Slum Upgrading

In this paper, Maria E. Freire discusses the alternatives available to finance slum upgrading in metropolitan areas and large cities. It examines the size of the problem as described by the U.N. Human Settlements Programme (UN-HABITAT), as well as the assumptions used to project the cost of providing a dwelling for everyone. It reviews successive approaches to slum upgrading implemented by donors and governments alike. It then discusses various approaches to financing slum upgrades and how funding should be provided in a municipal finance framework. It shows the potential that combinations of private, public, and external finance provide for committed communities. Five cases of slum upgrading policy are reviewed, identifying the key elements that make them successful and discussing whether their methods can be successfully implemented in other regions and large urban areas.

The author concludes that success in upgrading slums depends on several factors, notably the capacity of the urban government to finance infrastructure and deliver basic services and the capacity of the slum dwellers to mobilize resources to improve their dwellings. Experience has also shown that while small projects may be more successful and easier to implement, they cannot accommodate the needs of the rapidly growing urban population in many developing countries. To upgrade the current stock of slum dwellings and prevent further slum development, metropolitan planning should cover problems across urban and peri-urban areas and address multijurisdictional issues.

Further, the paper highlights a list of action items extracted from UN-HABITAT experience and suggests eight pillars for successful slum upgrading based upon the experiences reviewed. It concludes that slum upgrading fails mostly because of a lack of realistic plans that takes into account the financial and political constraints involved in providing affordable housing to the poor. In most cases it focuses on a small part of the population at risk, letting slums mushroom in other parts of the city. Investment in basic infrastructure is equally urgent, but preserving a share of city budget to extend services to slum areas is often an uphill battle. Even with political will, the mismatch between the needs of the increasing population and the lack of resources at the metropolitan level will lead to years of inadequate services and low living quality. It will take combinations of public, private, and community-based awareness and solutions to upgrade and improve slum living conditions.

This paper was presented at a 2011 conference at The Brookings Institution organized by the Lincoln Institute of Land Policy and is Chapter 14 of the book Financing Metropolitan Governments in Developing Countries.