The experience of urban poverty has many dimensions and is both similar to and distinct from the experience of poverty in rural areas. Urban poverty can generally be characterized by a combination of the following characteristics¹:

Urban poverty is not a homogeneous condition. Efforts to address it should begin with a poverty assessment that identifies different sub-groups of the poor, enumerates them, and measures the severity of deprivation along these different dimensions. The urban poor also have important assets, which will differ by sub-group. These may include strong community sharing traditions, linkages to rural communities, or access to communal land. These assets should be recognized and become the building blocks for poverty strategies.

Two factors typically handicap urban poverty assessments: a lack data regarding poor populations and poor neighborhoods, and a tendency, especially strong in official statistics, to use the same poverty indices for both rural and urban areas.²

We do not have adequate data on the urban poor for two reasons: they are either not counted at all because they are occupying land illegally or information collected is compiled in to statistical averages that reflect the urban area as a whole and tell us almost nothing about poor populations specifically. Measurement shortcomings cripple our ability to design or implement relevant programs. Sometimes, informal or "illegal" settlements do not appear on city maps, including those intended to guide infrastructure network extensions. In India, the homeless are not officially counted as part of the urban poverty population, which is limited to households having a place of residence. They therefore are not qualified for most anti-poverty programs. In China, itinerant populations seeking work in cities are not part of the registered population and therefore not eligible for many of the services aimed at mitigating poverty. Little is known about these populations and their needs, though their numbers are vast. (The city of Chang'an in the fast-growing Pearl River Delta has fewer than 50,000 registered inhabitants, but an actual population of 600,000 consisting mostly of people on temporary residential permits or having no legal status at all.) ³

In other instances, important distinctions between rural and urban poverty are lost to policymakers, because they inappropriately apply uniform wealth indices to measure the well-being of rural and urban populations. Materials like scrap metal may be an indicator of discretionary wealth in rural settings, but simply the cheapest, scavenged ingredient for informal housing in the city. Cash incomes generally provide a poor basis for comparing rural and urban poverty rates, since urban residents must buy a much larger share of basic consumption.⁴

Accurate poverty assessments can both better inform policy choices and serve as an important act of empowerment for the poor population. When the pavement dwellers of Mumbai, India (self-designated "We the Invisible") began, with NGO assistance, to record their numbers and document their conditions, they forced both local government and international aid organizations to acknowledge them and pay attention to their priorities for betterment.⁵

Principles of Poverty Assistance

The content of an urban poverty strategy should follow from the findings of the poverty assessment. However, some basic principles can guide poverty initiatives.

• Short-run poverty alleviation should be combined with longer-term initiatives intended to lift households out of dependency. Policies of the latter type (such as broadening access to education) may not show up quickly in reduced poverty rates, even when successful. They therefore require their own, carefully chosen measures of success.

• Whenever feasible, resources should be provided directly to individuals or community groups, so that they can make their own economic choices about how to best buy goods on the market. This approach is generally preferable to subsidizing formal-sector firms to provide goods for the poor.

• Spending on poverty programs is most cost-efficient when narrowly targeted to eligible recipients, as through vouchers or means-tested tariff subsidies. Broad subsidization of water tariffs or mortgage lending for all consumers drives up the cost of public programs, and delivers the greatest benefits to those with the highest consumption levels. Compromises with cost-efficiency may be necessary, however, to build political support for poverty programs or to avoid further stigmatizing the poor through overt means-testing. Lifeline tariff rates - under which essential consumption levels of water or electricity are subsidized for all - while not ideal, are one example of a practical policy compromise. Full cost recovery can be achieved by charging higher rates for additional levels of consumption. This yields a form of cross-subsidization from those with the highest consumption.

• All urban poverty initiatives should prioritize participation of the targeted communities. Community groups should have a direct role in priority-setting for poverty programs. Wherever possible, they should participate directly in service expansions intended to reach poor households. One of the most difficult steps in promoting community participation has been to make government service providers and related professionals accountable to poor populations. Accountability can be enhanced by straightforward steps such as having community groups sign off that community infrastructure projects have been completed and are functioning properly before contractors are paid, by having government partner with community organizations in service delivery, and by working with transparent budgets open for community inspection.⁶

Job Creation, Income Generation and the Informal Sector

In urban areas, poverty is more closely linked with income than it is in rural areas as the poor must pay for a larger share of the food, land and services they consume. As a result, remunerative employment is vital to their subsistence.

