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‘Bankable Slums’: the global politics of slum

upgrading
Branwen Gruffydd Jones
Published online: 17 May 2012.

To cite this article: Branwen Gruffydd Jones (2012) ‘Bankable Slums’: the global politics of slum upgrading,
Third World Quarterly, 33:5, 769-789, DOI: 10.1080/01436597.2012.679027

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 Third World Quarterly, Vol. 33, No. 5, 2012, pp 769–789

‘Bankable Slums’: the global politics

of slum upgrading
BRANWEN GRUFFYDD JONES

ABSTRACT This article develops a critical analysis of the Slum Upgrading

Facility, a new initiative of UN-Habitat which seeks to improve conditions for
residents of slums in Africa and elsewhere. The analysis highlights the
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neoliberal principles underpinning this initiative, and especially the vision of

slum improvement by means of financialisation. The article argues that it is
necessary and important to recognise the politics of international urban
development and housing, which has since the 1970s increasingly emphasised
neoliberal principles of private property and market institutions. The novel
ambition of financialisation must also be situated in relation to historical
transformations of housing finance in Anglo-American capitalism over the past
three decades. After situating the ideological principles underpinning the Slum
Upgrading Facility in these longer and broader global trajectories of
international policy, the final section returns to the present to examine other
initiatives currently being pursued alongside slum upgrading: the active
promotion of mortgage markets in Africa.

The dramatic expansion of slums in the global South has received

considerable attention in recent years. The widely referenced UN Report,
The Challenge of Slums, was produced as part of a concerted effort to focus
policy attention on the urban condition.1 International commitment to
address global inequality and poverty is expressed in the Millennium
Development Goals, one of which pledges ‘By 2020, to have achieved a
significant improvement in the lives of at least 100 million slum dwellers’.2
While the focus on slums encompasses the global South as a whole, Africa
occupies a central place within this discourse.
UN-Habitat is engaged in a range of programmes, research and advocacy,
aiming to improve the condition of cities in the South. This article focuses on
one particular initiative, the Slum Upgrading Facility, which is important
because it is the product of recent thinking within UN-Habitat and other
international development agencies. This initiative presents the problem of

Branwen Gruffydd Jones is at Goldsmiths, University of London, UK. Email: b.gruffyddjones@gold.ac.uk.

ISSN 0143-6597 print/ISSN 1360-2241 online/12/050769–21

Ó 2012 Southseries Inc., www.thirdworldquarterly.com
http://dx.doi.org/10.1080/01436597.2012.679027 769
 BRANWEN GRUFFYDD JONES

slums as a question of finance: how to secure the finance for improving the
condition of slums and the living environment of slum dwellers. While this
question might admit a range of potential solutions, UN-Habitat adopts a
neoliberal vision. The goal of improving conditions in slums is to be achieved
on the basis of the efforts of the poor combined with the resources of private
finance, within the sphere of the market. There is no question of societal
redistribution; the role of the state is to provide enabling conditions for the
operation of the market. This initiative rests, in the words of UN-Habitat, on
the premise that slum upgrading is ‘bankable’.
The article seeks to highlight the political character and historical
specificity of this current initiative. Most of the literature on urban
development policy focuses only on debates in and about the global South,
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while analyses of the politics of housing finance in the West rarely explore the
broader, global ramifications of these developments. The ideas and principles
informing the Slum Upgrading Facility need to situated in relation to both
earlier urban development policies, and transformations in housing finance in
the West. Over several decades international urban policy has come
increasingly to focus on the market, the private sector, institutional reform
and housing finance. While sharing the emphasis on the market and self-help,
the current initiative is novel in its promotion of slum upgrading by means of
private capital investment and household debt. This new initiative should
therefore also be understood in the light of transformations in housing and
finance which have characterised the Anglo-American capitalist system. Just
as sub-prime lending in the US emerged in the context of wider developments
within the housing–finance nexus, so too the slum upgrading agenda must
also be situated in relation to a wider range of policies seeking to promote the
expansion of mortgage finance in Africa. These are examined in the final
section.

Slum upgrading through financialisation

Over the past decade UN-Habitat has sought to raise the profile of the
problem of slums. Anna Tibaijuka, Under-Secretary General and Executive
Director of UN-Habitat from 2000 to 2010, criticised the ‘general lack of
attention to the urbanization of poverty on the part of policymakers. Shelter
issues continued to fall between the cracks and were hardly reflected in
discussions, even at international forums.’3 UN-Habitat estimated in 2005
that in the lowest-income countries 80 per cent of urban residents lived in
slums, and that the current population of slum dwellers was expected to
double by 2030.4 Slums are characteristic of urban forms across the global
South. In terms of absolute numbers the highest populations of slum dwellers
are in Asia, but in terms of proportions and future prospects the situation
appears most bleak in Africa, ‘where 71.9 per cent of the urban population is
estimated to be living in slums’.5
Part of the international response has been to renew the focus on ‘slum
upgrading’, alongside urban planning and other forms of city development.
The renewed emphasis on slum upgrading is characterised by a central focus
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 THE GLOBAL POLITICS OF SLUM UPGRADING

on finance. In 2004 UN-Habitat established a new sub-programme, the

Human Settlements Financing Division, within which the Slum Upgrading
Facility (SUF) was created. The development of SUF involved a design phase,
followed by a five-year pilot phase (2007–11). This initiative, considered to be
‘one of the most innovative strategies’ adopted by UN-Habitat,6 is important
in revealing the content of current international thinking with regard to
slums.
The point of departure for UN-Habitat’s approach is identification of a
‘finance gap’: ‘the stark reality that combined public and private investment
and official development assistance meets only 5 per cent to 10 per cent of the
financing required for improvements in housing and basic services in Sub-
Saharan Africa, South Asia and Southeast Asia’.7 The proposed solution is
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to devise new mechanisms for bringing finance to the slum. The purpose of
SUF is to demonstrate that slum upgrading projects, ranging from ‘area
upgrading’ to housing construction or home improvement, can be achieved
on the basis of commercial financial investment. This principle is
encapsulated in the term ‘bankable’:

