UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

CREATING PRODUCTIVE AND SUSTAINABLE URBAN COMMUNITIES

IN EL SALVADOR

MODEL FOR EFFECTIVE CONTRIBUTIONS TO THE SOCIAL HOUSING VALUE CHAIN

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Copyright © 2013 by the United Nations Industrial Development Organization (UNIDO)

This document has been produced by the United Nations Industrial Development Organization (UNIDO) under the guidance of Gerardo Patacconi, Chief of the Cluster and Business Linkages Unit of UNIDO, with the support of William H. Holaday, UNIDO Consultant. The authors are grateful to Valentina Varbanova, Rafael Vladimir Velasquez and Marco Dini for their contributions and valuable comments on the document.

This document has been produced without formal United Nations editing. The designations employed and the presentation of the material in this document do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations Industrial Development Organization (UNIDO) concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries, or its economic system or degree of development. Designations such as “developed”, “industrialized” and “developing” are intended for statistical convenience and do not necessarily express a judgment about the stage reached by a particular country or area in the development process. Mention of firm names or commercial products does not constitute an endorsement by UNIDO.

Although great care has been taken to maintain the accuracy of information herein, neither UNIDO nor its Member States assume any responsibility for consequences which may arise from the use of the material. The document may be freely quoted or reprinted but acknowledgement is requested.

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Table of ContentsAcronyms and abbreviations used in this publication............................................................................3

EXECUTIVE SUMMARY...........................................................................................................................3

INTRODUCTION......................................................................................................................................3

1. BACKGROUND....................................................................................................................................3

Problems addressed by the Joint Programme....................................................................................3

Development of the Joint Programme in El Salvador.........................................................................3

Comprehensive approach of the JP....................................................................................................3

2. THE JOINT PROGRAMME IN EL SALVADOR........................................................................................3

Components of the JP........................................................................................................................3

Sociopolitical and organizational activities.........................................................................................3

Initial situation of the selected neighborhoods..............................................................................3

Strategic planning workshops........................................................................................................3

Strengthening social cohesion........................................................................................................3

Initial findings of FUNDASAL..........................................................................................................3

3. UNIDO CONTRIBUTIONS TO THE JOINT PROGRAMME.......................................................................3

A. Planned contribution of UNIDO to the Joint Programme..............................................................3

B. Matrix structure of the Joint Programme......................................................................................3

C. Analysis of the Social Housing Value Chain....................................................................................3

Background....................................................................................................................................3

Conducting the value chain analysis as a participatory process.....................................................3

Stakeholder workshops..................................................................................................................3

Alliance for Social Housing.............................................................................................................3

Follow-up to the value chain analysis.............................................................................................3

D. Legal Framework............................................................................................................................3

Special law on subdivisions and parceling for residential use........................................................3

Law on development banking in El Salvador..................................................................................3

Programme for housing and comprehensive improvement of urban slums..................................3

E. Aggregation of Demand: Enabling Residents of Low Income Neighborhoods to Improve Their Housing..............................................................................................................................................3

Background....................................................................................................................................3

Community managers....................................................................................................................3

Identifying the housing improvement needs and wishes of the community.................................3

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Implementing the aggregation of demand model..........................................................................4

Accessible loans to finance home improvements..........................................................................4

Logistics and supervision of construction.......................................................................................4

Sustainability and replicability of the model..................................................................................4

F. Mobile school for microentrepreneurs in the construction industry.............................................4

Background....................................................................................................................................4

Launching the mobile school..........................................................................................................4

Selection of participants.................................................................................................................4

The mobile classroom....................................................................................................................4

The curriculum...............................................................................................................................4

Establishing a microenterprise for construction............................................................................4

Extending the model: sustainability of the mobile school..............................................................4

G. Supplier Development Programme...............................................................................................4

Background....................................................................................................................................4

Supplier development methodology..............................................................................................4

Implementing the supplier development component...................................................................4

Extending the supplier development programme..........................................................................4

H. Local Economic Development (LED)..............................................................................................4

Concept of local economic development.......................................................................................4

Local economic development in Apopa and Santa Tecla...............................................................4

Productive initiatives started under the Joint Programme.............................................................4

Results achieved by the local economic development component...............................................4

4. DEVELOPING A PROGRAMME TO TRANSFORM SLUMS INTO PRODUCTIVE AND SUSTAINABLE URBAN COMMUNITIES..........................................................................................................................4

Programme planning and design.......................................................................................................4

Identifying the project site(s).........................................................................................................4

Graph1. Partnership of UNIDO with HOLCIM.................................................................................4

RESOURCES: Awareness raising by project coordinator and additional local staff to engage with public and private sector on an ongoing basis before the project start and during its implementation phase...................................................................................................................4

Identifying partners at the local level and interaction with the community..................................4

Value chain analysis...........................................................................................................................4

Working group “Alliance for Social Housing”.....................................................................................4

Legal framework................................................................................................................................4

Aggregation of demand......................................................................................................................4

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Mobile School for Microentrepreneurs..............................................................................................5

Supplier development programme....................................................................................................5

Local economic development............................................................................................................5

Conclusion..........................................................................................................................................5

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Acronyms and abbreviations used in this publication

ADESCO Asociación de Desarrollo Comunal (community development associations)

AMSS

AUC

Metropolitan Area of San Salvador

ANDA Administración Nacional de Acueductos y Alcantarillados (national water and sewerage administration)

ARA Rural Water Association

BDS Business Development Services

BMI Banco Multisectorial de Inversiones (Multisectoral Investment Bank)

CASALCO Cámara Salvadoreña de la Construcción (Salvadoran Chamber of Construction)

CENTROMYPE Fundación Promotora de la Competitividad de la Micro y Pequeña Empresa

CSR Corporate Social Responsibility

FONDEPRO Fondo de Desarrollo Productivo

FUNDASAL Fundación Salvadoreña de Desarrollo y Vivienda Mínima (Salvadoran Foundation for Development and Minimum Housing)

FUSAI Fundación Salvadoreña de Apoyo Integral

IDB Inter-American Development Bank

ISCYC Instituto Salvadoreño del Cemento y del Concreto

JP Joint Programme on Housing and Productive and Sustainable Urban Settlements

LED Local Economic Development

MDGs Millennium Development Goals

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MSMEs Micro, Small and Medium Scale Enterprises

NGO Non-Governmental Organization

UCA Universidad Centroamericana José Simeón Cañas

UES Universidad de El Salvador

UN United Nations

UNDP United Nations Development Programme

UN-Habitat United Nations Human Settlements Programme

UNIDO United Nations Industrial Development Organization

VMVDU Vice Ministry for Housing and Urban Development of El Salvador

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EXECUTIVE SUMMARY

The present document is intended to provide guidance for developing programmes to transform slums into productive and sustainable urban communities. It is based on a Joint Programme (JP) of UNIDO, UN-Habitat and UNDP in El Salvador financed by the MDG Achievement Fund entitled “Housing and Productive and Sustainable Urban Settlements”1. This programme of integrated community development linked the provision of new and improved affordable housing with the economic development of the community and the creation of greater social cohesion among the residents. It was carried out on three levels – national, municipal and local. The focus of the document is on the components of the JP for the implementation of which UNIDO was fully or partially responsible.

The Joint Programme approach included creating and strengthening public-private partnerships to address the problems of the low income housing sector in a comprehensive manner and involved companies that follow a policy of corporate social responsibility (CSR) as part of their business strategy to provide technical and material support to different programme components.

The programme began with an analysis of the social housing value chain, which was carried out with the stated purpose not only of identifying and analyzing all the links in the value chain, but also of identifying ways to overcome the quantitative and qualitative housing deficit in El Salvador. An essential feature of the value chain analysis was the participation of all the main actors involved. Not only were they interviewed, they were also invited to workshops to validate the findings and formulate action plans. The majority of problems that the workshops identified as high priority were then addressed by interventions of the JP.

One of the initial activities of the JP was the provision of technical information and support to the Government to promote the enacting of appropriate legislation for social housing. The new legislation, which covered property ownership, title registration, access to credit, and other related measures, will have a strong positive impact on the low income housing sector.

A major component of the JP was aimed at enabling marginalized population groups to rehabilitate their communities by improving their housing. The component, which is based on an approach called “aggregation of demand”, aggregates the demands for affordable housing improvements of a group of residents in one location, develops integrated solutions to fulfill these demands and makes the solutions available to the group on terms that they can afford.

One of the bottlenecks identified by the actors in the social housing value chain analysis was the lack of skilled labor in the construction workforce. In order to resolve this bottleneck, UNIDO, with the cooperation and participation of major players in the value chain, developed a pilot project entitled “Mobile School for Microentrepreneurs in the Construction Industry”. The “Mobile School” was launched with two key objectives: (1) to teach new skills to construction workers so as to improve significantly the quality and efficiency of their work, including the proper use of building materials, and (2) to train workers in entrepreneurship so that they are able to associate in small independent companies to provide building services for new and improved housing and construction in general.

1 The original project title in Spanish is: “Vivienda y Asentamientos Urbanos Productivos y Sostenibles”,

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An important component of the JP was the supplier development programme for the housing construction industry. The objective of the supplier development methodology is to strengthen and develop business relationships between a lead company (usually a large or medium scale enterprise) and a group of supplier companies (usually four to ten), which may provide similar or different goods and services to the lead company. Business development advice is provided to the lead company and to the suppliers to improve their efficiency and profitability. The inclusion of small and microenterprises in the group of suppliers in order to integrate them better into the value chain not only helps them but also strengthens the value chain and contributes to the development of the country’s economy as a whole.

One component of the JP was aimed at promoting local economic development (LED) in an integrated and socially responsible manner at different levels – national, municipal and community. An important lesson learned during the JP was the vital importance of the continuing support by municipal authorities and full involvement of the private sector at the municipal and local levels, as well as representatives of the community, in order to implement a successful LED programme. The lack of this continuing support has meant that the LED component has not been able to make the expected contribution to the JP.

The JP is still a work in progress; it has accomplished only some of its objectives. The lessons learned can provide a basis for designing other programmes with similar objectives. These include the importance of identifying all key actors and bringing them together to engage in a constructive dialogue aimed at identifying problems and developing creative solutions. The JP has shown that continued support by both the governmental authorities and the private sector is essential if activities are to achieve their planned results. Finally, it has shown the importance of ensuring sustainability by involving appropriate national actors to assume ownership and continue implementing activities after the end of the programme.

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INTRODUCTION

This document is intended to provide guidance for developing programmes to transform slums into productive and sustainable urban communities and upgrading the value chain of improved housing of the construction sector in El Salvador. It is based on a Joint Programme of UNIDO, UN-Habitat and UNDP in El Salvador financed by the MDG Achievement Fund entitled “Housing and Productive and Sustainable Urban Settlements”.2 The objective of the productive urban communities model is to improve the quality of life of the inhabitants through a comprehensive approach to community development that includes both providing affordable housing and creating sustainable livelihoods.The core concept of the programme is integrated community development, which links the provision of affordable housing - both new and improved - with the economic development of the community and the creation of greater social cohesion among the residents. The UNIDO contribution focused on providing improvements to existing housing, which costs less than building new housing and can thus support a greater number of families with the available resources.

The programme has received a great deal of favorable attention in El Salvador owing to the seriousness and urgency of the problems it addresses and the innovative approach it follows, combining many elements to provide comprehensive solutions. In June 2012 the JP received an award for its work from the Legislative Assembly of the Republic of El Salvador.

The document briefly reviews the development of the Joint Programme (JP) and then examines its various components and how they were implemented. The focus of the document is on the components of the JP for the implementation of which UNIDO was fully or partially responsible.

The final chapter examines the extent to which the Salvadoran experience can be generalized and provide a basis for identifying the conditions and resources necessary for planning and implementing a similar programme in other countries. To date, many of the objectives of the programme have only been partially achieved. Since the JP is very complex and has had to deal with difficult external circumstances such as the municipal election in Apopa, one of the two municipalities in which it is working, it has been necessary to be flexible and adapt the activities to the changing situation. The progress achieved until now has to be viewed as initial steps of a pilot programme. Therefore, it is especially important to describe lessons learned during the JP so that future programmes may profit from them.

2 In Spanish, the title is “Vivienda y Asentamientos Urbanos Productivos y Sostenibles”. The Spanish term “asentamiento” is often translated as settlement. In an urban context, “neighborhood” or “community” seems more appropriate. The term “asentamientos precarios” is translated here as “slums”.

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1. BACKGROUND

Problems addressed by the Joint Programme The motivation for the Joint Programme on Housing and Productive and Sustainable Urban Settlements was the quantitative and qualitative housing deficit in El Salvador, and specifically in the Metropolitan Area of San Salvador (known by its Spanish acronym AMSS). According to the data collected during the most recent Census of Population and Housing (2007), the total number of dwellings in El Salvador was estimated at approximately 1.7 million, with 1.1 million located in urban areas and 0.6 million in rural areas. The qualitative housing deficit was estimated at approximately 315,000 units and the quantitative deficit at about 45,000 units. About 42% of the quantitative and qualitative housing deficit in the country is centered in AMSS3.

