House of Commons - International Development Committee

Urbanisation and Poverty - International Development Committee Contents

Written evidence submitted by David Satterthwaite and Diana Mitlin, International Institute for Environment and Development (IIED)[125]

SUMMARY

The scale and depth of urban poverty is considerably under-estimated within most low-income nations, many middle-income nations and globally. It is also mis-represented by the ways in which poverty is commonly defined and measured. This helps explain why many international agencies have no urban policies and are reluctant to work in urban areas on to poverty reduction.

This note describes the scale of urban poverty and how and why is it often under-estimated. Poverty is usually defined and measured by setting an income-based poverty line and assessing what proportion of the population fall below this. But most poverty-lines are based primarily on the cost of a minimum food basket and make inadequate allowance for the cost of non-food necessities for:

housing

water

access to toilets

health care

keeping children at school

transport

Poverty lines that do not consider these costs often suggest that only a few per cent of a city's population are poor, when 40-50% of the population lives in poor quality housing in illegal settlements lacking basic services. Assessments of poverty have to move beyond poverty lines to include attention to housing and services; also to the urban poor's vulnerability to stresses and shocks and the lack of the rule of law and respect for their civil and political rights. As they do so, this highlights many other entry points for poverty reduction including key roles for local governments and for organizations of the urban poor.

In over 20 nations, federations formed by the urban poor (slum and shack dwellers and the homeless) have become important actors in development, working not only at community level but also at the level of cities and nations. These are federations of savings groups, mostly formed and managed by women slum and shack dwellers. These savings groups and the larger federations they form undertake many initiatives—upgrading homes or building new houses and community facilities (typically community-toilets with washing facilities). In many nations, these federations' initiatives reach thousands of households, in some tens of thousands. But these initiatives are also to show governments and international agencies what the federations are capable of and to offer them partnerships in expanding their scale and scope. Many of these urban poor federations have developed successful large-scale partnerships with local and national governments—for instance in South Africa, India, Thailand and Malawi. Working with these federations and supporting their partnerships with local governments can greatly increase the effectiveness of international agencies' urban poverty reduction programmes. Many federations have set up their own Urban Poor Fund through which external support can be channelled and careful records provided to funders as to how the funding is managed.

The scale of urban poverty

1. Table 1 gives estimates for the scale of different aspects of urban poverty in developing countries. At least 900 million urban dwellers "live in poverty" as they live in dwellings that are of poor quality and usually illegal and that lack adequate provision for water, sanitation, drainage, health care and schools. There are no precise figures in the Table because many aspects of poverty are not measured. For instance, in most developing countries, no data are available on two of the most important indicators for assessing the scale of poverty: household incomes and the cost of non-food necessities. Most poor urban households derive most or all their income from work in the informal economy for which there are no aggregate data on incomes.

Table 1

ESTIMATES FOR THE SCALE OF DIFFERENT ASPECTS OF URBAN POVERTY IN DEVELOPING NATIONS

Type of poverty	Numbers of urban dwellers affected	Notes
Inadequate income in relation to the cost of basic needs	750-1,100 million	No accurate figures are available on this and the total varies, depending on the criteria used to set the poverty line (the "income-level" required for "basic needs")
Inadequate or no provision for safe, sufficient water and sanitation	More than 680 million for water and 850 million or more for sanitation	These estimates are for 2000 and are drawn from a detailed global UN review of individual city/urban studies.[126]
Severe under-nutrition	200 million+	In many Asian and sub-Saharan African nations, 25-40% of urban children are underweight.
Living in housing that is overcrowded, insecure and/or of poor quality	924 million	Based on a 2003 global UN review of the number and proportion of people living in "slums"[127]
Homelessness (ie living on the street or sleeping in open or public places)	c. 100 million	UN estimate. There are also large numbers of people living on temporary sites (for instance construction workers and often their families living on construction sites) that are close to homeless.