SUF will operate by working with local actors to make slum upgrading projects
‘bankable’—that is, attractive to retail banks, property developers, housing
finance institutions, service providers, micro-finance institutions, and utility
companies.8

A core assumption informing SUF is that commercial investment in slum

upgrading is viable, but is unlikely to become a reality unless its viability is
first demonstrated:

The largest amount of finance to be used for slum upgrading projects and
programmes should, in the long term, come from the commercial finance sector
in the form of loans. . .To reach this stage, however, it is important that each
facility be enabled to establish an initial successful track record of projects
delivered on the ground. That is what the SUF Pilot Programme is all about.9

The SUF pilot phase aims to demonstrate the viability of commercially

financed slum upgrading by creating specific ‘bankable’ projects in four
countries: Ghana, Tanzania, Sri Lanka and Indonesia. These projects would
serve as a practical demonstration that slum upgrading can be achieved with
commercial investment, and as a catalyst for an ongoing process of
replication and expansion, thus bringing slum upgrading ‘to scale’.
The initiative entails the creation of institutional arrangements and
relations to enable commercial investment in slum upgrading projects. This
involves a number of parties, the main ones being commercial banks and
other sources of capital; a financial guarantee fund; and the recipients of
loans. The role of SUF is to provide finance, together with other actors
(primarily local or national government), to guarantee loans from
commercial banks. SUF aims to ‘field-test’ various financial instruments
‘such as loan guarantees and special purpose vehicles in emerging market
771
 BRANWEN GRUFFYDD JONES

economies where domestic capital is plentiful but the means to harness it

scarce’.10 The ultimate recipients of loans are the residents of slums
themselves—‘slum dwellers’. The model envisages that slum dwellers be
organised into community groups, housing associations and federations
which would constitute the legal entity taking a loan, which would then be
repaid by the slum dwellers over a period of time. These projects are complex
and experimental undertakings which involve not only bringing together
various ‘stakeholders’—local government, private contractors, banks and
urban residents—but also setting up the organisational forms required to
represent and constitute each ‘stakeholder’ as a specific and suitable actor,
and designing and setting up the institutional structures through which these
various actors will work together on specific projects.
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UN-Habitat’s slum upgrading initiative is both an ideal model and a

collection of efforts to realise variations of that model in practice. The
approach rests on the notion that slum upgrading is potentially attractive to
banks and other holders of capital, because it can be profitable—that slums
are ‘bankable’. This rests fundamentally on the notion that slum dwellers are
capable of borrowing, and repaying at interest—that slum dwellers
themselves are ‘bankable’ subjects. These two assumptions underpinning
UN-Habitat’s slum upgrading approach are articulated clearly in the SUF
Handbook, a core document produced during the design phase of the Slum
Upgrading Facility:

Private sector investment capital is consistently attracted to development

projects with dedicated (ring-fenced) repayment schemes that generate
attractive financial returns with manageable and acceptable credit risk, that
are operated outside mainstream government systems and control, but are
regulated on a fair and equitable basis. Federations of urban poor savings and
lending groups (the slum dwellers’ Community Based Organizations) demon-
strate first-class structured repayment schemes with extremely low default rates
(in many cases less than 1%) making their performance suitable for private
capital investment.11

The UN-Habitat approach is still at the pilot phase; its outcomes and impact
remain to be seen. What is of interest here is that the core of this initiative
consists of developing mechanisms to enable the residents of slums, via
various intermediaries, to access loans provided by commercial capital so as
to realise improvements to their everyday living conditions.
How is it that in the first decade of the 21st century the problem of slums in
Africa and elsewhere has so unquestioningly been rendered as a problem of
finance, with a financial solution, and the ‘slum dweller’ so readily imagined
as a financial subject? In order both to trace the antecedents and to reveal the
specificity of this approach, it is necessary to situate the current slum
upgrading agenda in relation to two related developments. First, this current
policy agenda must be situated in relation to earlier approaches to slums,
housing and urban development in the global South. In many respects the
current slum upgrading agenda is a continuation of decades of evolving
772
 THE GLOBAL POLITICS OF SLUM UPGRADING

approaches in urban development policy, from ‘aided self-help’ and ‘sites and
services’ to urban management and ‘making markets work for the poor’.
Nevertheless, the current approach is not merely more of the same; the
specific emphasis on attracting private finance from capital markets, and
extending loans directly to slum dwellers, is a distinguishing feature. It is
therefore also important, second, to situate this initiative in relation to recent
developments in housing finance in the West.

A brief history of international neoliberal policy for housing and slums

International attempts to improve conditions in slums are not new. The most
well known antecedent is the ‘site and service’ approach, endorsed by the
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World Bank in the 1970s. However, the origins of international urban and
housing policy lie in the late colonial period.
The origin of slums as a social and material form in Africa lies in the
racialised logic of colonial urban planning, combined with the specific
character of colonial economic development. For the first four decades of
colonial rule the emphasis of urban policy was essentially to exclude the
African from the ‘modern’, ‘civilised’ realm of the city. Racial ideology
refused to accept the ‘primitive’ African as a permanent resident in the city,
and urban planning and construction barely catered for the African urban
population. Social and political conditions in Africa in the late 1940s and
1950s made the continuation of this colonial policy impossible, however.
African urban populations increased significantly during the second world
war. In the aftermath of the war European powers recognised that improving
social conditions for Africans was necessary for the continued stability of
colonial rule, hence the introduction by the British government of the
Colonial Development and Welfare Act in 1940.
The late colonial period saw an emphasis on home ownership for Africans,
explicitly with a view to consolidating political stability through the creation
of an African urban middle class.12 Questions of home ownership, as well as
housing construction and design, were conceived in relation to efforts to
increase social control in cities and to consolidate colonial rule and social
order, as well as to improve welfare. The promotion of housing for African
urban residents ranged from ‘sites and services’ schemes and the construction
of housing estates to experiments with housing finance. Home ownership was
promoted with the introduction of financial loans to Africans.13 The Colonial
Development Corporation, established by the British government in 1946,
began to provide finance for homes in British colonies in the late 1950s.14
Ghana’s first building society was established in 1956, just before
independence, and was modelled on building societies in Britain.15 In
Southern Rhodesia in the 1950s efforts to secure urban social order by
consolidating the African urban working class included attempts to provide
finance for housing, and ‘building societies played a crucial ideological role in
the subsequent campaign to make blacks homeowners’.16
After independence many postcolonial African governments attempted to
address the problems of inadequate urban housing through state provision of
773
 BRANWEN GRUFFYDD JONES

