Examination of Witnesses (Questions 20
- 39)
TUESDAY 12 MAY 2009
MR PAUL
TAYLOR AND
MR MICHAEL
MUTTER
Q20 Andrew Stunell:
Specifically what do you want them to be contributing in terms
of ideas, manpower, person power, whatever? Sending a few extra
people on aeroplanes is not a solution but what exactly are you
looking for?
Mr Taylor: It is always good to
get financial support because it is pretty much a high-wire act
sometimes. We always rely on quite a lot of money from the host
government; that is a significant criterion for how we select
the venue for the World Urban Forum. Typically speaking, we often
have difficulties in getting sufficient finance to get people
to the World Urban Forum from less developed countries. It is
expensive to get people there. I would have to say that the Scandinavians
in particular have always proven to be generous in that particular
area, but I would say also that the involvement in the discussion
that takes place there to put forward positions, to argue for
them, to debate with people who disagree with you or have different
viewpoints, is really important. The World Urban Forum is not
a forum at which we present UN-Habitat propaganda and try to sell
it. It is a forum at which we open up a space for everybody to
make a contribution and have an opportunity to influence the global
context of debate but also specifically what Habitat does in future.
Finally, it is the opportunity to make important contacts. What
we have seen is that many initiatives have come about and resulted
from what people meeting together at the World Urban Forum agree
to collaborate on and move on in the future to do practical things
about on the ground, and that is something we feel is extremely
valuable.
Q21 John Battle:
Can I say I welcome that? I think it was at the third one that
there was a suggestion that we build for the World Urban Forum
at the local level, so there is a series of regional urban forums
and we build, like future cities in Britain, on the urban councils
and they have workshops in between the years and that is fed through
with delegations rather than it just depending on one minister
going. Has UN-Habitat been able to take that forward as a process
for broadening the forum and building it up from the base?
Mr Taylor: We are a very small
agency and, frankly, we could not cope with too many more conferences
of that nature even on a regional basis. What we do though is
that on a political level we convene regional conferences of ministers
who have in their portfolio responsibilities for urban development.
We have one for Asia, we have one for Africa, we have one for
Latin America, and these make a powerful contribution, but generally
speaking those meetings do not have the financing requirements
on the scale that we have for the World Urban Forum, which is
pretty onerous and in organisational terms is pretty onerous as
well. What we do also though is that we are trying to regionalise
in the sense that you may have seen in the Habitat State of
the World Cities report, which tries to set out some of the
key issues of the urban agenda. What we are increasingly doing
is producing regional forums on that State of the World Cities
report so that issues specific to, say, Africa or Asia or Latin
America are represented in those reports and then we can make
certain those issues do not drop off the agenda at the annual
World Urban Forum, because the State of the World Cities
report, the global report, is always released at the World Urban
Forum. We are trying to create a situation of connectedness.
Mr Mutter: In relation to your
question on what kinds of subjects should the UK and DFID in particular
address, I would suggest that housing and finance, especially
the commercial finance aspect, would be something that would be
really useful to have as a backing for the Rio conference, especially
in terms of galvanising the international commercial banks, or,
shall we say, the ones that are still surviving by March next
year? For example, HSBC has been remarkable in its ability at
the local level to invest in providing commercial loans into the
kinds of housing schemes that we are promoting, firstly in Sri
Lanka but in other parts of the world as well. There is a lot
of goodwill backed up there in the finance houses that I think
is currently untapped and unheard of by the national governments
who may be attending the World Urban Forum.
Q22 Andrew Stunell:
That is interesting. We will take that further forward perhaps.
Can I turn to the Cities Alliance and "Cities Without Slums"
agenda. Earlier on you said that "slum" was unambiguous
and that was one of its advantages, but it is also an unachievable
slogan, is it not, to get rid of slums? We have cut away 100 million,
we have achieved the target for 2020, but we have still got an
extra 400 million people in slums, so are we not chasing our own
tails here? What are we actually trying to do and can you have
a city without slums?
