisionmaking mechanisms as well as the functions and responsibilities of the various actors. Old leaders are not always willing to join forces with new ones, nor are the technicians of public bodies necessarily very enthusiastic about having to go beyond their comfortable relationship with established lead- ers and form new relationships with more residents and with different points of view. Also, many factors external to the project influence com- munity dynamics and the relationships between the various executing ORGANZING PARTICIPATION: THE PROJECT LEVEL 133 bodies that are often present in the field. Among these factors is the prob- lem of manipulation by political parties, and the problems derived from the fragility of the social structure (for example, the groups involved in organized crime which wield considerable power and are often contrary to the integration of the informal settlement into the formal city). This is, therefore, a process of accommodation, rearrangement, and negotiation, the dynamics and results of which change depending on the situation and forces involved. Helping this process along and moving the parties toward an under- standing is one of the primary functions of social intermediary organi- zations. Experience shows that the dialogue between groups in the community and between the community and public bodies and other stakeholders does not flow in an entirely spontaneous way. It normally requires the presence of facilitators and intermediaries that can compe- tently execute a socio-technical support strategy. Such articulation and mediation efforts are needed to get the community and the institutions involved fully engaged in a participatory strategy, transforming con- flicts and mistakes into opportunities for growth and change. This process of accommodation, rearrangement, and negotiation through articulation and mediation requires a lot of listening and the active creation of opportunities for listening-and influencing-through separate meetings with conflicting parties. These should be followed by joint meetings with the mediator in which differences are ironed out. Usually, opportunities are given to old and new leaders to help organize different parts of the upgrading process, and the mediation efforts suc- ceed in improving the situation and allowing the project to move forward. Obviously, projects that involve a smaller group and / or a more lim- ited goal require a less elaborate organization and leadership profile and participatory strategy. The Bolivian cases, San Jose, and Tijuana exem- plify this; while Guarapiranga and Villa El Salvador are examples of cases where a wide range of actors and a large number of initiatives over a longer time frame make it essential to know the organization and leadership patterns in detail. The Issue of Gender Beyond "Gender Focus" Our field research and experience have shown that women play by far the most important role in infrastructure and shelter projects. This is a fact that merits recognition, and that should have a far greater impact on project design than it does at present. Among the cases we studied, only the Costa Rica one had an explicit gender strategy. This is a sobering 134 SLUM UPGRADING AND PARnCIPAnON realization, especially since we selected programs and projects for our study that are considered to have an above-average success rating. Shelter and infrastructure projects have a direct impact on the quality of life of the whole population, but they have a particular impact on the lives of women. These projects reduce the female workload, as well as the material penury and health risks to which women are subjected to a greater extent than men. Also, an improvement in infrastructure and shelter usually reduces the incidence of psychological and social prob- lems tied to poverty that hit women particularly hard: marital separa- tions, domestic violence, school abandonment. For all these reasons, women's level of interest in urban upgrading and housing projects is very high, as shown by their key role and high degree of participation. However, to insist on a "gender focus" approach that sees women exclusively as the main victims of urban poverty and discrimination overlooks the enormous contribution that they make to the urban economy and the life of the informal city. In fact, they take charge, to a much greater extent than men, of essential functions such as the provi- sion of food and water; the care of the home; and the care of children, the sick, and the old. Moreover, women are the head of household, solely responsible for maintaining the family nucleus, in a proportion that ap- proaches and even surpasses 30 percent of households in many cases. The female population is, in fact, the main human resource in the de- velopment of low-income settlements (see box 3-3) and plays the main role in all aspects of a project: community mobilization, project manage- ment, monitoring and evaluation, and financial contributions. Women's contribution in terms of time and even labor is greater than that of men, as documented by numerous examples in the cases we have studied. However, in none of these has any specific attention been given or spe- cific channels created in project design to harness the potential of women's participation. In reality, participation happened naturally and the chal- lenge for the project promoters was to accommodate and harness the participation during project implementation. Making Projects More Responsive to Women's Needs The examples we have studied show that there is need for more than the rhetoric of "gender focus" (which in any case very rarely surpasses the level of declarations of principle), because women are not just a special interest group to deal with typically "feminine" topics. The examples point to the need to change the approach to the problem, recognizing in women the key interlocutor that projects have among the beneficiaries, and drawing appropriate methodological and operational conclusions from this fact. ORGANIZING PARTCIPAMON: THE PROJECT LEVEL 135 Box 3-3. Positive Discrimination of Women in the San Jose Low- Income Housing Program In San Jose, construction technology had to be partiaHly modified because most of the available labor for mutual-help construction was female, and the prefab panels initially envisaged were too heavy for the women to lift. But the same filter that was designed to target the projects to the poor by demanding that each household put in 30 weekly hours of labor had the disadvantage of making it more difficult for women-headed households to participate. FUPROVI has taken specific measures to address this problem. The institution helps women-headed households receive a three- to six- month subsidy from the National Social Welfare Institute. Until recently, they also received food packages from the World Food Program. Housing associations frequently offer special terms and conditions to female-headed households, giving them less strenuous tasks, e.g., in daycare centers and soup kitchens rather than in construction. Finally, working women nor- mally try to put in as many as possible of their 30 hours over weekends. Although the burden on women-headed households is still particularly heavy, these "positive discrimination" measures have good outcomes. Be- tween 25 and 40 percent of the participants in FUPROVI projects are women- headed households, a figure consistent with FUPROVI's target group. Projects must be specifically designed to meet women's needs. There are three key dimensions that projects need to address in order to achieve this goal: * One of the problems that came up in our field interviews is of a cultural and family nature: the difficulties faced by women in over- coming the obstacles put up by men to their participation. The toughest challenges that many women leaders have to face is within the home. As we heard from one of the female organizers in San Jose, "There are things that they [FUPROVI] could help us more with; they lend us the money and provide the technical assistance, but they don't get involved in the fights." Certainly, the macho cul- ture is an inheritance difficult to overcome in Latin America, but socio-technical support strategies can address the issue as a theme within communities, as is done with many other issues that require a change of mentality and collective behavior. * Generally, women are left on their own to face the problem of rec- onciling the extra activity brought about by the project with their jobs, their role as mothers, and their responsibilities in the home. In the case of mothers who are heads of households, juggling all these 136 SLUM UPGRADING AND PARCICPAnON roles can be very difficult; the risk is the exclusion of families headed by women from participation in the projects, which would have happened in the San Jose case were it not for the specific mecha- nisms put in place. Ways need to be found around this problem, since this is one of the key mechanisms in the vicious cycle of pov- erty. The availability of support services (cooking, nursery, laun- dry, etc.) is a crucial contribution to women's participation that can be set up by a project, as is dearly shown by the example of FUPROVI. Finally, in defining all project features, the specific needs of women must be considered. From meeting times and technologies to the distribution of project tasks and workloads, the planning of a project must specifically address women and their special needs. Women will usually be the ones carrying the greater proportion of the load, accepting most of the responsibility, and doing most of the work; this must be acknowledged and planned for. Looking out for Vulnerable Groups The internal differences of each community have important consequences in the identification of the project and its design, planning, and imple- mentation. The complexity of the phenomenon of poverty, which does not have the same impact on all people, needs to be taken into account. In general, as we saw in relation to gender, projects give little specific attention to the most vulnerable groups, and they distribute benefits and obligations with little differentiation. The absence of any differentiation in the subsidy policy, for example, is a striking feature of all the cases covered by our field reports. In the cases studied, projects and programs seem to be based on the assumption that the groups involved are homogeneous, which in reality is far from the truth. In Guarapiranga, for example, the same benefits of upgrading accrue equally to all residents, and no attempt is made to recover at least part of the cost of the intervention from the better-off among them. It is obvious, from a cursory look at any of Guarapiranga's favelas, that there are great differences in income and living standards among the residents. Although almost all of them are indeed poor, a great many households are not in extreme poverty and could contribute to cost recovery through betterment levies or the property tax. On the other hand, in the projects we have studied, when the community does make a financial contribution, it is expected from all participating house- holds to the same degree, regardless of their capacity to pay. Urban upgrading interventions thus reproduce the Latin American tradition of disregarding the needs of the poorest by aiming develop- ORGANIZING PARTICIPATION: THE PROjECr LEVEL 137 ment interventions at the not-so-poor. Frequently, it is the unemployed, the women who are heads of households, and those subject to the worst social conditions who end up having to give up more in relation to their socioeconomic status. In upgrading projects, it is often mentioned that the poorest families are those that abandon the improved areas with greater frequency, cashing in on their houses and being replaced by people with higher incomes. In programs like FUPROVI's Habitat Popular Urbano, there is obvi- ously no intention to exclude the poorest. These programs often do so unwittingly, through perverse mechanisms that are set in motion by as- pects of their formulation. In San Jose, the demand for 30 hours a week of community labor is made in an attempt to target the program to the poor- est groups. The reasoning behind it is that if someone is willing to contrib- ute 30 hours of hard work each week toward the construction of the house, then he or she must be truly committed to the project. The majority of people would not be prepared to undertake this commitment if they had sufficient sources of income to be able to afford a house by any other means. Families who sign up for the project often have a tough time making ends meet during construction, and the man usually has to continue to work to earn the family's keep while the woman takes part in the con- struction. This is necessary if they are to achieve their dream of becom- ing homeowners as well as make ends meet in the short term. For vulnerable groups, things are considerably more difficult. If FUPROVI and the housing associations themselves had not taken spe- cific measures to aid women-headed households, the elderly, and people with handicaps, these groups would have been excluded from the pro- gram. In most mass low-income housing of the 1960s and 1970s in Latin America, the exclusion of the poorest-although unwitting-occurred through a less sophisticated mechanism. The units built according to middle-class technicians' ideas of what a house for the poor should be like were simply too expensive for the real poor, and were thus bought by the not-so-poor, who also needed houses and usually have better political connections than the very poor. Careful program monitoring allows identification of such perverse mechanisms and enables program promoters to take corrective measures, seeking to identify and protect vulnerable groups. Poverty indicators are important in this regard. Some of the information gathered by the socioeconomic quantitative survey discussed in chapter 4 can offer point- ers. For example, structures built with nondurable building materials, especially if the time of occupation is long, tend to house the poorest families. Structures built in high-risk areas, such as along the banks of streams or in areas with difficult access, also usually house the poorest families. 138 SLUM UPGRADING AND PARnCIPATION Identifying the poorest is important in defining an equitable subsidy structure for a project. All the cases we studied tend to consider "the poor" as a homogeneous group-which is far from true-and to distrib- ute subsidies with no differentiation. Targeting subsidies is a great chal- lenge, and most traditional methods are seriously flawed. The Costa Rican policy of adjusting the housing subsidy to income brackets, for instance, has similarities to many others around the world and presents the same problems. It is usually not easy to ascertain a poor family's income, since so many of the poor work in the informal sector, their income fluctuates, and there are no reliable records. A household's actual standard of living, in terms of the location, size, building materials, access to services, and whether the family owns, shares rooms, or rents, is a far more reliable indicator of household income and ability to pay. A rapid assessment of levels of pov- erty in a settlement is not a particularly complex task (see chapter 4 for more information about undertaking quantitative surveys); and, unless it is carried out, projects will continue targeting poor areas, and not poor people. A significant example of a project that changed its approach and be- gan to look out for a vulnerable group is the Cingapura project in Sao Paulo. Initially, people with handicaps had wanted to stay on in the in- formal settlement and not move to the new apartments built by the project. The situation changed when specific resources were provided, including priority for housing on the lower floors of the buildings, con- struction of ramps, special fittings in apartments, etc. Another important dimension in paying heed to the needs of the most vulnerable is communication, since information does not arrive in the same way to every group in a community. In this aspect also, the poorest are the most difficult to reach. In most field situations, it is evident that there is a large gap between the level of information of the leaders and community organizers and that of the other residents; in the case of the poorest, that gap is even larger. A careful information strategy, with particular atten- tion to the communication instruments to be used, could reduce the prob- lem. In the case of the poorest, numerous examples show that the most effective communication vehicle is that based on interpersonal relation- ships (via home visits and participation in cultural events, local festivals, and open meetings). It is also the most time-consuming and personnel in- tensive-but without it, the risk of not reaching the poorest is great. Mobilizing Local Knowledge and Resources Local Insights and Problem Solving People who live in a community know its needs and ways better than anyone, since they internalize its culture. Many local people also have ORGANIZING PARnCIPATION: THE PROjECr LEVEL 139 enormous common sense and, consequently, are often capable of find- ing creative solutions to problems that are apparently technically in- soluble. In a community of the Florido-Mariano district, Tijuana, one of the key problems in securing the community contribution for an up- grading project was finding the owners of the vacant lots. They were supposed to pay their share like the rest of the area's plot owners, but, contrary to the lot owners who live in the area, were extremely difficult to find. The municipality's technicians went to the cadastral and prop- erty registers, which were outdated and often either gave the contact details of a previous owner or an old address of the current owner. Ev- eryone was at a loss as to how to proceed but anxious to find a solution, since the contribution of vacant lot owners would make a significant difference to project finances. The obra social committee had a simple and excellent idea. They put up "For Sale" signs on all the vacant lots. The contact phone on the signs was actually that of one of the committee members. The owners imme- diately began to appear-sometimes, even, more than one owner for the same lot. In Novos Alagados, a favela of pile-dwellings in the Enseada do Cabrito in Salvador de Bahia, Brazil, a cooperative had been formed for mutual- help construction of new housing. In defining the rules for loan repay- ment for residents' purchase of construction materials, discussion had become bogged down in a prolonged consideration of the indices that should be applied to compensate for inflation. On one side, the techni- cians were divided, because several different types of indicators were in use in the country, each with its own pros and cons. On the other side, the residents' distrust was increasing, as they were afraid of some en- tanglement or speculation behind the matter of indices. After several meetings, an old woman stood up at the end of the room and said that, in her opinion, since the money was used for the purchase of materials, it would suffice to calculate the amount of money that could buy the same number of cement bags. Everyone immediately agreed. Projects need to create communication channels to ensure that mecha- nisms are in place for receiving such feedback both initially and over time. Transforming Technician Attitudes and Methods When socio-technical support providers need to compete for contracts and operate in a professional manner, there is a strong incentive for tech- nicians to abandon a top-down, paternalistic attitude in favor of an atti- tude of respect for their ultimate client and for this client's potential to contribute to the process. Other service providers, such as construction contractors, are also subject to this change. This is especially true when 140 SLUM UPGRADING AND PARTICIPATION the decision to award socio-technical support or construction contracts is made by community groups, as in the case of Sao Paulo's mutirao projects (in the case of socio-technical support), or Tijuana (in the case of construction contracts). However, even if the contracts are awarded by a municipality or other institution, the accountability that is part of a profes- sional relationship with local people leads to a change of attitude-which in turn often leads to the development of a new and more appropriate set of methods that incorporate local knowledge as a key input. The population has knowledge, insights, and problem-solving skills that are nonsystematically acquired, heterogeneous, and very down-to- earth, since they are based on daily experience. The knowledge of the technician is the result of a systematic approach of long years of study and is based on content, interests, and work experience that are defined and delimited by academia and the work environment of public or pri- vate institutions. Knowledge and attitudes are, in each case, based on a wholly different sort of logic. Opening up to the knowledge and insights of the community can pro- duce a new and very useful synthesis between technical knowledge and local knowledge. Through their role as intermediaries, social workers and other technicians providing socio-technical support are often the agents of this synthesis and cooperate in bringing about change in the approaches and methods of other technicians working on the project. Very significant, as we have seen, was the change in the mentality of the professionals of the construction companies involved in the large- scale infrastructure works in the informal settlements of Guarapiranga. They state that this experience has transformed their view of the city. Their unprecedented interaction with the reality of the informal city has made them revise project management and technical approaches, and to develop new solutions. It has also helped them question deeply in- grained social prejudices and develop a genuine professional interest in this new field. To a great extent, it was day-to-day contact with the community that produced the transformations that have occurred in technician perception and methods. A Guarapiranga architect says, for example, that her initial perception in designing the project was "romantic." But she then had to take into account "the down-to-earth perceptions of the inhabitants, who don't have a macro vision, because of the material limitations in their daily lives"; this helped her to be realistic in the solutions she proposed. It is interesting to look briefly at the incentive structure that allowed this to happen. As we have seen, practically all the work of the Guarapiranga upgrading component was done by private companies, under the coordination of a small and highly qualified unit in the mu- nicipality. Technicians working for private companies in the field in such ORGANIZING PARnCIPATION: THE PROJECT LEVEL 141 tasks as project management, construction, and socio-technical support need to achieve a high level of productivity and to find creative solu- tions to everyday problems. They want to advance in their company, and they are under constant pressure from their management to pro- duce results. And it is not just a matter of getting the job done in a quick- and-dirty way either, since these companies face tough competition, and the works at Guarapiranga have so many social implications that they are under constant scrutiny by the press and opposition parties. Identifying and Developing Community Capacity A fundamental consideration that begins to penetrate (although with difficulty) the culture of development projects is a concept expressed in the 1996 Recife Declaration (Habitat 1I Conference 1996): "Each one of us wants to be considered by what he is and what he can do, and not for what he lacks." Trying to see the resources as well as the problems allows one to per- ceive the endogenous factors of development-the resources and strate- gies that people use to cope with difficult circumstances and improve their quality of life. Important aspects of these strategies, however, es- cape traditional methods of analysis because they are contributions that cannot be easily quantified. The business of every development project is, to a great extent, to iden- tify, strengthen, and mobilize a community's assets and resources. Moser (1996) defines five constituent elements of the "asset base of the poor": * The ability to work * Human capital * Shelter (used with great imagination as a productive resource) * Family relationships * Social capital. These elements are described as the assets that individuals, house- holds, or communities can mobilize to face deprivation. Moser notes that "The possibilities of households to reduce their vulnerability and increase their economic productivity depend not only on the above as- sets, but on their capacity to transform those assets into income, food, and other basic necessities." Ignoring these aspects, it would not be possible to explain the sur- vival of families with an average income of approximately $200 per month in urban areas with rather high costs of living, as in the cases studied in our field reports. And it would be even more difficult to understand the mechanisms that make it possible for the resources invested in improv- ing infrastructure to be more than matched by private investments in 142 SLUM UPGRADING AND PARTCIPAnON shelter improvements in informal areas, a phenomenon that is particu- larly evident in Guarapiranga, Tijuana, and Villa El Salvador. Mobilizing the community's knowledge and resources is a key to suc- cess. This is partly due to psychological and cognitive factors. The power of some projects lies in knowing how to create in the local people the belief that, through the project, the sacrifices the community has gone through to obtain a piece of land, a house, and access to services will finally bear fruit. External intervention is perceived as something that gives the community a decisive hand in its daily struggle in hostile cir- cumstances to improve living conditions. This identification of values and goals gives impulse to participation, reinforcing the identity of the local residents and their self-confidence. Identifying the endogenous factors of development and devoting at- tention to their strengthening in program formulation is possible only if a careful process of participatory information gathering and analysis is carried out, and a participatory area development plan is prepared with adequate socio-technical support. One of the missed opportunities of the Tijuana case, for example, is that there was no real process of infor- mation gathering, which could have given the municipality invaluable input for the formulation of its social programs. Much more time, atten- tion, and resources than are commonly employed need to be invested in knowing more about one's partner communities. In this way, we will be able to target subsidies to real needs and to benefit from and strengthen existing resources. Information and Communication: Social Marketing Strategies Two questions arise with regard to social marketing strategies: * How does the population learn about the project? * By what mechanisms of information and communication does the participatory process first get under way? Given the importance of infrastructure and shelter problems in infor- mal urban areas, projects really do not need to invest a great deal in sophisticated promotion strategies for news of their existence to reach the communities. In fact, person-to-person contact and word of mouth tend to work better in local communities than other, more sophisticated instruments of dissemination. Sometimes the problem is just the oppo- site. There is a need to control the many rumors that circulate about the project among local people. Socio-technical support providers play an important role in this objective, achieving much through personal contacts. During project implementation, there is a particular need for social marketing strategies to ensure that critical information about the project ORGANIZING PARTICIPATION: THE PROJECT LEVEL 143 reaches all local people. For this, it is important to differentiate among the various beneficiaries (e.g., disadvantaged or vulnerable groups, or special interest groups). Especially in the case of the most disadvantaged, it is necessary to work consciously to counteract the tendency many projects have of unwittingly leaving them out of the information loop- a situation that often excludes them from participating and reaping a fair share of project benefits. An important aspect that needs to be stressed is that communication, which is such a large part of social marketing, works both ways. When communication channels are established, they are not just a means of conveying information to the community, but also a means of gathering comments, suggestions, and informationfrom the community, to iden- tify potential conflicts brewing within the community and allow the early activation of conflict resolution mechanisms. Usually, it is the socio-tech- nical support team that is in charge of social marketing and communica- tion in a program or project, and interpersonal contact is a key part of two-way communication channels, which makes it easier to act quickly on information received from the community. Social marketing has another important dimension: garnering the in- terest and support of society at large to urban upgrading initiatives. We have seen the key role political will has played in the cases studied for the adoption of upgrading policies. Political will, although it certainly has to do with organized pressure from poor communities, also depends greatly on public opinion in general and on the views and leanings of the middle classes. It is therefore crucial to create a favorable climate of opinion by making clear to society as a whole the advantages and im- portance of urban upgrading for the attainment of poverty reduction, public health, and environmental improvement goals that benefit the entire city, rather than just a program's target beneficiaries. The development of a favorable climate of opinion with regard to upgrading may also serve another important function. By depicting the informal city and its future possibilities in a more favorable light, the private business sector may be influenced to recognize the market po- tential of these areas and begin to target its investments to them. This result is already visible in many areas, such as Tijuana's Florido-Mariano district, but it needs to be strengthened considerably for true integration of the informal city. Social Marketing in the Case Studies Table 3-8 summarizes the wide range of social marketing strategies that were adopted in the different urban upgrading programs and projects described in the case studies. 144 SLUM UPGRADING AND PARTlCIPATION Table 3-8. Social Marketing Strategies in the Cases Studied Costa Strategy Bolivia Brazil Rica Mexico Peru Word of mouth / I / / / Community radio / / Community TV / , Radio ads / / Leaflets / / / Booklets / Short courses / / Meetings w/ ABCOs and SPCOs / / / Meetings w/ housing association managing committees / Meetings organized by municipality / Community assemblies / / Placards and billboards / Press ads / On-call socio-technical support / / Distribution of text of the People's Participation Law / Special events (barbecues, etc.) / Raffles and sweepstakes for model taxpayers / On-line communications / Source: Authors' construction from field study data. In Guarapiranga, social marketing, like information and communica- tion, is handled by the socio-technical support provider. A great variety of communication and dissemination materials have been prepared for di- verse themes and occasions (posters, folders, audiovisuals, murals, comic strips, jingles, and radio advertisements). These have been used in a variety of contexts, including meetings and social and theatrical events. These instruments were not utilized during the program formulation phase or during the selection of areas of intervention, which were driven principally by technical criteria. Rather, they were used to mobilize people for the implementation phase, through information campaigns on specific themes such as health and environmental education. They were also used to promote the project in neighboring areas and in the city at large. In the case of Costa Rica, an organized group (a housing association) contacts FUPROVI on its own. FUPROVI does not advertise, since it has more business than it can handle. Housing associations learn about its services by word of mouth. These organizations visit the foundation's ORGANIZING PARTICIPATION: THE PROJECT LEVEL 145 projects and receive information on the mutual-help construction pro- cess and its costs, financing mechanisms, and obligations. This is the beginning of a process of information exchange and negotiations that may take a great deal of time-four years in the case of the Lagos de Lindora project. Because the FUPROVI system demands great dedication and initiative on the part of the participants, an association usually looks at other options as well. While these other options may look simpler and more attractive, the community comes to realize that there are no other viable options catering to those at the income level of the FUPROVI clientele. The agreement with the foundation is preceded by a long and thorough con- sultation and information process. Even so, many of the participants claim that they accepted the proposal because they would have agreed to sign anything in order to obtain access to housing, even without having a clear notion of what mutual-help construction would entail. Social marketing and information/communication in Tijuana depend principally on direct contact among the decentralized offices of the mu- nicipality and the community groups. Radio has been efficiently used to publicize community upgrading programs, but other forms of commu- nication are not very developed, in part due to the fear of increasing the expectations of unserved communities and lengthening the list of liter- ally a few thousand projects already awaiting realization. Women and Leaders Should Receive Special Attention Leaders carry out the important task of informing their constituencies and, at the same time, they filter information according to their own vision and agenda. They have an essential function in the flow of com- munication, which is part of the reason why they profoundly influence the reaction and behavior of other inhabitants. Many of these leaders are women; and even when the leader is a man, women play a central role in improving infrastructure and shelter. It therefore follows that a project's communication strategy should focus above all on how to gamer the attention of both leaders and women. Participatory Information Gathering and Analysis One of the key aspects of organizing participation in urban upgrading is setting up a truly participatory process of information gathering and analy- sis. The benefits of a participatory approach in this process are manifold: * The process leads to a vision of the problems that includes, in addi- tion to technical aspects, the knowledge, views, and expectations of the community. 146 SLUM UPGRADING AND PARTICPATON * It transforms the local residents involved into communicators and resource persons, strengthening the link between the population and the project. * It creates trust and establishes a working relationship between socio- technical support providers and local residents. * It helps create a core group of community organizers with attitudes and skills that will be necessary throughout the project's life. * It contributes to the building of an interdisciplinary vision that takes into account the community's diversity and contributes to the com- patibility of the proposed solutions. Urban development projects that aim for the improvement of shelter and infrastructure require-as a first step-the description of the settle- ments under consideration and a diagnosis of their problems. The lack of organized information on practically any subject is a de- fining feature of the informal city. Information gathering is thus essen- tial in planning an upgrading intervention. By gathering and analyzing information with the active participation of local residents, not only is the quality of the information improved, but also the community is in- volved in identifying the area's problems, assessing their causes, and defining priorities. This is essential for eliciting and organizing local demand-a precondition for developing adequate, demand-responsive solutions. Information gathering and analysis is also the first process in a project in which the community participates in a big way. It is the point at which the relationship between the community, the project promoters, and the intermediary organization takes shape. In particular, active leaderships emerge, organizational capabilities and community resources are re- vealed, preliminary impressions on organization and leadership are tested, and the participatory strategy takes its final form. Some interesting methodologies to accomplish this goal were developed in Guarapiranga and in other Brazilian cases. Based on these examples, it is possible to outline the principal elements and stages of participatory information gathering and analysis, as described in chapter 4. Participatory Area Development Planning Quality Information Is Key to Effective Participation Despite the consensus on the need for community participation, many projects still cannot be considered participatory. And, for their part, com- munities cannot be expected to participate effectively in the key deci- sions involving urban upgrading if the resources and constraints ORGANIZING PARTIaPAToN: THE PRojEcr LEVEL 147 involved, as well as the implications of the various alternative solutions, are not clear to community members. For a project to be truly participa- tory, management of the information needed for infrastructure develop- ment should take into account the need to allow the local community to understand the community infrastructure and shelter upgrading pro- cess and to influence it. Lack of an Overall Vision Leads to Piecemeal Interventions In many cases, community movements and an increased public and po- litical awareness have prompted local authorities to undertake projects that have been confined to tackling a few urgent issues such as the drain- age of particular trouble spots or the creation of an all-weather access route. This kind of "scattered showers" approach is attributable at least in part to the lack of an overall vision of problems and solutions. By focus- ing on specific situations and introducing new physical constraints (such as the location and width of a paved road or an open drain), such attempts have often created obstacles to the design of a wider ranging intervention, and thus to the adoption of an integrated planning approach. We will see more of the drawbacks of piecemeal upgrading in chapter 4. An integrated planning approach to upgrading requires that oppor- tunities for synergy among local government authorities and service agen- cies be actively sought and fully exploited. The planning of settlement layout changes, for instance, requires the input of sector line agencies, since the location of pipes and other technical requirements for infra- structure have to be taken into account. On the other hand, the exchange of cadastral information among different utilities and local government agencies would have positive implications for the establishment of a framework for operations and maintenance and even for cost recovery.8 Participatory Area Development Planning A participatory area development plan is an instrument that provides a long-term overall vision of the development of an area and allows for the identification and use of such synergies. The process of preparation of such a plan is as important as the product, since it provides a forum for negotiation and comparison of different views involving local resi- 8The lack of accurate cadastral information is one of the reasons why collection of property taxes, user fees, and consumption tariffs is often erratic. Typically, electricity utilities have the best records, and municipalities and water utilities lag behind. An estab- lished mechanism of information exchange would help improve the latter's cadastral databases and facilitate the cost recovery process. 148 SLUM UPGRADING AND PARTICIPATION dents and other key project stakeholders. This is both a consensus-build- ing and partnership-forming process. The plan is developed by a committee of local residents with support from planners, engineers, and social workers. It is based on the partici- patory process of information gathering and analysis as described above and involves a survey of the situation of the settlement and its inhabit- ants, covering physical aspects, existence and state of repair of infra- structure, service availability, environmental aspects, land- tenure status, and socioeconomic situation. The information is organized and analyzed by an interdisciplinary team and presented to the community in a series of meetings with area-based and special interest groups. Based on analysis of the information and discussion in the community meetings, a coher- ent pattern of problems and priorities emerges. It is then possible to be- gin to propose and discuss alternatives for intervention in an interactive process in which the community, through established representation mechanisms, eventually reaches decisions that reflect real demand. The technicians' support is there to ensure that the chosen alternatives are affordable and technically sound. The final product of the exercise is a logical long-term sequence of activities and an agreed blueprint for the improvement of the area. Participatory area development planning was undertaken in various ways in the cases we studied. In San Jos6, we found that, in striking contrast to the high level and degree of participation in the building process, participation in planning is weak. In the FUPROVI model, plan- ning is seen as something the institution brings to the table, and FUPROVI's client groups seem to accept this as a given. In Guarapiranga, although reference to participatory and area-based planning was made in the terms of reference of the firms that carried out the planning and design work, the concept was not fully spelled out. As a result, although all the subsequent plans are area-based and integrate the various branches of infrastructure, not all can be termed fully participatory. Nonetheless, there is a clear trend toward a participatory area-based and integrated approach-this is a significant step forward in relation to previous prac- tice in Sao Paulo. In Tijuana's community upgrading Obra Social Comunitaria projects, priority setting is based on a simple list of desirable public works, not on a participatory planning process. The process of priority setting may be deemed participatory; but the planning element is missing. Community requests to delegaciones (decentralized municipal offices) or to the mu- nicipal department of social development, which are often made during well-publicized public gatherings, are lumped together in a laundry list. Following a preliminary feasibility check, the list is presented to a com- mittee, with community representation, at the level of the delegaci6n. ORGANIZING PARTICIPATION: THE PROJECT LEVEL 149 This latter establishes priorities, seeking, among other things, to spread the benefits of the project to the various parts of the delegaci6n. The decisions of the delegaci6n committees are submitted to a citywide com- mittee for ratification. In Tijuana, the lack of a planning element has meant that community requests have focused heavily on road paving; among infrastructure types, this is the most visible, easiest to identify, and one of the least expensive to address. In addition, road paving falls within the sphere of competence of the municipality, requiring minimal coordination and a moderate amount of supervision. Road paving is undoubtedly very much needed and in great public demand in the colonias populares of Tijuana, but so are many other things that could have been identified by a par- ticipatory planning process. In Ciudad Juarez, a very similar priority- setting process has taken place, and road paving has also dominated the local version of Obra Social Comunitaria. These Mexican examples are very similar to the local planning pro- cess established in Bolivia by the People's Participation Law. In this pro- cess, as discussed in chapter 2, a series of logical steps are followed to set priorities in each of the city's low-income areas. As in Tijuana and Ciudad Juarez, however, a true planning element is missing since there is no participatory information gathering and analysis to inform the process, and decisions are made without proper study of the alternatives. In Santa Cruz and El Alto, Bolivia, the PAP project, funded by Dutch develop- ment aid, seeks to build the planning capacity of local communities and enhance their participation in the planning process established by Law 1551. The fact that PAP relations with the municipalities are tense in both cities, however, indicates the resistance large municipalities feel toward participation. The Mexican and Bolivian examples are similar to the or,amento participativo (participatory local government budget) procedure used in Porto Alegre, Belo Horizonte, and other cities in Brazil. In Belo Horizonte, the drawbacks of defining priority works in the absence of a coherent plan led to the development of the concept of a sort of broad-stroke par- ticipatory area development plan, which is called Plano Global. Indeed, participatory area development planning may be undertaken at differ- ent levels of detail, according to local needs and conditions. In a case like Guarapiranga, where the plan will be used to execute an ambitious pro- gram of works in the short term, a very detailed development plan, coupled with detailed engineering plans, is vital. In a case like Belo Horizonte's, in which the participatory area development plan is meant to guide a long-term process, much less detail is needed upfront. In Peru, participatory planning has been a key element of the devel- opment of Villa El Salvador from the very beginning. It has also been 150 SLUM UPGRADING AND PARnCIPATION one of the reasons why VES has outpaced all similar settlements in Lima in terms of what it has achieved. The example of the VES industrial park shows what a development plan can do when it is known, shared, and fully backed by a community. In VES, the land for the industrial park was successfully withheld from residential development for 15 years pending the creation, after much debate and many false starts, of a pub- lic-private partnership. Protecting the land from invasion for all those years was no easy feat, particularly given the area's demand for residen- tial land. In 1999, 28 years after the first VES plan, a third participatory VES plan was prepared after hundreds of meetings and was approved by a citywide referendum, with an impressive voter turnout. Participa- tory area development planning is alive and well in Villa El Salvador. Creating Incentives for Landlords and Tenants The landlord-tenant relationship can be a powerful deterrent to urban upgrading projects in many situations. We have observed this in some parts of Latin America, but especially in Africa, where renters usually are the majority-and sometimes the vast majority-of the population of low-income urban settlements. In many of these situations, many in- formal settlement residents are not stable urban dwellers and are only interested in paying as low a rent as possible during their brief foray into the urban cash economy. Their intention is not to stay in the city for long: rather, when they feel they have made enough money, or when harvest time comes, they rejoin their families to work in subsistence ag- riculture. Such people feel no incentive to take part in initiatives to improve the quality of the settlements in which they live. Here we will use an African example: the case of the regularization and upgrading of the Ronda in- formal subdivision in Nakuru, Kenya, where a technical assistance project took place in 1994-96. Local landlords, many of whom live in the area, were interested in land tenure regularization, but not really in the im- provement of infrastructure. They were also wealthier and had far more political clout than their tenants, and strongly opposed the participation of tenants in any initiative concerning the settlement. Therefore, "com- munity" participation was restricted to landlords and to land tenure regu- larization-a situation that was fully accepted and even abetted by the municipality. We had found at the time that many in the city's profes- sional class, including high-ranking municipal officials, owned shacks for rent in Ronda that were managed on their behalf by resident land- lords. It therefore was no surprise that no one seemed to think that ten- ant participation was called for-not even the tenants themselves, who did their best to keep out of harm's way by not participating. In contrast ORGANIZING PARTICIPATION: THE PROJECr LEVEL 151 to the enthusiastic participation of the landlords, many of whom lived in the area, it was virtually impossible to enlist the participation of ten- ants in information gathering. Again in contrast to the landlords, their interest would have been service improvement (as long as rents stayed low); since the landlords' only interest was tenure regularization, ten- ants had all the more reason to stay away. Although such a situation is certainly to be regretted and constitutes a major obstacle to development, it is easy to understand how it arises. When informal developers are providing low-cost and low-quality mass housing to migrant workers in collective structures-as they were in Ronda-landlords and tenants have different, and frequently opposite, interests. In the Latin American cases we studied, a large majority of settlement residents own the plots and structures where they live, a fact that undoubtedly makes a great deal of difference in terms of the incen- tive structure. And even where people are building extra units for rent within their plots, tenants are a minority, and most of them are in the city to stay, which is not the case in Kenya. In situations like the ones we have studied, the incentives for partici- pation are clear, and the project's business is to create an appropriate enabling environment. In Belo Horizonte, for example, tenants were so scarce at the time of the promulgation of the PROFAVELA law that the law's controversial provision of ignoring landlord-tenant relations and legalizing tenure for any occupant of a favela shack, whether owner or tenant, went virtually unchallenged. When tenants are a majority, however, things are considerably more complex. Any attempt at addressing this problem needs to give careful consideration to the often conflicting interests of landlords and tenants, and create an appropriate incentive structure for both. In a case such as Ronda's, for example, tenure regularization, which appeals to landlords, might be pursued independently of service improvement. The latter could be pursued through demand-side subsidies and technical sup- port and start-up finance for small-scale entrepreneurs who, through water vending, latrine emptying, etc., could provide a minimum of the required services. In Ronda, water supplies are built and operated by local landlords, who tap existing mains in the formal city and bring wa- ter to their compounds through rickety piped systems. Their incentive is to provide a minimum level of service to their tenants and to charge for the water. Nakuru's chronic water supply problems, however, coupled with the precarious nature of the systems installed, make it difficult to reach an acceptable level of service. What would be an acceptable level of service at an acceptable cost to households? Although it certainly is not the intermittent and unreliable service at high unit cost that is provided to Ronda residents, it is difficult 152 SLUM UPGRADING AND PARTICIPATION to determine exactly what would be a good alternative. Careful analysis of the spending and consumption patterns of local households would need to be undertaken to determine affordable service standards and willingness and ability to pay consumption tariffs; this in turn would help determine the needed levels of subsidy. Privatized Utilities and the Urban Poor Even in cases where owners occupy most of the structures and urban services are provided by large utility companies, service standards and levels of subsidy must be examined and a new relationship built with the urban poor. Electricity is usually the first service to be provided in a low-income settlement, due to its comparatively low cost and ease of installation. Electricity companies are also proving to be leaders in de- veloping this new relationship with the poor. As we see in the case of Villa El Salvador, many marketing studies ignore the areas in which the urban poor live, dismissing them as homo- geneous lower class settlements with no purchasing power or specific requirements. In most Latin American cities, informal settlements house between 30 and 50 percent of the population and represent a market that cannot be ignored by utilities. On the one hand, universal access to services is a political imperative and a cornerstone of most concession agreements; on the other hand, the present situation, characterized by illegal connections and lack of cost recovery, undermines the viability of private sector service provision and the profitability of privatized utili- ties. The first step in overcoming this situation is trying to learn more about the needs, preferences, consumption patterns, and purchasing power of the urban poor. This information will allow utilities to: * Base extension of coverage and service upgrading on an accurate perception of demand * Identify needs for subsidies and negotiate their management with the state * Devise a marketing strategy that takes the reality of the poor as a consumer group into account * Extend service coverage in a financially sustainable way, by match- ing investment and cost recovery strategies. Utilities need to couple this information-gathering exercise with an effective outreach strategy. Most utilities have weak consumer relations strategies across the board, and many have launched efforts to improve the situation. Such efforts have seldom targeted the poor, however, and utilities generally do not have a track record of success in sustainable extension of coverage to the urban poor. In this context, some of the ORGANIZINC PARCICPATION: THE PROJECr LEVEL 153 recently privatized electricity utility companies in Brazil, such as Rio's Light and Bahia's Light and Power Company (COELBA), have come to realize that there is a gap that needs to be bridged in establishing new relations with the urban poor and that they are ill-equipped to bridge this gap on their own. This gap consists of a lack of knowledge about the poor and their settlements as well as of: * Social and cultural differences * Lack of a culture of consumer rights and responsibilities * A heritage of paternalistic relations with the state that perpetuates a low-level equilibrium between low-quality services and lack of cost recovery. Bridging this gap takes an array of social intermediation techniques and specialized personnel. Accordingly, utilities are forming partnerships with social intermedi- aries to provide socio-technical support. These partnerships might be the embryo of specialized units within the utility that deal with this large market segment. Privatized water utilities in Argentina and Bolivia are also developing specific strategies in this regard. There appears to be a significant need, and a significant scope, for the training of consulting firms and NGOs to fill the role of intermediaries in those parts of Latin America where utility privatization is advancing, but specific marketing and client relations strategies targeting the poor have yet to be developed. 4 Focusing on Process: Program Design and Rollout Strategies To establish the participatory process-particularly in the face of any resistance by entrenched interests-requires a well-thought-out plan. For instance, in Bolivia, participation was tied to resource flows to the mu- nicipalities, thus taking the various conflicting interests into account and creating incentives for stakeholders to participate in a process that is the result of a of conscious design. Although the specifics of this plan will vary with location and circumstance, the common denominator for suc- cess is that sufficient thought and attention are given to process. This chapter analyzes key issues of process in settlement upgrading initia- tives with regard to program planning and design. It also deals, at its conclusion, with the program rollout stage; here we discuss some of the project-level process issues identified and outlined in chapter 3 from an operational standpoint. (See box 4-1.) The presentation is based on lessons learned from the formulation and implementation of participatory urban upgrading and shelter programs. It draws on the experiences of the five case studies as well as those of the study's authors, consultants, and peer reviewers. Because program cir- cumstances vary greatly, we do not-indeed, we cannot-offer a recipe to be followed. Rather, we call attention to important and recurring pro- cess issues, following the chronological sequence of the major stages of program design and rollout. The objectives of this chapter are to: * Facilitate an optimal use of resources in program design and imple- mentation * Ensure that the key issues related to a project's social and financial sustainability are appropriately addressed during program formulation 155 156 SLUM UPGRADING AND PAKrlCIPATION Box 4-1. How to Use the Information in This Chapter Who Should Take the Actions Outlined Here? Program design efforts are usually initiated and led by the organizations sponsoring the pro- gram (e.g., a municipality in partnership with an international develop- ment bank or central government agency). Due to the multidisciplinary nature of urban upgrading, it is a good idea to set up a small unit led by an experienced professional and staffed with representatives of the sponsor- ing organizations and people with backgrounds in urban planning, mu- nicipal engineering, economics, and the social sciences. For example, the unit that formulated the CAMEBA program, the first large-scale slum upgrading effort for the barrios of Caracas, was housed in the Municipal and Community Development Foundation (FUNDACOMUN), the Ven- ezuelan government agency promoting the program, and had two co- directors: a social scientist and a civil engineer with municipal management experience. A few other professionals, with backgrounds in urban plan- ning, public administration, and economics, completed the unit. The pro- gram design process was supported by a steering committee comprised of representatives from FUNDACOMUN, the World Bank, other govern- ment agencies, the municipalities of the Caracas metropolitan area, and the general public. Such an organizational structure will go a long way toward ensuring that the key disciplines for upgrading are adequately represented in the program design process. This small unit coordinates all and conducts some of the work, recruiting specialized consultants as needed. What Time and Money Requirements Are Associated -with These Actions? Some readers may feel that the procedures outlined in this chapter are too costly and time-consuming. In reality, although it is true that adequate pro- gram preparation does have resource implications, a great deal of time and money may be saved over the life span of the program by adequate prepa- ration. Nevertheless, we admit that it is not always possible to follow these procedures exactly. The presentation that follows is therefore what we be- lieve a sponsoring organization should aim for, although we realize that it will sometimes be necessary to settle for suboptimal solutions on some points. * Build on previous experience so as not to "reinvent the wheel" each time * Be a tool in designing programs that lend themselves to scaling up. The program design and rollout cycle is subdivided into five stages: 1. Preidentification and consensus-building 2. Prefeasibility studies and program identification 3. Feasibility studies and program design 4. Establishing a program monitoring and evaluation system 5. Rolling out the program FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 157 For each of the stages in program design (stages 1 to 4), information is provided on objectives, key process issues, typical sequence of activi- ties, as well as considerations before moving on to the next stage of the process. Discussion of the final stage of the process-the program rollout stage-is organized by major issue areas. Stage 1. Preidentification and Consensus-Building Designation of a consensus-building stage, which may also be called the preidentification stage, is an attempt to transform the development of ini- tial contacts with stakeholders and potential program partners'-an ac- tivity that occurs at the start-up of every program-into a less hurried and superficial exercise. We propose making these initial contacts with key stakeholders and potential program partners into an opportunity to establish strategic alliances and ensure that the program receives the necessary measure of support. During the consensus-building stage, the program design unit identi- fies potential program partners and begins to formalize their role in the project and contractualize their contribution. This initiative is conducted proactively by deliberately organizing an inclusive and open consen- sus-building stage in which: * Key stakeholders and potential program partners are identified * Information about the basic aims and outlook of the program is provided * The views of key stakeholders and potential partners are expressed * Channels for negotiation and conflict resolution are established at the outset * Local rivalries that may stand in the way of a program are identi- fied and dealt with * Tentative basic agreements regarding the roles to be played by po- tential program partners are reached. The first stage of a participatory urban upgrading program entails building consensus among the likely key stakeholders in the program. This of course begins with a preliminary identification of these stake- holders, usually via informal networking with planning officials; infra- 'Stakeholders are people and organizations whose mandate, field of activity, or interests are related to or affected by the program; this relationship entitles them to a say in its design and execution, which may benefit from their information, insights, and collabora- tion. Program partners are people and organizations that will actually carry out specific program tasks and enter into contractual arrangements with the program. 158 SLUM UPGRADING AND PARnCIPAION structure line agencies or ministries; community-based organizations, nonprofits, or federations of such organizations; representative offices of donor agencies; large private firms that hire from or work within tar- geted communities; and related industry organizations. Ultimately, the stakeholders in an urban development process may include public au- thorities with jurisdiction over the area, public or private utility compa- nies, formal landowners, formal and informal land developers, owners and managers of area businesses, owners and managers of businesses that hire or are patronized by people from the area, managers and staff of public or nongovernmental facilities in the area (such as health cen- ters, schools, and daycare centers), politicians and political party activ- ists, development nongovernmental organizations (NGOs), religious groups, private firms providing services in the context of a program or project, and local residents and other target groups. The consensus-building stage lets government agencies and other key stakeholders deal with common concerns and uncertainties regarding a process that introduces many novel elements. Many entities fear that participation, area-based development, and a multidisciplinary approach may lead to loss of control, long lead times, and inefficient disburse- ments, among other problems. To allay these fears, it may be useful to present and analyze successful examples from other cities to the stakeholders. Organizing study tours of successful projects can be particularly useful in this regard.2 Studying successful examples is also useful in involving potential stakeholders in discussions about institutional and funding arrangements and for pro- viding an opportunity to begin conceptualizing possible roles for each partner in the program. It is also important to inform stakeholders and program partners that the program will only operate at its intended scale after a successful pilot stage.3 This information will reassure these key decisionmakers that there will be sufficient opportunity to test out the approaches and methodologies to be used in participatory upgrading. A well-organized consensus-building stage is particularly important when communities and other stakeholders are deeply divided by poli- tics. As demonstrated by the Tijuana case study, there are many situa- tions in which affiliation with a political party has traditionally been the passport to obtaining government support, while affiliation with a rival political party has meant foregoing that support-at least until the po- 2Chapter 2 provides a summary overview of participatory upgrading and housing projects in Latin America which could serve as possible study tour destinations. 3The importance of a successful pilot stage is emphasized in the discussion of Stage 5 later in this chapter. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 159 litical tide has turned. While local politics will continue to be an impor- tant factor in urban upgrading, the trend toward democratization and decentralization in Latin America has created new opportunities for participation, negotiation, and mediation. A thoughtful program design process must acknowledge political rivalry and provide the necessary opportunities for conflict resolution, beginning with a well-organized consensus-building stage. Similarly, the consensus-building stage is an opportunity to identify and deal constructively with rivalries among organizations and indi- viduals at the local level and other human nature issues that too often stand in the way of a program. Skepticism and turf issues must be ad- dressed early on, or they will certainly materialize later to the program's detriment. Box 4-2 provides a list of questions which are frequently raised during the consensus-building stage. Suggestions as to how to deal with these questions are provided throughout the book, especially in chap- ters 3 and 5. Box 4-2. Questions Frequently Asked during the Consensus-Building Stage * How is it possible to deal with some stakeholders' notions about participation being too complicated and time-consuming, and thus negatively influencing the attainment of project goals? * How is it possible to organize a successful participatory project if, at the start of the project, we do not have strong community organi- zations as counterparts? * How does one reconcile a participatory and area-based approach with existing practices-and the existing knowledge base-in plan- ning, design, funding, and execution of public works with effective results? . How is it possible to organize a process that involves different institutional missions and technical disciplines so that coordination is ensured and major turf issues avoided? * How does one deal with the level of expectations and initial as- sumptions regarding project timing that often do not take into account bureaucratic difficulties and other delaying factors (e.g., the need for building first consensus and then capacity)? * How does one deal with the information gap that frequently exists regarding low-income areas? * How does one deal with the all-too-common uncertainties that ex- ist regarding funding? . How can the project survive transitions in political power, e.g., as one mayor's term of office ends and another's begins? 160 SLUM UPGRADING AND PARTICIPATION Objectives * To reach a consensus among key stakeholders regarding the use of a participatory and area-based approach in an initiative to improve the provision of basic infrastructure and services and the shelter conditions of the urban poor. This consensus is required to overcome misunderstandings about what exactly is meant by participation and area-based planning and implementation, as well as misunderstand- ing of other parties' agendas and mistrust among organizations, and doubts about the cost-effectiveness of participatory initiatives. * To overcome common fears of government agencies and other com- munity and private sector stakeholders regarding participatory and area-based approaches. Commonly perceived fears include loss of control, lack of established coordination capacity and lack of ca- pacity of local governments and communities to carry out the ac- tions required by a participatory urban upgrading program. * To reach a basic agreement among key stakeholders as to the steps to be taken for the formulation and launch of an urban upgrading and shelter initiative. * To ensure that the level of expectations among key stakeholders regarding the program's time frame, cost, and objectives remains realistic. Key Process Issues The key process issues that apply to the consensus-building stage are similar to those that apply to any group dynamic in which consensus and collaboration are sought. Thus: * The process needs to be inclusive, and needs to be perceived as such. When in doubt about including a particular stakeholder, err on the side of inclusion; the process itself will in due course weed out participants who are not really interested or who cannot con- tribute much. Groups and people who feel that they are entitled to a say in program formulation but are denied the opportunity to do so may turn into enemies of the program. * Adequate opportunities (e.g., brainstorming sessions, one-on-one interviews, structured workshops) need to be created to permit expression of stakeholders' views and suggestions, and note needs to be taken of the views expressed and the consensus reached. Ef- forts should be made to use existing-as opposed to ad hoc-fo- rums to foster consensus among stakeholders. Existing discussion venues such as parent-teacher associations or mothers' clubs are FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 161 more likely to be culturally acceptable and to pose less of a threat to the way beneficiary communities are organized. * Every effort must be made to ensure that information flows freely and that people and groups have access to all the information they need to make decisions. * It is useful to have a mediator who is perceived by all stakeholders as impartial and knowledgeable. This role is often played by the coordinator of the program design unit. It is particularly important when local politics come into play to have an external, politically neutral program design unit coordinator who has no current or past links to the local power structure and who has strong diplomatic and mediation skills. * The consensus-building stage should aim for an explicit statement of the ground rules: what the forum for discussion of program is- sues will be, what the expected time schedule is, what the stan- dards/format are to exchange information, and what skills each partner can, in principle, contribute. Typical Sequence of Activities 1. Perform a preliminary identification of the key stakeholders who will need to be involved in the consensus-building process. 2. Conduct one-on-one interviews with the key stakeholders to get to know their perspective and motivations; understand what they may bring to the program, and identify conflicts and unresolved issues that may hamper the development of the program. 3. Hold a workshop with stakeholders for the presentation and dis- cussion of successful cases from other cities as well as to identify community priorities on a preliminary basis. (A sample program for a consensus-building workshop is provided in box 4-3.) 4. Conduct brainstorming sessions with key stakeholders to begin conceptualizing what a participatory and area-based urban upgrad- ing program might look like in their city, province, or country (depending on the level at which the program is being designed). 5. Consider organizing a study tour of successful programs for a small group of key stakeholders, especially in those situations where there is little similar experience at the local level. 6. Prepare a draft action plan for the program design cycle that re- flects the consensus of the key public and private sector stakehold- ers, and the likely role of each program participant. Note that this document does not constitute a formal agreement. 162 SLUM UPGRADING AND PARnCIPATION Box 4-3. Sample Program for a Consensus-Building Workshop Following is the agenda used in Ciudad Juarez, Mexico, for a first workshop with key stakeholders in an urban upgrading program. The program al- lowed ample time for questions and answers and for plenary discussion. 1. Welcome and Objectives 2. Latin American Experiences . Social Investment Funds in Central America . Bolivia's Social Investment Fund * The Guarapiranga Project, Sao Paulo, Brazil 3. The Development Plan for the Western Part of Ciudad Juarez (Zona Poniente), where most of the city's informal settlements are located 4. The Ciudad Juarez Urban Upgrading Program * Objectives * Methodology * Components * Coordinating Unit 5. Plenary Discussion 6. Conclusions and Next Steps Considerations before Moving On The consensus-building stage should have produced the following re- sults as a minimum; it is not prudent to proceed to the next stage unless these have been achieved: * A good level of understanding and agreement on the part of key public and private sector stakeholders regarding the major issues involved in a participatory and area-based upgrading and shelter project has been reached. * Major misconceptions on participation, including potential benefits, costs, and risks, have been clarified. * A consensus has been reached on the level and degree of participa- tion that would be feasible / desirable to implement, as well as on the program's objectives and design parameters, and on the ex- pected contributions of each stakeholder. * The benefits and coordination requirements of area-based devel- opment planning and implementation are understood by all stake- holders. FOCUSING ON PROCESS: PROGRAm DESIGN AND ROLLOUT STRATEGIES 163 * Key stakeholders have bought into the idea and have agreed to take an active part in program design and-hopefully-implemen- tation. * A tentative action plan for the program design cycle has been drafted, including objectives and activities and their sequence and key milestones; the observations of the key stakeholders have been incorporated into this plan. Stage 2. Prefeasibility Studies and Program Identification The prefeasibility studies carried out for the purpose of program identi- fication include some of the most important work of program design; this may also be the most creative stage of the program's formulation. At this stage in the process, the following activities are undertaken: * Essential information on local conditions is collected and collated * Identification of key stakeholders and potential program partners is 'finalized * Alternatives regarding the key features (type, scope, format, and structure) of the program are formulated and discussed (see box 4-4) * An evaluation of the different alternatives regarding program fea- tures, according to local constraints and opportunities, is carried out. The activities outlined above allow for the development of a proposal regarding program features including institutional arrangement and imple- mentation strategy, to be tested and refined during the next stage of the process-the feasibility studies and detailed program design. Objectives * To reach a good level of understanding about local conditions and to identify key constraints (e.g., social, economic, technical, institu- tional, legal, regulatory, and financial). * To finalize identification of program stakeholders and partnership opportunities with civil society, the private sector, other tiers of government, infrastructure line agencies, and the donor community. * To develop and evaluate different possibilities in terms of program features (type, scope, format, and structure) according to local needs, priorities, constraints, and opportunities; and to discuss these pos- sibilities with key stakeholders. * To learn stakeholders' views on different options regarding pro- gram features and facilitate a consensus among key stakeholders regarding the main aspects of program structure. 164 SLUM UPGRADING AND PARnCIPAnON Box 4-4. Program Features: Type, Scope, Format, and Structure Program type is defined by the type of action undertaken by the pro- gram to improve access to infrastructure and shelter by the urban poor. Following are the main types of programs found in practice, each of which has two main subtypes: * Upgrading of an existing settlement: (1) piecemeal upgrading, in which infrastructure improvements are undertaken without the benefit of an area-based upgrading plan; (2) integrated upgrading, in which an area-based upgrading plan that considers the require- ments of the various types of infrastructure is the basis for a coher- ent set of infrastructure improvements * Land delivery: (1) sites and services, in which land is subdivided according to a plan, and basic infrastructure is put in place before the plots are sold or distributed; (2) beaconed sites with a plan, in which a settlement is laid out and surveyed according to a plan, and plots are sold or distributed before the basic infrastructure is in place; infrastructure is then built gradually, according to resource availability, to the specifications of the original plan, as in Peru's lotes con tiza strategy * Housing programs: (1) home improvement programs, in which technical assistance and credit are extended to low-income house- holds for the expansion and improvement of existing homes; (2) new housing in new settlements, in which new infrastructure and housing units are built simultaneously in an empty or "greenfield" site; this type of program has been the object of most conventional public housing projects in industrialized and developing countries alike Program scope refers to the range of types of improvements undertaken by the program. Some programs focus only on water supply and sanita- tion; others also include, for instance, storm drainage, road paving, pub- lic lighting, and land tenure regularization. Some programs include Key Process Issues Severalcriticalprocess issues must be addressed at this stage; these involve: * Collecting available information regarding the infrastructure and shelter needs of low-income communities and the relevant con- straints and opportunities at the local level * Finalizing identification of the program's key stakeholders and potential partners, and outlining the key strategic alliances that will be the backbone of the program's structure FOCUSING ON PROCESS: PRoGRAM DESIGN AND ROLLOUT STRATEGIES 165 technical assistance and credit for home improvement, while others focus on infrastructure only. Program format refers to the kind of system and procedures adopted for project selection, resource flows, and the relationship between beneficia- ries and implementing agencies. Approaches to targeting and cost recov- ery are also part of program format. The main program formats found in practice are: * Social investment fund, or programmatic, in which municipalities or organized communities present project requests to a central fa- cility which evaluates them, and later funds and supervises the ex- ecution of the approved requests * Participatory budgeting, a variant on the programmatic format, in which part of the budget of a municipality is allocated through a participatory and transparent process in which requests are pre- sented by community groups and ranked by priority at public meet- ings organized by the municipality * Comprehensive upgrading, in which certain informal settlement areas in a city are chosen, according to predetermined criteria, to receive a wide range of upgrading investments over a relatively short period of time (usually two to three years). Program structure refers to the institutional arrangements and imple- mentation strategy adopted by a program, in terms of its participating institutions and their roles and relationships. Note that any initiative in upgrading and low-income housing needs to create channels for the involvement of the community or client group in the project's planning, design, and implementation to ensure responsive- ness to demand and to plant the seeds of sustainability. The support ser- vices needed for effective participation are very similar regardless of program type, scope, format, or structure. Understanding and developing a proposal on the type, scope, for- mat, and structure of program required. Collecting Available Information. Although some information is gleaned during the consensus-building stage, information collection begins in earnest at this stage, when the program design unit identifies sources and seeks to gather all available information regarding the in- frastructure and shelter needs of low-income communities and the ex- isting social, technical, environmental, institutional, economic, and financial constraints and opportunities at the local level. 