public housing, often in estates, and often alongside major processes of ‘slum
clearing’. These initiatives rarely reached beyond the lower middle classes,
and by the late 1970s were increasingly unsustainable as the situation of
African economies deteriorated. Meanwhile the World Bank began to
include urban questions within its development lending, establishing the
Urban Projects Department in 1972. The Bank criticised public provision of
housing, instead endorsing ‘aided self-help’, including ‘site and service’ and
‘settlement upgrading’ schemes.17 In 1973, for example, the government of
Kenya and Nairobi City Council received a World Bank loan for a ‘sites and
services’ scheme in the Dandora area of Nairobi, to provide serviced plots to
accommodate the residents of the neighbouring Mathare Valley slum, which
had developed during the 1960s.18 Many other African governments,
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including those of Senegal, Tanzania, Cote D’Ivoire, Botswana, Zambia

and Senegal, embarked on World Bank-funded sites and services and
settlement upgrading projects in the 1970s.19
The enthusiasm of the World Bank for the sites and services approach is
widely seen to have been influenced by the ideas of John FC Turner.20 Turner
was an urban anthropologist and architect who worked as an international
housing consultant. He advocated an approach to housing and urban
development which placed the needs and agency of the poor at the centre,
drawing especially on his experiences in Peru. Critical of ‘top down’
bureaucratic, technology- and capital-intensive, centralised housing schemes,
Turner saw the provision of housing not simply as a technical question, but
as central to human need, dignity and community- and self-realisation.
Turner argued that housing provision should be pursued at a scale, pace, cost
and standard appropriate for poor urban residents, and that owners should
be able to maintain control over the design and construction of housing.21
Critics on the left, most prominently Rod Burgess, as well as Latin American
scholars such as Emilio Pradilla Cobos, criticised the theoretical and political
implications of his analysis.22 Others pointed out that Turner’s views were
neither especially original nor especially radical and, moreover, that, while
the World Bank might have referred to Turner’s ideas, Bank policies were
not consistent with his arguments in various respects.23
The widespread diffusion of Turner’s ideas was in part a question of
timing. When Turner promoted his ideas about self-help housing, they were
warmly embraced by an international institutional policy network—
including USAID and the UN as well as the World Bank—which already
encouraged ‘aided self-help’ as the best approach to urban policy in
developing countries.24 As Richard Harris and others have shown, this
already established policy consensus was the fruit of considerable efforts on
the part of various individuals and institutions, reinforced by the ideological
climate of the Cold War. The UN had established a policy focus on housing
from the 1950s, and the US had begun to focus on international housing
policy, especially in Latin America through the Alliance for Progress and
USAID. USAID’s and the UN’s approach was influenced especially by the
American consultant Jacob L Crane, who led the International Housing
Office of the US’s Housing and Home Finance Agency. Crane was a
774
 THE GLOBAL POLITICS OF SLUM UPGRADING

passionate advocate of ‘aided self-help’ housing, and his approach was

adopted by the UN in the 1960s.25 During the 1950s, 1960s and 1970s this
approach was advocated by several international consultants who, alongside
Crane, had influence over policy design in Western donor agencies,
international institutions and developing country governments, notably
Charles Abrams, Otto Koenisgsberger and William Mangin.26 The promo-
tion of home-ownership by means of ‘aided self-help’ and housing finance
became the official policy of US development aid in Latin America.27 In the
context of the Cold War and after the Cuban Revolution, the US government
was concerned above all to prevent revolution in Latin America, and the
promotion of home ownership was directly related to these broader political
goals.28
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In the 1970s space remained for public housing institutions to play a role in
shaping national urban and housing development policy. The World Bank
and other international donors had always emphasised cost-recovery,
however, and critics began to question the financial sustainability of these
schemes, which required government subsidies.29 By the 1980s, economic
crisis and debt had closed the space for national influence over urban policy.
World Bank lending shifted from projects and programmes to broader
sector- and economy-wide adjustment lending.30 International donor advice
and technical assistance hardened to requirements for specific policy reforms.
Reform of housing policy was often an explicit component of structural
adjustment conditionalities, requiring privatisation of national housing
institutions and a shift to provision based on full cost-recovery, the market
and private finance
The World Bank perceived the failures of African economies to be rooted
in a lack of appropriate institutions necessary for the flourishing of market
economies. The consequent emphasis on governance was reflected in the New
Urban Management Programme (NUMP) from the mid-1980s, which moved
beyond existing principles of cost-recovery in a market framework to
promote wider sector reform and a greater emphasis on private property,
financial institutions and the promotion of mortgages.31 The need for land
titling and financial deregulation was now linked explicitly to the functioning
of the urban economy and the housing sector. The implications of this
approach to housing were elaborated in the early 1990s in terms of ‘enabling
markets’: housing was to be managed as an economic sector which should
function as a market. The role of government was to provide the institutional
and regulatory framework necessary to enable the housing market to
flourish.32
This framework further strengthened the perceived relationship between
urban development, housing finance and land titling programmes. If Crane,
Turner and others had shaped the content of international housing policy of
the 1950s–70s, the most prominent figure since the 1980s has been Hernando
de Soto. De Soto, an economist from Peru, promotes programmes of land
and property titling as the solution to urban poverty in the global South. His
argument is that the accumulation of wealth derives from the ability to
borrow against assets. In the West, he argues, this has been facilitated
775
 BRANWEN GRUFFYDD JONES