There have been attempts over the years to address the housing shortages, which have been greatly exacerbated by natural disasters such as the serious earthquakes in 1965, 1986 and 2001; however, they have been insufficiently effective. The weaknesses of the social housing4 sector in El Salvador have historically included: a fragmentation of policies, regulations and instruments; lack of adequate housing solutions; an insufficient infrastructure of public and social services; and a lack of accessible financing.5

The issues that the JP deals with are not restricted to the quantitative and qualitative housing deficit in the country, but also include the complex set of problems faced by slum dwellers. A workshop was held in June 2012 to review and analyze the content and progress of the JP (a process called “sistematización” or systematization in Latin America). As expressed in the report of the systematization workshop, the JP deals with the following problem areas:

• “The precariousness of slums is defined by structural disintegration which exists in the communities.

• The slums do not have the conditions to meet the needs of their inhabitants; they have no productive resources or infrastructure, including adequate housing.

• The slum is also not perceived by its inhabitants as their home.

• The structural disintegration of slums is also related to the lack of integration into their physical, economic and political environment.” 6

3 Statistics from the Diagnostico y plan de trabajo de la vivienda de interés social, Documento Condensado, 25 May 2011. 4 The term “social housing”, in Spanish “vivienda de interés social” is defined in El Salvador as housing for population groups with incomes less than or equal to four times the minimum income (currently US$219.35 per month in industry). In this document the terms “social housing” and “low income housing” will be used interchangeably.5 Programa conjunto: vivienda y asentamientos urbanos productivos y sostenibles, San Salvador, October 2009 – Programme Document. Available at: http://www.pnud.org.sv/2007/content/view/1062/163/6 Desarrollo inclusivo y sostenible de asentamientos precarios, Report of the Systematization Workshop, p. 2.

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The JP is particularly relevant for the economic development of El Salvador as it is directed towards strengthening the value chain of the social housing construction industry. The importance of the construction sector can be seen in the fact that it generated 3.5% of GDP and 6.4% of total employment (181,200) in 2006. Construction contributes between 40% and 43% of gross fixed capital formation, making it a key economic sector, which provides investment for the entire economy.7

Development of the Joint Programme in El SalvadorThe JP was developed, starting in 2009, by UNDP, UN-Habitat and UNIDO in partnership with national Government authorities, in particular the Vice Ministry for Housing and Urban Development, the municipal authorities of Apopa and Santa Tecla, the private sector, civil society organizations and the beneficiaries of the programme. Funding for the programme was provided through the MDG Achievement Fund financed by the Government of Spain. The JP was launched as a three-year programme, January 2010 -- December 2012, and extended to June 30, 2013.

The participation of three UN System organizations in implementing the programme brought together the expertise and experience of the three organizations to address aspects of productive, human and urban development in an integrated manner. The JP aims to contribute to the achievement of several of the Millennium Development Goals (MDGs): MDG 1, eradicate extreme poverty and hunger; MDG 3, promote gender equality and empower women; MDG 7, ensure environmental stability; and MDG 8, develop a global partnership for development. The Vice Ministry was strongly committed to supporting the JP and provided shared offices for the three agencies on its premises, which greatly facilitated the coordination of the programme among the agencies and with the Government. The Vice Minister took an active interest in the JP and chaired the JP Steering Committee, which demonstrated the ownership of the JP by the Vice Ministry.

Chart 1. Millennium Development Goals

7 Programme Document, p.8.

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The JP strategy included creating and strengthening public-private partnerships to address the problems of the low income housing sector in a comprehensive manner. The JP involved companies such as Holcim8, one of the world’s leading producers of cement, which follow a policy of corporate social responsibility (CSR) as part of their business strategy, to provide technical and material support to different programme components. Holcim, the largest cement producer in El Salvador, has a programme called ConstruFacil9, which supports a network of hardware and building materials retailers in the country, providing training and technical advice to enable them to provide better quality products and service to their customers. By including Holcim and other major producers of building materials, such as Amanco, CORINCA and Grupo Precasa10, in the component aimed at training construction workers, the JP further promoted CSR in El Salvador and strengthened the social housing value chain.

The JP was implemented mainly in two urban areas of AMSS, the La Cruz neighborhood in the municipality of Santa Tecla (new housing) and the neighborhoods Santa Carlota I and II and Campo de Oro in the municipality of Apopa (housing improvements). UNIDO’s intervention in the JP focused mostly on improved housing in the municipality of Apopa. Initially a fourth neighborhood in Apopa was included, El Sitio, but later programme activities were restricted to the above-mentioned localities. The inhabitants of these urban areas were involved in the programme in different ways – as purchasers of new housing or housing improvements, as workers and/or entrepreneurs in the social housing value chain and as participants in community activities supported by the JP, as described below.

Add: map of Santa Tecla & Apopa

Photos 1 and 2 of Apopa at the beginning of the project

8 Founded in Switzerland in 1912, Holcim is a global company with manufacturing facilities in over 70 countries. The company attaches great importance to sustainable economic, ecological and social development. The company’s approach has been recognized by the Dow Jones Sustainability Index (DJSI), and since 2005 was repeatedly named a “Industry Leader” in the DJSI. See http://www.sustainability-index.com/9 http://www.construfacil.com.sv/ 10 See their websites: http://www.amanco.com/, http://www.corinca.com/, http://www.grupo-precasa.com/.

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The programme was developed based on the concept of an integrated process of rehabilitating slums and the understanding that the problems are not only the physical inadequacy of the neighborhoods but also the social exclusion and the associated psychological effects on the residents. This concept requires the use of participatory methods in order to address the multifaceted nature of the problems. The objective of the productive urban communities model is to improve the quality of life of the inhabitants through a comprehensive approach to community development that includes both providing affordable housing and creating sustainable livelihoods. The model is directed towards integrating the urban slum areas, which have historically been excluded economically, politically and socially, into the larger community – the municipality. It aims to “improve the quality of life of communities and expand opportunities for development, especially for women and youth, strengthening their capacities.”11 The programme components have been conducted as pilot projects and are intended for further replication.

The objective of creating productive and sustainable urban communities sets the goal of the programme high – it is not sufficient to improve the physical environment; the involvement of the population in a participatory process is necessary in order to make the development of a more productive community sustainable. The objectives of the programme are described as follows in the report of the June, 2012 Systematization Workshop:

“The programme aims at productive, inclusive and sustainable development and it takes action in two ways:

1. The integration of the community into its environment … economically, socially and politically;

2. The structural reform of the community: creating a community that fulfills the needs of the inhabitants and with which they can identify.” 12

Comprehensive approach of the JP The JP has been designed to address the complex and interlinked problems related to the development of urban communities through three areas of intervention carried out on three levels. The areas of intervention can be classified as (1) the sociopolitical and organizational components, (2) the productive, economic development components and (3) the infrastructure, new and improved housing components. The three levels of intervention are the national, the municipal and the local -- neighborhood or community -- level. These areas and levels of intervention are not exclusive, but interconnected, and have an impact on each other; there is a great deal of synergy between the various programme components, and the areas and levels of activity in which they are implemented frequently overlap. For example, the supplier development component strengthens the social housing value chain at the local, municipal and national levels, and has an impact on both economic development and improving the construction of social housing.

11 Report of the Systematization Workshop, p. 1.12 Ibid., p. 2.

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2. THE JOINT PROGRAMME IN EL SALVADOR

Components of the JPAs described in the project document, the Joint Programme comprised four main components, with the activities and outputs listed below. As could be seen from the progress reports and the systematization workshop, the JP evolved and to some extent changed its areas of emphasis during implementation. The initial description of the JP was as follows:

1) To identify and implement a model for affordable new / improved progressive housing for the poor (1-4 minimum wages) including the definition of an appropriate regulatory and policy framework and financial instruments. This entails:• Identification of the sites for implementation;

• Revision of policies and regulations;

• Promoting the provision of housing solutions by contractors and subcontractors, providing a leveled playing field for women subcontractors;

• Setting up a financial mechanism composed of subsidy, mortgage and self-work contribution.

2) To strengthen the construction value chain for progressive housing with a focus on the development of micro and small enterprises. This includes:• Improvement of production processes and business practices with pro-poor effect

through the promotion of Corporate Social Responsibility (CSR) practices (social, productive and environmental);

• Improvement of the organization of the value chain via vertical and horizontal networking;

• Improvement of support services related to BDS provision, training and CSR.

3) To promote the development of productive and sustainable dwellings by means of:• Facilitating the provision of basic services with a focus on the needs of women;

• Identifying and promoting new business opportunities in the dwellings;

• Triggering a process of participatory local economic development planning.

4) Knowledge management, with the objective to regularly systematize and assess the experience to facilitate upscaling and replication.

The beneficiaries targeted by the Joint Programme are:• Policy makers (national and local);

• Support institutions, e.g. Business Development Services (BDS) providers, financial institutions, business associations, NGOs, training institutes, among others;

• Enterprises of the construction value chain (particularly micro, small and medium firms) and their networks, with an emphasis on the integration of women contractors in the value chain;

• Workforce and, possibly the community, through the promotion of CSR activities;

• Poor, micro entrepreneurs in the new dwellings through the development of business opportunities;

• The poor as “final clients” of the housing industry.” 13

13 This description in English is taken from the UNIDO document, Summary UNIDO Contributions: MDG Achievement Fund Project: Progressive and sustainable housing in San Salvador.

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Sociopolitical and organizational activitiesThere were two activities of the JP related to sociopolitical and organizational development and promoting social cohesion, in which UNIDO was not directly involved14 - the participatory strategic planning workshops and the direct support to the existing community development associations, called ADESCOs (Asociaciones de Desarrollo Comunal), which are a feature of all communities in El Salvador15. They will be described in this report in terms of the impact that they have on the UNIDO contribution, in particular on the aggregation of demand component.

Initial situation of the selected neighborhoodsAs mentioned above, the JP targeted two municipalities in the metropolitan area of San Salvador, Apopa and Santa Tecla. The neighborhoods in Apopa where the JP aimed at improving existing housing – Santa Carlota I, Santa Carlota II, and Campo de Oro – are informal subdivisions created in the early 1980s on the outskirts of the city. La Cruz, the neighborhood in Santa Tecla where the JP planned the project component for building new social housing, is a densely populated urban slum area settled by families who were displaced by the armed conflict in El Salvador, which lasted from 1980 to 1992. Insert photos – from CD

14 UNIDO was also not involved in the planned construction of new social housing in Santa Tecla, which has been subject to considerable delays due to problems of land use authorization and financing; however, this does not directly affect the components relating to the improvement of existing housing in Apopa.15 The “Asociaciones de Desarrollo Comunal” (ADESCOS), are legal associations of a group of persons who live in the same community and which have as their main purpose the improvement and development of the community and its inhabitants. These associations are foreseen in the norms established by the constitution of the Republic of El Salvador. Source: Chapter I, “Generalidades sobre las asociaciones de desarrollo comunal” http://wwwisis.ufg.edu.sv/wwwisis/documentos/TE/005.756-Ch512d/005.756-Ch512d-Capitulo%20I.pdf

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Fotos 3,4,5 6 from Apopa

The terrains of the two areas are very different – La Cruz is in the middle of the city, while the neighborhoods in Apopa are in a hilly, semi-rural area – but the living conditions share similarities. Both are characterized by poor quality housing, overcrowding, unsanitary conditions, lack or poor quality of public services, insecurity of tenancy, particularly in La Cruz, environmental deterioration, and criminality. The presence of gangs negatively affects community life, interfering with the organization of the inhabitants and the creation of productive activities. Furthermore, factors such as the low educational level of the inhabitants make it difficult for them to find access to decent employment, and there is thus a strong concentration in the informal sector.

Strategic planning workshopsThe strategy of the JP is based on the premise that the community must participate in the design and implementation of the programme in order to address the complex set of problems effectively. Therefore, the work in Apopa began at the community level with participatory strategic planning workshops carried out in November 2010 by a consultancy company contracted by the JP, Aguilar Aguilar S.A. de C.V., with participation by residents of the three neighborhoods in Apopa, which in the end did not result in programme plans

The focus of the workshops was on producing proposals for the community development program. Working together in groups, the participants described the socioeconomic and productive situation of their neighborhood within the framework of the municipality. The topics discussed in the workshops included: the history of the community; its relationship to various institutions both within the community and external to it and the amount of support they received from those institutions; and their perceptions of the strengths, weaknesses, opportunities and threats that characterize the community. Each group developed a mission statement, statements of vision and values, a list of objectives and a set of activities aimed at achieving these objectives.