166 SLUM UPGRADING AND PARTICIPATON This information, especially that relating to the informal settlements themselves, is often hard to come by, and a special effort will need to be made to gather information based entirely upon secondary sources. This exercise will allow the program design unit to identify information gaps and propose ways to overcome them through direct information gather- ing in the field, which will be undertaken in the next stage. Finalizing Identification of Program Stakeholders and Potential Partners. Building on the preliminary identification carried out in the consensus-building stage, the program design unit will now be able to finalize identification of the program's key stakeholders and potential partners, and outline the key strategic alliances that form the backbone of the program's structure. Partners need to be identified within the com- munities, in the public sector, and in civil society. Willing and able part- ners from the for-profit private sector (specialized service providers, microfinance institutions or commercial banks, small and medium-sized providers of infrastructure, private utilities, materials and equipment providers, private landowners, etc.) should also be identified at this stage. Features of Urban Upgrading and Shelter Programs. All urban up- grading and shelter programs have common features, but it is impor- tant to bear in mind that there are as many different types of programs in this field as there are cities, each with its own distinctive circumstances and requirements. As discussed in box 4-4, a basic distinction can be made between programs that aim to: * Improve existing settlements-whether squatter settlements (e.g., Sao Paulo's Guarapiranga program) or informal land subdivisions (e.g., Tijuana's community upgrading programs)-and deliver ser- viced sites or sites plus a plan (e.g., Villa El Salvador) * Produce housing, whether under the form of new housing and new urban settlements-e.g., the Foundation for the Promotion of Hous- ing (FUPROVI) in Costa Rica-or improvement of existing homes- e.g., the Desco (Center for Development Studies and Promotion) Densification Program in Villa El Salvador. Not surprisingly, these different types of programs have different re- quirements in terms of participatory strategies. Specifically, each pro- gram type poses different challenges in terms of urban form and structure, forms of participation, and expression of community demand. Urban Form and Structure. Existing informal settlements are part of the structure and history of a city, and have acquired, over time, their own specific features with respect both to urban form and content and to FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGrES 167 social constraints and opportunities. There are significant differences between the upgrading of squatter settlements and that of informal sub- divisions. In the case of squatter settlements, upgrading usually requires extensive layout changes and partial removal of the structures to deal with risk situations, provide space for public uses, and create access routes as well as ensure access to each plot. Depending on the site's physical features, the above may entail the need for significant removal of exist- ing structures and resettlement of local residents. With informal land subdivisions, public and private spaces are usu- ally already defined, and there is far less need for removal and resettle- ment. In this case, the need for removal and resettlement is dictated by the need for public use areas (e.g., parks, schools, clinics), which are usually not provided for by informal developers, and the existence of situations of risk (e.g., plots on unstable slopes or flood-prone areas).4 As a rule of thumb, the complexity of informal settlement upgrading is directly proportional to the need for layout changes and removal and resettlement, which are usually the costliest items in upgrading projects. This is why upgrading a squatter settlement is usually costlier and more complex than upgrading an informal subdivision. Another difference between upgrading squatter settlements and in- formal subdivisions regards the need for a plan. In many cases, upgrad- ing interventions take place without a plan, in what is called piecemeal upgrading. Piecemeal upgrading is not as harmful in the case of infor- mal subdivisions, since they already have a layout. Piecemeal upgrad- ing of squatter settlements, on the other hand, is definitely to be avoided, since it creates technical problems and unnecessary physical constraints to future layout improvements (see box 4-5). In the case of squatter settle- ments, a plan is not only important, it is essential. In most countries, there is some flexibility in terms of technical stan- dards when it comes to upgrading, but housing and sites and services projects are subject to a wide variety of strict rules and procedures involving, e.g., admissible land uses, population densities, minimum plot sizes, requirements on land to be set aside for public uses, minimum width and maximum slope of roads, etc. One of the reasons why informal settle- ments develop in the first place is the unduly high cost of developing land imposed by such standards. In this context, a community infrastructure or housing program must ensure that the existing planning standards and real estate market rules 4Resettlement may well be considered the Achilles' heel of community infrastructure projects, since it causes social disruption and entails the need to find suitably located and affordable land for substitution housing as well as the resources for the construction of such housing and related infrastructure. 168 SLUM UPGRADING AND PARTCIPATON Box 4-5. Problems Caused by Piecemeal Upgrading In Belo Horizonte, Brazil, a change in land use laws took place in 1983 that acknowledged the existence of favela areas and created the concept of special social interest zones, opening the way to their regularization and upgrading (see PROFAVELA program description in chapter 2). The new law was a valuable instrument, but the level of local experience with integrated upgrading projects was practically nil. The result was that many settlements were surveyed as they stood, and land tenure regularization processes were undertaken without any change in settlement layout. As a result, plots were regularized that lay on unstable slopes or in the middle of natural drainage paths. In other cases, political pressure from the com- munities led to piecemeal improvements in many settlements, such as the paving of a main access route or the building of a concrete drainage gully. Regularization without layout improvements, coupled with piecemeal upgrading works, had the effect of consolidating situations that were often undesirable and unsustainable and that had to be modified further on, wasting valuable resources and effort. Such experiences led, in the early 1990s, to the postulation of integrated regularization and upgrading by the organizations sponsoring the Alvorada upgrading program-an Italian-funded program which was executed by the NGO AVSI in the context of PROFAVELA-as the correct methodology to be followed. Integrated upgrading means that any action-upgrading or regular- ization-undertaken in a particular settlement needs to follow a partici- patory area development plan of the settlement, which considers all the needed layout changes, relocation and resettlement needs, and require- and regulations do not conflict with real needs or pose affordability prob- lems for municipalities and target groups. In actuality, however, afford- ability and standards usually do conflict, making it necessary to promote a study of existing standards and their impact on land and housing costs. This exercise will be important in order to identify specific areas of con- flict and to explore ways to resolve them, which may involve the prepa- ration and promotion of appropriate legal and regulatory changes or the obtainment of waivers as needed. It is also necessary to undertake this exercise in order to identify the ways in which the same standards that have pushed so many people into informality in the first place become one more obstacle to improvement of the situation and a key factor in the creation of new slums.5 5Another reason why it is important to study the impact of standards and approvals procedures on land and housing cost is that agencies often try to lower low-income hous- FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 169 ments of the various types of infrastructure. In this manner, even if the actual actions that are undertaken are discrete and upgrading takes place through a gradual, long-term process, every action is a contribution to the achievement of a well-defined goal. Upgrading is thus no longer piece- meal, although it may still be partial and gradual. In reality, most inte- grated upgrading programs take the form of comprehensive upgrading, a particular type of integrated upgrading that transforms an area typically over a span of about two years, with simultaneous investments in all the different branches of infrastructure. In the case of informal subdivisions, piecemeal upgrading does not do as much harm as in the case of squatter settlements, because informal subdivisions generally have a much better layout. This is shown in the Tijuana case, which also shows, however, that even in the case of informal subdivisions, a long-term plan is important in guiding a community's development efforts and public and private investment over the years. Piecemeal upgrading is sometimes undertaken due to a lack of experi- ence in undertaking a wide range of sectoral interventions. The short- term perspective that often dominates local politics is another leading factor. There is often a temptation, on the part of mayors, other local authorities, and even community leaders, to generate a large number of small works that can be inaugurated with fanfare. Part of the advocacy work of an upgrading program is showing politicians that the same po- litical impact can be achieved with planning, which has the added benefits of a much better quality end result, sustainability, and overall good use of resources. Formns of Participation. In the case of existing settlemnents, participation needs to operate within the framework of a methodology for improvement that has the existing settlement and its physical and social reality, including the residents' vision for the future, as its point of departure. The upgrading of existing settlements also has as a key constraint the need to preserve the existing stock of housing and infrastructure. The fact that people already live in the area and share its problems, however, represents a key cohesion factor and incentive to participation for diverse groups in the community. In the case of new housing/new settlements and sites and services schemes, the challenge is to bring dispersed and heterogeneous individuals to- ing costs by using less expensive construction techniques, rather than addressing more relevant cost issues. A rule of thumb derived from the authors' experience is that local regulations on land development may account for as much as 40 percent of low-income housing costs. 170 SLUM UPGRADING AND PARnCIPAnON gether to collaborate in a common venture, with no prior history of joint work, differing visions of what the new settlement should be like, and often few personal connections within the group.6 Expression of Community Demand. In the case of existing settlements, demands are usually complex and clearly articulated, and there is al- ready a history of attempts to cater to them. There may be an existing plan for the development of the settlement, or at least some form of shared vision among the residents. Spatial and behavioral constraints are usu- ally very challenging, however. In the case of new settlements, community demand usually focuses narrowly either on the plot or on the house itself, to the exclusion of almost everything else. Since sufficient land is usually available, spatial constraints are much less severe, but economic and financial constraints condition everything, since the time frame is usually much shorter than that of the gradual, step-by-step growth and improvement of an infor- mal settlement. Choosing the Appropriate Program Type. Local needs and circum- stances will normally dictate the choice of program type. Key factors in this regard are: * The relative frequency of squatter settlements versus informal land subdivisions versus tenement housing as the shelter alternative most used by the poor in the program area * Density of existing settlements, existing infrastructure and service levels, materials, quality and crowding of existing structures, and risk factors * The need for resettlement that an urban upgrading intervention is likely to generate, which is usually a function of the presence of existing structures in risk areas, of excessive horizontal density,7 and / or of the need to open access routes * The land tenure situation in existing settlements and the legal and political viability of land tenure regularization 6One way to foster involvement in such programs is to "contractualize" or formalize involvement. When people are selected to move into a new community, they can be asked to attend a community development dass, understand what their participatory obliga- tions are, and sign a community charter. 'The density of squatter settlements in the Guarapiranga basin, for example, some- times exceeds 1,000 persons per hectare, which is extremely high for a horizontal (one- to two-story) settlement pattern. It is often not possible to create a minimal road network and provide infrastructure without reducing this density, thereby creating a need for re- settlement. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STMATEGIES 171 * Land and trunk infrastructure availability near the program area or in locations that may be attractive to the client group, which is a precondition for effective resettlement * The overall policy environment and existing legal and regulatory constraints and opportunities * The socioeconomic situation of the residents of the target areas, subdivided by their different income levels and living conditions, and the indications thus gleaned regarding ability to pay and needed subsidy levels * Residents' willingness and ability to pay for basic infrastructure and services * The existing subsidy structure and the political viability of reform- ing it * The mix of available funding sources and their conditions and rela- tive advantages * Particular problems faced by women in the program area and spe- cific requirements the program would need to address through an appropriate gender strategy * Prevailing perceptions and political will regarding priority low-in- come communities to be tackled and types of initiatives to be in- cluded in the program. Table 4-1 provides an overview of the variables influencing the choice of program, and box 4-6 describes how these may be applied in practice using specific cases studies. Note that integrated upgrading, which in theory allows gradual implementation (as we have seen in box 4-5), nor- mally takes the form of comprehensive upgrading in practice. In the gradual implementation of integrated upgrading, a negotiated area development plan would be used as a blueprint for upgrading over a number of years, with gradual improvements following a logical se- quence and negotiated cost recovery targets. In actuality, gradual ap- proaches tend to be piecemeal, following no particular plan. Projects that do follow a negotiated plan are usually comprehensive upgrading projects. The sizable investments required by comprehensive upgrading are usu- ally made by a government. Usually, as in the case of Guarapiranga and Favela-Bairro, limited attention is paid to cost recovery, and the large subsidies that are provided are not well-targeted or transparent. Choosing People and Organizations to Work with the Program. De- termining the applicability of community-based shelter and infrastruc- ture development in a given situation, and the options for its implementation, requires an assessment of the local situation in terms of the local expertise, resources, and capacity. 172 SLUM UPGRADING AND PARTICIPATON Table 4-1. Key Variables Influencing Choice of Program Type Variable Program type and examples * Settlements are regularized in- Piecemeal upgrading (improvements are formal subdivisions with a grid added gradually over a long-term process, layout but without a negotiated plan) * Lack of vacant affordable land Examples: Tijuana, Ciudad Juarez, Bolivia * Public subsidy mechanism allo- cates small sum to each settle- ment each year * Squatter settlements with a Comprehensive upgrading (a wide range chaotic settlement pattem but of improvements according to a predefined no insoluble tenure problems area plan, as in integrated upgrading, but * Scarce availability of vacant undertaken in one go, usually in a time affordable land frame of about two years) * Large infrastructure deficit Examples: Guarapiranga, Novos Alagados, * Availability of significant Alvorada, Favela-Bairro amount of resources "in one go" and political decision to subsidize * Vacant affordable land Sites and services (mass production of * Finance for servicing this land serviced sites in large schemes for resettle- * Political decision to deliver ment of urban squatters; variant: sites and serviced land at scale services with basic starter housing units) Example: Integrated Serviced Land Project, South Africa * Vacant affordable land Sites with a plan (the Peruvian strategy of * Lack of finance for servicing lotes con tiza-surveyed and beaconed this land lots-defined by the 1961 Law of the * Political decision to deliver land Barriadas) at scale in a disciplined manner, Example: Villa El Salvador laying groundwork for gradual installation of infrastructure * Vacant affordable land New housing in new settlements (new * Small number of existing in- infrastructure and housing units are built formal settlements on empty land; variant: new housing in * Demand-side subsidy within available land in existing serviced areas) established housing finance Example: FUPROVI system FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 173 Variable Program type and examples * Degraded structures in serviced Redevelopment of degraded existing areas housing significant num- structures such as tenement buildings bers of urban poor Example: Don't Move, Improve, * Potential for negotiation with the Bronx, New York owners of existing structures * Availability of significant re- sources and political decision to subsidize * Significant self-help efforts in Technical assistance and credit for home low-income areas that lack expansion and improvement (form of technical guidance and access organized support to self-help housing to credit efforts that may be combined with up- * Demand for credit and techni- grading programs) cal assistance that can be stim- Examples: FUNHAVI-Cooperative Hous- ulated through well-targeted fi- ing Foundation, Ciudad Juarez; Desco nancial instruments (including Densification Program, Villa El Salvador savings products) and adequate social marketing strategies * Possible alliances with banks, microfinance institutions, and institutions able to provide technical assistance * Dense informal settlements Comprehensive upgrading with partial that need de-densification to verticalization on site (horizontal density deal with risk situations and lowered through partial removal of squat- improve access ter settlement and building of apartment * Severe lack of vacant afford- blocks on site; remainder of originalfavela able land is upgraded) * Large infrastructure deficit Example: Cingapura * Availability of significant re- sources and political decision to subsidize * Groups in settlements that can afford to move to apartment blocks Source: Authors' construction from field study data. 174 SLUM UPGRADING AND PARTICIPAnON Box 4-6. Choosing the Program Type The Brazil, Costa Rica, and Peru cases provide good examples of how different circumstances make for different choices regarding the type of program that is eventually selected. These three cases demonstrate the importance of land availability, demographic pressure, the existence of squatter settlements, and the availability of housing subsidies as factors shaping the choice of program type. In the case of Guarapiranga, the high frequency of squatter settlements and the scarce availability of suitably located land practically imposed the alternative of the comprehensive upgrading program. There were seri- ous legal constraints, but these were overcome through strong political will-specifically through a combination of environmental activism and pressure from local community-based organizations, leading to an un- precedented alliance between thefavela residents and middle-class envi- ronmentalists. The cost constraints of comprehensive upgrading of such a densely populated area were as serious as the legal constraints, but a political decision was made to mobilize the necessary resources with World Bank support. In the case of informal subdivisions, the problem of cost was not as serious, and the decision to upgrade was easier to make. In San Jose, where squatter settlements are not so predominant, the availability of suitably located land and the existence of a housing subsidy scheme make it possible to think of building new housing as a mass solution. The members of Costa Rica's housing associations are usually people who live in formal sector rental housing, and their first task upon establishing an association is looking for a suitable empty plot. The fact that they usually succeed in finding one, through a combination of their own efforts and political patronage, is testimony to the relatively ample availability of suitably located land in the San Jose metropolitan area. In Peru, where even more land was available than in San Jose (albeit without a housing subsidy) and where a specific legal framework for orderly land occupation by low-income people-the 1961 Law of the Barriadas-was in place, the alternative chosen was the creation of a new town in the desert. Villa El Salvador began with a layout and a develop- ment plan, and basic infrastructure and services were provided gradually over a span of more than two decades. The preliminary identification of program stakeholders and potential partners was carried out in Stage 1. What happens at this next stage is identification of the actual partners who will be involved in the design and rollout of the program, i.e., the people and organizations that will be directly involved in program activities. Many of them will be pro- gram stakeholders, while others may be selected and brought in from FOCUSING ON PROcESS: PRoGRAM DESIGN AND ROLLOUT STRATEGIES 175 elsewhere based upon their specific expertise. But from where are the program's partners to be drawn, and what do we expect them to do for us? In this regard, the agency promoting the program must do four things at this stage: 1. Get to know, and assess the potential to develop strategic alliances with, likely local partners, including those based in the targeted communities, in the private sector (both nonprofit and for-profit entities), and in other tiers of government. 2. Assess the type and level of contribution each partner may be able to provide to the program, such as concessional or commercial-based funding, technical assistance, or in-kind support.8 3. Assess the legal and regulatory environment regarding the man- dates of existing institutions as it relates to their authorized sectors of intervention, ability to effectively set and regulate tariffs and impose fines for noncompliance, procurement and contracting con- straints, as well as potential constraints regarding long-term fund- ing commitments for specific physical works in the targeted communities. Box 4-7 provides an example of the difficulties caused by existing institutional structures. 4. Assess the comparative advantages of existing institutions as a home for the program, and the constraints and advantages of the creation of a new agency to coordinate the program. Assessing Local Capacity and the Legal and Regulatory Environment. As- sessing local capacity, the legal and regulatory environment, and the comparative advantages of local institutions is important in identifying people and organizations to work with; specifically in identifying and comparing the relative advantages of agencies to provide program coor- dination and management services. The coordinating agency would need to be able to coordinate internal actors, such as the different departments of the municipality promoting the program; and external actors, such as participating community-based organizations, government agencies, utility companies, private foundations, NGOs, and for-profit private firms. The key questions to be asked in performing these assessments fall into several categories, as they relate to aspects of the specific program environment. On the socialfront: 8A proposal made in Tijuana for an in-kind contribution provided by a for-profit pri- vate sector partner would entail use of the maquiladora payroll for disbursing and collect- ing payments on microcredit loans provided by a private financial institution. 176 SLUM UPGRADING AND PARnCIPAnON Box 4-7. Coordinating Different Sectors of Intervention In the Guarapiranga upgrading project, one of the key challenges in imple- menting an integrated approach was coordinating the authorized sectors of intervention of the several agencies involved. In Brazil, responsibility for public thoroughfares, storm drainage, and solid waste collection and disposal rests with municipalities. Water and sanitation and electricity services are provided by utility companies; these are usually linked to the state level, and many are being privatized. In Guarapiranga, the coordi- nating role of the Sao Paulo municipality was recognized by all parties. Although this helped a great deal, the technical and procedural problems were still daunting. The intersections among the various types of infra- structure constituted the main technical problem to be faced. The routing of electricity cables through a settlement does not have to correspond with the road layout, and does not interferes much with the provision of other types of service infrastructure. On the other hand, streets and lanes provide the path for a large part of water supply and sewerage networks. Good storm drainage is important for the conserva- tion of road and sewerage infrastructure, and an effective solid waste management system is required to ensure that the sewers do not become choked with refuse and other solid wastes. Each of the agencies involved has its own technical standards and ap- provals procedures, and engineering design for each type of infrastruc- ture also had to take into account the requirements of all the other infrastructure types. This explains why, in the Guarapiranga project, the coordination of engineering services was a major cost item-comparable, in fact, to the cost of the engineering services themselves. Fortunately, the municipality's recognized coordination role allowed it to hire a single contractor for each area to carry out all the different works under the supervision of the different line agencies. This arrangement simplified matters considerably. * Who are the actors that work with communities in the program area? How well organized is each of them, and what is their level and record of achievement?9 9These questions refer to all social sectors, not just infrastructure and shelter. We are trying here to identify, beyond existing local actors with specific experience in upgrading and shelter, those who work with communities in other social sectors such as health and education and might have an interest in receiving training and thereby widening the scope of their activities. The reasoning is that organizations with community develop- ment know-how and experience, albeit in other sectors of activity, should be seen as po- tential resources for an upgrading program. FOCUSING ON PRocESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 177 * Are there any previous experiences with participatory mechanisms in shelter and infrastructure projects? If so, what was the rationale behind the approach utilized? What was the degree of participa- tion in these past projects? What institutions and organizations (gov- ernmental, community-based, nongovernmental, private for-profit) have that experience? * Which of the existing local actors would be interested in and ca- pable of providing social intermediation services? Who is familiar with the concept of socio-technical support? Are there agents whose credentials and record of achievement indicate that they could be- come good socio-technical support providers if they were to receive appropriate training? Basic credentials might include a proven track record working with the targeted communities (albeit in other sec- tors of intervention such as health or education). Such experiences usually provide an organization with an understanding of com- munity needs, capacities, priorities, leadership structure, and will- ingness and capacity to pay for certain services. * Is there any experience in contracting with these providers? If so, what was the experience (e.g., with the Ministry of Health, Ministry of Edu- cation, etc.)? What was the selection procedure? What were the con- tractual arrangements? What was the structure of compensation? On the technicalfront: * Is there core competence, at the local level, in the required technical areas (e.g. urban planning, engineering, urban economics, sociol- ogy, information and communication, social work)? Where is that competence located? * Beyond the people at the local level with academic knowledge of the core technical subjects, are there technicians with hands-on ex- perience in the application of such knowledge to urban upgrading and low-income housing projects? On the institutionalfront: * Is there any experience with area-based planning and management, as opposed to sector-based? If so, what was the rationale behind this approach? What lessons may be drawn from the experience? * Which of the existing agencies would be a likely coordinating agency? Would it be necessary to create a new body or agency for the purposes of the program? * Are political decisionmakers open to the idea of the creation of a new body or agency for the program, and are they willing to give it operational capacity and autonomy? Would the new agency have an adequate resource base? 178 SLUM UPGRADING AND PARnCIPATON What is the position of the line agencies? Would they be interested in and willing to work in a new format, under the coordination of a different entity? Is any one of the line agencies well-placed to be the coordinating agency, or is it better to propose a different entity altogether? On thefinancialfront: * What is the experience regarding cost recovery, taxation, subsidy administration, and loan recovery? What are the prevailing atti- tudes and political climate regarding these issues? * What kind of access does the community have to credit and sav- ings services, whether informally or formally provided, for micro- enterprise development, home improvement, new housing, or other purposes? * On the basis of existing practice, what are the likely paths that fi- nancial flows to and from the program would follow? What are the key bureaucratic obstacles? What are the main pitfalls to avoid in managing program resources? * On the basis of the above concerns-management of program re- sources, cost recovery, subsidy administration-which of the exist- ing institutions (public bodies or private institutions such as foundations) would be best placed to coordinate financial matters? * Does it make better sense to devolve financial management to a new body specifically created for the purposes of the program? No matter what entity is charged with managing program resources, two factors need to be taken into account: * Competing sources offer funding under different terms and condi- tions, and with different conditionalities or policy requirements attached to a loan or grant by the funding agency. These will influence both the choice of funding source and the entire program approach. The choice of funding source, with its specific features and requirements, may in turn influence the choice of entity to manage program resources. * Direct management of program resources by a government bureau- cracy, even at the local level, is usually cumbersome and time-con- suming, due to the existence of many onerous controls. Experience in Latin America has shown that it is often difficult to match the bureaucratic requirements of external funding agencies, whether bilateral or multilateral, and those of local administrations. This mismatch often results in long delays and even stalemate situations. Many programs have thus opted to create or use independent struc- tures such as NGOs or foundations that have government and civil society participation. Since these entities are legally outside the FOCUSING ON PROCESS: PRoGRAM DESIGN AND ROLLOUr STRATEGIES 179 government sphere, they are free to utilize private sector-like pro- curement, accounting, and auditing procedures, thereby enhanc- ing efficiency, effectiveness, and transparency. Key Features of a Coordinating Agency. In light of the above, the key characteristics to look for when selecting an agency to coordinate and manage a participatory urban upgrading program are the following: * An institutional mission and mandate that legally allows the agency to play the coordinating role * Core technical capacity in at least some of the disciplines involved and willingness to procure any elements that may be missing . A good track record of experience in area-based urban planning and management * Authoritativeness that makes it likely that other agencies will agree to work under its coordination * A good image and reputation for past achievements that make it a strong advocate and catalyst of resource mobilization for the program * Internal motivation and incentives to seek a coordinating role and play it effectively. Assigning Program Tasks. Answering the questions formulated in the previous section will help the program promoter visualize the dif- ferent possible scenarios regarding program structure. For each of the key functions-such as construction management, engineering, social intermediation, technical coordination among line agencies, and finan- cial coordination-the program promoter will need to identify appro- priate actors and explore various options. For instance, for each key function the promoting agency will need to decide whether to: * Create in-house capacity (as in Bolivia and Tijuana) * Work through an alliance of different government agencies and/ or infrastructure line agencies (as in Sao Paulo) * Work through NGOs, universities, or research institutions (as in Costa Rica and Peru) * Establish contractual arrangements or strategic alliances with for- profit private sector parties, such as providers of specialized ser- vices, utilities, financial institutions, building materials providers, etc. (as has happened in some measure in all the cases studied). Box 4-8 illustrates the variety of approaches to the division of labor found in the cases we have studied. Among the important decisions that will need to be made are: 180 SLUM UPGRADING AND PARnCIPATION Box 4-8. Approaches to Program Management * Bolivia. Municipalities have opted to create in-house capacity, cre- ating and staffing social development departments to handle the mechanisms of the People's Participation Law. * Brazil. At the program level, Guarapiranga was based on an alli- ance between municipalities and sector line agencies. Under the coordination of a program management unit at the state govern- ment level, each of the projects that composed the Guarapiranga program was run by a municipality (e.g., Sao Paulo, which took care of the urban upgrading project) or line agency (e.g., SABESP, the water utility, which built trunk infrastructure for wastewater collection and treatment). At the project level, in the case of the upgrading project, the municipality of Sao Paulo established a small high-level coordinating unit and hired for-profit private sector firms for all the necessary expertise and services. * Costa Rica. The government housing policy for the lowest income bracket is implemented by FUPROVI, an NGO. FUPROVI decided to build in-house capacity in all the sectoral disciplines (surveying, planning, engineering, social intermediation, legal and financial ser- vices, project management, construction management). This im- proves the coordination and interdisciplinarity of FUPROVI's work. FUPROVI occasionally hires outside professionals as private con- sultants when necessary. * Mexico. The municipality of.Tijuana decided to create in-house ca- pacity, at first at the central level and more recently at the level of delegations and subdelegations, for all tasks related to social inter- mediation and technical supervision. For future community infra- structure programs in Tijuana, the municipality has considered setting up a new organization-a foundation-as the coordinating agency and focal point of a public-private partnership, interacting with the delegations and subdelegations and organizing technical assistance, capacity-building, and resource flows. The foundation would not carry out all necessary tasks directly but would define procurement rules, ensure that all the participating agencies played their agreed roles, and provide overall supervision. * Villa El Salvador. A variety of approaches have been used in Villa El Salvador for the distribution of different project tasks. The most frequently used has been alliances of different public entities, each with a clearly defined role or set of roles, as in Sao Paulo. Unlike Sao Paulo, however, Villa El Salvador has not made extensive use of for- profit private sector expertise; NGOs, though, have been extensively involved and have been instrumental in providing badly needed tech- nical assistance to community organizations and local government. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 181 * Whether to create a new, independent agency or to manage the pro- gram under an existing structure * The extent to which it will be possible to rely on local actors for each of the key functions or necessary to bring in outside expertise. The answers to the above questions will depend on institutional, le- gal, regulatory, financial, and social constraints as well as on the avail- ability of qualified and motivated local actors. Program promoters will select their options based on their knowledge of local conditions, their assessment of the feasible level and degree of participation, and their estimation of capacity-building and technical assistance requirements. Institutional Optionsfor the Program Management Unit A key institutional issue is choosing an agency to lead the program and to ensure that the appropriate linkages to local government structures and other line agencies are in place. This issue is resolved in different ways in different situations. In many instances, the managing agency is an existing local government department; in other cases, a specific unit with special powers and resources is created within a local government agency. Yet another approach is the creation of an independent agency. Regardless of the option selected, the key function of the program management unit should be that of project promotion, coordinating agency, and clearinghouse, and not necessarily an agency that controls and executes everything. The diagrams in figures 4-1 through 4-5 illustrate the different flows of funds and program management arrangements that have been adopted in the cases we have studied. (Note that figure 4-5 reflects the complex relationships of the Villa El Salvador process over several de- cades and cannot really be considered a replicable program manage- ment arrangement.) Institutional Affiliation and Degree of Decentralization of the Program Management Unit Several options exist regarding the program management unit's institu- tional affiliation and degree of decentralization. For example, although the unit is usually located within the municipality, it can alternatively be managed by a line agency or NGO. Similarly, in terms of the extent of decentralization, it can operate from a central office, town hall, or a se- ries of smaller local offices close to the project areas. The choice among these alternatives should be based on the relations between the program 182 SLUM UPGRADING AND PARTICPATON Figure 4-1. Options for Flow of Funds, Contractual Relationships, and Program Management: Bolivia * Program design * Program promotion Capacity-building activities CENTRAL > > QBe < GOVERNMvIENT ' '?s +?S6 * Program man- CMC~ " agement unit °wX7og A . * Socio-technical 4 /z4S Q7cse ~;6 support MUNICIPALITY Planning . ln >oos es Design xplc oSx) _t * Construction * Maintenance COMMUNITY - +Contract t Flow of funds ~ ~O~' Contract 4 * Expression of demand « UCtUre C T T * Planning/ kurvk J L C CTOR ) supervision Construction Source: Authors' construction from field study data. Figure 4-2. Options for Flow of Funds, Contractual Relationships, and Program Management: Brazil ( DONOR FEEA *Financg GOVERNMENT *Program design *Supervision * Funding Program design os' ( MUNICIPALITY ) * Program promotion ~~~ ~~~ * ~~~Program manage- efsWss°si / ment unit * t;NxvcS I X s * Supervision COMMUTNITY xMCb Flow of U Contract * Maintenance fuinds ' 4 * Socio-technical * Expression of 'yO'po, support demand * Planning * Planning s' ,- CONTRACTOR * Construction supervision/ * Quality control Project management Source: Authors' construction from field study data. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 183 Figure 4-3. Options for Flow of Funds, Contractual Relationships, and Program Management: Costa Rica * Policy environment Promotion of assisted * Housing D mutual-help approach finance system to low-income housing * Political CENTRAL rPICe1O support to GOVERNMENT sdy Grant funding NGO in earlyoapp assistance+ + *Program design stages 12 Housing - *Program promotion subsidy :\OE' ( NGO - Programm ianagement t 2S°t-~~'ssCt _t.cK__ > ~unit *Socio-technical support - *Plannirig COMMUNITY ) 3p- Technical :Loans *Design ' asbsistance ' -*Technical-assistance *Construction CBridge financing * Project management *Trust fund management *Cash management -Working capital financing Source: Authors' construction from field study data. Figure 4-4. Options for Flow of Funds, Contractual Relationships, and Program Management: Mexico rFEDERAL & STATEA GOVERNMENTS ( CONTRACTOR ) l Earmarked budget Construction transfers (Ramo 33) Flow of l Contract funds I MNCAI * _ _ ~ ^> * Program promotion ( COMMUNITY ) * noOlOszb * Decentralized program management units * Grant funding * Requests work * Planning * 30% cash contribution * Design * Selects and hires contractor * Supervision * Collects cash contributions from residents * Adds own resources to federal * Manages 100% of project funds and state budget transfers * Helps oversee works Source: Authors' construction from field study data. 184 SLUM UPGRADING AND PARTICIPATION Figure 4-5. Options for Flow of Funds, Contractual Relationships, and Program Management: Peru , MUNICIPALITYJ Budget *Osi sr CENTRAL Atransfer Assists in GOVERNMENT ~~~~~ service C> 2A, provision . Program manage- ment unit *tioIn to * Socio-technical ( UTILITIES ConO - ( DISTRICT support pavi _ _ _ - MUNICIPALITY * Planning -~Service provision & use" . rastructure works Flow of o t t 4,es ,waXt9sei funds a Contract . Request for XS \ improvements COMMUNITY ) 5' * Oversees local CONTRACTOR government X expenditure tc4,s . 0Ssj \ ne Ne Technical assistance; grant and con- DONOR Technical assistance cessional funding grant and concessional funding Source: Authors' construction from field study data. partners and the political, technical, organizational, and intermediation capacities of the parties involved. It is important to realize that the differences among the various op- tions are also related to different levels of participation. A program man- agement unit that operates centrally within a governmental organization will probably work with lower levels of participation. As shared respon- sibility and the delegation of tasks and roles increase, the program's management must move closer to the private sector, civil society in gen- eral, and in particular the communities where projects are envisaged or proposed. This will invariably require decentralization, and there is a strong ar- gument for the delegation of program management to a new, autono- mous, ad hoc agency. Table 4-2 summarizes the position of the program management unit in each of the cases we have studied in terms of insti- tutional affiliation and degree of decentralization. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUr STRATEGIES 185 Table 4-2. Position of the Program Management Unit in the Cases Studied Case Location of unit Centralized/decentralized Bolivia Municipalities Centralized (Santa Cruz) Decentralized (Cochabamba) Brazil Municipalities Centralized Costa Rica NGO Centralized Mexico Municipality Centralized until recently, now decentralizeda Peru 1971-84: ABCOb Centralized until recently, now decentralized 1984 onwards: Municipality 'The management of Tijuana's community upgrading programs is now decentralized to the city's neighborhood administrative units: delegations and subdelegations. The man- agement of a similar program in Ciudad Juarez is centralized. bThe Self-Managed Urban Community of Villa El Salvador (CUAVES) is an ABCO which was so strong in the 1970s and early 1980s that it practically constituted a commu- nity-based local government entity. Source: Authors' construction from field study data. Advantages and Disadvantages of an Independent Program Management Unit The case for an independent agency, or at least one endowed with con- siderable operational autonomy, is a strong one. The FUPROVI example from Costa Rica (as described in chapter 8) shows that an NGO can be an effective coordinator and mediator, combining technical expertise and diplomatic and political skills. In the Guarapiranga case, an autonomous unit within the Department of Housing and Urban Development of the Sao Paulo municipality ensured the coordination of the urban upgrad- ing component. The unit has awarded and managed contracts to private sector firms for the provision of all necessary services. In Tijuana, the delegations have seen their degree of autonomy in managing community upgrading programs increase steadily over the years. The delegates and subdelegates play a central role in securing resources for their area, selecting and hiring social workers and engineers for socio-technical support teams, and managing individual projects. The main disadvantage of independent agencies and specific project management units endowed with special powers is that the acquired capacity may be lost once the project is over and the unit dismantled. In addition, staff members who are recruited to the unit usually command 186 SLUM UPGRADING AND PARnC'PATON higher salaries during the project, which causes jealousy and friction with their colleagues who remain in low-paying public service jobs. These people often have key roles to play in ensuring the flow of resources or other inputs to the project. But, since they are jealous of their better-paid colleagues in the program management unit, they may feel they have good reason to sabotage the program. For these reasons, this is one of the toughest choices in setting up a program's institutional structure. An independent program management unit may seem to be the only way to get the job done, but its drawbacks in terms of sustainability and capacity-building are apparent and very real, as summarized in table 4-3. Selecting a Program Format. The term program format refers to the kind of system and procedures adopted for project selection, resource flows, and the relationship between beneficiaries and implementing agencies. In our research, we identified three basic formats used in ur- ban upgrading programs throughout Latin America: Table 4-3. Advantages and Disadvantages of Independent Program Management Units Advantages Disadvantages * Significant operational advantages, * Better salaries and working condi- making them faster and more efficient tions generate jealousy and lack of cooperation * Less (or not at all) constrained by * Tend to operate in isolation and thus the bureaucratic obstacles typical of add no capacity to the public entities the public sector involved * Less subject to political interference . Risk to sustainability and a negative impact in the post-project phase: * Less affected by changes in political once the independent unit is dis- administrations and therefore better mantled, nothing takes its place, ,able to ensure continuity creating an institutional void * Unconstrained by public sector salary and career structures; are thus able to attract and retain high-quality staff * For the above reasons, have more external credibility Source: Authors' construction from field study data. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 187 * The social investment fund, or programmatic, format * The participatory budgeting format, a variant on the above in which resource allocation takes place at the local level * The comprehensive upgrading program format. A brief explanation of these formats follows. The Social Investment Fund, or Programmatic, Format. In the wake of the many social investment funds that have been organized in Latin America in recent years, some urban upgrading projects have set up a facility to receive and evaluate project proposals according to a set of predefined crite- ria, and fund and monitor the selected projects. This social investment fund format is generally used for nationwide programs, such as PROSANEAR in Brazil, with municipalities, utility companies, and NGOs presenting proposals to a central or provincial-level facility (see box 4-9). This approach has been called the programmatic format by Kessides (1997), who has ana- lyzed its application to water and sanitation programs. Another example of this format is the FUPROVI program in Costa Rica (see box 4-10). A problem with this program format arises when funding eligibility is restricted to municipalities and utility companies. In such cases, pro- gram performance is often marred by two factors: * Lack of experience or incentives for local governments and utilities to work with low-income settlements, which often translates into a lack of willingness to apply for funds earmarked for low-income settlement regularization and upgrading * Lack of capacity for proposal preparation and/or lack of credit- worthiness on the part of municipalities and utilities, which leads to the rejection of many proposals. The advantages of the social fund format are linked to its clear appli- cation process and streamlined project approval and funding procedure. Because a single agency is ultimately responsible for a program that is often nationwide or statewide, it can compare the quality and perfor- mance of many projects and establish benchmarks. Arguments against this format include the fact that the creation of a national-level indepen- dent agency to manage social funds and similar programs may be used as an attempt to "re-centralize" processes that had already been decen- tralized to the local level, and that it may detract from the development of public sector capacity by establishing a unit that functions under sepa- rate rules and conditions from the rest of the public sector. A variant on this format in which project proposals are presented by community organizations to municipalities is the participatory budgeting mechanism, which is presented below. 188 SLUM UPGRADING AND PARTICIPATION Box 4-9. Sodal Investment Fund Format The PROSANEAR Fadlity The Low-Income Urban Areas Water and Sanitation Program (PROSANEAR) is one of the examples of programmatic water and sanita- tion programs mentioned by Kessides (1997) which are set up along the lines of social investment funds. The PROSANEAR facility was organized in the mid-1990s following the success of the PROSANEAR program, which had pioneered the use of low-cost technology in almost 100 loca- tions in different parts of Brazil. The PROSANEAR facility provided access to soft loans to municipalities and water utilities for water supply and sanitation interventions in low-income urban areas. The Brazilian federal government, by making consistent funding available and delegating out- reach to municipalities and utilities and credit approval to the state level, had hoped to boost the levels of investment in urban upgrading projects in low-income urban areas. The impact of the new facility was lower than expected due to a combination of factors. In many cases, interested mu- nicipalities did not meet creditworthiness criteria or their proposals were not up to the standards established by the Federal Savings Bank. In other cases, the facility did not succeed in attracting the interest of large water utilities, which do not have a track record of working in low-income areas. The fact that this initiative fell short of expectations shows that the establishment of such a facility must be supported by capacity-building measures and stimulation of demand. Institutions and organizations that are likely project promoters must be made aware of the positive impacts such projects may produce and of the existence of methods that favor long-term sustainability. They must also be supported and trained in the preparation of proposals that follow participatory area-based planning methods. Participatory Budgeting Format. In participatory budgeting, government resources are allocated with the participation of organized communi- ties, through a structured series of meetings in each administrative area of a city. With few exceptions, it is used for the allocation of resources owned or managed by local government. This program format is based on the belief that a direct, rather than representative, democracy approach is more effective in ensuring that municipal resource allocation responds to community demands and aspirations. The way this format usually works is that local government first de- cides on the sum to be allocated to public works via participatory bud- geting-usually a set percentage of a municipality's investment budget for a given year. A certain sum is then allocated to each of the city's different administrative zones. The local government makes these FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 189 Box 4-10. Social Investment Fund Format: FUPROVI Costa Rica's FUPROVI acts in a manner analogous to social fund facilities, but its clients, rather than being municipalities or utilities, are housing associations. A candidate association contacts the organization, where- upon it receives a full briefing on the FUPROVI-assisted mutual-help sys- tem. Candidate associations are required to visit FUPROVI projects and have discussions with other associations that are currently working with FUPROVI. After this introduction, the candidate goes through a "dating" stage with FUPROVI, which usually takes a long-sometimes a very long-time (four years in the case of the Lagos de Lindora project). Dur- ing this time, associations explore other, potentially easier, routes before opting for the rigorous FUPROVI regime. Once they decide to work with FUPROVI and the contract with it is signed, the foundation provides associations with a full spectrum of capacity-building activities; social, technical, and administrative support; bridge financing; and legal assis- tance. The successful FUPROVI example shows that a funding facility for urban upgrading and shelter must be able to stimulate and organize demand and to offer (directly or through subcontracts) a whole gamut of capacity-building and technical assistance services. allocative decisions based on resource availability, demands, and op- portunities to invest in different parts of the city. Next, a series of public gatherings by zone is organized; at these, local citizens and organizations present requests and proposals, usually re- garding necessary public works such as stormwater drainage, access roads, road paving, or social facilities such as schools and clinics. At this stage, community requests are little more than indications of location and type of works required. They have not yet been the object of a tech- nical assessment or any design work. The proposals are priority ranked at the meetings. Next, the municipality's technical departments screen proposals for technical feasibility and establish preliminary cost estimates. Based upon this screening process, a list of priority public works is de- fined according to resource availability. This process, pioneered in the early 1990s by the city of Porto Alegre in southern Brazil, has been adopted by several other Brazilian cities, such as Belo Horizonte. Variations on participatory budgeting have been used in programs in Brazil, Bolivia, and Mexico. In Brazil, participatory budgeting is based on collection of requests and suggestions from the public, but lacks a true participatory area development planning process. Instead, public gatherings are held for each of the administrative regions of a city. These are of course much larger than a single settlement, which is the ideal 190 SLUM UPGRADING AND PARTCIPATON unit for participatory area planning. Nevertheless, the process of prior- ity setting may be deemed participatory, and is certainly a step forward from the conventional top-down approach, especially for works that are important for single neighborhoods but do not have citywide relevance. The area planning element is missing, however, and therefore priorities are set without a long-term vision of the development of each area. The example of Belo Horizonte, however, shows that participatory budgeting can be combined with participatory area development plan- ning. In Belo Horizonte, the drawbacks of selecting priority works in the absence of a coherent plan led to the adoption of a sort of participatory area development plan in broad strokes called Plano Global. Comprehensive Upgrading Program Format. This last program format entails definition of areas of intervention in advance in accordance with a predefined set of criteria and creating the needed conditions for a par- ticipatory area-based planning process to take place in each of them. In this format, the community infrastructure and shelter program takes the form of a comprehensive upgrading program for a predetermined part of a city, and each of its component projects is an upgrading project for a particular settlement. This format was used by the Guarapiranga program's settlement up- grading project, in which the favelas and illegal subdivisions that were thought to be the main cause of pollution by household wastes in the area of influence of a large-scale area-based environmental cleanup plan were selected for intervention. At a later stage, as discussed in chapter 7, more communities were included in the upgrading component, due to public pressure. In the formulation of the World Bank-funded CAMEBA informal settle- ment upgrading program in Caracas, Venezuela, where a large propor- tion of the population lives in dense squatter settlements, a set of criteria for project selection was developed to facilitate identification and prioritization of communities whose features corresponded to the program's objectives. It was decided to start with the barrios with the highest probability of success, so the program would establish credibil- ity and build capacity to tackle more difficult cases at a later stage. The criteria were aimed at ensuring that the program had sufficient time for t"The idea of integrated upgrading is that a negotiated area development plan taking all the different types of infrastructure into consideration becomes the blueprint for gradual upgrading, but does not necessarily mean that all related works will be undertaken at one time. When they are, this is usually referred to as comprehensive upgrading, which is therefore a particular kind of integrated upgrading. FocusING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 191 its learning curve and did not begin its activities by tackling the most difficult settlements, which would be an unnecessarily risky proposi- tion. The objective was to evaluate and score each settlement according to the criteria (see box 4-11), and, by attributing weights to each crite- rion, attribute to each settlement an overall score. The contiguous infor- mal settlement areas that had a higher proportion of higher scoring settlements were selected, since it was thought more advisable to inter- vene in all the settlements in a given zone, rather than intervening in isolated settlements throughout the city. Typical Sequence of Activities. 1. Collect existing information regarding the infrastructure and shel- ter needs of low-income communities and the existing social, tech- nical, environmental, institutional, economic, and financial constraints and opportunities at the local level. At this stage, the program design unit works basically with information made avail- able by the program's participating institutions. Such information, especially that relating specifically to the informal settlements them- selves, is often hard to come by, and a special information-gather- ing effort needs to be made to support program formulation, with assistance from the participating institutions.'" 2. Finalize identification of the program's key stakeholders and po- tential partners, and outline the key strategic alliances that will be the backbone of the program's structure. Partners need to be iden- tified within the communities, in the public sector, and in civil soci- ety. Also identify willing and able partners from the for-profit private sector (specialized service providers, microfinance institutions or commercial banks, small and medium-sized providers of infrastruc- ture, private utilities, materials and equipment providers, private landowners, etc.). 3. Identify potential financing sources and mechanisms for urban up- grading and shelter initiatives, along with their applicable terms and conditions. "One of the few cities where adequate information was available for program design from the outset is Caracas, where a major effort to gather and organize information on the city's barrios-the Plan Sectoral-was undertaken in 1993 and 1994 by a team from the Central University of Venezuela. The availability of this study was a major contribu- tion to the design of the CAMEBA program. The investment made in Caracas by the university to collect and organize the information paid off handsomely in terms of public benefits. Unfortunately, in most cases, no such information is available. 192 SLUM UPGRADNG AND PARTICIPATION Box 4-11. CAMEBA Program in Caracas, Venezuela: Subproject Selection Criteria * Socioeconomic situation. The prevalence of waterbome diseases and critical poverty, as evaluated by appropriate socioeconomic indicators, were considered criteria for settlement selection. * Level of community organization. Since the existence of a strong network of community-based organizations facilitates the adop- tion of a participatory approach, it is a good reason for selecting a settlement. * Land tenure situation. It was thought advisable to avoid settle- ments located on invaded private land due to legal obstacles to land tenure regularization, and instead to focus on settlements located on land belonging to the state, public statutory bodies, or compa- nies, which offer better conditions for tenure regularization. * Risk situations and need for resettlement. It was decided to avoid settlements that, due to occupation of high-risk areas or the need to open new access routes in high-slope areas, would require the re- moval and resettlement of a large proportion of the residents. * Land use constraints. Some informal settlements are located in ar- eas set aside by law for a specific use. In many instances, it is pos- sible to change land use laws or regulations, but in other cases, it is very difficult or undesirable to do so. An example of a situation in which it is difficult to justify a change in legislation is the case of the barrios that lie inside the El Avila National Park in Caracas. This park is the one nature reserve available to caraquenios, and it is unlikely that legislators would agree to compromise its integrity. * Overriding public interest. Some informal settlements are located in areas earmarked for large infrastructure of citywide, or even metropolitan, interest. Unless an alternative location can be found for the infrastructure, it is unwise to upgrade such settlements, since they will almost certainly have to be removed at a future date. A case in point is the linkage between the Cota 1000 freeway and the La Guaira highway in Caracas, which will almost certainly re- quire the removal of a large portion of the barrios that exist along the projected location of the new road. For this reason, it would not be appropriate to select those barrios for upgrading. * Existence of trunk infrastructure. It was thought that settlements located near existing spare capacity in terms of trunk infrastructure should receive priority, since investments will be more cost effective. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 193 4. Identify opportunities and constraints for developing participatory urban upgrading initiatives through analysis of the information gathered and through interviews with key local stakeholders. 5. Assess the existence, interest, and availability of appropriate local expertise through analysis of the information and interviews with key local stakeholders. 6. Develop alternative program features (type, scope, format, and structure) and implementation strategies based on the above. 7. Conduct a workshop with key stakeholders to examine the pros and cons of the various proposed institutional arrangements and implementation strategies and choose one to be explored in detail in Stage 3. Considerations before Moving On By the end of this stage and before undertaking the feasibility studies and program formulation stage, key stakeholders should have reached a consensus on the following: * The most advisable type and format of program to implement and a basic program outline, including types of actions to be under- taken and targeting criteria * Strategic alliances and institutional roles and responsibilities * The needed expertise and support services for subsequent phases of the program design cycle and how these would be recruited * Cost recovery strategies and subsidy design * Likely sources and uses of program funds. Stage 3. Feasibility Studies and Program Design In the prefeasibility stage described above, the program's main features were defined through data gathering, analysis, and discussions with key stakeholders. Next, feasibility studies need to be undertaken in each of the key areas of program design. This allows the program design unit to test the assumptions defined during the prefeasibility stage as well as the proposed program features, and to move on to detailed program design in collaboration with program stakeholders. Discussion of the results of the feasibility studies with key stakehold- ers leads to further definition of program features and procedures through the preparation of a preliminary version of a strategic plan and operat- ing manual. Program design is then finalized through a last round of 194 SLUM UPGRADING AND PARnCIPAnON discussions with key stakeholders, which leads to the final version of these two important documents.12 * The strategic plan provides the general program framework and stra- tegic context; outlines the program rationale; defines program fea- tures, design options, and institutional arrangements including roles and responsibilities of key stakeholders, sources and uses of fund- ing, and flow of funds arrangements. The program's major activi- ties are described, including project formulation, evaluation, and approval; procurement policies; and financial and administrative aspects. The strategic plan also spells out technical assistance and training requirements, cost recovery strategies, targeting criteria, monitoring arrangements and impact indicators, and administra- tive and logistical requirements. * The operating manual presents, in a clear and concise manner, the program's operating rules and procedures. It usually has annexes presenting terms of reference and templates for frequently used documentation. It presents technical standards and requirements for contractors and service providers, and describes the program's procurement procedures. In the case of programs based on the so- cial investment fund or participatory budgeting formats, it also spells out the specific procedures for receiving, evaluating, approv- ing, funding, contracting, and monitoring the implementation of project proposals presented by the community on the basis of a participatory area planning exercise. Objectives To define parameters and procedures for: * Program institutional and flow of funds arrangements, defining roles and responsibilities of participating institutions, and arrange- ments for program resource management * Targeting criteria (e.g., geographic, gender, income, sector) * Detailed criteria for project identification, building on the prelimi- nary criteria developed during the preceding prefeasibility stage and on the targeting criteria * Technology options to be used based on previous local experience and careful testing of any new technologies for compatibility with local conditions 12The contents of a typical strategic plan for an upgrading program and a typical oper- ating manual are in appendices A and B, respectively. FOCUSING ON PROCESS: PRoGRAM DESIGN AND ROLLOLrr STRATEGES 195 * Expected environmental impacts and the mitigating measures that will be needed * Involuntary resettlement strategies, including the definition of deliv- ery mechanisms for land and housing to cater to resettlement needs * Sources and uses of funding for the various program components * Subsidy structures and cost recovery strategies * Participatory strategies * Partnering with civil society and the for-profit private sector. Key Process Issues * Availability of baseline data, and especially of information on in- formal settlements, is a key issue in undertaking the appropriate range of feasibility studies. The information available on informal settlements-such as their delimitation, needs profile, willingness and capacity to pay, or social composition-is normally very lim- ited. To collect and organize such information will have a cost im- pact, and this needs to be taken into account when deciding on the level of resources to devote to the program design effort. * The existence of a strong core team operating at the local level is a key requirement for the feasibility studies and program formula- tion stage. If there is no appreciable local expertise on urban up- grading, it will need to be secured elsewhere. Such specific expertise, regardless of whether it is local, will have to be integrated into a local team whose members know the area, people, institutions, his- tory of institutional relations, and other local information relevant to the process. * Adequate resources and time need to be devoted at this stage if it is to lay a sound foundation for the program. Involving key stake- holders, for example, takes some time and requires the organiza- tion of workshops or similar public forums for the discussion and debate of specific issues. The process also needs to be made trans- parent and understandable to all stakeholders, which in turn re- quires the preparation of user-friendly documentation. All of this has a cost, but the investment made in careful formulation will cer- tainly add to the program's chances of success and help in avoid- ing costly mistakes. * Detailed feasibility studies are a major contribution to sound pro- gram design. In certain cases, however, local circumstances or re- source availability may make it impractical to undertake all the studies needed or desired. The program design unit must then make do with an analysis of indirect data so as to infer the necessary in- 196 SLUM UPGRADING AND PARrjCIPAnON formation.'3 As elsewhere, our recommendations in this section are based on good practice and are meant to be used with discernment, according to local needs and conditions. Typical Sequence of Activities Feasibility Studies. 1. Collect and systematically presentbaseline data for each component.'4 2. Conduct individual feasibility studies: * Legal and regulatory analysis, in which the legal and regula- tory framework is studied, obstacles to program implementa- tion are identified, and recommendations are made as to the appropriate course of action to deal with each obstacle (e.g., pro- moting settlement regularization and upgrading within the ex- isting framework or promoting the introduction of new legislation or procedures as appropriate). Legal and regulatory provisions to be studied include those that apply to land tenure, land subdi- vision, urban upgrading, and housing-e.g., the legal status of community-based organizations, building codes (and especially the relationship between existing engineering standards and those of any innovative technologies the program intends to use), lo- cal physical planning bylaws and regulations, land rights and land registration systems, and regulations for financial institu- tions which constrain the implementation of housing and infra- structure catering to the poor. * Social analysis, which looks at key features of the target com- munities, their history and level of organization, leadership struc- ture, presence of support organizations, area-based community organizations and special interest groups, the participation and '3For instance, a study on willingness and ability to pay for infrastructure and services is a valuable input when defining the subsidy structure and cost recovery strategy of a program. If local circumstances or resource availability make it impractical to undertake a full contingent valuation-based willingness to pay study, the program design unit may use an analysis of indirect data, such as current patterns of payment to water vendors, to infer the necessary information. This would certainly be a suboptimial solution, but prob- ably the best one available under the circumstances. "4In the prefeasibility stage, the program design unit works basically with information that is made available by the program's participating institutions. This allows the unit to identify information gaps and plan the information-gathering exercise that wiU be neces- sary in the later feasibility stage. FOCUSING ON PROCESS: PRoGRAM DESIGN AND ROLLOUT STRATEGIES 197 overall situation and requirements of women, and the community's main demands and expectations in relation to the program, with recommendations regarding the participatory strategy to be followed, in relation to the level and degree of par- ticipation to be pursued and the support structure that will be necessary. * Technical/environmental analysis, in which existing levels and main technological alternatives for infrastructure provision and their cost, suitability, labor requirements,'" and environmental impacts are analyzed and discussed with technicians from par- ticipating institutions and with local residents; recommendations are made as to the use of technological alternatives for each type of infrastructure; and the resettlement needs of the program are analyzed in relation to the presence of risk areas, removals re- lated to the need for new access routes or reduction of density in very crowded areas, etc. At this stage, the program design unit also needs to look into the availability of suitable land in or near the area to absorb the resettled population. * Institutional capacity analysis, in which the structure, functions, and levels of capacity of each institution in terms of equipment, human resources, technical and management experience, and knowledge and experience of participatory approaches are stud- ied in depth, and proposals are made regarding the impact of existing capacity on alternative institutional arrangements and required capacity-building activities. One of the key outputs of the institutional capacity analysis is the recommended institu- tional arrangement for the program, including the location and degree of decentralization of program management activities. * Economic analysis, including a profile of demand, a cost-ben- efit analysis (with sensitivity analysis), a least-cost analysis, and an analysis of the distribution of program benefits. Whenever possible, a willingness-to-pay and affordability study should also be undertaken. The scenarios developed by the economic analy- sis should be used to make recommendations regarding the sub- sidy structure and cost recovery strategy of the program.'6 "5The use of labor-intensive construction techniques allows urban upgrading and hous- ing programs to provide significant employment opportunities and should be pursued whenever possible. '6For a thorough treatment of economic analysis, see World Bank, Learning and Lead- ership Center and Operations Policy Department (1996). 198 SLUM UPGRADING AND PARnCIPATION * Financial analysis of the participating institutions, looking at their sources of revenue, financing mechanisms, and level and structure of debt to gauge the potential contributions each insti- tution will be able to make and recommend a financing structure and resource management arrangement for the program. 3. Develop a feasibility report, containing drafts of the strategic plan and operating manual. At a minimum, the feasibility report should include: * A summary of baseline information for the distinct program com- ponents * Identification of constraints and opportunities for the develop- ment of a participatory urban upgrading program * Measures to address specific constraints and make use of spe- cific opportunities * Institutional and flow of funds arrangements, including an out- line of the strategic alliances and commitments of each party * Preliminary identification of the technological options to be used and their cost implications * Preliminary list of geographic areas of intervention, with an out- line of the needed interventions both within and outside infor- mal settlement areas17 * Evaluation of involuntary resettlement needs and strategy to ad- dress these needs * List and proposed roles of key community-based, government, civil society, and for-profit private sector participants * Outline of a socio-technical support strategy, with a cost estimate * Outline of a technical assistance and capacity-building strategy, with a cost estimate * Cost estimate of investment requirements (within ±10 percent accuracy) * Funding and cost recovery arrangements * Rollout strategy for the program * Terms of reference for the development of more detailed ver- sions of any of the documents prepared during the feasibility studies, when needed * Terms of reference for developing contractual arrangements be- tween and among stakeholders "Informal settlement upgrading normally requires interventions outside the settlements themselves for the construction or renewal of the trunk infrastructure-roads, water and sewer mains, etc.-that connects settlements to the rest of the city. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 199 * Terms of reference to hire the needed expertise for the subse- quent stages. Participatory Program Formulation. Stakeholder participation in pro- gram formulation contributes to the enhancement of stakeholder own- ership of the program, demand-responsiveness of the arrangements, and the establishment of the strategic alliances that are the engine of many a successful program. For example, it is difficult to imagine that, if the mu- nicipality of Sao Paulo had not been involved in the design of the Guarapiranga program from the start, it would have assumed such a lead- ing role in the program's settlement upgrading component. The typical sequence of activities in participatory program formulation is as follows: 1. Finalize selection of key program stakeholders and partners from government, community, the for-profit private sector, and civil society. 2. Define and implement a strategy to disseminate and discuss feasi- bility study findings and impacts on program structure with po- tential governmental, community, civil society, for-profit private sector, and donor stakeholders and partners. 3. Establish working groups with key stakeholders and program part- ners to work on specific aspects of program formulation. 4. In collaboration with the key stakeholders and program partners, refine the preliminary version of the strategic plan. 5. Develop proposals for contractual arrangements with program partners from government, community, the for-profit private sec- tor, civil society, and the general public. 6. In collaboration with the key stakeholders and program partners, refine the preliminary version of the operating manual. 7. In collaboration with the program partners, develop a rollout strat- egy for the program (see Stage 5). Considerations before Moving On * The results of the feasibility studies and of the participatory pro- gram formulation exercise should be sufficient for a final decision to be reached by funding and implementing agencies on moving ahead with the program. The information thus gathered should al- low for the preparation and adoption of all the formal agreements that will be required in the specific circumstances of the program. It should also be sufficient to guide the program's start-up phase. * As soon as all formal approvals are obtained and a loan agreement (or other applicable document) is signed, the agencies concerned may move toward setting up the project management unit. It is 200 SLUM UPGRADING AND PARnCIPATION often the case that the existing program design unit responsible for program formulation is expanded and given additional capacity at this stage and converted into the program management unit. Stage 4. Establishing a Program Monitoring and Evaluation System Monitoring and evaluation, including measurement of program impact, provide essential feedback for the successful implementation of an ur- ban upgrading policy. In fact, one of the main reasons for the partial failure of many upgrading initiatives is the lack of a reliable monitoring and evaluation system that may sound an alarm when things are going less than well. On the other hand, the lack of emphasis on monitoring and evaluation makes it difficult to gauge the real impact of many projects that seem successful. It also makes them difficult to replicate, since there is rarely an audit trail or record of how decisions were made or actions that were taken, what the situation was before the project started, and what changes were brought about by the project. In this section, we provide a brief outline of the monitoring and evalu- ation system that needs to be established as an essential component of the design of an upgrading program. In so doing, we differentiate be- tween project monitoring and program monitoring. Monitoring and evalu- ation need to be undertaken as a regular feature of the projects that make up a program. Information from project monitoring and evaluation, coupled with that drawn from program-wide monitoring, will make up the program's monitoring and evaluation system. Objectives * To monitor the development of the program as a whole and of its component projects with regard to goals, time lines, and any un- foreseen circumstances that may occur. * To measure the impact of the program and of its component projects. * To implement a rapid problem identification system as well as a system for internal communications to the various stakeholders. * To facilitate evaluation procedures during and after activities through the definition of specific indicators. * To be able to correct the course of the program or of its component projects during their implementation according to reliable feedback. * To establish parameters in relation to cost, time requirements, per- formance of implementation arrangements and technological al- ternatives, etc., as a contribution to future upgrading activities in the same city and elsewhere. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 201 Key Process Issues In addition to daily control over project operations, deadlines, and any problems that may arise, the institution promoting a development pro- gram, or an administration responsible for policy implementation, should also perform periodic evaluations of the program or policy as a whole. Such evaluations are needed to gauge the results obtained by each stage of implementation of the program or policy within its economic, social, cultural, institutional, and environmental context. In this regard, the key process issues relate to different types of perfor- mance indicators. Specifically, they relate to indicators for: * Program monitoring in terms of input and output * Evaluating program outcomes, i.e., the impact of upgrading programs on living conditions * Project monitoring through effectiveness, efficiency, and pertinence indicators-which relate to input and output-and "reality moni- toring"-which relates to impact. Gauging the changes brought about by the project and its long-term impact is essential. One of the functions of monitoring and evaluation is to ensure that the resources devoted to a program are put to good use and that the program is competently managed, which is done by track- ing input and output. Monitoring and evaluation, however, must go beyond that to assess development impact. This is an assessment that can only be made long after the completion of each project, however. Programs that have a long-term perspective must go back to evaluate projects undertaken in their earlier years, and the time and resources needed to do so must be considered from the start in program design. Indicators for Program Monitoring. Angel (1999) defines 10 indica- tors for monitoring the progress of upgrading programs: * Program coverage structure: the proportion of households living in unauthorized settlements where the upgrading program has been fully implemented, partially implemented, planned, surveyed, and untouched. * Program coverage potential: the proportion of households living in unauthorized settlements where the program can be legally implemented. * Tenure registration structure: the proportion of housing units in unauthorized settlements with fully registered ownership docu- ments, partial registration in some approved form, and no registra- tion at all. 202 SLUM UPGRADING AND PARizCIPAnON * Program cost-to-income ratio: the ratio of the median cost per household of implementing the upgrading program and the me- dian household income in the city during the past year. * Program cost structure: the proportion of total program cost to date spent on overhead, surveying and planning, infrastructure, titling, social services, compensation to landowners, and resettlement. * Program time horizon: the time required to fully implement the program to serve all the population living in existing and antici- pated unauthorized housing, given the program implementation rate during the latest year. * Housing subsidy structure: the proportion of the total government subsidy to the housing sector (both on the books and off the books) allocated to urban upgrading, housing allowances, public and pub- lic-assisted housing, interest-rate subsidies, and tax credits. * Cost recovery rate: the percentage of the total cost of the program to date that has been recovered during the latest year. * Program decentralization structure: the proportion of total pro- gram cost to date spent by central government, transferred and spent by local government, transferred and spent by voluntary organiza- tions, and transferred and spent by communities. * Program privatization structure: the proportion of total program cost to date spent by government agencies, nongovernment agen- cies, the private sector, and as self-help work by members of the community. Indicators of Impact of Upgrading Programs on Housing Conditions. Angel (1999) notes that the impact of upgrading programs on housing conditions can be gauged, for example, through a before-and-after com- parison of housing conditions in a group of communities that under- went an upgrading process. He continues: A second form of linkage is a control-group comparison of housing condi- tions between communities which underwent an upgrading program and a control group of communities in similar circumstances which did not un- dergo such a program. A third, more analytical, form of linkage is econo- metric modeling, where variations in housing conditions-in different communities, cities or countries-are explained statistically through varia- tions in a number of other variables that describe the upgrading program. Typical indicators of housing conditions mentioned by Angel include the land price-to-income ratio, house value-to-income ratio, rent-to-in- come ratio, owner occupancy, credit-to-value ratio, indices of quality of construction and infrastructure, floor area per person, residential eco- nomic activity, and residential mobility. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 203 Indicators for Project Monitoring. A system of appropriate indica- tors must be developed for use in project monitoring. This system should comprise two types of indicators: * Those that allow a sort of "reality monitoring," which are the basis for an evaluation of impact . Those that look at effectiveness, efficiency, and pertinence, which relate to input and output. An appropriate balance should be soughtbetween input indicators (e.g., the length of pipe installed in a sewerage project), output indicators (e.g., the number of sewer connections installed), and impact indicators (e.g., a measurable reduction in the incidence of waterbome disease). Impact indicators are harder to measure, but essential in ensuring that a pro- gram or project gets its real job done. Statistics about road paving, for example, tell us nothing about access and mobility improvements for the poor if mentioned in isolation. As Angel (1999) notes, "monitoring the progress of upgrading programs tells us little about their impact." Reality Monitoring. All development programs or policies (and par- ticularly those that aim to improve informal settlements) can be seen as initiatives for fighting poverty and social exclusion as well as for strength- ening social capital (CERFE 1998). Indicators relative to reality monitor- ing should therefore be focused on three orders of macro-phenomena: poverty, social exclusion, and social capital. If we define poverty as a continued deprivation of the means of well- being over time, we could consider the following six points as poverty indicators, as a proportion of the target population: * Homes built with nonpermanent materials * Households that do not have access to safe water supplies * Households that do not have access to sanitation facilities * Economically active individuals with annual incomes lower than the income poverty line of the country in question * Children between the ages of 5 and 14 who do not attend school * Children who are malnourished. Obviously, not all changes recorded over time with regard to the con- ditions of poverty, social exclusion, and social capital can be considered solely as effects of the project being monitored. For example, if a project implements environmental sanitation activities and a clear improvement of health indicators is recorded, there will probably be a connection be- tween the two. In this situation, the variation of health indicators would measure, even if indirectly, the effects of the project. This first subsystem of indicators should make it possible to monitor the evolution of the 204 SLUM UPGRADING AND PARnaCPAnON economic, social, cultural, institutional, and environmental contexts and thereby gauge project impact, although it is well known that develop- ment impacts often take time to materialize. Effectiveness, Efficiency, and Pertinence Indicators. The second subsystem should be formed by specific indicators pertaining to the activities un- dertaken and their expected results. Obviously, these indicators can be conceived only in conjunction with the formulation of their correspond- ing activities. They should include: * Effectiveness indicators to (1) measure the level of execution of the various activities within a program or project (for example, in the case of constructing a sewerage system, one can measure the length of pipes installed in relation to the total to be installed; in a training activity, one can analyze the number of people who participated in specific activities in relation to the anticipated beneficiaries; etc.) and (2) measure the satisfaction of participants (or beneficiaries) regarding specific activities. * Efficiency indicators, which can be determined by comparing ac- tual costs with those budgeted for specific activities, actual time of implementation with the time frame originally proposed, and ac- tual costs with those incurred by analogous projects. * Pertinence indicators, which can be determined by linking the spe- cific outputs of the project to the variations in the related indicators in the first subsystem (for example, changes in the youth unem- ployment rate-an impact-would be related to the number of jobs created for youths by specific project activities-an output). By linking the various outputs produced by the program with social exclusion factors on the one hand and social capital factors on the other, it is possible to gauge the extent to which the activities of the program produce the kind of improvement in social indicators that was intended. Typical Sequence of Activities The development of the appropriate indicators needs to be an integral part of the program formulation exercise. The establishment of proce- dures for the regular collection of the information needed to measure these indicators needs to be envisaged and spelled out during the prepa- ration of the operating manual and taken into account by the program's management information system (see box 4-12). During the implementation period of each project, the system of indi- cators described above could be used as follows: FOCUSING ON PROCESS: PRoGRAM DESIGN AND ROLLOUT STRATEGIES 205 Box 4-12. Management Information Systems An appropriate management information system (MIS) is a key require- ment for effective monitoring and evaluation of program implementa- tion. One of the key tasks in the program formulation stage is to design an MIS that will allow program managers to act on sufficient and reliable information. A typical MIS would be composed of two main subsystems: a process subsystem and a management information subsystem. The process subsystem is comprised of eight modules that allow the program coordination unit to manage and process information from the full project cycle, from project identification to operations and maintenance: * Record and manage project requests * Request prioritization module * Request evaluation module * Project approval module * Procurement and contracting module * Supervision module * Accounting module * Ex-post evaluation module. The management information subsystem consists of six modules that allow the program coordination unit to manage and process general in- formation: * Targeting and programming module * Baseline information module * Program promotion module * Program budgeting module * Work assignment planning and workload control module * Performance and impact indicators module. * The reality monitoring indicators would be measured once a year. Secondary information sources would be tapped most of the time, although rapid on-site research would be conducted on an ad hoc basis. As mentioned above, the variations of the indicators would be evaluated. In this manner, indirect information on the develop- ment of the project can be obtained. * The efficiency, effectiveness, and pertinence indicators would be measured frequently based on the internal documentation of the project and through rapid on-site appraisal techniques. Special attention needs to be paid to the timely execution of monitor- ing activities. Delays can lead to a loss of control during project imple- mentation, with negative economic consequences and loss of impact. 206 SLUM UPGRADING AND PARTICIPATION Program monitoring-gathering and processing project implementation data and monitoring a set of indicators such as the ones suggested above- is one of the core functions of the program management unit. If indicators are well-designed and consistently monitored, stakeholders can be kept abreast of the program's development, and participatory evaluation tech- niques (see box 4-13) can be used to gauge the results obtained during each stage of implementation, to correct shortcomings in its operating strategy, and to adapt the program to changes in the circumstances in which it operates. Considerations before Moving On Before moving on to the program rollout and project implementation stage, it is essential to have a reliable monitoring and evaluation system firmly in place. The definition of responsibilities for data collection, pro- Box 4-13. Participatory Evaluation Participatory evaluation provides essential feedback on project imple- mentation and impact; it also increases community involvement and sense of ownership. The opinion of the residents about the progress and im- pacts of the project is invaluable, since they are both key actors and sub- ject to the change processes that upgrading sets in motion. Technicians and residents should be open to each individual's point of view. They also need to understand the importance of critical assessment of their own actions as well as those of others. In participatory evaluation, both the evaluators and the evaluated are subjects of the same common work, although in different roles and conditions. The evaluation will conclude a phase in the work, but will not conclude the process. Findings should be used as input for planning the next phase, as a basis for interventions in other areas, and as indicators of the resi- dents' progress toward autonomy and self-reliance. Some issues to be considered in participatory evaluation are highlighted below. In relation to the project * Objectives * Activities * Expected and achieved results * Positive and negative impacts * Aspects enhancing or obstructing community mobilization. In relation to the residents * Community identity: evaluation of people's investment in the project and perception of internal community dynamics, relation- ship to their surroundings, and level of solidarity FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 207 cessing, and storage is as important as the definition of good indicators. It is also important to estimate the cost of monitoring and evaluation activities and to include this in the program budget. Before moving on to the program rollout stage, the organizations promoting the program should have reached an agreement on the definition of responsibilities and on the sources of funding for monitoring and evaluation activities. Proper monitoring and evaluation are as important for the success of up- grading and housing programs as are physical investments, and it is essen- tial to ensure that the appropriate resources and capacity are in place. If monitoring and evaluation are an integral part of program activities from the start, it is easier to overcome the resistance of staff who often fear the threat posed by monitoring as a judgment on their performance. Finally, care should be taken not to waste resources by "overshooting the mark" by generating an excessive amount of data that will not be used. * Interpersonal relationships: dealing with differences of opinion and conflicts between residents and leaders and with external agents, as well as conflicts among the residents themselves * Sodal and political awareness: notions about rights and responsibilities * Critical ability: perceptions about the actions and services offered by the external agents and the role of the socio-technical support providers * Autonomy: identification of attitudes of self-reliance and initiative, and of attitudes of passivity and submission on the part of the community * Self-reliance of community organizations: movements toward fi- nancial and administrative autonomy of the representative bodies * Capability for self-criticism: perception of residents' own weak- nesses and willingness to overcome them. In relation to the services provided by external agents * Technicians' knowledge about the object of their work and ability to clarify residents' doubts concerning ongoing work * Coordination of groups by the technicians: ability to facilitate group activities and type of relationship established with the community * Critical ability of the technicians: perception of the dynamics within the community and in terms of relations with the other agents, and quality of services rendered * Capability for self-criticism: perception of the weaknesses of their technical actions and willingness to correct their course * Pertinence of the work: services that meet the real needs of the population * Quality of services: level of satisfaction with the services rendered. 208 SLUM UPGRADING AND PARnCiPAnON Stage 5. Rolling out the Program A good rollout strategy is essential for a successful program. The first year or so of operations usually needs to be devoted to setting up and testing the institutional and administrative machinery of the program. This should not be seen as a waste of time, but rather as an insurance policy on future performance. This section deals with the key issues to be addressed during program rollout, namely: * Administrative/operational issues, which have to do with build- ing central implementation capacity at the program level, by orga- nizing the program management unit, starting out small, and setting up a pool of service providers * Project/process issues, which have to do with building capacity in areas that are essential for the implementation of each of the projects that make up the program, i.e., setting up a social marketing strat- egy, participatory information gathering and analysis, participa- tory area development planning, and engineering and design. Organizing the Program Management Unit The first key issue to be addressed during the program rollout stage is to organize the program management unit-the agency that will direct and coordinate the process, and the relations between the different partners. As we have seen, the decision as to the institutional affiliation, loca- tion and degree of autonomy, and decentralization of program manage- ment functions is taken in the feasibility and program design stage, following the analysis and discussion of alternatives that takes place in the prefeasibility stage. In the program rollout stage, the agencies promoting the program need to recruit the necessary staff for the program management unit and pre- pare adequate facilities and logistics for its operation. The options in this regard are many and are directly influenced by the decisions made in regard to the institutional affiliation, location, and degree of autonomy and decentralization of the unit. A new, independent agency created solely for the purposes of the program will probably be located outside of the par- ticipating institutions and will have the opportunity to hire staff from the outside. On the other hand, when a program management unit is estab- lished within an existing agency, existing facilities and staff are normally utilized. Between these two extremes, many possible permutations and combinations are possible. The most common one combines new staff with existing staff, with some degree of use of existing facilities and logistics. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 209 An option that is often followed is to strengthen the existing program design unit, giving it the needed resources along with new management responsibilities. This approach has obvious advantages, shortening the program management unit's learning curve considerably, since the group that leads the program design effort is already familiar with all the stake- holders and program partners, and with the arrangements and proce- dures chosen and the reasons behind them. Starting out Small: The Importance of Pilot Projects At the start-up phase of an upgrading program, it is wise to devote the first year of operations to setting up and oiling the institutional machin- ery and to building capacity. This usually includes undertaking one or more pilot projects meant to test out the proposed methodology for project identification, planning, design, implementation, and monitoring. Urban upgrading is always complex, and it is a good practice to achieve scale through a series of incremental steps, which involves learning by doing, rather than trying to start a program already at scale. As noted previously, low-income communities usually have already been building their settlement for years, and some form of informal com- munity upgrading project already exists. By giving itself a little time to learn how best to relate to its target communities and coordinate the ac- tions of its stakeholders, a program increases its own chances of success. The number and location of pilot projects that are undertaken will depend upon the overall scale of the program. Efforts should therefore be made to undertake a number of pilots that are representative of the different types of areas in which the intervention is proposed, but care should be taken to ensure that the scale of the pilot project activities does not overwhelm a fledgling program management unit. Note that these pilot projects should be just that-test runs taken within the framework of a larger initiative. Too often, pilot projects are con- ducted as small projects intended to test out an approach or prove a point and are funded, staffed, and managed on a one-off basis. Although there is usually reference in pilot project proposals to future replication and scaling up, even successful pilot projects often find it difficult to generate sufficient interest and funding for follow-up initiatives. The frustrating result is that pilot projects are seldom scaled up and seldom reach critical mass. Furthermore, whatever good results they may achieve are ascribed by skeptics to particular circumstances that would not work at a larger scale. Therefore, when we refer to a pilot project, we mean an initiative undertaken by a program management unit that is consciously testing project methodologies for a larger initiative whose funding is already ensured. 210 SLUM UPGRADING AND PARTICIPATION Setting up a Pool of Service Providers One of the key concerns of the program rollout stage is to ensure that an adequate pool of service providers is available locally for the various tasks to be performed. The identification of these providers is relatively easy with regard to conventional tasks such as those related to construc- tion, but more difficult when it comes to project "software" aspects such as socio-technical support. Activities at this stage should therefore focus upon building local ca- pacity, either within the program management unit or in the local non- profit and for-profit private sector, ensuring the emergence of a sufficient number of organizations and practitioners with the necessary skills. The program can then hire the necessary expertise and operational support from this pool. The provider of socio-technical support may be the municipality (as in Tijuana), a private contractor (as in Guarapiranga), a nonprofit pri- vate contractor (like FUPROVI, in its work for the National Housing and Urban Development Institute in San Juan de Pavas), or an NGO that is itself the project promoter (as is the case for FUPROVI in its usual work). In the cases studied, we found that the existence of competing private organizations in service provision can make a program more account- able and demand-responsive. It can also enhance its efficiency and ef- fectiveness by letting the program management unit focus on strategy and coordination. If there is a clear and consistent procurement policy to ensure a level playing field and a steady flow of contracts, the work opportunities generated by a program are a strong factor in encourag- ing the establishment and development of a range of for-profit and non- profit private actors. However, it is usually necessary to "prime the pump" by publicizing the existence and key features of the program, as well as the specific opportunities it offers, and providing opportunities for capacity-building. A prime opportunity for capacity-building is of- fered by the implementation of pilot projects as described above. Who should be offered capacity-building opportunities? Normally, there are individuals and organizations that are identified during the program design phase as having qualifications, a background, and in- terest in community work that make them natural candidates. In addi- tion, it is advisable to seek and screen applications from other interested individuals and organizations both at the local level and farther afield. Successful service providers operating in other cities in the same coun- try, or even internationally if the size of the program justifies it, may also be brought into the project. This approach may contribute to faster de- velopment of the local capacity pool if they are required to operate with a local partner. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOLrr STRATEGIES 211 Once this initial screening process is completed, it will be possible to establish a list of prequalified service providers that can compete for the contracts generated by the program. The program management unit will need to establish and publicize a clear procurement policy and accom- panying procedures to ensure equal opportunities. It will also need to periodically revise and update the list of prequalified providers to add new providers and to disqualify existing providers with a poor perfor- mance record. As is seen from the experiences in the case studies, socio-technical support contracts may be awarded either by the program management unit or directly by community-based organizations. Direct community contracts enhance the demand-driven nature, the accountability, and the client orientation of the whole exercise. However, these will require a similar set of conditions, in terms of local capacity and representative structure, that apply to community management (as described in chap- ter 3). It may therefore be necessary to build capacity at the community level prior to pursuing a strategy of community-based contracts. In programs that adopt a social investment fund or participatory bud- geting format, the community will need to hire an intermediary organi- zation to help it design project proposals, which will be evaluated by the program management unit. This methodology has the advantage of "con- ditioning" the contract for socio-technical support during project imple- mentation to the success of the initial project proposal. It also provides the community with an opportunity to test the intermediary organiza- tion before a longer term commitment is made and provides an obvious incentive to the organization in terms of client orientation and level of performance. In programs that adopt the upgrading program format, the commu- nity would hire an intermediary organization to assist it throughout the project cycle. Setting up a Social Marketing Strategy The main steps in devising and establishing a social marketing strategy are outlined and discussed below. We begin with a discussion of social campaigns, one of the main instruments of social marketing, and move on to a discussion of communication planning, control and evaluation, and communication tools. Social Campaigns. The social marketing strategy of a program is nor- mally carried out through one or more social campaigns-organized com- munication efforts carried out by a program or project promoter. Social campaigns are aimed at stimulating participation and/or producing 212 SLUM UPGRADING AND PARnCIPAnON changes in the ideas, practices, and behavior of the target population. Such changes can be classified as cognitive changes, changes of behav- ior, and changes of values as described below. * Cognitive changes provide new information to people and raise their awareness level. They are brought about through campaigns to in- form or educate the target population, such as environmental edu- cation and adult literacy efforts. * Behavioral changes are more difficult to achieve than cognitive changes, because they involve changing deep-rooted personal and collective habits, learning new ones, and sustaining the new be- havior. Campaigns dealing with habits related to solid waste dis- posal, correct use of sanitation facilities, and personal hygiene are examples of campaigns aimed at behavioral changes. * The last category of changes refers to the change of deeply rooted val- ues and beliefs. Examples would be campaigns about family plan- ning or the importance of schooling. Social marketing uses segmentation, research, and direct communica- tion concepts to maximize the response of the various groups in a com- munity to social communication campaigns. These campaigns must be structured and oriented to the needs of each specific audience, includ- ing its socio-demographic characteristics, sociological profile, and be- havioral characteristics. They should also identify and target influential groups that may affect the success of the program or project. The objective of social marketing is more than simply transferring in- formation-it should also concern itself with the meaning and quality of its messages to be an effective tool for forging consensus among the com- munity and promoting desirable changes in perceptions and behavior. For example, if a project wants to stimulate participation-in addition to offering information about the possibilities and benefits available through the project-the content of the messages should be based on the factors that are known to motivate participation. Communication Planning. Communication planning is the founda- tion for the formulation of social marketing strategy and tactics. The development of the scope of communication work will be based on the results of participatory information gathering and analysis, particularly the information on key variables of the program; what it controls and is responsible for, its strengths and weaknesses, and an analysis of the ex- ternal environment in which it operates. The information on which communication planning will be based should be organized as follows: FocusiNG ON PROCESS: PROGRAM DESIGN AND ROLLOuT STRATEGIES 213 * Specific aims of the program and its processes * Social objectives and goals of the program * Dimension and coverage * Service criteria * Limitations of the program * Comparable experiences * Alternative methods for execution of an information and commu- nication campaign * Training requirements for social and technical teams to dissemi- nate information * The participatory strategy envisaged. The focus of a communication strategy can be the individual, groups in the community, or the target population as a whole. Success in dis- seminating new ideas and social practices and getting the target groups involved will be based on the knowledge of their objectives and aspira- tions, and on appropriate segmentation. Nevertheless, as the goals of the various communication campaigns undertaken by a program are different, depending on whether they seek information and mobiliza- tion for action, cognitive changes, or changes of behavior and even of values and beliefs, these goals will determine the tactics to be used. Relatively simple tactics are generally sufficient to bring about cogni- tive changes. However, to obtain mobilization for action, several cogni- tive tactics are required, followed by tactics that generate interest, create the willingness to act, and lead individuals to take action. Goals requir- ing changes of behavior demand, in addition, tactics that encourage the repetition of activity by experimentation (confirmation) and tactics that provide follow-up (to ensure continuity). Monitoring and Evaluation of the Communication Plan. Monitor- ing of the main indicators of means employed and results achieved is an essential mechanism that allows feedback and the reorientation of ac- tions toward the objectives of the program's social marketing strategy. The main aspects that are normally monitored are the following: * Performance and effectiveness of the strategy and the sequence of tactics: appropriateness of message, language, and medium; adequacy of contents and strategies regarding population profile and preferences * Performance of the agents of social marketing: flow of messages and mobility, dissemination of messages, uniformity of the mes- sages transmitted; engagement and motivation of the population * Responses of target population: assimilation of information, in- creased capacity to take initiatives, increased demand for informa- tion, engagement and motivation. 214 SLUM UPGRADING AND PARTCIPATION Communication Tools. * Personal contact. Often the most effective means of communica- tion, personal contact (e.g., word of mouth and house-to-house vis- its) is a crucial element of any communication strategy in housing and upgrading. Its importance is such that grassroots organizations, working with limited budgets, may achieve better results with it than through elaborate communication campaigns. * Signs, banners, placards, posters. Media of high visual impact, these transmit messages quickly for informative and educational campaigns. These may be placed in the streets, or on the walls of buildings, or in schools and religious and community centers. * Scale models, plans, thematic maps. These visual models can sup- port the dialogue between the technical team and the community in the initial presentation phases of the project and in the stages related to discussion and approval of alternative solutions and a general intervention plan. * Community newspaper. This reflects daily life in the community and reports and comments on local events. It may be a useful mecha- nism in establishing credibility with the population and transmit- ting messages rapidly. * Community/local radio. This is a medium of high impact and mass appeal. It transmits messages with great speed, which may be quickly passed on to other members of the community. * Loudspeakers. These are important for speed of communication, wide coverage, and flexibility in announcing community meetings at short notice. Loudspeakers may be fixed or mounted on vehicles for wide-ranging dissemination of messages. * Video and slide presentations. These types of media may be used for presentations for educational purposes, as a complement to other technical information for training, or as a means for stimulating discussion in focus groups. * Brochures, folders, leaflets, primers, manuals. These various tools provide different formats according to the type of message to be delivered to the public. They allow for accurate dissemination of a specific message and concepts. * Workshops. A workshop is an important mechanism for informa- tion exchange, discussion, and feedback, as well as interactive train- ing to promote capacity-building. The format of a workshop is highly flexible and may be adapted to suit the participants. * Direct mailing. Although this is a relatively expensive form of com- munication, it may be useful to send customized material by post to a specific audience that has been previously selected and targeted. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 215 * Didactic games. There is a wide range of games or group activities that can serve to stimulate learning and promote interaction and participation among community members. Participatory Information Gathering and Analysis As discussed in chapter 3, community-based information gathering and analysis is one of the key activities for participatory planning. The main steps in participatory information gathering and analysis are outlined and discussed below. Note that this section refers to information gathering and analysis at the project level, which is different and separate from the information- gathering exercise undertaken during program design. During the pro- gram rollout stage, the concern is to establish capacity for the participatory information gathering and analysis that will be an impor- tant activity for each of the program's component projects. The importance of this exercise should not be underestimated, so it is necessary to consider the capacity available for undertaking these ac- tivities. In particular, the availability of socio-technical support will be a crucial factor for a number of reasons, in particular to: * Clarify residents' queries * Represent the project and serve as a conduit for complaints and suggestions, referring the questioner to the appropriate authority where necessary * Respond and intervene rapidly to any internal or external conflicts. The availability throughout the project of on-call socio-technical sup- port to local residents from a social worker or technician is also impor- tant. This support must be available at easily accessible locations within or near the area and at specified times. Preliminary Information Gathering and Community Mobilization. First of all, a preliminary picture of the level of community organization and the community's priorities and aspirations needs to be drawn. This can be done in the following way: 1. A rapid investigation can be carried out by conducting interviews with key informants, such as those who lead neighborhood development or- ganizations, religious groups, sports dubs, or commercial organizations. 2. Once the interviews are completed, the participants are invited to evaluate the results together with the outside experts. In this man- ner, a more realistic picture of the situation, its opportunities and constraints, and the community's interest in the project emerges. 216 SLUM UPGRADING AND PARnCIPAnON 3. The next step is to inform and mobilize the community so as to coordinate the specific tasks associated with the formal collection of information through conduct of a diagnostic survey (see below for more information). This survey consists of qualitative interviews and assessments plus a quantitative social and physical census of the area, involving all residents. The objective during this phase is to communicate directly with as wide a range as possible of local residents, and not only with the lead- ers. This may be achieved by calling large meetings of specific social sectors and by announcing them through a variety of media (radio, mo- bile loudspeakers, posters, newspaper advertisements). The first general assembly is an important occasion to present the gen- eral goals of the project, its promoters, and the technical team with which the community will be dealing throughout the project. Participatory Diagnostic Survey. Data collection for the diagnostic sur- vey entails the use of several survey methods and sources to study the area's infrastructure and shelter problems while outlining its socioeconomic characteristics. Besides gathering information about the physical, economic, and social infrastructure, the survey also aims to document the community's development history, organization, and leadership profile as well as the avail- ability of economic and human resources that may be used during the project. The first task is to organize the information that is already available to the different organizations and entities promoting the project. Immedi- ately thereafter, the following instruments may be used. Quantitative Survey of the Physical and Socioeconomic Environment. If the project envisages a wide-ranging intervention, the quantitative survey is usually conducted in a census format in which all households are in- terviewed. This survey is preceded or done in tandem with an all-im- portant operation called enrollment.18 Each of the structures in the area of intervention receives a numbered identification tag that records the household or households inhabiting the structure. This identification tag is important, as it is the document that ensures participation in the up- grading project, and a copy is given to the head of each household. Any opportunists settling in the area after this time to take advantage of the upgrading project will not be eligible to participate; in this manner, the scope of the project is defined at the outset and remains constant long enough to enable the planning process to take root. "8Note that an information campaign about the enrollment initiative and the quantita- tive survey's objectives and mechanisms needs to be conducted prior to their undertak- ing. See the previous section, "Setting up a Social Marketing Strategy." FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 217 The quantitative survey of the physical environment usually begins by collecting data regarding housing and infrastructure, including: * Type of use and occupation of structure (e.g., commercial, residen- tial, owner-occupied, rented) * Duration of residential or commercial use * Access to footpath or road * Building materials and state of repair of structures * Existence and state of indoor plumbing, electricity outlets, and other facilities * Existence and state of repair of latrines or other means of sanitation * Existence and state of repair of legal or clandestine hookups to water supplies, sewers, and electricity * Existence of trunk infrastructure in or near the area * Risk situations. Physical survey data is complemented by the collection of socioeco- nomic data, which generally includes: * Age and sex of household members * Marital status of the head of the household * Literacy, level of instruction, profession, and employment of the members of the household * Sources and level of income, and household patterns of consump- tion and expenditure. A complete list of the information collected by the quantitative socio- economic survey is shown in box 4-14. Box 4-15 describes the tools that may be used during a participatory diagnostic survey for understand- ing the organization and profiles of community leaders. Data collection may be conducted either by community members or by interviewers from outside the community. In both cases, the key to success relates to the ability of interviewers to engage community mem- bers in the exercise and obtain access to local information and knowl- edge. The need to train community members to become interviewers may mean that it makes more sense to use trained and experienced out- siders for this task, but there are a number of advantages in using trained neighborhood interviewers, which include the following: * They can more easily establish trust and make themselves understood. * They can use the evenings for the interviews, when the majority of the heads of households are at home. * The interviewers become communicators / multipliers and resource persons for the project. 218 SLUM UPGRADING AND PARnCIPATON Box 4-14. Quantitative Socioeconomic Surveys Quantitative socioeconomic surveys can provide data that help clarify organization and leadership patterns and power relationships within an area, indicating the presence and influence of area leaders and commu- nity organizations. By mapping sectors using geographic information systems, areas under the influence of particular leaderships-as well as the presence and significance of community-based organizations-can be identified and analyzed. Examples of data collected by these surveys include the following: * Enrollment: enrollment numbers, by address and by head of house- hold; households and cohabiting households * Local organizations and leadership: institutions that provide assis- tance to the community, institutions through which local residents voice their demands, institutions attended by settlers, membership in local area-based organizations, membership in local specific-pur- pose community groups, membership of religious groups, atten- dance of community meetings, list of leaders by sector * Household socioeconomic features: household size and income, head of household marital status, households by household com- position, households by household income, households by per capita income, settlers' sex by age group, total households by sec- tor, number of people by years of schooling, number of people by profession, number of people by occupational status * Access to basic services: structures by modality of water supply, structures by means of water storage, structures by means of gar- bage disposal, structures by electric power use, structures by type of sanitation alternative * Housing quality: structures by predominant wall and floor materi- als, structures by number of rooms, structures by number of floors, structures by existence and type of bathroom * Occupancy patterns: structures by number of cohabiting families, structures by type of tenure (owned, ceded, rented), structures by time of occupation, structures by type of risk, structures and lots by type of use * Correlated indicators: predominant materials by duration of occu- pation, family income by family composition, predominant materi- als and risk situation by family income, income of head of household by sex, income of settlers by occupancy status and sex, per capita income by sex of head of household, per capita income by duration of occupation * Other: formal or informal providers of services (e.g., tanker trucks), businesses that work inside the community or hire from the com- munity, absentee landlords, vacant plots. FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 219 Box 4-15. Tools for Understanding Organization and Leadership Profiles The organization and leadership profile tries, with the assistance of for- mal and informal leaders and veteran residents, individually and/or in groups, to record the history of the community, recalling their main de- mands, movements, and struggles. This information provides insights into the process of land occupation, the most important stages of commu- nity development, and the main features of the dynamics of social rela- tions-including the power structure-over time. The main tools for creating these profiles are an interview outline and a set of observation criteria and techniques for focus groups. Unlike the quantitative survey based on questionnaires, the interview outline is semi- structured and serves as a tool to guide communication so that the point of view of the different social actors can be understood. Although the outline is open-ended, each question must fit within the general theoreti- cal and methodological framework of the investigation. Therefore, these interviews should be carried out by trained interviewers. The outline covers the following basic topics: . History of the settlement * Community organizations: demands and struggles * Participation in popular movements and committees * Main community demands . Intemal and external power structures and forces at play. During the interviews, the technical team takes note of respondents' comments, attitudes, and reactions to the interviewer's questions. It is important to capture spontaneous and informal reactions in order to complement the information about leadership. Because the quantitative survey process involves all households, it serves as an important opportunity to build social cohesion, which will influence mobilization. The act of counting and identifying each house- hold makes all residents responsible for the delimitation and care of the area covered by the project. This is the only real insurance against op- portunistic invasions into the area once news of the project spreads. Qualitative Interviews. These interviews provide information about the daily life of the neighborhood, the survival strategies adopted by the residents, cultural factors and cultural change, behavior and consump- tion and expenditure patterns, and expectations with regard to the project. This information is necessary for formulation of the project itself, as well 220 SLUM UPGRADING AND PARTCIPAnON as the development of its socio-technical support and communications strategy. The qualitative survey allows project promoters to have a bet- ter grasp of the "assets of the poor." This kind of knowledge is crucial, since, as mentioned above, the main business of a development project is precisely to strengthen the poor's asset base and their potential to con- tribute to the development process. Several methods may be used to conduct the qualitative survey, such as open or semi-structured interviews and various rapid assessment methods-e.g., focus groups, collective interviews, interviews with key informants, and direct observation through field visits. Survey respondents should be selected based on the following criteria: * They should be representative, not in the sense of political represen- tation (community organization or political party leaders), but in the sense of representing the types and categories that make up the community (such as heads of households, young men and women, workers in the trades or activities that are prevalent in the area). * They should have lived in the communityfor at least the lastfive years. * They should live in different parts of the area (spatial distribution of the informants is especially important in large, heterogeneous settle- ments). * They should represent different perspectives, preferably in equal num- bers, especially where there are antagonistic groups or conflicts (for example, between different political factions or different religious or ethnic groups). It is also useful to include people with a broad network of relations and who are widely known in the community because of their role or profession. These may be organizers of community or sporting activi- ties, religious leaders, political activists, trade union leaders, educators, or owners or managers of widely patronized collective services and stores. These participants can vary according to the type of information required and the activities envisaged for the project. Qualitative investigation permits us to fill in the rough outlines sketched by statistics, which tend to circumscribe and limit the analysis of the most entrenched causes of poverty. Examples of themes that may be examined qualitatively include: * History of the community * Migration patterns * Actions and behaviors in relation to the environment * Values and family relations * Family planning and health * Education, causes of failure at school, and school abandonment FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 221 * Domestic routines and division of labor * Consumption patterns and distribution of family expenses * Access to systems of formal and informal credit * Economic activities and home-based businesses (use of the home as a productive resource) * Forms of participation and community organization * Resource institutions such as community-based organizations, NGOs, charities, and public sector bodies operating in or near the area * Presence of the for-profit private sector in or near the area * Profile, legitimacy, and representativeness of the leadership * Aspirations and expectations of individuals and groups. This type of research requires experienced interviewers who know how to gather information through informal communication and can lead a group discussion or focus group. Geographic Information Systems (GIS). Information obtained through quantitative and qualitative surveys may be entered into a computer database and associated with a cartographic base of the area using GIS software. GIS permits the creation of thematic maps, which can be used to visualize geographical distribution and diagnose various types of problems related to a wide range of data including: * Environmental and social risk factors in the settlement * Availability and state of repair of infrastructure * Materials used for construction and the state of housing units * Different patterns of infrastructure availability and state of shelter within the settlement * Income distribution and social indicators * Household data and community leaders * External resource institutions operating within or near the communities * Private sector actors operating within or near the communities. These maps can be an extremely useful resource for a wide range of planning and monitoring activities. They can facilitate a readily under- standable synthesis of a variety of types of information, while allowing planners to visualize the different degrees of problem intensity across the area. They can also help local residents visualize and understand a range of problems during the presentation and discussion of the sur- veys with the community. An important caveat on the use of GIS is that, although these systems are relatively easy to set up in the framework of a development project, experience has shown that they are much more difficult to maintain and 222 SLUM UPGRADING AND PARICIPATION update after the project. This is unfortunate, since they are costly to imple- ment and can be an important planning and monitoring tool in the long run. To mitigate these potential problems, it is necessary to find a clear institutional home for the GIS and to make appropriate arrangements for access to the information and definition of the essential program tasks to be undertaken by the program management unit for maintenance of the database. Restitution of the Survey. A crucial step before the planning phase proper is the restitution of the diagnostic survey to the community. This is a process in which the results of the surveys are shared, discussed, and analyzed with the community. Meetings need to be organized with the community as a whole and with local area and special interest groups. There are a wide range of techniques that may be utilized to facilitate the workshops, which may involve small group discussions and ple- nary presentations by each group, as well as a wide range of instru- ments (from chalk and blackboard to thematic maps, murals, and flipcharts) which may help stimulate discussion. This participatory process allows people to influence and fully under- stand the diagnostic, so the community actively contributes to the survey's contents and acquires capacity for an educated analysis and approval of proposals in the planning stage. The process also builds awareness and responsibility, and helps overcome the "short-term syn- drome" in priority setting (i.e., when all the community wants is road paving or some other immediate and visible results). Participatory Area Development Planning The contents of the participatory area development plan were presented in chapter 3. In this section, we provide information on its development. The plan is based on the participatory process of information gathering and analysis described above and is developed by a committee of local residents with support from a social intermediation team usually con- sisting of planners, engineers, and social workers. From an operational standpoint, the key steps in preparing a partici- patory area development plan are the following: * Information gathering. This is a survey of the situation of the settle- ment and its inhabitants, covering physical aspects, existence and state of repair of infrastructure, service availability,.environmental aspects, land tenure status, and socioeconomic situation (as described above). * Participatory analysis of the information;. The information is or- ganized and analyzed by an interdisciplinary team and presented FOCuSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 223 to the community in a series of meetings with area-based and spe- cial interest groups (see previous section on Restitution of the Survey). * Identification of problems and priorities. Based upon an analysis of the information and discussions in the community meetings, a coherent pattern of problems and priorities emerges. * Identification and discussion of alternatives. Altematives for in- tervention are proposed and discussed in an interactive process in which the community, through established representation mecha- nisms, eventually reaches decisions that reflect real demand. * Choice of recommended alternatives. The discussion of alterna- tives leads to the choice of the recommended .options. The techni- cians involved ensure that the chosen alternatives are affordable and appropriate. * Final product. An agreed blueprint for the improvement of the area is developed, defining all relevant physical aspects as well as a logi- cal long-term sequence of activities for the improvement of the area in terms of its physical configuration and infrastructure and also in terms of basic services. Who Should Direct Participatory Planning? Many alternatives exist regarding coordination of participatory planning. At the project level, planning is normally coordinated by the organization providing socio- technical support. At the program level, a local urban policy bureau with overall responsibility for the participatory planning process may be a good candidate for managing the planning process as a whole. To facili- tate this bureau's task, institutional mechanisms and instruments to cre- ate conditions for involving the population in the definition and implementation of urban development strategies need to be developed (e.g., as in the several examples of participatory budgeting set forth in this book, including the Tijuana democratic planning system experience or Bolivia's People's Participation Law). Where should such a bureau be located? The focal point for area-based development planning is usually the municipality, and less often the water company or an NGO (such as FUPROVI or Red Habitat). Regard- less of where the coordination role is situated, utilities and other line agencies, public or private, must be involved throughout the identifica- tion and planning of upgrading projects. Direct project experience is often the catalyst for changes in public policy. In Belo Horizonte, for example, the concepts of integrated structural inter- vention and the participatory area development plan pioneered by the PROFAVELA program have been formally adopted by the city in its new master plan. The city has thereby acquired an instrument for the coordina- 224 SLUM UPGRADING AND PARTCIPATON tion of its sectoral interventions, all of which must make sense when con- fronted with each area's development plan. In a big city like Belo Horizonte, the management of all the necessary physical and socioeconomic informa- tion has required the introduction of GIS, which in turn has led to the de- velopment of significant information management capabilities. Engineering and Physical Design Aspects The work of planners, engineers, and designers needs to conform to the indications of the participatory planning process, and they must work under close coordination and guidance of the interdisciplinary socio- technical support team. Their work also needs to take into account two key factors for the design of an urban upgrading intervention: * The need to strengthen existing and create new physical linkages- access routes and connections to urban services-between the in- formal settlement and the centralized urban infrastructure. This is a crucial factor for integrating the informal settlement into the city as a whole. * The need to preserve the existing stock of buildings and infrastruc- ture as much as possible. However substandard this stock may be, it represents the effort and investment of local residents over the years and is not easily replaced. Planners and engineers working in urban upgrading should therefore use the existing settlement as their point of departure for the design pro- cess. This requires an appreciation of the specific physical features of informal settlements and an ability to develop creative and innovative solutions. Professionals involved in urban upgrading must therefore have ac- cess to a large repertoire of technological options and know which to use in each situation. The level of skills required for this kind of work is actually higher than that normally required by conventional situations in the formal city, which is compounded by the fact that a basic under- standing of informal sector social dynamics is also required. The degree and quality of community participation in the definition of urban and building design and choice of technology depends on the degree to which the work of engineers and designers is linked to that of the socio-technical support team, and on the degree to which the latter effectively presents the options and promotes discussions with repre- sentative groups within the settlement. It will also depend on the effectiveness of the methodology and tech- niques used by the socio-technical support provider. Obviously, respon- siveness to real and perceived needs and community demand will FOCUSING ON PROCESS: PROGRAM DESIGN AND ROLLOUT STRATEGIES 225 depend on the degree and quality of participation. More opportunities for discussion, and more open and better informed discussions, will help ensure a better level of understanding on the part of residents and tech- nicians of the linkages between different urban functions and between the settlement and its surroundings. Participation in the Definition of Standards and Choice of Technology Definition of standards and choice of technology are directly related to levels of service and also, obviously, to service costs. This is why it is very important to inform local residents about the implications of each technology in terms of cost and level of service and to involve them in technology choice. These discussions will lead to informed decisions about tariffs, user fees, and subsidy levels. A participatory planning pro- cess that does not address these issues poses a direct threat to future cost recovery. In general, methodologies that are based on direct beneficiary involvement in managing the construction process, such as in the case of FUPROVI, are more conducive to such discussions from an early stage. If a lower level of participation is envisaged, discussions about choice of technology and cost and service levels must be included in the analysis and negotiation of alternatives during the participatory planning process. Besides the capital cost, the choice of technology is often influenced by its specific implementation features, as in the case of FUPROVI's Mansiones project, where prefab panels were too heavy to be moved by the women who constituted the majority of the workforce and were re- placed by concrete blocks. Another factor to be taken into account is the labor requirements of different technologies, both in the construction stage and for operation and maintenance, since the use of labor-inten- sive technologies has a proven positive impact in terms of employment and income generation. The choice of technology requires an iterative process between the community and the technicians to ensure that demand and supply meet.'9 19Fabrice Henry, of the Inter-American Development Bank, provided the following ex- ample. In a recent low-income water supply project in Haiti, the community and the engineers met three times to look at the project design and see what could be done to ensure that project costs would be more in line with what the community could afford. This required good communication skills on the part of the engineers and a willingness to understand on the part of the community-and patience on both sides. The engineers came up with a simplified cost table explaining how each system component contributed to the costs; the community was presented with several levels of service and a price tag for each level. At the end, a consensus was arrived at, and the service level adopted proved to be both affordable to the community and in line with its aspirations. This itera- tive process was critical to ensuring that the community understood what it was paying for. 226 SLUM UPGRADING AND PARTICIPATION One factor that should be taken into careful consideration by projects that produce shelter units is the variety of uses to which a house is put and the need to add floors and otherwise increase available space in existing units. Some of the prefab technologies in use in Costa Rica, for instance, will not allow the addition of a second floor, which lowers upfront cost but severely limits a family's future options and precludes densification of existing settlements. Densification is often consciously pursued by upgrading or home improvement projects, as it is one of the best alternatives to urban sprawl and burgeoning infrastructure defi- cits. Although dictated by cost, which is obviously a very real and seri- ous constraint, using construction technologies that preclude densification is a decision that may have negative overall impacts and come to be regretted in the future. Design That Takes into Account Belonging and Ownership People participate in activities to the extent that they feel they belong. Participatory projects thus need to transmit messages that strengthen a sense of social ownership, both at the level of primary groups (families, neighbors) and on a secondary level (solidarity, citizenship). Human beings perceive certain architectural contexts as emotionally stimulating and others as meaningless and anonymous. Thus, the de- sign of people's living spaces-both housing and public spaces-affects their psychological structure and their social relations. The fact that dwellers can recognize references of significance and familiar use in their environment directly influences the quality of the social relations they develop in this space. The resistance they exhibit in the face of reloca- tion, even a relocation to a much better housing option, reflects both the desire to avoid the inconvenience of a move as well as the sense of be- longing that they have attached to the functions and meaning of their original environment. Programs such as Rio's Favela-Bairro and Guarapiranga have at- tempted to take these considerations into account by devoting attention to the design and quality of public spaces and urban equipment, by cre- ating incentives for people to improve such elements as the external fin- ish of their houses, and by devising creative solutions with viable costs. In this way, the programs have attained a greater identification of the inhabitants with their environment and ultimately have achieved a higher level of participation and sustainability. 5 Scaling Up: The Policy Level In spite of the many successful examples of participatory urban upgrad- ing in Latin America, most instances have been limited to pilot initia- tives or scattered interventions. (The Guarapiranga program in Sao Paulo and Rio de Janeiro's Favela-Bairro program are notable exceptions.) Though these various initiatives have increased access to essential ser- vices and improved living conditions in certain limited areas, they have failed to address the problems of the informal city at a scale that would make any decisive difference. Informal settlements have a significant presence in most Latin American cities. For instance, about 50 percent of Venezuela's urban population lives in barrios (1.2 million people in met- ropolitan Caracas alone). In Brazil's metropolitan areas, the percentage of the population living in favelas or illegal subdivisions ranges from roughly 15 percent in Porto Alegre to roughly 50 percent in Recife. Other examples abound throughout the region. Reaching a scale that would make a difference means establishing programs that would cater to hun- dreds of thousands of people. In this chapter, we outline the factors needed to scale up current ini- tiatives and set the stage for sustained and successful long-term upgrad- ing efforts across Latin America. These factors are summarized in box 5-1 and detailed in the following subsections. Political Will None of the other preconditions, discussed below, for large-scale up- grading can be achieved without political will. Political will, expressed by both the government and society as a whole, is essential for the pro- motion of large-scale urban upgrading with community participation. 227 228 SLUM UPGRADING AND PARTcIPATIoN Box 5-1. Conditions for Success and Scaling Up What are the criteria for success in an urban upgrading intervention? * Impact in terms of improvements in health, quality of life, and the local environment * Ability to go to scale and stay focused on the target population * Long-term sustainability of social, environmental, technical, and economic benefits * Ability of program participants to fulfill their obligations in a timely and cost-effective manner * Ability to leverage government and donor funding while allocat- ing risks to those program participants best able to assess and man- age them * Ability to minimize transaction costs faced by program stakehold- ers regarding project design and implementation What can be considered meaningful scale? * Program reaches at least 10 percent of the city's low-income popu- lation What are the key factors that ensure successful urban upgrading and low-income housing at the necessary scale? * Political will, initially and over time, to develop and proactively implement the policies and institutional framework needed to ef- fect change and mobilize the subsidy funding needed for urban upgrading In Recife, Brazil, for example, the Plan for the Regularization and Ur- banization of Special Zones of Social Interest (PREZEIS) program had established a conducive legal, regulatory, and methodological frame- work for participatory upgrading by the mid-1980s, and the program seemed ready to go to scale. Instead, it went on to languish for more than a decade due to a lack of political will on the part of government and a lack of collective pressure placed on government by local society; these factors in turn resulted in a lack of interest and a lack of funding. Similarly, in the Belo Horizonte case, also in Brazil, the conducive legal, regulatory, and institutional framework that was established in the 1980s was not followed up by a clear political decision to undertake mass up- grading. A key aspect of political will, at least initially, seems to be the presence of a charismatic champion who is willing to fight the battles and share the power. Clear examples of this in the cases we have studied were General Velasco's role in the beginning stages of Villa El Salvador, Presi- SCAUNG UP: THE PoucY LEVEL 229 * A citywide urban upgrading policy, supported by an appropriate national policy environment and a conducive national and local legal and regulatory framework . Capacity for area-based needs assessment, planning, and imple- mentation * Subsidy structures and cost recovery strategies that enhance finan- cial sustainability and reduce the need for subsidies, allowing gov- ernments to do more with limited resources * Land release mechanisms and shelter alternatives for resettlement, including systematic land tenure regularization * Appropriate mechanisms to collect, process, and update informa- tion on the informal city * Careful selection of program format: demand-driven programs, but with a strong supply mechanism and strong coordination * Strategic alliances with the private sector and civil society to facili- tate the affordability of and access to the material, capital, and infor- mational inputs required for community infrastructure and housing development * Development of appropriate institutional arrangements that facili- tate cost-effective interventions, transparent allocation of resources, and ability to respond to varying demands and capacities within different communities initially and over time * Development of a critical mass of local capabilities to carry out the various specialized tasks involved in urban upgrading and low- income housing dent Sanchez de Lozada's role in the design and implementation of Bolivia's People's Participation Law, and President Oscar Arias's role in the launching of the housing subsidy scheme in Costa Rica. In all these cases, the personal involvement and enthusiasm of the country's high- est political authority was a critical factor in moving upgrading to scale. Over the longer haul, as champions come and go, political will can be maintained and even enhanced via institutional mechanisms that pro- vide incentives for organizations and individuals to stay the course. As one Colombian mayor told us, "By training local leaders in manage- ment skills and putting them in charge of local works projects, we were able to execute 120 projects in 18 months. I had the reputation for being the 'super executive mayor'-which is ironic, for had it actually been the administration attempting to do the executing, we certainly would have got nothing like that amount done." 230 SLUM UPGRADING AND PARTICIPATION Policy Environment and a Citywide Upgrading Strategy There is an urgent need to capitalize on successful experiences to set up favorable citywide policy frameworks for upgrading projects in as many cities as possible. In many cities, the constraints experienced for the scal- ing-up of urban upgrading efforts have been primarily connected to policy as well as legal, institutional, and informational issues rather than financial problems. Experience suggests that such programs can be af- fordable for both the government and the community, as investment in basic tertiary infrastructure for urban populations currently lacking it is estimated to cost only 0.2 to 0.5 percent of gross domestic product (GDP) over 15 years.' Once the decision is made to pursue informal settlement upgrading as an element in a poverty reduction and social inclusion strategy, a city needs to: * Build an appropriate information base on informal settlements. The example of the 1995 Plan Sectorial by the Central University of Venezuela which delimits, names, and describes the barrios of Caracas, assessing their needs and estimating costs at various lev- els of intervention, could be followed in this regard. The geographic information system developed by the municipality of Tijuana is another good example of the efforts made by a city to build an ap- propriate information base on its informal settlements. * Eliminate legal, regulatory, and procedural bottlenecks that im- pose requirements on buildings and land use that are not appropri- ate to local conditions and that make it impossible to upgrade existing informal settlements without a high degree of removal and resettlement. Peru pioneered the adoption of barrio-friendly legis- lation in 1961 with its Law of the Barriadas. The two Brazilian in- novations of the early 1980s, the PROFAVELA legislation in Belo Horizonte and the PREZEIS legislation in Recife, are still valid models. There are formal and informal dimensions involved here. The formal elements include the laws, codes, and regulations that structure the interaction among the various program stakeholders, from national constitutions down to contract law and budgeting regulations. The informal dimensions are the uncodified norms and 'This figure reflects the incremental investment cost of secondary works only; it ex- cludes costs for expanding primary (trunk) and secondary infrastructure networks, which would approximately double the range of expenditures. Operations and maintenance, technical assistance, and community mobilization would also be additional. The range is based on various regional unit investment costs and assumed settlement densities (World Bank 1996a). SCALING UP: THE PoucY LEVEL 231 attitudes that underpin the formal rules and determine how those rules are actually interpreted. Politics and power structures clearly come to the fore in this context, as do the deeply rooted cultural factors that support such structures: whether there is a culture of public service or citizenship rights, for example; or whether the public and private actors have good, bad, or any experience in working together and the reciprocal attitudes they have shaped. The combination of formal and informal factors provides the basis for the incentive structure for participatory initiatives and creates an environment that can be either helpful or obstructive. * Build a plano y plan (beaconed sites plus a development plan) strat- egy for informal settlements, i.e., promote the preparation of partici- patory development plans (plan) and physical plans (plano) for each settlement. This has proved to be a major catalyst for community or- ganization, besides being essential to long-term development and in- vestment planning, as is clearly shown by the Peruvian example of Villa El Salvador. Having a plano y plan is also important in ensuring that isolated works gradually coalesce into a coherent whole. * Establish funding arrangements with a built-in long-term per- spective. Upgrading processes are complex and usually take place over extended periods of time. In a citywide strategy, it is neces- sary to establish a successful track record in a few areas before a program can consider itself to have consolidated a methodology that allows it to go to scale. At the same time, the sheer magnitude of the problem in most Latin American cities requires a long-term sustained effort. Flow of funds arrangements need to take this into account. The adaptable lending approaches emerging from the rep- ertoire of international donors could be an answer to this problem.2 Another interesting approach is the Bolivian mechanism of the People's Participation Law, through which a steady funding stream to municipalities is established. 