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World Resources 1996-97
(A joint publication by The World Resource Institute, The United
 Nations Environment Programme, The United Nations Development
 Programme, and the World Bank)
(Data edited by Dr. Róbinson Rojas)

6. City and Community: Toward Environmental Sustainability

Box 6.3 Housing Program for Cali's Poor Encourages Self-Help

During the time that I served as mayor of Cali, Colombia, from 1992 to 1994, I tried to design programs for the city's poor that supported people's basic desire to improve their living conditions. Many of these concepts grew out of my work as president of the Carvajal Foundation, a well-known philanthropic organization that has developed a number of programs to support small businesses and community initiatives in low-income settlements.

Cali, a city of 1.7 million inhabitants, is Colombia's second largest city; the city is known throughout Colombia for the civic-mindedness of its citizens and business community (1). Located in a rich agricultural valley, Cali is an industrial and commercial center.

Although overall environmental quality in the city is good, many of Cali's citizens reside in illegal squatter settlements in conditions of extreme poverty where services such as schools and primary health care are lacking. Because these communities have sprung up on government-owned or privately owned land without the required permits, they also lack basic services such as water, sewers, electricity, roads, and garbage collection.

One such district is Aguablanca, a settlement of 350,000 residents covering 1,500 hectares. Aguablanca attracted large numbers of people looking for a better place to live after a series of natural disasters and political upheavals in the 1980s (2).

In providing development assistance to the residents of Aguablanca, the Carvajal Foundation's strategy was to observe what people were doing to improve their living conditions and what obstacles they faced. Most of Aguablanca's housing consisted of shacks illegally constructed by the residents. Building a house or even improving an existing structure was very expensive. Residents could only buy construction materials at nearby locations where prices were high because there were many intermediaries between the manufacturer and the final retailer (3).

To assist the residents, the Carvajal Foundation built a warehouse in the middle of the squatter area to provide space for manufacturers to sell their construction materials directly to residents at wholesale prices (4).

In the beginning, convincing manufacturers to sell their goods in Aguablanca was difficult because they thought that the low-income residents would not have money. However, the poor did have some money, and they had it in cash, which was attractive to the merchants because they did not have to sell on credit. To profit, however, the merchants had to be open on weekends and holidays, when the residents could shop.

In addition to providing space, the Foundation provided insurance and agreed to handle the money to alleviate merchants' fears of handling large sums of cash in the Aguablanca district. The Foundation charged a commission of about 2 percent to cover operating costs.

Once people had access to construction materials, they usually hired friends to build their houses. But, because few people understood basic building concepts, they often purchased the wrong types of materials or used them incorrectly. For example, residents typically built foundations of reinforced concrete with far more load-bearing capacity than their modest structures required. Their money then ran out and the building stopped.

The Foundation approached a local school of architecture and invited students to come up with a sound, simple, modular house design that would enable the Carvajal Foundation to provide residents with the full plans needed to complete their houses (5). In this scheme, residents could start with a single space and a bathroom and then expand into a fully developed house as resources allowed. The basic starter house was 17 square meters; the fully developed house was 90 square meters. Designs for a house with a workshop and a house with a small store were also developed.

Eager to involve government agencies in this effort, the Foundation also convinced the city to approve the building plans and to set up a small office at the warehouse where residents could obtain building permits. Having preapproved building plans and easily obtainable permits was a valuable incentive for residents to build legal, affordable structures.

The government-owned Central Mortgage Bank also opened an office in Agua -blanca and encouraged residents to open savings accounts and obtain construction loans for their homes. Residents could make a down payment of 50,000 pesos (US$600) and then take out a 10-year loan. The monthly payment for a basic single-space house with bathroom was 20,000 pesos (US $250), which is less than the normal rent in the district.

Families interested in building their own homes were (and continue to be) invited to a workshop that covered everything from financing to construction. Each family sat down with a financial advisor who helped them evaluate their financial resources and decide how much space they could afford to complete initially. They were trained in how to read blueprints and how to build foundations, walls, and roofs, as well as in plumbing and wiring.

