Urbanization of Poverty by gabyion


									Urbanization of Poverty
by Dinesh Mehta

The rapid growth of the global urban population is one of the most striking features of the
demographic shift taking place in the world. Only 233 million people lived in cities in 1900
(14 per cent of the world’s population). By 1950, 30 per cent of the world was urbanized; in
1980, the figure was up to 39 per cent and by 2001, it is estimated that 47.5 per cent of the
world's population lives in urban areas.
This dramatic growth is unprecedented in human history. The level of urbanization will rise
to 56.7 per cent within the next two decades, with all of the urban growth in developing
countries. Numerically, this represents an increase of 1.5 billion people between 2000 and
2025.1 Another distinctive feature is that most of the urban growth will be a result of natural
population increase and the structural transformation of formerly rural areas on the
periphery of urban areas. Less than half of this urban growth will be a result of rural-to-
urban migration.

Just as the world is becoming increasingly urban, there is also an increase in the number of
urban poor. The United Nations Development Programme (UNDP)’s 1999 Human
Development Report demonstrates that despite the significant advances in human
development in previous decades, extreme poverty persists. In developing countries there
are still 60 percent more illiterate women than men. An estimated 1.3 billion people live on
incomes of less than $1 per day.2 In his "Millennium Report," United Nations Secretary-
General Kofi Annan declared that "extreme poverty is an affront to our common humanity,"
and called on the international community, "to adopt the target of halving the proportion of
people living in extreme poverty… by 2015."3

A number of recent inter-governmental meetings related to reviewing progress on
commitments made at major UN conferences, including the preparatory process of
Istanbul+5, have identified a range of concerns about the present urban context. Some of
these are:

      The worsening of access to shelter and security of tenure, resulting in severe over-
       crowding, homelessness and environmental health problems;
      Large and growing backlogs in delivery of basic service to urban residents as demand
       outstrips institutional capacity, financial resources and environmental carrying
      Increasing inequality in cities, manifested in stark residential segregation, increasing
       violence impacting disproportionately on women, the poor, and more generally
       intensifying poverty; and
      Lopsided economic growth displayed in the simultaneous evolution of high-end
       investments to attract foreign investment and an expanding informal economy with
       poor labour conditions.

More poor people are now in urban areas than ever before. The process of urbanization,
though stimulated by economic development, has also led to sharp divisions in growth
between cities and among social groups. It is estimated that nearly one billion urban
residents in the cities of the developing world are poor, and the next decade will witness
increased urbanization of poverty if current trends continue.

Globalization, a dominant force in the 20 th century’s last decade, is shaping a new era of
economic growth of nations. It was anticipated that with high rates of economic growth, the
incidence of poverty would reduce. But this has not happened. The global economy has also
fragmented production processes, labour markets, political entities and societies. So, while
globalization has positive, innovative, dynamic aspects—it also has negative, disruptive and
marginalizing aspects.

A critical feature of globalization is new lines and forms of stratification between places,
people and groups. In particular, it is manifested in much greater income inequalities. In all
the regions, where the absolute number of poor has increased, a majority of them are in
urban areas that have been the key drivers of the global economy. As the East Asian crisis
demonstrated, the urban poor are the worst affected group when there is sudden decline in
economic growth. The urban poor, unlike the rural poor, are the most vulnerable group
because most national governments in developing countries do not provide any social safety
nets for them.

Recognizing that traditional strategies to foster growth - macroeconomic stability and
market friendly reforms - are necessary for achieving higher rates of economic growth, but
not sufficient to impact on poverty levels, a more comprehensive development strategy is
now advocated by the multilateral agencies. In its recent World Development Report
2000/2001, the World Bank recommends a three-pronged approach to poverty reduction -
promoting opportunity, facilitating empowerment, and enhancing security. 4 UNCHS
(Habitat), through its global campaigns on secure tenure and urban governance also
advocates more direct action for reduction of urban poverty.

Responding to poverty at the local level

The challenge for urban local governments is to provide sustainable livelihoods, safe and
secure living environments and a better quality of life for the urban poor. There is an
emerging international consensus that good governance is a crucial pre-requisite for poverty
eradication.5 The Commission on Human Settlements, at its seventeenth session, identified
increased urban poverty as a key challenge for sustainable urban development and stressed
the importance of good urban governance. The 1999 Commonwealth "Durban Communiqué"
stressed the importance of good governance. UNDP’s 2000 Poverty Report calls good
national governance the "missing link" between anti-poverty efforts and poverty reduction.
The report goes on to declare that programmes to reduce poverty often "by-pass and
ignore" local government, hampering their effectiveness.6 The report also cites an important
lesson learned by the UN Capital Development Fund: "institutional strengthening of local
government would take longer than conventional targeted schemes to benefit the poor –
but the eventual benefits would outweigh the costs." 7

Improved urban governance implies that city governments will have to become responsive
and accountable to the poor, and adopt an inclusionary and participatory approach in which
the poor have adequate representation and voice. Empowering the poor implies recognizing
the rights of the poor to live in the city, ensuring secure tenure and access to basic services,
strengthening their participation in local decision making, and removing social barriers that
result from discrimination due to gender, race, religion and social status. Urban local
governments will also need to ensure that the vulnerability of the poor to ill health,
economic shocks, natural disasters, and violence is reduced and support the coping
mechanisms that the poor have evolved to minimize such risks.