Mr Taylor: We would like to parse
this term "Cities Without Slums" because generally speaking
what has happened in the past, particularly but not exclusively
in Africa, is to try and play catch-up. What has happened is that
the slum population has increased faster than action (if indeed
there is any action) to address slum formation. What we would
argue is that cities have to get ahead of the game, that what
they have to do is make sure that there is sufficient infrastructure
services, housing blocks, available to cater for projected increases
in low income housing populations. You might say that sounds pretty
Utopian. It is not. One of the things that really impresses you
if you go to China is the way they use their planning process
to think ahead of the formation of slums and other kinds of urban
development, and that is not only in terms of physically making
land available but also linking the planned allocation of land
with investment in services and budgeting for that investment
in services. In our view "Cities Without Slums" does
not mean eradication; I do not think anybody seriously thinks
we are proposing that, nor does it necessarily mean that within
a short timescale we can get rid of all the slums in the world,
rather that we get governments, local authorities and other players
to start thinking about the ways in which they can proactively
plan for their low income housing populations to try and make
certain that you are not the victim of circumstances but rather
that you are ahead of the game.
Q23 Mr Hendrick:
Is it something they are trying to do with birth control? The
elephant in the room on this subject is whether or not you can
get rid of the population growth. As fast as people want to build
property, if people are having children even quicker, as Andrew
puts it, you are going to be chasing your tail. You present China
as an example but it is not a typical example, is it?
Mr Taylor: Certainly that has
been one element of their success. There is also a very interesting
phenomenon which is emerging in China which reflects the points
which you have made. In a number of cases we are seeing declining
cities, where cities are not growing but reducing in the number
of their inhabitants. That is partly a reflection of the greying
of the population, but it is also a matter of whether you see
people as a resource or a problem. I think there is an increasing
inclination, if only in economic terms, to look at a relatively
young population as something which is at least of economic advantage,
certainly when you are comparing, let us say, the economic prospects
for India as compared to China. The relatively large number of
people in the younger age cohorts seems to suggest that you will
have higher levels of economic activity, and so in many ways the
slum issues are also dependent, obviously, on economic productivity
and economic growth. Generally speaking, the younger the age profile
of your population the more potential you have for economic growth.
I am not saying in terms of aggregate numbers it makes solving
of the issue of the backlog of slums a lot easier, but what it
does do is give an economic context within which things may not
be as difficult as they might otherwise be.
Mr Hendrick: It does not make it easier;
it actually makes it worse, because if you are going to get huge
growth in population you are going to get growth in slums.
Q24 Andrew Stunell:
Can I just bring us back to the discussion before? If the target
to get rid of slums is in the hands of national governments the
obvious way of getting rid of slums is to send some bulldozers
in. The less obvious and far more expensive way is to put in infrastructure
on plots of land so that the next wave of people will have un-slum-like
conditions to move onto.
Mr Taylor: Correct.
Q25 Andrew Stunell:
There is a major disincentive for a national government to go
down the second route, particularly if in any case its main policy
aim in this respect is to retain its population in the rural areas.
If it makes it really comfortable to flock to the big cities it
will actually accelerate something that it sees as being a problem.
That brings back this rural fashionable/urban unfashionable discussion
which we did not quite get to before. Do you have a view about
whether urbanisation is collectively a good thing or is it something
which national governments are right to be working to resist?
Should national governments be focusing on carrots or sticks to
solve the slum problem?
Mr Taylor: You have set a lot
of hares running there.
Q26 Andrew Stunell:
I am a novice.
Mr Taylor: Let us see if we can
track a few of them down. We are unambiguous that urbanisation
is a good thing. What we see is that urbanisation has always been
the motor of national development. We do not see any good examples
of models which are rurally based. Secondly, it is inevitable.