2. But there is strong evidence on the scale of urban poverty from sources other than national statistics—for instance the number of urban dwellers with inadequate nutrition levels and the number who suffer premature death. Infant and child mortality rates for urban populations in low-income nations are often 5-20 times what they should be, if their families had adequate incomes, reasonable quality housing and good health care.[128] There are also many case studies focusing on low-income urban populations that show very large health burdens from diseases that should be easily prevented or cured—for instance diarrhoeal diseases, intestinal parasites, TB and acute respiratory infections. It is common for a third or more of all urban children to be stunted within low-income nations.

The measurement of urban poverty

3. The number of urban dwellers who are "poor" is always much influenced by how poverty is defined and measured. If poverty is considered to encompass all those who have difficulties affording basic necessities and who are either homeless or live in poor quality, overcrowded and often illegal accommodation (because they cannot afford safer legal housing), then by 2000, at least 900 million urban dwellers were poor and the numbers are likely to have risen significantly since then (the urban population in developing countries has grown by over 500 million since 2000).[129] If poverty includes all those who live in accommodation lacking protection from the most common life—and health-threatening diseases and injuries, then it would number at least 900 million. Of course, within these hundreds of millions of people suffering urban poverty, there is considerable variation—from those who are destitute and suffering from acute malnutrition to those who can manage as long as there is no crisis (for instance a drop in their income, a rise in food prices or an income-earner being sick or injured). Table 2 illustrates this.

Table 2

DIFFERENT DEGREES OF POVERTY IN URBAN AREAS


	Degrees of poverty
Aspects of poverty	Destitution	Extreme Poverty	Poverty	At risk

Income	Income below the cost of a minimum food basket	Income just above the cost of a minimum food basket but far too low to allow other necessities to be afforded	Income below a realistic poverty line* but enough to allow significant expenditure on non-food essentials	Income just above a realistic poverty line.*
Housing with access to infrastructure and services	Homeless or living in a very poor quality shack that is no-cost or close to no-cost.	Very little to spend on housing—often renting a room in tenement or illegal or informal settlement shared with many others	More accommodation options—eg slightly more spacious, better quality rental housing or capacity to self-build a house if cheap or free land is available. The extent and quality of low-cost housing options is much influenced by government land, infrastructure and services policies and investments
Assets	Typically none or very little (although membership of a community-based savings group may provide access to small amounts of credit for emergencies)	Often some capacity to save, especially within well managed savings and credit schemes; housing the most valuable asset for those who manage to "get their own home" even if it is illegal
Vulnerability	Extreme vulnerability to food price rises, loss of income or illness or injury. Often also to discrimination and unfair practices (from employers, landlords, civil servants, politicians, the law…….)	Similar kinds of vulnerability to those faced by people facing destitution or extreme poverty, although less severe; often vulnerability to running up serious debt burdens; always vulnerability to illness/injury and its direct and indirect impacts on income

* A realistic income-based poverty line would be one that was calculated based on real costs in each city and which took into account the cost of non-food essentials as well as the cost of an adequate diet.

4. But most official measurements of poverty do not include any consideration of the quality of people's homes and access to basic services (such as water and sanitation). Governments and international agencies may talk about the number of people "living in poverty" but in most cases this is based on income measures with no assessment of their living conditions.[130]

5. The scale of poverty in any nation is generally measured by defining a "poverty line" and all those whose income or consumption falls below this are "poor". In many nations, more than one poverty line is used—for instance one for food poverty or extreme poverty (usually those whose incomes fall below the cost of a minimum food basket) and another for absolute poverty (which has a higher poverty-line, by adding some additional allowance for non-food needs onto the cost of a minimum food basket).

6. The proportion of a nation's urban population or a city's population that are poor can vary from a few per cent to 50%, depending on how the poverty line is defined. For instance, during the late 1990s, there were four different figures for the proportion of Kenya's urban population who were poor, ranging from 1.2% to 49%,[131] (although the 1.2% figure was very unrealistic and based on faulty data). It should be noted that half of the population of Kenya's capital, Nairobi, live in informal settlements lacking basic infrastructure and services and have very high infant and child mortality rates;[132] conditions for much of the population of other urban centres is not much better.