2With adaptable lending, a program framework is set up and finance is provided for the first two years of operation, with the understanding that the success of this initial stage will lead to further funding for program continuation. Any adjustments in program design or procedure may be carried out before the subsequent stage starts. All the lengthy and cumbersome approval procedures that have been carried out for the first stage re- main valid, and subsequent stages can be authorized through a much simpler procedure. This approach is ideal for a long-term urban upgrading process since it allows the process to continue for as long a time span as needed, and funding can be channeled according to actual requirements instead of having to conform to a predetermined plan developed and approved years before. 232 SLUM UPGRADING AND PARTICIPATION Area-Based Needs Assessment, Planning, and Implementation An integrated, area-based approach to needs assessment, planning, and implementation is required to ensure an efficient use of financial and technical resources, while maximizing the community's willingness to participate. A broad long-term vision of the development of the settle- ment or area of intervention, rather than the particular requirements of any single type of infrastructure, needs to be the axis and connecting thread of the planning of an urban upgrading project, especially in the case of squatter settlements. Municipal infrastructure is usually built and operated by line agen- cies that specialize in one kind of infrastructure: roads, stormwater drain- age, water supply, sanitation, light and power, etc. Such agencies frequently report to different political levels. Roads and stormwater drainage are usually handled by local governments; water, sanitation, and electricity are often under state or provincial responsibility. Water and sanitation are often the responsibility of a sole agency, but in many cases they are handled separately. Land and housing are normally dealt with by different agencies, and often simultaneously at the municipal, provincial, and central levels. In a context of growing private sector in- volvement in service provision, electricity services are being privatized faster than water and sanitation. The agencies that are being set up for utility regulation report to the provincial, state, or central government level, and less frequently to the local government level. The line agency model has worked reasonably well in most industri- alized country cities and in the formal parts of developing country cit- ies. One of its weak points is that different line agencies usually find it difficult to take coordinated action. In the formal city, this merely leads to various forms of inefficiency; in the informal city, such a lack of coor- dination causes problems that are much more serious. Especially in the case of squatter settlements, it frequently means that projects simply cannot be implemented, or that project benefits will be very difficult to operate and maintain. The reason behind this failing is that there are many complex interac- tions among the different branches of infrastructure. For instance, if sew- erage infrastructure is built in an area with stormwater drainage problems, this will jeopardize the operation of the sewerage. Rainwater will penetrate the sewers, often aided by residents who see the sewers as a means of solving the drainage problem. In time, the sewers will be clogged by the sediments carried by rainwater. At the same time, waste- water treatment facilities will become swamped by rainwater, leading to constant operational problems. Moreover, erosion linked to the lack SCALING UP: THE PoucY LEVEL 233 of stormwater drainage may in time result in a loss of the investment in sewers and related infrastructure. These partnerships thus pose many challenges. Each separate public entity-be it a ministry, a national institute, or a municipal or other sub- national department-must be able to function effectively with its own internal procedures. Quite often, however, a mayor will make a decision and send the message down the line, only to have the measure languish unimplemented since there is no capacity at lower levels to translate the meaning of the orders. When coordination with other parties is required, there emerges a host of problems in adapting internal procedures to those of others. Most government agencies are used to working in isolated, monolithic fash- ion. Communication among different parties is made difficult by the lack of fluid channels of communication. Tntersectoral collaboration also means, of course, that the public sec- tor must have the capacity to interact with the private sector-both profit- making and nonprofit. Most current laws, however, do not explicitly create incentives or even authorize governments to deal with public-private part- nerships. For example, budget, contract, and control rules in most coun- tries in Latin America tend to restrict the capacity of the state to allocate state funds to finance partnerships or their programs, projects, or actions. The private sector tends to expect shorter time frames than does the public sector for execution of any project phase, which can lead to par- ticularly severe problems. Tensions can also arise out of the dual require- ments for control by the state on the one hand and flexibility on the other. A common complaint from nongovernmental organizations (NGOs) is that they are forced to account for the minutiae of their expenditures when working under contract for a state body in a way that public bod- ies are not required to do, and that they thereby waste time and energy. Compounding these frustrations are issues of slow disbursement-and these are problems that arise when the parties involved are trying their best to work together. Nonetheless, such obstacles should not be seen as insurmountable. Chapter 2 presents an example of a well-oiled collaboration: that be- tween the Carvajal Foundation and the municipal public works com- pany EMCALI in Cali, Colombia. Special Features of Squatter Settlements Among the inherent features of squatter settlements that make infra- structure planning more difficult and impose a higher level of coordina- tion are the following: 234 SLUM UPGRADING AND PARTICIPAnON * Exclusion from available cartography and databases, on the assump- tion that such settlements are not part of the city and will eventu- ally be removed * Steep slopes and tortuous alleyways that make surveying by tradi- tional techniques slower and more difficult * "Fluidity," i.e., the absence of a set of generally accepted rules for land use and occupation * Demographic pressure, which, coupled with fluidity, causes rapid change, creating unstable situations that are difficult to manage. Let us take the example of Sao Paulo's Guarapiranga project. The in- tervention in each favela included the following: * Removal of structures from risk areas and public rights of way * Opening up of new access roads and improvement of existing ones * Building of stormwater drainage infrastructure * Building of water supply and sewerage infrastructure * Light and power and public lighting infrastructure * Household hookups to the new infrastructure * Paving of roads and sidewalks * Urbanization of public open spaces. In addition, new housing units had to be built, partly on-site and partly off-site, for those families that had to be removed from risk areas or be- cause of the building of new drainage infrastructure and roads. Tempo- rary shelter needed to be provided to relocated families, as well as storage and removal services. Moreover, these activities took place in areas where gross densities before the project were often close to 1,000 people per hectare, and where people continued to live and work throughout the project. How could such a complex project possibly work? For it did work, and on a large scale (176 favela areas and over 20,000 households). Let us try to understand how it was done. Guarapiranga's institutional framework was a horizontal one, in which the different line agencies served as equal partners under the coordina- tion of a project management unit which encouraged the adoption of collaborative arrangements. The project's favela upgrading component was coordinated by the municipality of Sao Paulo, which is responsible for physical planning, roads, and drainage. Public utility companies owned by the state of Sao Paulo provide water, sanitation, and electric- ity, these last under concession arrangements. As the recognized coordi- nator of the favela upgrading component, the municipality led the process of preparing an area-based development plan that addressed all infra- SCALING UP: THE POLIcY LEVEL 235 structure types.3 The execution of the plan for each favela was contracted out to a technical bureau that had in its terms of reference the obligation to submit the plans to both community scrutiny and technical scrutiny of the utilities responsible for each infrastructure branch. This was espe- cially important since innovative technological solutions were often used, especially for water supply and sanitation; these had to be approved by the utility that would ultimately be responsible for system operation and maintenance. Execution of the works was coordinated by the municipality, which hired contractors and subproject management and quality assurance services. Socio-technical support services were provided by a private firm hired as a subcontractor by the various construction firms involved. Three key elements ensured the success of this highly complex opera- tion: * An area-based plan taking into account community demand and tech- nical requirements of the different branches of infrastructure * A coordinating agency, recognized by the community, the various utilities, and the branches of government, with overall command of operations and the authority and resources to hire specialized technical support and executing companies * Adequate socio-technical support to the participation of local residents in the preparation of the area plan and implementation of the works. In Guarapiranga, the coordinating agency for the preparation of the area development plans (the municipality's Housing and Urban Devel- opment Department) was also responsible for coordination of the ex- ecution of the works. In addition, works related to the different branches of infrastructure all took place simultaneously, with a single contractor responsible for each area. This simplified matters considerably. Conflicts with Traditional Line Agency Structures In cases such as the above, where the works related to each branch of infrastructure are managed by a different line agency over an extended 3The Guarapiranga program was a large undertaking within which each of the state agencies and the one large municipality involved (Sao Paulo) had coordinating responsi- bilities for the component that was closest to its institutional mandate. The only state agency that could conceivably have tried to take the urban upgrading component from the municipality would have been SABESP, the water and sanitation agency. Since SABESP was already the program's main executing agency by virtue of the extensive wastewater infrastructure that was built, there was relatively little resistance to the municipality tak- ing the lead in upgrading. 236 SLUM UPGRADING AND PARTICIPATION period of time, a properly negotiated area development plan is critical. Each of the agencies involved must be represented in the planning pro- cess to ensure that its particular technical requirements are met. It is also important to ensure that the results of the area-based planning exercise properly feed into each line agency's planning process. Resistance to the coordination of an outside agency may sidetrack the results of participa- tory planning done by others in favor of a line agency's existing master plans, no matter how inadequate and outdated these may be. Guarapiranga's innovative area-based and horizontal institutional framework and clear assignment of responsibilities made it possible for one of the agencies to coordinate each of the project's components under the overall coordination of the project management unit. Although con- flicts nonetheless arose, they were manageable because the institutional framework and resources made available to the coordinating agency lent sufficient authority to the latter. Conflicts with the traditional line-based structure and coordination difficulties are the norm, which hampers the implementation of many projects. Also in Sao Paulo, in an area not far from Guarapiranga, urban upgrading projects initiated by the water utility SABESP outside the Guarapiranga framework met with major coordination difficulties that brought the projects to a standstill. The very actors of Guarapiranga, operating in the same city, find it difficult to produce results in the ab- sence of an enabling program framework such as Guarapiranga's. This proves the importance of a clear institutional arrangement that clarifies responsibilities and establishes a generally accepted coordination mecha- nism. Subsidy Structures and Cost Recovery Strategies Establishing a clear subsidy structure and cost recovery strategy is cru- cial to making a long-term, citywide upgrading program financially sus- tainable. The examples we have seen in San Jose and Tijuana, as well as in Bolivia, indicate that communities are willing and able to work with cost information. In Tijuana, they interact with program promoters to determine levels of community contribution to construction. In San Jose and Cochabamba, they monitor expenditures and propose ways to cut costs. It is possible to imagine communities taking part in decisions re- garding their own financial commitments to pay for operations and maintenance of infrastructure in the long run. There is a need to develop clear and consistent mechanisms for cost recovery as it relates to connection fees, tariffs, or user charges for utility services, as well as financial contributions to construction by communi- ties and mobilization of local fiscal revenues from increased property or SCALING UP: THE POLICY LEVEL 237 betterment levies. There was a conscious effort to address these issues in the Tijuana and San Jose cases; while in Sao Paulo, the community's willingness to pay has not so far been significantly tapped. In Tijuana, we have seen that the municipal community upgrading program is more advanced in establishing a responsible and transparent relationship with the communities than parallel efforts by the state government water util- ity CESPT, which feature such paternalistic hallmarks as hidden subsi- dies and a lack of willingness to discourage "free riders" (see below and chapter 9). Perceived, and sometimes real, capacity to pay constraints act as dis- incentives to service providers, discouraging them from extending ser- vices to low-income communities. To circumvent this constraint, a transparent mechanism for subsidizing lower income segments needs to be developed. An optimal subsidy design should provide clear, pre- dictable, and performance-based incentives to operators to deliver ser- vices on a commercial basis; among others, via subcontracting mechanisms with smaller scale providers while also providing clear eco- nomic signals to users regarding demand, cost of service, and correspond- ing out-of-pocket payment obligations. In all the cases we have studied, the targeting of subsidies was a problem, and the special difficulties of the poorest and most vulnerable groups were not fully taken into con- sideration. Community Contributions and Cost Recovery Cost recovery is crucial to the sustainability of project benefits, the es- tablishment of a responsible relationship between user and service pro- vider, and the development of a culture of rights and responsibilities. Progress on this aspect has been very uneven in Latin America: While some highly innovative approaches are being successfully pioneered, the old populist tradition of state handouts still prevails in many cases (see table 5-1). As a result, the significant advances in participatory mecha- nisms of the last two decades have not produced the improvement in cost recovery that might be expected. In all its dimensions, cost recovery is a central element in increasing scale. The variety of conventional cost recovery approaches in use include bet- terment levies, "social" (flat rate) tariffs, consumption-based tariffs, hookup fees, municipal or private fees and charges, and the property tax. Municipalities throughout Latin America find it difficult to collect the property tax, which is usually their main source of revenue. Many people fail to pay, and municipal mechanisms for debt collection are slow and inefficient. In an attempt to overcome this situation, the Villa El Salva- dor municipality has introduced a series of innovative mechanisms. These 238 SLUM UPGRADING AND PARnCIPATION Table 5-1. Cost Recovery Formats in the Cases Studied Country Approaches Comments Bolivia * Water and electricity tariffs Privatization has enhanced water * Local property tax and electricity metering; on prop- * Transparent subsidies erty tax collection, advances are slow in spite of decentralization and participation; high level of cost consciousness Brazil * Water and electricity tariffs Advances in metering of water * "Social" tariffs and electricity are slow: illegal * Hidden subsidies hookups are still common; prop- erty tax is not levied due to land tenure situation; low level of cost consciousness Cost Rica * Communities meet bridge Full cost recovery is a comerstone loan payments and pay back of the FUPROVI methodology; principal when government level of cost consciousness is very pays housing subsidy high, and project costs and loan * Water and electricity tariffs payments are negotiated with the * Transparent subsidies community Mexico * Upfront 30% community Community makes upfront con- contribution to cost of tribution and manages resources; works; property tax high level of cost consciousness; * Water and electricity tariffs advances in land registration, * Transparent subsidies from municipal cadastre, and property municipality; hidden subsi- tax collection dies from water company Peru * Water and electricity tariffs Advances in metering of water * Solid waste removal fees and electricity due to privatization * Property tax of electricity and better water man- * Tradition of hidden subsi- agement; advances in property tax dies, but municipality mov- collection and community collec- ing to transparency tion of solid waste removal fees Source: Authors' construction from field study data. include an awareness-raising campaign and the creation of specific in- centives. Neighborhoods with a good repayment record are given pref- erence in consideration for infrastructure improvements, and people who have paid the municipality all they owe can take part in raffles. Although property tax collection in informal settlements is even more of a problem than in the formal city, there seems to be a window of op- SCALING UP: THE POLICY LEVEL 239 portunity for property tax-based cost recovery. In Guarapiranga, for ex- ample, residents would like to pay the property tax because they feel it would give them some recognition-and added security of tenure. The same pattern can be found in favelas throughout Brazil, but there are many upgrading and land tenure regularization projects that, instead of looking into what would be a feasible level of subsidy, simply exempt project beneficiaries from the property tax. This is usually done for a term of 10 years, as in the case of Belo Horizonte's PROFAVELA law. The Tijuana and Ciudad Juarez examples introduce a new and very interesting format: direct community contribution to the cost of the works, prior to and during implementation. The Tijuana/Juarez format is made possible by three factors that, taken more generally, seem to condition the possibility of cost recovery: * The nature of the relationship between the promoting agency and local residents is not paternalistic. * Both parties are clearly conscious of the cost of the improvements. * There clearly is high demand for the improvements and motivation for participation. Influence of the Promoting Agency's Attitude. Looking at the track record of urban upgrading projects in terms of cost recovery, there is a clear case for cost consciousness and for a mature relationship. In many projects, the cultural and political environment can lead to a paternalis- tic relationship, which tends to produce a negative result in terms of cost recovery. Willingness and ability to pay are important, but are far from representing the whole picture: the attitude of promoting agencies is just as important. Examples of both attitudes are present in our field reports: a mature relationship in the cases of San Jose and Tijuana, and a paternalistic one in the case of Guarapiranga. It is very interesting to note the contrast between the community up- grading Obra Social Comunitaria (OSC) program of the municipality of Tijuana and the autogesti6n directa (direct self-management) water sup- ply and sewerage network extension program of CESPT in the same low-income areas of the city. A different attitude toward cost recovery and a different system for community contributions make for very dif- ferent results. Although demand for water supply and sanitation is cer- tainly high, "free rider" issues are much more serious for CESPT. The key differences between the two programs are as follows: * In OSC, residents are asked for an upfront contribution, and only after they come up with 30 percent of the required sum does the municipality deliver the first check. 240 SLUM UPGRADING AND PARTIPATION * In OSC, a local residents' public works committee manages the funds, selects the contractor, and oversees the work. There is full cost consciousness on the part of the community. * Although there is a free rider problem in OSC, this is limited by the social pressure free riders have to endure. In the CESPT case, there is no social awareness as to who the free riders are; the issue re- mains between CESPT and each individual free rider. The CESPT program, which in theory has no subsidy, has a 30 percent default rate on the community contribution on average, and debtors are not pursued. This works in practical terms as a 100 percent subsidy that is not targeted or transparent, since it simply benefits those who do not pay. This is clearly an incentive to the culture of nonpayment and to the permanence of a paternalistic relationship. In OSC, the average level of subsidy is much higher than in the CESPT program-70 percent-but the subsidy is transparent and benefits all residents equally. Social Pressure Limits Free Rider Issues. The Obra Social Comunitaria program also faces free rider issues, but to a far smaller degree, due to social pressure. This brings up the issue of how to enforce community contributions and what to do about those who do not pay. In Tijuana, since they cannot be legally pursued, free riders eventually get away with not paying. In the Ciudad Juarez OSC program, which promotes many water supply and sewerage projects, each participant is required to deposit his or her contribution directly with the municipal treasury, and free riders are denied hookups to the system. If they relent, they are charged the full nonsubsidized cost. This is of course much more diffi- cult to do in other cases, such as road paving or school improvement. In the Costa Rican Foundation for the Promotion of Housing (FUPROVI) case, families that fall behind in their in-kind labor contri- butions of 30 hours a week are charged a heavy fine of as many hours again as the ones they owe. If such episodes are repeated frequently, persistent defaulters are simply struck off the project participant list. Such extreme measures are rarely adopted, since social pressure and the desire for a home provide a powerful incentive and families normally put in their 30 hours every week. What experience seems to show is that free rider issues can be kept to a minimum with strong community participation. This is illustrated by the experience of Kiwi Street in Tijuana, where the public works com- mittee posted "For Sale" signs in vacant lots in a successful bid to iden- tify absentee lot owners and get them to contribute to the project. SCALING UP: THE POLICY LEVEL 241 The Issue of Subsidies Subsidies Are Fair and Necessary... Especially in the case of off-site infrastructure, but also arguably in the case of shelter improvement, ur- ban upgrading projects have a common good nature and benefit society as a whole. This justifies the adoption of subsidies in the common inter- est and as a measure of equity. From a practical standpoint as well, sub- sidies are necessary due to limitation in poor residents' ability to pay for improvements. ...But They Must Be Well-Targeted and Transparent. To be effective, subsidies must be correctly targeted, temporary, and transparent. Subsi- dies that fall outside these tenets place an undue burden on the public purse, often create or worsen social inequities, and contribute to a cul- ture of paternalism. Consequently, the process of designing and delivering subsidies is very important. Although the cases we have studied show that hidden subsi- dies are still common, there are also clear signs of hope, especially in relation to transparency. Targeting is still a problem in most cases, as we have seen above. The Bolivian case, for example, is one in which subsi- dies, although transparent, are targeted to poor areas and not to poor people. Villa El Salvador: Moving toward Transparency. In the Villa El Sal- vador home improvement credit project, promoted by the NGO Desco (the Center for Development Studies and Promotion), technical assis- tance, whose cost is 15 percent of each credit package, is provided as a subsidy. The amount of the subsidy is clear to all parties, as is the fact that technical assistance has a value that can be quantified and that a service worth that much is being provided as a subsidy. Subsidies and financing, although handled by the same organization, are here clearly separate. The Desco project is a clear example of a transparent and tem- porary subsidy that is targeted to a well-defined group-the borrowers in a home improvement credit project. The process of the development of Villa El Salvador has many examples of hidden subsidies, but the municipality's moves toward fiscal transparency and the public discus- sion of its accounts indicate a positive trend. Guarapiranga: No Discussion of the Subsidy Policy. Many factors would justify a high level of subsidy for the favela upgrading compo- nent of the Guarapiranga project; the following are among the most im- portant: 242 SLUM UPGRADING AND PARnCIPAnON * The Guarapiranga reservoir accounts for 20 percent of Sao Paulo's water supply and is one of that huge city's few open leisure areas. As such, its value to the city is immense. * Beyond their poverty, the vast majority of the population of the favelas of the Guarapiranga basin live in a state of social exclusion that entails limited access to essential public services such as water supply, sanitation, primary health care, and basic education. Im- proving their access to infrastructure and services is part of fulfill- ing the state's essential redistributive function and has a direct poverty-reduction impact that benefits the whole of society. * Many of the sewerage, stormwater drainage, and roadworks that are implemented within each favela directly benefit other parts of the city that are located upstream, downstream, or in that favela's vicinity. The above factors would have justified the adoption by the munici- pality of a high level of subsidies, in a motion that could have been pre- sented to lawmakers and the citizenry and easily carried. In Brazil's political culture, however, there is no tradition of subsidies being made explicit and being discussed, and Guarapiranga was not an exception. The project does not have a clear subsidy policy, and little thought has been given to long-term cost recovery. The result is a lack of transpar- ency, cost consciousness, and targeting-and a missed opportunity to help change the paternalistic political culture. Costa Rica: Challenge of Accessing Commercial Funding. The FUPROVI model is built around the existence of a generous government housing subsidy scheme. Using the FUPROVI methodology of organized mutual help, housing associations usually succeed in covering the full cost of the units with the housing subsidy that is granted to each of the association's members. This is important, since one of the key recurring obstacles to housing subsidy programs in several countries has been the fact that the subsidy often barely covers the cost of a serviced plot- which at best leaves the very poor living in unsound structures on ser- viced plots. Furthermore, location of serviced plot schemes in the outskirts of cities, far from services and job opportunities, often means that resi- dents find it difficult to improve their homes over time and have a very limited ability to pay for services. FUPROVI's success in making the most of the Costa Rican housing subsidy scheme has inevitably meant that the institution's modus oper- andi has become dependent on the existence of the subsidy. Once the country's macroeconomic problems led to reduction of the scheme, FUPROVI had to look for ways to overcome the cash flow problems it SCALING UP: THE POLIcY LEVEL 243 began to experience. FUPROVI is keenly aware of the fact that unless it is able to access commercial funding in the long run to finance its opera- tions, its successful efforts thus far at attaining economic and financial sustainability will be undermined. Tijuana: Several Coexisting Models. It is interesting to compare the Obra Social Comunitaria and theCESPT water and sanitation extension programs. Both work with the same communities. In the municipality's program, the level of subsidy varies between 50 and 80 percent (70 per- cent on average); through better targeting, full transparency, and cost consciousness, it seems more sustainable overall. Communities pay what they have agreed to pay. By contrast, in the case of the CESPT subsidy scheme, recovery of what the community is supposed to pay is around 70 percent, and the CESPT policy is to avoid litigation. This leads to a classic "hidden subsidy" situation, with the aggravating factor that the subsidy is neither targeted nor evenly distributed-it simply goes to those who do not pay. This, besides being unfair, sends the wrong kind of message, contributing to the paternalistic political culture. Another subsidy worth noting in Tijuana is the one built into the land release mechanism through the State Real Estate Board (INETT). In INETT subdivisions in the explosive growth areas of the eastern part of Tijuana, plots are sold well below cost, and payments are deferred. INETT plots have full documentation. This has led to a containment of new illegal subdivisions; thus, the policy of land tenure regularization in informal land subdivisions is gradually catching up with the existing backlog. Legal and Regulatory Framework For community upgrading and shelter programs to be sustainable, at- tain scale, maintain a focus on reaching the poor, and optimize environ- mental and quality of life benefits, a conducive policy environment, supported by an appropriate legal and regulatory framework, needs to be in place. This section provides an overview of key issues in the legal and regulatory environment that may constitute impediments if not ad- equately addressed. Building Codes and Land Use and Physical Planning Laws and Regulations In some countries, these are the responsibility of the local level; in oth- ers, of the national level. Peru, Chile, and Costa Rica are examples of countries where a national norm is followed. In the case of Peru's Law of the Barriadas, a national legal framework was established for the occu- pation and subdivision of land for housing the poor. In Chile and Costa 244 SLUM UPGRADING AND PARnCIPATION Rica, standards and regulations for land use and housing construction are national, taking no account of regional differences. In Brazil, these norms are local; this does not mean, however, that they are necessarily well-suited to local conditions since they still tend to copy industrial- ized country models. National or local, these laws and regulations are often based on im- ported models that require, among others, maximum densities, mini- mum plot sizes, minimum width, and maximum slope of streets that make it very difficult to upgrade informal settlements without de-den- sification, mass removal, and resettlement. (For example, Brazil's U.S.- inspired norms not only outlaw the informal city but also, in theory at least, the older parts of the formal city as well, with its narrow streets and high slopes.) The Brazilian cities of Belo Horizonte and Recife have created a supportive legal and regulatory framework for upgrading that is based on standards appropriate to local conditions. Landownership and Land Registration In this field, most laws and regulations are national. Outdated cadastres and land registries, complex bureaucratic procedures, and an extraordi- nary resistance to change fueled by entrenched interests conspire to make this one of the most complicated legal and regulatory conundrums in the urban development field. Alternatives for creating a more condu- cive environment are discussed below. Technical and Service Standardsfor Infrastructure Standards used in the developing world are often borrowed from high- income countries and applied across the board. The result is that formal sector activities are normally guided by such standards, while no stan- dards at all are applied with regard to the informal sector activities that are responsible for most of the housing and infrastructure produced in many developing country cities. Standards must be developed that en- sure adequate performance while keeping costs within a range that does not make it impossible to extend services. Legal Recognition of Community Organizations One of the key changes wrought by Bolivia's People's Participation Law is the creation of clear and simple rules for the legal recognition of area- based juntas de vecinos (neighborhood associations) with jurisdiction over their areas. Having a legally recognized community organization is a key factor for organized participation and for creating channels for dia- SCALING UP: THE POLICY LEVEL 245 logue and negotiation. One of the cornerstones of the FUPROVI pro- gram in Costa Rica is the ability of a legally recognized association to enter into a formal contract with the supporting organization. Procurement Rules Stiff rules and procedures for procurement are often one of the key ob- stacles to sound management of the program and project cycles. Many programs are characterized by long bureaucratic delays followed by periods of hectic activity in which organizations try to make up for lost time-often overlooking quality in the process. One of the key argu- ments for setting up autonomous project management units or entrust- ing project management to a third party (such as an NGO) is the need to bypass the bureaucratic morass of most countries' public sector procure- ment rules. Exclusivity Provisions A significant constraint to community-based and micro- and small en- terprise-based provision of infrastructure services often has been the exclusivity or monopolistic rights granted to public and private sector operators. Notwithstanding these legal restrictions, informal sector and community-based operators have found a significant niche. Studies car- ried out a few years ago by the World Bank Water and Sanitation Pro- gram in 16 countries (6 in Latin America and 10 in Africa), coupled with those undertaken by the World Bank Urban Environment Thematic Group on independent providers of solid waste collection and disposal services in Latin America (six countries), reveal the significant promise of these types of investment. On average in Latin America, private independent operators provide 25 percent of the urban population with water services and 50 percent with sanitation. In Guatemala City alone, over 200 independent entre- preneurs provide over half the population with water and sanitation services. These range from full-service companies serving over 70,000 persons to community enterprises and water tankers. Paraguay, Peru, Colombia, and Bolivia have burgeoning independent water and sanita- tion services. Over one-third of the growth in urban water service in Paraguay over the past 20 years has been due to independent operators. Currently, these operators provide water to about 600,000 people through more than 100,000 separate connections. Reportedly, the providers have invested $30 million in private capital. Some have multiple networks and assets whose replacement costs are in the range of a few million dollars. Most operate in the formal sector and get their licenses from the 246 SLUM UPGRADING AND PARTICIPATION municipalities and technical approvals from the Ministry of Health. The investment cost for water supply from a well via pipe distribution to about 300 households can be around $60,000. A surprising number have been flourishing in Colombia, where the Ministry of Economic Develop- ment has recently endorsed a water and sanitation strategy based en- tirely on independent providers. Reportedly more than 1,000 private water vendors operate in the pueblos jovenes (informal settlements) of Lima alone, many of which serve 500 households or more-albeit at rates two to three times that charged by the water company. Bolivia has long relied on a special form of independent provider, the water and sanita- tion cooperative. Despite serious limitations resulting from lack of ac- cess to long-term financing and limitations on existing regulatory frameworks, they consistently sell water of high quality and at lower costs than the public (and recently privatized) monopoly companies. Formal Recognition Formal recognition through the legal framework of the right of small operators to exist and the establishment of a regulatory mechanism would permit greater competition and encourage investment. This would pre- sumably lead to lower cost services, improve services from a technical and environmental standpoint, and provide access to lower cost and more reliable sources of funding for small-scale enterprises. An interest- ing example is in Cordoba, Argentina, where the exclusivity provisions attached to the privatization of the water company have thrown the aguateros, small private water supply operators, some of which have been operating successfully for decades, into a legal limbo that severely af- fects their incentives to invest in their operations, thereby restricting their capacity to serve a larger customer base or provide a more efficient/ competitive service (Solo et al. 1998). Legal Ownership of Assets Although communities and small-scale local operators can operate and maintain assets for which they also take an active role in design, con- struction, and funding, legal ownership often remains with the relevant local authority or utility. This can be an enormous disincentive for com- munities and small-scale local operators in mobilizing their scarce re- sources, given the uncertainty of how the legal owners of such assets may deal with them in the future. Formal mechanisms for granting com- munities and small-scale local operators continued control of these as- sets would be important, not only in pursuing demand-driven approaches, but for any strategy over time to facilitate their access to SCALING UP: THE POLICY LEVEL 247 more formal sources of capital to finance working capital and invest- ment needs. Participatory Planning The requirements of formal master plans are often an impediment to the adoption of participatory planning mechanisms. In Peru, for example, although families can fund works to connect to the local water system, they are only reimbursed for related expenditures if the proposed projects are contemplated in the utility's master plan. These plans, however, lack flexibility. In response, some communities in Lima have attempted, al- beit unsuccessfully, to seek legal recourse against the water utility SEDAPAL for recovery of related costs. A formal requirement that com- munities be consulted prior to formalization of master plans would pro- vide a clear incentive to participation. Ex-Post Supervision and Evaluation An explicit institutional and regulatory strategy needs to be formulated to assess project / program impact vis-a-vis corresponding poverty alle- viation and technical, environmental, and financial objectives. Program monitoring responsibilities and corresponding budgets, along with as- sociated capacity-building, should be formally assigned to those parties with the incentives to pursue these activities diligently. The regulatory framework should encourage the incorporation of required modifica- tions on a timely basis. Similarly, transparent channels need to be estab- lished to allow communities to have a voice in evaluating project/ program impact. Regulationsfor Financial Institutions Private sector initiatives aimed at delivering financial services to low- income populations need a conducive policy and regulatory environ- ment, including interest rate liberalization and development of prudential regulations relating to capital adequacy that foster a more conducive environment for small-scale microcredit programs. It is important to foster an enabling environment to support monitoring/ enforcement mecha- nisms for microfinance institutions (MFIs), including efforts to assist MFIs in improving the quality, consistency, and timeliness of information pro- vided to regulators via their conformance to generally accepted account- ing standards, as well as support capacity-building for regulators themselves. 248 SLUM UPGRADING AND PARTICIPAnON Ensuring Land Availability and Security of Land Tenure Secure Land Tenure Is Key to Sustainability... Secure land tenure is one of the most important factors in the sustainability of any intervention in informal settlements. It is arguably the number one aspiration of Latin American informal settlement dwellers. It is also the key that unlocks investment in home improvement and motivates residents to help maintain new infrastructure and engage in further improvements. ... But Full Legalization Should Not Be Considered a Prerequisite Full legal regularization of land tenure should not be considered a prereq- uisite for urban upgrading and shelter projects. The Costa Rican and Mexi- can cases show that this is a requirement that slows projects down and makes it difficult to achieve scale. Rather, it is important to identify the minimum level of legal recognition of settlements that is necessary to en- sure security of tenure and to provide services and promote urban upgrad- ing projects. Extension of basic services needs to be based on the mutual recognition of authorities and informal settlement residents. The recogni- tion of the rights of settlers and the gradual upgrading of informal settle- ments may subsequently lead to an initiative for full tenure regularization. Tenure Regularization as a Preconditionfor Infrastructure Investments In Mexico, full land tenure regularization is a precondition for any invest- ment in infrastructure in a settlement. Consequently, Mexico's federal government has set up a land tenure regularization program that is one of the largest and longest running in the world (it has been in operation since the early 1970s). The program is highly centralized and politically charged, having been considerably strengthened by the Mexican govern- ment in the early 1990s. The program has focused until now on ejido land. The ejidos, communally held agricultural properties, are the result of the agrarian reform brought about by the Mexican Revolution in the early 20th century. Many of them, located in rural areas that have since become urbanized, have been illegally subdivided into parcels that have been sold to low-income people. The dominant form of informal settle- ment in Mexico is not the squatter settlement, but the illegal subdivision. Tenure Regularization as a Preconditionfor Housing Subsidies Costa Rica's rigorous legal system-and its law-abiding tradition-makes it unthinkable to provide a housing subsidy to someone who is not the SCAUNG UP: THE POLIcY LEVEL 249 legal owner of a plot. There is no mention of an intermediate form of land tenure security short of full legalization. This means that a subsidy that is intended for the poor requires a precondition that the poor are rarely able to fulfill-and is part of the reason why it was necessary to create FUPROVI as a mechanism to enable poor families to fulfill the subsidy's requirements. Housing associations usually come to FUPROVI after securing the land they need, usually through a grant or subsidized sale of public land hold- ings. The land then needs to have its legal situation checked and regu- larized, after which it needs to be parceled out to the members of the association. A land subdivision scheme needs to be designed, presented to the appropriate authorities and approved, and individual title deeds issued to each of the members of the association. Only then will they have access to the government housing subsidy. Land tenure regularization is normally carried out in parallel with the construction of the new settlement and is completed by the time families start to move in. FUPROVI must complete regularization as soon as pos- sible, for until then, it is unable to recover its bridging loan from the housing subsidy scheme; because the funds are tied up, FUPROVI is unable to move on to new projects. A Specialized Authority Makes the Job Easier Experience shows that governments' establishment of a specialized au- thority with competence in land use and tenure regularization in infor- mal settlements (to handle permits, property titles, cadastral registers, etc.) is a positive measure. This specialized authority, as in the example given below of Baja California's State Commission for the Regulariza- tion of Land Tenure (CORETTE), should be capable of tackling the com- plex series of interrelated tasks necessary for tenure regularization. It also provides informal settlement residents with a "one-stop shop," in- stead of requiring them to face the bewildering array of government departments involved in legalization of land tenure. In Tijuana, for example, land tenure regularization has proceeded at a steady pace since the 1990 creation of CORETTE, which concentrates all needed professional skills under one roof. Client relations, surveying, estimating, conveyance and legal services, and liaison with the land reg- istry office are all provided by CORETTE. CORETTE's systematic approach led to the delivery of about 38,000 title deeds between 1990 and 1996. CORETTE built on the experience of Mexico's long-standing federal regularization program, whose Tijuana branch delivered about 10,000 title deeds in the same period. Together, the state and federal programs succeeded in regularizing about 48,000 250 SLUM UPGRADING AND PARTICWATION plots between 1990 and 1996-nearly half the existing demand at the time of 100,000 plots in Tijuana's informal colonias populares (illegal land subdivisions). In Costa Rica, FUPROVI has a series of departments involved in en- suring regularization of land tenure. Its structure for this purpose is simi- lar to CORETTE's. FUPROVI staff, who have legalized 15,000 plots between 1988 and 1998, believe that the process, which takes two years on average, is too slow. Rationalize the Process or Change the Rules of the Game? The relatively slow pace of CORETTE's and FUPROVI's progress is linked to their implicit acceptance of the status quo rules for land tenure regu- larization. All necessary tasks are located under a single roof, which streamlines a process that would probably not be feasible otherwise, but there is no attempt to simplify the regularization process per se, with its outdated procedures and unreasonable demands. Peru's Commission for the Formalization of Informal Property (COFOPRI), still an isolated example in Latin America, demonstrates that dramatic results may be achieved through reform of the land registration process itself. COFOPRI's objective is to create a system that ensures formal and sustainable rights to real property in low-income settlements in larger urban areas. The Law of Promotion of Access to Formal Property that was passed in March 1996 essentially applied the new system to all of Peru's informal urban settlements. The program targets more than 4 million people, or around 25 percent of Peru's total population, includ- ing those living from just above to below the poverty line. The National Formalization Plan, supported by the World Bank, covers informal ur- ban settlements in areas where poverty indicators, as measured by the lack of basic necessities (education, health, housing conditions, employ- ment, and infrastructure services), are at their highest. COFOPRI assumed the functions of about 14 separate agencies that previously regulated the titling process and now issues titles on the basis of legal and physical verification in the field. Operating under streamlined verification and registration procedures, the Urban Property Registry works closely with COFOPRI to register titles into a National Formalization Plan. The regis- try has regularized around 1.2 million properties by 2003 through the new simplified process. COFOPRI titles over 10,000 urban properties each month. Prior to program implementation, titling costs were approxi- mately $25 per square meter. It reportedly now takes one week at a cost of approximately $15 to register a mortgage. SCALING UP: THE POLICY LEVEL 251 Tenure Regularization Does Not Mean Automatic Access to Credit Although the COFOPRI program has titled about 1.2 million lots, few associated homeowners have been able to access mortgage financing (only around 4,000 between 1996 and 1999). This is largely due to the various problems that make access to credit difficult for low-income people: * The formal financial sector's lack of interest in this particular mar- ket segment * The formal financial sector's lack of information and inability to evaluate the credit risk of low-income borrowers * A lack of financial products specifically designed for the require- ments of low-income borrowers * Language, cultural, and gender differences between bank person- nel and low-income communities, which have in turn led to signifi- cant social barriers. Moreover, a title deed does not automatically mean that its owner will seek access to credit in the first place. Once their property is legalized, low-income residents already have 100 percent equity on their home. Their interest in taking out a mortgage to improve their homes or invest in a business may thus be limited. Regularization of Private Lands Is Always More Difficult The problem posed by the regularization of invaded private land is al- ways a complex issue in any country, given the implications related to the legal nature of private property and the interests of formal owners. In Costa Rica, invasion of private land is by definition not bona fide, which precludes legalization. In contrast, in Brazil, the 1988 constitution established the social function of private property as a principle and urban usucaption or adverse prescription as a right. Usucaption, from Roman law, is the acquisition of a title or right to property by uninter- rupted and undisputed possession for a prescribed term-for private urban land in Brazil, a term of five years. In Guadalajara and Northern Mexico, some of the new local govern- ments of the National Action Party have begun regularization of private lands through decentralized mechanisms and are cracking down on il- legal land subdivision. Informal developers are being given jail sentences for the first time ever. This is certainly a positive development, but it would also be necessary to review the legal and regulatory tangle that, as in many other developing countries, encourages developers to subdi- vide land illegally. Sao Paulo's Guarapiranga project is a good example. 252 SLUM UPGRADING AND PARTCIPATION Misguided Legislative Zeal and Lack of Enforcement Capability May Lead to Widespread Land Invasions and Illegal Subdivisions The Guarapiranga project conspicuously lacked a land tenure regular- ization component. This is understandable, given the complex legal and regulatory situation and because tenure regularization is usually not considered a precondition for infrastructure investment in Brazil. Inter- views with local residents and technicians, however, suggest that this has had a negative impact on sustainability, and that much more invest- ment by homeowners in shelter improvement could have been gener- ated if the project had included a land tenure regularization strategy. The explanation for this apparent gap in Guarapiranga's formulation is the same legal and regulatory tangle that has led to widespread infor- mal occupation of the Guarapiranga basin in the first place. Sao Paulo's Water Catchment Areas Protection Act of 1975 is a prime example of the misguided zeal that led so many developing country legal codes to mir- ror colonial and industrialized country models. This has often led to the adoption of a legal and regulatory framework that is at best impossible to enforce, and at worst may have diametrically opposed effects to those desired, as seen in the Guarapiranga case. The Water Catchment Areas Protection Act, in a bid to protect the res- ervoir from pollution, imposed low-density residential occupation as the only acceptable land use in the Guarapiranga basin. At the same time, regulations for the approval of land subdivisions were made much more stringent for lands located within a water catchment protection area. The combination of these two legal impediments led to a fall in value of the land around the Guarapiranga reservoir, making it attrac- tive for low-income occupation, and to an incentive for developers to engage in illegal land subdivision. The Guarapiranga basin thus became Sao Paulo's biggest urban frontier, with hundreds of new occupations and hundreds of thousands of people attracted to the area by the jobs offered by the dynamic economy of the southern part of the metropolis. Meanwhile, legal restrictions made it impossible for the state govern- ment or the municipalities to invest in basic infrastructure in the area, which has led to a huge deficit over the years. The Guarapiranga project required strong political will, for it required placing the reality of deprivation and environmental degradation first, and a flexible interpretation of the law. Fortunately, Brazilian legislation, unlike Mexican, does not impose ten- ure legalization as a precondition for investment in infrastructure. Guarapiranga's perverse legal and regulatory tangle is only now begin- ning to be unraveled. The River Basin Management Act of 1997 repealed the restrictive provisions of the 1975 law and laid the foundations for area- based planning and stakeholder participation in river basin management. SCALING UP: THE POLICY LEVEL 253 Informal settlements, however, are still at least in theory under threat. Pol- lutant load limits have been set, and it will be up to municipalities to de- cide how such limits will have to be met within their territory. Better equipped municipalities will probably act on this faster and with better results. Smaller and poorer municipalities are slow to react to the new law, making it very likely that the legal tangle-or at least a legal void-will persist. Security of tenure will in this case remain elusive for hundreds of thousands of people, and all the uncertainty, social malaise, and disincen- tive to investment associated with uncertain tenure will continue. Mechanisms Are Neededfor Affordable Land Release The lack of appropriate mechanisms to release sufficient affordable land into the market is one of the key reasons why the urban poor squat in the first place. As the example of Peru shows, when land is made available in a reasonably orderly way, even though services may be a long way off in coming to an area, the worst long-term layout problems typically found in informal settlements are avoided.4 Apart from their overall impor- tance, land release mechanisms may be an important element in an ur- ban upgrading strategy, and a crucial one in cases in which there is need for much involuntary resettlement. Resettlement is arguably the most difficult issue to be addressed by upgrading interventions, because of its social impact and cost implications. A range of instruments needs to be deployed to cope with it, including the development of housing for various income brackets and new settlements using sites and services approaches or variants of Peru's lotes con tiza (surveyed and beaconed plots) strategy in the vicinity of the original settlement. Strategic Alliances Key Actors: Who Are They? An urban upgrading project is a complex undertaking that requires a common goal and long-term coordinated action by many parties. The capacity to involve key stakeholders in strategic alliances often means the difference between success and failure, and is a key program coordi- nation role. Urban upgrading cuts across disciplinary and institutional boundaries and involves an impressive array of stakeholders, including: 4These problems include lack of definition of public and private spaces, plots without direct access to a public thoroughfare, lack of an adequate road system, and lack of rights of way for the installation of network infrastructure. 254 SLUM UPGRADING AND PARTICIPATION * The local residents or groups that stand to benefit from the pro- gram or project * The various public authorities with jurisdiction over the area * Public or private utility companies * Formal and informal landowners * Formal and informal land developers * Owners and managers of area businesses * Managers and staff of public or nongovernmental facilities in the area (such as health centers, schools, daycare centers) * Politicians and political party activists * Development NGOs or other private nonprofit organizations and intermediaries that propose to represent the interests of the poor * Religious groups * Micro- or small enterprises that provide infrastructure services in such areas as water, sanitation, telephony, road maintenance, etc. * Technical and professional associations * Foundations, microfinance institutions, and other private financial entities * Private businesses whose employees live in the area * The private firms providing services in the context of a program or project. Alliances with these parties should not be seen as a substitute for the need to strengthen public sector capacity. All the cases we have studied suggest just the opposite: for the partnerships to achieve their full po- tential, private actors require effective public partners. The idea of part- nerships is clearly still one that is rather alien to a public sector emerging from decades as the sole arbitrator of the common good, but the will to change seems to be emerging, albeit slowly and unevenly. New Actors on the Urban Relations Scene Urban planning instruments are becoming less top down and prescrip- tive as the role of the state is progressively redefined and urban gover- nance relies more and more on participatory mechanisms. The reality of the city is the product of the actions of myriad public, private, and com- munity-based actors. Development activities in complex urban situations thus need to involve a growing number of stakeholders, all with vitally important functions and roles. As we have stressed in the introduction, when we speak of participation, we refer to a broader concept than sim- ply the relationship between promoters and beneficiaries of projects. The surge of new actors on the urban relations scene implies various changes, many of which open a route to more democratic, participatory, SCALING UP: THE POLICY LEVEL 255 and sustainable development of cities. All urban policies-and all ac- tivities realized through urban programs and projects-are influenced by these trends. Municipalities stand out among these emerging players. Even in coun- tries with a strong centralist tradition, municipalities have taken on a key role in recent years, as in the case of Bolivia. City governments are the ones that frequently take the initiative in housing and infrastructure projects-and, even when they do not, they are always an important actor. Without the municipality's active involvement, even projects that are sponsored by central governments and international donors have serious difficulties, as the Participatory Action Planning projects in Bo- livia clearly show. By contrast, the community-based urban movements that were so strong in Latin America in the 1970s and 1980s have declined, along with the broader networks of neighborhood associations and federations. These have been weakened by their dependence on political parties and difficulties in renewal of leadership. On the other hand, in recent years new forms of partnership with civil society have become increasingly common. Such organizations as development and environmental NGOs and professional associations (of engineers, architects, or lawyers) are showing increasing capacity and a more professional attitude. Groups based on ethnicity, like black or indigenous movements, are also on the rise. Although with different motivations, many of these groups pur- port to speak for the sectors of the population that stand to benefit from urban upgrading and low-income housing programs. Finally, phenomena such as the privatization of utility services and the large-scale upgrading projects that involve construction and engi- neering firms and other for-profit private actors create new roles for pri- vate enterprise. These roles include traditional areas such as engineering, planning, and construction as well as new opportunities in project man- agement, quality control, and socio-technical support. Identifying Key Partners The variety of actors and stakeholders with potential roles makes it im- portant to manage the choice of partners for a program or project care- fully. With distinct interests and priorities, diverse backgrounds, differing institutional and funding capacity, and various levels of power and in- fluence, this choice presents a challenge. It is crucial to achieve a unified and shared vision of the objectives and strategic plan. Once this is re- solved, there is the further need to identify a partnership that may make it possible to define a resource base for the project and set up an efficient operation, coordinating the modes and pace of action of the various ac- 256 SLUM UPGRADING AND PARnCIPATION tors. The process of partnership building should make it possible for each participant to be heard and to be involved in the definition of pre- cise tasks and responsibilities. Not all parties that have an interest in the project can automatically become associates; one important filtering criterion is their possible con- tribution (that is, not only what they plan to gain from the project, but also what they can give). We must also ask ourselves what reasons would impede the participation of any actor in the project. The attempt to over- look actors who may appear less directly involved with the objectives of the project for fear of losing time or power, or for fear that the process may become too complex sometimes transforms potential partners into damaging opponents. This process may be reversed if an effort is made to involve these actors (see, for example, the difficult relations of the program management unit with environmental NGOs in Guarapiranga). Evaluation of Options to Select Public Sector Partners Public entities are the traditional partners of development aid institu- tions. They are responsible for repaying loans and are the ultimate deci- sionmakers regarding the policies, programs, and projects assisted by international organizations. Although the public sector continues to be the first interlocutor, note that, as part of the changes in the role of gov- ernment over recent years, decisionmaking and power over projects are being shared more and more with other actors. One positive trend-but one that also presents risks, as we will see below-is the decentralization of the functions of central governments as well as of the provincial level and large municipalities. Decentraliza- tion makes it possible for funding to be channeled through local govern- ments, bringing decisionmaking doser to the beneficiaries. This option requires investment in skill development, since the technical capabilities of the local level are often scarce. As far as the applicable laws and situation permit, it is better to avoid a dual command situation and to weigh down a project by involving too many central government organizations. If a municipality or province responds individually for a loan, it is better to involve national struc- tures only at a supervisory and controlling level. Even though it is necessary to choose a principal stakeholder from among the public entities involved (see box 5-2), it is also important to establish effective channels of consultation with other entities that are directly or indirectly involved in the process. Such channels should be operational throughout the project, from the preparation phase through design through implementation and operation and maintenance of the project, so that their technical requirements and contributions may be taken into account. SCALING UP: THE POLICY LEVEL 257 Box 5-2. Choosing Public Sector Partners There is a clear trend toward the management of projects by the lowest appropriate level of government, i.e., a municipality or a subdelegation, casa municipal, or subalcald{a (administrative subdivision of a municipality) in the case of large municipalities. The involvement of various line agencies as partners is positive, but it is important that the coordinating role be entrusted to organizations that by nature have a global vision of urban policy. In most successful projects, the public entities have chosen to delegate functions and responsibilities to private sector groups and to the popula- tion. This has modified the management style of the projects, which is now more focused on efficiency gains, cost control, and the achievement of concrete results within a well-defined time frame. Delegation of tasks has not weakened the capacity of public entities to control a project (if we understand the term "control" to mean the capac- ity to ensure results and not merely the affirmation of power). Moreover, delegation has enhanced budgeting and cost control methods, and has led to greater cost consciousness of both government and communities. This is a dramatic change from when the functions of planning, implementa- tion, and control resided entirely with the public promoter of the project. One factor that has made programs and projects more efficient and effective is the delegation of functions and responsibilities to private sec- tor actors. Examples like Guarapiranga, for the for-profit private sector, and FUPROVI, for the nongovernmental sector, show that it is possible for a public entity to delegate functions to the commercial or nonprofit private sector without losing control of the process and with clear gains in efficiency and effectiveness. The Cali partnership example given in chapter 2 is another good illustration of this. Involving the Private Sector The examples we have studied show that the participation of both the for-profit and nonprofit private sector and the involvement of civil soci- ety can increase the impact and sustainability of urban upgrading and low-income housing programs and projects. Private organizations intervene in low-income areas for a variety of reasons: with a developmental motive, as in the case of nonprofit orga- nizations; or by necessity, as in the case of the privatized utilities that need to increase market share, develop an image as a good corporate citizen, and/or improve cost recovery in low-income areas. Without 258 SLUM UPGRADING AND PARICIPATION overcoming the paternalistic relationship that state-run utilities have tra- ditionally had with low-income people, they will never be able to meet the investment and service expansion targets imposed by regulators while operating within reasonable tariff levels. Two key elements guarantee the development of private sector par- ticipation in urban upgrading and low-income housing: * Continuity. Entry into any new market typically involves consid- erable upfront investment and opportunity costs in terms of gath- ering information; developing a business strategy; and mobilizing the required technical, human, and financial resources. One-off transactions rarely justify such investments. Rather, the private sec- tor tends to seek out the elements that can guarantee the continuity of a process-and guarantees its own development in this way. Thus, a "specialized" private sector (which is totally or partially focused on the market segment represented by the urban poor) comes into being. FUPROVI is a good example of a private sector actor that has always focused on creating the necessary conditions for its own continuity in its market segment. * Strategic alliances. The complexity, diversity, and dynamism of informal settlements requires specialization. Emerging specialized organizations tend to develop strategic alliances with other parts of the private sector as well as with the public sector. These alli- ances in turn strengthen the specialization of each participant. For a privatized water utility, for example, an important benefit relates directly to core business activities and its ability to gain markets. Through a partnership with an NGO, it may be able to fulfill its commitment under the privatization agreement to expand cover- age to low-income communities. In addition, its staff can receive training from the NGO and acquire skills in how to work with low- income communities. The company's ability to work with this non- traditional clientele may become a key comparative advantage in international bids for contracts. For the NGO partner, such a part- nership may allow it to achieve a much higher level of effective- ness in its work at the neighborhood level, as well as provide the opportunity to expand its influence on local development issues to other neighborhoods and municipalities. These key elements apply to both for-profit and nonprofit private or- ganizations. If a specialized organization wishes to establish a sustain- able process, it must meet the above two conditions. For example, we have seen that FUPROVI has planned for its continuity since the begin- ning as one of the founding tenets of the organization. FUPROVI did not come into being in order to manage a specific project with a limited bud- SCALING UP: THE POLIcY LEVEL 259 get and time frame. It was formed to confront the problem of low-in- come housing in Costa Rica in general terms, based on a certain amount of start-up funding that it sought to preserve and leverage. The institu- tion has endowed itself with a structure that is adequate to its specific market sector and has invested in staff development from the begin- ning. The programs with which it currently works are products created by trained and experienced teams that are able to develop new partici- patory programs in response to the needs that arise in their daily work. The Role of the For-Profit Sector A glance at urban upgrading and low-income housing projects shows that the role of private enterprise has traditionally been limited to the provision of some types of specific services. Architects, engineers, and public works contractors are normally the only private sector actors present in upgrading, while private financial institutions are added to the list in the case of low-income housing in some countries. Some recent examples suggest that the private for-profit sector has a wider role to play in urban upgrading processes. Some of the innova- tions that we have observed include the case of private providers of socio- technical support in Brazil, who are beginning cost recovery programs on behalf of some of the recently privatized electricity companies. Other ex- amples include for-profit microcredit institutions that grant credit for home and community infrastructure improvement projects, such as Caja Popular Mexicana in Mexico, Financiera Calpia in El Salvador, and Caja de los Andes and BancoSol in Bolivia. The market potential for private for-profit actors in upgrading and low-income housing includes: * Engineering firms * Architecture and urban planning firms * Building contractors * Project and contract management providers * Quality control providers * Financial institutions (commercial banks and microfinance institutions) * Cooperatives of technicians (like the assessorias of Sao Paulo's mutirdo programs and the Catuche consortium in Caracas) * Socio-technical support providers * Building materials suppliers * Private landowners * Privatized utilities * Small and medium-sized providers of infrastructure services (see box 5-3). 260 SLUM UPGRADING AND PARTICIPATON Box 5-3. Micro- and Small Enterprises in Solid Waste Management One of the infrastructure services that could be delivered via micro- and small enterprises in urban upgrading programs is waste management. A study carried out by the NGOs IPES (Peru), ACEPESA (Costa Rica), and WASTE Intemational (the Netherlands) in 1996 covered a total of 89 mi- cro- and small enterprises involved in street sweeping, collection, recy- cling, and disposal in seven countries in Latin America. Although there are huge differences in the operations of the enterprises studied, some of the common aspects and main findings can be summarized as follows: * Some of the enterprises studied started in the early 1950s (Guate- mala and Costa Rica). They deliver services mainly in middle- and high-income areas. At the end of the 1980s and beginning of the 1990s, enterprises were set up under different development pro- grams in, among other countries, Bolivia, Peru, and Colombia. They particularly serve low-income areas. Most of the enterprises stud- ied are still operating. However, in Peru, microenterprises had to discontinue their services, because the municipalities where they had previously offered their services had decided not to renew their contracts. The principal reason for this was that the munici- palities in the meantime had acquired compactor trucks (basically from donations) and began offering their own services. * Costs of the enterprises studied are lower than or equal to the costs of conventional systems within the region. Average collection costs are $15 to $25 / tonne in Latin America; costs of the enterprises stud- ied vary between $7.50/tonne in Guatemala and $19.50/tonne in Bolivia. Average street sweeping and cleaning costs vary from $7 to $12 per curb kilometer in Latin America, while costs of the enter- prises in Peru are around $4.50. * The relationships between the municipalities and the enterprises are very different in the countries investigated. In Guatemala, the relationship is distant because the municipality does not intervene in any way in the functioning of waste collection. There the enter- Investing in the Informal Sector. For decades, urban policies in many countries have ignored the informal sector and have concentrated all planning and land management functions in the state. The result has been an apartheid-like division between formal and informal sectors, where legal, economic, and social systems have functioned according to separate logics. The private business sector's usual lack of interest in investing in the informal sector reflects this segregation. Yet the new SCALING UP: THE POLICY LEVEL 261 prises decide for themselves who they will provide their services to, how much they will charge their clients, when they will attend to them, and so forth. In Peru, on the other hand, the municipality determines in great detail how the enterprises must operate. In general, adequate municipal supervision enhances quality of ser- vice. * In the majority of the cases, the enterprises operate under contract or concession from the municipality. Contracts vary from a period of four to six months (Colombia) to a period of 10 years (Costa Rica and Guatemala), but are usually for a period of one year. Some enterprises operate without written contracts but have been granted authority to operate by the municipality. Contracts help clarify the tasks both of the enterprises and of the municipality and improve the quality of service. Even when there is no contract, a depen- dency relationship with the municipality exists; for example, for secondary collection or for access to the final disposal sites. * The waste collection enterprises establish close relationships with the communities they serve. They usually offer personalized ser- vice and form part of the community. The client's satisfaction with the service offered is a necessary condition for success. In some cases, e.g., in Bolivia, community associations supervise the perfor- mance of the enterprises. * Waste collection enterprises obtain their revenues either by charg- ing the population directly or by being paid by the municipality. The arrangement depends on what works best in the particular local situation. In Guatemala, the method of direct payment by the residents is very effective. In Peru, where the municipality has granted the enterprises the right to charge the people directly for this service in some areas, this method has had little success, and nonpayment or delayed payment is a frequent result. One of the reasons for nonpayment is that people consider that these services should be provided by the government free of charge. Municipali- ties also can be bad payers, as is also the case in Peru, where pay- ment may be delayed by several months. Source: Arroyo and Larinois (1999). supermarkets, building materials suppliers, and automobile service sta- tions that can be seen sprouting up in places like the Florido-Mariano district of Tijuana, or the telecenter operations that offer telephone, fax, and Internet services in Lima, are proof that changes are under way. These investments create job opportunities in low-income areas and can contribute to the start of a cycle of gradual increase in residents' incomes. Urban upgrading projects can contribute decisively to the elimination of 262 SLUM UPGRADING AND PARICIPAnON some key obstacles to private business investment by improving access to the areas; solving conflicts on landownership; and improving essen- tial infrastructure such as water, sanitation, and electricity. Private Business as a Project Sponsor. It should be possible to create incentives for various forms of association with the private business sec- tor in undertaking urban upgrading projects. The involvement of the private for-profit sector in sponsoring upgrading projects is a very re- cent phenomenon, and there is scarcely a track record yet established. Nonetheless, our interviews with private business leaders in Tijuana and Ciudad Juarez have shown that a well-planned and efficiently run ini- tiative could attract considerable business support. The logic for private sector involvement may be one of trying to develop its image as a good corporate citizen; expanding its market share; or that the target settle- ment may be home to a firm's employees.5 In the logic of participatory area development planning, private businesses with interests in the area could be consulted to explore possibilities for synergy and collabora- tion. Through these consultations, partnerships and specific agreements could be reached concerning one or more aspects of the project. Upgrading Can Create Job Opportunities. Another aspect that should be emphasized is that the public works contracts involved in upgrading can offer job opportunities to the local population. Many projects nego- tiate specific conditions for the training and hiring of labor with the con- tractors responsible for the work. An example of such synergy is in Brazil, where an agreement with SENAI (a training entity allied with the Fed- eration of Industries) has allowed the training of the local construction workers who took part in the Novos Alagados project in Bahia. An agree- ment with the contractor gave hiring priority to area residents, reducing unemployment in the area by 25 percent. In Belo Horizonte, Brazil, up- grading projects in the Nossa Senhora Aparecida and 31 de Marco slums have actively encouraged the establishment of small local businesses that performed project-related construction work. These businesses have continued to operate in the external market. Also in Belo Horizonte, col- lection of construction-related waste was put in the hands of commu- nity cooperatives, especially when it required the employment of manual labor due to difficult access to the sites. Public agencies here had shown a certain reluctance to employ large contingents of local residents, since 'Improving living conditions could contribute to reduction of employee turnover and increase worker productivity, which is extremely high in the maquiladora industry of Mexico's northern border. SCALING UP: THE POLIcY LEvEL 263 they feared political pressure to keep people in employment even after the end of the works, which does not seem unjustified. More involve- ment of private sector actors could modify this scenario and broaden the opportunities for the employment of local people, community coop- eratives, and small local businesses in local projects. Involving the Nonprofit Private Sector. While the private for-profit sec- tor needs incentives to do more in low-income areas, the nonprofit sec- tor appears to face the opposite problem. Despite the considerable growth of nonprofit organizations in both qualitative and quantitative terms, governments are still reluctant to work with NGOs. One example of such reluctance is that consulting and project management assignments for which NGOs could be qualified are often subjected to procurement pro- cedures that make it difficult for them to compete for contracts. Nonetheless, private nonprofit organizations (NGOs, foundations, and associations that purport to represent the population's interests) more and more frequently act as key project participants for the following reasons: * Their knowledge of the culture, needs, and aspirations of poor com- munities makes them effective mediators between the population and the government. * Their greater flexibility in managing funds than is possessed by public entities makes them attractive channels for more efficient disbursement of project funds. * There is a growing political acceptance of the social role that such intermediaries can play in development activities. This has impelled the emergence of new NGOs and the growth of existing ones, and above all, has begun to create a wealth of experience and specialized know-how in the nongovernmental sector. NGOs can play two roles in upgrading and low-income housing: at the program level and at the project level. They also often carry out both functions in a complementary fashion. 