Urban informal settlements seem inherent to cities in low- and middle-income nations. Between 40 and 65 per cent of the urban population in Latin America live in informal dwellings with inadequate levels of urban development. In the case of Bolivia, there are historical reasons. During the 1950s and 1960s, the state produced large-scale housing projects, which in the 1970s became unable to tackle the rapidly growing rates of precarious suburban development. Then, “site and services” schemes became the most important instrument for housing policy, but soon they proved inadequate for solving the massive problem of homelessness. The public sector also made erroneous financial calculations, usually overestimating people’s capacity to pay. The situation was made worse by the extreme labour instability and weak national economy during the 1980s. The failed processes of creating a national housing policy contributed to the spread of informal settlements.

In contrast, current state policies in Bolivia focus on the integration and upgrading of informal settlements into the urban structure. This implies the provision of basic infrastructure and services, facilities for social development, regularization of informal plots, securitization of land ownership and the strong participation of the benefited communities. A whole new housing programme, called PROVIVIENDA, emerged in 1998 and was supported by funding from the Inter-American Development Bank. This programme aimed to improve property and financial markets and facilitate access by the poor to credit systems, creating a subsidy policy for the poor. PROVIVIENDA consisted of four sub-programmes, among which the Neighbourhood Upgrading Sub-programme (SMB – Subprograma de Mejoramiento de Barrios) was financed by 72 per cent of the total resources of PROVIVIENDA. The author of the present report participated directly in this sub-programme.

The neighbourhoods selected by SMB had to be among the most impoverished in the cities. Most of the plots had to be inhabited by homeowners (in order to avoid speculation by landlords). They also had to be legitimately organized and the investment per plot could not exceed US$ 2,800, although in some exceptional cases it could reach US$ 4,200. In a selected neighbourhood, 75 per cent of dwellings should lack a sewage system, although the area should be close to already installed infrastructure and service networks. They also had to be accessible from road systems and to garbage collection trucks. Among other conditions, neighbourhood size could not be under 100 plots nor could they be situated in disaster risk areas.

The SMB was conceived to operate in two different areas. The first aimed to supply potable water, sanitary sewerage, road improvements, rainwater drainage, electricity and public lights, toilets, and infrastructure for social activities. The second area was community development and the regularization of land property rights. The report analyzes these in depth. After a difficult process of adjustment, these different elements could work together to create multiplier effects, where social improvements are reinforced by better infrastructure. A major conclusion is that actions for community development were essential for the greater success of this sub-programme, compared with other more traditional policy schemes. The report includes quotations from interviews with local beneficiaries in several cities. These actors provide a first-hand evaluation of the successes and failures of the Subprograma de Mejoramiento de Barrios.