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Urban Housing Challenges and Opportunities in Developing Countries
By Daniel Biau Deputy Executive Director
Urban Housing Workshop
Nairobi, 9-10 June 2003

Your Excellency, Honourable Mwai Kibaki, President of the Republic of Kenya,
Honourable Minister for Roads, Public Works and Housing, Eng. Raila Odinga,
Honourable Minister for Local Government, Mr. Karisa Maitha,
Your Worship the Mayor of Nairobi, Mr. Joe Aketch,
Honourable Ministers, distinguished participants, ladies and gentlemen,

On behalf of the Executive Director of UN-HABITAT, Mrs. Anna Tibaijuka, I wish to congratulate the organizers of the present workshop on urban housing for a very timely initiative. at UN-HABITAT, we believe that the issues of housing and urbanization should be placed at the top of the development agenda of most African countries which are currently experiencing a rapid urban transition.

The urban population of Kenya is expected to increase from 10 million (one third of the total population) in the year 2000 to 21.7 million (51 per cent of the total population) in 2020. this represents an average increase of 600,000 people per year in urban areas. Even if these statistical projections are not fully accurate, they give an idea of the challenges ahead of all policy-makers.

The Istanbul+5 review, undertaken by the United Nations in 2001, has shown that many countries have formulated comprehensive housing policies and strategies. Many of these policies and strategies even include an appropriate recognition of facts and an assessment of the limitations that should set the framework for realistic implementation processes. These policy and strategy documents, however, have been only partly turned into action.

As UN-HABITAT’s experience over the world indicates, the most important factor limiting progress in improving housing and living conditions of low income groups particularly in informal settlements and slums is the lack of sufficient political will to address the issue in a fundamentally structured, sustainable and large scale manner.

There is no doubt that political will combined with local ownership and leadership, and the mobilisation of the potential and capacity of all stakeholders, particularly the people themselves, are the key to success. lessons from several countries underscore the importance and the fundamental role of sustained political will and commitment.

One crucial and common shortcoming in the housing sector is the inadequacy and limitations of housing finance mechanisms. the fact that conventional housing finance usually works in favour of middle and high income groups is reflected in highly segmented housing markets. the poor, low- and even middle-income majority of the population in most developing countries cannot afford a loan even for the least expensive commercially built housing units. Consequently, many low- or even middle-income households build their own houses progressively over long periods – as long as ten to fifteen years, or as is the case for the majority of the low-income population in many cities, they are simply tenants. Upgrading initiatives should not rely entirely on governmental subsidies or on full recovery from slum dwellers.

Progressive municipal finance, cross-subsidy mechanisms, micro-credit schemes and beneficiary contributions should be associated to ensure financial viability.

Security of tenure is another fundamental challenge in urban housing. Promoting security of tenure is a prerequisite for sustainable improvement of housing and environmental conditions. Squatter upgrading projects need to be carried out and these projects should prevent unlawful evictions. Governments should focus on regularization schemes in order to provide incentives to families to invest in their homes and communities. there is no doubt that every effort should be made to ensure optimal use of the housing stock and improve the quality of life in existing settlements.

Another important topic requiring attention is the promotion of rental housing options. Regardless of the nature of existing or new finance mechanisms, the reality for many poor and low-income urban residents remains that adequate housing is simply too expensive to own. The majority of urban residents in many developing countries are actually tenants in the private informal sector. Data on urban housing tenure in developing countries are not very reliable but it is estimated that a considerable number of urban dwellers, probably in the range of 30-50 per cent, are tenants.

There should be no discrimination against private rental housing in the national housing policy and the involvement of tenants and owners in finding solutions prioritizing collective interests should be promoted.

Another major challenge of housing policies is to adopt an adequate approach to urban land management. Due to rapid urbanization, the urban poor are forced to find their shelter in illegal settlements located in a variety of places: customary land, public land reserves, marginal land or in illegal sub-divisions. The resulting growth of informal settlements, primarily in peri-urban locations, is often the response to public inaction, or ineffective interventions that create more problems than they solve. The dynamisation of land markets is a key element of any good housing strategy.

With uncertain or illegal land tenure, the low-income, high-density settlements lack basic infrastructure and services such as drinking water, sanitation and energy. an important obstacle to increasing investment flows in urban basic services has been the reluctance of city authorities to put in place a realistic and sustainable pricing policy that could ensure cost recovery. Ironically, the affluent groups benefit most from under-pricing of basic services such as water supply, as the poor are rarely connected to municipal services and have to rely on the informal market. Generally the poorest city residents pay the highest unit price for services, such as water and energy. Governments should not try to provide top-class infrastructure and services to a minority but should first expand access of needy groups to basic amenities and services.

Mr. President,
Your Excellencies,
After this review of fundamental housing challenges in developing countries, i now wish to give you - based on un-habitat's worldwide experience - a summary of current trends in housing policy around the developing world. Lessons learnt from good policies can guide national and local governments with limited resources when they wish to focus on strategic priorities and make best use of the opportunities offered by the urban economy.

I would like to share with you the eight following principles:

  1. Governments should promote a facilitating legislative and institutional framework in the housing sector;
  2. . They should focus on the development, operation and maintenance of trunk infrastructure (roads and water supply) at city-wide level;
  3. They should support the establishment of fair and transparent municipal finance systems based on equitable land taxation;
  4. Governments and local authorities should design, adopt and implement pro-poor city development strategies, ensuring sufficient availability of public and private land for housing development;
  5. They should build partnerships with the private sector for the management of basic services and utilities, such as water supply, and with private investors and developers for the delivery of both owner-occupied and rental housing;
  6. They should strongly encourage and support the efforts and initiatives of slum-dwellers in the incremental upgrading of their living environment, through technical and financial assistance;
  7. They should provide appropriate incentives to the banking and cooperative sectors, as well as to private foundations and ngos, in order to direct more resources to the housing market;
  8. Finally, in terms of process and method, governments should adopt decentralisation policies, strengthen local authorities and involve all stakeholders in the elaboration, monitoring and evaluation of the housing policy, through consultative and participatory approaches.

UN-HABITAT has a wide range of expertise and documentation on these topics which can be utilized for advocacy, policy advice and capacity-building at various levels.

Mr. President,
Your Excellencies,
to conclude, i wish to recall that the millennium declaration endorsed the 'cities without slums' goal of “improving the lives of at least 100 million slum dwellers by 2020”. This figure (100 million) sounds huge, but when compared to the estimated current population of nearly one billion slum dwellers globally, it is a modest and realistic target. It implies addressing the needs of ten percent of the world’s current urban population who suffer from diverse aspects of inadequate shelter, including lack of security of tenure and insufficient access to basic services and infrastructure.

From the outset, it is clear that such a long-term initiative needs to fully involve all stakeholders, first amongst them the slum dwellers and their organisations.

Secondly, all related public authorities at the national, city and local levels should be the locomotives of this process in terms of creating an enabling environment.

Thirdly, all related civil society organisations (including Ngos, research institutes and professional associations) should mobilise their capacity and potential to contribute to these activities.

At this juncture, I wish to appreciate that the government of Kenya is fully committed to this millennium development target through the recently launched Kenya slum upgrading programme, which is supported by UN-HABITAT.

with the guidance of its major initiatives on urban and shelter development namely: the global campaign on urban governance and the global campaign for secure tenure, un-habitat stands ready to increase its cooperation and assist all the stakeholders, primarily the government and local authorities of Kenya, in prioritizing the slum upgrading component of the national housing policy.

I thank you for your kind attention and wish you full success in your deliberations.