1. At the program level, in association with other actors. In this sce- nario, the NGO plays the role of the program management unit and usually also of the program promoting agency. FUPROVI is one such nonprofit organization that performs both roles. Another example of an NGO that both promotes and manages a program, although in this case in association with municipal organizations, is the Association of Volunteers for Intemational Cooperation (AVSI) in Belo Horizonte. This NGO has catalyzed resources and partner- ships for the formulation and application of the PROFAVELA law. The result in both cases was the development of approaches and 264 SLUM UPGRADING AND PARTICIPATION methodologies that have had a strong impact on public policy. In Bolivia, NGOs such as Red Habitat and Gregoria Apaza in El Alto (discussed in chapter 6), the Institute of Integrated Training for Women in Cochabamba, and Cidcruz and the Center for Urban and Regional Development in Santa Cruz provide program support both to municipalities and community organizations, especially in par- ticipatory long-term planning. 2. At the project level, working in the project area alongside the community. This is a very common situation with several variants. FUPROVI, in the case of San Juan de Pavas, executed the project as part of a program that had been promoted by another institution. As we have seen, FUPROVI usually works both at the program and project levels, as does AVSI in Belo Horizonte, where it helps define participatory development plans in each area. The NGO Desco in Villa El Salvador, Peru, similarly provides program sup- port to the municipality and the Self-Managed Urban Community of Villa El Salvador (CUAVES), while also promoting specific projects. In Guarapiranga and Tijuana, although NGOs are active in the infor- mal settlements, they are not involved in urban development or hous- ing work. NGOs function as social service providers in Tijuana and Ciudad Juarez, and as environmental organizations in Guarapiranga. The Advantages of NGOs. The participation of NGOs and similar institutions can be particularly fruitful for the development of some project tasks for which public entities are less sensitive and organiza- tionally more rigid. Among these are the capacity to gather information and analyze needs with the cooperation and involvement of the popula- tion, social communication and the strengthening of community organi- zation, and attention to the use of local resources and of low-cost appropriate technology. NGOs generally appear to be better at provid- ing socio-technical support, assisting communities in the design and management of their own development projects, than are public enti- ties. In the context of the cases studied, FUPROVI in San Jose, Desco in Lima, and Red Habitat and Gregoria Apaza in El Alto are NGOs per- forming essential development promotion and support functions. NGOs can also be important fundraising agents. Besides finding re- sources for a project, they often succeed in obtaining further in-kind or financial support to solve specific problems and broaden the project budget to account for the unforeseen circumstances that are so common in upgrading projects. Another advantage NGOs often have over the state is the tendency to favor the continuity of upgrading actions. In the Latin American con- SCALING UP: THE PoucY LEVEL 265 text, there is a strong inclination by new administrations to discontinue their predecessor's programs. NGOs often serve as a connecting link between successive municipal administrations, exerting pressure to com- plete an initiative that is under way. They are often also the only guard- ians of the historical and documentary memory of the process of intervention. A good example in this sense is ASVI, which serves as a guarantor of the continuity of the PROFAVELA program in Belo Horizonte. The Liabilities of NGOs. The problems that have arisen in many situ- ations result from some organizations' lack of technical capacity and from the difficulties and limitations of certain NGOs in working with large institutions and managing financial resources. Some NGOs are very adept at social promotion work among the population, but they dedicate little time and resources to written documentation and systematization of methodology. As a result, their experiences are difficult to reproduce in other situations and on a larger scale. Moreover, some NGOs focus on the promotion of one particular cause in such an exclusive way that they lose sight of many of the factors at play in a given situation. This can produce a sterile, confrontational rela- tionship with government and impede collaboration, which is the basis for all successful cases of NGO involvement. In successful cases, the all- too-typical lack of trust between government and NGOs is overcome through a conscious effort on both sides. National and international NGOs often work together, which tends to work well, since their strengths and weaknesses are complementary. National NGOs can be more aware of the needs and preferences of local people, but are subject to the manipulations of local interests; the latter, by contrast, generally possess a certain cultural and economic indepen- dence and more advanced levels of organization and resource adminis- tration. International NGOs, however, do not always know how to meet local needs and demands. In many successful cases, one sees forms of alli- ance and collaboration between local and international NGOs. However, the nongovernmental sector is so broad and diversified that it is difficult to generalize about qualities and defects. Some so-called NGOs have self- serving, rather than developmental, goals; some have even served as ve- hicles for corruption. The very term "nongovernmental organization" has a different meaning in each country. In some countries, any not-for-profit association in the field of civil society can call itself an NGO; while in others there are forms of classification, accreditation, and control that regulate their activities and their possibilities of access to financing. These points demonstrate the need to establish selection criteria for organizations under consideration as partners or associates of a program 266 SLUM UPGRADING AND PARTCIPATON or project. Among the possible types of information to be considered in evaluating candidate NGOs are: * Their documented work experiences with grassroots organizations in urban poverty reduction projects * The qualifications, experience, availability, and motivation of their technical team * The specific staffing arrangements, work methodology, and bud- get they present for the project. Institutional Arrangements and Decentralization One of the issues discussed in chapter 4 is the choice of program format. The social investment fund format (and its variant, participatory bud- geting) and the comprehensive upgrading program format were identi- fied as the main existing formats. In the former, communities present requests to a facility that selects and funds projects. This format has the advantage of ensuring response to direct demand, and the disadvan- tage of encouraging a piecemeal approach to upgrading, since commu- nity requests are normally not based on any coherent plan. In the comprehensive upgrading program format, investments fit into a coher- ent overall plan, and the interactions among infrastructure systems are taken into account. However, unless every effort is made to involve the community in the discussion of alternatives and their cost, comprehen- sive upgrading may select costly solutions that preclude tariff-based cost recovery. Organizing and creating channels for participation that ensure re- sponse to demand does not mean that one can forget the supply side. In fact, participatory upgrading requires a stronger supply mechanism than conventional urban development work, because of the much wider skill set and stronger coordination capacity that is required. Area-based needs assessment, planning, and implementation has been identified as a key requirement of urban upgrading. The potential for conflict with traditional line agency-based institutional structures has been identified and discussed, and the need for a strong coordination mechanism that is accepted by all parties has been determined. The vari- ous possible institutional arrangements have been discussed in an ear- lier chapter and are further explored in this chapter. Decentralization, with its advantages and pitfalls, is also discussed in detail in this chap- ter. Decentralization processes are often not as well-thought-out and well- managed as would be desirable, and it is important to identify recurrent problems and possible solutions. Examples drawn from the cases stud- ied are briefly discussed below and summarized in tables 5-2 and 5-3. SCALING UP: THE PoucY LEVEL 267 The genesis of a program or project usually defines the key actors and their functions. Government is almost always involved from the very beginning, either because it promotes the project directly (as in Guarapiranga or Tijuana), or because a government entity acts as a re- source and focal point for a range of partner organizations. Strong government involvement is the rule rather than the exception. In a few cases, the state plays a more limited role of promoter and regu- lator-as in the case of FUPROVI's program in Costa Rica-but it tends to play a dominant role in most cases. This does not mean that there have not been changes in the role of government. The key role of part- nerships and the abandonment of a sectoral approach in favor of an area- based, integrated approach are two of the most important and far-reaching of these changes. They are also elements of successful large- scale programs such as Guarapiranga or Favela-Bairro. The viability of undertaking a partnership-based interdisciplinary program or project at scale thus depends a great deal on government's openness to two factors: * A real participation of the government's partners in the definition of the strategic plan * An integrated, area-based approach to problems and to the devel- opment of alternative solutions involving the different spheres of the administration. It may thus be said that the project begins with the meeting of its dif- ferent actors, and its institutional structure is a consequence of the cul- ture and modus operandi of its context. The idea of participatory budgeting arises from the encounter between the political will of the administration (or, in the Bolivian case, the administration's legal obli- gations) and the demand of the neighborhood groups. In the case of FUPROVI, the point of departure is the basic need for housing, and the decision on the part of the government to meet this need. In addition, the availability of international support (in this case, from the Swedish International Development Agency) played a key role. In the case of the legalization and upgrading of informal settlements in Belo Horizonte, the process began with a coalition of grassroots organizations and local and international civil society which succeeded in pressuring local gov- ernment to change the rules and in garnering local and international funding. Table 5-2 gives the general features of the cases we have studied in terms of program type and responsibility for promotion and process coordination. Table 5-3 explores the ways in which key responsibilities were allocated in the institutional arrangement adopted. Table 5-2. Process Features in the Cases Studied Feature Bolivia Brazil Costa Rica Mexico Peru Program type Participatory budget- Upgrading program Participatory low- Participatory budget- A process, not a ing at local level based income housing ing at local level based program on specific central gov- development on central and state emmnent transfers; government transfers piecemeal upgrading plus local resources; piecemeal upgrading Process type Urban upgrading Integrated urban New housing and Urban upgrading Building of a city (isolated works) and upgrading infrastructure (isolated works) social investment Process State (central) State (provincial); State (central); NGO State (local) State (central); state 00 promotion state (local) (local); ABCO Program State (local) State (local) NGO State (local) State (central); state coordination (local); ABCO Methodologies Participatory budget- Participation in defi- Assisted mutual-help Participatory budget- Entire city based on used ing with community nition of upgrading construction; com- ing, community man- community manage- control of expendi- plan and during munity management agement of the works ment principle (shared ture; general meet- works implementa- of the works (shared (shared control) and control) local govern- ings of ABCOs; tion, involving both control) community financial ment established on neighborhood asso- ABCOs and SPCOs contribution basis of preexisting ciations and surveil- ABCO; the use of lotes lance committees are con plano y plan strat- area-based egy;' direct democracy mechanisms Feature Bolivia Brazil Costa Rica Mexico Peru Socio-technical Scarce (exception Intense, but limited Intense and long-term Limnited in intensity Limited outside sup- support is PAP project) time frame; absent in (18 to 24 months), but and time frame; absent port, due to high level post-implementation absent in post-imple- in post-implementa- of community organ- period mentation period tion period ization, responsibili- ties can be shared among local govem- ment, ABCOs, and SPCOs Resettlement/ In a few cases Yes In a few cases No No replacement housing aBeaconed sites plus a development plan. Source: Authors' construction from field study data. 270 SLUM UPGRADING AND PARTICIPAnON Table 5-3. Allocation of Responsibilities among the Partners in the Cases Studied Responsibility Bolivia Brazil Costa Rica Mexico Peru Project management S-L PC NGO; S-L; S-C; S-L; SPCO SPCO ABCO; SPCO Socio-technical support S-L PC NGO S-L S-L: ABCO; SPCO Construction PC PC SPCO PC; S-C; PC SPCO Engineering, architecture, and urban planning S-L PC NGO S-L S-C; S-L Quality control (works) S-L PC NGO S-L; S-C; S-L SPCO Control of budgetary S-L; NGO; S-L; S-C; S-L; expenditures ABCO S-L SPCO SPCO ABCO; SPCO PC private contractor S-C state (central) S-L state (local) Source: Authors' construction from field study data. Dealing with Decentralization Over the past 30 years, the concept of decentralization has gained wide acceptance. It has been translated into policy-and, in turn, into pro- grams and projects-by decisionmakers and policymakers at all levels from international organizations to local governments, although with many different approaches. Decentralization can be considered one of the global trends that characterize economic and social development in the world today (CERFE 1995). The rationale is that decentralization, by delegating resources and re- sponsibilities to the lowest appropriate level, brings government closer to the people it serves, recognizing that local governments, being closer to the problems, have access to knowledge about local constraints and resources that provincial and central governments will never have, and are likely to be more accountable and use simpler procedures. Decentralization has been implemented in many contexts. Urban poli- cies in Brazil, the new role of municipalities in Venezuela, the recently enacted Costa Rican local government reform, the decentralization that has accompanied democratization in Mexico and Bolivia, health policy in countries as disparate as Brazil and Burkina Faso, and rural develop- SCALING UP: THE POLICY LEVEL 271 ment initiatives in many countries are only a few examples. Nonethe- less, while recognizing both the need for decentralization and its highly positive aspects, it is useful to undertake a serious analysis of the limits and negative aspects that decentralization policies have often had. The Three Missed Opportunities of Decentralization It is possible to identify at least three missed opportunities that are often evident in decentralization processes: * Responsibility. Theoretically, since decentralization attributes more functions to those who are closer to the problem, it should also in- crease their administrative, technical, and implementation respon- sibilities. In practice, however, since these people are often given a weak motivational structure (e.g., inadequate salary ranges, career opportunities, and status), they tend to pass on the responsibility for resolving thorny problems. In addition, a lack of clarity in de- termining roles and responsibilities at the various levels can weigh down the entire process and can in fact lead to a decrease in re- sponsibility. * Bureaucratic simplification, a goal toward which administrations that want to be closer to the people strive. Decentralization does not mean the elimination of central or provincial actors. In practice, therefore, decentralization increases the number of bureaucratic layers, as each decisionmaking level has its own bureaucratic struc- ture. In particular, in situations of overlapping administrative lev- els, each level will usually retain some of the responsibility over a given issue, which causes bureaucratic complications and delays. * Local knowledge. A local government is by definition located in the town or city that it administers, and the assumption is that it knows much more about it than the faraway central government. This can only be true, however, if the local government has the will or material conditions to produce that knowledge, which does not happen in many cases. Frequently, for lack of human or financial resources, local decisionmakers fall into the "sorcerer's apprentice" syndrome, and learn about or "know" their area through common sense only-and often through prejudiced eyes. This is particularly true in the case of informal settlements and areas of urban poverty in general. Recently, and with difficulty, local governments have begun to recognize the role of information not as a luxury, but as an indispensable tool of government. It should be noted that centralized administrations are not necessarily models of responsibility, bureaucratic simplification, and local knowl- 272 SLUM UPGRADING AND PARTICIPATION edge either. Better coordination and information exchange among peers, one of the supposed advantages of centralized administrations, often exist only in theory. Decentralization Policies Are Rarely Financed Adequately Several points must be noted in this context: * There are many different forms of decentralization. These can be differentiated by their focus (for example, political, fiscal, or ad- ministrative decentralization) or by the degree to which decentrali- zation is implemented. * The resources needed to implement decentralization policies are often not available. From many of the reports prepared by devel- oping countries for the Habitat II Conference in 1996, it was clear that decentralization policies were proposed and implemented to some degree in most countries through more or less adequate re- forms in the political, administrative, and legal arenas. However, decentralization policies were hardly ever adequately financed. * Given the municipalities' proximity to the local community, their ability to provide a more effective interface in terms of engaging local people in the design, implementation, funding, monitoring, and expansion of local programs is fundamental for program so- cial and financial sustainability. However, most municipalities do not have the needed institutional capacity in areas relating to com- munity mobilization, technical assistance, proposal preparation, and-especially-expenditure management, revenue mobilization, intergovernmental transfers, sound financial management practices, and appropriate frameworks for municipal borrowing. A Frameworkfor Municipal Finance The severity of the resource bottleneck means that the success of de- centralization policies hinges on the improvement of local government financial and institutional capacity, the development of optimal funding strategies for local infrastructure investments, and increasing the stream of private financing for local governments and other subsovereign enti- ties. Key areas of concern in this regard are the following: * Local government institutional capacity, including improving regulations; strengthening autonomy, accountability, and operat- ing capabilities; and promoting private participation and competi- tion in the provision of local infrastructure SCALING UP: THE POLICY LEVEL 273 * Local government financial management and creditworthiness, including improving intergovernmental fiscal relations, improving municipal tax administration, and enhancing local government bud- get processes and improving payment, cash management, and fi- nancial control systems. * Local government investments and access to private capital mar- kets, including strengthening the review process of local public in- vestment programs and outlining the conditions for mobilizing debt funding and budget-neutral funding schemes * Role of financial intermediation for local governments, includ- ing the structural, regulatory, and institutional changes needed to develop market-based financial intermediaries; the elements of public support that might initially be needed to assist such inter- mediaries; and the steps by which existing financial intermediaries could be transformed into market-based operations * Links to the capital markets infrastructure, including discussing benchmarks for pricing debt obligations of subsovereign entities, outlining measures aimed at bridging the gap between demand for and supply of local government securities, and outlining approaches to building closer financial partnerships between local governments and providers of financial services and capital. Human Resources Are an Even Worse Problem Local government finances are no doubt a major problem for the imple- mentation of decentralization policies. However, the lack of qualified human resources is an even more serious problem. Decentralization of any kind necessarily means accepting the challenge of greatly increas- ing the need for qualified personnel. Decentralization Can Backfire If Certain Conditions Are Not Met In brief, decentralization is without a doubt a positive political, insti- tutional, and social process. But if certain conditions are not met (au- thenticity of the process, adequate financing, availability of motivated and qualified personnel in sufficient numbers, clarity in the distribution of responsibility to the different levels, etc.), decentralization can back- fire badly-or, at the very least, become a futile waste of energy. In the cases we have studied, there are several examples of the posi- tive impacts of decentralization and also of its risks-often in the same case. In Mexico, for example, the highly centralized federal program for land tenure regularization has been successful. But it is the ongoing pro- 274 SLUM UPGRADING AND PARNCIPATION cess of decentralization and democratization that is allowing an impor- tant step forward-going beyond the legalization of the subdivision of ejido lands, into legalization of tenure in the case of illegal subdivisions of private lands in Guadalajara and other cities. Centralization versus Decentralization: Two Mexican Cases It is useful to analyze the differences between the Obra Social Comunitaria programs in two northern border towns, Tijuana and Ciudad Jufrez. Municipal governments in Mexico are free to adopt a centralized or a decentralized structure as they see fit. Tijuana and Juarez, two cities of similar size (about 1.5 million), have gone opposite ways: Tijuana's local government is highly decentralized; Juarez's is centralized. Tijuana's territory is subdivided into delegations, with the larger delegations di- vided into subdelegations. The delegate and subdelegate are the repre- sentatives of the local government in their areas, and they are equipped with staff, office space, and equipment to cater to many needs of local residents. They are also there to transmit requests and suggestions to the municipality's specialized branches and to coordinate their action in the area. The delegation is thus a sort of local government one-stop shop. In Tijuana, the OSC program has seen increasing delegation of pow- ers and resources to the level of the delegation and subdelegation. At the start of the program with Manos a la Obra in 1995, all social promoters worked for the Municipal Administration of Social Development (DESOM). Similarly, all the technicians who assisted communities and oversaw the works belonged to the Municipal Urbanization Unit (UMU), the public company in charge of urban development projects. More pow- ers were passed on to the delegations and subdelegations each year, and, in the 1998 program, Mas por Tijuana, social promoters and technicians worked directly for the delegations and subdelegations. The advantage of decentralization is that social promoters and techni- cians are now closer to the people, and more day-to-day decisions may be made locally. In fact, the delegate or subdelegate is far closer to the reach of common people than the faraway authorities at the town hall. There have been disadvantages as well. When all social promoters worked for DESOM, they had regular coordination meetings at the town hall, which allowed them to discuss difficult cases with their peers and learn from one another's experiences. Technicians similarly met regu- larly at UMU, where they benefited from standardized and up-to-date information on the cost of materials and workmanship and established technical routines such as producing as-built plans of all completed works. Nowadays, with decentralization, these important learning and SCALING UP: THE PoucY LEVEL 275 coordination roles are no longer being filled. Social promoters and tech- nicians unanimously denounce this as a major drawback. In Ciudad Juarez, centralized control is the norm. An attempt at es- tablishing local offices failed three years ago because the offices were not adequately staffed and equipped, and all meaningful decisions con- tinued to be made at the central level, making the local offices redundant. In the Juarez OSC program, each participating settler has to deposit his or her contributions directly at the municipal treasury in downtown Juirez. All social promoters work for the central social development department and have their offices in downtown Juarez. Similarly, all technicians work at the public works department downtown. The advantage here again is information exchange and coordination; the disadvantage is that local people have far less access to decisionmaking concerning their project. The happy medium between the Tijuana and Juarez formats could be the adoption of Tijuana's decentralized system with the establishment of a project coordination unit that would establish and enforce uniform procedures, ensure coordination, and promote information exchange and a continuous learning process. The Increasing Importance of Local Governments in Costa Rica In the FUPROVI case in Costa Rica, the small size of the country-60 percent of Costa Rica's 3.5 million in population lives in the capital's metropolitan area, known as the Great Metropolitan Area (GAM)6-has allowed the institution to work effectively with local communities while having strong links to the central government. But the winds of change are blowing even in Costa Rica-a new local government law has been approved, enhancing the role and political legitimacy of local authori- ties. Although decentralization is still in its infancy, FUPROVI has al- ready felt the need to establish area coordinators for the various parts of the GAM. The role and weight of local authorities in FUPROVI programs are bound to increase as decentralization proceeds. The Gap between Large and Small Municipalities in Brazil Guarapiranga is a case that illustrates at once the weight carried by Brazil's large municipalities in infrastructure, service provision, and shel- ter policy, and the relative helplessness of small municipalities in the same fields. Although all municipalities theoretically have the same pow- 6The GAM is formed by the capital San Jose and the outlying municipalities of Alajuela, Cartago, and Heredia in Costa Rica's Central Valley. 276 SLUM UPGRADING AND PARTCIPATON ers under the constitution, in reality, small municipalities are extremely behind in key resources such as knowledge of their own territory, its prob- lems, and potential; qualified personnel; and capacity to formulate and implement policies, programs, and projects. The ability to prepare funding proposals for projects and handle liaisons with financing agents-one of the key functions of local government-is usually lacking. It was thus decided that the municipality of Sao Paulo would run its own informal settlement upgrading component under the Guarapiranga project, while the smaller municipalities in the basin would be assisted by Sao Paulo State's Housing and Urban Development Company (CDHU). The result was that, while Sao Paulo was able to mobilize fur- ther resources and dramatically increase its counterpart funding, cover- ing more favelas and illegal subdivisions with infrastructure and service improvements, the smaller municipalities had little power over deci- sions and had to depend on CDHU. The state company moved more slowly than its client municipalities or the Guarapiranga project man- agement unit would have liked. One key component of the upgrading subprojects that was held up by this arrangement was the building of new housing units for families who had to be removed from their origi- nal locations as a result of the project. Lack of coordination and the re- sulting delays in resettlement had a very negative social impact. Development of a Critical Mass of Local Capabilities The operation of participatory programs and projects in upgrading and housing requires the availability of a range of specialized services. We have seen in earlier chapters that the range of services needed for par- ticipatory low-income housing projects is very similar to that needed for participatory urban upgrading. Developing local capabilities in this field requires not just training, but also the attraction of the appropriate out- side expertise and active creation of work opportunities in the upgrad- ing field that will allow the emergence and consolidation of local specialized organizations. In this context, the continuity of the funding stream for upgrading and low-income housing is very important: there needs to be a market for specialized organizations to survive and thrive. Such specialized organizations should be able to provide one or more of the following: * Socio-technical support, including support to participatory moni- toring and evaluation of program and project impact * Urban planning through a participatory approach * Architecture and engineering services and technical guidance in appropriate technologies SCALING UP: THE POLIcy LEVEL 277 * Program coordination services * Project and contract management services * Construction skills in tune with the specific needs of informal areas * Quality control in engineering and construction * Affordable building materials * Operations and maintenance of assets * Market-based financial services. Creating a critical mass of local actors qualified to support a partici- patory process is a key issue in scaling up programs and projects. The creation of a critical mass of capacities depends on several elements that need to be taken into consideration and stimulated during project imple- mentation, namely: * Sustainability of private actors. It is crucial to be able to count on qualified and sustainable private actors-that is, actors whose sur- vival and development over time may ensure quality provision of specialized services and operational autonomy. * A new organizational culture. The project should be an opportu- nity to create a new culture in its public and private partners, incor- porating the specific methodologies and approaches needed for participatory upgrading work, as well as the habit of interdiscipli- nary teamwork. This will create an environment that demands the appropriate skills and stimulates their development. In this con- text, the project should be seen as an opportunity for a process of training by doing. * Continuity of funding for the upgrading policy. A continuous funding stream for participatory upgrading and low-income hous- ing is needed to create the opportunities that will stimulate local actors to continue to work in this sector and build capacities. This is especially crucial in the case of for-profit private actors, which are very important in this process. There has to be a market for them if they are to be expected to develop and consolidate their capacity. * Training opportunities. The creation of local capacity depends on many other things as well, but training opportunities are essential. Since the skills involved in participatory upgrading projects are spe- cialized, they have to be brought from outside if they do not al- ready exist in a given local context, and a process of transfer of know-how to local actors needs to be organized. Due to the magni- tude and complexity of the problems in the field, the need to de- velop skills concerns all the actors in the process-i.e., public agencies, private providers of goods and services, financial institu- tions, NGOs, community organizations, and community leaders and local people. 278 SLUM UPGRADING AND PARnCIPAnON By observing the experiences that we have discussed in this work, some key capacity gaps appear that training efforts should attempt to address: 1. Integrated and interdisciplinary approaches to infrastructure and shelter development 2. Methodologies for work with local groups in developing instru- ments such as a participatory area development plan 3. Methodologies and appropriate technologies for participatory collection and analysis of information and for monitoring and evaluation 4. Methodologies for socio-technical support 5. Cost recovery mechanisms 6. Innovative finance mechanisms for providing access to savings and loans 7. Appropriate technology and standards for upgrading and low- income housing 8. Promotion of the role of women in projects (moving from mere gender awareness to the choice of women as the key partners of a project) 9. Participatory models founded on the association of various pub- lic and private actors (moving from simple consultation to more advanced forms of community management and mutual aid). Of the cases we studied, the most impressive example of training of local community members was undoubtedly FUPROVI's pro- gram in Costa Rica. Members of a housing association, many of whom had no previous experience in the construction field, are trained to build infrastructure and shelter and manage a construc- tion process, including procurement, warehousing, cost account- ing, and reporting to the group. FUPROVI also has an intensive training program for its own staff. Other cases we studied offer additional striking examples of skill development. The management of the construction process by neighborhood works committees in Tijuana-although the works are much less complex than in the Costa Rican case-is one of them. Another is the training of hundreds of social workers whose previ- ous experience was mainly in industrial relations to provide social support to favela dwellers in the Guarapiranga program. The de- velopment in Villa El Salvador of a generation of able community and business leaders who have been exposed to the day-to-day prac- tice of community organization but who have also had the oppor- tunity to undertake formal studies is also worthy of note. SCALING UP: THE POLICY LEVEL 279 The Role of Microfinance in Community Infrastructure Failure of Public Sector Interventions Though public sector programs for assisting low-income communities in accessing infrastructure services and housing have varied greatly in size, delivery mechanisms, targeted clientele, and autonomy, they have typically fallen far short of their objectives. This has been due to (1) lack of accountability, resistance, and lack of technical capacity of implement- ing agencies; (2) top-down approaches which lead to the introduction of solutions that have little in common with the needs, priorities, or capac- ity of the local communities, thus greatly restraining consumer willing- ness to pay; (3) legal and regulatory obstacles (e.g., building codes, constraints on property rights); (4) poor targeting; and (5) weak focus on cost recovery. Limited Private Sector Involvement Private funding for these works has been practically nonexistent given the banking sector's perception of low-income borrowers as "nonbankable." Even in more progressive environments, bank credit ap- praisal procedures are expensive and slow, especially given the small loan amounts, frequent repayments, and heterogeneous nature of technical solutions. In addition, banks seek physical collateral that borrowers can- not provide and/or face legal impediments to the registration and en- forcement of their collateral/ security rights. Even access to savings products has proven quite difficult as banks impose minimum balances, fees, and documentation requirements which increase the direct and opportunity costs to the poor for these services. Private provision of ba- sic services has similarly been limited due to assumed, and sometimes real, willingness and capacity to pay limitations of low-income communi- ties for these services. Finally, language, cultural, and gender differences between the service providers/banks and low-income communities have also led to significant social barriers to private sector involvement within low-income communities. Resulting Inefficiencies and Negative Externalities In light of these circumstances, private financial institutions have fo- cused on the upper income brackets, quite often to the exclusion of 60 to 85 percent of the population. Consequently, low-income communities are often left to finance their shelter needs through personal savings and informal credit sources, including relatives, suppliers' credits, rotating 280 SLUM UPGRADING AND PARTCIPAnON savings and credit associations, and moneylenders. However, these in- formal sources are expensive and unreliable, leading families to self- construct their communities incrementally, resulting in diseconomies of scale in construction, foregone discounts on bulk purchases of building materials, and construction of structurally unsound housing. Similarly, families, which have been unable to pay the upfront costs of water and sewerage hookup fees, on-site storage tanks, latrines, or septic tanks, often obtain illegal and technically unstable connections, resulting in com- munity-wide negative public health impacts. Even when funding is available, incremental improvements can add to overall development costs, especially given the natural evolution of household demand, with water supply typically the first priority, fol- lowed by on-site sanitation, block-level sanitation, and eventually the public provision of mains. However, these incremental improvements may add to project costs, for example, by adding a water supply, then drains, and then paved roads. Conversely, if such investments are made at the beginning, the result is that the loan needs to be longer term for monthly repayments to be affordable. This situation is even more nebu- lous for community-wide infrastructure where obtaining payment from each household for its share of the investment can prove problematic due to free rider issues. Sustainable Banking Servicesfor the Poor Breaking through the perception of the poor as nonbankable are a grow- ing number of microfinance institutions, including BancoSol and Caja de Los Andes (Bolivia), Compartamos and Caja Popular Mexicana (Mexico), Genesis Empresarial (Guatemala), K-REP (Kenya), ASA and BRAC (Bangladesh), and Bank Rakyat Indonesia. Charging interest rates often well above those of local commercial banks to cover their operat- ing and funding costs, these MFIs feature on-time repayment rates of 95 percent and higher and have reached tens, and sometimes hundreds of thousands, of low-income clients.7 Their lending methodologies center upon providing quick and convenient access to small (often below $500), short-term loans, while relying on nontraditional forms of collateral such as joint liability between solidarity group members and providing addi- tional incentives for on-time repayment through.the promise of contin- ued access to larger loans. MFI credit officers also often either live or 'BancoSol, a commercial bank, charges 55 percent annual interest for local currency loans, compared to commercial banking rates of around 22 percent. However, interest rates in the urban informal markets are as high as 800 percent. SCALING UP: THE PoLIcy LEVEL 281 work in the communities they serve, and thus are familiar and comfort- able with the social and economic realities of their client base. Though these programs seek principally to support microentrepre- neurs through working capital financing, many recognize that due to the fungibility of money, 20 to 40 percent of their loans are applied for "consumption" purposes, including home improvement.8 Indeed, often the microentrepreneur's business is home-based. Thus, loan proceeds invested in paved flooring, improved spacing and ventilation, or ob- taining access to water and electricity serve to improve shelter condi- tions, as well as the productivity of the microenterprise. Some MFIs, including SEWA Bank, Grameen Bank (Bangladesh), FENACOAC (Guatemala), LPD (Indonesia), Financiera Calpia (El Sal- vador), Mibanco (Peru), and Caja Popular Mexicana, have developed tailor-made programs for home improvement. Typically, these institu- tions require borrowers to have participated in a series of shorter term loans to qualify and / or to have saved over a substantial period prior to being eligible for these larger and long-term loans. These MFIs recog- nize that households want an ongoing relationship with an institution that can provide a range of financial services to match their evolving needs. They also realize that home improvement lending requires indi- vidually tailored loan terms and conditions (larger amounts, longer maturities, grace periods, collateral) to conform to household needs and payment capacity. In response, they have adapted their appraisal proce- dures and asset liability operations to better assess and manage the risks and opportunities associated with this product line. MFIs as Possible Partners in Urban Upgrading Initiatives Besides acting as a vehicle to leverage donor resources, the availability of market-based credit plays a key role in ensuring true choice by the communities.9 For example, true choice may mean that dernand is ex- pressed for a higher level of service than what the government or a donor may be able and willing to finance, say for waterbome sewerage instead of on-site sanitation. Hence, altemative funding sources would facilitate the demand-responsiveness of participatory urban upgrading initiatives. 8For example, Bank Rakyat Indonesia, with over 2.6 million borrowers, does not re- quire loan proceeds to be used for any specific purpose. Similarly, credit unions and sav- ings and loan cooperatives, which in most cases are unregulated, provide a broad range of financial services, and most certainly have extended credit for home improvement. 9Microfinance programs providing both credit and savings services can also serve to increase community capacity to pay for infrastructure services and housing loans. 282 SLUM UPGRADING AND PARnCIPATION An emerging base of commercially oriented MFIs are supporting small- scale urban upgrading projects, such as water, drainage, sanitation, road paving, electricity, and telecommunications, along with home improve- ment. These loans, which carry fees and interest rates sufficient to cover operating and funding costs, have been issued under three modalities, which are described below and illustrated in figure 5-1. * Microenterprise loans. The MFT issues a loan to small-scale service providers for investment and/or working capital purposes. The microentrepreneur then charges users for the service provided, with corresponding revenues applied to repay the MFI loan. This model has been applied in Guatemala, Mexico, Kenya, and Paraguay. * User group-based loans. Technical assistance providers, often the MFIs themselves, mobilize and assist user groups in the design, imple- mentation, operation, and maintenance of the urban upgrading project. The MFI then provides a loan to cover part of the subproject invest- ment (between 30 to 70 percent of the total cost), with remaining fund- ing secured via a subsidy provided by a government or donor agency. This model has been successfully applied in Guatemala. * Individual household (consumer) loans. Individual families, based on combined household income, receive a consumer loan from the MFI. The household then applies the loan proceeds to cover its cost- sharing of a community infrastructure asset. Similarly, home im- provement loans are provided under commercial terms and conditions to support household service connection fees, addition of on-site water and sanitation facilities, and purchases of lot with basic services. This model has been applied in Indonesia, India, Bolivia, and Mexico. These community infrastructure lending programs have varied sig- nificantly in terms of lender legal status, rural-urban focus, borrower profile, and credit terms and conditions. However, the use of the above- referenced nontraditional forms of collateral and expedited loan appraisal procedures, combined with the expectation of follow-up credit, has proven critical in terms of fostering high loan repayment rates for these small-scale infrastructure assets-many of which are indeed character- ized by free rider issues. Given that the MFI is typically the only source of financial services (both credit and savings) available to borrowers, they have an incentive to maintain themselves in good standing. Possible Roles of the Public Sector in Supporting MFI Programs Some MFI programs have formed strategic alliances, whether formal or informal, with public sector agencies, including municipal governments, SCALING UP: THE POLICY LEVEL 283 Figure 5-1. MFI Loan Modalities Investment and g Microfinance \icroeenterpri Connection Service and User Fees Microenterprise Model Microfmance Market-Based Loan ser institution Group 30 to 70% of Project Cost Government $ Grant Infrastructure Windowy Asset Comrunty Based or Third- User Group Model erat { _oshcl]' Infrastructure Loan~~~~~~~~~s $Asset $ Govemmtent t ~~~~~~~ { ~~~~~Based or Wi,nbdiow r | $ ~~~Third-Party _FHouse~hold Operator) L-Household$ Individual Consumer Loan Model Source: Authors' construction from field study data. 284 SLUM UPGRADING AND PARTICIPAnON infrastructure providers, and social investment funds. Government par- ticipation has centered upon the following financial, technical, logisti- cal, and legal support: * Provision of demand-side subsidies to communities approved by the MFI to defray some of the technical assistance and investment costs. Amounts covered have ranged from 30 to 70 percent, with the remainder covered by MFI loans and community/ household in-kind contributions. * Development of secondary and tertiary infrastructure assets, as well as granting of usufruct rights to land required to build, own, and operate the assets. * Provision of operations and maintenance services for the assets. * Logistical support in assisting low-income communities in secur- ing, transporting, and warehousing required construction materials. * Promotion and training in the application of appropriate technologies. * Legal recognition of the right of community-based groups to own and operate the assets. Potential Roles of the Private Sector in Partnering with MFIs Private companies of various sectors have provided support to the work of MFIs and to urban upgrading programs. It is thought that there is much scope for increasing the participation of the for-profit private sec- tor in these initiatives. Some successful examples include: * Home improvement building material providers that pass on "pre- ferred client" discounts to approved MFI borrowers or social in- vestment fund grant recipients. Such arrangements were employed in the Cali and Tijuana examples. * Private landowners who agree to solve long-standing disputes over property rights to invaded areas via land swaps. * Commercial banks, through establishment of commercial lines of credit to the MFI, provision of cash management and trustee ser- vices, and application of smart-card technology. In Guatemala, 12 local and private commercial banks have established commercial lines of credit with Genesis Empresarial. Provided under market terms and conditions, these credit lines involve no government or donor guarantees. * Private infrastructure providers through such mechanisms as sub- contracting subproject operations and maintenance to community- based providers; provision of training and technical assistance in the design, implementation, and operation of such assets; and full SCALING UP: THE POLICY LEVEL 285 or partial funding of upfront investment costs in secondary or ter- tiary infrastructure assets. Public-Private Partnerships: Keeping Grants and Loans Separate Engaging communities as partners serves to increase the technical and social sustainability of urban upgrading programs. However, given these programs' reliance on public sector and donor resources, the issue of financial sustainability often presents a significant challenge to program participants. Often it has been the case that strategies to address this matter are not even taken into consideration during project design. Con- sequently, the opportunity to leverage donor and government funding is lost as private sector or community-based resources are foregone or even crowded out. Microfinance institutions, on the other hand, though representing a potentially effective mechanism for delivering financial services to low- income communities, confront borrower capacity and willingness-to-pay constraints as they venture down the income scale. Most successful pro- grams typically do not allow borrower monthly loan payments to ex- ceed 25 to 30 percent of combined family income. These limitations usually put the purchase of starter homes or even a housing site with or without basic services outside their purchasing power. Therefore, some level of subsidy will be required for lower income groups, especially since many of the infrastructure-related services to be provided are of a common good nature, with benefits accruing to society in general. Also, in an effort to standardize operations and reduce costs, most successful MFIs have focused exclusively on the delivery of financial services. Con- sequently, technical assistance and community mobilization activities- centerpieces of successful participatory programs-are excluded from their list of services. Placing both participatory infrastructure and microcredit programs within a single institution presents clear dangers of mixing a commer- cial-based initiative with grant-based operations, given the wrong sig- nals the latter might send to MFI borrowers. Thus, although the menu of services offered via participatory community development initiatives, MFIs, social development funds, and the for-profit private sector are highly complementary, the challenge is to develop mechanisms that bring together the community linkages, incentive structures, and services of- fered by each into a practical, well-coordinated, and sustainable approach without detracting from their respective mandates. Part II Voices from the Field 6 Bolivia: The People's Participation Law In our journey through the four largest cities of Bolivia we found a seed that is blooming and rooting. In a country with an organizational tradi- tion that dates back to the precolonial Inca ayllu form of community or- ganization, a country with a long tradition of practical mutual help, the state has legally recognized the existence of legitimate community orga- nizations and their right-indeed, their duty-to participate in local development as both subject and beneficiary. Law 1551, passed in 1994, institutionalizes community participation processes; it also legally rec- ognizes area-based community organizations (ABCOs), granting them the right to participate in local planning and to establish surveillance committees as a mechanism for social control over the actions of the municipal government. Further, it establishes a new concept of munici- pality in the country, encompassing urban areas and their surrounding countryside; and it mandates budget transfers to municipalities of 20 percent of the national income, which are known as co-participation re- sources. BOLIVIA, FREE, INDEPENDENT, SOVEREIGN, MULTIETHNIC, AND MULTICULTURAL, CONSTITUTED IN A UNITARY REPUBLIC, ADOPTS THE DEMOCRATIC REPRESENTATIVE FORM OF GOVERN- MENT, BASED ON THE UNION AND SOLIDARITY OF ALL BOLIVIANS. -Article I of the State's Political Constitution The People's Participation Law is part of a deep institutional change in the country. Before the law's passage, just as in most of Latin America, the state was extremely centralized, and all government activities were 289 290 SLUM UPGRADING AND PARTICIPAnON managed from the capital city, the presidency, or the ministries. The municipality's power was almost nonexistent except in the largest cities, and most of the country did not even have a local government, since only larger urban areas were under a municipal jurisdiction, while all rural areas were ruled directly by the central government. Under the new law, a participatory planning process is established within all mu- nicipalities whereby all communities work with the municipal govern- ment to elaborate a five-year municipal development plan (MDP), from which an annual operating plan (AOP) is derived. The People's Participation Law, together with Law 1654, Administra- tive Decentralization, is looking to create an environment wherein the country can effectively deal with extreme poverty at the municipal level, since it is here at the municipal level that the actors, potentialities, limi- tations, and main attributes for addressing poverty exist. The Importance of the Bolivian Experience In Bolivia, as in no other Latin American country, the people's participa- tion process has been extended to the whole country and even has a national law effecting its institutionalization. In a short period of time, this institutionalized community participation process has advanced greatly; today, about 15,000 community organizations have legal status throughout the country; there are 311 surveillance committees in full operation, exercising citizen control over the implementation of MDPs; and 311 municipalities are preparing and updating their plans in par- ticipatory processes with community organizations. Although the pro- cess has advanced much faster in rural areas, municipal activity in the cities uses the People's Participation Law as its framework and is slowly being adapted to national demands. POPULAR PARTICIPATION HAS FUNCTIONED VERY WELL IN THE RURAL AREAS; IN THE URBAN AREAS, IT IS JUST BEGINNING TO FUNCTION ..THERE IS A CENTRALIZED MANAGEMENT IN THE LARGE MUNICIPALMES, WITH VERY LITTLE PARTICIPATION FROM THE CIVIL SOCIETY. -Jose' Barriga, Vice Ministerfor People's Participation and Municipal Strengthening We here discuss and assess the country's experience with popular participation from a macrocosmic perspective-that is, from the national level-placing emphasis on its application in the four largest cities of BOLMA: THE PEOPLE'S PARnCIPATION LAW 291 Bolivia: La Paz, El Alto, Cochabamba, and Santa Cruz. These metropoli- tan areas together account for more than half the national population. In these cities, we have tried to see the progress of people's participation through the eyes of the local governments, the nongovernmental orga- nizations (NGOs), and the community organizations involved. The following may be highlighted as the fundamental points of this experience: * People's participation is part of the institutional reform of the Bo- livian state, which encompasses decentralization to the municipal level, new flows of resources for local development, and organized participation. This reform has had a great impact on the relation- ship between the population and government institutions, and on the distribution of the government's budget for social programs. * People's participation in Bolivia-just as in the orcamento participativo (participatory local government budget) model used in Porto Alegre, Belo Horizonte, and other cities in Brazil (discussed in chapter 4 under the heading "Advantages and Disadvantages of an Indepen- dent Program Management Unit")-involves the population in lo- cal development. It differs from the Brazilian case because it is a general norm at the national level and for all the municipalities of the country, rather than the product of a purely local initiative. * The basis of participation are ABCOs, which are legally recognized as subjects of the development process and as having an important role to play in municipal planning.' * Law 1551 has had an easier application in rural areas due to their traditional social organization. Although progress in the cities has been slower with a weaker organization and a more complex situ- ation to address, there has been a great advance in terms of aware- ness regarding the new rights, the processes for the law's application, and even the management of relevant technical and accounting concepts. * Although important strides have been made in terms of local com- munities' awareness of municipal issues and in participatory plan- ning processes, the concept of popular participation still requires support in the form of technical assistance and training by the cen- tral government, prefectures, and NGOs if further progress is to be made. 'These ABCOs are known in Bolivia as organizaciones territoriales de base. 292 SLUM UPGRADING AND PARTICIPATION Background A Tradition of Community Organization Community organization for the collective satisfaction of basic needs has a long history in Bolivia; there is evidence that such practices existed even before the Incas' conquest of the territory. In Bolivia, people seem to get organized for just about everything, from the pasanaku for savings, to the mink'a for crops or for building a house, to the bands that dance in the carnivals.2 This organization has taken several forms and has been subject to local cultural influences-resulting in numerous diverse forms of cooperation corresponding to the country's vast geographic and eth- nic diversity. This tradition of community organization has always been, for many communities, the only way to respond to the constraints imposed by poverty and an absentee state. It has been responsible for most of the infrastructure built in the countryside-schools, roads, and irrigation systems. Frequently, it has played a key role in low-income urban neigh- borhoods as well. Despite its legitimacy, however, community organiza- tion had never before been legally recognized by the state. Limited Municipal Authority Was the Pattern Until mid-1994, municipal authority in Bolivia was exclusively urban and confined for all practical purposes to some dozen large and me- dium cities. Municipal budgets depended on a resource allocation from the nation's general treasury, a transfer of 10 percent of tax revenues, senate-sanctioned funds (in some cases), plus any concession made by bureaucrats appointed by the military dictatorships that governed the country during most of its republican life. Of Bolivia's present 311 mu- nicipalities, nine departmental capitals and El Alto spent about 92 per- cent of the national municipal budget, some provincial capitals shared the remaining 8 percent, and most municipalities did not receive even a cent for their budget. Only the municipalities of the country's three larg- est cities had achieved an institutional solidity and had the technical capabilities to perform the normal duties of a local government. When the country returned to the democratic practice of selecting lo- cal governments through free elections in January 1988, municipal man- 2Pasanaku refers to a revolving savings fund, where each member of a group of savers in turn has the right to draw a specified amount from the fund. Mink'a or minga is a reciprocal loan of labor for the execution of works, involving the honor-bound participa- tion of men, women, and children among neighbors and relatives. BOLIVIA: THE PEOPLE'S PARMCIPATION LAW 293 agement did not, for the most part, change. Rather, decisions on local public investment remained in the hands of a few appointed or elected politicians and civil servants, who together or individually would de- cide matters without consulting the citizens. Up to this point, Bolivia's few municipal governments were prey in many instances to authoritar- ian decisionmaking, influence peddling, endemic corruption, and little technical efficiency. Sucre Was the Forerunner Between 1987 and 1990, Sucre, capital of the republic, became the site of the country's first formal experience in urban participatory planning when four graduates of Cochabamba's Architecture School undertook as their dissertation work the implementation of four popular planning workshops in Sucre's low-income neighborhoods, in partnership with the local municipality. This experience established the operational and conceptual basis for participatory management in urban local develop- ment in Bolivia. Following Sucre's lead, Cochabamba took a step toward institutional- ization of this process by conducting five area workshops between 1991 and 1993. The following year, it created the Department of Neighbor- hood Management, to be responsible for planning, organizing, direct- ing, and controlling neighborhood development programs executed under the operational plan of each municipal administration. As stated in Cochabamba's 1994-95 operational plan, the department was in charge of eight decentralized local government units known as community houses, "operational units responsible for planning, organizing, direct- ing, and controlling the execution of works for social, cultural, and envi- ronmental development, with community participation." In all, Cochabamba's pilot experience reached 66 percent of the city's urban population, and 100 percent of the rural population of the municipality; this accounts for 280,000 inhabitants in almost 90 percent of the municipality's total territory. With much enthusiasm, technicians-in Sucre through the juntas de vecinos (neighborhood associations) and in Cochabamba which put all the neighborhood organizations together-analyzed the situation, the needs and desires of the people, and proposed and carried out identi- fied projects. Oscar Terceros, director of the program in Cochabamba, notes that it became an accepted "custom that all the people working in the urban planning department and in the area workshops worked to- gether with the beneficiaries on Saturdays and Sundays in one or an- other neighborhood; in this way, the people would see municipal workers performing activities with them." According to Rauil Salvatierra, neigh- 294 SLUM UPGRADING AND PARnCITAnON borhood leader in Cochabamba's District VIII, this experience was in- strumental in "showing concerned officials that we could decentralize." Concurrently, the issue of popular participation was being raised in de- mands and proposals from various community organizations, induding the Confederation of Rural Workers and the Confederation of Indigenous People. (See box 6-1 for a summary of popular participation in Bolivia.) Not surprisingly, popular participation became a campaign promise dur- ing the election process of 1993-and ultimately resulted in Law 1551. Participatory Process: Law 1551 Role of ABCOs Popular participation is based on the state's official recognition of all area-based community organizations, which typically include neighbor- hood associations in urban areas and community organizations of in- digenous people, ethnic groups, or rural workers in rural areas. All of these entities, which are organized according to their local customs and traditions, are granted legal status in the eyes of the state and are granted the full right to participate in the development process of their munici- pality. To achieve this status, all an ABCO needs to do is register in its Box 6-1. Why People's Participation in Bolivia? Carlos Hugo Molina, former national secretary of people's participation, and promoter of the People's Participation Law, offers an explanation as to why this movement took hold so dramatically in his country. "First, in 1953 there is a real land reform process in Bolivia ...Second, the democratic transition process in Bolivia in 1982 occurs as a submission of the military to civil authority...The third element is that in Bolivia there is such an . economic crisis until 1985 that everyone is obliged to accept structural adjustment and the new rules of the economic game, which are critical for the maintenance and conservation of the state.. .The fourth one is an ex- traordinary thing that has not taken place in any other Latin American country, and that is the system of pacts and agreements reached by the political parties. "Finally, the fifth one-which gives context to all the items above-is that the People's Participation Law considers people not only inhabitants, but citizens. It links citizenship with the workings of the state. The munici- pality is finally recognized as a key state organization and is given territo- rial jurisdiction. People's participation is the result of the accumulation of all these factors." BouvIA: THE PEOPLE'S PARTICIPATION LAW 295 municipality; the registration process is both free of charge and very simple. In the first three years of implementation of the People's Partici- pation Law, about 15,000 rural workers', ethnic, and urban organiza- tions obtained their certificate of legal recognition, accounting for an approximate average of 100 families (420 people) each. Once registered, these organizations can continue to work according to their uses and customs (see box 6-2 for some examples); they also have the right to help identify, prioritize, manage, and supervise the implementa- tion of development projects to be consigned in the municipal plans. This recognition has been instrumental in giving citizens back their right to a participatory and representative democracy in accordance with the state's political constitution. Historically, due to the lack of democracy, the pres- ence of authoritarian governments forced the civil society to get organized by strengthening the associations and not the political parties. As Carlos Hugo Molina, former national secretary for people's par- ticipation, explains, "When you ask who are the members of a civil soci- ety, the answer in Bolivia is the labor unions, the federation of private entrepreneurs, the church, universities, civic committees. The reference is to institutions, but the citizen never appears. We are not aware that the citizen is also part of civil society; we have to be an entity or organi- zation to be part of civil society. In Bolivia, if you do not have an organi- zation to support you, you have no chance of being heard." THE PARTICIPATORY PLANNING FOCUS IS DIFFERENT FROM THE ONE THAT HAS HISTORICALLY PREVAILED IN OUR COUNTRY; TRADITIONALLY, PLANNING IN BOLiVA HAS BEEN A VERTICAL AND CENTRALizED PROCESS. THE PEOPLE'S PARTICIPATION LAW WANTS TO MODIFY THIS UNILATERAL AND BUREAUCRATIC PRAC- TICE BY GIVING IT A DEMOCRATIC, PARTICIPATORY, AND CONSEN- SUAL FOCUS. ITS PHILOSOPHIC DIMENSION IS THAT WE INTEND TO DEMOCRATIZE THE COUNTRY; THE PRACTICAL IS THAT CONSULT- ING WITH SOCIETY MEANS IMPROVING EFFICIENCY AND RECON- CILING THE USEFUL WITH THE PLEASANT. -Roberto Barbery, Former Deputy Secretaryfor People's Participation Surveillance Committees Together with the formal recognition of area-based community organi- zations, the People's Participation Law created something new-the surveillance committee. A municipality's surveillance committee is com- prised of representatives from each district's ABCOs. As set forth in the 296 SLUM UPGRADING AND PARnCIPATON Box 6-2. Uses and Customs An important aspect of the People's Participation Law is that it recognizes the variety of Bolivia's participation mechanisms, which have their roots in the history of this multicultural state. Elected by the Dead. In the community of Coroma, located in Bolivia's highlands, the election of community leaders is done under the inspira- tion of the dead. When an important decision is to be made, the elders of the community get together in a room where they have deposited the ponchos of the dead. They believe that the spirits inhabit these ponchos and that they will illuminate the decisions that the elders gathered in the assembly have to make. (Note that the elected community leaders are usually middle-aged males, who do not attend this meeting) A Woman Decides. In the Crucefio Chaco, many Guarani indigenous organizations receive the name Capitania, and their hereditary leader is called the captain. These organizations grew from the structure of the Jesuit missions of colonial times, and they have remained latent during the republic. Recently, they have gained new force and have asked the state to recognize the territory that had been taken away from them. However, what makes this form of representation curious is that, in some of the Capitanias, the chief authorities do not make any decision without first consulting their wife-or, if single, their sister. These women have no voice in the meetings, but, after listening to the men, they whisper the decision to be taken into their ears. Source: Government of Bolivia (1996b). Procedure Manualfor Surveillance Committees of the People's Participation Secretariat, the comrnittee "is the body that organizes the interaction between rural workers' associations, indigenous communities, and neigh- borhood associations and the municipal council; it also articulates the demands of the population in municipal participatory planning It rep- resents the population and exercises social control over the municipal- ity." The surveillance committee ensures that municipal participatory planning reflects the various demands from communities, that the mu- nicipal government makes the public investments scheduled, and that local participation in the state's tax revenues is used adequately. More specifically, the committee: * Ensures that resources from central government budget transfers are invested equitably between the urban and rural populations BOLIVIA: THE PEOPLE'S PARnCIPATION LAW 297 * Ensures that the municipal government does not devote more than 15 percent of these resources to overhead and that 85 percent is spent in works and services * Issues binding statements on the budget and reviews accounts on expenses and investments made by the municipal government * Refers cases of misconduct or disregard of the agreed investment plans to the appropriate judicial authorifies. Roberto Barbery, former deputy secretary for people's participation, adds, "Surveillance committees are organized in all municipal govern- ments, they're seeking to pressure the municipal governments-that is, there's a series of results that we could list which demonstrate that the People's Participation Law is applied in many things, and in those where it's not fulfilled, it grants the right of the individual to complain, to de- mand compliance." DISTRICT DEVELOPMENT PLANS HAVE REALLY BEEN VERY PARTICIPATORY. WE'VE HAD MARATHON SESSIONS IN WHICH WE'VE DEVOTED OURSELVES FULL TIME TO THIS; DIAGNOSIS, VALIDATION HAVE BEEN VERY PARTICIPATORY. -Germdn Maraiidn, President, Surveillance Committee, Cochabamba The Bolivian Decentralization Model As the vice minister for people's participation and municipal strength- ening, Jose Barriga, explains, the People's Participation Law "responds to a decentralization process where the country is betting on municipal- ization." The new municipality is based on strengthening of municipal management autonomy; expansion of municipal jurisdiction, encompass- ing both urban and surrounding rural areas; and the transfer of new responsibilities, including infrastructure and maintenance of health ser- vices, education, roads and support to production, recreation and sports, and the environment. By territorializing local management, a great advance has been achieved in terms of the application of public policies-particularly in rural areas, which in theory was a function of the national government, but in reality constituted a sort of "no man's land." Decentralization of responsibilities on a territorial basis has left the central government with very few operational attributions, forcing it to focus on its normative and enabling role, fostering and ensuring compliance with state poli- cies. People's participation is supplemented by the Administrative De- 298 SLUM UPGRADING AND PARTICIPATION centralization Law, which transfers jurisdiction over all regional minis- terial offices to departmental prefectures and mandates departmental administration to support the municipal governments and communities in this new process.3 Fundingfor Participation For participation to work, the law distributes 20 percent of the national tax revenue across all the municipalities in the country. This distribution of tax revenues in accordance with population size represents an initial exercise in equity. In theory, each resident in the country has an equal opportunity to access public resources for development. The total of participation-earmarked budget transfers is divided by the number of inhabitants in the country; then, the amount that corresponds to each municipality is determined according to the size of its population. The automatic and daily transfer of funds from the nation's general treasury to municipal accounts is complemented and supplemented by the mu- nicipalities' own revenues. There is, however, still a historical debt to meet. The older, larger municipalities have received investments over the years at the expense of opportunities being afforded to the remain- der of the territory. The constitution of a special fund was envisaged to compensate for this imbalance. The Impact of People's Participation Implementation of Law 1551 has had wide-ranging impacts, notably in its "process of citizenship creation," as phrased by former national sec- retary Molina. Its impacts, like its roots, are based in the nature of Boliv- ian culture. Roberto Barbery, former deputy secretary for people's participation, points out that "There is a feedback process, a reciprocal influence, between law and culture... the law helps change behaviors, and, in turn, culture intervenes in the application of the law. This means that neither the law will be able to modify the culture, nor will the cul- ture invalidate the law." This harmony of culture and law is producing solid results. Moreover, the public participation process can be enriched with new tasks. With this new law, Molina notes, "The Bolivian state has created an institu- tional framework sufficiently functional and sufficiently operational that 3Like many Latin American countries, Bolivia, although not a federal state, is subdi- vided into departments with a semi-autonomous departmental government, which in the Bolivian case is called a prefecture. BOUVIA: THE PEOPLE'S PARTICIPAnON LAW 299 it can serve as a train engine able to pull new cars. The first cars are control of municipal public investment, efficiency and transparency in budgeting, and participatory planning. If the engine were to pull an ad- ditional car, such as housing, there is no reason for it not to work." The Participatory Process in Urban Areas In this section we examine the implementation of people's participation in urban areas, based on perspectives from the numerous public and private actors who are contributing to this effort in the country's main cities. Urban-Rural Differences. In developing and applying the People's Participation Law, the government initially looked more closely at the rural areas-first, because these had traditionally been overlooked, and second, because, for many reasons, it was in the rural areas where par- ticipatory processes had always been applied with greater intensity. (See box 6-3.) The cities still have a long way to go in terms of popular partici- pation. "The process is much more rooted in the rural domain and in smaller cities. When the cities acquire an important dimension, like Cochabamba, Santa Cruz, El Alto, La Paz, then the process certainly is weaker: first, be- cause these are old-fashioned municipalities; and second, because of the low degree of consolidation that neighborhood associations have," says Mauricio Lea Plaza, participatory planning director of the Vice Ministry of People's Participation and Municipal Strengthening (VPPFM). Another difference has to do with the nature of the organizations in the countryside and in the city. In the rural domain, the area-based com- munity organization coincides with the functional organization. The rural workers' union represents all the community that lives in a specific area, but it also represents the functional and productive activities of its popu- lation; while in the urban area, people look to the neighborhood associa- tion to attend to the broader developmental issues of the neighborhood, but look to other organizations to address their functional problems. Learning to Do Participatory Planning: A Santa Cruz Example. "In the first moments of people's participation, the mayors would invest in roads near the central square, in the town hall, in ornamentation. They received the first resources ever, they had never haridled any money, so at that moment the reaction was to make this type of investments. They bought vehicles, cellular phones. But that is part of a process, it is the beginning of a process," notes vice minister Jose Barriga. 