International Housing Coalition (IHC)

In an effort to make people aware of the issues of urbanization and slum proliferation in the developing world, the IHC held a book launch on December 3rd at the Washington, DC offices of the National Association of Realtors (NAR.) Robert Buckley, Managing Director, The Rockefeller Foundation, gave introductory remarks, followed by Neal Peirce who summarized the findings in the book. A question and answer period was moderated by Peter Kimm, IHC Chairman. Free copies of the publication were distributed at the event.

Century of the City emerged from the seminal Rockefeller Foundation Global Urban Summit and its urgent agenda for harnessing the vast opportunities of urbanization for a better world and more sustainable future. For more information, go to http://www.rockfound.org/about_us/news/2008/century_of_the_city.shtml.

Neal Peirce is a foremost writer among American journalists on the contemporary metropolis. With Curtis Johnson he co-authored the Peirce Reports (now called Citistates Reports http://citistates.com/reports/) on compelling issues facing 25 metropolitan regions across the nation. Known widely as a lecturer on regional and urban concerns and the role of governments and community groups, Peirce has been a familiar figure before civic, business, academic, and professional groups. He has appeared on Meet the Press, the Today Show, National Public Radio, and local media across the country.

The IHC's event was featured on two blogs: Global Interdependence Initiative's Exchange Blog, http://www.gii-exchange.org/blog/2008/12/happy_faces_in_challenging_pla.html and CSIS Global Strategy Institute's Blog, http://forums.csis.org/gsionline/.

The Reaume Foundation of Chicago, Illinois awarded a grant to the IHC in November to study investment in housing in the countries of origin of immigrants to the United States. Investments directed for construction of housing for family use, for retirement, and for longer term investment to meet the needs of local housing markets is thought to have been on the rise in recent years. Yet investors and buyers may lack information about how overseas real estate transactions are completed and about key legal and regulatory issues, all of which ultimately makes the investment process more costly and unpredictable. This may be particularly true in developing countries where the legal framework for property ownership and transfer is often incomplete or unclear. During 2009 the IHC will produce case studies in selected low or middle income countries where there is an active international residential real estate market. The information will be made available to real estate professionals in the U.S.

This IHC report assesses the land market in Kampala, Uganda. It examines the extent to which land is a constraint to development and, particularly, to the development of adequate housing for the majority of Kampala residents. Stephen Giddings, an IHC consultant and a former senior USAID official, prepared the report, which was presented at a networking session of the World Urban Forum IV held in Nanjing, China in November 2008. Both the paper and the IHC’s participation in the World Urban Forum IV were funded by the Reaume Foundation. To download the report click here.

The U.S. foreign assistance program does not focus on urban poverty and slum conditions. It lacks a strategic framework through which the U.S. can partner with developing countries to guide and manage the ongoing urbanization process so that it might best support broad economic growth and poverty alleviation.

The World Today. The developing world has become half-urban. The fastest growing populations are urban populations. The most concentrated poverty is found in the slums that ring the cities of aid-recipient countries. More than a billion people live in slums in abysmal housing without adequate access to clean water and sanitation. In the developing world, more than a million people are born in or move to cities every week. A foreign assistance program for the 21st century must build on these facts, and more:

• The global economy is an increasingly urban economy. Extreme urban deprivation in the shadows of export-oriented industries is not sustainable politically, socially, or environmentally.
• Cities are at the nexus of climate change. Cities are at once uniquely vulnerable to sea level rise and extreme weather conditions and pivotal in reducing greenhouse gases through urban efficiencies.
• Urban slums threaten the social fabric. Massive urban slums can be part of the cause and not just the symptom of failed states and threat to U.S. national security; the real costs of inaction might therefore be much higher than is generally assumed.
• World sentiment will not allow leaders to continue ignoring inhumane living conditions. Rather they will increasingly be compelled to address the urban squalor that today results from unbalanced development and underinvestment in urban infrastructure.

The Case for Action. While urban growth may be inevitable, the dire living conditions of the urban poor are not. It is time for the U.S. development assistance program to recognize that slum conditions are not naturally self-correcting, but can be alleviated through community-based efforts supported by committed international partners. A dedicated effort by the U.S. foreign assistance program can pay widespread dividends. Specifically:

• Alleviation of slum conditions can accelerate broad economic growth.
• Slum shelter upgrading, strategic public investment and improved security of tenure can stimulate private investment and spur economic advancement of the poor.
• Decent housing addresses a multitude of basic human needs, particularly improved health.
• Redeveloping the world’s slums can stimulate civic engagement and increase social stability.

The United States can be a leader in supporting the innovation that will be required to begin to address world urban deprivation and build the foundation for sustainable urban economic growth in the developing world.

Recommendations for USAID: More specifically USAID should give immediate attention to the importance of urban development and slum improvement by:

• Establishing a unit within USAID that is responsible for updating the “Making Cities Work” strategy and that has the resources and capacity to make agency personnel aware of the importance of directing assistance to urban areas and the problems of poor housing and slums.
• Raise the visibility and priority within USAID of implementing projects for clean water and sanitation in furtherance of the Paul Simon Water for the Poor Act, particularly projects in slums in Sub-Saharan Africa. A high level water coordinator should be designated to oversee USAID’s water and sanitation activities.

The United Nations projects that some time in 2008 more people on earth will live in cities than in rural areas. Over the past half-century, the world's urban population has increased nearly fourfold, from 732 million in 1950 to 3.15 billion in 2005. The bulk of future urban population increase - 88 percent of the urban growth from 2000 to 2030 - is projected to occur in cities of the developing world. Asia and Africa, the most rural continents today, are set to double their urban populations to some 3.4 billion by 2030.