Strategic Planning for Poverty Reduction at Local Level

Labour markets

      Support for small and micro enterprises
      Increased access to employment
       Facilitating "informal" enterprises - street hawkers, small manufacturing etc.
       Support to home based activities
       Safety nets
Land,   housing and urban services

     Tenure security and property rights
     Flexible and relevant regulations regarding land and shelter development
     Easy procedures and permits
Financial markets

       Increase access to credit and saving schemes
       Linkages between the formal and informal finance institutions

Public finance

       Cost recovery and targeted subsidies
       Pro-poor participatory budgeting

Urban governance & capacity building

       Accountability and responsiveness to the public
       Anticorruption policies and practices
       Capacity building of local governments, community organizations, and NGOs

Adapted from: Deniz Baharoglu and Christine Kessides, 'Urban Poverty' in Poverty
Reduction Strategy Papers - A Sourcebook, (Draft), World Bank, September 2000

The decentralization process has been initiated in many developing countries. In these early
stages of decentralization, the balance of power and distribution of functions between
national/provincial and local governments is still evolving. Historically, poverty reduction has
been the domain of national government, but this responsibility is being increasingly
devolved to the local government. Urban local governments are often expected to ensure
that a minimum level of basic services is available to all residents, particularly the urban

In more specific terms, local governments, like national governments, need to prepare pro-
poor urban development strategies and action plans. This is best done through a
consultative process involving the poor. The focus of such strategies should be on policies
and actions that have a direct impact on improving the living standards of the poor. Many
cities around the world have successfully demonstrated this approach. These cities'
experiences are well documented in the best practices databases and the documents of the
Urban Management Programme (UMP), Sustainable Cities Programme (SCP), LIFE and other
initiatives of the UN system. These experiences also demonstrate that it is possible to meet
international poverty reduction goals at the local level.

With increasing urbanization of poverty, the action space for poverty reduction will need to
be in urban areas. The urban poor have tried to cope, against all odds, to survive, build
their own shelter, and earn a livelihood. They are an integral part of the urban economy and
a partner in its development. The experiences of participatory pro-poor urban strategies
evolved through contributions from all the stakeholders in a city demonstrate that positive
institutional responses at local level do contribute to a significant reduction in poverty. As
more cities around the world adopt such approaches, it will become possible to meet the
international goal of reducing poverty by half in 2015.

Dinesh Mehta is Co-ordinator of
the UNDP/UNCHS (Habitat)
Urban Management Programme.

  UNCHS (Habitat). 1999. ‘State of the World’s Cities.’ Nairobi. Available at:
  1987 purchasing-power-parity; See UNDP 1999 Human Development Report 1999, pages
25 and 28.
  "We the Peoples: The Role of the United Nations in the 21 st Century," paragraphs 70 and
  World Development Report 2000/2001- Attacking Poverty, September 2000
  In addition to the examples that follow, see UNDP’s 1999 Human Development Report, the
World Bank's 1999/2000 World Development Report and UNEP’s GEO 2000 report.
  UNDP 2000 Poverty Report. See chapters 5 and 6 and the "Main Messages".
  UNDP 2000 Poverty Report, p. 64.

                              Some Basic Poverty Definitions

               Income Poverty                                     Human Poverty
Extreme       poverty:   Lack   of   income         Lack     of   basic   human    capabilities:
necessary to satisfy basic food needs -             Illiteracy, malnutrition, abbreviated life
usually defined on the basis of minimum             span, poor maternal health, illness from
calorie     requirements.    (Often    called       preventable diseases.
absolute poverty.)                                  Indirect measures are lack of access to
Overall poverty: Lack of income necessary           goods, services and infrastructure -
 to satisfy essential non-food needs - such         energy, sanitation, education,
   as for clothing, energy and shelter - as         communication, drinking water -
  well as food needs. (Often called relative        necessary to sustain basic human
                   poverty.)                        capabilities.