For most of the poor, the informal sector is both their safety net and their principal avenue for potential advancement. In Nigerian cities 70 to 80 percent of job opportunities are in the informal sector.⁷) There are more than 2.6 million microbusinesses in Mexico.⁸ The informal sector is home both to micro-entrepreneurs and to larger businesses that provide employment for the poor. Establishments of the latter kind often are located in the informal sector to avoid burdensome regulation and taxes. Urban poverty initiatives have a responsibility to promote innovation and productivity in both segments of the informal sector, while also making the transition to formal-sector employment (and regular tax payment) easier to negotiate.

Local authorities can support the informal-sector economy by resisting the temptation to over-regulate in the name of orderliness. This implies supporting informal markets rather than trying to eradicate them. Licensing requirements should be streamlined and rigid zoning rules that prohibit using homes for businesses should be carefully revised. Micro-lending has proved to be an effective means of helping informal-sector entrepreneurs and sometimes entire community groups to lift themselves out of poverty by gaining access to small amounts of capital. There now is abundant experience on how micro-lending programs can best be designed to create opportunities for social mobility while at the same time maintaining high rates of loan repayment.⁹ Standard bank lending must become flexible enough to supply credit to larger, informal-sector establishments by identifying suitable types of collateral that can be pledged as loan security. We can draw on the lessons learned from the success of numerous NGOs (SEWA in India and the Grameen Bank in Bangladesh being just two examples) in reaching the smaller and more desperate streetsellers through community-based lending approaches.

Large-scale job generation through the formal sector can take place as the result of national or regional economic growth. Then migration can become an engine of poverty alleviation, not only for migrants themselves but for family members, primarily rural or village residents, who are tied to the migrants by flows of remittances. Where regional growth is vigorous, migration can rapidly reduce national poverty. Some 10 million itinerant workers are now in Guangdong Province, China, having moved there from poorer areas. Although the living conditions of recent migrants to cities are harsh, often extremely so, surveys repeatedly find that the majority of migrants view themselves as better off than before moving and are more optimistic about their future.¹⁰ Many national policies in the past have discouraged urban migration, but the movement of labor to regions with the fastest-growing economies and strongest competitive advantages should be seen as part of the solution to national poverty.

Housing, Infrastructure and Lack of Services

Basic Infrastructure and Environmental Services. Providing public services to poor communities is an effective means of combating urban poverty, as it reduces the cash income needed to acquire essentials. However, poor families often are denied basic services, like access to safe drinking water, on the grounds that their settlements are illegal and that service provision would only encourage more land invasions and migration. However, with the passing of time there is clear evidence that a lack of services does not discourage migration to urban areas, it simply ensures an increased level of disease and human misery, degrading human capital that is vital to the productivity of a nation's workforce. There is a large body of experience proving that it is possible to engage in a low-cost slum-upgrading process that will dramatically improve the quality of life for poor urban residents (See the Cities Alliance and the MIT Slum Upgrading Websites). Where possible, donors should begin to work with government officials to support upgrading activities.

Unfortunately, while the upgrading of existing sites is a necessity, it is an often an expensive option. Informal settlements tend to occur where land has the least value - at the edge of the urban area, in flood zones, on dangerous hillsides - all locations where infrastructure provision can be extremely costly. The most effective response to this inefficient pattern of settlement is to guide informal settlements onto municipally approved infill locations, where government will provide security of tenure. This approach recognizes the inevitability of informal settlement but reduces the costs of extending the essential services that residents need. City governments and donors alike must begin to recognize that - given the inevitability of urban growth and migration for the first half of this century at least - they can save millions of dollars by proactively planning for and facilitating environmentally and socially sound growth rather than leaving themselves to the vicissitudes of random settlement patterns. (See Service Delivery and UEM briefs )