Banks give families a 60-day grace period during which they do not have to make payments on their loans, so families work hard to complete their houses during this period to avoid having to continue to pay rent after they have begun repaying their loans. Through this process, families learn how to budget for the house and control their cash flow.

The success of the Carvajal Foundation's original program inspired a private developer to develop 3,000 lots in another part of the city. Nearly 11,000 families applied for the program, and 2,500 lots were sold in the first week.

In 1992, the city of Cali adopted the same model and launched a program, the Cuidadela Desepaz, for 28,000 minimum-wage families. About 3,000 lots were developed by the municipality to relocate families from high-risk areas; the remaining lots are being developed by the private sector (both nonprofit and for-profit) (6).


The Foundation discovered that the food costs of the poor in Aguablanca were more than those of people in many other, more prosperous areas of the city, partly because grocery stores were not purchasing goods efficiently. The Foundation offered management training to grocery store owners and established wholesale food outlets. To participate, a grocery store owner had to agree to attend a simple, 30-hour course on accounting, marketing and sales, and investment project analysis.

Once food sellers completed the training process, they could buy directly from these outlets. This meant that for the first time, they could buy their stock at the best wholesale prices. As soon as the program went into effect, retail prices went down by as much as 15 or 20 percent. Merchants were making higher profits, because, as part of the training, the Foundation suggested that merchants use a markup of about 10 percent, instead of the 3 to 4 percent that they had been charging.

The Foundation has developed a training course for entrepreneurs (7). Because many informal entrepreneurs have only 1 to 2 years of primary schooling, the courses emphasized basic business skills. The program covers topics such as sales and marketing, administration, accounting, cost estimation and investment analysis, handling personnel, and quality control (8). Individual counseling was provided to help entrepreneurs set up account records and transfer other skills that they had learned to their individual businesses. The Foundation also provided loans to entrepreneurs if they needed them.

The combination of training, individual counseling, and credit reduced the failure rate of many small businesses to about 5 to 10 percent. Individual counseling and direct training have been provided to 22,000 Colombian entrepreneurs in microenterprises. Thirty percent have received US$3.9 million in small loans. According to estimates by the Carvajal Foundation, about 20,000 new jobs have been created in Cali through this program (9).

In addition, the Foundation has trained volunteers from the community to educate families in the importance of proper nutrition, prenatal care, and immunization (10). Success can be seen through the reduction in the infant mortality rate from 70 per 1,000 live births in 1983 to 26.2 per 1,000 live births in 1993. Seventy percent of the population has access to health services in Agua-blanca; vaccination programs cover 90 percent of the children under the age of 1 year and 75 percent of the children under the age of 5 years.

--Rodrigo Guerrero

Rodrigo Guerrero is a regional advisor on health and violence at the Pan American Health Organization in Washington, D.C. In addition to serving as mayor of Cali, and President of the Carvajal Foundation, he is also a physician.

References and Notes

1. Tatiana Gutierrez and Elizabeth Olson, "The Role of Intersectoral Links in the Socioeconomic Development of Cali, Colombia," paper presented at the Conference on Cali: The Entrepreneurial Spirit, School of International and Public Affairs, Columbia University, New York, March 21-24, 1994.

2. World Health Organization (WHO), "La Funcion de Los Centros de Salud en el Desarrollo de los Sistemos Urbanos de Salud," Serie de Informes Tecnicos No. 827 (WHO, Geneva, 1992).

3. Luis Fernando Cruz, "Fundacion Carvajal; The Carvajal Foundation," Environment and Urbanization, Vol. 6, No. 2 (October 1994), p. 178.

4. Ibid., pp. 178-179.

5. Op. cit. 3, p. 179.

6. Instituto de Vivienda de Cali (INVICALI), "V eintiun Mesos de Gestion Responsable," Informe del Gerente a la Junta Directiva del Instituto de Vivienda de Cali (INVICALI, Cali, Colombia, December 1994).

7. United Nations Children's Fund (UNICEF), "The Urban Poor and Household Food Security," Urban Examples, Volume No. 19 (UNICEF, New York, 1994), pp. 20-23.

8. Op. cit. 3.

9. Op. cit. 3.

10. Op. cit. 3, p. 181.

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