The workshops were conducted with members of the communities, comprising representative of the ADESCOs and other community leaders, together with participants from the municipal administration as logistic support. The facilitators who led the workshops were experienced in participatory methodology and used techniques such as self-affirmation exercises to stimulate participation. The information provided by the participants was used to prepare socioeconomic analyses of the three

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communities, which were intended as a basis for creating a strategic plan for the development of the three communities into productive urban communities.16

Strengthening social cohesionFollowing on the strategic planning workshops, the JP carried out further activities together with the ADESCOs aimed at strengthening social cohesion within the communities. The partner organization contracted by the JP to work with the communities was FUNDASAL, the Fundación Salvadoreña de Desarrollo y Vivienda Minima (Salvadoran Foundation for Development and Minimum Housing). FUNDASAL is a non-profit non-governmental organization that has been working in El Salvador for 44 years to provide decent, affordable housing to low income population groups. Its mission is “the promotion of sustainable human development by strengthening the social production of housing for vulnerable and excluded population groups, enhancing their active participation; training critical awareness; promoting gender equity; advocacy; and risk management.”17

The initial work of FUNDASAL for the JP18 was aimed at familiarizing the employees of FUNDASAL who would be involved in the programme with the situation in the selected neighborhoods and introducing them to the inhabitants. They began in Apopa by holding a general assembly for the inhabitants of the three neighborhoods to present the project to them; they identified the community leaders and established contact with the women’s and youth groups. Rather than holding a workshop for the residents of La Cruz, Santa Tecla, FUNDASAL was able to familiarize itself with the

16 The methodology used, the workshop results, and the analysis subsequently carried out on the basis of these results are all described in a report to the Joint Programme by Aguilar Aguilar S.A. de C.V., Consultoría Capacitación y Asistencia Técnica: Diseño Participativo del Plan Estratégico de los Asentamientos Productivos Urbanos de la Cruz, Calle 14-14 y Santa Carlota-Colindantes en el Marco del desarrollo Local de Santa Tecla y Apopa. 17 http://www.fundasal.org.sv/ 18 The description of the activities and results is taken from a report by FUNDASAL to UNIDO, Primer informe de avance del proyecto “Construcción de comunidad, tejido social y escuela de gestores sociales para el desarrollo local. Santa Tecla y Apopa”.

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The policies and approach followed by FUNDASAL in its work in El Salvador fit well with the comprehensive community development approach that underlies the objectives and activities of the JP. FUNDASAL began operations in 1968 in response to a natural disaster that destroyed many homes in the AMSS. Since then the organization has carried out more than 282 projects and built close to 45,000 houses. The organization aims at rehabilitation of slum areas, working together with the beneficiaries and enhancing their skills so that they can transform neighborhoods into livable spaces with accessible basic services. The objective is not only to provide decent housing, but to contribute to eliminating the effects of poverty and marginalization. The organization’s work focuses on individuals, families and communities, forming critical awareness, providing social tools for self-organization, engaging in and influencing political processes and following policies that are consistent with the expectations and needs of the people. Helping people to organize themselves gives them a sense of belonging to their communities and enables them to make decisions jointly to overcome their problems. The goal of generating alternative development projects is to benefit as many families as possible with the minimum use of resources and to engage the population in active, responsible participation in the development process at the local level and in wider social transformations at the national level. (The description of FUNDASAL is taken from the website: http://www.fundasal.org.sv/)

community on the basis of reports of a previous consultancy and through participation in a household survey there.

Further activities of the JP that were implemented by FUNDASAL included educational sessions, which were aimed at building trust and strengthening social cohesion within the community. They were carried out in a participatory and inclusive manner, using horizontal rather than vertical communication and encouraging all of those attending to contribute to the collective educational process. These sessions were held with women’s and youth groups in Apopa and La Cruz and focused on topics of relevance for the participants. A training course for community managers was organized, with the aim of training a group of people who would participate in the community development process. The initial themes discussed were the living conditions in the community and the improvement of these conditions through mutual cooperation and assistance. There were also interactions between community leaders, young people and youth groups.

The leaders proposed the establishment of a body comprising representatives of the mutual assistance and representative of the housing committee that would act in coordination with the ADESCO. The coordination would guarantee that the families fulfilled their responsibilities in the different phases of the project. The participation of families should be regulated according to a collective agreement setting out their rights, obligations and rules for living together in the process of improving their living conditions. The critical route proposed for this organization consisted of the following steps: forming the working groups, discussion of the rights and obligations of projects participants, approval of the agreement by the participating families before beginning the physical work; election of bodies that, together with the ADESCO, would guarantee the quality of the work and efficient and transparent management of resources.

The leadership of La Cruz and the Apopa communities identified the following significant actors in the community development process: (1) the Vice Ministry for Housing and Urban Development, (2) the municipal administrations of Santa Tecla and Apopa, (3) the Joint Programme and (4) the ADESCOs. The coordination of all the actors involved was recognized as a necessary condition for the creation of productive and sustainable urban communities. This had to be carried out through the creation or improvement of channels of communication to share agreements, problems and progress.

Initial findings of FUNDASALAfter the initial period of involvement in the community, the FUNDASAL team found that many families were not interested in involving themselves in solving community problems; while the youth committees in Apopa were well organized, the young people of La Cruz were negatively affected by their lack of connection to the city as well as by antisocial conduct within the community. The older community leaders claimed for themselves the major roles in carrying out the community development projects, especially the dialogue with institutions and families. The efforts by FUNDASAL in the following months were to be focused on increasing the areas of interaction between the municipalities, with a view towards generating a shared vision of their needs in relation to the improvement of their living conditions.19

19 Taken from the website: http://www.fundasal.org.sv/.

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3. UNIDO CONTRIBUTIONS TO THE JOINT PROGRAMME

A. Planned contribution of UNIDO to the Joint ProgrammeAs originally planned, UNIDO’s contribution to promoting the achievement of the objectives of the JP was to components 2 and 3 as described below:

Component 2:

a) Improvement of production processes and business practices in the construction industry through:

1. value chain analysis with a CSR focus;

2. design and capacity building to implement improvement plans.

b) Value chain development through:

1. training of value chain and network brokers;

2. network development.

c) Improvement of support services through:

1. BDS market development;

2. development of new training curricula and internship programs;

3. institutional capacity building on CSR promotion.

Component 3:

a) participatory local economic development trough training and capacity building of public and private sector stakeholders” 20

As developed during the implementation of the JP, UNIDO’s contributions to components 2 and 3 form an integrated package of interventions, called the “Model for effective contributions to the social housing value chain”21

B. Matrix structure of the Joint ProgrammeThe chart on the following page provides an overview of the components and activities of the JP, focusing on the activities implemented by UNIDO, and showing those implemented by the other agencies that impact on the UNIDO activities. The boxes in the chart indicate which of the three agencies had the lead role implementing the activity and which other public and private sector actors were involved. The chart illustrates the matrix structure of the JP, with the three areas of activity: (1) economic development, (2) improved infrastructure and social housing, and (3) sociopolitical and

20 UNIDO document, Summary UNIDO Contributions: MDG Achievement Fund Project: Progressive and sustainable housing in San Salvador.21 In Spanish: “Modelo de eficiencia productiva de la cadena de valor de la vivienda de interés social”, literally “Model of productive efficiency of the social housing value chain”.

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organization development, and the three levels in which these activities are carried out: the national level, the municipal level and the local level (neighborhoods or communities).

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JOINT PROGRAMME ON PRODUCTIVE AND SUSTAINABLE URBAN COMMUNITIES

NATIONAL LEVEL MUNICIPAL LEVEL COMMUNITY LEVEL

ECONOMICDEVELOPMENT

_____________________________________________________________________________________________________________IMPROVEDINFRASTRUCTUREANDSOCIALHOUSING

_____________________________________________________________________________________________________________________________SOCIOPOLITICAL ANDORGANIZATIONALDEVELOPMENT

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PUBLIC-PRIVATE PARTNERSHIPS– CORPORATE SOCIAL RESPONSIBILITY(U/UN/H) Training building material suppliers Holcim / ConstrufacilSupport to School for MicroentrepreneursHolcim and national building materials manufacturers (Precasa, Amanco, etc)

STRENGTHENING THE SOCIAL HOUSING VALUE CHAINSUPPLIER DEVELOPMENT PROGRAMME (U) PDP

NETWORKING AND COOPERATION – PUBLIC PRIVATE PARTNERSHIPSALLIANCE FOR SOCIAL HOUSING – Working group and four sub-groups established, meetings held (U/UN/H)

LOCAL ECONOMIC DEVELOPMENT (LED)BUSINESS WORKING GROUP (U) (started up, intial meetings held)STRENGTHENING BUSINESS NETWORKS (ongoing) (U)LED Training Courses for municipal administration (U) (one held, with CONECTADEL; one planned)OTHER LED ACTIVITIES (UN/H)Updating business registry (planned)Improved employment office (planned)

INFRASTRUCTUREIMPROVED WATER SUPPLY THROUGHSTRENGTHENING ARA (UN/H)

NEW ENTERPRISES ESTABLISHED (U/UN/H)Manzana Gourmet, Tiendona, Support to agriculture, Support to cultural initiatives, Microenterprise for construction

ACCESSIBLE IMPROVEMENTS TO SOCIAL HOUSING AGGREGATION OF DEMAND (U) FUNDASAL

Survey of housing improvement needs Proposed integrated solutions

ACCESSIBLE FINANCING Small loans (prequalification, application, approval) INTEGRAL

ACCESS TO GOOD QUALITY BUILDING MATERIALS

IMPROVED SKILLS IN CONSTRUCTIONSCHOOL FOR MICROENTREPRENEURS IN THE CONSTRUCTION INDUSTRY (U) Universidad Politécnica, Holcim, Precasa, Amanco etc., Universidad de El Salvador

PROPERTY TITLES LEGALIZED THROUGH NEW LEGISLATION (UN/H)

COMMUNITY NETWORKING FUNDASALADESCOS strengthened – Support to women’s and youth groups, sport activities (UN/H)Community managers selected and trained (U)

FINANCINGMOBILE BANK LAW ENACTED (UN/H)

LEGISLATIONNEW LEGISLATION FOR SOCIAL HOUSING ENACTED AND IN FORCE (UN/H)

PROCEDURESIMPROVED PROCEDURES FOR CONSTRUCTION PERMITS (UN/H) (PLANNED)

VALUE CHAIN ANALYSIS FOR NEW AND IMPROVED SOCIAL HOUSING (U)

C. Analysis of the Social Housing Value Chain BackgroundThe construction industry for affordable housing, known as the social housing industry, has been very active in the past 50 years in El Salvador, in both the economic and social dimensions. From the economic point of view, it has spurred growth and created jobs, and from a social perspective, it has attempted to alleviate a housing shortage that has become untenable. While the main problems faced by this industry had been known, they had never been addressed in a comprehensive manner. A diagnosis of the social housing value chain of affordable housing was thus necessary in order to identify key issues and develop action plans to solve them.22

Conducting the value chain analysis as a participatory processUNIDO was the lead agency for conducting the value chain analysis, which was carried out with the stated purpose not only of identifying and analyzing all the links in the value chain, but also of identifying ways to overcome the quantitative and qualitative housing deficit in El Salvador. The diagnosis provided a systems perspective, which showed how the problems – the bottlenecks – are interlinked with each other in the system. The analysis also showed how the various actors created or contributed to the bottlenecks, and how resolving a few of them could improve the functioning of the entire value chain.

As described in the report, the focus of developing the social housing value chain was based on the following parameters:

• Improving the supply of new and improved housing for people earning between 1 and 4 minimum wages, improving urban quality, and providing living conditions of human dignity for the target population in a way that is profitable for the private sector.

• Strengthening demand for new and improved housing, increasing the purchasing power of households and providing more opportunities for productive employment in the social housing value chain.”23

The value chain analysis covered the metropolitan area of San Salvador (AMSS); it was directed by the UNIDO project team and supported by a Salvadoran consulting firm and international experts. The analysis showed that, although several components overlapped, there were two distinct value chains, one for the construction of new social housing and one for making improvements to existing housing of low income population groups. The steps in this analysis comprised secondary research, identification of key actors in the chain, identification of analysis projects, field measurements through surveys and preparation of the final report.

22 The background section and the description of the purpose of the value chain analysis are taken from: Diagnostico y plan de trabajo de la vivienda de interés social, Documento Condensado, 25 May 2011, which is the condensed version of the full report of the value chain analysis, entitled Diagnostico y plan de trabajo cadena de valor vivienda de interés social, 2011.23 Documento Condensado, p. 5.

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The initial studies analyzed the experience of five major types of social housing projects: large-scale housing construction, cooperative apartment buildings, neighborhood improvement, small projects built by small construction businesses, and subdivision projects. This generated a large information base for the analysis of the entire value chain. The institutions and companies that carried out the housing projects provided all the information and assistance needed to analyze the different types of projects.24

Following this, the actual analysis of the value chain was carried out, which comprised the following steps: (1) preparation of a plan for the analysis; (2) field research – visits and interviews; (3) draft report of the results - drafting, identification of bottlenecks and strategic analysis; (4) presentation of the bottlenecks in a workshop held to validate the findings.

