Low-income Housing Finance CODI Experience

CODI in brief Founded in 2000 A public organization: having a government institution status with flexibility in organization management Main objective: strengthening poor community organizations

Current Activities Citywide slum upgrading ( “Baan Mankong”) Poverty Alleviation (Supporting communities in savings, credits and loans and community development plan, etc.) Community Welfare Assisting in setting up of Community Organization Councils throughout the country Promoting natural resource management and sustainable agriculture Solving land and housing disputes in rural areas

CODI strategies To play supporting role in community development process People, not CODI, are the owners and key actors of the process To coordinate with govt. agencies, NGOs, other civic groups To promote community-based savings To use finance as a tool for development

CODI Network Community Development Committee Academics Supported Agencies NGOs Local Authorities Others WELFARE LAND - HOUSING SAVINGS - CREDIT COMMUNITY ENTERPRISE ENVIRONMENT OTHERS

CODI provides financial support by lending its capital funds to community organizations. At present, CODI credit facilities comprise four types of loans as follows; - Loans for housing and development - Loans for community enterprises/income generation - Loans for holistic development - Short-term revolving funds

Income Generation Activities

Baan Mankong Housing Program Citywide slum upgrading a breakthrough in solving slums on a citywide scale Comprehensive approach in dealing with problems of land tenure, infrastructure, environment, construction and financing Combination of self support, government subsidy and private cooperation Lead to amendments in rules and laws which are obstacles to housing solutions for the poor

BMK demonstrates strong PPP partnership P- Poor people/communities as key actors in identifying problems, developing plans to resolve problems and implementing those plans themselves P- Public; government, CODI, local authorities, etc. Government as subsidy provider: CODI as facilitator, provider of long-term housing loan P- Private sector; NGOs, professionals, educational organizations etc. provide technical support

solutions suitable for all communities City-wide upgrading involving many possible city development actors and find various secured housing solutions for all communities in the city City-widesurvey / joint planning, search forsolutions together Find various solutions suitable for all communities in city Community Municipality Other dev.agencies On-site Upgrading Land-sharing& reconstruction Reblocking & readjustment Resettlements่ Row-house Flat Detach house Row-housing Mixed approach

Baan Mankong Procrss City-Wide Planning Organize meetings of stakeholders Establish joint committee to oversee implementation Survey all communities to identify problems and create holistic plan Develop housing, land tenure and policy plan for whole city

Set up community working team Form savings groups Mobilize local resources, strengthen local groups, and build collective management skills Set up community working team Collect information about land, housing, physical infrastructure, income, employment, problems, and existing development initiatives

Conceptualize housing and development goals regarding land tenure, upgrading scheme, involvement of local authorities, NGOs, etc. Formulate financing plan Work with architecture and engineer on developing housing designs and infrastructure Submit detailed plan to BMK committee

all communities in districts and city Community Survey all communities in districts and city Community survey of all households In the community and all communities in the city carried out by community people การ

Participatory planning process

Loan process Loan approval Loan disbursement Screened by local and regional committees before being sent to CODI Approved by BMK sub-committee comprising reps from communities, CODI, NHA,GSB, GHB If loan amount exceeds THB50 mln.(~USD1.7), approved by CODI board of directors Loan disbursement Loans are disbursed in tranches based on progress of project

Progress of Baan Mankong (up to March 2011) Number of project approval 882 Number of cities 278 Number of communities 1,552 Number of families 91,822 Govt. subsidy (THB mln. ) 4,706

Baan Mankong Chantaburi Before and after

Baan Mankong: Financial Aspect

Providing Flexible Financial Support for City-wide Upgrading by Communities Upgrading of infrastructure and social facilities Grant 2) Local management cost 3) Support for exchange visits, capacity building, seminars, coordinator Members Loans From CODI Revolving Fund Interest 4 % Communities Members Members Government Subsidy Banks

Source of Financing Three components of BMK financing: Local communities’ own savings (10% of project cost) Government subsidy-THB80,000(~USD2,667) per family Housing loan from CODI

Government subsidy Subsidy is given to community not to individual family Allocation of THB80,000 (~USD2,667) Infrastructure development 55% Financial support 30% Project management (incl. 15% meetings, training, exchange visits, etc.)

CODI loan A collective loan to community organization, not to individual household Collective land tenure Loan maturity is 15 years and is payable in 180 equal monthly installments Interest rate is fixed at 4% p.a. Maximum loan amount per household is THB 300,000 (~USD10,000) CODI finances up to 90% of the project cost.

Loan Security: 1) Land and buildings are mortgaged with CODI 2) Guarantee agreement signed by chairman, committee and all members of the community organization.

Re-lending to members A loan from CODI is on-lent to individual household with a margin of 2-3% added to e interest cost. The margin is set aside for the purpose of loan administration, community welfare and serves as a cushion for loan repayment in case any member fails to meet his or her obligation in any particular month.

Community organization Loan management by community subgroup Community organization Subgroup management Subgroup daily savings Loan collection Group guarantee Help members who cannot pay Interest 4% CODI Community Cooperatives on lends to members at 6-7 %. Margin for community development, management and welfare Loan management by community

BMK Loan Performance (as of Mar.2011) (Accumulated amt.) THB mn.(USDmn.) Approval 4,464(149) Disbursement 2,700 (90) Repayment 519 (17) Outstanding 2,181 (73) NPLs 2.05% Beneficiaries No. communities 1,119 No. households 25,866

Funding sources Current funding sources for long-term housing finance CODI initial capital fund approx. THB 2,800 mln. Government budget (2009) THB 3,000 mln. CODI-GHB Refinancing scheme THB 500 mln.

CODI-GHB Refinancing scheme Total amount: THB 500 mln. GHB agrees to refinance BMK loans from CODI at the same interest rate and same terms and conditions CODI and GHB agrees on mechanism to compensate GHB for interest rate differentials

Project assessment Key success factors Barriers Strong community leadership Flexible, affordable financing for the poor People process which suits poor community livelihood Barriers Public land-use policies Certain rules and regulations Coordination among relevant agencies

Challenges Future funding for the program Scarcity of affordable land Linkage between formal and informal financial markets

New look of a slum in Pitsanuloke province

Bangbua Community before upgrading

Bangbua community during completion

Thank You