You talked about using forced evictions to send people back to
the countryside, just supposing morally and ethically you could
bite on that particular bullet. It does not work. We can take
some obvious examples. There is the famous case in Zimbabwe, for
example, where 800,000 low income residents had their houses bulldozed
in precisely the fashion which you describe and many of them were
trucked back to the rural areas. They are now back in the urban
areas. This is what happens. You have in Tanzania the famous example
in the 1970s of village-isation policies, perhaps a lot more humane
than was undertaken in Zimbabwe but also some of it had a bit
of a prod behind it as well. That completely ended in failure.
Even the worst-performing cities, and you can pick whichever city
you care to name, and I am talking here particularly about primate
cities, the large cities; but we can create even better arguments
for intermediate cities, even some of the most difficult and dysfunctional
cities contribute a higher share of gross domestic product per
capita than do rural areas. Let us take Lagos, an extremely difficult
city. It contains about one eighth of the population of Nigeria.
It produces about 60% of GDP. You can find countless examples
like that from around the world, so we would regard urbanisation
as both inevitable and desirable. The trick is to make certain
that the form of urbanisation you get is as successful as it can
be. There can be many dysfunctionalities, there can be many people
who are excluded from the development process in cities, either
by accident or design, in most cases a combination of both, who
cannot contribute as fully to city life as they otherwise could
because there is a philosophy around if you have a world-class
city that the poor have no place in it, that they should be hidden
away, they should be excluded, that indeed, if I were to exaggerate
somewhat but not much, that exclusion is a price worth paying
for economic development. Our research, as you will see in the
latest State of the World Cities report, shows quite conclusively
that cities that have higher degrees of equality are also amongst
those that are more economically efficient, so (a) cities, even
if badly run, make a disproportionate contribution to the share
of national income, and (b) they can do even better if they are
equitable and well run and then they can do a lot better than
those that are left to their own devices. Yes, we are unambiguous
about it. I will make one final point here, if I am not going
on too long: it is very difficult to get statistics on forced
evictions. Anticipating a question on that I had a bit of a root
around with our people in Nairobi on this and they said it is
very difficult to get numbers. In the last period on which we
are able to get some sort of numbers— the period 2000-02—there
were something like something over six million forced evictions
around the world, as best we could tell. In the preceding two
year period there were about four million forced evictions. These
are very, very spongy figures but they are the best we could get.
On our not-evidence-based assertion, but in terms of our witnessing
of forced eviction events around the world, we would say that
forced evictions are increasing and often used as a sort of alternative
method of town planning. Often, low-income populations, in order
to have access to employment opportunities, are located on extremely
valuable areas of land close to the centres of town. These areas
are often coveted by real estate developers who will then get
into league with government and arrange for those residents to
be evicted, often under the harshest possible circumstances. So
we argue very strongly against forced evictions. We are not saying
that evictions can never be done; often for very good public purposes
you have to displace people, but it should be done with due process
and there are international standards which prescribe what the
due processes are. Unfortunately, at the moment, we see many cases
where forced evictions are on the increase.
Mr Mutter: Could I just add a
little bit about the processes of urbanisation and, also, population
expansion? Most countries that urbanised some time ago display
higher GDP per capita levels, and with that rise in affluence
there is a tailing off of family size, generally speaking. So
there is a pattern that you could say is the good side of urbanisation,
which is that given good investments in the urban structure people
tend to have a higher income level, GDP per capita. The UK, for
example, with 90% urban living, is an example, but it is true
that most developed countries are extremely urban by comparison
to poor countries. So there is a growth in per capita income levels
with structured urbanisation, and there is a tailing off of growth
of population as a whole, as a result of that. That is the model
we are trying to encourage. I might just cite the case of Singapore.
I know people did not have an option to go and live in the countryside,
because there was not any, but they structured their investments
in the standards of urban development in a very proactive way.
I know it seems, maybe, difficult to remember, but in the 1950s
Singapore was riven with slums and the government took a very
bold step. They tried various models but the model they came down
to was to say, okay, the private sector should build all the new
housing but the government would pay the 40% deposit on anyone
relocating from the slum to a high-rise apartment block. People
were very sceptical that this could ever work; people said they
did not want to live in the air and they preferred their little
shack with their boat and all the rest of it, but in the end people
complained if they were not given an opportunity. That model has,
by and large, worked and it is private sector-driven, but with
a very decent slug of government money going in, but into the
model of private development housing but for the lowest income
groups.
