Today the global slum population is estimated at 837 million persons, accounting for one-third of the urban population in Asia, over one-half in Africa and approximately one-quarter in Latin America (World Bank 2002). These figures are projected to double over the next 25 years, leading to one of the greatest challenges a country's development will face: a growing majority of the population, who are marginalized slum dwellers.
What are slums? There remains much controversy about what characterizes a slum, with substantial regional difference driving the current debate. In general though, slums are informal settlements that lack access to basic services. Slums are typically characterized, in part, by the lack of access to clean water and exposure to unsanitary conditions with excrement and open sewage pooling along unpaved walkways. Slums are usually high density and have an insufficient number of quality schools and health clinics. Despite these daily hardships, slums are also places of community and vibrant economic and entrepreneurial activity.
What is slum upgrading? Slum upgrading consists of physical, social, economic, and environmental improvements that are done in partnership with citizens, community groups, businesses, and local authorities. These improvements often focus on introducing or improving basic service provision, mitigating environmental hazards, regularizing security of tenure, providing incentives for community management and maintenance, and improving access to health care and education.
Programming Considerations
The Enabling Environment
Local and national governments can create an enabling environment to encourage slum upgrading through a variety of actors, the foremost being the urban poor themselves. Some key government actions that facilitate slum upgrading include:
the explicit provision of secure tenure to slum residents;
an improved low-cost, user-friendly system for land titling;
community contracting to implement small infrastructure works in slums
(See Participatory Management brief);
the reform of building codes to enable incremental building by slum dwellers and to facilitate their access to micro-credit for progressive building;
well-targeted incentives to encourage the local private sector to move down market and begin serving the poor's credit needs;
consistent implementation of policy that is enforceable at the local and national levels; and
public-private partnerships with slum dwellers to improve community living
conditions, open lines of communication, and build trust and accountability
among government authorities, local businesses, and the urban poor.
Documentation of slums and their characteristics
Slums are spatial areas, and as such, it is important for stakeholders to have accurate data on where they are located within a city and the socio-economic and health conditions of the residents living in that slum. This information is particularly valuable for policymakers interested in designing upgrading, disaster mitigation, and health policies as well as for slum communities interested in organizing for service provision. Some tools that are valuable for documenting the location and characteristics of slums include, GIS mapping, land surveys, and household censuses. Combining these traditional tools with community surveys and focus groups leads to enhanced data quality and develops relationships based on greater understanding and trust between local government officials and slum dwellers. For example in Pune, India, the residents from the slum communities led a slum census, collecting their own socio-economic data. Information such as location, legal status, hazards due to location, facilities within and around the slum, main castes, religions, languages spoken, and year of establishment of the slum were collected. Teams of slum dwellers then checked the GIS maps to connect that data with slum boundaries. The community and local authorities are using this information to build community toilets and improve service provision where the need is the greatest.
Secure Tenure
Security of tenure is one of the first policy challenges that must be addressed if slum upgrading is to reach scale. Having land security has a positive effect on the poor's willingness to invest in housing improvements and basic services. Currently, it is estimated that anywhere from 30 to 80 percent of the urban population in developing country cities live in informal settlements without formal land title (Durand-Lasserve May 2002). Given the pace of urbanization in developing countries, the number of city residents without land title or land security will only increase. Land security does not have to mean individual freehold title, which is often the least appropriate form of secure tenure. It is inappropriate because it assumes there is an up-to-date cadastre, and that there is institutional capacity at the local and national levels to do multiple transactions and enforce a legal regulatory framework that is fair to all. Land security can take many other forms than individual freehold title. What is sufficient land security in one country may be insufficient in another, depending on the country's national policy and social norms. Some types of land security include:
government announcement that the urban poor has land use and development rights for a designated amount of time, i.e. 10 years of the right to use;
private rental agreements whose legality is recognized and accepted by the
government;
community land trusts that provide long-term leases to their members;
de facto tenure through the paying of property tax and utility services; and
accretion of documents such as voter registration forms, ration cards, etc.
Incremental Building
Slum dwellers, given their limited financial resources and their varying degrees of tenure security, often build their homes one brick at a time. This form of incremental building enables slum dwellers to build what they can afford when they can afford it: a new cemented floor one year and possibly an additional room the next. Government can empower and facilitate incremental build by recognizing it as a legitimate form of construction and understanding the living and economic realities facing the urban poor, including extremely limited land access and highly constrained finances. When government builds policy and regulation on untrue assumptions about the needs and interests of the urban poor, the effect can be too crowd out local builders and financiers from the low-cost housing market. For example strict building codes in Kenya, although designed to protect the population from faulty construction, resulted in the virtual elimination of all finance options for the urban poor because local financiers could not legally finance housing construction or improvement loans unless the house was built to code. Local authorities that are concerned with safety should achieve a balance between necessary building codes and the way that the urban poor construct their homes. In Nepal authorities provided widespread training on how to build low-cost, earthquake-resistant homes to local builders.
Shelter Financing
Government and donor financing of slum upgrading has been and will continue to be insufficient to meet the scale of current and future slum dwellers' needs. Private sector lending will become increasingly necessary to fill this resource gap. One example of a lender moving down market to meet the borrowing needs of the poor is MiBanco, a Peruvian micro-finance institutions (MFI). MiBanco, similar to several other MFIs, has diversified its product menu to include a shelter finance loan with a longer term and higher borrowing ceiling. Whereas traditional mortgage lenders rely on credit histories, proof of formal sector salaries, and land title, MiBanco and other MFIs use demonstrated savings ability, group guarantees, proof of timely utility bill payments, and land security as indicators for assessing risk. Thus, MiBanco's shelter finance loan is utilizing virtually the same lending and risk assessment methodologies as their more traditional products and meeting additional credit needs of their clientele.
Access to and Financing of Basic Services
A primary misconception that often excludes slum dwellers from access to basic services is that they are unable and/or unwilling to pay for formal connection. In reality, slum residents are willing to pay for services, so long as they these services are delivered to their satisfaction. To assess what is satisfactory to the urban poor and what is their willingness and capacity to pay, the community should be involved in the decisionmaking and procurement processes. (See Participatory Management Brief) The financing of basic services will need to cover capital, operation, and maintenance costs. There are several approaches to financing basic services, including accessing the capital market, public-private partnerships, community-lending pools, well-targeted government subsidies, and donor credit guaranties. (See Capital Financing brief)
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Cities offer the hope of alternative livelihoods and undiscovered opportunity, and for that reason poor people come and remain in cities and their slums. It is a rational choice, given their economic and social constraints. Thus, slums are not the result of market failure but rather policy failure. Slums are the product of mis-managed urban growth and lack of appropriate policies and planning, and as such, the biggest challenge to addressing slums and slum proliferation is government policy and urban planning. For additional information about slum upgrading and related topics, please reference the attached bibliography and website list.
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Durand-Lasserve, Alain. May 2002. Secure Tenure for the Urban Poor [Draft]. Prepared
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