historically by a legal system which documents the ownership of land and

property. The legal document affirming ownership of an asset is vital for
securing loans using the asset as collateral; loans can be invested in business
and so form the necessary basis for the generation of wealth. De Soto argues
that the millions of inhabitants of the slums of the global South are effectively
‘owners’ of their buildings and land but, lacking formal title and
documentation, are unable to use this ‘dead capital’ as collateral to secure
loans to finance their business ventures.33 De Soto and his Institute of Liberty
and Democracy have been enormously active and influential in promoting
the legal formalisation of private property rights in cities of the global South.
Echoing earlier discussions about the role of Turner’s ideas, critics have
pointed out that de Soto’s arguments are not new. Home points out that de
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Soto’s ideas are a contemporary echo of the arguments of Arthur Young, an

English economist and proponent of Enclosures who observed in 1787 that
‘the magic of property turns sand to gold’.34 Mitchell highlights similarities
with the work of Peter Bauer, the right-wing critic of development aid who
argued that the citizen of the Third World is a natural capitalist and
entrepreneur.35 Nevertheless, de Soto’s ideas gained enormous international
prominence; as Gilbert highlights: ‘he is a very influential voice within
Washington’.36 De Soto’s first book, The Other Path: The Invisible Revolution
in the Third World (1989, first published in Spanish in 1986) received
endorsements from George HW Bush, Richard Nixon and others; his ideas
had already been recommended to the UN by Ronald Reagan in 1987.37 The
Mystery of Capital received enthusiastic endorsements from, among others,
Margaret Thatcher, Milton Friedman, The Wall Street Journal, The
Economist, Francis Fukuyama, Niall Ferguson and Bill Clinton. De Soto
has been called upon by the governments of many countries, including El
Salvador, Mexico, the Philippines, Romania, Egypt and Ghana, to offer
advice regarding property reform. His ideas have been explicitly adopted or
referenced by Western donor organisations, especially the World Bank and
38
USAID. The UK Department for International Development (DFID)
commissioned research into the policy relevance of De Soto’s arguments.39
The SUF Handbook cites de Soto’s argument about the ‘dead capital’ of
the urban poor.40 The point here is not to claim direct influence of de Soto’s
ideas on the UN-Habitat slum upgrading initiative, but to emphasise the
shared underlying principles and the global political, economic and
ideological environment in which both sets of ideas and agendas have been
promoted. Western organisations, most notably the World Bank and USAID,
have, especially since the 1980s, promoted the formalisation of land tenure
and property titles in urban areas so as to facilitate the development of
housing and real estate markets. Arguably, just as with Turner before him, it
was not the novelty of de Soto’s ideas which underpinned their international
embrace but their utility in adding legitimacy to existing ideological
positions. In particular, in the case of de Soto, these neoliberal arguments
were being advocated not by a World Bank consultant from the West, but by
an economist from the South.41 While de Soto actively promotes his ideas,
Mitchell has documented that his widespread influence is the product of
776
 THE GLOBAL POLITICS OF SLUM UPGRADING

careful and long-pursued effort on the part of an international network of

neoliberal think-tanks and proponents.42
In the late 1990s there was a specific effort to develop an internationally
coordinated policy agenda for cities and slums, giving UN-Habitat a
leadership role. This gave rise to the establishment of the Cities Alliance in
1999, and the strengthening of UN-Habitat’s institutional role within the UN
system. UN-Habitat’s increased budget was supported by a number of
Western donor agencies, including DFID.43 UN-Habitat’s current slum
upgrading agenda embodies long-established principles of the promotion of
home ownership on the basis of self-help. It occupies the framework
established in the 1980s and 1990s of promoting institutional arrangements in
which the private sector and housing markets can flourish. What is novel is
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the SUF vision of financialisation: the ambition to link the residents and
infrastructures of slums to capital markets by facilitating the extension of
commercial financial loans for housing and construction projects, to be paid
for on the basis of slum dwellers’ household debt.
Stepping away from the specificity of ‘development’ and exploring the
specificity of ‘housing’ can shed further light on the novel features of this
initiative. The influence of Western institutions on national policy in Africa
has increased substantially since the 1980s with the debt crisis and subsequent
structural adjustment conditionalities. Given the increasing significance of
international financial institutions, Western donor agencies and consultants
in shaping national urban development policies in Africa and elsewhere in the
global South, it is important also to consider the changing content of
international housing policy in relation to developments in the West.

Housing and financialisation in Anglo-American capitalism

The proposal that private finance and household debt is the solution to
conditions of inadequate housing and infrastructure suffered by residents of
slums can be situated within three related economic and ideological
developments which have characterised the model of Anglo-American
capitalism: an emphasis on private individual home ownership; the
financialisation of housing; and the extension of mortgage finance to groups
who previously had little access to credit. These developments have arisen
from both changes in housing policy and broader processes of economic and
financial liberalisation and deregulation.
If we trace the era of neoliberal reform to the 1980s and the regimes of
Thatcher and Reagan, then it is apparent that housing has always occupied a
central position. The promotion of home ownership was a core strand of
Thatcher’s political agenda, manifest most visibly in her government’s
policies to sell council housing to tenants at substantial discounts. During the
postwar decades the state developed a major role in the provision of housing
and, by the 1970s, the stock of council housing was considerable and
generally of high quality. Council housing was originally informed by an
egalitarian vision as a central core of the welfare state, rather than as merely a
residual form of provision for only the poorest in society.44 Thatcher sought
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 BRANWEN GRUFFYDD JONES