Mr Taylor: I think, on the point
of urbanisation, we would tend to argue that there is quite a
clear mathematical relationship between the rate of urbanisation
and GDP. In terms of examples, we would cite the fact that China,
once again, embraced urbanisation very early, and we can see a
clear relationship between economic growth in China and the rate
of urbanisation. Those countries that are in urbanisation denial
tend to perform the worst in terms of economic growth.
Q27 Chairman:
You have made that point a number of times, and Mark Hendrick
has asked you the population questions. When you put the two together,
you have got people living in urban "slums" but they
are also multiplying. Michael said that as living standards rise
family size tends to get smaller but your own figures suggest
that the growth of urban slums is going to be natural generation
within those slums. What is your policy on trying to manage that?
Mr Taylor: First of all, I would
say, in overall terms, the rate of urbanisation is slowing globally.
It is still happening and the only area of the world where you
are seeing rates of urbanisation decreasing, I think, are in Western
Europe. The rate of increase is slowing down. I think the second
point we would say is that what you, essentially, have to do,
as we have been arguing already, is to release a variety of resources
into the housing market which, at the moment, are not being fully
exploited. Michael has talked about the availability of domestic
finance. We find that in many countries there are surprising amounts
of domestic finance looking for a home (Michael can probably give
you better information on that), even in relatively poor countries.
Secondly, we find that there are enormous opportunities for generating
funding from savings of slum dwellers themselves, and there are
many well-documented examples of this, where slum dwellers put
away small amounts of money on a periodic basis and this proves
enough—and they do it through savings organisations which
are run by themselves—to generate capital for investment
in housing. So, yes, you are seeing increasing population but
we also believe that there are under-utilised resources which
can be unlocked through innovative schemes of housing finance.
So we do not believe that it is, by any means, a hopeless situation.
Q28 Chairman:
You do not have a population policy; to some extent you think
it will take care of itself?
Mr Mutter: There are a whole range
of reasons for urbanisation taking place. As towns expand they
engulf villages that are around them, and those people become
part of the urban scheme. Nairobi Metropolitan, for example, which
has just been announced, will engulf fair-sized towns in a radius
of about 50 to 80 kilometres from the current centre. So that
will become a new city of 10, 15 or 20 million people in due course.
Hopefully, it will be properly planned, the housing areas will
be earmarked and investment will be made in those kinds of provisions
and there will not be an expansion of the slum areas. However,
even in rural areas, as happened in Europe and the UK in particular,
villages grow until they take on urban characteristics. So, without
moving, people become more urban than they were previously. Villages
of 5,000 people, for example, become urban centres with the provision
of schools and things like that. Just a quick word on reasons
for people moving. Education has been a huge driver for rural
people to gain access to education for their children. They may
be uneducated themselves. We saw this very distinctly in South
Africa. Eastern Cape was a predominantly rural region where, by
the time the school was due to be brought to a rural population
the village had already gone; they had gone to Cape Town; they
had gone to Khayelitsha to find education opportunities, which
they could only find by moving to an urban area. I would say there
is a cut-off point below which you cannot provide the kind of
provision urban areas offer in rural areas. They can be made better
but only up to a certain extent. Eventually, the natural tendency
of the human population throughout the world is to urbanise.
Q29 Andrew Stunell:
You have opened up an aspect of this which I was not fully familiar
with at all. Are you saying that the majority of developing countries'
governments are pro-urbanisation? I get a very different picture.
I just wondered whether there is not actually a major policy gap
between what you are trying to achieve at an international level,
facilitating national governments carrying out a policy which
actually they completely and fundamentally disagree with. Is there
not a rather significant disconnect there?
Mr Taylor: I think it is a reasonable
comment that you are making, but I think the situation is changing.