In contrast, for North America and Europe, where more than half the population has lived in cities since 1950, urbanization has slowed considerably. Latin America, at 77 percent urban, is going through a similar transition as it sees growth of its "megacities" - urban agglomerations with more than 10 million inhabitants -- slow considerably. Urban slum populations in Latin America, however, continue to grow.

Africa is currently the least urbanized continent with around 40 percent of its population living in urban areas. However, the urban areas of Africa are predominantly characterized by slum conditions. Recent estimates by the U.N. are that fully 72 percent of Africans residing in urban areas are living in slums. Urbanization there is more recent and more rapid because of higher overall population growth, rural poverty, and in some cases conflicts that drive people into cities. Low incomes and limited resources present a further challenge in addressing the tremendous need for urban infrastructure and services.

James Adams, Vice President at the World Bank for the East Asia and Pacific Region, recently spoke at the Singapore World Cities Summit. His comments, summarized below, are a window into the evolving views of the role of cities in fostering economic growth and development.

So called "old thinking" in the development profession was that urbanization was a bad thing - that it led to people living in miserable conditions in slums with few opportunities to find work, educate their children, or escape poverty. Public policy was regarded as being biased toward cities, which increased the attraction of rural people to urban areas. Yet cities were viewed as incapable of providing the services and jobs the rural immigrants were looking for. At one time donor agencies, led by the World Bank, were genuinely interested in finding ways to encourage people to stay in rural areas where their social networks could remain intact, rather than to migrate to cities and face the possible destruction of these networks and have to deal with crime, violence, and squalor.

This thinking has been turned on its head in East Asia. Countries in the region have generally embraced urbanization because it creates "engines of growth" in the form of cities that, if planned and managed well, offer people opportunities to build productive lives. Nowhere is this thinking more evident than in China. A generation ago cities were first recognized as "growth poles," each sending a wave of economic growth to its hinterland. Extreme poverty rates among rural populations dropped dramatically from 37 percent in the mid-1970s to five percent in 2001. This urban growth has been largely achieved without a proliferation of slums. Among the many factors responsible for this achievement are good national policies that give the Chinese municipalities the authority to introduce and implement regulations on government land use, transport systems, and the urban environment. There has also been strong urban planning and utility management at the city level. Finally, it was recognized that urbanization requires large-scale, sustained investment. For example, China spends a considerable percentage of its GDP on urban infrastructure. With urbanization as the basic pillar of China's economic growth, by 2020 fully 60 percent of the Chinese are expected to be city-dwellers.

More and more data is confirming that spatial inequality within cities and between regions may increase in the early phases of development, but declines over time with strong economic growth. In effect, cities draw people and firms to areas of higher productivity. Urbanization is closely related to the way nations shift from agrarian to industrial economics and later to post-industrial economies. No country has grown to high income status without vibrant cities. China appears to be the latest country to prove this axiom.

The Foreign Assistance Act of 1961 defines the U.S. Government's foreign assistance objectives and authorizes USAID. Congressman Howard Berman, Chairman of the House Foreign Affairs Committee, is particularly concerned that the current Act does not adequately provide the flexibility necessary to tackle global extremism, poverty and corruption. He has announced he plans to rewrite the 1961 Act and has begun to meet with a wide variety of interested parties. The IHC has met with his legislative aide and plans to be an active participant in discussions about the principles that should guide future U.S. foreign assistance.

Background:

Today's foreign assistance structure dates back more than 45 years to the early days of the Kennedy administration. The structure was built in the midst of the cold war to meet goals and objects quite different from those being faced today. Over the years it has been amended piecemeal. Steven Radelet of the Center for Global Development (CGD) recently summarized its shortcomings as follows:

• Lack of clarity on policies, goals, and objectives. There is no over-arching policy for global development or strategy for U.S. foreign assistance.
• Heavy bureaucratic requirements. Many programs are subject to cumbersome bureaucratic strictures that ensure some funds never get close to their intended recipients. There is far too little flexibility to respond effectively to meet the key needs on the ground in recipient countries.
• Substantial fragmentation across policy and executing agencies. More than 20 executive branch agencies administer our foreign assistance programs, sometimes working at cross-purposes or duplicating the efforts of each other.
• Weakened professional capacity. As programs have spread across agencies, bureaucratic requirements have grown, administrative funding has been cut, and the professional capacity within USAID has dwindled.
• Poor and incoherent allocation of funds. Our foreign aid is heavily skewed toward political/military, counter-narcotics, and HIV/AIDS programs, and concentrated in a small number of countries, some of which are middle income. Only one quarter of funds goes to countries in Sub-Saharan Africa.
• Weak accountability for achieving results. Monitoring and evaluation systems too often fail to capture whether programs achieved important strategic development objectives, and because our foreign assistance programs are scattered over so many agencies it is often impossible to hold any one agency responsible for success or failure.

The IHC sees this re-writing as an important opportunity to move the housing/urban agenda forward within the U.S. foreign aid programs. Among the many criticisms of the existing legislation is that it was written at a time when urbanization was not recognized within a development context, and development theory expressly favored rural and agricultural investment. Some even viewed the evolving pattern of urbanization as something that could be stopped by effective countervailing assistance programs. That perspective has been replaced by the recognition that urbanization is both an engine of economic growth and an inevitable consequence of it. A central development challenge of the 21st century is to manage this growth in order to amplify its broader benefits to economic advancement, while addressing the need for decent shelter and services of a growing population.