to dismantle as far as possible the existing council housing regime, to prevent

future continuation and expansion of council housing, and to entrench the
ideology and mechanisms for individual home ownership across society
beyond the traditional confines of the middle and upper classes.45
The provision of public housing in the US, first authorised in the
National Housing Act of 1937, was never as widespread as in parts of
Western Europe, and what there was only ever provided for the very poor.
The limited policy and legislation was significantly shaped by the interests of
the private construction industry; the argument of the early 1930s that public
housing was too ‘socialist’ remained influential.46 Nevertheless, though
limited, some public housing provision informed by principles of redistribu-
tion did exist from the 1930s, reaching its peak in the 1970s under the Carter
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administration. Since then public housing provision has been progressively

undermined. The Reagan administration substantially reduced funding for
housing and undertook a number of initiatives to reduce what limited public
housing existed.47 In a conscious imitation of Thatcher’s policy, efforts were
made to encourage the sale of public housing to tenants.48
The promotion of home ownership has remained central to the
programmes of subsequent governments on both sides of the Atlantic. In
the UK, the New Labour government’s asset-based welfare and economic
policy went further than Thatcher in putting the promotion of home
ownership at the core of widespread initiatives to privatise welfare
provision.49 In the US the Clinton administration heavily promoted home
ownership among lower income groups,50 an emphasis unquestioningly
continued by the subsequent Bush administration.
In both the US and UK continued emphasis on home ownership was
integrally related to the deregulation of mortgage finance. The deregulation,
liberalisation and internationalisation of finance which started in the 1980s
had major implications for housing and urban development.51 The
deregulation of mortgage finance was one of the most significant
transformations of the British economy.52 Until the beginning of the 1980s
housing finance was a relatively discrete, specialist sector, channelled via
direct and limited flows between borrower and mortgage lender, the source of
finance being primarily existing savings held by building societies. Dereg-
ulation led to a significant increase in the number and variety of institutions
involved in housing and property finance, which heightened competition and
spurred innovation. The liberalisation of national banking and finance
sectors introduced greater competition as international banks and financial
institutions could enter the market alongside local actors. Deregulation
meant that banks could offer a wider array of financial services, non-bank
institutions could offer banking and financial services, and the boundary
separating mortgage finance from other banking services was dissolved.
Funds for mortgage lending now derived not solely from existing savings and
retail finance, but also and increasingly from national and international
capital markets. These developments have been characterised in terms of the
‘financialisation’ of housing.53 This draws attention to the way in which the
functioning of housing provision and housing finance is increasingly driven
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 THE GLOBAL POLITICS OF SLUM UPGRADING

by the logics and practices of financial markets; the increasing, if indirect,

relationships between housing and international capital markets; the
increasing dominance of the ideology of finance; and the growing significance
of securitisation.
In both the US and UK the objective of widening access to mortgage
finance among poorer and otherwise excluded households was an explicitly
articulated government objective. These groups came to be seen in terms of
new markets to be captured. Listokin and Wyly observed of the US in 2000:
‘Housing policy is now a race to tap new markets for homeownership by
reaching traditionally underserved populations of racial and ethnic
minorities, recent immigrants, American Indians, and low- to moderate-
income (LMI) households’.54 This was supported by legislation mandating
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Fannie Mae, Freddie Mac and the Department of Housing and Urban
Development (HUD) to target ‘underserved’ areas and households.55 These
policies, combined with competitive pressures in the mortgage finance sector,
further financial deregulation and developments in technology, gave rise to
the massive growth of sub-prime mortgage lending. New mortgage products
were designed specifically for borrowers with low incomes and/or a poor
credit history, who would not be eligible for regular mortgage finance. The
development of this new ‘market segment’ of mortgage finance increased
enormously during the 1990s and even more so during the 2000s. While
ostensibly a progressive development drawing the formerly excluded into the
realm of home ownership, the global financial crisis has revealed the reality:
these products were costly, highly exploitative and unsustainable, charac-
terised by higher fees and interest rates than ‘prime’ mortgages available to
borrowers with a good credit-rating.56
This section has shown how developments in mortgage finance over the
past three decades, in the context of global economic and financial
liberalisation, have combined with the ideological pursuit of home ownership
to drive the promotion of mortgage finance for the poor. Government
policies promoted private home ownership and sought to make this ideal
available to ever wider sections of society. These developments in the West
must also be recognised as crucial in shaping the ideological context within
which the SUF was conceived. In the Anglo-American model the solution to
housing for the poor was seen to lie in devising market-based regulatory
frameworks and financial mechanisms to enable home ownership on the basis
of household debt. Poverty was to be tackled by enabling all in society to
accumulate wealth through debt-based asset ownership. Meanwhile, low-
income households and racial minorities were seen by banks and financial
institutions as new profitable market segments.
Sassen is one of the few commentators who has highlighted the potentially
global dimensions of these developments, arguing that there is:

. . . a new global space for the deployment of subprime mortgages: the billions
of households in much of the world where residential mortgage capital has
much room to grow. . .the subprime mortgage is not going to disappear. From
the perspective of banks and financial firms, a market comprising potentially

779
 BRANWEN GRUFFYDD JONES

billions of modest-income households worldwide is too good a thing to

relinquish.57

From the perspective of banks and financial firms, as well as international

donor agencies and financial institutions, Africa is considered the ‘final
frontier’ of housing and personal finance. The SUF arises from an
internationally coordinated agenda promoted by a range of institutions,
many of which also actively promote the expansion of mortgage markets in
Africa. The final section reveals international efforts to make mortgage
markets and extend the frontiers of homeownership among Africa’s middle
classes.
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Africa: the final frontier for mortgage finance

