The Slum Upgrading Facility (SUF) is a new global facility located within UN-HABITAT. SUF is designed to lead and coordinate technical cooperation and seed capital initiatives established to develop bankable projects that promote affordable housing for low-income households, the upgrading of slums, and the provision of urban infrastructure in settlements in cities of the developing world. The key clients of SUF are municipal authorities, CBOs, NGOs, and relevant departments of central government, as well as the local, private sector, including retail banks, property developers, housing finance institutions, service providers, micro-finance institutions, and utility companies. A central objective of SUF is to mobilize domestic capital for upgrading activities by facilitating links among these local actors and by packaging the financial, technical and political elements of development projects. This will entail identifying projects, building local capacities, networking, and providing direct technical assistance and seed capital. A second objective of SUF is to ready local projects for potential investment by international donor facilities, international financial institutions and, potentially, investors in the global capital markets – with the specific intent of leveraging further, domestic capital for slum upgrading.

SUF will be executed by Human Settlements Financing, the Sub-Programme 4 of UN-HABITAT in conjunction with the Cities Alliance, the collaborative initiative of the World Bank Group and UN-HABITAT set up to advance strategies to improve conditions of cities in the developing world. SUF will be advanced in cooperation with international donor facilities such as the Private Infrastructure Development Group, international financial institutions including the World Bank Group, International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), Asian Development Bank (ADB), etc.as well as the United Cities and Local Governments, Slum and Shack Dwellers International, and the UN-HABITAT Governing Council. A UN-HABITAT Programme Manager and a contracted Management Support Team will together manage the operations and technical activities of SUF. UN-HABITAT and its partners seek to capitalize the facility with USD 30 million for an initial 3-Year Pilot. The Department for International Development (DFID) and Swedish International Development Cooperation Agency (Sida) have pledged support towards the 3-Year Pilot with a contribution of USD 20 million.

UN-HABITAT and its partners, in consultation with DFID and Sida, are adopting a staged approach to the SUF 3-Year Pilot, by providing additional support of USD 1.8 million towards an initial 10-month start up period, referred to as the SUF Design Phase. UN-HABITAT will recruit a design team of five persons: senior urban advisor, investment finance adviser, project finance adviser, Africa regional advisor, and a program management adviser. The design team will undertake a number of activities to ready the 3-Year Pilot for full implementation. These include fund raising, establishment of inter-institutional relations among key SUF partners, and a number of management arrangements such as the tendering of the contract for the management support team, recruitment of programme manager, and the development of a one-year action plan. The SUF Design Team will in parallel identify a pipeline of prospective field pilots in cities of Sub-Saharan Africa and South and Southeast Asia, developing in greater detail four projects selected from among the initial pipeline. Further work will be undertaken in the four projects including consultation with local partners, initiation of capacity building activities, and the design and initial field-testing of financial mechanisms to mobilize domestic capital for slum upgrading.