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Market News

 June 14, 2006
Our Cities: slums and the urban environment

 Vancouver, Canada (GLOBE-Net) -- According to the United Nations, the number of people living in slum conditions by 2030 will rise from today's estimate of 900 million to over 2 billion. Urban poverty represents not only a serious threat to the natural environment, but also a social and economic time bomb that could destabilize many regions of the globe, says the UN. The World Urban Forum opening next week in Vancouver will explore possible solutions to the environmental and related problems of unchecked urbanization, with particular attention on slums.

The United Nations believes most of the world's population growth over the next two decades will be in the already overcrowded urban areas of developing countries. "What we are witnessing is an absolutely clear trend," says Billy Cobbett, Program Director for The Cities Alliance, a joint project of The World Bank and UN-HABITAT. "Sub-Saharan Africa, Southeast Asia, and other areas are going to shift from mostly rural societies into mostly urban ones -- it is a natural, irreversible economic process that must be recognized and planned for."

Three countries that are among the fastest growing economies in the world, China, India and Brazil, also possess the greatest number of slum dwellers.

While basic environmental technology and improved physical infrastructure is needed to rehabilitate urban slums, the factors that led to their creation must also be addressed. There are no technological quick fixes.

Poor governance, little or no environmental regulation and economic disenfranchisement have been cited as major contributing factors to the deterioration of living conditions in urban slums, according to numerous reports. Any strategy designed to improve urban sustainability will have to include measures that address these problems as well.

According to Mr. Cobbett, perhaps the greatest challenge is to convince local and national governments of the unavoidable nature of urbanization: "We need to discuss strategies that authorities can best implement to prepare for urban growth -- we want to optimize the growth, not debate if it's going to happen or try to change it," he says.

Failing to prepare for rapid urban growth, or resisting it as many countries have done, creates a 'lose-lose' situation for cities, adds Cobbett. "The people suffer from inadequate housing, environmental pressures and poverty, while the city loses out on potential labour and resources -- it's not a slum problem, it's a city problem."

As noted in a report published by the Cities Alliance (The Dynamics of Global Urban Expansion) although many governments have attempted to control rural-urban migration flows, most, if not all, of these have ended in utter failure. The report further notes that urban densities in all regions are decreasing over time. If average densities continue to decline at the annual rate of 1.7% (as they have over the past decade), the report notes, doubling of the developing world's urban population by 2030 will result in a tripling of their built-up areas. The central policy message of the report is clear, according to the document: Developing country cities should be making realistic plans for urban expansion, investing in trunk infrastructure and protecting sensitive land from incursion, it notes.

Urban slums are not just a Third World problem. Many North American cities have witnessed deterioration of large areas of their inner cities as wealthier residents migrated to surrounding suburbs to escape noise, pollution, crime and congestion. These abandoned areas quickly became major problem areas requiring increased police resources and housing for the influx of disadvantaged poor migrating to cities in search of work.

Quick fixes to deal with urban poverty often have backfired in many of these cities. Huge housing tracks established to provide basic shelter for the urban poor -- the infamous "Projects" - resulted in increased crime and more social dislocation. These well intentioned projects are being dismantled in almost every instance.

Massive forced evictions for "slum clearance" are on the rise in many cities across the world. In Zimbabwe recent drastic actions to deal with urban slums involved bulldozing thousands of shanties, which in turn has led to even more social dislocation, increased environmental degradation, and greater risks of disease, hunger and crime.

The challenge of dealing with urban slums, while daunting, is not without hope. Slums can be transformed into viable communities through investments that lever community resources, notes the World Bank.

A report by the Cities Alliance says that for every $1 of institutional investment, a further $7 is invested by households, particularly where property tenure has been established. The benefits of this investment can be seen immediately in these communities. Slum upgrading projects have proven to be technically and financially feasible, says the World Bank.

From a business perspective, meeting the basic sustainability needs of large cities would appear to be a market burgeoning with opportunity for companies providing environmental goods and services or physical infrastructure. It is indeed a huge potential market, but the financial resources needed to deal with urban slums in the developing world are far beyond the capacity of any one country or the international community generally to manage in the short term.

A United Nations Task Force on Improving the Lives of Slum Dwellers estimates it would cost US$18 billion annually for the next 16 years to improve living conditions for 100 million slum residents and provide housing and services for another 570 million people who would otherwise become slum dwellers. As noted by the UN "As large as 100 million may seem, however, it is only 10 per cent of the present worldwide slum population, which, if left unchecked, will multiply threefold by the year 2050.

These funds would be used to provide water and wastewater infrastructure, roads, electricity, waste management, improved housing, and related social services such as microfinance and environmental remediation. They would also go towards financing changed regimes of governance and strategies for citizen inclusiveness.

The reason for the latter priority is simple. To effectively tackle the challenges of rapid urbanization, economic, social, and environmental factors must be addressed simultaneously.

This is very much the focus of the Slum Upgrading Facility (SUF) established within the UN-HABITAT Programme to coordinate technical cooperation and to provide seed capital for 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 Slum Upgrading Facility (SUF) are municipal authorities, non-governmental organizations 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.

A second objective is to prepare local projects for potential investment by international donor facilities, international financial institutions and potential investors in the global capital markets -- again with the intent of leveraging further domestic capital for slum upgrading.

It all starts with recognizing the urgency of the issue, and engaging the participation of stakeholders at all levels of society in planning strategies that move from ideas to action.

Earlier this year a historic event took place in India when eighty three families living as pavement dwellers on the streets in South Mumbai, were presented with keys to new homes by visiting South African Housing Minister Lindiwe N. Sisulu. The Government provided land for the housing while construction was facilitated by the Society for Promotion of Area Resource Centres (SPARC). Project capital was provided by a financing program being piloted in India by SPARC's construction and a local finance company.

The State Government has now committed to resettle all pavement families in Mumbai in two years, which will see 100,000 people moving from pavement dwellings where 10 to 12 people live in spaces as small as 9 sq feet to new 225 sq feet homes, designed by the slum dwellers themselves.

Turning ideas such as this into action is the core theme of World Urban Forum III (WUF3) taking place next week in Vancouver. Slum upgrading and affordable housing constitute one of the largest components of this seven day examination of the problems of urbanization that will bring over 8,000 people from more than 150 countries to Vancouver.

The entire Program of WUF3 is designed to engage the thousands of participants in the search for strategies to make cities around the world more sustainable. As noted by Charles Kelly, Canada's Commissioner General for WUF3, "One of the most important things we have learned about urban sustainability over the past thirty years is that linear top down approaches to decision making so characteristic of the past simply will not work in the future. Making cities more liveable requires a different decision-making model, an integrated, horizontal process that actively involves those who will be most affected."

As noted in the final Program for WUF3 in light of the scale and severity of the slum challenge, a full suite of practical solutions are required such as the provision of security of tenure and affordable land; the need for inclusive slum upgrading processes that empower the urban poor; as well as adequate mechanisms for financing slum upgrading, affordable housing, and proactive programmes to avoid the formation of new slums.

As noted at the outset, urban poverty and slums represents a serious threat to the natural environment in many parts of the world. But street-level strategies that promote the empowerment of slum dwellers and partnerships such as evident in the successful slum rehabilitation programs in Mumbai, can go a long way to bringing very real improvement to the quality of lives of the urban poor. This message alone could be the most important achievement of the World Urban Forum taking place in Vancouver next week.

Complete details and the final program the World Urban Forum are available at www.wuf3-fum3.ca.