7. The fact that governments and international agencies use different bases for defining and measuring poverty helps explain why urban poverty levels can be very high in many middle-income nations and still low in many low-income nations (including some of the poorest nations). For instance, official poverty statistics suggest that Colombia and Ecuador have a much higher proportion of their urban population living in poverty than Ghana, Burkina Faso or Vietnam—but this because different criteria are being used to set poverty lines. The reason that urban poverty levels appear low for Ghana, Burkina Faso and Vietnam is because inadequate allowance was made for the cost of non-food needs in setting their poverty lines.[133] The key issue here is that when poverty lines include a reasonable allowance for the cost of non-food necessities, it is common for 35-60% of the urban population in developing countries to have incomes below the poverty line.

8. Most governments measure poverty by setting poverty lines based on the cost of a minimum "food basket" and calculating what proportion of the population have incomes or food consumption levels below this. But the scale of poverty is influenced by the extent to which these poverty lines make an additional allowance for individuals or households to pay for non-food necessities—for instance for:

— housing (much of the urban poor pay rent for their accommodation and even renting one room in a shack lacking piped water and toilets can take 10-20% of their income);

— water (often purchased from vendors or kiosks because no piped supplies are available in their homes; it can represent 5-10% of their income);

— access to toilets (many urban poor have no toilet in their home and have to use public pay-to-use facilities or if they cannot afford these, they defecate into plastic bags or waste paper that are thrown away—the so called "wrap and throw" or "flying toilets" common in many cities);

— health care (large sections of the urban poor have no access to public health care and so have to pay to use private health care or go without and use unlicensed pharmacies to purchase medicines and get medical advice);

— keeping children at school (even if the school is free, there are often costs for uniforms, exam fees, school books, meals and transport that households struggle to afford. In many nations, large sections of the urban poor have to send their children to private schools because they cannot get into government schools; these may be very poor quality but they are still difficult for low-income households to afford);

— transport (many low-income households move to informal settlements on the urban periphery, because accommodation is cheaper here or because they were pushed out of a more central site but living here can mean transport costs to and from work and services take up 10-15% of household income).

Some poverty lines make no provision at all for the cost of these non-food necessities—so they greatly under-estimate the scale of urban poverty.

9. The obvious point is that non-food needs are expensive in larger and more successful cities and if no allowance is made for this in setting poverty lines, poverty in such cities will be greatly under-counted. In a recent Poverty Reduction Strategy Paper in Liberia, the text elaborates the differences in perception between citizens in urban and rural areas when it reports on the results of a participatory exercise to understand the ways in which citizens perceive poverty. The rural population perceived poverty as a lack of material objects, roads, market access, social structures and services, employment, housing, food and a large family size. In urban areas, people associate poverty with unemployment, low income, high costs for medicine and education and limited market access and sanitation.

10. Because it is difficult to gather data on the cost of non-food necessities (and to define a "minimum" set of necessities), many poverty lines are based on a multiple of the cost of a minimum food basket. But poverty lines may be just 1.15 times the cost of the food basket—or three times the cost of the food basket. Obviously, the scale of poverty is much influenced by which multiple is chosen. For most cities, a realistic poverty line would be at least two to three times the cost of the minimum food basket, because so many non-food necessities have to be paid for and are expensive—but most poverty-lines in Africa and Asia have much less allowance for non-food necessities than this.

11. Set a poverty line based only on the cost of food and apply it in a city—and in most cities, the scale of poverty will not seem serious. But look in this same city at the proportion of people living in very poor quality accommodation lacking provision for basic services and struggling to afford sufficient food (because these other items have to be paid for) and poverty can affect half or more of the whole city's population. This is not to say that measuring poverty by setting a poverty line is wrong; what is wrong is setting poverty lines that are not based on an accurate assessment of the income needed for non-food necessities as well as for food.