At the beginning of my time in UN-Habitat, the argument of many
developing country governments was: "Urbanisation—bad;
rural—good; people staying in rural areas, our policies
ought to be to keep them there". Now that is still heard
but it is not heard quite so commonly, I would say. We have it
as our mandate from our governing council to actually promote
the cause of urbanisation. Nobody at our governing council, which
also includes developing countries, says: "No, you should
not be doing this". What we are saying is that unless you
address the urban problems that are being faced at the moment
there are greater problems in store in the future, in terms of
social consequence, social unrest, urban violence, in terms of
increased forced migration, in terms of conflict over land and
in terms of increased numbers of deaths from natural catastrophes.
So there are things that are in the pipeline. I think governments
now are less in denial than they were. I think that is, in part,
a consequence of the arguments that have been presented by UN-Habitat
over the years.
Q30 John Battle:
I want to follow up the Chairman's question and put it another
way. I am passionate about urbanisation—I am an urban-addict—and
I love the city of Leeds, where I live, but are there structural
limits to mega-cities? Why I ask that is that I can see that if
a city extends—in the 1500s Hounslow was a village miles
away and it is now part of the conglomeration of a huge urban
area. If you get people coming in informally to a city centre—let
us call it that—and so you have mega-cities of more than
one million people, which my own city is now, do you have structural
limits, particularly in relation to, say, water and transport?
What I found was the sewage system will not sustain that number
of people and, also, people cannot get in and out because the
roads and transport systems get clogged up. When the place where
I was staying was cleared out and we were given land at the far
end of Sao Paulo, it took three-and-a-half hours by bus to get
back into the place of work in the morning and back out at night,
and men and women never saw their children in daylight. So are
there structural limits to a city, and are you tackling that issue?
Mr Taylor: Yes, what we are seeing
is that there are natural limits to growth of mega-cities. In
fact, we tend to see too much concentration in international comment
on mega-cities. In fact, 50% of the worlds' urban population lives
in urban centres of 500,000 people or less (if I recall my statistics
correctly), and it is around about 10% that live in mega-cities.
So we can get the issue of mega-cities out of proportion. The
second thing is that we are seeing that there are natural limits
to growth, particularly in badly planned and badly integrated
mega-cities, which is leading some of those mega-cities—even
some of the most famous ones—to actually lose population
to intermediate-sized cities; places like Mexico City, La Paz
and Manila. They are experiencing this. What we would say is that
any sensible government would put as much emphasis on the development
of its intermediate cities as it would on its mega-cities and,
also, to meet the objectives which Mr Stunell referred to, in
terms of improving the living conditions of the rural population.
Cities—and we use the American term "cities" but
that refers to all human settlements—exist in order to provide
services not only for the residents of those cities themselves
but, also, of their surrounding hinterlands. Certain facilities,
as Michael was hinting at, can only be provided when there are
certain densities of populations and certain economies of scale—higher
order facilities, such as tertiary education facilities and higher
order medical facilities and so on. If you have a properly developed
settlement strategy you can more easily provide these higher order
services to rural populations if you can get some reasonable sized
settlements developed with reasonable access to rural populations.
So we should not overly concentrate on mega-cities. I would also
say, in terms of what is actually happening in the cities, probably
one of the more significant developments over the last 10 or 15
years has not been the mega-city but the city region. This applies
to both developed and to developing countries. Typically, for
example, now we would refer to almost the entire south-east of
England as a city region that needs to be looked at in an integrated
kind of way. The Pearl River Delta that you see in China, the
North Eastern Seaboard of the US and the Rand area of South Africa.
This is a development that you get in more mature stages of urbanisation.