Housing: Shelter and Asset Accumulation. For the poor, housing provides both essential shelter and the most important form of asset accumulation. Regulations that encourage gradual house construction over time, permit the use of informal-sector materials, and provide security of tenure encourage wealth accumulation through housing. Housing also illustrates the benefits of providing direct assistance to households rather than subsidies to formal-sector firms. When South Africa changed to racially democratic government, it promised to build one million houses for those without homes. Its initial policy was to subsidize formal-sector contractors to build houses for the poor. Few houses were built; construction was poor; locations were chosen to minimize land costs and often were far removed from job opportunities or markets. Gradually, South Africa has shifted to transferring resources directly to the poor so that they can build housing of their own choice, at their own pace, in preferred locations. Follow-up studies have found much more efficient housing construction from this "voucher" program and much higher rates of household satisfaction.¹¹ (See the Slum Upgrading Brief]

Education. Completion of basic schooling, with an introduction to marketable vocational skills, is an effective route out of poverty. However, worldwide some 125 million children - two thirds of them girls - are not enrolled in school.¹² Tuition fees and charges for books, uniforms, food and school maintenance prevent many children from attending school, as evidenced by large enrollment increases following the introduction of free basic education in, for example, Uganda (2.2 million), Tanzania (1.5 million) and Malawi (1.1 million). Cities are efficient locations for increasing school attendance. Free basic schooling for all city children, regardless of their parents' legal or income status, should be an achievable urban goal. In many countries, decentralization initiatives have turned over more authority for school administration and curriculum to local governments. Educational research, however, indicates that the most critical steps in decentralization go further, strengthening community and parental connections to the school, especially in poor neighborhoods. Various options exist for strengthening the roles of parents in their children's schooling. These range from community representation on school boards to giving parents school vouchers which they can use at the school of their choice, as in Chile.

Healthy Cities. Health is a crucial component of any project to eliminate poverty. Improper nutrition and exposure to toxic substances can lead to high levels of morbidity and, at worst, permanent brain damage. Morbidity has profound impacts on productivity and one's long-term chances for rising out of poverty. We know very little about the health status of the urban poor, but where we do have data the need becomes clear.¹³ In most countries, poor urban populations experience infant and under 5 mortality rates that are as high if not higher that poor populations in urban areas. The same trend is reflected in several other health indicators. We must find ways to improve public health conditions where the urban poor reside.

There have been some success stories. In Rajshahi City, Bangladesh, a City Health Plan originated from a workshop involving political and social leaders and community-based organizations. Unemployed residents now collect waste door-to-door once a week, sweep streets, and clear drains. They earn a small income at the same time they are improving public health. The city is establishing 10 urban health centers near slums and has contracted with a local NGO to operate the centers.¹⁴ Under a local public health model introduced in El Mezquital, a large informal settlement in Guatemala City, and now replicated elsewhere in Guatemala, the community elects part-time public health workers, each of whom is trained in basic healthcare needs and has responsibility for providing services to a micro-zone of 50 families.¹⁵ These programs illustrate the potential for using community participation as a service delivery tool, while creating a base for further community organization. (See Urban Health brief)

As mentioned above, social capital refers to a range of sociological factors that promote or inhibit the well-being of groups and individuals. Poor urban residents may experience the degradation of some positive types of social capital (supportive social networks, for example) at the same time they experience enhanced access to forms of social capital that they could not access in rural areas.

Valarie Kozel, at the World Bank, uses social mapping exercises to identify 3 different types of poverty: the destitute (people who have experienced some trauma that precludes an increase in well-being without direct intervention from external organizations), the structurally poor (people who are poor for reasons other than access to basic capabilities or whose access to basic capabilities are precluded by larger social forces) and those she labels the mobile poor "those who are low-income but debt free, who possess assets or employment sufficient to maintain at least a steady state and who face fewer social constraints to economic mainstreaming than do the structural poor".¹⁶ These distinctions are particularly helpful to policy makers because as they distinguish between the poor who can benefit from more general aid programs and those who will need more specific types of aid and protection.

