[URBANTH-L]NEWS: World Faces Prospect of Teeming Mega-Slums

Angela Jancius acjancius at ysu.edu
Fri Sep 16 13:26:54 EDT 2005


World Faces Prospect of Teeming Mega-Slums

By Martin Schuijt

September 13, 2005, Inter Press Service

http://www.ipsnews.net/news.asp?idnews=30248

UNITED NATIONS, Sep 13 (IPS) - A new report by the United
Nations Human Settlements Programme (UN-HABITAT) warns that
governments will have to take the lead in building some
96,150 housing units per day if the world hopes to avert a
massive urban crisis in the near future.

Titled "Financing Urban Shelter", the report explores the
challenges of urban development within the broader context of
the Millennium Development Goals (MDGs), which include
achieving a significant improvement in the lives of at least
100 million slum dwellers by 2020.

Almost half of the world's six billion people already live in
cities. Of these, it is estimated that about a third live in
slums.

"The housing crisis is already with us," the report notes.
"The large-scale evictions from urban areas of Zimbabwe,
Mumbai, India, or Malawi are all part of a larger problem of
financing urban shelter."

Anna Tibaijuka, UN-HABITAT's executive director, said that by
recent estimates, more than two billion people would be added
to the number of city dwellers in developing countries by
2030. To meet the needs of that additional population, some
35 million new housing units would have to be built every
year for the next 25 years.

Tibaijuka highlighted the current contradiction of
"affordable shelter that is inadequate and adequate shelter
that is unaffordable", adding that state-subsidised
conventional housing was the solution to prevent the creation
of new slums.

But unless adequate financial resources are invested in the
development of urban shelter and services, including clean
water and sanitation, billions of people will be trapped in
poverty, deplorable housing conditions, poor health and low
productivity, making today's enormous slum challenge even
greater.

She said that one of the key challenges in meeting the MDG on
slums "is mobilising the financial resources necessary for
both slum upgrading and slum prevention by supplying new
housing affordable to lower income groups on a large scale".
Those efforts would also bring into focus the importance of
urban planning, which is lagging behind in many parts of the
world.

The report also highlights the strengths and limitations of
current trends in conventional mortgage financing. While such
financing has been expanding for the past decade and is
increasingly available in many countries, only middle- and
higher-income households have access to it, while the poor
are generally excluded.

UN-HABITAT stresses that it is in the interests of
governments to extend mortgage markets down the income scale,
as home ownership is beneficial economically, socially and
politically.

"If you cannot provide housing for the relatively better off,
you can definitely not serve the poor," Tibaijuka told
reporters.

The majority of urban poor households can only afford to
build their homes in stages, as financial resources became
available, she said. In response, shelter microfinance
institutions and community-based funding initiatives have
emerged in recent decades.

The report concluded that short-term small loans of one to
eight years in amounts from 500 to 5,000 dollars were more
useful for incremental building than the longer-term large
loans favoured by the mortgage markets.

It is also important to increase the number of lenders in the
housing microfinance sector. Guarantees are an important
mechanism for broadening the appeal of microfinance
institutions to lenders and addressing the current problem of
capital shortage, the report said.

Naison Mutizwa-Mangiza, head of UN-HABITAT's Policy Analysis
and Dialogue Branch and an author of the report, said that
the challenge of credit lay in the fact that the cost of a
typical house was between 2.5 and six times the average
annual salary, a ratio that rose to about 10 times in
developing countries.

The report analysed such trends as interest-rate subsidies,
conventional mortgages, secondary mortgages and a growing
diversity of mortgage providers. Among the main challenges,
especially in developing and countries with economies in
transition, were low levels of domestic savings, both private
and public. One of the report's conclusions related to the
need for accelerated employment and income generation,
Mutizwa-Mangiza said, noting a widening gap between incomes
and housing prices in many countries, which resulted in the
inability of young first-time buyers to purchase homes.

>From 1997 to 2004, housing prices had grown by 112 percent in
Australia, for example, 139 percent in the United Kingdom,
and 227 percent in South Africa.

This calls for a shift of the public sector away from direct
housing construction towards assistance for home ownership
through direct subsidies, he said.

About 70 percent of housing investment in developing
countries takes place through incremental building, which of
course, is not acceptable to conventional mortgage financing
institutions. To address that need, shelter microfinance had
emerged in recent years, but its scale is still small in many
countries. There is also an emerging preference of lending to
women.

Tibaijuka stressed that without massive investment --
definitely involving governments -- adequate shelter would
not emerge on its own. Governments needed to subscribe to the
main principle of the UN-HABITAT agenda, "adequate shelter
for all".

While microfinance presented important possibilities, public
support and international cooperation were still needed. In
particular, international support was needed for a global
mechanism to assist the poor.

She noted that several programmes of slum upgrading and
resettlement of the urban poor were underway in Brazil, which
had some of the best practices in that regard. (END/2005)



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