Stakeholder workshopsAn essential feature of the value chain analysis was the participation of all the main actors involved; not only were they interviewed, they were also invited to workshops to validate the findings and formulate action plans. The actors participated in the diagnostic process by contributing their opinions and ideas, and this active participation of stakeholders in the analysis greatly enhanced the process. The workshop meetings resulted in a working dynamic that was evidently unprecedented in the country. For the first time in many years the different actors all sat together around a table to discuss the issues related to social housing. There were representatives from the public sector, social organizations, unions, academia, building material manufacturers, construction companies, clients of social housing projects and financial institutions. The private sector representatives included the chamber of the construction industry, Cámara Salvadoreña de la Construcción (CASALCO) and Holcim, the largest cement company in the country; those from the public sector included representatives of the Vice Ministry for Housing and Urban Development (VMVDU); those from civil society included social organizations, such as FUNDASAL and the Fundación Salvadoreña de Apoyo Integral (FUSAI). Other organizations that were actively involved included the Integral Sociedad de Ahorro y Crédito (Integral), the Universidad Centroamericana José Simeón Cañas (UCA), the Administración Nacional de Acueductos y Alcantarillados (ANDA) and the Instituto Salvadoreño de Formación Profesional (INSAFORP). The meetings were characterized by synergistic teamwork, a comprehensive view of the entire value chain as an interconnected system and a shared vision towards the same goal.

The first workshop generated interest among the actors regarding the value chain issue, which was demonstrated by their active participation and contributions. The workshop participants validated the analysis and agreed on the two value chains presented (new construction and housing improvements) and the bottlenecks identified, and also identified additional bottlenecks, thus enriching the analysis. During the second workshop the participants made valuable contributions to the preparation of the action plans for overcoming the bottlenecks in order to improve the functioning of the value chains. Since the validation of bottlenecks and formulation action plans were both carried out in workshops, the final document took into consideration the viewpoints of all actors.

The action plan to overcome the bottlenecks was prepared in four steps: (1) prioritizing the bottlenecks using the results of the workshop; (2) drafting a proposed plan of action to overcome the

24 The description of the value chain analysis process is based on the UNIDO report, Sistematización: Diagnóstico de la Cadena de Valor de la Vivienda de Interés Social.

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prioritized bottlenecks; (3) holding a workshop to discuss the action plans with the value chain actors; and (4) finalizing the action plans.

Alliance for Social HousingAll the actors found it positive to highlight the problems of the sector and the value chain and discuss possible solutions together, and they were emphatic in expressing their hopes that that the exercise would not only be a further discussion of the problems, but a real initiative towards reaching solutions. The analysis of the information obtained in the two workshops allowed the JP implementation team to identify those bottlenecks that had the strongest negative impact on the efficient operation of the value chain, and four of them were identified by the actors as being the most important ones for improving the functioning of the value chain. Those actors who were interested in reaching agreement on specific, achievable and measureable actions to develop sustainable projects for new and improved social housing then met together and formed a working group called the Alliance for Social Housing (mesa de la Alianza por la Vivienda de Interés Social).

The Alliance for Social Housing was considered by many to be one of the most important outcomes of the value chain analysis. An excellent example of a public-private and academic partnership, the working group brought together participants from 34 bodies to discuss the issues related to social housing in El Salvador. The working group formed four sub-groups devoted to overcoming the four most important bottlenecks, specifically: financing, bureaucratic procedures, inputs and training, and new technologies. The Alliance and the four thematic sub-groups continued to function under the coordination of UNIDO. In order to ensure the continued functioning of the Alliance, it will be important for a local body, either government or private sector, to assume ownership and take over the responsibility for organizing meetings and promoting effective follow-up.

Follow-up to the value chain analysis The strategies to strengthen the value chains for new and improved social housing that were developed on the basis of the value chain analysis foresee concerted action among all actors based on developing public-private partnerships. The strategies involve the following activities:

· Improving the productive and business functioning of the value chain (in terms of materials, processes, technologies, products) to meet the market segment of the population earning 1-4 minimum wages and to create opportunities for employment and income for poor economic actors ( workers and employers);

· Improving the organization of the value chain (strengthening connections between the different links, business networks, and supplier development) to facilitate the achievement of collective efficiency.

· Strengthening institutions (public and private) that provide training and support services to actors in the value chain. 25

The majority of problems that the workshops identified as high priority were then addressed by interventions of the JP. Efforts were made to ensure that the solutions developed were well designed and included in the JP work plan. The working group noted that these activities must be capable of being extended to the entire value chain in order to finally achieve the main objectives of the JP.

25 Documento Condensado, p.6.

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An important lesson learned from the experience was that there was clearly a willingness among the actors involved in the value chain to overcome the bottlenecks identified. A second important lesson was that the problems were sometimes widely known by the actors; however there had not been any previous attempt to consider all of them together in a comprehensive and systematic way, much less to formulate proposals jointly for the implementation of action plans to solve those bottlenecks.

D. Legal FrameworkOne of the initial activities of the JP was the provision of technical information and support to the Government to promote the enacting of appropriate legislation for social housing. This activity was led by UNDP, with the support of UN-HABITAT and UNIDO. As a result of this activity, the legal framework for social housing in El Salvador was significantly improved in 2012. The intention of the new laws is to improve the access of a large segment of the low income population of the country to new or improved housing. The proposed new legislation covered property ownership, title registration, access to credit, and other related measures.

The first two laws that were passed were the “Special Law on Subdivisions and Parceling for Residential Use” and the “Law for Development Banking in El Salvador”. 26 A third law “Law for Territorial Development”27 ,has been enacted during the implementation of the JP, a law on land development and use, which impacts favorably on the programme activities, although the JP was not directly involved in its drafting and approval by the legislature.

Special law on subdivisions and parceling for residential useThe special law on subdivisions was enacted in January 2012 and entered into force on 12 September 2012. The purpose of the law is to regulate the bona fide possession, sale and transfer of title for housing lots. The law includes provision for a four-year transitional period during which residents of subdivisions had been developed and sold without having completed all the relevant legal and technical requirements would be able to obtain legal property titles. It also includes provision for a register of property developers, whereby only those who are registered will be permitted to subdivide areas of land and sell the lots. This law will have a strong positive impact on the low income housing sector because it will prevent the further proliferation of subdivisions which lack basic services and where the tenants do not have legal titles to their property.

The JP promoted this law by creating a forum for discussing of the law outside the Legislative Assembly, which was favorable for drafting the text. The support by the JP also included organizing a mission to Colombia for deputies of the Legislative Assembly to enable them to obtain first-hand information about the legislation in Colombia on this topic and contracting an advisor to promote the approval of the law. The text of the law was presented to the Alliance for Social Housing working group, which had been convened by the JP, for information and discussion before it was enacted by the legislature.

26 “Ley especial de lotificaciones y parcelaciones para uso habitacional” and “Ley de la Banca de Desarrollo de El Salvador”.27 In Spanish, "Ley de Ordenamiento y Desarrollo Territorial".

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Law on development banking in El SalvadorThe objective of the law on development banking is to promote the development of viable and profitable investment projects in productive sectors that are important for the country. It is intended to increase the availability of short-term and long-term credit. The JP supported the enactment of the law by conducting discussions with the Banco Multisectorial de Inversiones (BMI – the multisectoral investment bank), which was the institution responsible for the drafting of the law for presentation to the Legislative Assembly. As part of its advocacy efforts, the JP organized a mission to Brazil for deputies from various political parties to enable them to obtain information first-hand about the relevant experience of the Brazilian development bank, BNDES.

Programme for housing and comprehensive improvement of urban slumsFor the population affected by these laws, not only the enactment of supportive legislation is important, but also its implementation. In order to implement the special law on subdivisions, the Vice Ministry for Housing and Urban Development launched phase II of a programme for housing and comprehensive improvement of urban slums in September 2012. The objective of the programme is to improve the living conditions of low and medium income population groups and increase the capacity of the housing sector to fulfill the demand for housing efficiently and equitably. It includes an office of regularization to assist residents of subdivisions to obtain legal titles during the transition period. The office will also assist residents of communities located along abandoned railroad lines and streets that are no longer used. The Ministry estimated that more than 42,000 families can benefit from the process of regularization and legalization of property ownership during the transition period over the next four years.28

E. Aggregation of Demand: Enabling Residents of Low Income Neighborhoods to Improve Their Housing29

BackgroundA major component of the JP, for which UNIDO was the lead agency, aimed at enabling marginalized population groups to rehabilitate their communities by improving their housing. It is expected that the improvement of the living environment will stimulate a series of changes among the people involved, which are at the core of development and directly related to the achievement of the MDGs. The component is based on an approach called aggregation of demand, in this case aggregating the demands for affordable housing improvements of a group of residents in one location, developing integrated solutions to fulfill these demands and making these solutions available to the group on terms that they could afford.

The aggregation of demand model has the objective of making housing improvements accessible to low income residents through small loans; it has the dual purpose of improving the qualitative deficit of dwellings and providing opportunities for productive employment to residents of the neighborhoods involved.

28 Ley especial de Lotificaciones y el proceso de regularizacion, 30 August 2012, PowerPoint presentation, Vice Ministry of Housing and Urban Development, El Salvador.29 The description of the aggregation of demand component of the JP is based on the UNIDO report by R. V. Velásquez, Informe de actividades: Modelo de eficiencia productiva de la cadena de valor de la vivienda de interés social, 10 July 2012.

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The JP contracted FUNDASAL, the Salvadoran NGO described in Chapter 2, to lead the aggregation of demand. As already noted, FUNDASAL has more than 40 years experience in making affordable housing available to low income communities in El Salvador. The organization has expertise both in the technical, planning and architectural aspects of social housing construction and in the community organization aspects – working together with marginalized population groups and involving them in creating solutions to improve their living conditions. From the outset, this component had the objective of developing a model based on the establishment of partnerships between the public and private sectors and civil society, which would be sustainable and replicable in other communities.

Community managersThe work was supported by a group of “community managers”, called “gestores sociales” (literally: “social managers”) in Spanish, who are people from the neighborhoods trained to promote the housing improvement model among their neighbors, to make a preliminary financial evaluation of potential customers and to prepare a basic evaluation of the improvement needs. They are the "sales force" for the model and also earn an income for their work, thus contributing to a household economy. The work of the community managers complemented the work of staff of the lead organization, FUNDASAL, who were responsible for the overall organization and implementation of the component and also provided technical assistance.

Identifying the housing improvement needs and wishes of the communityIn order to determine the housing needs in the target neighborhoods, data were collected from the residents of the three neighborhoods and El Sitio, a nearby neighborhood. The purpose was to collect qualitative and quantitative information about the typical demand for housing improvements based on the priorities, socioeconomic characteristics, willingness to participate and ability to pay of the families in the area of the pilot project. Meetings were held with two focus groups comprising representatives of the families, community leaders and construction workers; two building materials suppliers in the area were interviewed; and a survey was conducted of the 270 households in the four neighborhoods.

The results of the survey showed that the priority reasons for home improvements were to obtain greater security, more living space, better light and ventilation, better hygienic conditions and more privacy. Most of the housing in these neighborhoods had been built informally, using whatever materials were available. The improvements sought by the residents consisted mainly in improving the floor or roof and adding either interior or exterior walls. Owing to their very limited budgets, the residents mainly considered improvements with a maximum cost of US$ 1000. They saw housing improvements as a gradual process, determined by the amount they could afford.

Most families had been prevented from making improvements to their housing by other household expenditures. They had managed to acquire a basic unit where they could live, sleep, prepare and eat food and attend to personal hygiene; however, the level of overcrowding was great and the quality of construction of the dwellings was poor. The major expenditures that hindered families on investing in housing improvements were cited as food, education, health and mobile telephones. The high cost of building materials was also cited a factor preventing investments in housing improvements.

Those who participated in the survey and focus groups judged the proposed model positively, noting the following advantages: the model provided a possibility of obtaining better prices for materials

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and labor; construction work done in the area by local residents would provide employment, generate income and create confidence; and a group of families would have better access to loans. A major limitation in some cases was the lack of a legal property title, which would mean that the investments were not secured. Some members of the focus group expressed doubts about the loan management since on previous occasions the interest rate agreed on when the loan was signed was not properly reflected in amount of the required payments.

Implementing the aggregation of demand modelThe aggregation of demand process basically consists of three stages: (1) determining the clients’ needs and proposing comprehensive solutions; (2) preparing loan applications and obtaining approvals; and (3) organizing the logistics and construction work to carry out the housing improvements.

According to the model, in the first stage, the FUNDASAL technical team, after determining the needs of home owners who want to carry out an improvement to their dwelling, prepares a file for each applicant containing the design, plan and budget for the improvement requested by the client. After preparing a sufficient number of individual files, the total amounts of the different materials required are calculated, and the previously selected building materials supplier is contacted to negotiate better prices and cost-free transportation and to ensure that good quality materials will be delivered.

Accessible loans to finance home improvements The second stage of the model is to obtain financing to carry out the construction work. The model focuses on providing access to loans to home owners with an income between 2 and 4 minimum wages (currently the minimum wage in industry in El Salvador is US$ 219.35 per month). The microfinance institution that the JP engaged as a partner for this model was the “Integral Sociedad de Ahorro y Crédito” (Integral Savings and Loan Society), known as Integral, which has ten years’ experience in providing small loans for businesses, agriculture, buying homes, etc. in El Salvador. Loan applications containing client files prepared by community managers and the social organization are forwarded to the microfinance institution to conduct the necessary credit research for loan approval.