300 SLUM UPGRADING AND PARnCIPATION Box 6-3. Voices on Urban-Rural Differences "The participation component clearly appears in the rural area, stronger than in the urban area; the reason for this is very simple, since in the rural area there has never been participation in government processes; when the option is opened, people take it immediately..." -Carlos Hugo Molina, Former National People's Participation Secretary "Urban demands are related to the issue of collective consumption, like the sewage system or the water supply, and those demands are the most expensive; therefore, those projects are long-term projects. Rural projects are short-term and punctual, like an irrigation system, which is done fast; the house for the school teacher. These projects are implemented on a yearly cycle." -Ruben Ardaya, AID Project "I think that you work better in rural areas, because the characteristics are different. Since the Bolivian state has historically been centralized, civil society in the rural areas has had a great importance, because the state as a public structure was practically nonexistent. Civil society had to occupy that vacancy ...In Bolivia, urbanization is a recent phenomenon; conse- quently, in the urban areas, civil society has no organizational tradition, which makes some public authorities underestimate the possibility that the citizens, through their organizations, may perform roles of orienta- tion and social control for public administration." -Roberto Barbery, Former Deputy Secretary of People's Participation "Where we have more problems is in the urban municipalities. I have seen that in the department of Santa Cruz, the People's Participation Law has been a great success in the municipalities with a lot of peasant commu- nities, because that was the group that was previously excluded, it was not even part of the municipality. There, the People's Participation Law has been a revelation because it has changed the power relationships in the municipal council; that is, the peasants have come to the town and have taken it in many cases." -Fernando Prado, President of CEDURE, Santa Cruz. IF YOU ASK A MAYOR RIGHT NOW, DO YOU THINK THE POPULAR PARTICIPATORY LAW IS GOOD? HE OR SHE WILL REPLY "EXCEL- LENT," BECAUSE, THANKS TO THIS LAW, THERE ARE RESOURCES AVAILABLE.. .AND HE OR SHE CANNOT BE SO CYNICAL AS TO SAY THAT HE OR SHE DOES NOT LIKE THE LAW WITH REGARD TO THE PARTICIPATION OF THE CIVIL SOCIETY, BECAUSE THE PACKAGE IS COMPLETE, IT'S ALL OR NOTHING. -Roberto Barbery, Former Deputy Secretaryfor People's Participation BOLIVIA: THE PEOPLE'S PARTICIPATION LAW 301 They began investing in the new municipalities by responding to what seemed to be the needs. Little by little, the municipalities undertook participatory projects. At the beginning, these were heavily influenced by the historical requests each area had. "We've seen that we've been given freedom to identify our needs. In the old days, others used to think for us, they would decide for us and would do works that maybe we didn't even really need, but now we identify in each neighborhood what it is that we really need," explains Ratil Salvatierra, local leader of Dis- trict VIII in Cochabamba. In Santa Cruz, participatory planning processes have been develop- ing through Participatory Action Planning (PAP), a poverty relief project financed by the Netherlands that is trying interesting practices that have the potential to be replicated elsewhere. A leader from District VI of the federation of neighborhood associations (FEJUVE) of Santa Cruz, says that "PAP. Santa Cruz is carrying out works in different neighborhoods, and there we're really learning, if not everything related to participatory planning, at least what we consider comes close to the ideal. True par- ticipatory planning in each neighborhood takes no less than three months, because enough meetings must be scheduled on a sectoral basis." (See box 6-4.) A FEJUVE leader of District VII with the same experience adds, "We have at La Villa true participatory planning. Everyone is participat- ing in planning and summing up his priorities, so that we have a good Box 6-4. Participatory Planning in Santa Cruz German Caballero is sports director within the People's Participation Sec- retariat of the Santa Cruz municipality. He explains how participatory planning is working in Santa Cruz. "Mayor Johnny Femandez has pro- moted a series of workshops on Local Participatory Planning, in which the People's Participation Secretariat, with all its structure and technicians, visits the city district by district to hear the requests of each neighbor- hood. Starting with these local needs assessments, early in the year, the annual operations plan of the People's Participation Secretariat is estab- lished. Usually, in December of each year, we do the workshops, and all neighborhood associations participate. I would say that this is the activity that allows the People's Participation Secretariat and the Santa Cruz mu- nicipal government to comply with the People's Participation Law. In each workshop, an order of priorities is established by the neighbors themselves. The neighbors request a sports field, health, education, etc., but they also establish an order of priorities; which work is first, which is second, which is third; as a function of this, the resources are distributed neighborhood by neighborhood." 302 SLUM UPGRADING AND PARTCIPAnON idea of the needs of men, women, adults, youngsters, children. So, I be- lieve we're getting to know a true participatory planning in our local units. The mayor's office should plan that way, too." This last comrment refers to the fact that, while PAP dedicates three months to participatory planning in each neighborhood, the municipality tries to do it in three days. Although there is some friction between PAP and the current admin- istration, the technicians of the Santa Cruz municipality are also enthu- siastic about their work with the participatory processes. Notes German Caballero of the People's Participation Secretariat in Santa Cruz, "This municipality, like no other in the country, works in a very direct manner, so that the local resident is the one who plans his neighborhood, the one who decides what's going to be done with the AOP. The surveillance committee, which has a representative of that neighborhood, simply has to approve what its neighbors have decided. Observe, for instance, if you, as neighbor, have requested a multifunctional sports court and we have planned a soccer field; there, the surveillance committee says: no sirs, the neighbors requested a multifunctional field and you planned a field only for soccer." Gilberto Bejarano, a colleague of Caballero's, is a technical adviser to the secretariat; he notes solidarity between diverse groups, indicating that "in participatory planning, there has been an unselfish attitude on the part of the neighbors when they requested the works. There, solidarity has existed in the same district when the differ- ent local units fought for something: 'I want four classrooms.' 'But, I need three classrooms, you have more, why don't you let them give me one?'...'Well, I give him one because he really needs it.' There, you had solidarity." The secretariat carries out the annual planning in the months of No- vember and December with three-day meetings for each district, often in sessions lasting until midnight. The president of FEJUVE Santa Cruz, Rodolfo Landivar, says with great enthusiasm that participatory plan- ning is already happening based on the AOP. Nevertheless, there are people who think that the process conducted by the municipal govern- ment in Santa Cruz is not completely participatory, since "Planning is indeed done at the end of the year to be approved by the municipal council, but it's not true participatory planning; in other words, leaders make requests, but a true participatory planning coming from the neigh- borhood doesn't really exist," explains the District VII delegate of FEJUVE Santa Cruz. "Political practices limit and void effective participation. For instance, the participatory planning that the municipality must do according to the law in order to prepare the annual operations plan only consists of one meeting. The district meeting of participatory planning with the municipality starts at 7 p.m., a request list from the district is prepared, BOLIVIA: THE PEOPLE'S PARTICIPATION LAW 303 and at 9 o'clock starts the barbecue for the leaders, and there ends the meeting," says Rosario Rosas, director of the NGO Cidcruz. Fernando Prado, director of the NGO Center for Urban and Regional Development (CEDURE), Santa Cruz, builds on this point. "The mu- nicipality says that the participatory planning process is perfect. They send their technicians once a year to each district, they hold a big meet- ing, and representatives of the local boards make their requests-like in the Middle Ages before the king, a list of good wishes-and in the mayor's office, resources are obviously limited, and they start to define and cut down at their own criterion. That is, priority definitions are not given by the neighbors. And that's what the so-called participatory planning is." Strategic Planning and Participation. But there are also other prob- lems. Sometimes the population is not aware of other needs that the municipality rnight attend to, and they ask for what they believe the mayor is most likely to do, as the former national secretary for people's participation points out. "And here we find two things that are almost constant, but not only in Bolivia. When people are asked to set a priority to their demands, they do it based on two things mainly, infrastructure and services. They request the school, they request the health center or post office, and then the teacher, doctor, and medicines. Here we under- stand why there is no demand for housing, because thats not the munici- pal government's competence. It's a need of those living there, but it's not a specific responsibility established by law to be addressed by a mayor. If the surveillance committee, districts, and local boards identify a need of this kind, it could be perfectly channeled to a ministry, a fund, an aid institution." The current people's participation vice-minister qualifies the situation in similar terms when he says that "Nobody's going to ask the municipality for something that is not of its competence, that would have to be requested from another institution, so, with the privatization process, they're not going to request either water or electrification." In spite of the problems, people want to advance toward a new mo- dality of strategic planning; citizens' participation also seeks its place to realistically think of the future. Community organizations and munici- pal governments both want to launch it, and other sectors would also like to participate. German Marahion expands on this point. "We believe that the municipality's strategic plan may not be left out of the partici- patory process. We want the neighbor to participate in the plan and say what he wants, his opinion in this regard. There, we're making all dis- trict representatives go fight for what they want in their district." Katia Uriona, director of the NGO Institute of Integrated Training for Women (IFFI), Cochabamba, sums up the case. "A strategic planning answer is going to be built from the districts, but also with a summons to 304 SLUM UPGRADING AND PARTICIPAnON the sectors. We believe that, starting from the specificity, for instance, of retailers or private entrepreneurs, there are visions and demands regard- ing the municipality different from the ones expressed from the territo- rial ambit. This process will allow us to have sectoral diagnoses; it's going to let us define strategic objectives for the municipality where we can also say, as part of civil society, how we imagine our city and how we want it to be." Gender Issues Women's voices are also heard in this process-which is precisely as intended. The Procedure Manualfor Surveillance Committees of the People's Participation Secretariat mandates that "The mechanisms that enable women's participation must be taken into account. There must be physi- cal presence of women in the assemblies and meetings. Expressly ask women about decisions, expenses, etc. Try to incorporate women into the boards of directors." Moreover, President Sanchez de Lozada cre- ated, in 1994, a national Gender, Generational, and Ethnic Issues Secre- tariat to protect the interests of women, among other focal groups. Several NGOs are working with a gender focus in the development process; among these are Gregoria Apaza in El Alto, IFFI in Cochabamba, and the PAP project in Santa Cruz. (See boxes 6-5 and 6-6.) The president of the National Confederation of Neighborhood Asso- ciations (CONALJUVE), Juan Jose Diez de Medina, explains that "You will notice that Latin American countries are still backward in their in- clusion of women in decisionmaking; at present, CONALJUVE is prob- ably the only popular organization in the continent that has a mandatory quota for women in all its appointments, with equity between men and women: 50-50. That, in our country, is enormous progress, because in congress the fight is still for 30 percent women's representation, and in- stead, we as an institution have been able to include 50 percent in our bylaws." International Support Due to the interest the people's participation venture in Bolivia draws, several international cooperation agencies are supporting it. The pro- cess has received support from Danish, Dutch, Swiss, and U.S. bilateral cooperation, as well as from the World Bank and Inter-American Devel- opment Bank. The people and institutions involved in setting up people's participation in Bolivia are invited to seminars and workshops or sim- ply to present the Bolivian model throughout Latin America. BOLIVIA: THE PEOPLE'S PARTICIPATION LAW 305 Box 6-5. Women and Participation in El Alto Ana Quiroga, director of the NGO Gregoria Apaza, explains how women are drawn into the participatory process: "In El Alto, Gregoria Apaza applies the methodology of people's participation, but with special atten- tion to women's and youngsters' demands. This process has meant work- ing with women leaders, training them, and supporting them a lot, especially regarding negotiation techniques." Once women are trained, they take part in the regular cycle of partici- patory planning "and then negotiate with their associations; they negoti- ate with the district committee; and, in this process, the board is the one that starts to negotiate women's demands with the surveillance commit- tee, not just the women any more. In other words, the demand generated by women in this process is assumed by the territorial organizations as part of their requests." "That day, March 8, the agreement with women, youngsters, and neigh- borhood associations was going to be signed, and there was a standstill here in El Alto. The mayor didn't want to sign because there was no press, no TV. What he wanted was publicity; the international women's day, signing of the agreement. The neighborhood associations-and not just the women-said: 'No! we will not leave, and the mayor will not leave, until he signs.' Then they started to sit down; this is what impressed me the most, the youngsters in the first line, women in the second, and all the local boards, as if protecting them, behind." In El Alto, there are many female presidents of neighborhood associa- tions, and a woman, Olga Flores, is president of the surveillance committee. Roberto Barbery points out that "PAP Santa Cruz, which is funded by the Dutch, is possible thanks to the People's Participation Law. Its long- term objective is to link the struggle against poverty with participatory planning." Also with Dutch support, the Housing Ministry is trying to replicate the experience of PAP Santa Cruz in the city of El Alto with interesting results. "Its methodology is participatory from the bottom up, and we have come this far with the FEJUVE organization, which locates the suitable neighborhoods for this plan; then we visit the neigh- borhoods to collect basic information, because many of these neighbor- hoods are of recent creation and are not included in the 1992 census. We see how poverty is-just a superficial overview-and how the planning process within the neighborhood is, if they have meetings, who makes the decisions. Then we give training courses on participatory planning, urban planning, and specific topics such as housing, gender, health, and microenterprises. Next we have a workshop on self-diagnosis method- 306 SLUM UPGRADING AND PARTICIPAnON Box 6-6. The Methodology of PAP Santa Cruz: Women's and Men's Participation In PAP Santa Cruz, Roberto Barbery, coordinator of the project and former deputy secretary of people's participation, explains that "Women's par- ticipation levels in the local units where we work is higher than men's. But what's important here is that men are present: we do not simply have a debate among women; men also participate, and it has been possible to identify many topics related to gender training among the projects they formulate." Barbery sums up the PAP methodology thus: "Preparation, organiza- tion, and execution of differentiated diagnosis by gender and genera- tions. The consolidated diagnosis of each one of the local units is accompanied by gender workshops, activities in the framework of the People's Participation Law, municipality organization, citizen linkages, etc. Finally, formulation of a development plan with four areas: human development, habitat and environment, economy, and community orga- nization. "This is done in three months, with all territorial and functional organi- zations organized in a local committee that executes projects worth up to $40,000. For big projects, the municipal counterpart is required. In institu- tional terms, the municipality's willingness to incorporate PAP mecha- nisms and methodology has not been declared yet." ology and how to make a neighborhood development plan. It has four sessions.. .Each neighborhood has a local workshop. Around 200 neigh- bors have participated in these workshops, and we work with groups by age and gender-men over and under 25, the same for women, people over 55 years, and children. We try to involve all neighbors. They make their demands," says Hector Ugarte, Housing Ministry official in charge of the PAP El Alto project. The U.S. Agency for International Development finances the Demo- cratic Development and Citizen Participation program for municipal strengthening and support to the participatory process, initially in about 20 municipalities. Ruben Ardaya, who is in charge of the program, ob- serves that "For us, the citizen is high up there, organized in surveil- lance committees, area-based organizations, functional organizations... .This scheme of popular participation leads us not only to produce works and services, but also democracy; and this is a characteristic of the people's participation system in this country. Every year we sign an agreement, a plan with all municipalities, mayors, councils, and surveillance commit- tees, and discuss the types of activities to be performed, as well as dates for these activities throughout the year and the results we expect." The BOLIVIA: TEE PEOPLE'S PARTICIPAnON LAW 307 project works with surveillance committees and ABCOs, with the ex- ecutive and legislative branches and all the municipal administration, providing institutional strengthening and training. Support to Participation: Snapshots of Governmental and Nongovernmental Actors In Bolivia, there are more than 700 NGOs, many of which support com- munity organization and local development. In fact, they constitute a significant additional resource for these purposes, although most oper- ate at a rural level. In addition, municipal planning institutes and com- munity organizations constitute the support framework for people's participation. IIPLAM (La Paz). In La Paz municipality, the Municipal Research and Planning Institute (IIPLAM) made a serious citywide effort to apply participatory planning methodology, working by districts and organiz- ing workshops at the district and neighborhood levels. At both levels, neighbors were asked to contribute to a diagnosis of their situation and discuss priorities for development. "During the workshops, people mapped out their reality on paper, which was very effective. A neighborhood's structural elements, roads, major natural and manmade drainage, main buildings, and also its events and important activities, and its problems," says Norman Ramirez, IIPLAM director. Gregoria Apaza (El Alto). Ana Quiroga, director of the Gregoria Apaza, told us about the participatory planning activities undertaken by her NGO in association with Red Habitat and other local organiza- tions in order to support local neighborhood associations in the imple- mentation of the People's Participation Law. "We perform the diagnosis with lots of participation from the people, under agreement with local ABCOs... What the law has done is generate conditions to do what Gregoria Apaza wanted to do... .then, something that seems like a utopia suddenly happens, and that allows you to accelerate progress, despite the scant willingness of the El Alto municipality." Red Hibitat (El Alto). Red Habitat, another NGO of El Alto, has de- voted itself since 1993 to microcredit for housing with Dutch support and, more recently, to the fields of environment, local management, and lead- ership training. Though its housing program had initial grant financing, it has managed the program since 1998 in a self-sustained manner. "In the city of El Alto, the problems were housing quality, crowding, illegality of land tenure, and regularization of existing constructions. Over 308 SLUM UPGRADING AND PARTICIPAION 85 percent of the houses have been built through self-help," says David Quezada, director of Red Habitat. "For us to enter an area, we need to have a dialogue with the neigh- borhood association, the signing of an agreement. The housing topic was a pretext to also start supporting diagnosis studies at the local level. We want to make the participation law a concrete reality in El Alto, and specifically in District V. The project is called 'training and strengthen- ing of local organizations'; its objective is to generate management ca- pacities for local development," states Anelise Menendez of Red Habitat. Also, technical assistance is offered on topics such as surveying and in- formation and motivating strategies. (See box 6-7.) CIPRODEC (Cochabamba). The Research Center for the Promotion of Economic and Community Development (CIPRODEC) is an NGO that works in the low-income neighborhoods of Cochabamba in Districts H and VIm. It started with basic infrastructure projects, where it found a great deficiency on the municipality's part, and went on to a more integrated vision. The NGO is very critical of the municipal government and its performance. Box 6-7. El Alto: Voices from the Leadership of District V In a meeting with District V leaders, where Red Habitat works, among the many complaints for the scarce participatory spirit of the municipal- ity, we also heard enthusiastic words. Guillermo Quispe, president of the school committee of Villa Ingavi, notes, "In Villa Ingavi, the school com- mittee is working with the Norwegian Alliance. Currently, we have a water project, we are building a perimeter wall, we're also intending to do part of the patio drainage; but to do that the alliance isn't alone, we also give our contribution." Others point out the problems they face. Says Victor Paz Quispe about participatory planning, "It almost doesn't exist, even though we've been oriented by the Norwegian agency on this aspect. We lobbied the mayor, demanding participation in the mid-term review of the municipal devel- opment plan. We participated through an interview with the technical department, but they had no ears for us.. .Now, just a few leaders partici- pate in the annual operations plan, but when they showed us a project, it was for another neighborhood!" Local leader Isaac Paredes points out that "The distribution of the popular participation funds is not enough. Besides, the mayor scheduled our annual operations plan for 1998, but the work did not begin until 1999, or later; we don't know when it's going to begin.. .on the other hand, we would need a little technical support to prepare and propose our own projects." BOLMA: THE PEOPLE'S PARTICIPATnON LAW 309 At its beginning and under a previous administration (1994-95), CIPRODEC coordinated very well with the municipal government. Un- der the current administration, which has decentralized the application of the People's Participation Law to district offices known as commu- nity houses, municipal officials work with the NGO, "I would say, mak- ing faces, but they have to invite us; they have no other choice," observes Cesar Virguetti, CIPRODEC's director. "What we have now is a rather authoritarian municipality, a municipality that is corrupting and intimi- dating the neighborhood associations by creating parallel organizations, accusing leaders, taking them to the courts, and frightening those who think differently." Mauricio Lea Plaza is both critical and appreciative of the decentrali- zation process in Cochabamba. "Cochabamba has had a very sui generis experience, which seems to be the path for large cities, consisting of moving the planning to the district level. But what I have been demanding from the mayor is to know the municipality's vision as a whole. How does A articulate with B, which are the elernents that transcend the districts?" PEOPLE OFTEN BELIEVE THAT WHEN A LAW IS NOT ABIDED BY EXACTLY [AND] WITH PRECISION, IT NO LONGER WORKS. INSTEAD, THE MERE FACT OF DEMANDING THE FULFILLMENT OF SOMETHING IMPLIES THAT THE LAW HAS MET ITS PURPOSE, BECAUSE IT IS GRANTING THE PEOPLE A SUBJECTIVE RIGHT: THE KNOWLEDGE THAT "I CAN CLAIM SOMETHING." -Roberto Barbery,former Deputy Secretary for People's Participation IFFI (Cochabamba). IFFI is an NGO that works in District XIV, espe- cially in Villa Sebastian Pagador. Its main focus is women's support. It manages four programs covering democracy and citizenship, women and economic activities, food security and reproductive health, and pre- schools and libraries. Katia Uriona, IFFI director, states that "We believe that we had come to a moment when women recognized their right to participation, the importance of exercising their citizenship; the approval of Law 1551 cre- ated a scenario that allows the channeling of this experience by the mecha- nisms proposed by the People's Participation Law. Women's demands have to do with infrastructure and services, but also with training, eco- nomic activities, violence and rights. These demands go hand in hand with another process called sensitization, undertaken along with the lead- ers, to mixed groups, but especially boys, and the ABCOs, the surveil- lance committee, and the FEJUVE. We have also had a training workshop 310 SLUM UPGRADING AND PARTCIPAnON with the planning team of the municipal government about gender strat- egy." She concludes that "The other achievements are having incorpo- rated a significant percentage of women's demands in the district development plans and in the AOPs." Cochabamba: Community House, District XIV-Villa Sebastian Pagador. Cochabamba municipality is divided into 14 districts, each under the responsibility of a community house, with a district adminis- trator appointed by the mayor. In the community house of District XIV, IFFI has a small office, as well as the surveillance committee, the district council, and the school board. The administrator, Captain Ledezma, ex- plains that when he got there "The district was totally disorganized, and my first task was to visit each one of the leaders and summon them to a meeting for the organization of the ABCOs, as well as the district council and other civic institutions that were still alive." He is very enthusiastic about the participatory process in his district: "I'm not the one who decides anything for Sebastian Pagador. If some- thing is decided at a meeting, what the majority says is done. If there are three options-some want pavement, others want a multifunctional sports court, others want a bridge-then with these three possibilities, we hold an election, and the votes are counted in the presence of the district director and the surveillance committee. The one with more votes is the priority; if most people say "pavement," then we do it, that's what's taken to the AOP." Some local leaders told us that "Law 1551 has benefited us, but we do our part. Neighbors supply 50 percent of the counterpart effort for the works." Rufino Huanca, a local leader, is critical, noting, "Nevertheless, help from the mayor's office is very seldom obtained. Most of it is what we, the neighbors, do ourselves. The people who live here work hard to build our city." Santa Cruz. Municipal administrations are key factors in the popular participation process. In order to have an idea of how they operate, we examined the Santa Cruz People's Participation Secretariat as a sample, which shares the general structure of the large cities' administrations charged with the application of the People's Participation Law, as well as their problems. In this case, the municipality is in the hands of a political party with populist tendencies, with a mayor who is seen by many as partisan, and of whom many institutions complain regarding the guided participa- tion he practices in their view. The People's Participation Secretariat re- ports directly to the mayor, and has gender, generational, health, education and sports departments. In the municipality, despite the crit- BOLMA: THE PEOPLE'S PARTICIPATION LAW 311 ics, the staff are very proud of their participatory planning process, which they consider a model for urban municipalities in Bolivia. Cidcruz (Santa Cruz). The NGO Cidcruz of Santa Cruz started opera- tions before the People's Participation Law, when there was not much of an organization in the neighborhoods, or at least none that had any legal recognition. Initially, promoting committees were created, organizations that, according to Rosario Rosas, Cidcruz director, "quickly became a very masculine space... and became a promoting committee for works in the neighborhood to improve the habitat... .There was a very conspicu- ous absence of women, for, although meetings were mixed, men would make decisions, and it was not possible to get the opinion and concerns of women. So we thought it was important to create an intermediate organization composed only by women, to get to the promoting com- mittee already with more capacity. Mothers' committees were organized. The People's Participation Law arrived just then, so the promoting com- mittee and mothers' committee were deleted from the neighborhood's history, and we started to promote the neighborhood associations." Regarding the People's Participation Law in Santa Cruz, Rosario notes that "It must be understood as a process...people have to get familiar with it little by little, practice it, understand it, find its gaps and defects." She adds, "From the law's point of view, it has the great virtue of legiti- mizing the representation space. It's excellent that it has a territorial base; that's why it has men, women, youngsters, children, and the elderly- everyone. This ambit is governable and allows an ordered and coherent work. Upon the achievement of legitimacy through legal representation, there's a faster empowerment, people feel legitimacy before the law." Where Are the Results? "An essential objective of the popular participation process," notes Carlos Hugo Molina, "which we can clearly see now, was to create the possibil- ity of the exercise of citizenship, because there was no possibility of citi- zenship in a country where 42 percent of the population was living in rural areas with no possibility of voting to elect their local authorities. It is as simple as that." (See box 6-8.) Roberto Barbery notes that "The law is valid in itself; the mere fact that it exists is already a result. Now, we can't say that the law has not been observed-it's observed in some cases, in others a little bit less-but we have to acknowledge that it's sometimes too ambitious. These things take time. For instance, this is an electoral year in Bolivia; therefore, the mayors are more concerned with ensuring a good result in the municipal elections and are not thinking about processes that require long matura- 312 SLUM UPGRADING AND PARnCIPAnON Box 6-8. The Success of the People's Participation Law as Viewed by Cochabamba's District VIII Leadership The comments made about the People's Participation Law by local lead- ers are revealing. They consider it a good law, they express their desire and willingness to participate, and know that they now have a right to do so, but they criticize the nagging problems in the application of the law, especially in the relationship with municipal authorities. "We, the neighborhood associations, are spreading the word about the People's Participation Law, because we have also seen that out citizenry is not reading-oriented, doesn't like to read, doesn't know how to read. Maybe with the cassettes we are preparing now we're going to help them to know the People's Participation Law. I have a cassette here, for in- stance, in Quechua," notes Rauil Salvatierra. Romualdo Perez, another leader, continues: "What share of the budget transfer resources were we entitled to receive in investments? We didn't know. But slowly, we have been reading the law, we have discerned it, so we already understand the scopes and the spirit of the law. That's why we later requested what is due to our district from the mayor's office." He adds, his tone somewhere between enthusiasm and disappoint- ment, "This law is wonderful, it even says that the district administrators have to be residents of the district. Nevertheless, that's not observed; it's 'rhetoric,' says Mr. Hector Vasquez [the district administrator] When we have asked him about it, he says, 'It's rhetoric; who's going to observe that!' This law is wonderful, when I went to Argentina two years ago, I made them read it, and people were amazed. They said: 'You Bolivians are a lucky bunch!' But nobody respects it. What's the use of having good laws if nobody respects them?" With all the difficulties and setbacks, there have been advances. Ver6nica Cutipa, a Barrio Universitario leader, points out "Well, my experience would be that, while before the law we knew nothing, we have learned something, at least to complain, to demand the rights that are ours by law. We the neighbors have learned to participate, which we didn't know before. To know my rights! That would be what I have learned." tion and too much working time." On the other hand, the progress in deal- ing with concepts and practices that were not known by local people be- fore is palpable. As Vladimir Ameller, the vice ministry's director of economic development explains, "Even the lexicon of the people from rural and poor urban areas has changed. They talk about operational planning, participatory planning, budget, they know what the AOP and MDP are." BOLIVIA: THE PEOPLE'S PARTICIPATION LAW 313 IT'S REMARKABLE HOW THEY HANDLE TECHNICAL TERMS. THEY WILL SAY: "I HAVE BROUGHT A SURVEYOR, HE HAS DONE A TOPOGRAPHIC PLAN." THEY NEVER HAD THE POSSIBILI TO TREAT THOSE TOPICS AND NOW THEY DO. -Ana Quiroga, Director, Gregoria Apaza According to the president of the Cochabamba Surveillance Commit- tee, local leaders have started to take measurements and even fill their cylinders for concrete resistance tests. He wishes that "Each leader of the local board becomes the supervisor of the work, opens the work book, registers everything in the orders book, starts and concludes the works, and commits him or herself to a project's quality." Legal and Regulatory Framework A variety of laws and executive instruments support and institutional- ize public participation in Bolivia and make its overturn difficult to effect. State's Political Constitution Bolivia's political constitution establishes as a fundamental right of the people the ability to "formulate petitions both individually and collec- tively" and as a duty the need "to cooperate with state organizations and the community in social service and security, and to safeguard and protect collective goods and interests." The 1994 reform of the constitu- tion included several elements supporting the People's Participation Law, such as the recognition of the rights of indigenous people, legal repre- sentation of indigenous and peasant communities and their associations and unions, and the establishment of the new territorial municipalities as autonomous and equal as well as able to form consortia of munici- palities, if necessary. People's Participation Law This law, which has been in force since July 1, 1994, and was modified and extended in July 1996, recognizes, promotes, and consolidates the popular participation process by incorporating indigenous communi- ties, indigenous towns, peasant communities, and urban neighborhoods into the legal, political, and economic life of the country. 314 SLUM UPGRADING AND PARnCIPAnON AT HEART, IT DEALS WITH A DEEP-ROOTED REFORM THAT GOES BEYOND THE GOVERNMENT; IT IS A REFORM OF BoLIVAN SOCIET, OF THE BOLIVIAN STATE TO MAKE IT MORE DEMOCRATIC. -Roberto Barbery, Former Deputy Secretaryfor People's Participation It intends to improve the quality of life for Bolivian men and women through a more egalitarian distribution and better administration of public resources, and it strengthens the political and economic instru- ments necessary to enhance representative democracy through a par- ticipatory democratic process and through equal opportunities in representation levels for women and men. To achieve these objectives, it legally recognizes neighborhood associations and creates surveillance committees that exercise social control over the municipalities. Administrative Decentralization Law This law, sanctioned on July 28, 1995, regulates administrative decen- tralization from the central government to the departmental level within the unitary system of the republic. It consists of the transfer and / or del- egation of technical and administrative attributions from the executive branch at the national level, and establishes the organizational structure of the executive branch at the departmental level, as well as the depart- ments' revenue base and budgetary mechanisms. In this way, it improves the efficiency and efficacy of public administration by ensuring the op- eration of the executive branch at the lowest appropriate level. Other Related Laws A new Law of Municipalities has been promulgated in accordance with the provisions of both the Administrative Decentralization and People's Participation Laws. This law establishes, among other items, a constitu- tional court to determine the constitutionality of laws, decrees, and reso- lutions; monitor municipal autonomy; and guard against a return of any centralizing or authoritarian trends from the executive branch. It also establishes an ombudsman, whose mission is to avoid citizen abuse and negligence on the part of government and state entities; it controls the operation and compliance of public rights and guarantees regarding administrative activity in all public sectors.4 41n its first year of operation, many of the complaints filed by the ombudsman in- volved municipal governments. BOLIVIA: THE PEOPLE'S PARCIPATION LAW 315 Pursuant to Law 1551, the Law for Educational Reform adjusted its contents and purposes to incorporate a participatory, multicultural, and multilingual dimension. It also created the school boards as a civil soci- ety mechanism related to the neighborhood associations for addressing educational issues. The law also established flexible curricula to be adapted to the needs of each place and designed with the participation of the relevant school boards. Participatory Planning Manuals The Vice Ministry for People's Participation has been involved in the development and validation of participatory planning manuals for mu- nicipalities that are predominantly urban or predominantly rural and for ethnic and indigenous districts. A manual has also been prepared focusing on gender. Says the vice ministry's participatory planning di- rector, Mauricio Lea Plaza, "At first, I resisted the idea of manuals, but in the end, we have gone for it, because our experience in participatory planning showed us that in some cases, one model of participation was followed, and in some other cases, another one; that the role of neigh- borhood associations was not always recognized; that the municipal government was not always leading the process, which, for example was sometimes led by an NGO; and that then we had to correct those things. Now we have a procedural instrument that is part of the policy." The Municipal Development Plan The MDP integrates strategies, programs, and projects for a five-year period, as prioritized in the participatory planning process. According to the Procedure Manual for Surveillance Committees, "The surveillance committee has to exercise its coordinating role between the municipal government and the community organizations, protecting the interests of the latter, and ensuring that municipal action caters to identified de- mand. For this, it is critical that the surveillance committee participate in the entire process of elaborating the MDP." The Annual Operating Plan The AOP can be conceived in a very simplified way, as the result of a process through which a municipality's investment priorities are estab- lished for the short term (one year), within the overall framework of the MDP. The Procedure Manualfor Surveillance Committees notes that "The surveillance committee has to exercise its social control role, assuring that the AOP reflects the demands from the grassroots level, in an equi- 316 SLUM UPGRADING AND PARICIPATON table balance between urban and rural areas. For this, it has to establish participatory mechanisms that allow for the inclusion of societal demands in the budget; these demands are included in the MDP and are annually reviewed by the communities. Therefore, the AOP becomes a basic in- strument for the surveillance committee to perform its social control role, verifying conformity between the local government's actions and the planning contained in the AOPs." Mechanismfor Reporting Mismanagement of People's Participation Funds The Procedure Manual for Surveillance Committees requires that surveil- lance committees control the proper use of the people's participation funds and that they continually inform their communities and neigh- borhood associations as to their findings regarding fund usage. To per- form this function, a surveillance committee must receive periodic reports from the municipal government. If it detects any irregularity, it can make this observation to the municipal council, which has to reply within 10 days. If the reply is not acceptable, the committee can then report the irregularity to the national treasury, which will investigate the complaint. If it upholds the complaint, the treasury will send it on to the senate within 30 days. The senate can then freeze budget transfers to the violat- ing municipality until the problem is solved. Resource Mobilization and Financial Sustainability Municipalities' investment resources originate from various sources: the central government, through mandatory budget transfers; international development aid channeled through the central government; various social investment funds; NGOs; and municipalities' own revenues de- rived from local taxes, levies, and fees. The MDP, as the instrument that guides investments in local development from whatever source, pro- motes a clear focus and coherence of effort. Additionally, because MDPs and AOPs are part of the nationwide General Economic and Social Development Plan, municipalities are al- lowed to mobilize and leverage resources from other sources. In this way, municipalities can-and many do-multiply the resources they have available for improving the living conditions of their inhabitants. For example, with 5 percent or less of resources from central government transfers, a municipality can take part in a scheme to provide basic health insurance to people who do not have access to medical insurance pro- vided by a trade union; with 20 percent of the cost of a school, joint financing with another entity of the system-e.g. the Ministry of Educa- tion-is made possible. BOLIVIA: THE PEOPLE'S PARTICIPATION LAW 317 Central Government Transfers (Co-participation) The importance of co-participation resources for municipalities is highly variable, as table 6-1 and the following discussion illustrate. In general, for larger municipalities, the most important revenues are their own, which are almost five times greater than the transfers known as co-participation. Table 6-1 illustrates the evolution of revenue from co-participation in five municipalities of the Cochabamba jurisdiction (out of a total of 44 municipalities). As the table shows, the sharp rise in revenues following enactment of the People's Participation Law in 1994 corresponds to the distribution of 20 percent of the national income in accordance with the population of each municipality, which was mandated by the law. Rev- enues for the Cochabamba jurisdiction overall increased by 6.5 times between 1993 and 1999. This increase was not consistent across the juris- diction, however. Revenues for the central municipality of Cercado (the capital of Cochabamba) rose only 2.75 times, while those for the impor- tant municipality of Sacaba rose some 50 times and those for much smaller Colomi rose 162,000 times. Meanwhile, in Villa Tunari and Tapacari, rev- enues went from zero to 9.5 million and 3.8 million bolivianos, respec- tively. This kind of dramatic change happened in municipalities across the country. In Cochabamba, revenues from co-participation in 1996 had increased by 108 percent over 1994 transfers, by 177 percent in 1998, and by 223 percent in 1999. Using the year prior to implementation of the People's Participation Law as a reference, Cochabamba's revenue growth from 1993 to 1999 was 545 percent. In 1994, Cercado, the capital's mu- nicipality, received 49 percent of the district's budget; by 1999, this pro- portion had been reduced to, and stabilized at, 37 percent. Table 6-1. Co-participation Revenues in Cochabamba, 1993, 1994, 1996, 1998, and 1999 Population Revenues (bolivianos) Municipality 1992 1993 1994 1996 1998 1999 Total 1,110,205 34,219,378 68,281,988 142,356,727 189,067,766 220,661,402 Cochabamba 414,307 29,811,808 33,542,848 53,143,647 70,581,495 82,327,902 Sacaba 68,127 276,512 3,362,268 8,737,674 11,604,775 13,537,674 Colomi 15,489 19 606,852 1,951,636 2,637,132 3,077,855 Villa Tunari 48,111 0 2,267,053 6,204,078 8,194,766 9,560,248 Tapacari 19,202 0 867,010 2,461,854 3,269,697 3,815,674 Notes: Revenues for 1993, 1994, 1996, and 1998 are actual; 1999 revenues are projected. 5.80 bolivianos = US$1.00. Sources: Public Finance Ministry, Internal Tax Department, and State's General Ac- counting Department. 318 SLUM UPGRADING AND PARnCIPATION Social Funds and Prefectures Besides putting co-participation funds in the hands of municipalities, the People's Participation Law requests that the nation's various social funds-such as the Social Investment Fund and the National Rural De- velopment Fund-support local development plans; these are also sup- ported with resources from the departmental prefecture. Microcredit Microcredit has been another important funding resource for develop- ment in Bolivia. It has been used to fund commercial, service, and pro- duction activities and, to a much lesser extent thus far, for housing and home improvement. The privately run BancoSol of Bolivia is widely known for its success rate and low level of loan delinquency. The asso- ciation of microfinance institutions operating in Bolivia has the support of the Swiss Agency for Development and Cooperation, whose La Paz representative at the time of the study, Verena Munzenmeier, notes, "Microfinance institutions provide microcredit and are supervised by the same authority that supervises banks. They are allowed to lend money and also take deposits, yet they do not raise that much in savings. Until now, their operations have been based on community resources, with no formal, private banks involved; however, they still are able to finance some home improvement, even though their funding comes from com- munity savings only." Although some other NGOs work with microcredit in the cities, the Red Habitat example cited above is particularly encour- aging for the purposes of this study in its home improvement activities in El Alto. There, it provides loans against the nominal guarantee of the cus- tody of the property title-which is not a mortgage-and solidarity guar- antees. Anelise Menendez, of the NGO, states that "Our building materials credit program has a very low delinquency rate. In the first three years, the average overall delinquency rate was 2 percent." David Quezada adds that "We combined the individual guarantee, the guarantor's col- lateral, plus a collective guarantee. Each block of 10 neighbors is guar- anteed with two property titles, generally those of the leaders." Actors, Alliances, and Institutional Arrangements Key actors in implementing the People's Participation Law and its par- ticipatory processes are neighborhood associations and their confederate orga- nizations (FEJUVE, CONALJUVE), surveillance committees, and municipal governments. Other actors contribute as well, including the central gov- ernment, departmental prefectures, NGOs, and international agencies. BouvMA: THE PEOPLE'S PARrlCIPATION LAW 319 Neighborhood Associations In the case of cities, the recognized organization is the neighborhood association. These boards have been in existence since 1900 and have achieved a certain presence in low-income neighborhoods, making de- mands and pressing claims in response to community needs; their pres- ence is much less felt in higher income neighborhoods. Participants in neighborhood associations feel the need for greater state assistance and training in order to be able to operate in a context of fre- quent political problems and erratic support from municipalities. Ex- plains Victor Paz Quispe, the secretary general of El Alto's Villa Huayna Potosi, "We were sent to the National Regional Development Fund. There we were told that we were not to coordinate directly with them, but that the mayor would be our bridge. We went to the mayor's office, and it took forever for them to process it... .We have found many obstacles, and sometimes we just wanted to put our hands up, when we got tired and had nothing. Since we haven't been trained to make project proposals, we, the neighbors, need help." FEJUVEs Neighborhood associations join to form a neighborhood association fed- eration (FEJUVE) in each main city, i.e., the nine departmental capitals plus El Alto and Llallagua. These federations were recently restructured to better match the People's Participation Law framework. This restruc- turing created intermediate entities in large urban districts and promoted the organization of federations in secondary municipalities. Between 1994 and 1999, some 45 FEJUVEs were organized in secondary cities. The FEJUVEs are somewhat subject to divisiveness. In several capi- tals, there have been schisms in the federations. Notes a neighborhood association leader in El Alto, Rogelio Challco, "It's as good as having no support at all: there are two parallel FEJUVEs, and this is detrimental." CONALJUVE represents all the country's FEJUVEs. As a civic organiza- tion, it represents neighborhoods in matters of national interest and imple- ments the decisions they make in their congresses, acting as their representative in several sector commissions organized by the government. The Surveillance Committee The surveillance committee is the only community body created by the new legislation. As we have seen, it has the task of mediating the rela- tionship between ABCOs and the municipal government and monitor- ing completion of participatory plans. The committee is made up of one 320 SLUM UPGRADING AND PARICIPATON delegate per district, elected by the district's neighborhood associations. Former national secretary of people's participation Carlos Hugo Molina summarizes the duties of the surveillance committee thus: "There are five occasions for which the surveillance committee absolutely must meet: to discuss planning for the subsequent year, to approve the budget at the beginning of the year, to verify what was proposed and incorpo- rated in the budget, to check mid-year on budgetary execution, and to assess the investment made at year-end." Several of the people we interviewed pointed out that a major prob- lem for surveillance committees was a lack of resources to perform their work. "It is a volunteer organization, and is self-financed," notes Mauricio Lea Plaza, VPPFM participatory planning director. Another problem is lack of training, above all, in large and complex municipalities where the neighborhood leader has to at least know how to interpret a budget and an economic report, as well as a project and its lists of specifications. Information is thus vital to this task. YOU KNOW THAT THE FUNDAMENTAL PILLAR FOR A DELEGATE IS INFORMATION. WITHOUT INFORMATION, THE DELEGATE CANNOT DO A THING, HE CANNOT KNOW HOW MUCH IS BEING INVESTED IN HIS DISTRICT, HOW MUCH IS BEING EXECUTED. WITHOUT INFORMATION, HE CAN HARDLY DO HIS JOB. -District VIII Delegate to the Santa Cruz Surveillance Committee Despite their problems, the surveillance committees enable numer- ous positive contributions. Emilio Lobo, of the Santa Cruz Surveillance Committee, sums these up. "We, the representatives of each district, are present in the participatory planning of the AOP and also in all sorts of activities, from the distribution of meals to schoolchildren to a broad range of municipal public works. And we approve all payments." Municipal Governments The municipal government is the state body closest to the general popu- lation. It is also the entity that is perhaps the most challenged by the new law. Large urban municipalities of long standing must divest themselves of their centralized practices and become accustomed to citizen partici- pation. And newly formed smaller municipalities, for their part, are at the beginning of the learning curve: they have a real capacity problem, and everything must be learned. Moreover, the large urban municipali- ties must evolve out of their centralist practices and are not accustomed BOLIVIA: THE PEOPLE'S PARTICIPATION LAW 321 to citizen participation. Mauricio Lea Plaza cites a mayor of Tarija, "Who told me every time I spoke with him: 'I know what the people need; that is why they elected me mayor!"' Nonetheless, all municipalities operate under the new legislation and have been taking on, even if only gradually, their principal role in local development. "To conceive of any neighborhood improvement program without the participation of the municipal government is practically unthink- able," observes Vladimir Ameller, VPPFM director of economic development. Other Actors Within the central government, the authority in charge of the law's ex- ecution is the Vice Ministry of People's Participation and Municipal Strength- ening, which, in its previous incarnation as a national secretariat, conceived and promoted the law in the first Sanchez de Lozada admin- istration. Although the vice ministry is still highly supportive of the law, people's participation was not a top priority for the Banzer Suarez ad- ministration. A high-ranking VPPFM official observes that "The vice min- istry had practically disappeared, few people even knew that it existed; I believe that if, a year ago, the vice ministry had been shut down, no one would have noticed." He acknowledges, however, that the vice ministry's importance grew again once the administration realized that the mechanisms established by the People's Participation Law were ir- reversible and that the central government needed someone to manage the complex central-local relationships these mechanisms entail. Within the new decentralization framework, the departmental prefec- tures play an important role in supporting local governments and com- munities with training, technical counseling, and joint financing of municipal projects. NGOs and private development institutions such as universities, the church, and private foundations have played and continue to play a sig- nificant support role for communities and municipalities. We have seen the important socio-technical support and resource mobilization pro- vided by Red Habitat, Gregoria Apaza, CIPRODEC, IFFI, and Cidcruz; there are many more organizations like these that have taken part in the participation process.' The state has promoted the participation of NGOs in training and municipal and community technical assistance, confident of their effec- tiveness, based on their longevity and the trust they have gained among sMost of Bolivia's hundreds of NGOs work in rural areas. 322 SLUM UPGRADING AND PARTICIPAnON the communities within which they work-often going beyond the spe- cific tasks they have been established to do. International cooperation has also played a significant role. Most mul- tilateral cooperation institutions and many public and private bilateral co- operation agencies have been involved in important efforts to support public participation in Bolivia. We have reviewed some cooperation ex- amples from Denmark, the Netherlands, Norway, Switzerland, and the United States; many other cooperation agencies have also helped sig- nificantly. Actors That Are Conspicuously Absent Although planning guidelines include other social organizations besides ABCOs in the process, this participation is still very weak. Participatory planning director Mauricio Lea Plaza notes that "In the cities, the neigh- borhood associations are not capable of working effectively with trade unions or professional organizations." The disadvantage of this situa- tion is brought home by Fernando Prado, president of CEDURE, Santa Cruz: "In the municipalities that are mostly urban and where there is a power structure and a strong economy, if you only interact with territo- rial bodies, very localized problems are prioritized, which is appropri- ate for the neighborhood. But who thinks about the whole? Who considers strategic projects for the city? For this, you need the participation of func- tional, economic, political, and professional institutions. These currently do not have a participation mechanism." The former national secretary of people's participation, Carlos Hugo Molina, concurs, noting that this lack of engagement and participation extends to the middle and upper classes as well. "Why don't we partici- pate? We should be there; we have opened up this process ourselves. And yet, neither us, nor anyone else of the 'politically conscious' in this country of a certain class has done so; and the neighborhood association continues in the hands of the people who have community problems that they cannot resolve by themselves. Our problems we can resolve by other means, and this is what breaks the solidarity and organization prin- ciple. Faced with that reality-and it is neither good or bad; it is a real- ity-I have suggested that the members of the surveillance committees be increased by 50 percent, with representation originating from func- tional, professional, civic, and union organizations, and from NGOs." Problems Discontinuity in the Institutional Framework. A first issue is the re- structuring of the state apparatus between the Sinchez de Lozada (1992- BOLIMA: THE PEOPLE'S PARrciPAnON LAW 323 97) and Banzer Suarez (1997-2002) administrations. The earlier one con- ceived a cutback in the number of ministries, grouping several of them in secretariats coordinated by three large ministries: Human Develop- ment, with "social" secretariats, such as education, health, ethnic issues, sports, housing, and people's participation; Sustainable Development and Planning; and Economic Development, with "economic" secretari- ats. The Banzer administration returned to the concept of ministries for each sector. There are also some mismatches between the two forms of govern- ment established in the state's political constitution. The new political organization on which the People's Participation and Decentralization Laws are based clashes with the old political subdivision of the country, which has not been totally reformed. The old units, such as the province, provincial section, and canton, serve very little practical purpose nowa- days, but they have not been abolished, which creates some confusion. Relations between Municipal Government/Surveillance Commit- tee/FEJUVE. Frequently, there are evident tensions between these ac- tors. Sometimes the municipal government manipulates the surveillance committee, giving its members advantages that border on the illicit; in other cases, relations remain tense. While the surveillance committee was created by law, the FEJUVE was created autonomously by neigh- borhood organizations. Between the two, there are tense relations and mistrust, and, until recently, little real understanding of each other's role. Although normally the surveillance committee and the FEJUVE find it difficult to collaborate, there are some small but hopeful examples such as one presented by Ana Quiroga, of the NGO Gregoria Apaza of El Alto, where the surveillance committee "has achieved what the FEJUVE hasn't. Since the FEJUVE is divided into two factions, the surveillance committee has managed to group together all the social control func- tions, and now the surveillance committee in El Alto has greater power than either of the two FEJUVEs." Even more so, as CONALJUVE presi- dent Juan Jose Diez de Medina notes, "In Sucre, they have managed to put everything together. The FEJUVE directors who have been elected in the neighborhood association congress have also been appointed mem- bers of the surveillance committee. There is no problem there." Carlos Hugo Molina supports this last solution, explaining that "There must be a fusion of the two bodies into a single one, because both are trying to represent the same people and do the same things." Politicization Is a Problem in the Process. One of the most frequent concerns in this study has been the topic of the "politicization" of the process, of the co-opting of local leaders by municipal authorities to gain 324 SLUM UPGRADING AND PARTICIPAMON support for their programs. Everyone complains about this, although no one wants to acknowledge having participated in these practices. THEY LOOKED HERE IN THE NEIGHBORHOOD FOR PEOPLE TO JOIN THEM, AND OF COURSE, HERE IN BOLIVIA, THERE IS A HIGH RATE OF UNEMPLOYMENT, THERE ARE PEOPLE WHO ARE WILLING TO SELL THEMSELVES, AND THEY ARE TOLD: "LET'S SEE; LET ME GET YOU A JOB." -Romualdo Perez, Neighborhood Leader, Cochabamba In striking contrast, Oscar Terceros, former director of Cochabamba's area workshops, now muses that maybe the workshops should have been politicized, so as to highlight the efforts of the political party that moved that process forward. He observes, "We had said that the area work- shops project should not be politicized; this is a project of the people, of the municipality, and should have no political color.. .I believe now, with hindsight, that if our party had participation as a proposal and put it in motion, why not say it publicly and legitimize its paternity of the pro- cess? 'We have promised the following and have fulfilled it,' in an at- tempt to get a political return." Terceros' main concern is that, since the political returns of the project were small, it lost steam, while it could have continued enjoying political support if the returns had been greater. Practically all of the interviewees mentioned this topic in one way or another. For example, Fernando Prado of CEDURE, Santa Cruz, notes that "Bribing leaders is easy when there is so much power on one side and such economic precariousness on the other." Ver6nica Cutipa, a Barrio Universitario leader, reveals another side of the problem: "They say of these neighborhoods, 'that neighborhood is aligned with the other party, so we won't give them anything,' while of other neighborhoods they say 'that neighborhood is on our side, so we are going to help them.' So there: tractors are taken, even water is dis- tributed, but not to our neighborhood." Carlos Hugo Molina offers the following thoughts on the matter. "I have another reading, trying to see more into the future. Five years ago there were no possibilities of saying 'it was politicized or not politicized,' be- cause there was nothing...It is impossible to resolve the lack of citizenship of the 170 years of existence of this country in five years; all possible mis- takes must be made, because this is the democratic school of the country...it is a long-term process. There will not be enough money for party leaders to buy, to lure, or to bribe everyone, and at some point an expression of the people will surface that will be committed to the future and the country." BOLMA: THE PEOPLE'S PARTCIPATION LAW 325 When we attempted to discuss this topic with Rommel Porcel of the Santa Cruz Surveillance Committee, he pointed to a small notice in his office, telling us "It says there, 'it is forbidden to talk politics."' Organization and Implementation The implementation of the People's Participation Law was a radical measure, and required-and still requires-the support of all involved institutions and the concrete engagement of many actors. The state es- tablished an entity (the People's Participation Secretariat, later the VPPFM) to initiate and monitor the process, with programs for munici- pal strengthening, community strengthening, and participatory planning, among others. Each ministry and state institution has the specific man- date to support the process in its sector. I BELIEVE THAT WHAT MUST BE DONE IS TO STRENGTHEN THE CIVIL SOCIETY AND MUNICIPAL GOVERNMENTS WITH TRAINING PROGRAMS; PROGRAMS THAT ALLOW THE EFFECTIVE LINK BETWEEN THE MANAGED CITIZEN AND THE MANAGER CITIZEN. -Roberto Barbery, Former Deputy Secretary of People's Participation Even though the central government's role is clearly a normative and monitoring one, the departmental level of the prefectures is in charge of providing training and advisory programs to municipal governments as well as to communities, through its popular participation director- ates. As vice minister Jose Barriga states, it is necessary "to seek a single point of entry to the municipalities, to channel training on health, edu- cation, housing, and popular participation, in a manner that is accessible to everyone. Otherwise, if you address each of these areas with separate training, there comes a time when the mayor complains about seminar overkill. Seminar followed by seminar, and little remains in the end." Municipal governments are, in their autonomous framework, in charge of preparing development plans and executing them in coordination with community organizations. Many have established their own people's participation units for this end. In several large cities, they have pro- ceeded with the decentralization of municipal services to the district level-although in this regard, there is still a long way to go to achieve true decentralization. As the main actors in the process, organized com- munities must strengthen their organizations and improve their capaci- ties, taking advantage of all the available training programs. 326 SLUM UPGRADING AND PARTICIPAION Scale and Sustainability The popular participation experience covers all Bolivian residents, na- tionals and foreigners-a total of about 8 million multicultural, multiethnic inhabitants. As noted by Vice Minister Barriga, popular par- ticipation is both a state priority and a state policy. However, a state policy does not have the same level of buy-in from all administrations. Vladimir Ameller, director of economic development, explained that the popular participation experience was not, at first, a priority for the Banzer administration. Nonetheless, as participatory plan- ning director Mauricio Lea Plaza points out, "It is a state policy, and this implies that it is on the agenda." Carmen Hada of the Ministry of Hous- ing expands on this point: "Even though the current administration doesn't place as much emphasis on this topic, the mechanisms are clearly established, the roles have been assigned in the municipalities, and the application of the law has also been done at the central level." Further, the technical personnel who were committed to the first phase of imple- mentation are still in place, and they are less sensitive to government changes at either the central or municipal level. THIS IS A LONG PROCESS, IT IS A COMPLEX PROCESS, AS WELL AS A VERY DYNAMIC PROCESS OF "MUNICIPALIZATION"; YET, IT IS A STATE PRIORITY, A STATE POLICY. POPULAR PARTICIPATION IS ACKNOWLEDGED AS SOMETHING IRREVERSIBLE, AND EFFORTS HAVE BEEN MADE TO STRENGTHEN THIS POPULAR PARTICIPATION. -Jose' Barriga, Vice Ministerfor People's Participation and Municipal Strengthening People's participation was not hampered by the Banzer Suarez ad- ministration, although it did not get the strong support it will need to continue to be developed. In any event, it has shown great resiliency, and this is what matters. It is only to be expected that in some adminis- trations, this process will move at a slower pace, while in others it will be more dynamic, depending on the level of support it gets. The automatic transfer of 20 percent of the state's tax revenue to mu- nicipalities, coupled with the municipality's new responsibilities vis-a- vis its citizens, are elements that encourage popular participation's sustainability. A mayor can be confident that adequate resources exist to support municipal responsibilities. Moreover, access to public resources for delegated responsibilities is essentially the same across all Bolivian municipalities, ensuring citizen equity and equal opportunities. BOLIVLA: THE PEOPLE'S PARTICIPAnON LAW 327 Conclusions The people's participation process in Bolivia can be interpreted as an act of courage on the part of the national government. The innovative Bo- livian legislation institutionalizes at a national level what has been sug- gested so many times throughout Latin America (and elsewhere): a leading role for local communities in their own development. The key elements of Bolivia's law are legal recognition of organized com- munities and their prerogative to prioritize development projects in their locality and control local government action, revitalization of municipal power and the promotion of its duties in both urban and rural locales, and assignment of a basic budget to finance local development projects. Imple- mentation of Bolivia's Law 1551 has yielded the following conclusions. 1. I Participate, You Participate, He/She Participates, We Decide. Under the People's Participation Law, actors are brought into the political process who have been absent until now and who have different interests than those already on the scene. This situation brings home the necessity of sharing power-a difficult concept to introduce anywhere in the world, since sharing power inevitably means losing some of one's own power. To promote participatory practices means to deal with a set of common and interdependent interests as well as with opposing and contradictory interests; the advocates of these various positions must learn to coexist and coor- dinate their ends and to achieve strategic or at least ad hoc alli- ances among themselves. Promotion of participatory practices also implies sharing a stake in the possibilities of development propos- als and represents a pooling of wills, resources, and knowledge in processes that will be sustained over time if they become indepen- dent from individual action. It means moving toward a solution- oriented perspective, since it is no longer possible simply to demand the granting of a benefit without proposing a feasible solution. Fi- nally, it entails assuming citizen rights and duties in which the atti- tude of the opposition is infinitely more valuable than the absent one of those who refrain from taking part in the process. 2. Decentralization or Delegation? Enactment of the People's Par- ticipation Law is resulting in a gradual, unevenly realized transfor- mation. There is much disparity across municipalities as to whether true decentralization with increasing degrees of autonomy is being applied versus a simple delegation of powers from the central to the local governments. In general, the population, its leadership levels, and some politicians tend toward decentralization and are attempting to bring the levels of decisionmaking closer to commu- 328 SLUM UPGRADING AND PARTICIPAnON nities. The municipal apparatus, on the other hand-particularly in the large ones-persists in promoting delegation without real decentralization. Some traits of the central government also encour- age this behavior. 3. We Move Forward without Going Back-But Not as Fast as We Would Like. From our review, it is clear that the process has ad- vanced much more in rural areas, although some significant progress can be seen at the urban level as well. Here, we have witnessed both a burgeoning consciousness on the part of the population and authorities that the participatory process must be followed in local development plans and an initial, albeit imperfect, application of par- ticipatory planning. As in implementing any innovation, problems have been encountered along the way, from weakness of urban neigh- borhood organizations to corruption among authorities and commu- nity leaders. But the institutionalization of popular participation compels all mayors, regardless of their individual predilections or preferences, to take the population into account. The resources tied to participation oblige mayors to invest in their municipality, and the law allows the population to petition for its rights with a certain amount of clout. This is a powerful tool in community development. In light of much criticism that indicates, "we do not feel represented, the participation mechanisms are not working," Roberto Barbery answers, "This proves that the law helps in itself, because before the law there was not even the possibility of realizing this situation. Now, a need has been created and the people assume that partici- pation is an element that legitimizes the exercise of power. That is a result that in itself justifies the law." The overall success of the model created in Bolivia proves that this kind of participatory practice can in fact be institutionalized-even though each country will have to adapt it to its own particular characteristics. WE HAVE A COMPARATIVE ADVANTAGE WITH REGARD TO OTHER COUNTRIES: HERE, THERE IS AN INSTITUTIONAL FRAMEWORK FOR PARTICIPATION THAT IS BEGINNING TO WORK. I DON'T THINK THAT THERE IS MORE OR LESS CORRUPTION, OR MORE OR LESS EFFECTIVE OR INEFFECTIVE AUTHORITIES THAN A FEW YEARS AGO, YET THERE IS A HIGHER DEGREE OF CONSCIOUSNESS AMONG THE PEOPLE, THERE ARE NOW INSTRUMENTS FOR PEOPLE TO EXPRESS AN OPINION, AND THE CITIZENRY IS STARTING TO ACT, TO DEMAND, TO VOICE ITS NEEDS. -Carlos Hugo Molina, Former National Secretary of People's Participation 7 Brazil: The Guarapiranga Program, Sao Paulo The Guarapiranga program is a large-scale attempt to deal with the pol- lution of the Guarapiranga reservoir, which provides water for over 3 mil- lion people in the sprawling metropolitan area of Sao Paulo. Uncontrolled informal settlement development in the water catchment area, which gathered momentum in the 1970s and 1980s, was one of the chief rea- sons behind the deterioration of the reservoir's water quality. By the mid-1980s, these water quality problems had become so serious that the World Bank's help was sought by the Sao Paulo water utility for a cleanup program. The program, which began in 1993 and was completed in 2000, was comprised of a number of different projects, including the building of major primary and secondary infrastructure for wastewater collec- tion and treatment, comprehensive upgrading of squatter settlements and informal land subdivisions, and the development of a new legal and regulatory framework to manage the water catchment. Upgrading was thus part of a regional development plan for a consid- erable part of a metropolitan area involving the state and municipal lev- els. A large part of the Guarapiranga basin is in the municipality of Sao Paulo, but some small municipalities in the metropolitan area are also within its borders. As illustrated in figure 7-1, the institutional arrange- ment adopted for the program was horizontal, in which each of the main actors was responsible for a component or project under a general coor- dination unit which was established at the state government level. The urban upgrading component of Guarapiranga in the municipal- ity of Sao Paulo, which was run by the municipality itself, was the main focus of the study. The scale of the project was impressive; investment in the urban upgrading project alone amounted to around $207 million, 329 330 SLUM UPGRADING AND PARnCPATION Figure 7-1. Guarapiranga Program's Institutional Arrangements SSo Paulo Department of World Bank Water Resources Consultative Program State Bank of Council Management Slo Paulo Unit Sao Paulo State Sao Paulo Sao Paulo State Water & Sanitation Department of Housmg & Urban Municipality Compan the nvirorrnent Development of S5o Paulo Company the Environment Company Source: Authors' construction from field study data. directly benefiting approximately 250,000 people in squatter settlements and informal land subdivisions in the period from 1993 to 2000. The entry point for urban upgrading in Guarapiranga was environ- mental sanitation. Planners recognized that the informal settlements of the Guarapiranga basin are a part of the city that is not going to be re- moved; social and environmental reasons therefore dictated the need for a sanitation infrastructure. An integrated, rather than sectoral, up- grading approach was taken in recognition of the important interactions between wastewater collection and other branches of infrastructure such as roads, storm drainage, and water supply. Since upgrading of all the different types of infrastructure took place simultaneously, Guarapiranga may be considered an example of a comprehensive upgrading project. This comprehensive approach inevitably resulted in increased per capita project costs, but was critical to enhancing the sustainability of the intervention by ensuring that the negative impacts of a lack of storm drainage and road paving on the sewerage network were avoided. It also provided an opportunity to boost demand-responsiveness and community ownership of projects by involving local residents in partici- patory information gathering and area development planning. This ef- fort has thus been a methodological advance in relation to earlier upgrading projects in the Sao Paulo municipality. BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 331 Upgrading a dense and highly consolidatedfavela is a feat of planning and engineering, since the settlement layout must be improved and the infrastructure built while preserving the existing permanent structures as much as possible.' The constraints planners and engineers must deal with thus far surpass those found in conventional urban development projects. Another difficulty is that local residents continue to live and work in the area while the construction takes place, which presents quite a challenge in terms of construction techniques. The Importance of the Guarapiranga Experience Many metropolitan situations present the same challenges found in this program;2 these include: * The scale of the program and the complex challenges faced * The conflict between environmental protection and human settle- ment needs * The integration of diverse interests and priorities into a coherent set of actions * The need to tailor interventions to the expressed needs and priori- ties of different groups of beneficiaries * The need to adapt project requirements to the dynamics and pace of a participatory process. A program this large offers a great potential for learning lessons both from its successes and its mistakes. The most important lessons of the Guarapiranga program relate to: * Innovative institutional and legal frameworks for administering complex territorial systems * Changes in the work culture and in the project management meth- odology, including significant private sector participation 'Preserving the existing structures as much as possible is important for two main rea- sons: (1) to preserve the investment made by local people in their homes over the years and (2) to reduce the need for removals and resettlement, which are usually the single biggest cost item in an upgrading project. The need to preserve the existing structures means that planners and engineers literally have to design new roads and infrastructure around them, which poses quite a technical challenge. Some leeway is provided by the possibility of removing and relocating existing structures built of nonpermanent materials. 