This type of analysis is as important in cities as it is anywhere else. It is particularly important to take a look at the structural nature of poverty in cities. Urban areas can be a place of increased tolerance where migrants can gain access to education and opportunity that would be forbidden in the rural setting from which they came. However, certain groups continue to experience tremendous discrimination. Poor female entrepreneurs, for example, have been shown to experience great difficulty in negotiations with city officials over space to sell their wares. This is both because of their poverty and because the officials they deal with are often males and there are social norms that inhibit their ability to negotiate with men on an equal footing or, in many cases, at all.

Social networks are important for many reasons. Informal social networks can tie households together and provide support when illness strikes or money runs out. Urban residents often maintain linkages with their extended families in rural villages, supporting them through remittances and in return preserving access to permanent social supports. Studies of urban migration find that workers from the same village tend to live near each other in the city, re-creating the sense of village community. The first migrants make job and housing connections for those who come later.¹⁷

While this is true, social networks can also be fragile and, at times, absent in urban settings. Domestic servants in Latin America may be sent to cities alone by parents who were promised that their daughters would receive an education in exchange for domestic service. Similar promises lure Thai women from the Northeast who are then forced into prostitution. Itinerant workers often move to the city on their own, without social connections or legal status. A large number report that they have no one else to turn to, in the event of sickness or loss of all income.¹⁸ Slum upgrading projects and urban road construction can dismantle community connections, forcing residents to re-locate on their own, destroying social capital in the process.

Efforts to assist the poor in urban areas must examine the different types of social capital they control and lack as part of a complete analysis. Development professionals then need to think clearly about how their project can effectively strengthen existent types of human capital at the same time it can help a community gain access to important new kinds of capital (such as education or the ability to communicate more effectively with government officials).

Notes

Cities Alliance

http://www.citiesalliance.org

Department for International Development (British)

http://www.dfid.gov.uk/

International Food Poverty Institute

http://www.ifpri.org

Human Settlements Programme

International Institute for Environment and Development

http://www.iied.org

Oxfam

http://www.oxfam.org

UNESCAP Human Settlements Urban Poverty Alleviation

http://www.unescap.org/huset/hangzhou/urban_poverty.htm

World Bank Urban Poverty

http://www.worldbank.org/urban/poverty/index.html

WHO Center for Health Development Health and Cities Program

http://www.who.or.jp/city/

Joanne Csete, International Food Policy Research Institute, 202.862.5600

Marcia Glenn, USAID, 202.712.1549

Christine Kessides, World Bank, 202.473.3945

David Sattherwaite, david@iied.org

Andersen, Lykke. 2002. Rural-Urban Migration in Bolivia: Advantages and Disadvantages. Instituto de Investigaciones Socio-Economicas, Universidad Catolica, Bolivia.

Argenti, Olivio. 2000. Food for the Cities: Food Supply and Distribution Policies to Reduce Urban Food Insecurity. Rome: Food and Agriculture Organization of the United Nations.

Baharoglu, Deniz and Christine Kessides. April 2001. "Urban Poverty" in Poverty Reduction Source Book [Draft for Comment]. Washington, D. C.: World Bank.

Baumann, Ted, Joel Bolnick and Diana Mitlin, 2002. The Age of Cities and Organizations of the Urban Poor: The Work of the South African Homeless People?s Federation and the People?s Dialogue on Land and Shelter, IIED Working Paper 2 on Poverty Reduction in Urban Areas, IIED, London.

Cour, Jean-Marie. February 1999. The Financing of Urbanization and Local Development. Paris: OECD Programme de Developpement Municipal/Club du Sahel.

Collignon, Bernard and Marc Vezina. April 2000. Independent Water and Sanitation Providers in African Cities: Full Report of a Ten-Country Study. Washington, D. C.: World Bank.

Csete, Joanne, Carol Levin and Daniel Maxwell. June 1998. Does Urban Agriculture Help Prevent Malnutrition? Evidence fromKampala. Washington, D. C.: International Food Policy Research Institute.

de Soto, Hernan. 2000. The Mystery of Capital. New York: Basic Books.

Department for International Development (DFID) [Britain]. April 2001. Meeting the Challenge of Urban Poverty in Urban Areas: Strategies for Achieving the International Development Targets. London: DFID.