Logistics and supervision of constructionThe role of the social organization in the third stage consists of organizing the logistics and supervising the construction work. The demand for construction work generated by this model requires a quality workforce, to ensure that improvements will be carried out at appropriate cost and quality and within an acceptable time frame, thus creating customer satisfaction and making improvements that will not deteriorate rapidly. The model ensures the quality of work in two ways: (1) technical assistance to support those who take loans with design, calculation, purchase of materials and basic direction of the works, and (2) establishing the school for entrepreneurs in the construction industry. This novel approach to training the construction workforce by means of a mobile classroom is described in detail below. The school works directly with workers living in the community, which contributes to the community’s productive development.

Sustainability and replicability of the modelAn essential aspect of the pilot project aimed at ensuring the sustainability of the model was to identify the problems of communication and action among the staff of the organizations and the

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community managers and develop methods to overcome the problems. Action was taken to integrate these actors, as well as the school for microentrepreneurs, better into the entire process. Emphasis was placed on empowering the community managers to be the ones able to solve problems, to identify potential demand, and to offer solutions.

In order to disseminate the model more widely, UNIDO has held discussions with organizations that are interested in applying in other communities in El Salvador. The organizations include FUSAI, which is a nonprofit organization whose mission is to promote nonprofit or for-profit businesses with a significant social impact for low-income families, together with Fondo Pro Hábitat, a programme of FUSAI that supports projects to improve living conditions in slum neighborhoods, Hábitat para la Humanidad, and Fundación Promotora de la Competitividad de la Micro y Pequeña Empresa en Centroamerica (CENTROMYPE).30

F. Mobile school for microentrepreneurs in the construction industry31

BackgroundOne of the bottlenecks identified by the actors in the social housing value chain, which affects the construction industry in general, is the lack of skilled labor in the construction workforce. Many of the quality issues of construction projects can be attributed to inadequate procedures and practices of construction workers (specifically masons, plumbers and mechanics). Also, the value chain analysis showed that what is perceived as the poor quality of construction materials is in part due to improper use of the materials. In order to resolve this bottleneck, UNIDO, with the cooperation and participation of major players in the social housing value chain, developed a pilot project entitled “Mobile School for Microentrepreneurs in the Construction Industry”.

Launching the mobile schoolThe “Mobile School” was launched with two key objectives: (1) to teach new skills to construction workers so as to improve significantly the quality and efficiency of their work, including the proper use of building materials, and (2) to train workers in entrepreneurship so that they are able to associate in small independent companies to provide building services for new and improved housing and construction in general. With these new skills they can enhance their income thus improve the quality of life of their families and community.

The development of the school was based on public-private partnerships from the outset; it began with consultations with key players who had participated in the workshops held during the value chain analysis. Discussions were held with major construction materials manufacturers, including Holcim, the cement manufacturer, which had experience in the development of courses for construction workers. Other discussion partners included Grupo Precasa, which produces cement blocks and precast concrete, Amanco, which produces plumbing supplies, CORINCA, the Corporación

30 See their websites: http://www.fusai.org.sv/index.html, http://www.fondoprohabitat.org/index.php, http://www.habitatelsalvador.org.sv/, and http://www.centromype.org.sv/. 31 This section is based on the UNIDO reports by R. V. Velásquez, Informe de actividades, July 2012, and Sistematización ONUDI: Escuela de Microempresarios de la Industria de la Construcción , August 2012.

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Industrial Centroamericana SA de CV, which produces metal building parts, and the Instituto Salvadoreño del Cemento y del Concreto (ISCYC - Institute of Cement and Concrete). These discussions covered both the subjects to be taught in the curriculum and the provision of material and teaching support to the new school.

Selection of participants During the household survey carried out by FUNDASAL, the project team had identified residents of the neighborhood who had worked in construction. They were invited to an open information session during which the proposed training course was described, including the curriculum and the potential advantages of training and the benefits of certification. Those attending the information session were invited to register for the training course. The number of students in the first class was 21, including several women and youth who had no previous experience in construction, who wanted to participate in the course to increase their knowledge and learn a new profession. All 21 students completed the course successfully.

The mobile classroomIn parallel to the selection of participants, the project team identified the further requirements for the school. It was decided to construct a mobile classroom in order to bring the school close to the students. The mobile classroom, which was constructed from two transport containers and fully furnished and equipped, has a capacity of 24 students and an instructor. As the purpose of the mobile school is to bring the training courses directly to the town or neighborhood where students live, it was also necessary to find a nearby area of land for the practical exercises. This was done in partnership with the Rural Water Association (ARA), a community enterprise that supplies water to some of the target neighborhoods and which has been supported by the JP. ARA owns land near the target neighborhoods, and it was agreed that ARA would provide the land and that the students in the practical exercises would build a small building for the ARA office.

The curriculumThe curriculum focused on two main areas: theoretical and practical technical training in construction techniques (masonry, plumbing, etc.), including industrial safety, and training in entrepreneurship, including both theoretical course work and practical support, i.e. a business incubator. The curriculum was developed and taught together with the construction materials producers; the support provided by the firms included the provision of instructors for technical classes on making cement and concrete, assembling prefabricated concrete building materials and plumbing. Their involvement had the dual function of increasing private sector engagement in the school and ensuring that classes demonstrated the use of the latest, most appropriate techniques to the students.

The first training course began with the module on entrepreneurship development. This module lasted 40 hours and covered human development, developing the entrepreneurial spirit, organization of an enterprise, the importance of leadership and the importance of cooperation. The second module, which lasted 64 hours, provided theoretical and practical training in building techniques. Instruction was provided by the Universidad Politécnica and by the University of El Salvador, the national university of the country.

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The course included a class conducted at the School of Civil Engineering of the University of El Salvador on quality of construction materials and soils. Instruction was provided by engineers and university staff, who taught techniques for materials testing and soil testing, with practical demonstrations given in the soils laboratory of the University and in the field provided by ARA, where the students were constructing a building. The students also visited the Holcim cement factory to see the manufacturing processes first hand, where they learned about material manufacturing, industrial safety practices and techniques for the proper use of cement and concrete. The final module of the first course was 48 hours in plumbing installation, taught in cooperation with Amanco, the plumbing supplies company.

Written background material for each of the courses was prepared by the instructor or instructors responsible for the course and reproduced and distributed to the students. The manufacturers who sponsored the school provided materials such as cement, sand, metal parts, etc. to be used in the practical exercises and the construction of the office building for ARA. Each student received a set of basic tools needed for housing construction and a shirt bearing the logo designed for the school.

At the end of the first course the students were awarded a certificate showing that they had completed all the assigned modules and acquired the appropriate skills. The courses taught in the mobile school will strengthen the value chain by adding to the number of qualified construction workers, and enable the course participants to find work more easily. The impact of the results of this school on the value chain may be better appreciated when the pilot course is replicated in other settlements, so as to provide more skilled construction workers and start up more microenterprises. The better workmanship should significantly improve the quality of construction work done in the country, including social housing.

Establishing a microenterprise for constructionFollowing the completion of the course, the JP provided support to the participants to help them establish a microenterprise for construction. In addition to the entrepreneurship training included in the course, the JP also supported them through participation in the supplier development programme, implemented by the organization PDP, Programa de Desarrollo de Proveedores, in the framework of the JP, which is described below. The members of the microenterprise, with their new knowledge, can become skilled actors in the construction value chain. By giving the new enterprise the opportunity to develop further as a supplier to a larger construction company, the supplier development programme enables it to work with other companies in other projects, as a partner or supplier, under the concept of inclusive business.

Extending the model: sustainability of the mobile school In parallel with planning and conducting the first training course, UNIDO began efforts to ensure the continuation of the construction industry school, working with the Dean of the Faculty of Engineering and Architecture and Director of the School of Civil Engineering of the University of El Salvador (UES, the national university, which also has regional centers) and establishing a cooperation agreement with the private sector. It is intended that the university will design and manage future courses and train the instructors, with financial and technical support from the private sector. The UES was selected because the institutionalization of a model such as this one requires an institution that can adequately develop a curriculum and teach courses in various disciplines, besides having a high

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commitment to outreach and community service. Agreements are also being made with the sponsoring companies to continue their support.

At the time of writing this document, it was planned for UNIDO to conduct the first training of trainers course for teachers and instructors of the UES Faculty of Engineering, to prepare them to teach the next course for construction workers. The training is planned to be carried out by a team of instructors with experience gained in the first training course. It is also intended to train three of the workers who completed the first course to be master builders, who will teach building techniques in future courses.

The second course of the mobile school is intended for a group of construction workers from La Cruz, Santa Tecla. UNIDO support to the second course will include paying the fees for the instructors and providing the written material developed for the first course, as well as obtaining the construction materials needed for practical exercises from the supporting firms. The students from this second course will also receive business incubator support from PDP to help them form a microenterprise for construction services.

G. Supplier Development Programme32 BackgroundAn important component of the JP led by UNIDO is the supplier development programme for the housing construction industry. This component is based on a methodology that was developed several years ago and has already been applied successfully in El Salvador to a variety of industrial sectors. The JP contracted a Salvadoran organization called PDP (Programa de Desarrollo de Proveedores – supplier development programme in Spanish) to implement the component. PDP is supported by the Ministry of the Economy, UNDP and other organizations and hosted in the Salvadoran Chamber of Commerce and Industry; it has implemented supplier development projects financed by UNDP and the Inter-American Development Bank (IDB), among others.

In El Salvador, large companies in the construction sector lack mechanisms for supplier development, maintaining relationships rather on an ad-hoc basis and continuously varying their sources of supply. This approach is deeply rooted, and restricts the growth of supplier firms. Overcoming it and the strongly competitive attitude of the leading construction industry firms has proved to be very challenging and has delayed the progress of the initiative.

Supplier development methodologyThe target group for supplier development programmes includes entrepreneurs and managers of potential lead companies in a specific economic sector; national and international organizations and institutions for the development of micro, small and medium size enterprises (MSMEs); consulting firms for promoting productivity and local and national officials and international organizations responsible for designing policies and programmes for regional economic development.

32 This section is based on “Sistematizacion de la experiencia ONUDI/ Programa de Desarrollo de Proveedores”, July 2012, and “Informe de avance cadenas industria de la construcción”, August 2012, both by PDP, San Salvador, El Salvador.

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The objective of the supplier development methodology is to strengthen and develop business relationships between a lead company (usually a large or medium enterprise) and a group of supplier companies (usually four to ten), which may provide similar or different goods and services to the lead company. Business development advice is provided to both the lead company and the suppliers to improve their efficiency and profitability. The inclusion of small and microenterprises in the group of suppliers can integrate them better into the value chain, which not only helps them but also strengthens the value chain and contributes to the development of the country’s economy as a whole.

The guiding principles that represent the spirit of the methodology include the following: (a) the client-supplier relationships should ensure mutual gains ("win-win"), despite the unequal bargaining power between companies; (b) there should be an equitable distribution of the gains from the improvements, (c) there should not be total dependence of one company on another, in order to reduce the vulnerability of both; (d) there should be mutual technical cooperation, including technology transfer, information and training, (e) the programme should promote the establishment of long-term relationships over time (contracts), thus giving greater certainty to the supplier firms and enabling them to undertake improvement plans.

Implementing the supplier development componentThe supplier development component of the JP is intended to improve business relationships and generate skills in participants in the construction industry value chain, particularly related to housing, recognizing especially the potential involvement of MSMEs. The choice of economic activities in which to develop client-supplier relationships represents a critical success factor; as resources are limited, the selection of a specific value chain should be carefully considered. The construction industry in El Salvador is a key activity, given its importance to the development of the economy and employment. Therefore, the launching of activities by PDP in the construction sector as part of the JP is expected to have a positive impact on job creation and economic growth.

Under the JP, PDP has worked with two groups of companies in the construction industry, each one comprising a lead company and five supplier companies. The supplier development process began with a promotion stage, which lasted nearly six months, in which PDP invited a group of large and medium companies to information events in order to raise awareness of the programme and interest them in taking the strategic decision to develop a group of suppliers. The following stages were: diagnosis (approx. 1.5 months); interaction (0.5 months); designing improvement plans (1 month) and implementation of the improvement plans (3 months). In order to further expand its support to the construction sector, PDP has initiated activities with two additional groups of companies.

The application of the methodology contributes to the development of the supply chain by creating greater mutual understanding, developing more transparent and professional relationships between the lead companies and their suppliers, and improving the competitiveness of both the suppliers and the lead companies. At the end of the intervention, it is intended that suppliers can improve such strategic parameters as quality, price, delivery time, service, support, enterprise management and technological modernization; this will have a major impact on the efficiency of the value chain and can lead to contracts with other buyers. The programme also helps to link the enterprises with financial and support institutions that provide support in the form of training, technical assistance and funding, making the contacts with those institutions less costly and more efficient. In implementing the supplier development component of the JP, PDP introduced new elements to its

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methodology, namely the inclusion of new supplier firms and the inclusion of a supplier from a slum area of the city in a group of companies.