2Although it is sometimes referred to in English as the Guarapiranga project, we here follow local usage and call it a program, in view of its complexity and the fact that it com- prised many large, distinct projects, one of which was the informal settlement upgrading project managed by the municipality of Sao Paulo. We use the word program to refer to the broader Guarapiranga initiative and project to refer to its urban upgrading component. 332 SLUM UPGRADING AND PARTICIPAnON * Definition of a precise function of socio-technical support that uses specific social work and communication methodologies * The importance of issues such as land tenure and cost recovery, and the price paid for not addressing them. Background Rigid Laws and Lack of Enforcement Allow Growth of Informal Settlements With a population of 16 million people, water consumption in the Sao Paulo metropolitan area is 60 cubic meters per second. Guarapiranga was one of two great dams built south of Sao Paulo by the British in the early 1900s for water supply, hydropower generation, and recreational uses. The Guarapiranga reservoir meets 20 percent of Sao Paulo's water needs: 12 cubic meters per second for 3.2 million people. The water catch- ment area occupies 639 square kilometers and presently is home to 622,000 people, 170,000 of whom live in more than 180 squatter settle- ments or favelas, with densities reaching-and sometimes surpassing- 500 inhabitants per hectare. In addition, there are 119 informal land subdivisions, which house more than 250,000 people. In 1992, these oc- cupied an area equivalent to the water surface area of the reservoir- approximately 26 square kilometers. For more information, see box 7-1. Because the Guarapiranga reservoir supplies so much of Sao Paulo's water, legal measures were taken to preserve the water catchment area. In 1975, the Law of Protection of Water Catchments was enacted by the state of Sao Paulo, which limited the use of the surrounding land. The law prohibited installation of industrial uses or high-density residential subdivisions in the reservoir's vicinity. Ironically, the prohibition against subdivisions caused the price of land to drop, creating an incentive for informal occupation. Since the laws restricting occupation were rarely enforced, there was nothing to stem the tide of hundreds of thousands of poor people who, attracted by the availability of jobs in Sao Paulo's dynamic southern zone, settled in the reservoir's vicinity. Water Contamination Follows Since the informal settlements had no infrastructure for the collection and disposal of wastewater, untreated sewage discharges into the sur- face water drainage system flowed directly into the reservoir. The im- pact on the Guarapiranga reservoir was enormous, and a crisis ensued as the water quality deteriorated. In 1985, the State Water and Sanitation Company of Sao Paulo (SABESP) performed a number of water quality BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 333 Box 7-1. A Snapshot of Greater Sao Paulo The metropolitan region of Sao Paulo, with 16 million inhabitants, is made up of 39 municipalities, including the city of Sao Paulo itself. Although it occupies just 0.9 percent of the territory of Brazil, it is home to 10 percent of the country's population and contributes 16 percent of the country's gross national product. In spite of the flight of industry toward the state interior and to other states, the Sao Paulo metropolitan region still ac- counts for 15 percent of Brazil's industry and 12 percent of its commercial and service establishments. Twenty-eight percent of industrial jobs and 17 percent of tertiary sector jobs are located here. Sao Paulo is also head- quarters for the most important industrial, commercial, and financial con- cerns controlling the country's private economic activities. Despite its dynamic economy, the region is characterized by profound inequalities and social imbalances. Even though the median per capita income is relatively high ($4,590), its distribution is unequal. According to a survey of living conditions in the region, 47.3 percent of families were classified as poor or destitute in 1994; the 1990 figure was about 39 per- cent. Infrastructure is also a problem: 35 percent of housing does not have sewerage, and only 17 percent of the sewage that is collected is treated. This metropolis is one of the few in developing countries where, con- trary to most predictions, population growth rates have actually slowed down. Population projections and census data show that the annual growth rate between 1991 and 1996 was a relatively modest 1.45 percent, yet the expansion of the "clandestine city"-the various shelter altematives used by the urban poor that are developed in defiance of planning regulations and building codes-in the form of squatter settlements and illegal subdi- visions has been enormous. In 1973, just 1.2 percent of the population lived in squatter settlements; in 1993, this proportion was 19.8 percent. The rate of population growth in informal settlements during the 1991-96 period was 16.4 percent per year. Slower population growth has been accompanied by another trend: the dwindling size of households, as pro- gressively fewer people live with extended family. Growth in the favelas has been the result of increased poverty, and particularly of the following factors: * The high price of rent and housing units and land in the formal areas of the city makes it impossible for the poor to find formal housing. * These neighborhoods are characterized by a high concentration of young people in their child-bearing years, which leads to greater population growth in informal areas than in the city as a whole. Sources: IBGE (1990, 1994, 1996) and PMSP (1992). 334 SLUM UPGRADING AND PARTCIPAnON studies and determined that a dangerous load of pollutants derived from domestic sewage was being discharged into the reservoir each day. Al- though the problems in the Guarapiranga reservoir began in the 1970s, the situation became critical during the 1980s when the appearance of algal blooms signaled a high degree of pollution. By the end of the de- cade, contamination of the reservoir had reached alarming levels and the Department of the Environment and SABESP turned to the World Bank for support for a cleanup program. The Program Response Initially, the primary objective of the Guarapiranga program was to en- sure the quality of the water supply for metropolitan Sao Paulo. Without losing sight of this, the range of program actions was considerably ex- panded during the formulation stage. The program ultimately came to benefit 250,000 inhabitants of the Guarapiranga water catchment, as well as the city as a whole. Two main courses of action were undertaken by the program. Correc- tive action reduced degradation of the water source; and institutional ca- pacity-building action helped develop a legal, regulatory, and management framework to improve and maintain water quality. To accomplish these goals, five specific objectives were established: 1. Expand and improve water supply, sewerage, and wastewater treat- ment services. 2. Improve collection and disposal of solid waste. 3. Upgrade informal settlements and provide alternative housing so- lutions to people living in risk areas.3 4. Protect and recover the quality of the environment through the cre- ation of parks and reforestation. 5. Manage the basin through an appropriate legal and regulatory framework, an environmental protection and development plan, an information system, and the development of management ca- pabilities. Each of these five objectives generated a specific project. The focus of this chapter is on the third of these projects: the upgrading of the Guarapiranga basin's informal settlements. The Guarapiranga program's primary purpose was to improve the water quality of the reservoir, but the presence of a large, poor popula- 3Many housing structures have been built in areas that are unfit for human settlement, since they are subject to landslides or floods. BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 335 tion in the catchment area made it necessary to shift priorities. In Sao Paulo, as in other developing country cities, environmental degradation and the lack of basic infrastructure and services in the informal city are intertwined. This issue was addressed squarely by the program so that environmental sanitation became the entry point for catalyzing invest- ments in upgrading and addressing the problems of areas of risk. The program began in 1991 with an environmental impact analysis. In December 1992, a loan agreement was signed by the government agen- cies involved in the project and the International Bank for Reconstruc- tion and Development of the World Bank Group; this became effective March 1993. Initially scheduled for completion in December 1997, the program was rescheduled to continue for three additional years. The majority of the program components were successfully completed by the end of 2000, with the exception of some management issues that depend on legislative change. Participatory Process Distrust, Apathy, and Submission Undermine Participation The 100,000 inhabitants of Jardim Iporanga, Vila 7 de Setembro, Jardim Esmeralda, Jardim Pouso Alegre, Vila Eda, and the other 134 favelas learned about the upgrading project by word of mouth from informed neighbors. As community leaders pointed out, promoting new ideas among residents of informal settlements is difficult because the residents have very little trust in government. Politicians' promises are well-known to community leaders, as some of the leaders are themselves on politicians' payrolls. As one project technician says, "There are some good neighbor- hood associations, but others live off building platforms for politicians." AT FIRST WE DOUBTED THE PROJECT BECAUSE HERE IN BRAZIL, PEOPLE ARE ACCUSTOMED TO DOUBTING EVERYTHING. -Tereza Neiva Pereira, Community Leader All too often, government projects have promised improvements but have been abandoned or have failed to deliver, leaving residents in in- formal settlements to continue to live under unhealthy conditions, in the stench of wastewater and garbage. To avoid further disappointments, community leaders asked for explanations regarding the upgrading project and demanded conditions to be imposed on the project memorandum of understanding in order to provide reassurance and security to resi- dents on contentious issues such as resettlement and temporary shelter. 336 SLUM UPGRADING AND PAIRrCIPATION Once these reassurances were provided, community leaders became increasingly convinced that they could back the project and encouraged their neighbors to be involved, overcoming residents' initial doubts and lack of interest (see box 7-2). The apathy of many community members was fueled by poverty's "dynamics of submission," as became apparent during the community focus group discussions. During these discus- sions, it was observed that residents tended to speak little, generally tended to agree with the community leaders, and did not voice their own opinions. There was a pervasive respect for hierarchy and a passive submission to the more dominant community members. One commu- nity member explains, "Our culture doesn't allow us to advance, but we are not guilty of ignorance. We just didn't have the opportunity to learn a different way." In spite of some leaders' attempts to involve local residents, the popu- lation remained passive at times. According to the social coordinator of the municipality, Cleusa Mello, "The residents are satisfied by the mere fact that the municipality is doing something in the area... they accept Box 7-2. Tereza Neiva Pereira, President, Jardim Esmeralda Neighborhood Association Tereza Pereira, 45, directed the Jardim Esmeralda Neighborhood Asso- ciation for three years, during which time an upgrading project was car- ried out in her favela. "As soon as I saw that the project was real, I decided to get to know it. My biggest concern was that what would happen with this project was what had happened with some families who were relo- cated 'provisionally' to a large municipal warehouse. Even today, over 20 years later, they are still living in the warehouse, waiting for a solution. We were not going to allow this to happen here." After she became convinced of the benefits the project would bring to her community, she organized dozens of meetings with families. Afterwards, she began pro- moting the project house to house. During construction, Pereira mediated incessantly between the neigh- bors and the contractor. "When there is a problem, I gather all the parties to discuss it until they find a solution." To live in an informal settlement is difficult enough, she says. "And one day, all the engineers and technicians will leave, and all we will have left is our own capacity to unite for a common purpose." In her opinion, people do not need handouts to im- prove the conditions of their lives. Referring to calls for consumption- based tariffs for water and electricity, she says, "I am in favor of everyone paying for what they consume. To pay less, people will have to learn to save water and electricity." BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 337 almost everything with a patience that, frankly, I find excessive." Never- theless, as noted by one of the technical support group coordinators, "The apathy does not mean that the people do not want to participate in the project. What I think is happening here is that in many public activi- ties, the policy of 'we give and you receive' is still accepted as the norm." Drug Trafficking, Another Enemy of Participation Drug trafficking, and the power of drug lords, is an aspect of the social reality that is prevalent in the favelas of Guarapiranga, and drug traf- fickers exert a strong influence and control in some communities. As a social worker from Jardim Iporanga explains, "There are places where drug lords own the soccer field, maintain the daycare center, distribute gifts for all the children at Christmas.. .In short, they do more for the population than the government itself. In this manner, as well as through threats and coercion, they ensure the residents' loyalty, which enables them to continue their illegal activities with immunity from the law." I KNOW OF SOME CONTRACTORS THAT HAD TO MAKE PAYMENTS TO THE BANDITS TO BE ABLE TO WORK, BUT THIS WAS NOT GENERALLY THE CASE. -Contractor for the Jardim Esmeralda Works On some occasions during the project, contractors had to negotiate with gangs to be able to proceed with the works. Drug gangs often op- pose projects, since, for example, installing lighting and opening or fix- ing streets can be a deterrent to clandestine activity. Fortunately, with only a few exceptions in some communities, drug traffickers did not have decisive power over this project, although there were delicate situ- ations in a few communities. Women Lead in Participation Even in Brazil's patriarchal society, women take a lead role in issues related to neighborhood management and are responsible for dealing with refuse disposal, the lack of security in the streets, and other prob- lems in the community. Sueli Esteves Rodrigues, president of the Neigh- borhood Association of Vila 7 de Setembro states that "It's a fact that, without us, many problems would not be solved. Ours is the work of ants-of suf- fering and patience. But in the end, it is the only way things get done." The majority of men leave in the morning to go to work and return late in the evening, leaving the women to manage these problems. Among other com- 338 SLUM UPGRADING AND PARTICIPAnON munity projects initiated by Rodrigues are a circus to provide entertain- ment for the community's children and a variety of training courses for adolescents. As succinctly described by Nair Cerqueira, president of the Neighborhood Association of Jardim Eda, "We, the women, have a big- ger heart." Cerqueira's activities are described in box 7-3. Socio-Technical Support Teams Open New Avenuesfor Participation The government's lack of credibility in relation to living up to its prom- ises, combined with residents' apathy and drug trafficking, were not the only deterrents to community participation in the project's early stages. Another deterrent was the lack of sufficient channels for information and communication in the project's original structure. This was corrected in later stages by the work of socio-technical support teams. These teams provided ready access to the project for residents, as well as information on technical and programming issues, and served as an avenue for re- quests and complaints. They helped organize participation in informa- tion gathering and analysis, discussion of project alternatives, and programming of the physical works, staging hundreds of meetings of Box 7-3. Nair Cerqueira, President of the Neighborhood Asso- ciation of Jardim Eda Nair Cerqueira is an energetic woman of 60 who made an agreement with her husband so she could become involved in the project and attend meetings both in the daytime and at night. "He doesn't participate, but he doesn't stop me. I do all I need to do in the house; everything is perfectly under control ... .and then I go to the association to deal with the problems. I don't like to be stuck on myself, only thinking of my own problems." During the project, she offered to solve all types of problems. She cam- paigned on behalf of the residents and defended their rights. Worried about the lack of play areas for the children, Cerqueira gathered hun- dreds of signatures for a petition. She also lobbied to modify the upgrad- ing plan of her settlement to include, for example, construction of a park and recreation area. She also showed that she was willing to act with an iron hand where necessary to ensure that community members were acting for the com- mon good. In one case, she wamed a family constructing a new shack during the night in a designated risk area that she would have it demol- ished if they insisted on building it. She endured various threats, but these people are now her friends and neighbors, living across the street from her in one of the project's new houses. BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 339 thematic and area-based groups in each settlement. They also helped negotiate contentious resettlement issues and organized the transfer of families to temporary shelters and, later, to their new homes. In the project's pilot phase, these social support services were pro- vided by the municipality's own social workers and those of planning and engineering firms. Because there were few of these workers, they quickly became overwhelmed by the task, which subsequently led to delays in the implementation of the project. The program and project coordinators realized that social support needs had not been adequately reflected in the project's initial resource allocation. They knew they had to move quickly, but found that bureau- cratic constraints severely limited their options. The quickest solution found was to amend the existing construction contracts so that the con- struction firms were required to provide social support services in all subsequent stages of the project. Instead of hiring the necessary person- nel directly, these firms decided to enlist a separate private company with the participatory planning and social mobilization skills required for working with communities in slum upgrading projects. The work of this company, Diagonal Urbana, went beyond what was originally envisaged in terms of social support. Instead, the firm intro- duced the concept of socio-technical support. The technical support group, working in close coordination with the social workers and the construc- tion firms, provided a bridge between the community and the design and construction process, helping find sound technical solutions to ca- ter to community demand and concerns. Community leaders and construction firm staff soon came to appreci- ate the importance of socio-technical support services. As one engineer notes, "We had an engineer whose only duty was the coordination of the work with the Diagonal team and the municipality. We are fully con- scious of the fact that, if the population doesn't participate and collabo- rate, the work may become unfeasible. The social side is fundamental... this kind of work involves a radical change from all points of view: the technical and management aspects of the work are very different from what we do in the formal city." A longer time frame for socio-technical support would have enhanced the project's sustainability. Vilma Dourado, Diagonal's director of social action, observes that "The time allotted was not sufficient to have an impact at the cultural level or to change collective behavior. It was just enough to guarantee the development of the construction work with a minimum of problems." As discussed further below, this statement re- flects a larger concern about the lack of environmental education and other community development activities in the post-upgrading phase that would have improved the project's sustainability. 340 SLUM UPGRADING AND PARTaCIPAAnON THESE PEOPLE INVOLVE YOU IN THEIR LIFE; THEY INVITE YOU TO BAPTISM PARTIES AND WEDDINGS, AND AN EXCHANGE OF VALUES TAKES PLACE. -Social Worker The activities of participants in community processes are often perme- ated with strong feelings. In Guarapiranga, relationships between profes- sionals and community residents became so close that families welcomed technicians into their homes. Although this kind of working relationship may in some situations lead to a dependency relationship between the community and outside professionals, this depends upon the culture of the residents as well as the attitudes of the professionals. During the project, the professionals learned to see the residents of these previously excluded communities with new eyes, and both cultural and behavioral changes were observed in the way they responded to thefavelados. A Chain Reaction "Vila 7 de Setembro was the first favela to be upgraded," according to local leader Sueli Rodrigues. "We spent four years raising awareness in the community to make participation in the project a reality. Our ambi- tion was to set a standard that the other areas could follow." (See box 74.) Vila 7 de Setembro is now, like the other upgraded favelas, a fully serviced part of town, and is a showcase of the urban planning and engi- neering skills the project helped develop and refine. As the impact of all this work was felt by the communities, a drive to improve homes and their immediate surroundings began. An engineer from one of the con- tractor firms noticed that "When we began the work, residents started to build sidewalks. They wanted to improve the area in front of their houses. In many places, they began to use the trash containers we put in the area. There was definitely a transformation in their habits." Ney Favela, leader of Nova Guarapiranga (see box 7-5) adds, "The commu- nity began to build; it remodeled houses, and people became more con- cerned with maintenance. Everyone is building; even I am improving my house. The residents themselves bought the trash containers that you see in front of the houses. This is a demonstration of civic conscious- ness in preserving the new infrastructure. Now, the new works are inte- grated with the old favela. It's all one." A chain reaction was unleashed by upgrading. The residents of the informal settlements began to feel like ordinary citizens. They have an address, a postman comes to their house, they receive bills for water and electricity. This normality increased the people's self-esteem and strength- BRAzIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 341 Box 7-4. Sueli Esteves Rodrigues, President of the Neighbor- hood Association of Vila 7 de Setembro Sueli Rodrigues, a 43-year-old woman who acts as president of the Neigh- borhood Association of Vila 7 de Setembro, has a sweet yet penetrating gaze which is both calm and convincing. The association she directs has made autonomy and independence its motto. After completion of the project, the association continued on its own with educational activities and environmental surveillance. Rodrigues is proud that the association is practically a self-financed microenterprise, thanks to sewing shops, a bakery, typing services, and silk-screening. The equipment for the busi- nesses was acquired little by little by selling crafts or by asking for used furniture and equipment from nearby offices. With support from private companies obtained through the Civil Construction Union and others, it was possible to build a headquarters and promote courses for profes- sional education. According to Rodrigues, the secret to the success of the association's various activities is a capacity to share information and re- sponsibilities. "It's not me the leader. Each resident knows where city hall and where the offices of SABESP are. They know how to talk to those people on the phone and speak out for their rights because this is what we have taught them." ened their sense of belonging to a physical and social environment. It also clearly stimulated residents' economic investment in their commu- nity. In areas with better community organization, these improvements in turn stimulated collective investments in public areas and common facilities. Demands from other favela areas surfaced as soon as the project started. Residents of areas that had not been included in the project's original plans realized that the project provided unprecedented opportunities for improvement. These demands put pressure on the municipality and led to a broadening of the geographic scope of the project. THE ENTRANCE WAS AN UGLY, DARK ALLEY SURROUNDED BY WOODEN SHACKS. PEOPLE WOULDN'T COME TO MY HOUSE; I SEW, I HAVE CLIENTS, AND THEY DIDN'T LIKE TO COME HERE. -Jardim Iporanga Resident This political pressure had repercussions even in the Billings Basin (the other great reservoir in the southern zone of Sao Paulo), where the municipality is planning another large-scale upgrading project. Elisabete 342 SLUM UPGRADING AND PARTICIPAnON Box 7-5. Anselmo Jose de Almeida, Leader of Nova Guarapiranga and Vice President of the Favela Federation of Sao Paulo The name and personal history of Anselmo Jose de Almeida (Ney Favela) are identified with Sao Paulo's favelados (favela dwellers) movement. Twenty years have passed since he was elected leader of the Favela Fed- eration of Sao Paulo, which in turn created, among other regional organi- zations, the Coordination of Informal Settlements of Santo Amaro. He took part in the organization of three congresses, in which more than 10,000 favelados participated. The last one, in 1986, called for full land tenure regularization for favelados. Another of the movement's battles was the demand for upgrading, which through the years has become mainstream public policy. Ney Favela's vision remains relevant today. He recognizes the positive impact of the project on the lives of Guarapiranga residents, and he sees upgrading projects as a way to limit the effects of economic and social injustice. He regrets, however, that upgrading projects do not confront the causes of these social ills. He believes that showy public works are given priority over political and cultural development work and educa- tion. He sees the lack of environmental education activities as a major flaw in the Guarapiranga project. He is also a proponent of giving com- munities more power over decisionmaking and project management. Ney Favela's strong leadership is due to his innate ability and the politi- cal alliances he has built over the years. On some occasions during the Guarapiranga project, his opposition paralyzed construction and un- leashed people's protest. For these reasons, the technicians of the differ- ent institutions involved in the project show a great deal of respect for this leader. Franca, coordinator of the project for the municipality, notes that "Com- munities are our best allies in broadening the scope of the project." Legal and Regulatory Framework The Unresolved Question of Land Tenure The desire of settlement residents to normalize and legalize their situa- tion is at odds with prejudices held by sectors of government and the general public, to the effect that people living in favelas are natural-born nomads and might abandon their settlement at any time. In reality, many residents have lived more than a dozen years in the same place and feel BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 343 connected to where they have raised their children. The project sought to strengthen this sense of belonging. As Elisabete Franca, the municipal official responsible for the project, explains, "The sewers and drainage infrastructure, as well as the new public spaces, create a sense of affection, belonging, and pride in the residents." Although residents did not know much about the regular- ization of informal settlements, they said they were ready to pay a fee or levy for legal documents establishing ownership of their houses. "I would like to pay to have a document; I will go into debt if it is for the better. They didn't improve my house, but now that we have the basic infra- structure, I am very happy-and I don't have any desire to leave here," says one resident of Jardim Iporanga, one of the informal settlements urbanized by the project. The issue of land tenure, which so worries the inhabitants of Guarapiranga, has difficult legal implications. Dirceu Yamazaki, the pro- gram management unit coordinator, explains that the Law of Protection of Water Catchments of 1975, which controls the use of the land to pre- serve water sources, inhibited industrial occupation. He states that it had "exactly the opposite effect with residential occupation." The rigid- ity of the law, as noted earlier, devalued the land and precipitated infor- mal residential occupation. Yamazaki also observes that "As any occupation was forbidden, the government could not make investments in infrastruc- ture. We have in the Guarapiranga basin the worst level of services in the entire municipality... .The road system is chaotic, and, because of the water catchments law, all public infrastructure work is illegal. The result is increased contamination. And the pollution is diffused rather than from a point source, which makes it more difficult to address." Because the occupation of land took place in a water source area sub- ject to the restrictions of the 1975 Law of Protection of Water Catchments, it was not possible for the project to make progress in regularizing land tenure until the broader legal constraints were removed. Even for the city's apartment buildings, to which about 500 families were transferred, an innovative legal instrument, in the form of a lease giving families per- mission to use the apartments, was developed. The principle of payment for the housing units was established, but its method of calculation was unclear, and unresolved legal and bureaucratic questions impeded pay- ment for a long time. The problem has only recently been resolved.4 41n addition to the 500 families that went to the municipal apartments, less than 1 percent of the population-the better-off families with stable incomes-were relocated to properties of the Housing and Urban Development Company (CDHU), the state's formal social housing system. It has been difficult to find enough families in the favelas with sufficient income to occupy CDHU units. 344 SLUM UPGRADING AND PARnCIPAnON The new water sources law of 1997 acknowledges the existence of in- formal land occupation. However, it does not clearly define legalization rights and delegates everything to regulations the municipalities will adopt later. This adds to an already complex, onerous, and lengthy process. Land Tenure Issues Compromise Project Results The legal questions concerning land tenure are a deterrent to external private investment. The Basin Development and Environmental Protec- tion Plan prepared by the program states that if restrictions concerning land use and occupation were loosened and fiscal incentives created, investors would be more interested in the area, which would improve overall conditions. This in turn would increase the sustainability of the project, create employment, and help prevent new land invasions. Many residents reported that legal status of occupation is a critical issue, since their insecurity of tenure inhibits their participation in the project and has a negative impact on its sustainability. IF THE HOUSE IS NOT OURS, THEN ONE DAY IT CAN BE TAKEN AWAY. -Community Leader Resolving these land tenure issues has the potential of alleviating resi- dents' concerns that their houses may be taken away from them. Ac- cording to the social workers, project beneficiaries need to have a sense of ownership and responsibility; having some form of legal title to their homes would go a long way toward promoting this. In some cases, ini- tiatives taken by community leaders (e.g., providing information on le- gal rights) compensated for this insecurity and played a decisive role in increasing residents' confidence. Increased costs and delays in construction resulting from land tenure issues have added to residents' feelings of insecurity. Some contractors said that the ill-defined legal situation of many favelas, especially in cases of inva- sion of private lands, forced the construction companies to wait for long peri- ods to receive authorization from the legal owners before they could start the works. One contractor notes that 'Within the area of the project, you can find a favela located on a piece of land that is public and another that is private. There is no difference between the two physically: it is all the same favela, with the same problems. This is one of the big problems affecting the project. We have to negotiate with landowners, create awareness about the importance of the work, and ask for authorization. We have to take these measures because if we don't, we run the risk of having the work stopped by a legal order. This can sometimes set our work plan back for many months." BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 345 Institutional and Legal Advances in Managing Water Catchment Areas One of the primary results of the Guarapiranga program is the change in the legal instruments governing the management of water catchments in the state of Sao Paulo. The new legislation embodied by the 1997 State Law of Water Sources is based on a different view of the correlation be- tween water quality and land use, largely due to the Guarapiranga ex- perience. As general coordinator Yamazaki explains, "It is significant that the philosophy for future management is not based on rigid control of the use and occupation of the land, as the old law was. The state needs a different policy for urban management, based on negotiation and par- ticipation, since it doesn't have the capacity to control land use." Ac- cording to Yamazaki, the old water catchments protection law usurped the right of municipalities to govern their own jurisdictions, especially since some municipalities lie almost entirely inside the perimeter of a protected basin. For that reason, the idea now is that the criterion for evaluation will be the total of existing and potential pollutant loads go- ing into the reservoir. By determining the reservoir's capacity for self- cleansing, the maximum admissible limits of effluent pollutant loads can be determined and fixed by law. Under the new legislation, the load limit translates into reference pollutant loads for each one of the 130 sub-basins of Guarapiranga, and each municipality is able to decide and legislate on land use in such a way that in all sub-basins the defined load limit will be respected. Other new concepts have been implemented to promote the environ- mental recovery of the Guarapiranga water catchment. The community's inclusion in the management of the Guarapiranga program gave rise to a committee with representatives from universities, professional organi- zations, nongovernmental organizations (NGOs), and community enti- ties. This successful effort suggested the basis for the committees organized to manage all water catchments in the new basin manage- ment system of the state of Sao Paulo. The new legal and institutional framework established the State System of Water Resources, which in turn created the Committee of the Alto Tiete Basin (Guarapiranga is a sub-basin of the Tiete River). This committee includes five subcommit- tees; its executive arm being the Basin Agency, established using the Guarapiranga program's management unit as its foundation. According to another law, which was passed by the state assembly, revenues collected for water consumption provide the principal source of funds to ensure the Basin Agency's financial autonomy. This complex group of measures took time to discuss and has been slower to mature than originally foreseen, but in principle, the law establishes that river 346 SLUM UPGRADING AND PARnCIPATON catchments be managed according to principles of integrated water re- source management. Although the structures and procedures for river basin management were to be established within five years of the start of the program, the term was extended in order to create a transition management unit as an interim arrangement between the program's management unit and the formation of the Basin Agency. Resource Mobilization and Financial Sustainability Community Pressure Increases Resources One of the most important conclusions drawn from the study is that, although the low-income residents of Guarapiranga know the value of improving their surroundings, and many inhabitants of the Sao Paulo metropolitan area value the environmental improvements brought about by the program, they ignore the price required to pay for these improve- ments. The initial estimate of the cost of the Guarapiranga program was $262 million, 45 percent of which was contributed by the World Bank. Later, additional funding had to be found because the large investment required for urban improvements had not been completely foreseen. The Sao Paulo municipality-the most important of the municipali- ties in the basin-used its influence to draw more attention to urban development in the program design phase. It thus succeeded in increas- ing the focus on improving informal settlements, which is presently one of the most important aspects of the program. As Dirceu Yamazaki ex- plains, the municipality of Sao Paulo undertakes this work within its jurisdiction, while the Housing and Urban Development Company of the state of Sao Paulo (CDHU) is responsible for upgrading in smaller municipalities that lack the capacity for this type of work. Elisabete Franca, the municipality's project coordinator, says, "At the beginning of the basin recovery program, there was little concern about the poor settlements. The SABESP initiative was characterized by a fo- cus on sanitation in the basin, with little emphasis on the upgrading of low-income areas. The municipality, however, presented a plan for im- proving the informal settlements (a cost of $1,800 per lot was foreseen at the time) and for providing environmental education." This initial idea evolved into a comprehensive intervention that included infrastructure for water supply, drainage of wastewater and storm runoff, access roads, paving, and electricity supply as well as socio-technical support during construction, as well as the need for removals and relocation of some families (including temporary lodgings and substitution housing). The average cost per lot for settlement layout and infrastructure improve- BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 347 ments, including removals and resettlement, was $5,900, according to Franca.s The original sources and uses of funding plan has been significantly modified. Matching counterpart funds from the government agencies, which were initially set at about $143 million (see table 7-1), actually reached $293 million, more than double the original figure. SABESP, which was to invest about $40 million, actually contributed a total of $54 million. However, the majority of the increased investment was contrib- uted by the municipality of Sao Paulo. "The program succeeded in le- veraging a lot of funding," notes Franca. "In the municipality alone, instead of the $38 million initially agreed upon, $174 million has been invested." Table 7-1. Initial Sources of Funding, 1992 IBRD Counterpart funds Total Implementing agency $ (mil.) % $ (mil.) % $ (mil.) % Program management unit 21.4 8.2 10.2 3.9 31.7 12.1 SABESP 36.7 14.0 39.8 15.2 76.5 29.2 CDHU 17.2 6.6 39.1 14.9 56.3 21.5 Sao Paulo Dept. of Environment 10.5 4.0 15.5 5.9 26.1 10.0 Municipality of Sao Paulo 33.1 12.6 38.2 14.6 71.4 27.3 Total 119.0 45.4 142.9 54.6 261.9 100.0 Source: Authors' construction from field study data. Increased funding was coupled with changes in program design that increased the number of informal settlements to be upgraded, as well as the comprehensiveness of the work. This broadening of the project's philosophy and scope came about as a result of pressures exerted by the community. "There was a lot of pressure from neighborhood organiza- tions for improvements, and the pressure increased with the start of the project. Once construction began, the population could see the results, and the demand increased," Franca points out. 'Note that the physical conditions of informal settlements in the Guarapiranga basin, and hence the cost per family of their upgrading, vary widely. Costs for a sample group of favelas are provided in chapter 3 in the discussion on the cost of socio-technical sup- port (see table 3-3). 348 SLUM UPGRADING AND PARCIPAnON Finance as a Constraint and a Catalyst Cash flow difficulties have-not surprisingly-had a negative impact on the project. As funds dried up due to the government's budgetary problems, the pace of work slowed between 1997 and 1998, even com- ing to a complete halt in some areas. A construction company representative explains the ramifications: "We had an initial contract to finish the work in 15 months. We made a plan for this, but suddenly the funding stopped. This information shook the community and the professionals involved. The social support work was interrupted. The residents lost confidence. Our company carried on with the work, but very slowly. There were moments of anguish when some residents behaved aggressively, and some leaders hindered our work." Apart from being the project's lifeline, funding issues had other di- mensions as well. Several administrators and technicians, and some lead- ers, underlined the catalytic effect that World Bank funding had throughout the project. Yamazaki summarizes the situation thus: "The Bank found that the environmental education and housing component should be the entire responsibility of the state. But in our experience, funding from the Bank, even only 10 percent, helps a lot because it con- vinces the other program partners of the importance of the issue." Many municipal representatives echoed this view, and one of them acknowl- edges: "If the Bank demands something, everyone complies." FOR THE TIME BEING, I CAN'T DO ANYTHING TO THE HOUSE BECAUSE I DON'T ALWAYS HAVE MONEY TO EAT. -Jardim Copacabana Resident The difficult economic situation caused by increasing unemployment also had at the time a direct impact on the residents' ability to invest in housing and infrastructure improvements. These economic circumstances affected their willingness to participate in the project in the form of fi- nancial contributions. The fact that the project was not integrated with employment and income-generation activities made it difficult to over- come this constraint. Problems with Cost Recovery and Subsidy Policies The lack of a clear policy concerning subsidies and cost recovery mecha- nisms posed another obstacle to sustainability. One of the most striking features of Guarapiranga in this regard was the lack of cost conscious- ness. The project beneficiaries who were interviewed disregarded the BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 349 cost of the work, as did the technicians, particularly those involved in providing social support, and even the community leaders themselves. Nevertheless, the potential for more transparent subsidies and en- hanced cost recovery seems to be present. Some community members expressed a willingness to pay for services and criticized the flat rate "social" tariff for water and electricity. They favored tariffs based on consumption because, according to them, this would reduce waste and define responsibility for payment. The Development and Environmental Protection Plan prepared as part of the Guarapiranga program emphasizes financial sustainability and identifies "payment for water use (consumption)" and "payment for scenic landscape potential use (including water activities)" as the two main instruments for cost recovery. However, although the state assem- bly approved these proposals, these issues are not yet firmly established in the minds of technicians and administrators-and even less so in the minds of residents or the general public. No, I DON'T HAVE THE SLIGHTEST IDEA ABOUT THE COST OF THIS WORK. THis IS A PROBLEM WITH THE PROJECT. THE CONTRACTOR SHOULD POST A SIGN GIVING THE COST OF THE WORK TO AVOID SPECULATION. OTHERWISE, PEOPLE MIGHT SELL THEIR HOUSE FOR LESS THAN WHAT WAS INVESTED IN IT BY THE PROJECT. -Community Leader This lack of concern for financial sustainability led the municipality's social action coordinator, Cleusa Mello, to propose the collection of a special user fee to cover the cost of cleaning and maintenance of the settlements. To her, "Lack of payment implies a lack of commitment," but still municipal officials find it difficult to recover the cost of munici- pal infrastructure and services such as the road system, storm drainage, and solid waste collection. They believe that the state water company (SABESP) is better positioned than the municipality in terms of financial sustainability, since the utility's costs can be partially recovered through water tariffs. However, this belief is based on the premise that SABESP distributes bills, and communities are willing to pay for the water they consume. One community leader who works with SAPESP notes that "There is confusion about tariffs. There are areas that pay the social tar- iff, independently of the amount of water consumed; others pay by the meter; and others don't pay anything because nobody charges them." 350 SLUM UPGRADING AND PARTICIPATION Actors, Alliances, and Institutional Arrangements A Broad Horizontal Partnership of Public Sector Actors Various governmental organizations were involved in implementation and management of the various project components of the complex Guarapiranga program. The institutional arrangement that brought the project to fruition was complicated because the program was complex and incorporated a number of different project components covering a range of sectors. For this reason, the responsibility for project manage- ment, which was originally envisaged to be under the control of the water utility (SABESP), was transferred to the Department of Water Resources, where the program management unit was created. These dynamics resulted in the organizational structure shown ear- lier in figure 7-1. The chart reflects the complexity of the relationships and the horizontal organization that benefited the project. Elisabete Franca is convinced that the project's innovative horizontal arrangement brought about good results in comparison to the traditional hierarchical structure commonly associated with government projects. She believes that state and municipality participation contributed to continuity of effort and the creation of joint initiatives. Conflicts between Environmental Protection and Social Needs Although community participation was a key element of project imple- mentation, various stakeholders and organizations representing the com- munities felt that there should have been greater consultation during the course of the development and design of the project itself. Many groups, including the Favela Federation of Sao Paulo, acting as the union of informal settlements, and various environmental NGOs, did not feel that they were included in defining the project. Consequently, they pressured the government to create a Tripartite Advisory Council comprised of representatives from the state, municipalities, and civil society, with a total of 42 members. The Guarapiranga / Cotia Subcom- mittee, a tripartite organization with deliberative power, later replaced this council. This subcommittee consists of representatives from univer- sities, professional organizations (e.g., lawyers, engineers, etc.), NGOs, neighborhood organizations, associations, and clubs. The model is sub- sequently being used in other river basins of the state. Yamazaki notes that the confrontation with the NGOs was not limited to requests for greater participation, but also extended to broader criti- cisms of the program's vision: "Opposing viewpoints have always ex- isted, and they still exist, because some environmental NGOs don't like BRAZ: THE GUARAPIRANGA PROGRAM, SAO PAULO 351 to see the poor living in this area." Nevertheless, some NGOs work di- rectly with people living in the favelas. For example, one NGO set up by a number of professors at the University of Santo Amaro describes its organization's activities in the informal settlements of the Guarapiranga basin: "We work with the schools and promote some events in which we propose different topics such as public health, conservation, and envi- ronmental education. We work for the formation of community leaders and we have also established a community vegetable garden. We are monitoring the concentrations of algae in the reservoir, and the Depart- ment of the Environment included us in the Guarapiranga program in the project on environmental education." As community leader Ney Favela, member of the Guarapiranga sub- committee, states, "There was a time when the government could have slowed the growth of informal settlements, but there was no political interest in doing so. Later on, the environment became a political issue. It was then that the government began to worry and invest in the decon- tamination of the Tiete River and the Guarapiranga program. The main axis of this program was the environment, because the government saw that it could no longer remove the residents. It wasn't possible to fight the cause anymore, only its effects. And they fought the effects through a program to upgrade the informal settlements." Participation of Private Sector Organizations The participation of the private sector was an important innovation in project management in the upgrading component of the Guarapiranga program. A small group of government officials coordinated the pro- gram, supported by a variety of private companies in different roles. As described by Franca, the private sector is no longer viewed as an enemy by civil society and the governmental sector, and it has taken charge of many of the routine operational activities previously carried out by the public sector. "In the case of the municipality, there are only 16 people in the unit that coordinates the activities in low-income areas: a general coordina- tor (who is an architect and planner), a contracts and works supervision coordinator (also an architect and planner), a geographic information systems specialist, and a social team comprised of a coordinator and 12 social workers. The result is good; we are much more efficient this way," affirms Franca. Under this scheme, subproject management was assigned to a man- agement company; another company was given responsibility for in- spection and quality control of the public works. Infrastructure and housing construction was carried out by several contractors. 352 SLUM UPGRADING AND PARTICIPATION As described above, socio-technical support was also assigned to a private sector company, which acted as an intermediary between the residents and the various other private sector and government agencies involved in the project. The novelty of this arrangement meant that pro- gram and project management had to use some creativity in hiring so- cial support services. That did not detract from the importance of the social work. According to Yamazaki, "Social work, in projects such as these, is fundamental before, during, and after the physical interven- tion. To meet these demands, we found a way of including a clause in the contract with the construction companies that would require them to hire socio-technical support services for the population. They must have found the demand strange in the beginning, but I am sure that they now understand the importance it has." The level of participation of the private sector in the Guarapiranga program had some unforeseen cultural impacts, creating opportunities and situations that had not previously existed. For the first time, for ex- ample, many middle-class professionals had the opportunity to enter the world of the informal city, which until then had been foreign to them. In addition, companies of diverse sizes and sectors of specialization be- came involved, exposing them directly to the favelas where they came to understand the lives of the communities living in informal settlements and also appreciate the need for a different approach toward the design and implementation of infrastructure. TEN YEARS AGO, NO CONTRACTOR OF IMPORTANCE WOULD HAVE BEEN INTERESTED IN THE UPGRADING OF INFORMAL SETTLEMENTS. BUT NOW, IT IS AN IMPORTANT MARKET NICHE. -Dirceu Yamazaki, Program Management Unit Coordinator Professionals who had the opportunity to participate in the project told us about the transformation of their view of informal settlements and their inhabitants. One engineer summarizes his feelings toward the project as follows: "Before this job, I had always worked in the rich areas of Sao Paulo, constructing luxury buildings in Morumbi and places like that. This experience has profoundly changed my technical, professional, and-I would say-human perspective. My vision of the city is now completely different." Improving Opportunitiesfor Participation Not all the actors in the project felt that they had a good opportunity for participation. Some community leaders requested improvements in the BRAzIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 353 channels of participation. They believe that the World Bank could be instrumental in influencing the government in this regard. Ney Favela explains, "I don't think that the Bank should directly finance civil soci- ety organizations, but if the Bank wants the project to be a success, it should ensure that certain tasks, such as environmental education and post-implementation socio-technical support, are mandatory components of the project. It is therefore necessary for the government to provide funding to those organizations that are already working closely with the communities, especially because they know how to work with fewer resources. Our proposal is that the World Bank evaluate the program and offer a seminar in which representatives from the government and the community can discuss questions and complaints." Favela's posi- tion is similar to that of other participants, such as those in the munici- pality of Sao Paulo who regret that, since the state is the loan recipient, the municipality does not have the same influence in decisionmaking as does the state government. There are also some NGOs critical of the state government for what they consider to be rigid procedures and a lack of opportunities for par- ticipation. A representative of the Guarapiranga NGO network cites a specific example: "The government, when it published the request for proposals [RFP] for environmental education services, placed require- ments and conditions in the RFP that disqualified NGOs from bidding, in spite of their qualifications to do the work. Not even SOS Mata Atlantica, one of the largest NGOs in Brazil, could participate. At that point, there was a rupture between the NGO network and the coordina- tors of the Guarapiranga program. As a result, the program was not able to make much progress in environmental education." The World Bank's procedures and modus operandi also drew some criticism. A municipal representative notes that the Bank team had diffi- culty understanding the dynamics of the work: "In their first visits, they would request a complete list of the families to be relocated, as if it were possible to determine this before the participatory planning process. In reality, as the project proceeded, we had to invent a thousand mecha- nisms for adapting the project to the needs of the population. One was called 'chess': a family that had to be removed but didn't want or have the economic means to move to an apartment outside the area could exchange their position with another family whose house was not af- fected by removal, but who did want to move. This kind of adjustment requires a lot of time and is decided case by case in the field by the social workers with the population." Yamazaki attempts to sum up the issues of participation that resulted in various difficulties and delays: "These types of programs are very slow to mature and are very different from simple construction programs. 354 SLUM UPGRADING AND PARTICIPATION Programs like this require that institutions of diverse cultures, with dif- ferent levels of organization and autonomy, work together. There are a thousand difficulties, even difficulties in accepting the World Bank's rules for procurement and financial management, which are different from our legal formats and our mentality. All this contributes to delays in the project." Dynamics That "Greased the Wheels" Certain dynamics compensated for the above-cited problems, enabling the project to make steady progress. These dynamics included: * The "human factor" and direct personal relationships * A sense of belonging to the same team and of a bond between the communities and professionals involved * The role of private actors in establishing a work style based on effi- ciency and obtaining results within a specified time frame. MANY PROBLEMS COULD HAVE ARISEN THAT WERE AVOIDED IN PRACTICE. WHY? BECAUSE OF PRESSURE FROM THE POPULA- TION, THE TECHNICIANS, AND EVEN THE WORLD BANK. PROBLEMS WERE JUST NOT LEFT UNSOLVED. -Dirceu Yamazaki, Program Management Unit Coordinator And, as stated by an engineer responsible for some of the project ar- eas, "Without a doubt, this project benefited from good relationships among professionals in different areas. Even though we had to solve some problems during the course of the work, people got involved with a lot of goodwill." Organization and Implementation Learning.the Way All that occurred in project design and the attention given to problems in specific issue areas gradually gave the project its integrated character. The methodology evolved along the way; this was necessary to achieve sustainability. The technicians acknowledged that the project's initial limi- tations imposed the introduction of new strategies and new ways of do- ing things: "Integration among technical actors from different areas of expertise happened naturally, beginning with simple activities and then BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 355 spreading to more complex ones. Once the various disciplines were inte- grated, the decisionmaking process became more agile. Integration between the contractors hired by the municipality and the sector of the municipal- ity responsible for project coordination was also built on a day-to-day ba- sis, after the work began. There was no previous planning process or definitions of scope to help us there. The process was a result of good com- munication and openness between the technical and social work teams." A Diagonal architect sums up the experiences: "The Guarapiranga project, in terms of life experience, is very rich. The project allowed ex- perimentation with technical, human, and ecological possibilities. In practice, it gave concrete form to ideas about the informal city that were initially very romantic. But as one implements the project, one observes all the variables and the limitations of one's actions, and these ideas be- come more practical and down to earth. A key role in this is played by the residents, who do not have a macro vision due to the limitations of their daily lives. They are much more concerned about whether the work will take away a piece of their house than they are about the benefit that it might bring to the community; however, that helps us to be realistic in our solutions." Teamwork and openness on the part of the technicians involved per- mitted the entire team to exchange perceptions, criteria, and methods. The overarching conclusion of this process was the need to strengthen the social work before, during, and after each upgrading project. Organization of Socio-Technical Support The results of socio-technical support work from the second stage of the project onward were made evident by comparison with the pilot stage, which the municipality undertook with minimal social intermediation arrangements. This pilot stage showed the need to intensify socio-tech- nical support and, at the same time, served as a useful baseline in com- paring those areas that received an appropriate measure of such support and those that did not. The socio-technical support work also introduced innovations in subproject methodology, opening the way to a participa- tory process as described in box 7-6. Upgrading interventions that had already been planned and designed for most areas without participation were submitted to analysis and ne- gotiation with local residents. Diagonal Urbana was hired to provide social intermediation services, under the supervision of the municipality's social workers. The social work addressed the following key areas: * Identification of community organizations and other stakeholders, key local social features, and leadership patterns 356 SLUM UPGRADING AND PARTICIPATION Box 7-6. Socio-Technical Support The objective of socio-technical support in the project was to open clear channels of information and communication and stimulate greater par- ticipation by residents in the project. The steps by which this was accom- plished are detailed below. 1. Introductory meeting in which the entire population participated. The municipality presented the project's objectives, criteria, and procedures. 2. Meetings of interdisciplinary technical teams to update project data. Community representatives were elected to help update ex- isting data and to take part in discussions on alternatives for inter- vention. After noting all the changes resulting from the new information and discussions, the preliminary projects and work plans were adapted to the new reality through biweekly meetings with contractors, social workers, and officials from the Department of Housing, along with a technician from the company responsible for coordinating engineering work for all Guarapiranga upgrading subprojects. This was called "sweeping" because it "deared the field," or laid the groundwork for the beginning of the works. 3. Multipurpose meetings with residents. Participation during the development of the works was ensured by a busy schedule of con- sultation meetings with community members and special-interest groups, during which information about the development was pre- sented and discussed, and decisions were made regarding work fronts and timing of the needed removals. Prior to resettlement, the problems of life in temporary housing were discussed at specific meetings with groups of families preparing for transfer and reloca- tion. Depending on the works' progress, the relocation or removal of houses affected by the opening of roads and infrastructure de- velopment was determined on a case-by-case basis. In such cases, residents were transferred to temporary housing. 4. On-call socio-technical support. In addition to scheduled meet- ings with area-based and special-interest groups, the social work- * Meetings with area-based and special-purpose community organi- zations to disseminate information and promote the project * Organization of participatory information gathering and analysis to update existing data and feed into participatory planning exercises * Support to communities during construction, including discussion of required changes in design which were made possible as long as they did not go against the technical requirements of the construction BRAZIL: THE GUARAPIRANGA PROGRAM, SAo PAULO 357 ers and support technicians were available at specified times for private, one-on-one meetings with residents. This was needed to ensure that people had an opportunity to discuss topics they would not feel comfortable with in a group meeting. 5. Special assistance to the population removed to temporary hous- ing. The most intense work was with the groups most directly affected by the project. Before their removal and while they were in temporary housing, their most common problems were discussed, including garbage disposal, use and cleaning of sanitary facilities, and use and maintenance of laundry facilities. The community shared all these services. Discussions and decisions on alternatives for relocation also took place before removal, so that their final destination was known in advance. Only those with a specified minimum income would be relocated to an apartment; some fami- lies refused this because they felt they would not be able to meet the expenses involved. On average, residents stayed four to six months in temporary housing, awaiting transfer to a new house or apartment. When funding was limited, the work slowed down, which meant a lengthened stay and created additional problems for families in temporary housing. 6. Support to final relocation and handover of the completed works to the community. As the conclusion of the works drew near, with relocated families beginning to move to their new dwellings and the new infrastructure being put into use, socio-technical support turned its attention to preparing residents for their relationship with a transformed living environment. Although educational ac- tivities were carried out throughout the process, they were stepped up at this point. The main topics covered were health and environ- mental education, preparing for new financial obligations (tariffs, local taxes, user fees), use and care of the new infrastructure and facilities, and water and electricity use with a view to conservation. Promoting educational activities formalizes the handover of the new facilities to the community and helps strengthen community organization to promote new improvements after the project. * Social communication campaigns * Minimal follow-up after completion of the works, entailing meet- ings to encourage community organization and discussion of steps to take to ensure conservation of project benefits. According to Cleusa Mello, the coordinator of the municipality's so- cial workers, one of the findings of the social work was that it is not up to external actors such as the municipality to determine the best form of 358 SLUM UPGRADING AND PARICIPATION community organization. What these external actors can and should do is provide support for community organization in the aftermath of projects-a crucial step toward sustainability. Scale and Sustainability The Challenge of an Ambitious Project Operations in Guarapiranga were multisectoral and on a broad scale, with the goal of righting environmental imbalances in a large area and improving the living conditions of hundreds of thousands of people. Programs of this size face particular challenges where sustainability is concerned. WE FEEL THAT LIFE IMPROVED. WMTH THE PROJECr, THE QUALITY OF THE ENVIRONMENT IMPROVED. BETTER HYGIENE IMPROVES THE HEALTH OF THE POPULATION. EVEN THOSE THAT DIDN'T GET A NEW HOUSE GIVE THANKS TO GOD BECAUSE IMPROVING THE LEVEL OF THE NEIGHBORHOOD IMPROVES EVERYONE'S LIFE, AND CONSE- QUENTLY PROPERTY VALUES ARE RAISED. -Tereza Neiva Pereira, President of the Jardim Esmeralda Neighborhood Association Many of the residents stated that the project had a positive impact on their quality of life, but, in order to achieve this, the project required a massive investment in infrastructure works which was disproportion- ate to the relatively small investments in environment educational ac- tivities and the lack of project activities to promote employment and income generation; these are considered to be necessary to ensure sustainability in such a large and complex project. Even the contractors themselves noted that they were concerned about issues relating to project sustainability. The engineer responsible for the Jardim Iporanga works notes, "I know that the objective is environmen- tal protection and improved hygiene. For that to happen, you would need to work in tandem with the population for a long time to change collective behavior. This is an important factor and should be done start- ing with the schools, and then with visits to the houses, supervising and informing the residents, especially after the works have been completed." What was particularly evident from the interviews and focus group sessions undertaken during the project was the agreement among the par- ticipating groups for the need to continue social support work and envi- BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 359 ronmental education after the project's completion. They also agreed on the need for a greater emphasis on supervision, provision of technical assistance, control over post-project developments, and credit for home improvement and for the development of income-generating activities. Obstacles to Sustainability The following observations from focus group participants are useful in analyzing the obstacles to sustainability, which were observed to relate primarily to a lack of credit facilities, the pervading culture of crime, and a lack of environmental education. A resident of an upgraded area makes the following observation: "Lack of credit prevents people from making improvements to their houses. People want to invest in their houses; we were only waiting for the completion of the project. Now we will have to wait until we have the money. Besides, people don't receive any orientation on how to improve their homes." Risks to sustainability also relate to the criminal activities in the favelas. A resident from one of the upgraded areas says, "We have no leaders here. If you complain to the neighbors about their behavior, they might even kill you. If you tell someone they shouldn't throw garbage in the street, the storm drains, or in the canals, they say, 'You don't own any- thing! Do you rule here?' These violent people invaded the hillside, which we all know is an area of risk, and, next thing you know, they are order- ing you about. They're all criminals. We don't know how to defend our- selves, and nobody comes to our help." Diagonal's director of social action, Vilma Dourado, observes that "There were no provisions for an environmental education campaign as part of the project. Although we always talked a little about this topic in our community meetings, there was not enough time to discuss impor- tant issues of maintenance and conservation of the area with the fami- lies in sufficient detail." The absence of environmental education after the works were completed proved to be a constraint to the development of a wider social awareness about the importance of environmental pro- tection and conservation. THE SPEED OF DETERIORATION OF THE COMPLETED INFRASTRUC- TURE IS VERY HIGH; THE ONLY WAY TO STOP IT IS A POST- IMPLEMENTATION PACKAGE INCLUDING SOCIO-TECHNICAL SUPPORT AND ENVIRONMENTAL EDUCATION. -Dirceu Yamazaki, Program Management Unit Coordinator 360 SLUM UPGRADING AND PARnCIPATION One biologist from the Interdisciplinary Nucleus of Environmental Sciences of the University of Santo Amaro clarifies this when he notes that the project "Created better infrastructure, allowed the entrance of garbage trucks, put in place garbage containers; nevertheless, the popu- lation was not made aware of the importance of garbage collection. People aren't aware of the problems they cause because of their behavior, and the garbage dump is seen as a deposit for all types of filth. They throw old sofas, refrigerators, and everything they no longer use into it. The mistake was in not making environmental education part of the process; this inhibits the project's sustainability." The community leaders believe that more importance was given to the public works than to the problems of education and environmental awareness. "The biggest concern is to show off the works, without in- volving the population that will be responsible for their maintenance," says a community leader who reiterates the need for socio-technical support and environmental education to continue after the construction of the in- frastructure. He attributes this gap to a lack of vision on the part of high- ranking government officials and observes that the funding for social work was insufficient for the scale and complexity of the problems. This same conclusion was reiterated by the coordinator of the upgrad- ing project at the municipality of Sao Paulo as well as by the officials responsible for the subprojects, who were insistent in their recommen- dations. As indicated by the conclusion from one of the focus groups: "There is an urgent need to increase socio-technical support work and environmental education in the post-implementation phase of the up- grading of informal settlements. The lack of such work after subproject completion limits the possibility that residents will participate in any post-project initiatives and affects the environmental, social, and finan- cial sustainability of the subproject." "Now We Even Want to Plant Flowers" In the end, the Guarapiranga program has transformed the lives of many people and the life of the city. Not every problem was foreseen, and some aspects of subproject sustainability are at risk, but the reservoir's condition has improved, and many residents reported that they were grateful for what had been done. Tereza Neiva Pereira, president of the Jardim Esmeralda Neighborhood Association, expresses the extent of positive changes in the community: "We have gone through a radical change here. There is a climate of euphoria, and everybody wants to finish their houses, to clean them up. I believe that our lives have im- proved in several ways. You see children who have started to go to school for the first time, and men who have begun to work again." One of the BRAZIL: THE GUARAPIRANGA PROGRAM, SAO PAULO 361 community women in the Jardim Iporanga adds, "We assemble all the neighbors to take care of the gardens. Now that everything is so pretty, we even want to plant flowers." Conclusions Several aspects of the rich experience of the Guarapiranga program, and particularly the process of participation and its effects here, stand out. 1. Although poverty reduction was not an explicit objective of the pro- gram, it clearly did have an impact on poverty. In big cities in de- veloping countries, the growth of informal settlements is one of the main causes of environmental degradation. For that reason, envi- ronmental sanitation is an excellent starting point for stimulating large investments in settlement upgrading and trunk infrastruc- ture improvements. At the same time, public investment acts as an incentive to private investment in housing improvements, which ultimately enhances the residents' ability to undertake economic initiatives. 2. Communities voiced their concerns and applied pressure on those in power, which resulted in a substantial increase in the level of investment in urban upgrading and improved the quality of the upgrading subprojects. Community participation thus leveraged additional funding, although the channels of participation were not sufficiently fine-tuned to fully exploit the community's ability to contribute to project implementation. In spite of this, dialogue among the various actors often remained difficult, as it was in the process of formulating the subprojects. Reducing the cultural dis- tance between public policymakers and members of poor commu- nities continues to be an uphill battle. 3. The scale of a program of multisectoral intervention such as Guara- piranga is itself an agent for institutional and legal change. The institutional gains of the Guarapiranga program are significant. The program involved a number of institutions that, in spite of some difficulties, created a new type of relationship based on an innova- tive management model comprised of the state, municipalities, and civil society, interacting in a horizontal and decentralized structure. The following characteristics of the program favor this model: * A clear objective-i.e., improving the water quality of the Guarapiranga reservoir * A well-defined geographic area of intervention * A horizontal institutional arrangement that stimulates interac- tion between different institutions and civil society. 362 SLUM UPGRADING AND PAIMCIPATION One lesson learned in this program is that fostering personal, direct relations between technicians of different institutions can allow them to jointly address related activities, speed up the decisionmaking process, and find solutions. From a legal standpoint, the project is revolutionizing regional plan- ning and management philosophy and is contributing to the defi- nition of a new legal mechanism for river basin management. Perhaps the most crucial issue has been the use of the territory as a unit of planning and management. This regional focus has over- come the sectoral interests that had prevailed earlier. 4. Private sector participation in programs to improve informal settle- ments is a vehicle for radical changes in perception and contribut- ing to cultural change. Large-scale interventions in the informal city introduce new actors to the process. Due to the large volume of works completed, medium-sized and larger firms have for the first time dealt with the reality of marginalized areas. This encounter has changed the personal and professional view of many middle- class contractors and technicians toward the favelados. At the same time, the intervention of the private sector has begun to penetrate and influence project management style, which previ- ously was directed by the bureaucracy of public administration. All actions of the Guarapiranga program were coordinated in pub- lic institutions by small, high-level technical teams, with most man- agement and implementation tasks delegated to private companies. Integration between public and private sector professionals was good. New workflows and procedures were developed from this interaction on a day-to-day basis, with positive results. 5. The program lacked a clear cost recovery policy, which reflects the paternalism or mentality of dependence that still prevails in Brazil. Guarapiranga was not an exception to this general situation. There was a low level of cost consciousness, and the institutions involved did not shown much interest in developing mechanisms for finan- cial sustainability. This was a missed opportunity, considering that the population appears to be willing to pay user fees, local taxes, and tariffs for water and electricity consumption; and/or to better estab- lish their claim to legal ownership of their homes. The companies pro- viding public utility services seem to think that a system of efficient metering, billing, and collection can only be implemented after comple- tion of the settlement layout and infrastructure upgrading. The rules and criteria for this were not defined during the program cycle. 6. The significant public investment made by the program was not used to help implement a clear policy of subsidies that would have favored the poorest and stimulated mechanisms of social solidar- BRAZIL: THE GUARAP[RANGA PROGRAM, SAO PAULO 363 ity. As a result, residents ignore the costs of the benefits obtained, and an important incentive for the preservation and maintenance of the new infrastructure and facilities is foregone. 