In Africa, for example, where urbanisation is still in its first
throes—you are seeing the mega-city phenomenon—but
the next stage will be the city region. What we are seeing now
is that governments, realising, first of all, the economic powerhouse
effects of these city regions but, also, some of the inefficiencies
that are associated with bad planning for infrastructure, such
as you have just mentioned, are also getting more and more involved
in decision making at that kind of level. If we were crystal ball
gazing for the future, I think one of the outcomes of the recent
credit crisis has been that we might well see a change from the
formal, Washington consensus, which is all about shrinking government,
to expanding the role of government, and we would anticipate that
you will have increasing government involvement and interest in
these enormous conglomerations or city regions for developing
in various places.
Q31 John Battle:
In fact, just this weekend in Leeds, in my city, the Government
here in the last Budget a couple of weeks ago declared Leeds the
city region for the whole of West Yorkshire. The theme is catching
alight, if we cross-reference north and south. Can I ask you about
water? In a sense, with electricity, you can throw a wire over
a cable that is there already and "steal" electricity
to get electric, but in terms of water you really have a problem
with water and sanitation. You set up a fund, I think, the Water
and Sanitation Trust Fund. How is it working out? What is it doing?
Surely, land right rows—if you put the water in, authorities,
civic or government, resent you sorting the water out because
that makes settlements permanent. How are you managing that fund?
Mr Taylor: First of all, we are
trying to use the money that we receive, which is relatively modest
(I think we have received something like $10 million into the
fund so far) to work with international finance institutions,
such as, in Africa, the African Development Bank and, in Asia,
the Asian Development Bank, to leverage additional funds. So from
that $10 million, I think, at the last count, we had leveraged
something like around $1 billion for further investment. What
we use our money to do is to try and improve the efficiency and
effectiveness of the investment financing provided by the international
finance institutions by doing a lot of the pre-investment work,
by the involvement of communities in the designing of schemes,
in terms of capacity building of some of the key players, particularly
in water and sanitation utilities, through training and other
measures, and also involving communities in the implementation
of the schemes as well. We find all these measures taken together
can give you overall a better result. Furthermore, what we are
doing also is one of the problems we mentioned previously is when
you do projects they often tend to remain as projects; that there
are boundaries round them and when the project financing is finished
it is back to business as usual. So what we have tried to do in
our water and sanitation programme is go for regional approaches
which involve a number of cities and go across national borders.
For example, we have one big programme that is around the Lake
Victoria region in East Africa (I forget how many cities it involves
now—15 or 20) and we have another one in the Mekong area,
which involves Thailand and Laos. What we are trying to do is
ensure that whatever resources that we get in for water and sanitation
do not go into direct provision, but we try and use that money
to deliver increased efficiency and effectiveness of the totality
of funds that we can make available for any area, and sustainability
of the overall investment.
Q32 Mr Hendrick:
70% of people living without improved sanitation and 80% of people
living without improved water live in rural areas. DFID is focusing
much of its efforts in those rural areas to improve sanitation
and water. Given the rate of urbanisation, do you think DFID should
shift its priorities?
Mr Mutter: No, would be the immediate
answer because three billion people without access to sanitation
is just incredible—that we can live in a world with that
degree of deprivation. So it needs everything. I think there is
still a good case to be made for the provision of water and sanitation
measures in rural areas. Very often this, however, does relate
to government strategies, in particular, especially with the Water
and Sanitation Trust Fund we have set up. The power of convening,
as Paul was saying, beyond national boundaries with different
governments coming together around, for example, Lake Victoria,
where there is a large rural population, is very important in
getting the strategy right that then does provide for both the
urban and the rural provision. One of the things that we have
been able to do with the Water and Sanitation Trust Fund is provide
a centre for the global water operators' partnership. This was
seen to be something that had never been put together before,
and water operators or utility companies that do make these provisions
do so opportunistically to where there is the greatest return.
To get them to then provide or broaden their scope so that they
provide also for the less well developed parts of the geographical
spread is very important indeed. Again, if you like, it is the
value-added of having a UN department that is able to bring these
various disparate groups together.
Mr Taylor: Can I make another
point here? Often provision of water supplies and sanitation services
in rural areas is justified on the basis of delivering services
to the poorest of the poor. There is a lot of evidence to suggest
that the conditions of slum dwellers in cities is much worse than
the conditions of rural dwellers.
