Inclusive Urban Human Settlements: Policies and Financing

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by: Erna Witoelar, Indonesia *)


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CHALLENGES OF URBANIZATION Urban population in Indonesia is now

already larger than in rural areas; by2025 predicted to be 67,5 %

Challenges: anticipating and copingwith increased urban population

Local governments have variableresponses: some better than others.

National Urban Development Policy& Strategy: cities as a whole social-

spatial entity, able to fulfill theneeds of all its citizen

(Indonesian National Planning Board)


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INCLUSIVE CITIES

principles of inclusive cities:

citizens as asset: includingthe urban poor, who are not

weak/helpless not charitybut empowerment

private sector potentials:

including the informal sector. Eventually they needto 'graduate' into the formal sector need capacitybuilding, public education and creationof an enabling environment


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Recognize the existence of squatters & develop pro-

poor, pro job & pro environment policies

Slum upgrading: not just the physical infrastructure,also attention to social, economic & environmentalaspects of the development effort (Tribinaapproach

Inclusive Urban Settlement Policies

in Indonesia since the 80s:- increase the quality of thehuman resources;

- improve the quality of theliving environment;

- increase the access tolivelihood opportunities)


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Conducive Rural Settlement Policies Increase rural pull for a more balanced rural-

urban population spread

support infrastructure in potentialrural economic growth centers

(agropolitan / minapolitan) in amulti-sector & multi-stakeholderintegrated program approach.

integrated social economic development:

build rural schools, clinic

s, communitycenters, good markets, etc: financing& implementation directly to and by therural communities themselves


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holistic approach through integrated implementation:

within the Indonesian Public Works units (sanitation

& drainage, clean water supply, waste managementaccess roads, community empowerment, etc)

mobilizing cross-sectoral support (public health,SME & microcredit support, education facilities like

pre-school initiative support, community library, etc)

Infrastructure for Inclusive

Human Settlement Strategy

build partnerships with civilsocietys community empowerment

& private sectors CSR programs


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Inclusive Urban Services reaching out to the urban poor:

- process is very crucial (Solo, Central Java: trustbuilding, confidence building & pride building)

- local governments support in infrastructure (Solo:

build first then move); or land (Tarakan: for slumresettlement, Jakarta & Palembang: for greenopen space); exemptions or sharing of users cost

- first they need intermediaries / facilitators,eventually they become self organized

- simplify rules, maximize flexibilitycreate space for dialogue

- participatory process for ownership


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Inclusive Urban Services cont. attention to livelihood improvement

- identify prime commodities already produced in

small scales

- facilitate group organizing: pre-coops, cooperatives- empower for upscaling (involve financial institutions

for micro credit & SMEs)

- support in quality improvements,

packaging, marketing, promotionand maintain sustainability

(involve private sectorfrom the beginning)


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Up-scaling possibilities already many pilot projects, some are innovative,

many are successfully addressing real problems

up-scaling should not be a "one size fits all"approach, allow adaptations/adjustments to local

situations, social-economic-cultural conditions write case studies, promote media visits, organize

workshops, peer-to-peer learning visits (role ofCSOs, municipal associations, multi-stakeholder

association like CITYNET, urban policy institutions) use intermediaries to channel resources / facilitate

capacity building (role of philanthropic organizationslike grant-making CSOs, corporate and /

or community foundations, etc.)


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Up-scaling possibilities continuedFinancing up-scaling:

National governments role: facilitate financial support

from multilateral/bilateral investments/grants to local

governments. Can use intermediaries from financialinstitutions with proven CSR (BNI, Danamon, etc)

international financing like ADB should support up-scaling efforts by governments:

- move away from traditional funding of pilot projects,- allow innovative channel i.e venture capital support

- direct channeling of funds to local govt.,

private sector developers, etc


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Financing for Low Cost Housingchallenges: capacity of lenders to overcome subsidized

mortgage constraints due to funding mismatch households troubled when subsidized mortgage

expire (4-6 years) and market place mortgagestake place

Mortgage with market based interest rate is notaffordable for targeted households

policy options: continue & lengthen current subsidy affordability establish liquidity facility for partial principal funds

promote national housing savingprogram for cheaper long term fund


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Financing for Slum Upgradingchallenges: financial mechanism not restricted just for housing,

also basic infrastructure like access road, electricity,water, basic service provision, security of tenure, etc

governance issues:- governments should also partner for funding, asgovernments (local and national) budgets should beallocated for more strategic interventions

- local governments should facilitate harmonizationof financing from several government agencies

- the capacity of the slum population them-selves to contribute is quite significant


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Multilateral & Bilateral Funding

Through Partnerships Move away from supporting traditional pilot projects:support cities own local economic developmentprograms, already pulling up its economic potentials.

Support good inclusive city practices, upscale theiroperations and ensure their sustainability

Encourage & support multi-stakeholder partnershipsbetween local government, private sector and civil

society already proven & successful programs Remember MDG 8: continue partnerships among

donor communities & governments on AidEffectiveness & Donor Harmonization .

Incl. promoting direct funding to cities.


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*) Presented at ADB ASIAN URBAN FORUM 2011

Financing Urban Cities Manila, Nov 15-17, 2011

Inclusive Urban Human Settlements: Policies and Financing

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