Desilets, Brien and Olga Kaganova with Grigory Artyemenko, Alina Alieva, Fedir Deydyuk y Olena Sergeeeva, with assistance from Larisa Rudenko and Dmitriy Zubarenko. 2001. Small Enterprises in Kharkiv Oblast: Assessment and Recommendations. Washington, D. C.: Urban Institute/USAID.

Díaz, Andrés Cabanas, Emma Grant, Paula Irene del Cid Vargas and Verónica Sajbin Velásquez, 2001. El Mezquital ? A Community?s Struggle for Development, IIED Working Paper 1 on Poverty Reduction in Urban Areas, IIED, London

Gugler, Josef. "Overurbanizing Reconsidered" in Gugler (ed.), The Urbanization of the Third World. Oxford: Oxford University Press

Gupta, Surit Dutta and Han Heijnen. September 2001. "The Healthy Cities Concept: Towards Sustainable Environment and Health in Rajshahi City, Bangladesh" in Proceedings of an International Meeting on Cities and Health: Towards the Betterment of Citizens? Health and Welfare Systems, 3-5 September 2001. Kobe: WHO Center for Health Development Health and Cities Program. Available at http://www.who.or.jp/city/publications/index.html

Mabogunje, Akin. 2001. "Nigeria and the Good Urban Governance Campaign" in The Launching of the Global Campaign for Good Urban Governance in Nigeria. Abuja: Federal Ministry of Works and Housing.

McKernan, Signe-Mary. 2002. "The Impact of Microcredit Programs on Self-Employment Profile," Review of Economic and Statistics, 84(1). February. pp 93-115.

Ngan, Hoang Thi Ngoc and Le Van Khoa. September 2001. "Environmental Health and Health and Welfare Systems Development in Ho Chi Minh City, Viet Nam" in Proceedings of an International Meeting on Cities and Health: Towards the Betterment of Citizens? Health and Welfare Systems, 3-5 September 2001. Kobe: WHO Center for Health Development Health and Cities Program. Available at http://www.who.or.jp/city/publications/index.html

Oxfam. 8 April 2002. Every Child in School: A Challenge to Finance and Development Ministers. Oxfam Briefing Paper 20. London: Oxfam.

Oxfam. 23 June 2002. Every Child in School: Are the G8 Serious? London: Oxfam.

Patel, Sheela and Diana Mitlin, 2002. The Work of SPARC and its Partners Mahila Milan and the National Slum Dwellers Federation in India, IIED Working Paper 5 on Poverty Reduction in Urban Areas, IIED, London.

Robredo, Jesse. Naga: Profile of an Inclusive City. 2002. Manila: The Urban Partnership Foundation.

Satterthwaite, David. September 2001. "Rural and Urban Poverty: Understanding the Difference" in Economic Perspectives. Washington, D. C.: U. S. Department of State. (available at http://usinfo.state.gov/journals/ites/0901/ijee/satterthwaite.htm)

??? 2002. Reducing Urban Poverty: Some Lessons from Experience. London: International Institute for Environment and Development. Available from http://www.iied.org.

Sethuraman, S. V. August 1997. Urban Poverty and the Informal Economy: A Critical Assessment of Current Strategies. Geneva: International Labour Office. (available at http://www.ilo.org/public/english/employment/recon/eiip/publ/1998/urbpover.htm)

World Bank. January 2001. Engendering Development through Gender Equality in Rights, Resources and Voice. Washington, D. C.: World Bank.

World Bank. July 1999. Education Sector Strategy. Washington, D. C.: World Bank.

WHO Center for Health Development. September 2001. Proceedings of an International Meeting on Cities and Health: Towards the Betterment of Citizens? Health and Welfare Systems, 3-5 September 2001. Kobe: WHO Center for Health Development Health and Cities Program. Available at http://www.who.or.jp/city/publications/index.html

Zhao, S. 2000. "Organizational Characteristics of Rural Labor Mobility in China," in L.A. West and Y Zhao (eds.), Rural Labor Flows in China [Institute of East Asian Studies, University of California, Berkeley] pps. 231-250.