The actors involved include UNIDO, which finances 30% of the cost of the PDP intervention, generating interest in the construction sector to work with PDP; PDP, which finances 70% of the cost of the intervention; the Chamber of Commerce and Industry of El Salvador, as the responsible entity hosting the PDP management team; and CASALCO, which has expressed interest in learning the methodology and adapting the PDP as part of the services it can provide to its members. CASALCO can become a potential partner to institutionalize the supplier development programme in the construction sector.

Extending the supplier development programmeThe JP is expanding its support to the construction industry value chain. UNIDO has contracted PDP to create two more groups with one lead company and five supplier companies each, for a total of four. This initiative is now in the promotion phase. It is expected to make an alliance with CASALCO to continue to expand the programme. In order to ensure sustainability of the initiative, discussions are being held with the Ministry of Economy, to develop a plan to maintain supplier development as a programme sponsored by the Ministry. Under this plan, MSMEs wishing to be supported by the programme could apply for a grant of 70% from FONDEPRO (Fondo de Desarrollo Productivo)33, a fund to support MSMEs, which is administered by the Ministry; the firm would only have to finance the other 30%.

H. Local Economic Development (LED)34

One component of the JP was aimed at promoting local economic development (LED) in an integrated and socially responsible manner at different levels – national, municipal and community. UNDP led parts of the component, in particular the support to individual productive initiatives, while UNIDO led the activities to support the development of business networks in Apopa and training the municipal authorities in LED. At the time of writing this document, due in part to delays caused by the municipal elections in Apopa, many of the LED activities were still in the initial stages of implementation. The description here focuses on the LED programme as planned, as this should form the basis for planning future programmes. An important lesson learned during the JP was the vital importance of continuing support by municipal authorities and full involvement of the private sector at the municipal and local levels, as well as representatives of the community, to implement a successful LED programme. The lack of these factors has meant that the LED component has not been able to make the expected contribution to the JP.

Concept of local economic developmentLED is conceived as a participatory process, which can be defined as follows: “The purpose of local economic development is to build up the economic capacity of a local area to improve its economic future and the quality of life for all. It is a process by which public, business and non-governmental

33 http://www.fondepro.gob.sv/index.php/inicio 34 This section is based on the UNIDO reports by M. Dini, Sistematización de la experiencia del Programa Conjunto: Apuntes sobre la actividad de desarrollo económico local en Apopa, May 2012, and M. A. Vega, Informe de misión El Salvador: Programa Conjunto MDG-F Vivienda y Asentamientos Urbanos Productivos y Sostenibles en San Salvador July 2012.

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sector partners work collectively to create better conditions for economic growth and employment generation.”35 Strategically planned LED is used by communities to strengthen the local economic capacity of an area, improve the investment climate, and increase the productivity and competitiveness of local businesses, entrepreneurs and workers. Thus, LED can play a key role in transforming slums into productive and sustainable urban communities by ensuring the economic basis necessary for upgrading and maintaining housing and infrastructure in the community.

Local economic development in Apopa and Santa TeclaThe support of the JP to LED began with a study tour to Panama in December 2010, in which different actors involved in the JP participated – representatives of the municipal governments of Apopa and Santa Tecla, local community representatives, representatives of social NGOs, officials of the Ministry of Economy and members of the JP team. The purpose of the study tour was to familiarize the participants with the Panamanian experience and bring them into contact with some of the actors involved in the LED programme in Panama. The JP organized a second study tour to Cuzco, Peru in August 2011, involving other participants, who took part in a module of a course on LED and visited three municipalities that were in the process of developing LED projects.

Owing to resource limitations and the lack of a specific mandate from the municipality of Santa Tecla to undertake a LED programme, it was decided to focus most of the LED activities of the JP on Apopa. The municipality of Apopa, with about 135,000 inhabitants has between fifty and sixty medium-sized companies and approximately 5,000 – 6,000 small and micro enterprises. The municipality has high rates of extreme poverty and the level of insecurity is one of the highest of the 19 municipalities of San Salvador. One of Apopa’s strengths is that it has good road infrastructure to communicate with neighboring regions. 36

LED activities in Apopa focused on working with the municipal authorities. A proposal outlining three areas of action to contribute to developing a comprehensive development strategy was submitted to the business working group and municipal administration and agreed by the city council during the previous municipal administration. The three areas were:

• Support for the preparation and conduct of the participatory process to establish the priority areas of activity for the LED strategy. This comprised two areas:

o A training programme in DEL for city officials and local leaders;

o Consolidation of the business working group.

• Technical assistance to strengthen the capacity of City Hall in LED, consisting of:

o Updating the register of companies and modifying the methodology for collecting information;

o Creation of a unit specializing in support to local businesses.

• Cooperation with the responsible municipal officials to design and implement LED activities prioritized by local actors, comprising the following:

35 World Bank, Urban Development Unit, Local Economic Development (LED) www.worldbank.org/urban/led: LED: A Primer, p. 1.36 M. A. Vega, Informe de misión El Salvador, p. 3.

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o Employment office;

o Technical training programme;

o Programme to stimulate local entrepreneurship;

o Partnership promotion.

The LED process in Apopa was severely disrupted by the municipal elections and the subsequent change in local government; which meant that from October 2011 to October 2012 almost no LED activities took place. During the election campaign the JP team organized meetings with all the candidates to present the LED programme to them, and obtained commitments from all of them to continue the programme if elected. However, although the new municipal administration made commitments regarding LED, such as implementing activities to support small and micro enterprises in specific sectors, and investments to promote industrial development in specific areas, these activities did not take place. Therefore, the project team decided to present a proposal to the new local government comprising an abridged version of the earlier plan, in which joint activity was focused in four areas, which would be supported by UNIDO and UNDP:

• A course on LED (UNDP – UNIDO) – the course was designed in cooperation with FUNDEMUCA, the IBD fund to promote municipal development, and the Universidad Centroamericana José Simeón Cañas (UCA). The course began with participants from City Hall, the local communities, the Vice Ministry for Housing and Urban Development and the private sector (Holcim), who also taught classes in some of the modules;

• Strengthening the employment office (UNDP) – supplying basic equipment (desks, computers, etc.) necessary for the office to function better;

• Reorganization of the business register (UNDP) – a consultancy firm was contracted by the JP to update the municipal business register;

• Promotion of business linkages and networks (UNIDO) – an advisor was hired to train the technical team in City Hall and to support the establishment of business networks.

One of the important tasks for the technical team in City Hall in developing the LED programme is to carry out an assessment of economic characteristics of the area, including a profile of locally available skills and resources aimed at improving the competitiveness of enterprises in the municipality.

Since the first phase of the LED strategy in Apopa was focused strongly on City Hall and its role in local development, it will be essential in the following phase to stimulate the participation of other local productive players, particularly entrepreneurs and their associations. An important step in the LED process was the establishment of a working group of local businessmen. The series of meetings was interrupted by the elections and the change in administrations and should be resumed under the new administration.

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Productive initiatives started under the Joint Programme37

In order to promote LED at the grassroots level, the JP supported the establishment of five productive initiatives, one in Santa Tecla and four in Apopa. UNDP was the lead agency for the first four, while UNIDO supported the microenterprise for construction, which was described in Section F. These initiatives are described briefly in this section, and their status is outlined as at the time of writing (October 2012). While the challenges faced by these five initiatives are very specific, their stories are presented here as case studies that may shed some light on the problems that can arise in promoting individual productive initiatives in the framework of LED as part of future community development programmes.

The success of productive initiatives should be examined from two points of view: the conditions needed for them to be sustainable and their impact on the community. The business success of new ventures is a necessary but not sufficient condition to achieve the objective of contributing to the creation of productive and sustainable communities. In order for an enterprise to be commercially sustainable, it must have reached or exceeded the break-even point; the management capabilities of the persons involved in running the enterprise must be equivalent to those of competitor firms; and the projected market for its goods and services must be favorable for the future development of the company. The impact of the new initiatives on the community can be measured in two directions: first, in terms of improving the material conditions of people's lives and secondly, in relation to the perception that they have of themselves, their identity and culture.

In the case of the JP in El Salvador, an important element was the relation between the new enterprises and the ADESCOS. The role of the ADESCO as owner or funding body of these economic initiatives introduced new elements into the management of the enterprise, and it is important to evaluate these elements in terms of their strengths and weaknesses for each initiative. The experience of an elected community body in starting up productive initiatives as part of a local economic development programme can be instructive for future programmes. The five productive initiatives supported by the JP are described here in terms of their legal status, economic data, relationship with the ADESCO, activities to date, future prospects and impact on the community.

The “Manzana Gourmet” is the one enterprise that has been started in Santa Tecla. It is a catering business that is run by four young people and has been operating for five months. The young entrepreneurs have recently begun training in restaurant management; it is essential for them to be trained in areas such as inventory management and marketing strategy, as well as to develop a management model based on specialization of functions and roles in the enterprise. The relation between the Manzana Gourmet and the ADESCO was decided in a community assembly. The company has legal autonomy and the resources provided by ADESCO for the start-up are considered as loans and must be returned to the ADESCO, which shall reinvest them. If the ADESCO reinvests these resources for the development of new ventures, it would make the goals of the community as a whole (expressed by the ADESCO) converge with the goals of the company. This convergence is an important condition for the community to recognize these initiatives as its own.

The second enterprise, the “Tiendona”, was established as a wholesale store to supply non-perishable food products to small shops in Apopa, and recently to the market; it does not yet have a permit for retail sales. The Tiendona is owned by two ADESCOs. It employs two young people, one of

37 The description and analysis in this section are based on the UNIDO report by M. Dini, Informe de Misión, chapter 3, Consideraciones acerca de las iniciativas productivas, October 2012.

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whom has considerable experience in managing such an operation and has been operating for six months.

The third initiative is alternative agricultural production. The JP has supported 70 farmers from Apopa (11 women and 59 men) by providing training in the use of improved techniques and better farm management, leading to increased productivity, and thus better nutrition for the families involved. This undertaking has been very successful, due in part to the fact that all families recognize the importance of its objective, food security. It also is related to the cultural traditions of many of the inhabitants of the communities, who are still connected to their peasant roots. The initiative combines two elements that complement and reinforce each other: technical training aimed at improving the productivity of agriculture, and creating political awareness among the participants, who are strongly motivated to regain their dignity, culture and autonomy. The project is based on the rediscovery of traditional techniques with low environmental impact, the use of native seeds that are better suited to local conditions and eliminate the dependence of the farmers on large suppliers, the building of relations of reciprocity and the creation of solidarity among the participants.

This initiative has already had a major impact on the community -- first, it involves a relatively large number of people directly in the production, secondly, its activity has an immediate positive effect on the quality of life the families involved, by improving their diets. A further possibility that can also be envisaged is allying the agricultural production in Apopa with one of the international initiatives that are exploring alternative ways of production, distribution and consumption. Three examples are Slow Food, Fair Trade, and Solidarity Purchasing Groups (G.A.S. in Italy).38 Such an alliance could have three important effects: enrich the scope of training of the farmers; increase their visibility and generate a political force for the community; and improve the local image of the community, which could also have a positive impact on the municipality of Apopa. Finally the international connection could encourage more young people to be involved in these activities, and it could improve their perception of the efforts being made by their parents.

The fourth undertaking aims at starting new cultural activities and deriving commercial benefit from them. It involves 60 persons directly and 120 indirectly. The interested youth have delegated two persons from each of the three communities to continue the process of organization, and they have defined the content of the cultural programme. The objective is to create jobs and thus generate income related to the management of an amusement park that the JP is building in Apopa, and the JP is organizing training activities for the participants, including visits to successful undertakings, etc. As is the case for the other initiatives, it is also important to create conditions to facilitate collective management, and define the relationship of the ADESCOs with the undertaking. Regarding community impact, the number of people involved demonstrates the broad interest in this undertaking. Furthermore, this activity (similar to the agricultural production) has a significant impact on the intangible aspects that influence the capacity of the community for collective action, in particular self-esteem and local identity.

The fifth productive initiative is the microenterprise for construction work that has been formed by the 21 students of the first course of the mobile school, which was described above. It began its first remunerated pilot projects under the supervision of the JP, with a view to learning how to handle administrative and financial management of the business. The importance of this enterprise is seen in the number of people involved. The fact that the trained construction workers need additional

38 See: http://www.fairtrade.net , http://www.slowfood.it and http://www.retegas.org.

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workers to assist them means that the enterprise will continue to provide a source of employment for the community. In terms of community impact, this project, in addition to generating new jobs (the number will vary depending on the market), will also increase the quality of life for families thanks to the improvements made to their homes. This company was created as a private company, without formal ties to the ADESCO, which reduced the level of management complexity.

Results achieved by the local economic development componentA critical examination of the LED component must be based on its relation to the strategic approach of the JP, which provides the justification for the LED activities and the time horizon in which they operate. The starting point of the LED component was the need to overcome the marginalized situation of the neighborhoods in which the JP working. It was decided from the outset that in order to support the transformation of slums into productive and sustainable urban communities it was necessary, along with improving their material conditions of life, for the community to be able to establish a dialogue with its environment, i.e., the municipality and the greater metropolitan area.