The under-estimation of urban poverty

12. One paper published in 2003 suggested that there was little urban poverty in most African nations—and that only 1.2% of Kenya's urban population, 2.3% of Zimbabwe's urban population and 0.9% of Senegal's urban population were poor in the mid—or late 1990s.[134] A 2007 World Bank paper[135] using the dollar a day poverty line suggested that less than 1% of the urban population of China, the Middle East and North Africa and East Europe and Central Asia are poor and that overall, 87% of the urban population in developing countries were not poor. Official statistics for cities such as Cairo and Pune (a successful city in India with three million inhabitants) suggest that only 1-2% of their population is poor. If these figures are accurate, clearly, addressing urban poverty is not a priority. But, if between one-third and one-half of most of these nations' urban populations or these cities' populations are facing serious deprivations (which is actually the case)[136] and most of the growth in poverty is taking place in urban areas (which may be the case),[137] the needs of the urban poor deserve far more attention. One particular worry here is how much the US$1 per person per day poverty line under-estimates urban poverty because this is one of the main indicators used to monitor poverty levels for the Millennium Development Goals. Incidentally, how can Cairo and Pune have such low levels of poverty when 30-40% of their populations live in illegal settlements lacking adequate provision for basic infrastructure and services.[138]

13. Other reasons for the under-estimation of urban poverty include:

— The lack of attention to aspects of deprivation other than inadequate income, including inadequate, overcrowded and insecure housing, inadequate provision for water, sanitation, health care, emergency services and schools, vulnerability to stresses and shocks, and lack of the rule of law and respect for civil and political rights.

— The lack of knowledge of local contexts by those who define and measure poverty, in part reinforced by the lack of local data on living conditions and basic service provision. This often leads to poverty measures and hence urban poverty statistics that bear no relation to conditions on the ground.

The many immediate and underlying causes of urban poverty

14. If poverty is defined and measured based only on people's income or consumption, it may bias poverty reduction measures towards those that seek to increase incomes or consumption, obscuring the many poverty-reducing measures that can address other aspects of poverty. Eight different aspects of urban poverty are worth highlighting because this also highlights eight different areas in which poverty reduction may be appropriate:

Inadequate and often unstable income

Inadequate, unstable or risky asset bases

Poor quality and often insecure, hazardous and overcrowded housing.

Inadequate provision of "public" infrastructure

Inadequate provision of basic services

Limited or no safety net

Inadequate protection of poorer groups' rights

Poorer groups' voicelessness and powerlessness

15. It may be difficult for those who define and use poverty lines to accept this broader view of urban poverty, and it is difficult to incorporate many of the above aspects into quantitative measurements of poverty. But there are many examples of government, NGO or community-driven programmes that show it is important to describe the poverty situation in this way because of the following:

16. It helps shifts official perceptions of "poor people" from being seen as "consumers" or "objects" of government policy to being seen as citizens with rights and legitimate demands who also have resources and capabilities that can contribute much to more effective poverty reduction programmes. It also implies a greater engagement with the groups facing deprivation.

17. It provides more entry points for poverty reduction and makes explicit the contributions that a much wider group of governmental, private sector, non-governmental and community-based organizations can make to poverty reduction. This includes integrating measures to improve housing conditions and associated infrastructure and services into poverty reduction, and understanding the multiple linkages between these and addressing other aspects of poverty.

18. It highlights the importance of aspects other than income. Many case studies show how the deprivations associated with low income were much reduced without increasing incomes, through increasing assets or safety nets or improving housing conditions and basic services, or through political changes that allowed low-income groups to negotiate more support (or less harassment). Governments generally have relatively little scope to directly increase poorer groups' incomes, but have much more scope to address the other aspects of poverty noted above.