Mr Mutter: Especially for sanitation.
Mr Taylor: Particularly for sanitation
but, also, if you look at the morbidity and mortality statistics.
It varies from city to city, of course, but particularly but not
exclusively in Africa quite a clear picture is emerging, that
the situation in the slums is often—not always—much
worse than in rural areas.
Q33 Andrew Stunell:
Part of your mandate is to do with planning and land tenure. I
wonder if you could just report back to us on how the UN Housing
Rights programme is proceeding and whether you could actually
say it was producing any results.
Mr Taylor: Yes, we are working
on the Housing Rights programme in combination with the High Commissioner
on Human Rights. We find that the rights approach is one that
is very good for advocacy; it allows you to make a case for doing
something. This is part of the whole process of trying to increase
the footprint of urban. Having said that, we do not believe that
on its own it is sufficient. The danger always is that debates
about rights also tend to disconnect from the other things that
you should be doing in order to achieve practical improvement.
In our view, rights is good but it is very important to connect
with policies with regard to slum upgrading, with regard to investments
in infrastructure, and with regard to land rights, and so on and
so forth. So, yes, this is an important part of our armoury but
it is not the most important part, by any means.
Q34 Andrew Stunell:
I guess that in most slums, even informal slums, the majority
of people are actually tenants rather than landlords, if I can
put it that way; they are paying to be there rather than owning
land. I think you began to point to the fact that this is not
quite the panacea solution—give everybody a square yard
or two to put their shack on. What do you see as the balance of
the land tenure argument against the other things which need to
be done?
Mr Taylor: We see land tenure
as being extremely important. Indeed, it is the fear of eviction
which probably is the strongest disincentive to investment in
the improvement of shelter. There are a lot of arguments, principally
put around by people like Hernando de Soto who argue that formal
titling, as has been done in the West, is the solution to many
problems; that if you get formal title you can release capital
that can be used for other purposes. We believe titling, yes,
is important, it can do what he says, but whether it is the appropriate
solution, particularly for developing countries, we would tend
to say that it is better that you have a range of solutions. We
tend to find that titling is too cumbersome, too expensive and,
frankly, not practicable in many countries, given the numbers
of people who are living in slums. We would argue that, in fact,
there is a continuum of land rights that need to be addressed,
but at the most basic level it is a perception by residents of
slum areas that they have security of tenure. That, even of itself,
is one of the most important levers you can get for slum dwellers
themselves to invest in the improvement of their own conditions.
Q35 Andrew Stunell:
Could you give any hands-on, practical example of where you can
see an improvement having been made in the tenure situation which
has led to that increased sense of security? You have asserted
it as a theoretical point, but is there a practical example?
Mr Mutter: Yes, the City of Solo
in Indonesia has a very dynamic mayor and he set about a very
specific programme, which is government promoted but, often, not
implemented, of ensuring that in the pockets of slum areas that
have been identified for improvement the land titling is the driver.
In that particular set of circumstances it does release commercial
loans from the local banks. It is an interesting case of a particular
city having a political will from the leadership to ensure that
this is carried out. Unfortunately, in many cases, there are so
many vested interests entwined with politics that it becomes defeated.
What is interesting about this city is that the next meeting of
the Asian Ministers of Urban Development and Housing will be held
there in July next year, so they will have a first-class example
on their doorstep of being able to see how the effects of land
titling have led to improved conditions.
Q36 Mr Singh:
What is the Slum Upgrading Facility? What does it do? What problems
are you experiencing? What successes have you had?
