(Corrects April 2 story to make clear Simittrarachchi works for Habitat for Humanity International, not UN-Habitat)
NAIROBI (Reuters) - A U.N. program to break the poverty cycle by providing small housing loans to slum-dwellers is set to take off in six nations after agreements were signed Thursday.
Launching the project at a meeting in Nairobi, the U.N. housing agency UN-Habitat said financial institutions in Argentina, Bangladesh, Kenya, Nepal, Tanzania and Uganda would receive loans of up to $500,000 (338,340.78 pounds) for housing slum-dwellers.
Funded by Spain, Bahrain and the Rockefeller Foundation, the $5 million Experimental Reimbursable Seeding Operations project lends the money to local banks that will in turn lend to the urban poor.
"It is designed for the poor with due diligence," UN-Habitat boss Anna Tibaijuka told reporters. "UN-Habitat is partnering with banks to ensure people don't fall into poverty."
She said the scheme would provide low interest loans in local currencies to guard against foreign exchange exposure.
New housing will be built in eight slums in Nepal under the project, which is expected to help at least 6,700 people there.
"If we can help people take the first step, they will complete the process themselves," said Habitat for Humanity's Nepal spokesman Aruna Paul Simittrarachchi.
The U.N. program has a total budget of $5 million of which $3.6 million is available to be lent to developing nations with $1.4 million for administration, staff time and legal fees.
(Reporting by Alison Bevege; Editing by Daniel Wallis)