19. It recognizes the multiple roles that housing and neighbourhoods can have in urban poverty—and in poverty reduction. Housing in urban contexts generally has more influence on the incomes, asset bases, livelihoods, vulnerability and quality of life (and health) of low-income groups than external poverty reduction specialists recognize. Housing not only provides accommodation but is also:

— a location for getting to and from income-earning sources or possibilities and services;

— often a significant cost in individual or household budgets (so reducing this cost can mean more income available that can be spent on other necessities);

— for many, an important source of income (as a location where income-earning activities take place, especially for women, or where income is earned by renting out space);

— the primary defence against most environmental health risks (which are more serious in urban contexts than in rural contexts if there is no provision for water, sanitation and drainage, because of the larger and denser concentration of people and their wastes).

— a valuable asset, for those low-income households who are "owner-occupiers" (even if this is in an illegal sub-division or squatter settlement where this ownership is not officially recognized);

— (for many low-income groups) the place where social networks are built that have great importance for households in helping them avoid poverty or cope with shocks and stresses.

20. Safer and more secure housing also provides households with more protection against the loss of their household assets from theft, accidental fires, extreme weather and disasters such as floods, landslides or earthquakes; it is almost always the poorer groups in urban areas that bear most of the costs from disasters.

21. One important aspect of poverty for large sections of the urban population with low incomes is the insecurity of their accommodation, either because they are tenants (and have little legal protection from instant eviction or from other unfair practices by landlords) or because they live in illegal settlements (with little if any security or protection against bulldozing). Forced evictions where informal settlements are bulldozed remain common, especially in Asia and Africa.

22. It may be assumed that higher incomes are the best way to help low-income households buy, build or rent better quality, safer, more secure housing. But there are often more possibilities for achieving this by making housing cheaper—for instance, through addressing the many constraints that unnecessarily increase the cost and reduce the supply of housing and of inputs into housing (land, materials, credit, infrastructure….). There are often many untapped resources that can help low-income households get better quality accommodation without increasing their incomes—especially through providing them with access to unused or under-utilized land on which they can organize the construction of housing, and to negotiate with local government to secure access to services.

23. There can be powerful complementarities between different actions to reduce poverty—for instance, as improved basic service provision improves health, reduces fatigue (for instance, water piped into the home replacing a long trek to fetch and carry water from a standpipe) and increases real income (for instance, from less time off work from being ill or injured and lower medical costs).

24. Acting on the other aspects of poverty often increases incomes for poorer groups. Better quality housing and basic infrastructure and services can increase poor households' incomes. This may seem counter-intuitive, but better housing, infrastructure and services can increase real incomes through:

— enhancing income-earning opportunities for home enterprises (the scope and scale of which is often much improved by more space, electricity and better water supply and sanitation);

— expanded housing, allowing one or more room to be rented out;

— a good quality piped water supply that not only greatly improves the quality and quantity of water available to the household but, in many low-income settlements, also reduces the daily or weekly bill for water (which, for low-income households, often translates directly into increased food intake); and

— greatly reducing the loss of income from income earners having to take time off because they are sick or injured or because they are nursing other sick family members or because of the costs of medicines and treatment.

25. The importance of local resources and space for urban poor groups' own initiatives. Many of the more successful poverty reduction programmes have been achieved through urban poor groups successfully negotiating resources and/or room for autonomous action and/or a halt to previous harassment from local authorities—often with little or no foreign funding involved.[139] If this is generally true, this greatly widens the scope of local actions that can help reduce poverty.

26. Where the poor's capacity to pay for improved services and for safer housing is limited, their capacity to negotiate with local authorities for less harassment (eg remove the threat of eviction for an illegal settlement) and very modest resources (eg the loan of equipment to help dig or clear drainage ditches, a weekly collection of solid waste….) can bring considerable benefits at very low cost.

27. The need for long-term support from governments and international agencies for "good" local governance in urban centres. In many urban centres, provision for urban infrastructure and services is so limited and the capacity to expand it so weak that many of those with "above poverty line" incomes, including even middle-income groups, cannot find housing with adequate provision for water and sanitation and for protection against natural disasters. "Good" local governance has importance not only for what it can contribute to poverty reduction but also for what it stops local governments from doing that increases poverty (for instance, programmes to bulldoze informal settlements and forced "resettlement" programmes that cause, exacerbate or deepen poverty).