Three decades of economic liberalisation through structural adjustment in
Africa have brought deepening poverty and an ever more precarious
condition of everyday life for many, resulting from lack of employment,
increases in cost of living, imposition of user-fees and the collapse of public
services. Economic and social adjustment has generated opportunities for
accumulation and growth for others. These divergent experiences and
fortunes are nowhere more starkly visible than in towns and cities, where the
expansion of slums and the deterioration of public urban infrastructures have
been accompanied by striking developments in real estate. From Johannes-
burg to Dar es Salaam, Accra to Maputo, gated developments, luxury
condominiums, vast mansions and villas, shining new hotels, shopping malls
and retail complexes are as much a characteristic of Africa’s neoliberal urban
condition as the spectre of slums.
It is beyond the scope of this article, which is concerned to examine
critically the content of current international policies regarding slums,
housing and urban development, to analyse the causes and dynamics of these
developments. Such an account would need to trace the ways in which
neoliberal adjustment has encouraged investment in construction, real estate
and retail over productive sectors, and the relationship between cycles of
accumulation and the emergence of speculative property bubbles as, for
example, occurred in Zimbabwe in the 1990s, South Africa from the late
1990s to 2008, and Egypt in the 1990s.58 While most of these developments
arise from processes within Africa, investments in property on the part of the
African diaspora in Europe, the US and the Gulf states has become
increasingly significant since the 1980s, enabled by financial liberalisation.
However, the current real estate expansion in housing construction and
shopping malls is also fuelled by efforts on the part of Western donors.
During his visit to Nigeria in 2002 then President George W Bush,
expressing his ‘desire to see mortgage markets developed in Africa’,
announced the establishment of the United States–African Mortgage Market
Initiative.59 Since 2002 US agencies have energetically promoted mortgage
finance and home ownership in Africa, centring on three areas: promoting a
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 THE GLOBAL POLITICS OF SLUM UPGRADING

particular approach to housing; providing ‘technical assistance’ for institu-

tional and legislative reform; and financing housing projects.
The US government has attempted to shape Africa’s housing agenda on
the basis that the US’s own successful experience provides lessons which can
be useful elsewhere. HUD is not permitted to fund overseas projects, but it can
engage in policy discussions and exchanges. HUD has pursued what it calls
‘an active international agenda’, organising conferences and promoting the
US’s approach as suitable for Africa. HUD has co-organised and sponsored a
series of conferences in Africa addressing housing and housing finance,
including the Cities In Change Conference (South Africa, August 2004), and
two High-Level Peer Exchange Conferences on ‘Government Enablement of
Private Sector Lending for Affordable Housing’ in East Africa (Uganda,
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November 2005) and West Africa (Ghana, April 2006). In 2006, working
with USAID, HUD was ‘sponsoring and participating in at least 15 networking
events on such topics as property rights, use of GIS [geographic information
systems], housing finance, and donor coordination’.60 HUD also works with
UN-Habitat in international meetings such as the annual World Urban
Forum.
HUD has sought actively to influence the content of housing-related
policy in Africa. It seeks to develop ‘partnerships with other countries to
help promote universal housing goals’, because ‘People everywhere share
the same hope, the same dream of having a home they call their own
because people everywhere know that owning your own home is central to
having a stake in the community’s destiny’.61 HUD encourages discussion
about the regulatory and legislative environment; the role of the private
sector and financial services; the need to mobilise funds from domestic
capital markets; and the importance of secondary mortgage markets,
financial intermediaries, risk-management and asset-backed securitisa-
tion.62 Before the financial crisis, HUD promoted the relevance for Africa
of the US’s experience:
The nations of Africa can benefit from learning about the housing sector in the
United States, where almost 69 percent of Americans own their own home.
Candidly, this is a remarkable record. And there is no reason why it cannot be
matched or exceeded in Africa or elsewhere, provided they hear the core
message we want to share. . .When private property rights are protected, when
contracts are enforceable by impartial judges, when taxes are kept low and
applied fairly and equally, when regulatory barriers to enterprise and housing
are lowered, and when people participate in governance, then the vital
principles are in place for the private sector to thrive and produce the affordable
housing so desperately needed in so many countries.63

USAID has long been involved in urban housing in Africa, with an

emphasis on policy reform, the promotion of home ownership, private
sector housing, mortgage finance and secondary mortgage markets, for
example in Zimbabwe, Egypt and Morocco.64 In particular, the US has
sought to influence reform of housing’s legislative and regulatory
environment. Based on the principles that it is ‘critical that the legal
781
 BRANWEN GRUFFYDD JONES

and regulatory framework supports market-oriented municipal finance’,

and that ‘strengthening the legal and regulatory framework needs to be
addressed in order to encourage greater private sector investment in the
housing market’, USAID pursues a range of ‘capacity-building’ initiatives.65
These include ‘peer-exchange’ learning programmes and partnerships with
African cities and municipal authority staff, ‘introducing US city
management practices to developing country counterparts’;66 country-
based Municipal Development capacity-building programmes, for example
in Angola, Mozambique, Mali and Ethiopia; technical assistance to the
Ministry of Lands in Zambia for facilitating transfer of private title in
urban land, and in Kenya and Egypt supporting modernisation of the
land registry system; providing technical and financial support to South
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African municipal authorities and banks in the development of a range of