                           The Multidimensional Nature of Poverty
One of the major deficiencies in the concept of "income poverty" is its inability to capture
the severity of living conditions in many countries. The link between income level and the
level of deprivation is often weak, as many with incomes above the poverty line suffer from
serious deprivation and some below the poverty line do not.
In 1997, UNDP's Human Development Report introduced the concept of human poverty. It
argued that if income is not the sum total of well-being, lack of income cannot be the sum
total of poverty.
Human poverty does not focus on what people do or do not have, but on what they can or
cannot do. It is deprivation in the most essential capabilities of life, including leading a long
and healthy life, being knowledgeable, having adequate economic provisioning and
participating fully in the life of the community.

As an alternative to income poverty measures, Human Development Report 1997 created
the human poverty index. For developing countries it captures three dimensions:
      Deprivation in a long and healthy life, as measured by the percentage of people not
       expected to survive to age 40.
      Deprivation in knowledge, as measured by adult illiteracy.
      Deprivation in economic provisioning, from private and public income, as measured
       by the percentage of people lacking access to health services, the percentage of
       people lacking access to safe water and the percentage of children under five who
       are moderately or severely underweight.

UNCHS (Habitat)'s Global Report on Human Settlements 1996 uses the concept of "housing
poverty" i.e. " the individuals and households who lack safe, secure and healthy shelter with
basic infrastructure such as piped water and adequate provision for sanitation, drainage and
the removal of household wastes."

Attempts have been made to estimate the number of urban poor based on such a wider
definition of poverty. The result is striking. In 1990, it was estimated that "some 600 million
urban residents in developing countries live in 'life-and-health threatening homes' and
neighbourhoods because of the very poor housing and living conditions and the lack of
adequate provision for safe, sufficient water supplies and provision for sanitation, drainage,
the removal of garbage and health care." If we take an optimistic approach, and assume
that the situation has since stabilised, i.e. that the incidence of such living conditions has
remained the same (43 per cent), this would imply that some 835 million urban dwellers in
developing countries are currently living in poverty. If, however, a more realistic approach is
adopted - assuming that only a third of the urban population growth is catered for in terms
of shelter provision - the number of urban poor in developing countries may well have
reached 950 million by the year 2000 (i.e. 49 per cent of the urban population). If industrial
countries are included in this estimate, the total number of urban poor is currently 1.1

The World Bank's World Development Report 2000/2001 broadens the notion of poverty to
include vulnerability and exposure to risk - and voicelessness and powerlessness. All these
forms of deprivation severely restrict what Nobel Peace Prize winner Amartya Sen calls the
"capabilities that a person has, that is, the substantive freedoms he or she enjoys to lead
the kind of life he or she values".

However, the multidimensional nature of poverty raises the question of how to measure
overall poverty and how to compare achievements in the different dimensions.
One approach, says the Report, is to define a multidimensional welfare function or a
composite index. An alternative is to define as poor anybody who is poor in any one of the
dimensions - without attempting to estimate tradeoffs among the dimensions - or anybody
who is poor in all dimensions, and to define the intensity of poverty accordingly.

                           FACTS AND FIGURES ON POVERTY
A quarter of the world's population, 1.3 billion people, live in severe poverty...

      Nearly 800 million people do not get enough food, and about 500 million people are
       chronically malnourished. More than a third of children are malnourished.
      In industrial countries more than 100 million people live below the poverty line, more
       than 5 million people are homeless and 37 million are jobless.
      Of the world's 23 million people living with HIV/AIDS more than 93% live in
       developing countries.
      More than 840 million adults are illiterate - 538 million of them are women.
      In developing countries 160 million pre-school children are underweight.
      1.2 billion people live without access to safe drinking water.

Today's society has the resources to eradicate poverty…

      The net wealth of the 10 richest billionaires is $133 billion, more than 1.5 times the
       total national income of the least developed countries.
      The cost of eradicating poverty is 1% of global income.
      Effective debt relief to the 20 poorest countries would cost $5.5 billion - equivalent to
       the cost of building EuroDisney.
      Providing universal access to basic social services and transfers to alleviate income
       poverty would cost $80 billion, less than the net worth of the seven richest men in
       the world.
      Six countries can spend $700 million in nine days on dog and cat food.
      Today's world spends $92 billion on junk food, $66 billion on cosmetics and nearly
       $800 billion in 1995 for defence expenditure.

Extreme poverty can be banished from the globe in the early part of the 21st Century

      The proportion of human kind living in poverty has fallen faster in the past 50 years
       than in the previous 500 years.
      Since 1960 child death rates in developing countries have more than halved,
       malnutrition rates have declined by almost a third, the proportion of children out of
       primary school has fallen from more than half to less than a quarter.
      Over the past three decades the population in developing countries with access to
       safe water almost doubled - from 36 per cent to nearly 70 per cent.
      The extension of basic immunisation over the past two decades has saved the lives
       of three million children.
      In 1960-93 average life expectancy increased by more than a third in developing

Poverty is no longer inevitable and should thus no longer be tolerated.

Source: UNDP (1999)

To top