New actors; the organizations and federations formed by the urban poor

28. In over 20 nations, federations formed by the urban poor (slum and shack dwellers and the homeless) have become important actors in development, working not only at community level but also at the level of cities and nations. These are federations of community-based savings groups, mostly formed and managed by women slum and shack dwellers. These savings groups and the larger federations they form undertake many initiatives—upgrading homes or building new houses and community facilities (for instance community-toilets with washing facilities). In many nations, these federations' initiatives reach thousands of households; in some, tens of thousands (see Table 3).

Table 3

EXAMPLES OF THE SCALE OF THE SAVINGS AND WORK PROGRAMMES OF SOME OF THE URBAN POOR FEDERATIONS


	Date(a)	Number of settlements where there is a process(b)	Active savers(c)	Savings(d)	Houses built	Tenure secured (number of families)

INDIA	1986	5,000	100,000	US$ 1.2 million	6,000(e)	80,000
SOUTH AFRICA	1991	750	30,000	US$ 1.2 million	15,800	23,000
THAILAND	1992	42,700	5 million	US$ 206 million	40,000	45,000
NAMIBIA	1992	60	15,000	US$ 0.6 million	1,200	3,700
CAMBODIA	1993	288	11,300	US$ 145,000	3,300	800
PHILIPPINES	1994	148	42,727	US$ 631,830	13,388	18,191
ZIMBABWE	1995	62	45,000	n.a.	750	3,500
NEPAL	1998	396	3,147	US$ 173,402	50	85
SRI LANKA	1998	130	21,506	US$ 29,469	100	2,000
COLOMBIA	1999	1	60	US$ 10,000	-	60
KENYA	2000	50	20,000	US$ 50,000	110	5,600
ZAMBIA	2002	45	14,000	US$ 18,000	-	138
GHANA	2003	15	12,000	-	-	-
UGANDA	2003	4	500	US$ 2,000	-	150
MALAWI	2004	100	20,000	US$ 50,000	660	1260
BRAZIL	2005	5	100	US$ 4,000	-	7,000
TANZANIA	2004	16	1,000	US$ 2,000	-	-

(a) The year in which significant savings scheme activity began and, in some instances, this precedes the year when the federation was established.
(b) This is the most meaningful measure of the scale of each federation—the number of settlements where grassroots activities are taking place to build collective capacity and catalyze grassroots-led development.
(c) The second indicator of scale, the number of people who save regularly
(d) Local currency values converted to US dollars.
(e) A further 30,000 households in India have got new housing not constructed by the federations there

29. But these initiatives are not autonomous of the state because the federations intend these to show governments and international agencies what they are capable of. They also offer governments and international agencies partnerships in expanding the scale and scope of these initiatives.[140] Many federations have worked with local governments to undertake city wide surveys of informal settlements with enumerations and mapping for such settlements to provide the information base for upgrading. Most have demonstrated their capacity to build houses that are cheaper and better quality than those built by contractors. Many of the federations of the urban poor have developed successful partnerships with local governments and some have successful partnerships with national governments—for instance in South Africa, India, Thailand and Malawi.[141] The growing number of these national federations and the increasing scale and scope of their work programmes have generated a growing interest among professionals and international agencies in the role of urban poor's own organizations in urban poverty reduction —in part because of the limitations in conventional, state-managed, professionally directed initiatives (whether or not funded by international donors). Many federations have set up their own Urban Poor Fund through which external support can be channelled and careful records provided to funders as to how the funding is managed.

30. These federations have formed their own umbrella organization, Slum/Shack Dwellers International (SDI),[142] that the federations manage with the support of the local NGOs that work with them. This provides the federations with a collective voice in their relations with international agencies. It also supports the many community-exchange visits between the federations (as they learn from each other's work) and the visits of federation members to other nations where urban poor groups have shown interest in their work and methods. Some international funders have made funding available to SDI which is then managed by SDI's board, on which representatives of the federations sit.[143]