securitisation measures for infrastructure financing; working with the
Federal Mortgage Bank of Nigeria to produce draft legislation to improve
the ‘enabling environment for the Nigerian mortgage market’; and
carrying out research on mortgage market development in several
countries—Ghana, Uganda, Zambia, Tanzania, South Africa—to ‘develop
baseline data on the state of play on a country-by-country basis’.67 A
central component of mortgage law reform advocated by USAID, the
World Bank and related entities is foreclosure legislation. Egypt’s new
mortgage law, introduced in 2001, makes provisions for foreclosures and is
modelled specifically on US mortgage regulations.68 Similarly Ghana’s
recent mortgage law reform of 2008, supported by the International
Finance Corporation (IFC), has introduced foreclosure rights.69
In addition to the ideological work of networking, and ‘technical
assistance’ to secure appropriate legislative reform, the US’s promotion of
mortgages and housing in Africa has included provision of financial
resources. Through its Overseas Private Investment Corporation (OPIC) the
US government provides financial resources to American companies to
support private sector housing projects and the development of mortgage
markets in Africa. OPIC ‘is involved in every aspect of housing development,
including construction, mortgage finance, mortgage-backed securitization,
the manufacture of building materials, and the provision of property-
registration and brokerage services’.70 In 2006 OPIC sponsored a conference
in Cape Town, ‘Housing Africa: An International Investment Conference
Focusing on the Housing Sector.’ The purpose was to explore how American
investors could facilitate ‘the development of a formal housing industry in
Africa’, and to demonstrate to US companies ‘that lucrative investment
opportunities await them in Africa’s housing’.71 OPIC President, Robert
Mosbacher, stated: ‘It is within Africa’s power to convert the home from a
primary means of shelter to the primary unit of economic development, and
America’s successful housing industry is the ideal vehicle to make that
promise a reality’.72
Between 2001 and 2007 OPIC provided more than $1 billion in financing
and insurance so as to leverage additional capital for housing investments
and developments. In 2008 Bush announced that OPIC had established five
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 THE GLOBAL POLITICS OF SLUM UPGRADING

new private equity investment funds for Africa, one of which focused on
housing, intended to:
. . . invest in major cities across West Africa, with a focus on housing projects
catering to lower-middle and upper-middle income populations; commercial,
retail, mixed-use and hospitality development projects; and, potentially,
publicly-traded real estate companies. . .By increasing the amount of residential
and commercial housing available to residents, the fund’s investments will in
turn boost the local mortgage markets. It should also attract local and foreign
capital from experienced property developers seeking to exploit real estate
opportunities in the region.73

The World Bank actively promotes the development of mortgage finance in

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Africa, through the IFC. IFC launched initiatives to support and expand the
primary market in mortgages in Ghana and Uganda in 2007, and is pursing
similar initiatives in Burkina Faso, Nigeria and Tanzania.74 In Uganda IFC
provides financial and technical support to five banks and works with ‘key
stakeholders’ to overcome ‘legal and regulatory constraints to the growth of
mortgage lending and investing’. Attention is focused on ‘implementing tax
incentives to promote home ownership, helping increase securitization of
mortgages in the secondary market, and raising the standards that banks use
to appraise homes’.75 The initiative in Ghana similarly involves financial
investment and regulatory reform. All banks receiving support are required
to use IFC’s Mortgage Toolkit, developed by a US bank, ShoreBank
International, and designed ‘to help lenders build internal capacity, improve
risk management, and facilitate more lending for mortgage finance’.76
While not so directly involved in the promotion of mortgage reforms in
Africa, the promotion of private finance is central to British development
policy.77 DFID provides core funding to the IFC, and supports the World
Bank-hosted Public–Private Infrastructure Advisory Facility.78 The UK
government’s financial development institution, CDC—successor of the
Colonial Development Corporation—promotes the private sector in devel-
oping countries and emerging markets. Over the past few years CDC has acted
as an equity fund rather than supporting specific policy reforms. Current
policy is to invest more than 50 per cent of its funds in sub-Saharan Africa. In
2006 the Africa Real Estate Fund was established by Actis, an independent
equity group which evolved out of CDC Capital. This incorporated CDC’s
existing direct investments in real estate, including retail developments in
Nairobi, Kampala, Dar es Salaam, Lagos and Accra.79 CDC has investments
in several property development companies in Cote d’Ivoire, Tanzania,
Kenya, Nigeria and Ghana, and has directly supported Africa’s boom in
retail real estate, investing in some of the major new shopping mall
constructions across the continent—the Palms Shopping Centre and Ikeja
City Mall in Lagos, Accra Mall in Accra and Manda Hill in Zambia—as well
as the development of up-market housing such as the Regimanuel Gray
estates in Ghana.80 CDC also has substantial investments in financial services
and banking across Africa. In 2003, via the Actis Africa Fund, CDC gained a
controlling stake in the Development Finance Company of Uganda (DFCU).
783
 BRANWEN GRUFFYDD JONES

DFCU, founded in 1964 by CDC and the Ugandan government, was recently
privatised and is the largest financial group in Uganda.81 Aside from the
Uganda government, the other shareholder is the IFC. DFCU started mortgage
lending in 2002 and is now a leading provider of medium- and long-term
finance.82 CDC has shares in Ghana’s HFC bank, which was established in the
early 1990s with World Bank support to focus on mortgage finance.83
If the development of luxury shopping malls on a par with those in North
America and Europe reflect the consumption practices and desires of Africa’s
elite and new middle classes, where do these newly rich live? It is the class
dynamics of Africa’s neoliberal social transformation, in conjunction with
these specific institutional efforts, which underlie the development of private
housing estates, luxury flats and ‘affordable housing’ for the middle class, and
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the consequent emergence of mortgage finance.84 In 2008 the launch issue of

This is Africa, a new publication produced by the Financial Times, carried an
article by Lanre Akinola which characterised Africa as mortgage finance’s
‘final frontier’. It reported that ‘Scarcely discussed outside of South Africa a
decade ago, mortgage products are now being aggressively rolled out in an
attempt to capitalise on pent-up demand for financial services’. The fact that
this signals simultaneously a cultural and ideological as well as economic
change is articulated by Akinola: ‘Increasingly, populations in a number of
sub-Saharan countries are being introduced to the concept of funding their
lifestyles through debt.’85