In order for the transformation of the slums into productive communities to be sustainable, this transformation must be coherent with development processes in the environment. It is clear that key issues such as crime and pollution cannot be addressed in the local community alone, but require a joint approach with the other actors in the environment – including both the municipal administration and opinion leaders in the municipality. The same applies to the support services to enhance the capabilities of enterprises created in the community – the community needs to benefit from policies, support institutions, education and training at the municipal and regional levels. Secondly, there is a question of critical mass and visibility – there must be a market outside the community for the goods and services it produces.

The LED concept requires more than training and support activities carried out at the level of City Hall and the promotion of individual productive enterprises. In order for an LED strategy aimed at overcoming the marginal status of a community to be sustainable in the long term, two simultaneous processes are necessary, whereby both the members of the community and the inhabitants of the rest of the municipality reflect on their development goals, set objectives and decide on activities directed towards achieving them. To date, only a few steps have been taken in the framework of the JP to promote such parallel processes of reflection. The Mayor of Apopa has recently reorganized his team to structure its intervention in economic matters, but has not engaged in a participatory planning process at the municipal level, and the business working group has only started to meet.

An important element of strategic thinking about the community is to recognize the existing links between the community and the environment, for example what is bought and sold by the community residents, how many residents work in town and how far do they travel to work, what skills predominate in the community, what unmet demands for skills exist. The JP carried out a study of economic flows of the community, which contributed to identifying development goals, but the process is incomplete without the joint reflection by members of the community. The individual initiatives described above were promoted at the community level, but there has been no joint reflection on the potential contribution of these initiatives to the overall community development process.

What is also needed, and has not yet been developed, is a clear and agreed strategic vision of LED and the links to be established between the municipal government and local communities. Such a

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vision would provide a basis for the community leaders to help refine the action plan, make proposals for more effective support by the municipality, structure lasting partnerships with the private sector, and work more effectively towards the development of productive and sustainable communities.

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4. DEVELOPING A PROGRAMME TO TRANSFORM SLUMS INTO PRODUCTIVE AND SUSTAINABLE URBAN COMMUNITIES

Programme planning and designThe purpose of this chapter is to provide guidance related to planning and designing a programme to transform slums into productive and sustainable urban communities, based on the lessons learned during the implementation of the Joint Programme in El Salvador. It is intended to answer questions related to what can be generalized from the Salvadoran experience, what conditions are necessary for a similar programme to succeed, and what can be learned from the problems that arose.

The JP was composed of a number of different modules aimed at strengthening the social housing value chain and building productive and sustainable urban communities; the individual components were strongly interlinked and supported each other. While it could be possible to carry out some of the activities without implementing the entire package, the synergies and complementarities among the various parts of the programme should be carefully considered in planning a future programme. The descriptions given of the different components should help in deciding on the inclusion of some or all of them in a programme.

The previous chapter described the partner organization(s) involved in each of the components and the activities they carried out. This chapter will consider the question of how to fulfill those functions in future programmes; if similar institutions do not exist in a country where a programme is being planned, other arrangements will be needed to fulfill those functions. It will also be noted which of the three UN System organizations (UNIDO, UNDP, UN-Habitat) was responsible for a component’s implementation

Finally, the specific actions required for implementing each component will be identified. To the extent possible, the resources needed for of each component will be given as a guide for establishing a budget. It should be noted that the project has been supported by one project coordinator and one national expert consultant for the whole duration of the project to ensure smooth project implementation, coordination with counterparts, carrying out of study tours, formalizing partnerships with public and private sector and presenting the project on demand of other countries.. In line with different activities and tasks, short-term national and international experts have been recruited, as well as company consulting services have been contracted, as outlined below, after each stage of the project. In addition, the project has been closely backstopped the project manager and additional expert at headquarters during the whole project duration, including its development phase. In addition, expenses for training, logistics, study tours and miscellaneous costs should be considered in the project budget.

Identifying the project site(s)Clearly, an early step in planning a programme is to identify where it will be implemented. The area selected for the programme to help provide residents with access to housing improvements through small loans – three neighborhoods in the municipality of Apopa – was chosen not only because of the

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high levels of poverty, but also because the topography and legal tenancy status of at least 50 per cent of households meant that the risk was not too great that the improvements would be lost.

ACTION: Map the areas where the programme will be implemented on the basis of identified criteria.

RESOURCES: Involvement of headquarters’ staff and locally recruited staff to make the necessary research in order to make an informed decision (3 working months)

Identifying public and private sector partners at the municipal and national levels

An essential aspect of the JP strategy was the creation and strengthening of public-private partnerships. Since the programme was carried out on the national, municipal and local levels, it was necessary to identify public and private partners on all three levels.

At the municipal level, it was essential to obtain the cooperation of City Hall, especially the mayor. To the extent possible, this cooperation should be sought at the planning stage, and maintained throughout the life of the programme. At the national level, it is important to develop good cooperation with government authorities, but also to identify relevant private sector actors. The JP, for example, benefited from the support of the multinational cement manufacturer Holcim, as well as national building materials manufacturers in many of the programme components.

ACTION: Contact all relevant public authorities (national and municipal), the most important private enterprises in the sector and appropriate civil society organizations to determine their interest and willingness to be involved in the programme, and include them at an early stage, if possible in the planning process.

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PROCEDURESIMPROVED PROCEDURES FOR CONSTRUCTION PERMITS (UN/H) (PLANNED)

CSR

Graph1. Partnership of UNIDO with HOLCIM

RESOURCES: Awareness raising by project coordinator and additional local staff to engage with public and private sector on an ongoing basis before the project start and during its implementation phase.

Identifying partners at the local level and interaction with the communityAt the local level, the community development associations, known as ADESCOs, played a key role in the JP, as the initial entry into the communities was done through them. As explained above, the ADESCOs are legally mandated elected bodies that are established in all communities in El Salvador.

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CONSTRUFACILMicrocredit for housing improvementTechnical assistanceIntegrated offers for improvementSupport and training for construction hardware stores

TRAINING FOR THE LABOR FORCEModular programme for the training of labor forceCertification for bricklayers and foremenENVIRONMEN-

TAL SUSTAINABILITYProcesses for cleaner production of cement productionTraining on practices of clean use of concrete

NEW TECHNOLOGIESReserach in new forms of use of cementPromote the use of new technologies of concrete application

While the ADESCOs are the formal representatives of the community, there also exist informal structures, which should also be identified to the extent possible. A number of activities carried out early in the programme were aimed at strengthening the ADESCOs, which in turn supported the JP, for example building confidence among the target population and aiding in the joint identification of goals with the community residents. Community leaders were asked to identify all the functions performed by the ADESCOs in the framework of the JP, and these are listed below.

• Broaden the organizational base for implementing the programme by including new leaders and sharing experience and methods with them;

• Function as a contact point for institutions and families and inform the community about the programme and agreements reached;

• Encourage residents to participate in the programme;

• Take part in the initial diagnosis of the problems;

• Participate in the preparatory work and assist in designing specific interventions;

• Take part in defining the educational and organizations processes of the project;

• Ensure the legal status of the community associations.

Future programmes will have to identify existing organizations or create new ones to fulfill the functions carried out by the ADESCOs.

The interaction model proposed by the community leaders, which was only partly realized in Apopa, was to establish a second body specifically for the programme, comprising representatives of the mutual assistance committee and representatives of the housing committee that would act in coordination with the ADESCO. The coordination would guarantee that the families fulfilled their responsibilities in the different phases of the project. The participation of families would be regulated according to a collective agreement setting out their rights, obligations and rules for living together during the process of improving their living conditions. The critical route proposed for this body consisted of the following steps: forming working groups, discussion of the rights and obligations of programme participants, approval of the agreement by the participating families before beginning the physical work; election of bodies that, together with the ADESCO, would guarantee the quality of the work and efficient and transparent management of resources. Plans for future programmes should include provision for establishing a representative body to facilitate communication and promote involvement of the community members in the programme activities.

The experience of the JP showed the importance of continuing two-way communication between the organizations implementing programme activities and the community. This was achieved in part in El Salvador through the monthly publication of newsletters, which were jointly prepared with the community residents, printed and sold in the community. The fact that the residents were willing to purchase these newsletters showed that they valued this communication tool.

ACTION: Involve the residents of the communities where the programme will be implemented from the outset. Work with the representative body in the community or support the establishment of a new one that can serve as a channel for two-way communication between the residents and the organizations

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implementing the project and promote continued community involvement in programme activities.

RESOURCES: If the ADESCOs are existing, the cost for their employees is borne by them. However, if this institution is to be created, this might involve some investment. The community leaders should be paid in order for them to be motivated to perform their functions and have a decent living. Communication costs should be included, depending on the outreach of the advocacy campaign. A communication expert should be recruited.

Value chain analysis The analysis of the value chains for new and improved social housing, which was led by UNIDO, was undertaken as the first component of the JP and provided important information about the low income housing sector. The identification of separate value chains for the construction of new social housing and for improving existing housing provided important insights for planning interventions, and the identification of the bottlenecks connected with each link helped to identify which activities were necessary to overcome them. Many of the activities of the JP were planned or modified in light of the findings of the analysis.

The process of conducting the analysis showed the crucial importance of including all the major actors in the study and the added value of convening them to validate the findings and plan ways to solve the problems identified. In designing a future programme, the value chain analysis could be carried out as a preparatory activity before planning the rest of the programme to identify all the links and the associated bottlenecks in the value chain of the specific country. The process and findings of the Salvadoran study should be helpful in designing the value chain analysis in other developing countries.

ACTION: Conduct an in-depth value chain analysis in a participatory manner, involving all stakeholders. Use the findings of the study as a basis for planning programme interventions.

RESOURCES: Subcontract to a consulting company to perform the value chain analysis (3 work months) and to document the experience (1 work month).

Working group “Alliance for Social Housing” Many stakeholders found that the convening of the “Alliance for Social Housing” was one of the most useful outcomes of the value chain analysis. The establishment and convening meetings of this working group were supported by UNIDO. This activity showed the utility of establishing a forum in which all the major actors of the value chain are represented and which can meet to discuss the problems related to the sector. Furthermore, it was found useful to form sub-groups that work on developing solutions to particular types of problems related to social housing in a more flexible manner than when the entire working group was convened. In order to ensure the sustainability of such a working group, it is essential for a local entity – one of the public or private partners – to assume responsibility for convening meetings and to establish mechanisms to follow up on implementing the decisions taken at the meetings.

ACTION: Establish a working group of stakeholders, and if it is considered necessary form sub-groups to work on solving problems related to specific

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bottlenecks in the value chain. Identify a local partner to take over the ownership of the group, one which is committed to convening meetings and ensuring that decisions are followed up.

RESOURCES: Cost of establishing a local entity to ensure the continuity of the working group. UNIDO local expert to convene, carry out and report on the working group meetings.

Legal frameworkThe JP provided support for the enacting of new legislation relating to social housing. This component of the JP, which was led by UNDP, showed the importance of considering the legal framework for the housing sector in planning such a programme. The new legislation was acknowledged as a significant milestone in making decent housing accessible for low income population groups, and the role of the United Nations and the JP in preparing it was recognized.

The innovative feature of the JP advocacy was the direct contact with the Legislative Assembly deputies. The provision of technical assistance and advice proved to be very effective in helping to draft and approve the new laws. Equally important as the enactment of necessary legislation is its enforcement. As described above, in September 2012 the Vice Ministry for Housing and Urban Development started a campaign to assist slum dwellers to obtain legal property titles, and the new legislation will ensure that future subdivisions can only be approved if all the relevant legal and technical requirements are fulfilled.

ACTION: Review the legislative framework related to affordable housing, and if necessary advocate new or revised legislation. Work together with the appropriate national authorities to support the drafting and enactment of the legislation.

RESOURCES: This component was lead by UNDP, however, UNIDO supported it with the support of the national project coordinator in lobbying for the new laws and carrying out study tours for exchange of experiences.

Aggregation of demandThe aggregation of demand model, which was led by UNIDO, involves several interlinked elements and is closely linked to other parts of the JP; it is central to making home improvements a realistic possibility for low income families. This programme component was designed to address the major bottlenecks faced by low income families to improving their housing by collecting the needs and requirements of a cluster of home owners, preparing integrated solutions, providing assistance in obtaining loans, negotiating better prices with the building materials suppliers and supervising the construction work. By helping the community residents to overcome the barriers identified, this component can contribute greatly to improving the quality of life in the community.

Three sets of functions are necessary to make the model work, and future programmes with similar goals will depend on obtaining the types of expertise required to perform these functions. The work carried out by the social organization (FUNDASAL) included both technical expertise in architecture and engineering and the social expertise needed to communicate with the people in the target communities and gain their trust and respect. A microfinance institution such as Integral must be identified to carry out the tasks relating to the provision of loans to low income slum dwellers. The

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third important element in implementing this component is the role played by the community managers (“gestores sociales”). They functioned as community liaison persons, who linked the individual families and the neighborhoods with the JP and the two institutions that were implementing the component. As residents of the neighborhood, the community managers had the task of building confidence among their neighbors in relation to the programme. They provided information to the other residents of the community, explaining the JP and its objectives and generating interest in participating; they were also responsible for collecting data, which was needed by FUNDASAL for the aggregation of demand as well as by Integral for considering the loan applications.