Mr Mutter: This came about from
a lot of ideas that had been put together from the year 2000,
but it was not until the 19th session of the Governing Council
of UN-Habitat in 2003 that the idea was formalised and it was
not until 2004—and largely with DFID's foresight to put
money up front for this Slum Upgrading Facility—that it
could get off the ground. The very basic idea is that through
proper planning and technical assistance and through, ultimately,
the availability of a guarantee system at the local level that
the commercial banks will be attracted into slum upgrading projects
that are put together, largely, by the slum dwellers. In these
cases, slum dwellers become not beneficiaries, as a terminology,
but clients, because they are the ones who will be making the
repayments on the commercial loans. So this whole notion turns
round the idea of someone waiting for someone else to come along
with a dollop of money to improve their life; this is a real enabling
process for those slum dwellers, and they respond very well. The
other interesting aspect of that market segment, shall we say,
is that they are very much better at repayments than their middle
income counterparts who tend to have a default rate that is much
higher. It is very similar to the kind of experience that the
world has witnessed with microfinance, and the way in which the
peer group ensures that the major repayment is made regularly
and on time, and if there is a problem with a member of the group
that problem is resolved at the group level before it becomes
a problem with the financial institution or the bank at a formal
level. Savings, also, provide that very initial stimulus at the
local level. However, as a facility (and we are only coming towards
the end of our first three-year pilot programme in four countries:
Indonesia, Sri Lanka, Tanzania and Ghana), we are beginning to
see the commercial banks participating. They do it, very largely,
when they are involved in the process at the local level. So in
order to facilitate the process locally we have developed a methodology
of what we call local finance facilities, multi-stakeholder groups
in a not-for-profit company, where everyone can be involved. You
may ask about the longer-term sustainability of such groups, and
where we have had these established at an early stage, after a
number of years governments are dedicating national budget lines
(for example, in the case of Sri Lanka the Government of Sri Lanka
has dedicated a national budget line to permanently sustain this
local finance facility there). It is then able to pick up the
pockets of slums in cities like Colombo, but across Sri Lanka,
and, hopefully, also, in due course, in the North where there
are going to be a lot of displaced people needing access to reconstruction
activity. What we find is because the expertise is contained locally
and is stimulated locally they become a problem-solving institution
in their own right. If you have got a land problem it is more
likely to be solved by this finance facility. The banks are happy
to be involved from the very beginning in these processes and
we are absolutely amazed by the speed with which both the slum
dwellers and the commercial banks and government are able to come
together and see the value of this kind of local facility.
Q37 Mr Singh:
Have you come across any obstacles?
Mr Mutter: There is an obstacle
to expansion through not having the longer-term finance available,
and that is what I would still stress; to have a 10-year window
of funding would enable it to expand before the guarantees that
are placed are absolved. There is a need for five- to 10-year
money as capitalisation of that process. We have started, and
it is looking good. The only other obstacle that takes time is
the land issue, but with persistence over the period of time,
even the land issues can be resolved.
Q38 Mr Singh:
Do you have any plans to generalise this model when the pilots
come to an end?
Mr Mutter: As I say, we are coming
towards the end of the third year—by the end of this year
will be the end of the third year of the experiment. We have had
a mid-term review that is encouraging, and the group that oversees
this process have said they would like to see another two years
carry on of the pilot—another three year period. We have
not got the funding secured for even that period yet, but there
is optimism in the process. I think, when we have been able to
evaluate all of the different characteristics of different countries,
there will be an opportunity to say, okay, this now needs expanding
with the 100 million—
Q39 Chairman:
How many people were covered by the four pilot schemes?
Mr Mutter: For example, one of
the pilot schemes is the whole of Sri Lanka. Of the individual
projects, there are six individual projects within Sri Lanka being
covered, and that is covering about 6,000 people all together.
That is typical in each of the four countries. The requirement,
especially if it is going to keep pace with preventing slum formation,
is going to be quite large, but the commercial banks do see this
as a market system that they ought to be into and the reflection
of that is in what we call the gearing ratio. In other words,
for a given guarantee, how much more money is the commercial bank
willing to put it? At the moment, it is 2:1 in Sri Lanka, in one
case, it is 4:1 in Tanzania, but we would like to see 10:1 being
the norm going forward. It will only come about with the banks
being able to see that this is a workable process and gaining
confidence that there will not be massive defaults in the process.
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