7. The lack of solutions to the problem of insecure land tenure pro- foundly affected the project. The regularization of land tenure in the Guarapiranga basin was prevented primarily by the 1975 Law of Protection of Water Catchments. The new law of 1997 acknowl- edges the existence of occupation, but does not clearly define legal- ization rights and delegates everything to regulations the municipalities will adopt later. This adds to an already complex, onerous, and lengthy process. Meanwhile, the negative impacts are immediate. Residents feel insecure. Internal and external private investors are reluctant to invest. Attitudes of responsibility and par- ticipation in maintenance are inhibited. The impact of tenure insecurity on cost recovery is a particularly serious problem. On the one hand, there is a negative incentive for residents to do their part in a cost recovery scheme. On the other, informal land tenure poses a legal obstacle to the application of some constitutional cost recovery instruments such as contribuidao de melhoria (betterment levy). 8. The project's social component was as important as the physical intervention and is essential for sustainability. Socio-technical sup- port work focused on increasing the project's responsiveness to community demands, opening clear lines of communication among diverse public and private sector participants, and involving the population in the project's implementation. In Guarapiranga, in- novative methodologies for social action and mechanisms for par- ticipation were created. Unfortunately, the investment in this area was limited to the imple- mentation phase. Essential issues regarding sustainability-envi- ronmental education, methods to prevent and control new land invasions, credit and technical assistance for home improvements, and income and employment generation-were left unaddressed. 9. Without educational activities and structured stimuli to participa- tion following subproject implementation, there will be little im- pact at the deepest level of individual and collective habits. If behavioral changes do not occur, the benefits achieved will be at risk. A lack of understanding of the essential components of the community development process during the program formulation phase was responsible for this serious gap in project design. 10. All those interviewed, representing the institutions involved in the Guarapiranga program, conveyed a single overarching lesson. The improvement of the physical environment can produce a very posi- 364 SLUM UPGRADING AND PARTICIPATION tive impact, but the engine of change is the community, which must be mobilized to continue the development process. Without a strat- egy for long-term participation, no project will be truly sustainable. 8 Costa Rica: FUPROVI's Habitat Popular Urbano Program, San Jose Since 1988, Costa Rica's Foundation for the Promotion of Housing (FUPROVI) has been conducting a program called Habitat Popular Urbano, which can be translated as Urban Popular Habitat, and is based on assisted mutual-help construction. The name of the program refers to a method of developing low-income housing in which a housing asso- ciation builds homes for all its members as a group, upon consultation and in partnership with an institution (FUPROVI) that offers social, tech- nical, and administrative assistance services in exchange for a fee. Habi- tat Popular Urbano had, as of the time of our study, helped 15,000 families build their own homes; it employs highly innovative methods within the framework of private sector participation in Costa Rica's social hous- ing policies. The Importance of the FUPROVI Experience FUPROVI's experience is relevant outside the Costa Rican and Central American context for the following reasons: * FUPROVI assists the segment of the population that has little ac- cess to the benefits of public policies, such as housing subsidies, by using instruments of these same policies and selling its services in the market. FUPROVI has developed a methodology which not only contributes to its success in assisting the target population, but which may also serve as a guide for formulating appropriate public policy. * From the start, FUPROVI has made its own continuity a priority. To this end, it caters to Costa Rica's housing association and precarios (informal squatter settlements) market sector. Internal staff train- 365 366 SLUM UPGRADING AND PARTICIPAMON ing has enabled FUPROVI to better respond to the complex social processes of the poor or informal sector. In the FUPROVI program, community members administer and execute the projects, and communities control the project resources. Habitat Popular Urbano uses a formula that reduces the cost of housing construction and that functions as a filter. This formula allows FUPROVI to focus on serving the poorest communities. Moreover, FUPROVI uses clear, easy-to-understand contracts and makes information readily available to its clients. Background The Lost Decade and the Challenge of Housing In the 1980s, the political, economic, and social situation in Latin America became extremely difficult. General instability affected import prices, public finance, inflation, and unemployment-all of which augmented the housing deficit. Not for nothing did statesmen such as Nobel Prize winner and Costa Rica's then-president Oscar Arias Sanchez call this the "lost decade" for Latin America. The situation was no different for the small Central American country of Costa Rica, where the crisis was compounded by rapid population growth, internal migration, refugee inflow from war-tom neighboring countries, and limited effectiveness of state action. The crisis produced a marked deterioration in housing conditions and a growing tension in the urban development and housing sectors. Squatter settlements, locally called precarious, were a result of the in- vasion of urban lands carried out by organized groups that hoped to meet their need for housing by collectively demanding public services and the legalization of the lands they occupied. By 1985, the official fig- ures estimated that the housing deficit was at 124,000 units. Taking into account poor sanitation and hygiene in some squatter settlements, how- ever, construction of another 280,000 would in fact be needed. AT THE END OF THE 1970s, THERE WERE 11 SQUATFER SEITEM 1N THE GREATER m opomurAN AREA. AT THE END OF THE 1980s, THERE wER 138; OF THESE, 91 wERE LTocAE IN SAN Jc6 rsELF. -Lorena Revilla, Social Worker, FUPROVI In 1986, the problem of housing and human settlements became one of the fundamental points in Oscar Arias's presidential platform. He prom- COSTA RICA: FUPROVI's HABITAT POPULAR URBANO PROCRAM, SAN JosE 367 ised to build 80,000 houses during his presidency (1986-90). With this prom- ise was born a housing development plan that radically changed the direc- tion of this policy area-and created huge expectations among the people. The chance to acquire one's own home was recognized as a human right, and all succeeding administrations have reinforced this perspective. An Enviable Level of Human Development The level of expectation among Costa Ricans has arisen partly because their other vital needs-such as health and education-have been met (box 8-1). For this reason, Costa Rica has been able to concentrate on the problem of housing. It has made the right to proper housing a priority because it promotes family stability and helps raise families' economic level. At the focus group we held at FUPROVI's Villa Maria project, one of the project participants described the situation thus: "Education in Costa Rica is almost mandatory, because the government provides it, almost im- poses it. And if we get sick, we go to the social security clinic. It seems that the greatest problem facing us poor people is where to live.. .Rentals are very expensive, and, if you have to fix anything in your rented house, you have to pay for it yourself.. .So it is better to have a home." Box 8-1. Country Overview of Costa Rica A small Central American country of about 52,000 square kilometers, Costa Rica is considered one of the most durable, stable, and peaceful democracies in Latin America. Sixty percent of the population of 3.4 mil- lion reside in the greater metropolitan area of San Jose, a section in the country's Central Valley that covers about 3.83 percent of the territory. The provincial governments of San Jose (the capital), Cartago, Heredia, and Alajuela are all located in this metropolitan area. After many years of consistent investment in the social sectors, Costa Rica ranks high among Latin American countries in terms of its well- being. The country is placed at 43 on the world Human Development Index ranking as established by the United Nations Development Programme. A 19th century law that promulgated free and obligatory education in Costa Rica has produced dramatic effects: in 1994,95 percent of Costa Rican adults could read. The government invests 22.9 percent of the national budget in education each year. Ninety-six percent of Costa Rica's population has access to potable water and electricity, according to data from 1996. 368 SLUM UPGRADING AND PARTnIPATION Desirefor Housing Translates into Housing Associations These comments suggest that housing is the top priority for poor Costa Ricans, an observation underscored by the social commitment to hous- ing demonstrated by the large number of housing associations found throughout the country. Housing associations are formed on the basis of a single common interest: the desire on the part of their individual mem- bers to obtain housing. Generally, families from different places join to- gether in a housing association. In Costa Rica, these associations are one of the most common ways in which families build a home, and their numbers have grown steadily since 1986, notably among the lower and middle classes. The rapid growth in the number of housing associations, both formal and informal, occurred in response to the housing deficit and increasing demands from civil society to meet their housing needs. An inhabitant of FUPROVI's Dina project, which serves as a typical example of how a housing association is initiated, explains how this organization began: "The need for housing led us to organize ourselves and form a group. The idea for a collective housing and social infrastructure program arose when we observed the activities in other neighborhoods and the hous- ing programs that other groups had initiated. From this point, we went through the legal paperwork in order to create the association and to identify the institution that offered the best financial deal for us." By uniting in their search for housing, groups gain government assis- tance and obtain better prices through their collective purchasing power. A community member from the Villa Maria project explains the situa- tion: "The organization began because of politics; one compaiiero who is involved in politics began to talk to other friends in order to get them involved in housing; in the beginning, in keeping with party politics, we did not allow anyone and everyone to join, but only calderonistas.' Later though, both liberationists and calderonistas could join, and the leader- ship was more democratic. From there, the association began to grow: from the 12 original associates, it soon grew to 50 members." The Birth of FUPROVI: A Private Arm of the State Housing Policy In 1986, the state introduced a new housing finance system with a strong investment capacity. However, it proved necessary to find new ways of 'In Costa Rica, two large political parties alternate in power: the National Liberation Party (PLN) and the Social Christian Unity Party (PUSC). Based on the last names of their respective leaders, members of the PLN are referred to asfigueristas-for Jose Figueres- and those of the PUSC are referred to as calderonistas-for Rafael Angel Calder6n. COSTA RICA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN JOSi 369 working with organizations within the private sector that would be ca- pable of producing new responses to the problems of working with low- income people, going beyond the slow pace of state bureaucracies. One of these responses was the establishment of a private sector entity with social goals in the housing sector. FUPROVI COMPLEMENTS STATE ACTIvFrY.. BECAUSE THE STATE IS SLOW AND INEFFICIENT IN RESOLVING URGENT PROB- LEMS SUCH AS HOUSING, THE IDEA WAS TO CREATE NONGOV- ERNMENTAL TOOLS THAT COULD PROVIDE A MORE FLEXIBLE AND EFFICIENT RESPONSE TO THE DEMANDS OF THE MOMENT. -Jose Manuel Valverde, Applied Research Coordinator with CERCA, a UNCHS (Habitat) Program for Central America FUPROVI was created in 1987 by an independent group of Costa Rican professionals from the public sector, the for-profit private sector, and academia, all of whom shared a desire to develop new and more flexible solutions to low-income housing delivery and urban upgrading. FUPROVI successfully lobbied the government to receive financial as- sistance from the Swedish government, which offered Costa Rica fund- ing and technical assistance for several development programs. Subsequently, the Swedish International Development Agency granted a total of $14 million to FUPROVI in three payments. This funding was primarily used for institutional development of the foundation and to set up a rotating fund for bridge loans to participants in FUPROVI's Habitat Popular Urbano program. In addition to Habitat Popular Urbano-its low-income housing pro- gram-FUPROVI works with six smaller programs focusing on housing for the elderly and handicapped, urban upgrading, environmental im- provement, community training, and support for income generation. The Habitat Popular Urbano Program Habitat Popular Urbano focuses on low-income families in the greater metropolitan area and the province of Lim6n. This latter was FUPROVI's largest project outside of San Jose, but there have been four others in different urban areas located near the capital. Table 8-1 presents a sample of FUPROVI's Habitat Popular Urbano projects. In the Habitat Popular Urbano program, FUPROVI's support to its client families consists of three fundamental components: Table 8-1. A Sample of FUPROVI's Habitat Popular Urbano Projects Area of Con- Average No. of individual struction cost per Project Location families Family characteristics lots (m2) area (m2) family ($) Mansiones San Rafael de Montes de Oca 119 38% single-parent families headed 130 42 3,496 (east of the capital) by women; 77% have 3-5 members Dina Patarra de Desamparados 61 120 42 4,552 (south of the capital) (J Villa Maria Moravia de Coronado 140 50% single-parent families headed 60 42 8,300 C (north of the capital) by women, with an average of 3 members per family Lagos de Pozos de Santa Ana 385 30% single-parent families headed 120 65 6,960 Lindora (west of the capital) by women, with an average of 4 members per family San Juan Pavas, San Josd 885 50% single-parent families headed 90 42 2,107 (west of the capital) by women, with an average of 5 members per family Source: Authors' construction from field study data. COSTA RICA: FUPROVI's HABITAT POPULAR URBANO PROCRAM, SAN JOSe 371 * Bridging loan for the construction, improvement, and expansion of houses * Bridging loan for building infrastructure * A package of specialized services such as land tenure regulariza- tion, project organization, intermediation with government depart- ments, and technical assistance. This last comprises training and socio-technical support as well and is collectively referred to as ACAT (asesoramiento, capacitacion, y asistencia tecnica). An important part of the service package is helping families obtain a government housing subsidy voucher. One of FUPROVI's most important services is legal assistance for land tenure regularization and for formalizing the constitution of housing associations. The need for this assistance is real; as a participant in the Lagos de Lindora project explains: "I belonged to a small association that did not have legal status.. .After the association was legally estab- lished, we had to work even harder... .By the time Oscar Arias's govern- ment came along with the promise of housing, we were like orphans, knocking on doors all around." Many of the housing associations that come to FUPROVI for assis- tance have already obtained land tenancy and a legal construction permit by the time they approach FUPROVI. This provides an indication of the motivation and level of capacity within the associations to develop solu- tions to their housing problems within the state's policies and legal frame- work. Notwithstanding, the bureaucratic application and processing procedures can take a considerable time, and funds are usually not avail- able when construction begins. In these cases, FUPROVI offers bridging loans which enable construction to proceed while the transactions for state housing subsidies for each of the families are being prepared and processed. Even though the FUPROVI methodology lowers costs significantly, the housing subsidy rarely covers the full cost of the house and related infrastructure. Families therefore normally have to take out a small loan from another authorized financial institution in the National Housing Finance System to cover the difference. FUPROVI assists its client fami- lies in obtaining this loan. In exchange for these services, the client families take on a variety of obligations. Each family must contribute 30 hours of work per week to housing construction. "The requirement of 30 hours is a filter: if some- one can pay someone else to construct their house, they will not give 30 hours per week. This ensures that the program is directed toward the poorest groups," explains Mario Rodriguez Vargas, FUPROVI's finan- cial director. Thus, mutual-help construction exacts a strict obligation on those who participate. 372 SLUM UPGRADING AND PARTICIPATON Participatory Process Associations Usually Make the Initial Contact FUPROVI does not initiate the formation of housing associations. Nor does it usually seek out organized groups to offer them its services, as it did in its first years of existence, and still does occasionally when it has a specific interest in a group. Rather, it is FUPROVI that usually receives the requests of those who desire its help. "In some cases, where we have taken the first step, this action works against us, because they believe that we have come to offer them houses. When we tell them that they have to pay, and that they have to work, they become disappointed because this is, ultimately, exactly what they do not want. For us, it is very important that they take the first step. They must be aware of the need, and they must present this need to us. Now we do it this way: when they come to us, we explain to them what FUPROVI is and say that they should come back when they feel our services are pertinent," explains Fernando Rojas, a FUPROVI engineer. Once the initial contact between the association and FUPROVI has taken place, a FUPROVI social advisor begins to interface with the group's leadership. "There is a companiero in charge of making the first contact. Through a variety of channels, the groups begin to request information, and this person contacts the group's board of directors. Together, they visit other FUPROVI projects to review the methodology," explains Os- car Mario Garbanzo, a FUPROVI social worker. He adds that in this first meeting they do not enter into details regarding the costs of the con- struction or the finishings. The leaders then take this information to the association. They are encouraged to make a decision as a group on whether to accept the methodology. Once all members of the housing association group agree, an engineer and a social worker go to the com- munity together to gather more detailed information about the families. THERE ARE PEOPLE WHO ARRIVE AND ASK QUESTIONS, BUT WHEN THEY FIND OUT THAT IT IS MUTUAL-HELP CONSTRUCTION, THEY LEAVE BECAUSE THEY DON'T LIKE THE IDEA. -Leiner Castillo, Dina Project Leader Once the process is understood, it generates different kinds of reac- tions. Some people become involved and view the development of the project as their own, while others of those who go through the experi- ence do not appear to be satisfied. Sonia, a participant of FUPROVI's San Juan project, asserts that she accepted the project because "I wanted COSTA RICA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN JOSe 373 a house so badly, but had no idea that it would cost me so much effort." Some do not want to participate at all; others rise to the challenge, as Rose Mary, a leader of the Villa Maria project, explains: "When we went to Lagos de Lindora and I saw the women working alongside the men, I became aware that we were actually going to build the houses, and that I would have to do so much hard work. And then I thought, if they can do it, I can do it." No matter what the initial reaction is, however, it is not until people are actually developing the project that they perceive the full implications of the FUPROVI methodology. Because of the hard work the system of mutual help poses for the families, the fact that the housing associations are free to search for an- other alternative that meets their needs means that, in many cases, sev- eral years may go by before a group returns to the foundation to sign a contract. The organization behind the Mansiones project was formed in 1986; it did not formalize a relationship with FUPROVI until 1991. (The project was completed in 1993.) Similarly, the Lagos de Lindora housing association began negotiations with FUPROVI in 1991, but did not sign a contract with the foundation until 1995. The First Stepfor the Association Is to Obtain Land Once a contract has been signed with FUPROVI, the first goal for a hous- ing association is to acquire land for construction. No fixed method ex- ists to achieve this objective. In many cases, when associations contact FUPROVI, they already have a lot on which to build and have begun negotiations for its purchase. In some cases, they have obtained the lot through political clientelism or through a donation of land by a state entity. When the association does not already own land, FUPROVI finances the purchase or refers the association to other financing organizations. Client Expectations versus FUPROVI Offerings There is usually a mismatch between the initial expectations of client families and the services FUPROVI offers. Realistic expectations are es- sential, especially if we take into account that FUPROVI's client families have, in 80 percent of the cases, a monthly average income of approxi- mately $180. One of the principal characteristics of these families is that between 30 and 50 percent of them are headed by women. As is often the case where women are heading up households, income is lower. Both before contract signing and before construction begins, FUPROVI provides extensive information and training on community organiza- tion and on the project as a whole. Part of the rationale for these activi- ties is to adjust client expectations to what lies ahead. "The foundation's 374 SLUM UPGRADING AND PARTlCIPATION objective is to transfer resources, knowledge, and technology, but the people want their house right away," says Mario Rodriguez. As Antonio Benavides, a FUPROVI sociologist, sees it, "The people come for the house, they want to see the four walls.. .We offer them a package that enables them to build not only the house but also a community." The need for community building is not always perceived by all concerned. In the Mansiones project, for example, the FUPROVI team insisted on build- ing a community soup kitchen and a daycare center to facilitate the work of those involved in the construction. The housing association complied, but only operated these for as long as it took to get the houses built. A member of the project's board of directors, Ana Alfaro, notes: "Those things did not really interest us; what we wanted were the houses." FUPROVI's ultimate objective of building communities through train- ing and hard work thus contrasts with the client groups' initial expecta- tions, which generally focus solely on house construction. At most, community-building figures only as one of a client group's secondary goals. But unlike many experiences in the private sector-whether for- profit or nonprofit-this apparent conflict has proven to have a positive side effect in FUPROVI's case. It provides a reason for FUPROVI to do an especially thorough information and training job, encouraging its cli- ents to stay grounded and act on realistic expectations. Socio-Technical Support Is Fundamental to Self-Management In order to get construction under way, FUPROVI provides a work team to support the community. The team's size and composition depends on the scope of the project, but generally it consists of a project head (with a technical or social background), an administrative instructor, an engi- neer for technical advice and work supervision, a social worker to con- sult with the organization, and a master builder who guides the construction step by step. The communities are responsible for all op- erational tasks, while the team provides needed socio-technical support, reflecting FUPROVI's proven ACAT methodology. This methodology has changed somewhat over time. "In the begin- ning, we at FUPROVI were afraid that the associations might not be able to do certain things.. .We controlled the storage and the purchases, and the community carried out the physical labor. Later, we began to shift storage administration to them as well, and the community began to manage material receiving and custody. Then we saw that they had much more capacity than we had imagined. Now they also manage the pro- curement and purchase of the materials, negotiations with suppliers, and calendars for payments. This level of responsibility helps communi- ties develop their administrative potential. Moreover, they know where COSTA RICA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN JOSe 375 their materials and monies are at all times. At the end of the project, you only see houses, you cannot see everything that has gone into it or that is underground: plumbing, foundations, long hours, machines, and work. The community sees all that, though, and values what it has built," says Mario Pefia, a FUPROVI administrative instructor. The main tasks of a FUPROVI project team focus on consultations and negotiations, intermediation, advisory work, technical assistance, and training. Team members provide technical supervision, guidance, and referrals regarding social, engineering, administrative, and legal ques- tions. The goal is to allow the community group to make its own deci- sions and undertake the organizational, administrative, financial, and legal actions-not to mention the actual construction-on its own for itself. Through this process, the community learns to negotiate with other institutions, to assign contracts, and to organize and undertake work. WHAT WE HAVE SAID TO EACH OTHER IS THAT IF WE ENGINEERS DID NOT HAVE TO DEAL WITH THE PROBLEM OF ORGANIZATION, THE CONSTRUCTION WOULD BE EXTREMELY SIMPLE. BuT THE ORGANIZATIONAL ASPECT IS AN UPHILL BATTLE. IT REQUIRES, ABOVE ALL, THAT THE FAMILIES SEE THAT THEY ARE THE OWNERS OF THE PROJECT, AND THAT THIS OWNERSHIP WILL BECOME CONCRETE IF THEY BECOME INVOLVED AND PARTICIPATE. -Miguel Artavia, FUPROVI Engineer So one could say that housing is the means by which FUPROVI achieves its goal: to teach low-income families to be the owners of a devel- opment project, something that extends far beyond housing. They begin with a greenfield site. Then they see the idea of the housing project on paper. Later, a tractor comes and begins to move the earth. Slowly, the idea that they are the owners of the project begins to form in people's minds. In order for them to take hold of this idea, they undergo a lengthy period of training and a tiring process of mutual-help construction, and they need tools, like the technology and methodology that FUPROVI seeks to transfer. The effective appropriation of the project through this complex process is what makes the difference. The FUPROVI team-provided training improves the aptitude, atti- tudes, skills, and knowledge of the participants in the above-mentioned areas. Special training is provided to community leaders. Specifically, training is provided to help community members: * Provide support to the community and participating families through activities such as soup kitchens and daycare centers 376 SLUM UPGRADING AND PARTICIPAnON * Organize and coordinate the mutual-help program * Manage and resolve conflicts * Plan, organize, and administer construction of the projected infra- structure and housing * Procure and purchase needed materials and equipment * Handle administration of supplies and storage * Learn to handle and maintain tools and equipment * Construct the buildings. The FUPROVI process of assisted mutual-help construction differs from other mutual-help construction projects, such as those developed by government agencies. The complexity of the organization that is re- quired generates in each of the mutual-help projects a series of subpro- cesses. Box 8-2 illustrates the complexity of a FUPROVI project and the concomitant need for a wide variety of socio-technical support services. Training Is Very Important Training, and the skills acquired through it, has been necessary for project implementation; beyond that, it has been one of the main assets for sus- tainability and for the continuity of the development process. Training needs are defined through meetings between the FUPROVI team and the board of directors of the housing associations and are ratified at gen- eral gatherings of the membership. Rose Mary, a leader of the Villa Maria project, points out that "The FUPROVI lawyer gave us training and technical advice to legalize our housing association. First the board of directors got together and the lawyer explained the process; then the directors met with everyone else. The whole FUPROVI group-architect, sociologist, social worker, and technical instructor-met with the association leadership and the law- yer. The sociologist visited us on several occasions to prepare us for the process; then we divided into groups and wrote up the statutes." Ana Lorena, another Villa Maria leader, explains FUPROVI's training in the construction work itself. "In the first training sessions, they showed us how the crowning beams and plates went. Every time we needed it, the advisor showed up at the construction site and told us how to do the things we asked him about." Training of its own staff is also important. Internal staff training has enabled FUPROVI to better respond to the complex social processes of the poor or informal sector. The process of internal staff development has occupied, from the beginning, a central place in institutional strat- egy. Eloisa Ulibarri, FUPROVI's executive director, says that the foun- dation "has 110 professionals on the books and 50 more as consultants. COSTA RICA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN Joss 377 Box 8-2. More Than Just Construction A FUPROVI mutual-help construction project encompasses many spe- cialized and diverse tasks, as Rosa Carmona, the leader of the Lagos de Lindora project, explains: "We believed that we could not do it because nobody was specialized, but we learned how. We have housed more than 200 families; we had daycare centers and a soup kitchen; we worked from Sunday to Sunday; we kept track of the hours that people worked. The schedule went from 7:00 a.m. to 5:00 p.m. with 30 hours per week to be done by the husband, the wife, the children older than 15, a friend, a brother.. .When they did not complete their 30 hours, we sent them a letter of summons, and it was registered in the libro de actos [deeds regis- try] that they either promised to make up the hours or else pay someone else to do them. There was a list in the office with the amount of hours worked by each family. The people who could not manage the physical labor of construction worked in child care or in the kitchen. "As it was a large project, we divided the work into sections and, from there, into subgroups, for each of which there was a coordinator who oversaw the work. There was a clothing sale and a bakery. The kitchen was in operation for two and a half years." These support activities, which are key to the mutual-help project, arise in consultation with FUPROVI. The activities are generally not permanent, but help to meet needs as they arise. This is how Jorge Rodriguez, coordinator of the Cristo Rey project, explains it: "Other activities such as child care, a soup kitchen, bus services to take people to the project location were needed for the participatory mutual-help labor of construction. Once the construction was finished, these support activities also closed down." Although understandable, this linkage of the support activities to the project meant a lack of continuity in the development process-with the loss of some achievements, such as child care, that would have continued to be important for the communities. A long-term development perspec- tive that would avoid this loss could perhaps be developed through spe- cific social support work throughout the project. The institution promotes ongoing education, and, for this reason, many staff members are studying business administration or taking advanced degrees in their areas." The Key Role of Women's Participation It is not strange that two women leaders provided us with details re- garding construction; the labor for these projects is performed mostly by women, due to the fact that they head up a significant number of house- 378 SLUM UPGRADING AND PARTICPAnON holds (between 30 and 50 percent). Also, women sometimes dedicate their time to the mutual-help construction while their partners work to maintain the household. This is why so many of the support activities undertaken by housing associations, such as daycare centers and soup kitchens, focus on freeing up women so they can devote time to the project. THE MAIN PROBLEM I SEE IS TIME. WE ALREADY WORK A LOT OUTSIDE THE PROJECT. I AM A SINGLE MOTHER, I HAVE A FIVE- AND-A-HALF-YEAR-OLD DAUGHTER, AND I WORK TO MAKE A LIVING AND ALSO HAVE TO COME TO THE CONSTRUCTION SITE. FOR THOSE WHO HAVE A PARTNER IT IS EASIER, BECAUSE THEY COME TO WORK HERE, AND THEIR HUSBANDS PROVIDE FOR THEIR LIVING EXPENSES. -Deysi Ribera, Dina Project Participant Ana Alfaro, a leader at Mansiones, explains that this participation has given particular characteristics to the projects: "We had to overcome the challenge of having men accept that the head of their work team might be a woman, that we women can work, that we know how to make a mix, that we can make solid frames.. .In the end, the majority came to recognize that we could do it." Certain accommodations were made in deference to the predominantly female composition of the workforce, Alfaro acknowledges. "We decided at the beginning that we would use prefabricated houses, but when we realized that we were mostly women, and that the prefab panels would be too heavy for us, we decided to use cement block and iron rod construction." The Process Requires Sacrifices To participate in a project requires other sacrifices for families, such as making payments on the bridge loan. This problem makes itself felt to- ward the end of projects when families are supposed to start paying back their loans, the subsidy money has not yet arrived, but the houses are not yet ready for the famnilies to move into. "Almost all of us pay rent or live with a family member. We cannot move in nor camp out nearby, because the municipality does not allow it. If they had allowed this, the project would have been finished already," says one woman involved in the Dina project. Furthermore, the majority of project participants (if not all) claim that mutual-help construction is exhausting, and the laborers become so tired CoSrA RICA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN JOSt 379 after a certain point that burnout sets in and they want nothing more to do with the project. For this reason, once the project is completed, they generally dedicate themselves to fixing up their own houses and forget about communal life for one to two years. This is one reason why the daycare centers, communal kitchens, bus services, and other commu- nity initiatives do not survive the completion of construction. Community leaders are particularly vulnerable to this burnout. In the opinion of Rosa Carmona of Lagos de Lindora, "As for the management of the construction, we did very well. But there were things they [FUPROVI] could have been more helpful with. Sometimes we felt that we alone were committed to the project. They didn't have to deal with surly families. It would be good for them to support us in this aspect, but I'm not sure they would be willing. They loan us money, so maybe it is not good for them to have problems with the families." Legal and Regulatory Framework A Foundation Serving as a Private Arm of State Policy According to FUPROVI legal advisor Ana Yancy Valverde, "Prior to set- ting up FUPROVI, we investigated several possible legal structures. We decided that the most appropriate was that of a private foundation, be- cause this format permits smooth resource flow, and its legal framework facilitates many things. For example, a foundation enjoys a series of tax breaks. In a way, in Costa Rica's legal system, the foundation forms part of the state, even though it is private. There is a legal structure that en- ables the foundation to extend the state's arm; therefore, we concluded that this would be an ideal format." The Legal Status of Housing Associations One of the principal characteristics of the groups that are FUPROVI's clients is that they are organized entities and, in the majority of cases, legally registered as associations. To be formally registered is a require- ment for an association to sign a contract with FUPROVI. Once the asso- ciations decide to work with FUPROVI, they must sign a contract in which both parties' rights and obligations are stipulated; once legal rec- ognition has been gained, an association is ready to negotiate, manage resources, and sign contracts. FUPROVI does not limit itself to working with formal associations. It also works with groups of families that are not legally organized. In these cases, training is provided, with instruction about the association's lead- ership and operational structure. The training covers issues related to 380 SLUM UPGRADING AND PARTICIPAnON making collective decisions as an association, how to write statutes, and how to obtain legal recognition. Legalizing the Land Is a Lot of Work Upon its founding, one of FUPROVI's first activities was to work with precarios, the groups of squatters who had been awaiting a solution to their housing and infrastructure needs for a long time. Until FUPROVI's arrival on the scene, Costa Rica's public institutions had not created ap- propriate regulations to regularize squatters' land tenure. One of FUPROVI's first projects, La Floresta, involved the relocation of squat- ters to a new site, with a very complicated contingent legal situation. Explains Ana Yancy Valverde: "Their land situation seemed to suggest that we could never help them. We had to do a thorough legal diagnosis for each family... and, in some cases, we had to freeze the land titles in the public registry, because the problem was such that we had to sus- pend any transactions that might affect the properties." As it did in this very first case, FUPROVI's legal division continues to undertake diagnostic studies to identify if land is suitable for the con- struction of houses and if it can be legalized. FUPROVI assumes total responsibility for all the tasks that fall in this area. The administrative route for the legalization of the land, which can take two to three years, can be undertaken only when the land is not affected by any lawsuits, which prolong the process of legalization due to judicial procedures. Valverde notes, "In our Costa Rican reality, much of our juridical stat- utes derive from the Napoleonic Code, in which one must first demon- strate that one operates in good faith. And when one knows that the land belongs to a third person, one has already lost good faith. The pro- ceedings are very cumbersome; as a result, many people say, 'Better for me to remain illegal.' For the average poor person, the only way to ob- tain a title is through a government program. If they attempt the legal- ization as individuals, the land is usually eaten by the lawyers, the experts, and others." FUPROVI has made an effort to propose alternatives and demand the modification of some Costa Rican norms and procedures. It has pro- moted change in the legislation and has generated a series of exceptions that permit the approval of this type of project without the need for a special ruling on informal settlements in general. COSTA RICA: FUPROVI's HABrrAT POPULAR URBANO PROGRAM, SAN JOS9 381 Resource Mobilization and Financial Sustainability Subsidies and Soft Credit According to Income Level Costa Rica's National Housing Finance System (SFNV) plays an essen- tial role in the financing of the Habitat Popular Urbano program by mobilizing financial resources from the government and directing them toward investment in housing projects. With 3 percent of the national budget, SFNV is funded by 33 percent of the Fund for Family Grants and 25 percent of the investment proceeds of the Costa Rican social se- curity. The Housing Subsidy Fund authorizes subsidies and soft loans that can be complemented by authorized credit providers. Public and private institutions such as banks, credit unions, cooperatives, and other providers of housing finance function under the authority of the Hous- ing Mortgage Bank, the government financial entity that regulates hous- ing finance. SFNV's governing body is the Ministry of Housing and Human Settlements. SFNV operations are based on the classic instruments of subsidies and soft loans. The composition of the state's contribution depends on a family's income. At one extreme, those who receive the minimum wage are granted a full subsidy; at the other extreme, those who receive four times the minimum wage have access to a small subsidy and to credit at near-market conditions.2 The higher the income, the smaller the sub- sidy, and the closer the interest rates are to market levels. Families with incomes higher than four minimum wages rely fully on the market for access to housing. As elsewhere in Latin America, a low-income housing program of this nature tends to exclude the poorest people. The for-profit private sector that offers housing solutions that take advantage of the subsidy pro- gram focuses on the not-so-poor or the lower middle class. Those who are really poor cannot afford to pay for land, infrastructure, and construction, the combined market cost of which exceeds the amount of the subsidy. They also find it difficult to deal on their own with the government bu- reaucracy to regularize land tenure, obtain building permits, and access the subsidy. FUPROVI's intervention seeks to overcome these constraints. With the Subsidy, It Is Possible to Manage the Financial Burden With the SFNV subsidy voucher, FUPROVI's bridge loan can be paid off within two years on average. If the family does not have access to a 2The minimum wage is a fixed amount which is adjusted every six months. 382 SLUM UPGRADING AND PARICIPATON voucher, FUPROVI establishes a monthly payment, which represents 30 percent of the family's income, so the loan can be paid out over 15 years. The Mansiones project, which was completed in 1993, demonstrates the significance of this financial burden on families. In those days, the subsidy scheme was working smoothly, and the subsidies paid out at the end of the construction period were sufficient to cover construction of both house and infrastructure. WE HAVE SEEN PRIVATE CONSTRUCTION PROJECTS LIKE OURS THAT COST UP TO $30,000 PER HOUSE; THESE HOUSES ARE COSTING US $8,300 APIECE. IN OTHER WORDS, BY WORKING TOGETHER ON THE CONSTRUCTION, WE ARE SAVING A COOL $22,700 EACH. -Rose Mary, Villa Maria Project Leader Ana Alfaro, a leader of this project, explains: "At the end, the cost of each house was $3,057, including the infrastructure, plumbing, and elec- trical wiring. Adding the debt to IMAS [the National Social Welfare In- stitute] for the land, the majority owed about $3,343. After they gave us the vouchers, we ended up with debts of around $1,274-an amount the families could handle." Without the Subsidy, Things Would Be Much More Difficult A different scenario occurred in the Dina project. Here, the processing of the subsidy voucher was slowed by legal problems related to a neigh- boring lot. This created a situation in which the project participants had to begin paying back the bridge loan before receiving the subsidy money. A FUPROVI loan recipient at Dina notes, "If this institution is there to help people of scarce resources, they should offer lower interest rates, so we can pay less." The belief expressed here is that if the community puts in its own labor in the project, this should be recognized with a lower financial burden. One woman at Dina expresses her dissatisfaction: "Each year, the inter- est is 15 percent, which seems high to me. I always thought that we would not have to pay so much if we were to be putting in so much work. They told us at the beginning that the price was $30, but as the project has taken longer, the interest has gone up. They raised the monthly payments to $94. Many have dropped out because they could not pay. For people here, the lowest salary is $226 and the highest is $471. If the subsidy voucher had come through, the house would almost be free." At the same time, they recognize the value of FUPROVI's work: "They have trained us for the work. We have had a few problems, but not things that we could not fix." COSrA RICA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN Jost 383 AS A RESULT OF POLITICIANS' PROMISES, MANY PEOPLE EXPECT NOT TO PAY OR TO RECEIVE A FREE VOUCHER. SO WE BEGIN BY LOWERING THE LEVEL OF EXPECTATIONS. WE MAKE THEM SEE THAT THEY MUST BEGIN WITH WHAT THEY HAVE. WE SUGGEST THAT THEY LEARN TO ADMINISTER THESE RESOURCES AND TO REALIZE THEIR OWN ABILITY TO COVER THEIR COSTS. -Miguel Artavia, FUPROVI Engineer According to FUPROVI, each house in Dina is worth about $15,000, while the cost to the participants was about $8,750; this is not enough to appease the project participants, however. It is clear that the attitudes of project participants toward the cost of FUPROVI services and the condi- tions of its bridge loans are determined by the availability of the hous- ing subsidy voucher-the panacea that appears to resolve all problems. How Can FUPROVI Offer Financing without the Subsidy? Through three donations of the Swedish International Development Agency, FUPROVI received a total of $14 million, which was used for the institutional development of the foundation and for bridge loans to project participants in a rotating fund mechanism. The institutional de- velopment aspect was a key part of the Swedish aid package. FUPROVI has always tried to follow sound financial management practices and recover cost. As Mario Rodriguez explains, "The goal of FUPROVI is to maintain its resources at $14 million-that is, to maintain the value of the three Swedish grants in hard currency." He notes that the foundation's policy is to divide the funds into three parts: the first is in the hands of the housing associations as bridge loans, the second is securely invested, and the third is kept liquid as a reserve for projects in the early stages of development. FUPROVI finalized negotiations with commercial banks for the establishment of a trust fund arrangement that will allow the banks to take over FUPROVI's cash management chores. FUPROVI applies near-market interest rates to project participant loans because of its desire to recover all the costs of the services it offers. The organized mutual-help construction methodology lowers the final cost of the operation to below market levels and makes it possible to build the houses with the amount available through the housing subsidy voucher. The system worked well until 1997, when the Costa Rican hous- ing subsidy program began to experience problems. Up to then, FUPROVI projects had followed a predictable pattern. In each project, the benefi- ciary families were enrolled by FUPROVI in SFNV. While they completed the construction work, FUPROVI assisted them in legalizing the prop- 384 SLUM UPGRADING AND PARIMCIPATION erty and getting their subsidy requests processed. With the entry of the subsidy program's donations or soft credit, the state housing finance system would return to the foundation the amount of the bridge loan plus the agreed price of its services. To cover the difference between the subsidy amount and the cost of the houses, the client families would take out a loan from an SNFV-authorized financial institution. However, when the subsidy model is threatened, the bridge loan be- comes a long-term credit option. As a result, two specific problems have arisen. First, for the families, there is the problem of repaying a loan over a 15-year period at interest rates only a little lower than market levels; second, for FUPROVI, there is the serious problem of having its resources tied up in each project for a much longer time than before. As FUPROVI was always repaid through the rapidly authorized state subsidy, its fi- nancial cycle was relatively short. This raises the question of how FUPROVI can finance new operations while the participants of previ- ous ones are still paying off their loans. To this end, and to ensure that loans could be repaid at an interest rate that is affordable to the participants, FUPROVI took several steps in or- der to preserve the institution and its qualified staff under the new cir- cumstances, and to create new opportunities to reach its target public. One option being pursued is to access soft credit-no longer grant fund- ing-through the Swedish International Development Agency. IN ORDER TO SERVE THE NEEDY IN A SUSTAINABLE WAY, THE INSTITUTION MUST ITSELF BE VIABLE. EVERY NICKEL THAT WE INVEST WE HAVE TO RECOVER. -Mario Rodriguez Vargas, FUPROVI Financial Director Other options include the following: * Reduction of output. The longer financial cycle has led FUPROVI to lower its output from around 4,000 to around 1,500 units per year, which has also led to the layoff of about 40 percent of the staff. * Reduction of unfunded mandates. The grant-based programs that FUPROVI had launched inter alia to promote income generation and assist the elderly have been curtailed. * Partnership with Costa Rican banks. FUPROVI has developed sav- ings and long-term credit products in partnership with Banco Popu- lar and Banco Nacional de Costa Rica, to provide options for families that want to improve existing homes, build homes on existing plots, or buy land for future building. Credit for each of these may be COSTA RICA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN JOS9 385 provided separately so that families may move gradually toward their goal of homeownership. * Innovative credit mechanisms. Innovative credit mechanisms such as cuota creciente (increasing montly payment), in which repayment starts out with small installments that increase over time, are being used to enhance affordability and widen the client base. * Sale of FUPROVI services, including training, to other organiza- tions. FUPROVI's institutional experience and the recognized qual- ity of its technical assistance and training services allow it to provide its services to government organizations and other nonprofits. * Projects for the lower middle class. FUPROVI is developing profit- making projects in partnership with private developers for people who earn between four and six times the minimum wage. The profit made on these projects will be invested in FUPROVI's low-income housing programs. * Sale of FUPROVI services in other Central American countries. FUPROVI is looking into the possibility of providing services to inter- national aid organizations active in other Central American countries. * Grant funding. Swedish grant funding is being sought to enable FUPROVI to undertake housing and basic services projects to as- sist the numerous Nicaraguan immigrants in Costa Rica. Other in- ternational aid organizations are being approached for funding for similar projects. * Aggressive investment policy. FUPROVI's investment policy, which had hitherto been very conservative, has been made more aggressive to maximize earnings on resources available for investment. * Improvement of credit management services. Credit analysis and billing and collection services have been improved, and innova- tions such as the transfer of obligations from housing associations to individual families after construction have been introduced in an attempt to maximize repayment rates. Actors, Alliances, and Institutional Arrangements Alliances Are Fundamental FUPROVI must build strategic alliances with public and private institu- tions in order to perform its work. FUPROVI does not own any land, and thus alliances with public institutions and other entities are neces- sary to obtain land for those associations that do not have it and to achieve tenure legalization. The legal aspect of a project sometimes depends on the administrators of these institutions. 386 SLUM UPGRADING AND PARTICIPAMON One clear example of this need for alliance-building is the group of autonomous public organizations involved in infrastructure and con- struction to whom the community must apply, with FUPROVI's help, for permits and services. Specifically, FUPROVI must negotiate with the Costa Rican Electricity Institute, the body that regulates and generates electricity on a national level; and with the National Light and Power Company, which is responsible for electricity distribution infrastructure in the greater metropolitan area. It also must obtain a water quota from the Water Supply and Sewerage Institute and road access from the Min- istry of Public Works and Transportation. Construction permits, solid waste collection, construction and maintenance of secondary roads, and, in some cases, drinking water supply also must all be arranged for in coordination with the municipality. Motivationfor Partnership: Project Success Is an Important Criterionfor Government Credibility Because public housing for low-income people has been a government priority since 1986, the actors cited above are more than willing to work with FUPROVI: the success of this kind of project is a crucial measure of the government's capacity to deliver on its promises. Jorge Blanco, an electrical utility official, clarifies. "FUPROVI has al- ways worked closely with us. They are a very committed institution. In most cases, we end up giving away the lines and the posts; the only thing we don't give away are the meters.. .We are clear that nothing of what we have here in this institution is for ourselves; it belongs to the state. In the end, and over time, when they pay for their electricity, they pay back the investment." Design and Technology Urban Design: Tradeoffs in Quality and Standards The people who participate in FUPROVI projects not only must con- front the costs, the legalization of the land, and the effort of obtaining a housing subsidy voucher, but must also obtain the necessary permits. The design must be approved by the various institutions responsible for giving permission for construction. Costa Rican institutions take this quite seriously. There are very strict requirements to fulfill, or else the work may be held up. In practice, this means that FUPROVI is barred from using alternative, and less expensive, technologies for infrastructure. The technology used for drainage, water supply, wastewater collection, and other services is conventional and proven. COSTA RICA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN JOSt 387 Savings are made by focusing on the services that are most important, cutting back on finishings, and using the assisted mutual-help method. Beyond meeting physical planning and housing bylaws and standards and putting the land to maximum use, FUPROVI does not place empha- sis on the quality of the urban design of its projects, which look for the most part like traditional public housing. The clients do not seem to mind the rows of identical houses, since the initial and overriding interest of the group is simply to obtain a house. This desire takes priority over interest in design. Especially given that one of the key concerns is to minimize the project's final cost, it is assumed that a more creative or better quality design of free space will require more land than is avail- able or raise the price unnecessarily. "If there were larger collective open spaces in the settlement, it would have been necessary to relocate a certain number of the families involved... .Moreover, if you start talking about parks and large amounts of open space in a public housing project, the people who give the per- mits begin to get scared," says FUPROVI architect Jorge Rodriguez. This is not to say, however, that there is no a priori design process that takes into consideration basic infrastructural services such as the street net- work, drinking water supply, electrification, and the management of wastewater. Other services, such as street paving, public transportation, and health and education facilities, are normally not part of the projects. As a result, these have to be addressed by the community itself after each project is completed. IN THE END, WHAT WE OFFER IS NOT A TOTALLY FINISHED HOUSE, BUT RATHER A SETTLEMENT WITH BASIC HOUSING: WALLS, A BATHROOM, ROOF, A CEMENT FLOOR, DOORS, WIN- DOWS AND ELECTRICITY; IN GENERAL, THE CEILING, WALL PAINT, AND INTERNAL DIVISIONS ARE NOT INCLUDED. -Jorge Rodriguez, FUPROVI Architect Generally, FUPROVI engineers and architects propose the settlement plan and layout, and are also responsible for infrastructure design. In some cases, the communities already have at their disposal a settlement layout and plan, which is revised by FUPROVI technicians. In all cases, the design is submitted to the housing association for approval, although design pa- rameters are not very flexible (see box 8-3). 388 SLUM UPGRADING AND PARnCIPATION Box 8-3. Costa Ricans Like Their Houses Set off from the Rest, with a Patio in Back The tendency in Costa Rica to build free-standing homes rather than high-density structures puts pressure on design engineers. Jorge Rodriguez corroborates this assertion: "When we talk to the families, the first thing they request is their own plot, with a patio in back; moreover, they don't want to share walls." When FUPROVI staff propose the possibility of a more efficient use of limited space through the construction of vertical condominiums, they receive responses like that of Lorena Revilla, a social worker. "You could try that possibility with family groups, parents and children, but not with unrelated families. Here we are used to having our own space, our little piece of land, a patio." This cultural pattern causes available space to be used for individual plots rather than public open spaces. There are a few exceptions. In the Villa Maria project, the houses do share walls, with the goal of reducing the built-up space and expanding the communal areas. FUPROVI made an initial recommendation, and in this case, the housing association accepted it. New Technological Alternativesfor Housing FUPROVI expresses great interest in construction technology and experi- mentation in alternatives that reduce costs for its clients without compro- mising product quality. The ultimate goal is to lower costs and simplify the construction process. This position has led FUPROVI to take advantage of all the construction technology available on the market (see box 8-4). The variety of technical options for construction favors the versatility of the mutual-help program, at least in relation to the housing itself if not in relation to the infrastructure. The members of the housing asso- ciation are responsible for 100 percent of the work. They begin to build the houses only after they have 80 percent of the infrastructure in place. FUPROVI has the basic earth-moving machinery and rents it out to the community on a nonprofit basis. Other needed equipment and special- ized services are procured from commercial suppliers. Scale and Sustainability Sustainability of the Institution FUPROVI was not established with pilot projects in mind. Rather, its goal is to insert itself competitively into the low-income housing mar- COSTA RIcA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN JOsE 389 Box 8-4. Use of Appropriate Low-Cost Technologies in Construction The most common construction method in Costa Rica is based on the use of concrete blocks. The first public housing built by FUPROVI was made of this material. Later, it began to use prefabricated units, which come in two models: PREFA-PC and ZITRO. The first consists of horizontal pan- els, and the second of vertical panels. Most of these systems do not allow for the addition of a second floor at a later stage. This limits the use of a strategy that is very common in Latin America, the vertical densification of existing settlements to create space for families that grow, for new generations, for rental, or for the development of a business. ket, taking on an essentially private sector objective-marketplace sur- vival-in addition to its nonprofit social mission. FUPROVI recovers its investment by charging a fee for its services. It has also taken advantage of mechanisms the Costa Rican government makes available, both to provide support to its client families and to recover the credits extended to them. Thanks to careful administration, the projects and the institution itself have remained afloat, despite diffi- culties posed by the country's economic situation. In administering its monies, the foundation has shown itself to be adept at taking account of macroeconomic parameters such as inflation, interest rates, and devalu- ation, and proficient at methodologies such as cash flow management and handling key financial management concepts. FUPROVI's financial sustainability has depended on other important factors as well. First, the Swedish International Development Agency's money has allowed the foundation to create a rotating fund that has made bridge loans possible. The terms under which Swedish assistance was granted required FUPROVI to build a solid structure, which has created an internal dynamic capable of dealing effectively with the chang- ing elements of reality. Also, the foundation has had to create its own style of intervention and to develop work methods that are adequate to the realities of poor communities. The institution has adapted itself to the situations it has had to confront. Second, state subsidies for low-income housing have enabled FUPROVI to achieve a rapid recovery of the bridge loans to ensure that the rotation funds are sustained. We have seen above that the current crisis that plagues the SFNV has forced FUPROVI to reduce its staff and the scale of its operations. Scale and sustainability will both depend on the success of the measures the foundation is taking to cope with the situation. 390 SLUM UPGRADING AND PARnCIPATION In its first 10 years of operation, FUPROVI has served about 15,000 families. This figure reflects the total of all FUPROVI projects. In this sense, it may be said that FUPROVI has been successful. "With the re- sources that we received to take care of 4,000 families, we have helped 15,000," says Mario Rodriguez with pride. FUPROVI clients represent a considerable market share, making up nearly 10 percent of SFNV total housing construction during this time period. Sustainability of Individual Projects Two dimensions of the projects are considered in order to determine their sustainability. One is maintenance of project benefits; the other is self-reliance, or the capacity to resolve problems and undertake further development initiatives after the project finishes. FUPROVI has made inroads along both dimensions. Additionally, in recent years, it has made some progress in terms of the environmental sustainability of its projects. This success has been achieved by includ- ing a comprehensive methodology to protect the environment in its ur- ban development activities. Capable professionals have been hired to train, assist, and advise client groups about the importance of sustain- able development and how to achieve it. Regarding maintenance of infrastructure and parks and other public spaces, we noticed that the communities took good care of these in the finished projects we visited (but also see box 8-5). Furthermore, the com- mitment of project participants is high. The percentage of families that aban- don a project during its execution is very low. In Villa Maria, out of 47 families, only 2 dropped out: one because it did not meet its work obli- gations, and the other because it did not qualify for the subsidy voucher. Jorge Rodriguez describes the factors that generate a sense of owner- ship and ultimately the sustainability of these projects: "Early housing projects in the country.. .failed because they just gave people a finished house, and many families sold out and returned to the squatter settle- ments since that was where the agencies went to hand out food." With mutual-help construction, which makes housing construction affordable, participation becomes a fundamental requirement for project comple- tion. Participation is a necessity imposed by economic reality. With FUPROVI, housing association members not only build their own houses and the accompanying infrastructure, they also administer the project, and initiate and manage the organization that oversees it. Surely this is why FUPROVI's mutual-help construction projects have generated other community-based development projects in their after- math. The ongoing Villa Maria project is one of many such examples. Here, a community made an agreement with two neighboring commu- COSTA RICA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN JOS9 391 Box 8-5. "Keeping the Slum in Their Heads": The Atypical San Juan de Pavas Project San Juan de Pavas is located west of the capital, in Rinc6n Grande de Pavas, an area characterized by growing slums. Unique in its history and struggles, this community is made up of extremely poor families from a squatter settlement that was relocated by the National Housing and Ur- ban Development Institute (INVU) and by a large number of illegal Nica- raguan immigrants. INVU had almost finished building the infrastructure through a private contractor, but the project had progressed unevenly. Squatter shacks were juxtaposed with recently finished houses. At this stage, INVU hired FUPROVI to develop and manage the project. The San Juan project is an exception to the general model of FUPROVI projects. The socioeconomic conditions in San Juan led to the develop- ment of a different strategy, which, although it involved the community in construction, did not look to involve the community in administering the process. This was because the community lacked a capacity for self- organization, mainly due to its low socioeconomic status and lower edu- cational levels. Moreover, there were serious problems with crime and substance abuse in the community and authoritarian community lead- ers-both of which factors made it difficult to introduce participatory decisionmaking processes. Given this context, it was difficult to generate interest in maintaining the infrastructure. During the final stage of housing construction, when we visited the site, garbage in the streets, foul odors, and unsanitary conditions continued to be a problem throughout the area. FUPROVI's Maria Esther Mejia notes, "It was as if they kept the slum inside their heads, even though the new houses were finished." All of these factors are reflected in more modest results and a lower level of sustainability here than in other FUPROVI projects. As a result of this situation, of all of FUPROVI's projects, San Juan is the one that most closely resembles the classic urban upgrading model in Latin America- even in the fact that FUPROVI was hired for this project by a public institution rather than by the community. nities to pave their comrnon access road. A similar example was given by Oscar Mario Garbanzo, a FUPROVI social worker: "In the case of the Oasis project, 27 families paved the road through mutual-help construc- tion, four years after having finished the initial project." FUPROVI nonetheless feels it must do more to stimulate the continu- ity of development. Explains FUPROVI executive director Eloisa Ulibarri, "The idea is that the communities are enabled to take steps to obtain other resources. With FUPROVI's limited resources alone, it is very chal- 392 SLUM UPGRADING AND PARnaPAnON lenging. We need to work more in the last stages of the project to achieve sustainability and local self-management." According to sociologist Jose Manuel Valverde, an applied research coordinator working with the UNCHS (Habitat) CERCA initiative, "FUPROVI has been very efficient in delivering the housing solutions it has developed. Other efforts, both governmental and nongovernmen- tal, have been tremendously inefficient. But self-management, under- stood as the community's capacity to manage a project, is not FUPROVI's principal achievement. If we compare it with initiatives in other Central American countries, FUPROVI can certainly teach them a lesson in effi- cient delivery and the ability to create solutions. On the other hand, other Central American countries such as Nicaragua and El Salvador could teach FUPROVI something in terms of methods of self-management." If FUPROVI lacks mechanisms to build community capacity, the im- pact of the mutual-help construction process on the life of individual participants is nonetheless significant. FUPROVI places great emphasis on teaching families how to manage things and to be responsible for the budget, materials, and waste generated during the construction process. Family members can grow and evolve through the training and practice afforded by the project. Based on the experience of having to adjust con- struction expenses to available resources, they can cease to live day to day, learn not to spend more than they can afford, and begin to budget for their living expenses. Their new knowledge has an impact on both their own lives and that of their community. For example, the women begin to take on a new role in the family and in the community; all of this contributes to sustainability. IF SOMEONE HAD TOLD DONA ROSA IN SANTA ANA BEFORE THE PROJECT THAT SHE WOULD BE MANAGING MORE THAN $26,000, SHE WOULD HAVE HAD A HEART ATTACK. Now THis IS ROUTINE STUFF FOR HER. -Oscar Mario Garbanzo, FUPROVI Social Worker Thus, as people see the home of their dreams take shape, individual and collective change begins. The kind of improvement in urban ser- vices brought about by collective action after project completion-such as street paving and the extension of public transport lines-appears to follow a constant pattern, but the process continues. In projects that have been completed for two or three years, one finds not only paved streets and bus lines, but also local businesses, tradespeople, and other com- munity activities. COSTA RIcA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN Jost 393 Conclusions It could be argued that the FUPROVI experience is so ensconced in the Costa Rican context, which is so different from other South and Central American situations, that it can hardly serve as a model for other areas. One might also argue that because 15,000 homes only represent about a dozen average favelas or barrios, the scope of this experience might speak against its potential for replication in the areas of large concentrations of urban poverty found in most other Latin American countries. However, if one is seeking guidelines rather than a model or template for replication, the FUPROVI project offers much that can be applicable to other areas. FUPROVI has learned valuable lessons by experimenting with its model of intervention. First, each of its projects has addressed and re- solved the problems created by its specific circumstances. Second, in de- veloping these projects, methodologies that were both innovative and appropriate were defined. It is important to understand the mechanisms and conceptual foundations that have shaped FUPROVI's methodology, because it is unique in its context. The following conclusions are an at- tempt in this direction: 1. Nonprofit private sector involvement has been a fundamental ele- ment in defining and developing methodologies appropriate to this work. In recent decades, housing policies similar to the Costa Rican model have met with partial collapse in many developing coun- tries. In various cases-Brazil is perhaps the best known of these- housing policy has not reached the lowest strata of the population. This is due, principally, to methods of intervention that only worked for the middle and lower middle classes and in the context of the formal city. This model is not responsive to the dynamics of low- income and informal sectors. FUPROVI's achievement is to assist the sector of the population that would not have had access to the benefits offered by public policies, using the instruments of those same policies and offering its services on the market as a product. Methodological development is therefore indispensable to the in- stitution, as it represents a benefit for the target population and, at the same time, a clear guideline for housing delivery to the poor that could be adopted by public institutions in general. In other words, in this case, the participation of the private sector, repre- sented by FUPROVI, lends a hand to the state; it represents the meeting point between supply and demand, and it transforms- although not without difficulties and limitations-the participatory process into the principal instrument of its action, taking as its point of departure the expressed demand of the communities involved. 394 SLUM UPGRADING AND PARTICIPATION 2. Since its initial establishment, FUPROVI has been concerned with its own continuity. It was not designed to manage a specific project with a defined budget and time line, but rather to confront the prob- lem of low-income housing in general terms and over the long term. Therefore, the institution learned how to organize itself so as to best attend to the specific sector of the market represented by hous- ing associations, squatter settlements, and individual families in search of a housing solution. Developing the capacity of its own staff has been an important priority since the beginning. The foundation's current programs are a product of the constant retool- ing and training of the teams, which have developed new method- ologies and approaches to respond to needs as they arise in daily practice. As is typical of the private sector, the foundation consid- ers the elements that might ensure its own continuity to be a neces- sary (but not sufficient) condition for the sustainability of this process. In this way, a specialized private sector entity comes into being. Specialization arises through the recognition of the diversity and dynamism peculiar to the low-income housing sector. This con- cept can also be extended to the process of privatization. For ex- ample, a private electricity utility company can modify the situation in which many people in low-income communities default on their payments only if it creates new forms of outreach. Also, it is clear that the complexity of the processes of informal settlements im- poses the development of strategic alliances with other private sec- tor institutions as well as with the public sector. 3. In FUPROVI's program, the communities control the resources for their project: they directly administer the funds. The process of as- sisted mutual-help construction represents a necessity for the fami- lies. It is the formula that reduces overall cost and makes their homes affordable. Moreover, it serves as a filter, because it enables FUPROVI to focus its program on the poorest communities. The foundation's response to the low-income housing problem is thus based on a realistic point of departure: the realities of the clientele. Experience shows that a project is more efficient when the formula- tion responds to the actual needs and demands of the population sector involved and when it uses a methodology and workplan that is clear to and shared by the people. In the planning phase, it is necessary to make a considerable effort to formulate project instru- ments that are appropriate to the characteristics of the beneficia- ries. One example of this effort is the training material FUPROVI produces to explain the mechanisms of its intervention, develop an agreement between the parties, and initiate the process of mutual- help construction. CoSrA RIcA: FUPROVI's HABITAT POPULAR URBANO PROGRAM, SAN JOSe 395 4. The modalities and forms of participation are what define the type and characteristics of a FUPROVI project. The technology applied and the process adopted are consequences of the following factors: * Reduction of the time it takes to complete the work, with the goal of limiting the impact of inflation, which might overly re- duce the already scarce resources of the participating families * The requirement of strong direct community participation in the implementation phase so as to limit construction and develop- ment costs * Awareness that the project's final product represents only a first stage that the family will improve on over time. 5. The following consequences for sustainability are clear: * The level of participation in infrastructure maintenance is high, and the process of home improvement is constant. In all the projects we visited, even though many of them had been com- pleted several years before, we saw no evidence either of lack of maintenance or of vandalism. * The process of improvement of the common spaces is very slow. Whoever has participated actively in a FUPROVI project in a position of leadership has lived through significant physical and psychological stress. The families, after many months of intense work, want to finish their own house before dedicating them- selves to finding remedies for other problems which-in vari- ous ways-the participatory process has made them consider "theirs." * In the construction phase, the absence of other actors not di- rectly linked to the housing problem-civil institutions, public institutions, or religious groups that provide social services and represent a support network-slows the onset of the subsequent phase of continuing community development. * It is undeniable that the participatory method used in these com- munities to resolve conflicts as they arise is a key legacy of the mutual-help construction process in terms of both sustainabil- ity and the human development of the families. To generate actions that contribute to a project's sustainability after it has been implemented (i.e., though post-project support) is not sufficient. Continuity, and therefore, human development, is an objective that must be considered from the project's beginning. In this light, structural and physical intervention, as in the case of FUPROVI projects, represents not an end in itself, but rather a fundamental contribution to the ability to meet basic needs. 9 Mexico: Community Upgrading Programs, Tijuana During the 1990s, significant reforms were introduced by Tijuana's mu- nicipal government, including an overhaul of the municipal cadastre, the enhancement of local revenue generation, and the involvement of civil society in the city's strategic planning. Tijuana has pioneered an approach to informal settlement upgrading that couples participatory budgeting, in which the community makes an upfront cash contribution averaging 30 percent of the cost, with community management of small local works projects. Tijuana's community upgrading programs have successfully per- formed a significant amount of work over the years and have challenged conventional assumptions about the ability of poor urban communities to participate in development programs. At the same time, the piece- meal approach of these programs, the absence of participatory planning, and the lack of development-oriented community-based organizations has meant that the significant mobilization the programs have gener- ated has not been channeled into a long-term development process for Tijuana's colonias populares.1 The Tijuana model, which was revised and adapted in 1998 to address the challenges posed by the deficiencies of previous