Conclusion
This article has examined the international slum upgrading agenda, with a
specific focus on UN-Habitat’s Slum Upgrading Facility. This initiative seeks
to improve conditions in slums in Africa and elsewhere in the global South.
The proposed solution is to attract private finance from commercial banks
and capital markets to invest in infrastructural improvements. The financial
return for investors will derive from structured repayments on the part of
slum dwellers. This is a very specific form of solution. It is essentially
neoliberal in character, invoking not only the principles of cost-recovery in
the market, but a specifically asset-based approach to household and social
provisioning.
The SUF initiative can be understood in terms of financialisation in two
respects. First, it is a model which establishes links between the
infrastructures and residents of African slums, and national and, ultimately,
international capital markets. Second, it is a model which presupposes a
financial vision of social life and social provisioning. In this vision the home
is presented as an object which is most suitable not only for private individual
ownership but as an asset to be invested in, traded and used as collateral for
leveraging additional finance to fund consumption, welfare or entrepreneur-
ial activity. This approach to slum upgrading must be situated not only in
relation to the longer trajectory of international urban and housing policy,
which has promoted home-ownership on the basis of self-help since the late
colonial period, but also in relation to the contemporary Anglo-American
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 THE GLOBAL POLITICS OF SLUM UPGRADING

capitalist system. The financialisation of housing and mortgages has been a

defining dynamic of Anglo-American neoliberal capitalism over the past
three decades.
The purpose of this article has been to subject to critical scrutiny, and to
historicise, the ideas informing this approach to slum upgrading. It has also
been to expose the deliberate efforts, over many years and by a wide range of
Western institutions, to promote institutional and regulatory reform in
Africa with a view to expanding economic and financial markets and the
incorporation of housing and urban infrastructures within the market and
circuits of finance. Kevin Fox Gotham has emphasised the central role of
legislative reform in creating the institutional environment suitable for the
commodification of housing and real estate.86 In doing so he foregrounds the
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politics of what is often presented as a technical and evolutionary

development. Gotham’s analysis centres on the experience of the US. This
article has drawn attention to the global extension of such efforts at
legislative and institutional reform.
The ultimate concrete questions regarding the effects and implications of
such policies require a different form of analysis and lie beyond the scope of
this article. The SUF is in its pilot phase; its results remain to be seen. Initial
research on one of the pilot projects in Ghana (to be reported in a
forthcoming paper) suggests that the new housing is too small and too
expensive for the majority of residents of the slum. In this and other projects,
perhaps some relatively better off residents might benefit from the consequent
improvements. More broadly, however, such an approach cannot offer a
progressive or sustainable solution to improving the living conditions of the
majority of poor urban residents in African slums. The expansion of slums
and the deterioration of urban conditions in Africa, the increasing
precariousness of life for the majority, the increased cost of living and
absence of employment, have been driven fundamentally by the neoliberal
reforms of the past three decades. This policy approach exists within and is an
integral part of that very neoliberal framework.

Acknowledgements
This article arises from research funded by the British Academy, grant
LG45467, which is gratefully acknowledged. I would like to thank Gyekye
Tanoh, Claire Mercer, Charles Heller, Angharad Closs-Stephens, Mustapha
Kamal Pasha, Sanjay Seth, Raj Pandey, Alison Ayers, Maureen Woodhall,
Mark Lacy and the anonymous reviewers for helpful discussions and
comments.

Notes
1 UN-Habitat, The Challenge of Slums: Global Report on Human Settlements, Nairobi: United Nations
Human Settlements Programme, 2003.
2 United Nations, Resolution adopted by the General Assembly 55/2: United Nations Millennium
Declaration, United Nations General Assembly, 2000, at http://www.un.org/millennium/declaration/
ares552e.htm, accessed 12 May 2011.

785
 BRANWEN GRUFFYDD JONES

3 UN-Habitat, Implementation of Conference on Human Settlements, Strengthening of UN-Habitat,

Sixtieth General Assembly, Second Committee, 19th Meeting, United Nations General Assembly,
2005, p 6, at http://ww2.unhabitat.org/documents/Source.pdf, accessed 12 February 2011.
4 UN-Habitat, Financing Urban Shelter: Global Report on Human Settlements, Nairobi: United Nations
Human Settlements Programme, 2005, p xviii.
5 UN-Habitat, The Challenge of Slums, p 13.
6 UN-Habitat, Implementation of the Outcome of the United Nations Conference on Human Settlements
(Habitat II) and Strengthening of the United Nations Human Settlements Programme (UN-Habitat),
Report of the Secretary-General, United Nations General Assembly, 2005, p 6, at http://
daccessdds.un.org/doc/UNDOC/GEN/N05/444/02/PDF/N0544402.pdf?OpenElement, accessed 12
February 2011.
7 UN-Habitat, The SUF Handbook, Vol 1, An Approach to Financial Action Planning for Slum Upgrading
and New Low-Income Residential Neighbourhoods, Nairobi: Slum Upgrading Facility, UN-Habitat,
2006, p 11.
8 UN-Habitat, SUF Local Finance Facilities: What they are, Why they are Important, and How they Work,
Slum Upgrading Facility Working Paper 8, Nairobi: United Nations Human Settlements Programme,
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2008, p 1.
9 Ibid, p 5.
10 UN-Habitat, Implementation of the Outcome, p 6.
11 UN-Habitat, The SUF Handbook, p 7.
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86 Gotham, ‘Creating liquidity out of spatial fixity’; and Gotham ‘The secondary circuit of capital
reconsidered’.

Notes on contributor
Branwen Gruffydd Jones is Lecturer in International Political Economy at
Goldsmiths, University of London. She is editor of Decolonizing Interna-
tional Relations (Rowman and Littlefield, 2006) and author of Explaining
Global Poverty: A Critical Realist Approach (Routledge, 2006). Her current
research focuses on two areas: the politics of the Africa city; and African
political thought.

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