An important aim of the JP in implementing this component was to ensure that it could be replicated in other communities. Therefore, UNIDO contracted a consulting firm to study the model and identify the necessary elements for it to be self-sustaining. The consultants found that the model was sustainable and could be replicated in El Salvador under specific conditions, including relatively small discounts from materials manufacturers, building supplies merchants and construction workers, as well as favorable loan conditions from the lending institution and lower interest rates than were generally available for micro loans to low income population groups.39

The consultants’ report recognized the community managers as a key element, and identified several factors that were necessary to ensure that they could play their role effectively. Three important ones were motivation, training and organization, including the establishment of standardized procedures. Regarding motivation, the consultants found that in the original community development concept implemented by FUNDASAL, the community managers were not paid for their efforts, which reduced their motivation and reliability. FUNDASAL designed and carried out training courses for community managers, who would work together with the existing leadership to promote community development, disseminate information to the community about the project, encourage people to participate, and try to create greater solidarity among the residents and willingness to provide mutual assistance and work together to achieve common goals. However, economic realities meant that those who wanted to become community managers also wanted to be paid. The current model foresees remuneration for their work.

A second essential element is effective training. As the persons who applied to become community managers started out with different levels of knowledge, a comprehensive training programme was essential to ensure that they had the necessary skills to carry out their assigned duties. In addition to interpersonal and communication skills, the community managers needed to acquire sufficient technical information to understand the home improvement needs and requirements of the applicants. They also had to learn enough about the loan approval process to help the applicants in filling out the forms required by the finance institution.

A third essential element was the establishment of standardized procedures to ensure that all people working in the community transmitted the same message to residents , that all clients were treated in the same way, that information only needed to be collected once, that the number of visits to the clients could be reduced to a minimum, that clients received a response as soon as possible regarding their loan application, that the building materials merchants supplied materials according to agreed

39 See the report to UNIDO by the consulting firm, PRAXIS Asesores y Consultores, Modelo de Negocios para la Metodología de Agregación de Demanda y Oferta de Soluciones Integrales de Mejoramiento de Vivienda (Business model for the aggregation of demand and supply of comprehensive solutions for housing improvements), October 2012.

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conditions and that construction work was adequately supervised by the responsible organization. The consultants’ report found that the lack of adequately standardized procedures was an important element in reducing the willingness of community residents to participate in the programme.

At the time of preparing this document, the first three loans had been approved, and the housing improvements had been carried out. The experience of the JP demonstrated clearly that for the model to work well there must be better coordination between the different actors (microfinance institution, social organization and community managers) and better communication with the clients to achieve the expected results.

ACTION: Identify organizations to carry out the technical and organizational functions that were performed by FUNDASAL and the micro lending functions carried out by Integral. Identify and train persons from the community or municipality to carry out the functions of the “community managers”. Establish standardized procedures to be followed by all persons involved in implementing the programme.

RESOURCES: A local company was subcontracted for the duration of six work months to develop the model of aggregation of offer and demand. The consulting firm was supported by the guidance of an international expert, recruited for three work months. The sustainability of the model is currently ensured by additional local project short-term staff. In addition, a consulting company was subcontracted for three work months to develop a model for the economical sustainability of the aggregation of demand and offer.

Mobile School for MicroentrepreneursThe mobile school represents a truly innovative component of the JP. The establishment of the school for construction workers was aimed at overcoming several of the bottlenecks identified in the construction link of the value chain – poor quality of construction work, lack of skilled labor, poor supervision and management of construction projects and use of inefficient building techniques. The mission of the mobile school is to provide practical training in both building and business skills that will enable the residents of the target communities to improve their livelihoods and thus support the development of the neighborhoods into productive and sustainable communities. The location of the mobile classroom near the community where the workers live made it easy for them to attend classes, and the mobility means that in future the classroom can be located near the next community for which a course will be held.

Photos/graphs

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Photos 7, 8, 9, 10 are taken from the first Mobile School for Entrepreneurs, September 2012

An important feature of the undertaking was the inclusion of private sector partners, such as Holcim, Precasa and Amanco, and the inclusion of academia, in El Salvador both the Universidad Politécnica and the University of El Salvador. Making company staff available to serve as instructors, and supplying building materials for the practical exercises and other material support, such as the cargo containers provided by Holcim for the mobile classroom, enabled the building materials manufacturers to demonstrate corporate social responsibility. It also helped to ensure that the theories and techniques taught in the school were up to date and that the students gained familiarity with the newest materials and how to use them.

The inclusion of entrepreneurship training as a central feature of the curriculum and the provision of business development support to the students of the first course to help them to form a microenterprise were key elements for achieving the goal of making communities more productive and sustainable. The future success of the students and their microenterprise will be an important test of the effectiveness of the mobile school in contributing to the development of the community and to the strengthening of the social housing value chain. The experience of the micro construction company should be documented and made available so that others who interested can learn from it.

ACTION: Identify academic institutions and private sector partners to support the school. Design a curriculum appropriate for the needs of the target audience.

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Select students from the community who are motivated to participate in the training. Ensure that the instructors transmit all the necessary skills and employ up-to-date techniques that are appropriate. Where possible involve staff of private sector companies as instructors. Ensure that the institutions and companies involved are motivated to continue the school.

RESOURCES: The support (financial and in-kind) of the private sector is vital for this component tp prepare the training material; provide trainers and location, as well as the support of local Universities to ensure the sustainability of the programme.

Supplier development programmeThe supplier development component in the JP was supported by UNIDO. It contributed to strengthening the social housing value chain both by building business networks and by assisting the lead enterprises and the micro, small and medium enterprises that supply inputs to them to work more efficiently and profitably. While the supplier development programme functions at the national level, it is linked to the local level through its support to the microenterprise formed by construction workers from the municipality of Apopa. This support is provided both in the form of advice and assistance to the workers in setting up the new enterprise and in helping the new enterprise establish links with the two lead enterprises.

UNIDO contracted the Salvadoran organization PDP (Programa de Desarrollo de Proveedores) to carry out this component of the JP because PDP already had extensive experience in El Salvador in conducting supplier development programmes for other subsectors of the economy and was thus well-qualified for this task. Clearly it is a great advantage to have an organization such as PDP already active in the country. If a programme is being designed in a country without such an organization, another entity would have to be trained in the methodology and then supported in applying it. The reports of PDP El Salvador about implementing the programme provide useful information about what is required to make this component function successfully.

It is possible that the supplier development module could be implemented as a standalone project. Strengthening the construction industry value chain and making it more inclusive of small and microenterprises can have a strong positive effect on housing for low income population groups, as well as on the economy of the country as a whole. Greater efficiency can result in faster, better quality and lower cost construction; inclusion of small and microenterprises can mean better and more secure incomes for those employed there.

ACTION: Identify an organization, such as PDP in El Salvador, which can implement the supplier development programme in the country. If the organization does not have experience in implementing such programmes, provide training in the methodology. Assist the organization in the identification of appropriate firms to participate in the supplier development programme, including micro, small and medium enterprises.

RESOURCES: A consulting firm has been recruited twice, each time for duration of six month to develop two value chains of one main company and five suppliers. The contribution of UNIDO to this subcontracting was 30% of the total cost, the rest is covered by the Chamber of Commerce and Industry.

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Local economic developmentThe local economic development (LED) component is a key factor in the development of productive and sustainable urban communities, which aims at increasing the productivity of a community by promoting business networking and establishing new enterprises in a way that benefits all community residents. In the JP, parts of this component were led by UNDP and parts by UNIDO.

A successful LED strategy requires not only a comprehensive set of interventions aimed at improving economic conditions in the slum area and the living conditions of the inhabitants, but also joint reflections by all the inhabitants about the direction they want the development to take and the role of LED in achieving these goals. In order for the local community to appreciate and value these activities, they must have collectively achieved some clarity about their goals. If the inhabitants of the local community have not set clear objectives and perspectives, they will not recognize what happens in the settlements as an opportunity to enhance their own development, and further community integration.

An important focus of the strategy for the creation of productive and sustainable urban communities is the integration of marginalized areas into the larger community. The marginalization of significant parts and population segments of an urban area is a result of unbalanced growth and is difficult to sustain over time. A strategy of sustainable development cannot permit that some segments of the community continue to be marginalized; the persistence of pockets of exclusion and poverty tends to generate social tension and violence that hinder all types of balanced growth.

The LED strategy requires action to encourage the participation of all actors in the area concerned, both public and private. These can include: relevant central or state government officials, the city administration and relevant local officials, public institutions to promote productivity, international agencies, formal and informal neighborhood and community associations, NGOs, employers (large and small) and their associations, employees and workers and their associations, schools, universities and other academic institutions. These actors should jointly define their future development and agree jointly on goals and prioritize areas of action. In the private sector, it is essential to promote and maintain the dialogue within and between the various business branches. Support by local authorities, especially the mayor, and the active participation of the municipal officers in charge of local economic development are equally important.

A decisive factor is also consolidating relations of trust between the local actors involved in the design and implementation of LED strategies. Therefore, it is important to form both a team of network facilitators in the private sector, and an area or department in City Hall specialized in working with businesses and local economic development. The technical team in City hall should be responsible for creating an environment conducive to business generation and development of economic activities in the municipality, facilitating horizontal and vertical networking between businesses and strengthening cooperation between the public and the private sector. Within the local government the team should coordinate with other work areas of the Municipality, such as environment, public safety, municipal permits and procedures, education, employment and business registers. It should also be responsible for coordinating with the central Government and other institutions, to promote the provision of support services to businesses in the municipality.

The training of both municipal staff and local private sector leaders is essential. While the first course conducted in Apopa represented a step in this direction, it is necessary to establish a permanent local

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training strategy in LED. The training provided should also stimulate the creation of an area of ongoing collaboration between local stakeholders and academic institutions specializing in LED. This can be the basis of monitoring and evaluation -- to monitor the activities undertaken, drawing lessons, disseminate best practices, train local technical and personal, etc.

The experience of the JP illustrated some of the difficulties that can arise when the programme supports the establishment of individual enterprises. It is difficult within the limited timeframe of a donor-financed technical cooperation programme to select and promote productive enterprises long enough for them to become economically viable. It is also difficult to ensure that they have a positive economic and social impact on community development.

One aspect that can further complicate the management of such enterprises is the involvement of a community based organization (CBO), such as the ADESCOs in El Salvador. The following points should be considered if there is a similarly structured CBO in the community. CBOs are usually elected representative bodies, with a turnover in their membership. Therefore, it must be decided what role, if any, the CBO will play in managing the enterprise. If CBOs are involved, training should be provided to the people involved to enable them to carry out these functions effectively.

A central question concerns the use of income generated by the enterprise. After securing the necessary investments to ensure the competitiveness of the company, e.g. infrastructure and equipment, training, consulting, etc., the use of any remaining proceeds should be decided by the entire community in an assembly, and the decision should be binding until changed by the community.

ACTION: Ensure a clear understanding among the programme team of the relationship between local economic development and the creation of sustainable and productive urban communities. Obtain full support of municipal authorities, especially the mayor, of business leaders in the municipality and the community and of community leaders. Provide sufficient training for those actors. Establish a business working group involving both business leaders and representatives of micro and SMEs to begin developing business networks and mutual cooperation. Involve community residents in the participatory process of deciding on the objectives of local economic development.

RESOURCES: An international expert on Local Economic Development and project systematization has been recruited at regular intervals throughout the whole project duration, amounting to a total of seven working months. In addition, an expert on networks and clustering was recruited for a duration of three work months.

ConclusionThe Joint Programme in El Salvador aimed at transforming slums into productive and sustainable urban communities. It was a complex undertaking involving a set of interlinked components that supported a comprehensive approach to community development. The programme was carried out on three levels – local, municipal and national – and included interventions in three areas – increasing social cohesion, promoting economic development and improving low income housing. It worked with government authorities on the national and municipal level, with private sector companies and representative bodies, with NGOs and academic institutions, and directly with the

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inhabitants of slum areas. It supported the creation and strengthening of business networks and public-private partnerships, and encouraged greater corporate social responsibility.

The JP is still a work in progress; it has accomplished only some of its objectives. But it has shown the way towards a comprehensive approach to problem solving. The lessons learned can provide a basis for designing other programmes with similar objectives. These include the importance of identifying all key actors and bringing them together to engage in a constructive dialogue aimed at identifying problems and developing creative solutions. The JP has demonstrated that different institutions can work together towards achieving common goals. But it has also shown that continued support by both the governmental authorities and the private sector is essential if activities are to achieve their planned results. Most of all, it has shown the importance of ensuring sustainability by involving appropriate national actors to assume ownership and continue implementing activities after the end of the programme.

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