Guatemala Program for Slum Upgrading Through Financing from the Private Banking Sector - Phase 1 - Project Preparation



Approval Date
Actual Completion Date
Proposal Focus
Core Focus
Secondary Cities
Country Type
Lesson Learned for Cities Alliance Members and Partners
Lessons learned is under review and it is uploaded under the Evaluation Report section. The lessons derived from the Task Manager's Completion Report are as follows.... The key lesson is that private sector financing offers a feasible solution for community upgrading. Commercial banks are intersted and willing to invest if they can insure their investments to overcome regulatory limitations and if low income cutomers are able to afford their loans. NGOs are only able to engage in upgrading projects if they have access to assured financial resources, including from private sector investors.  


With the long-term objective of launching a national slum upgrading programme based on private sector investments, the Guatemalan Government seeks in this first phase to identify appropriate financial guarantee mechanisms to stimulate private sector investments, and to define a TA programme to build the capacity of NGOs and MFIs to assist unserved communities in the design and implementation of bankable upgrading projects.
1) Identify the appropriate financial guarantee mechanisms to stimulate private sector investments;  2) Define a technical assistance programme that will build the capacity of NGOs and MFIs to organize the communities to be able to prepare and implement “bankable” upgrading projects; 3) Establish a national program of slum upgrading based on private sector investments, sustained in turn through a partial guarantee mechanism which would permit commercial banks to classify lending to qualifying institutions as investment grade and to refinance loans in the secondary mortgage market.
A team of experts, supported by a Special Advisory Group (SAG), will work with the Vice Ministries of Housing and Community Development and in consultation with the municipalities, NGOs, MFIs, and community organisations to: (1) carry out two studies on:  a) Effective demand in selected municipalities (community needs, capacity to pay);  b) NGOs, MFIs, and community associations’ capacity to design, organise and implement upgrading projects (2) design an action plan and methodology for a slum upgrading programme, identifying bankable upgrading and community organisation and development projects. 3) mobilise donor support and finalise a second phase Cities Alliance proposal.
Expected Impacts and Results
1) An increase in the capacity to design and implement community upgrading projects and, thus, in the rate of provision of basic services with a goal of meeting or surpassing the urban growth rate and, ultimately, eliminating the deficit in basic services;  2) A technical assistance plan for a national slum upgrading programme is to be prepared for subsequent adoption by the Guatemalan Government and municipalities involved.