Pairing public funds with the savings of poor people to revitalise their own communities generates substantial economic and social benefits
Prior to 2004, 230 families in the Bang Bua Canal Community lived in shabby and unsafe conditions. For almost a century people have squatted illegally here, living in fear of eviction. Drugs, violence and abuse were constant threats to dwellers.
Today, Bang Bua Canal Community is a flourishing canal-side community. Two-storey row houses have replaced the old, unsteady dwellings. Walking around the community, one finds gardens, open spaces, concrete walkways and proper drainage and sewer systems. There is a welfare house for the poorest members of the community and a rent-to-buy option for those who cannot afford to purchase homes.
To accomplish all this, the community accumulated three million baht in savings, obtained a 30-year renewable lease from the Treasury Department, and borrowed 20 million baht from the Community Organisations Development Institute (Codi). The community also received a grant of 18 million baht for infrastructure improvements.
Bang Bua is recognised by various international organisations as a successful case in slum development, but it is just one example of over 800 Ban Mankong projects.
Ban Mankong was launched in 2003 to address the housing problems of the poor because conventional methods, such as low-income units and relocation, were not working. Cooperating with academics, NGOs and community leaders, the government has experimented with on-site development, reconstruction and land-sharing.
Embracing a city-wide solution, low-income communities work hand in hand with local authorities, professionals, universities and NGOs to survey all slums and develop a plan. Communities demonstrate their financial responsibility and ability to manage a budget by saving 10% of project costs. These savings activities demonstrate financial discipline and ensure collective commitment. Once the master plan is accepted, the government channels infrastructure subsidies to the communities. Codi also provides a 15-year loan to communities to purchase land or build housing at a rate of 4% per annum.
Ban Mankong projects have benefited 88,000 families in 1,457 communities in 76 provinces in Thailand. Lending has reached 3.07 billion baht, and the programme has channelled 3.8 billion baht of government subsidies to targeted communities. A variety of landowners have participated in this scheme, including the Treasury Department, Crown Property Bureau, State Railways of Thailand and some Buddhist temples.
There have been misconceptions about Ban Mankong Programme, especially in the eyes of real estate developers who argue it is an inefficient use of land, suggesting that low-rise inner city settlements should be demolished and redeveloped for high-rise high-density units. However, countless high-rise buildings have been built and left vacant because they did not meet the needs of targeted residents. Slum demolition results in new slums, instigating social conflicts and widening wealth disparities.
Auntie Chan is a leader from the Klong Lumnoon community. Although she was forcefully evicted 30 years ago, she now has a house of her own and works seven days a week to help the poor get homes of their own. She has introduced hundreds of international visitors to Bang Bua. They frequently tell her they admire the government for keeping the poor in the city because in their countries the poor have to hide behind the rich. She believes that "happiness and hard-work are indicators of successful development".
Some believe that heavy investment of public funds in the form of subsidies and low interest loans is a misuse of the money. However, compared to public spending in industry, tourism, or property, the Ban Mankong Programme has received a trivial amount. Furthermore, other economic sectors are entitled to highly-subsidised loans.
Public funds paired with community-based savings trigger additional investments and generate substantial economic and social benefits. The value of land and housing stock increases, jobs are created through community-based construction projects, and the purchasing power of the poor increases. The ultimate effect is improved public health and more engagement in society, with less crime and substance abuse.
It is also sometimes said that the scheme creates a class of "privileged poor". On the contrary, the upgrading process depends on the willingness and readiness of each community to enter the programme and requires a significant investment of time and resources. Consequently, it is impossible for the thousands of slum communities in Thailand to upgrade immediately.
Communities that work with Ban Mankong understand the difficulties. Projects typically take one to two years to get off the ground, during which time members must work hard to plan, save and make decisions regarding land and upgrading designs. Despite their small income, most are committed to the end goal and are willing to make the necessary investments. The accumulated savings allow communities to develop and implement ideas that improve their economic condition and demonstrate their self-reliance.
Thailand has been on the right track in upgrading informal urban settlements through a community-oriented process, with government policies that support harmonious and sustainable development. Ban Mankong embraces democratic participation not only by encouraging each community member to play an active role in the development process, but also by creating comprehensive city-wide solutions that engage all stakeholders. By incorporating all viewpoints, the development process does not focus simply on financial indicators, but considers social, environmental, political, legal, gender and public health issues. Such an inclusive and widespread approach is critical to Thailand's evolution as a vibrant democracy.
Nutta Ratanachaichan is a financial advisor to Codi.
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