Fairer Economies

Informal settlements are growing worldwide — here's what we need to do

A cluster of houses at an informal settlement area in Mumbai, India, May 20, 2023.

Improving informal settlements is essential to make progress on the SDGs. Image: REUTERS/Niharika Kulkarni

Jonathan T.M. Reckford
Chief Executive Officer, Habitat for Humanity International
Yvonne Aki-Sawyerr
Mayor, City of Freetown
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  • Nearly 1.1 billion people live in slums and other informal settlements around the world.
  • A new report models the impact of improving informal settlements, and found it would enable millions of children to attend school and increase some countries GDP by more than 10%.
  • Solutions include providing land tenure, expanding microloans and supporting low-cost housing start-ups.

More people than ever before are living in slums or other informal settlements. This isn't just a global scale problem, though — it's also a global scale opportunity.

The number of people living in slums or other informal settlements has grown by 165 million in the past 20 years, bringing the total to nearly 1.1 billion.

Unable to access affordable housing, families have no alternative to living in substandard homes, with little access to sanitation services, electricity and safe drinking water. Residents of informal settlements often lack security of tenure or land rights, living under the constant threat of eviction.

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The opportunity of solving the housing crisis

Take Freetown, Sierra Leone, one of the most crowded cities in the world. Up to 60% of the more than 1.2 million residents live in a patchwork of informal settlements constructed on precarious land prone to flooding, fires and landslides. This level of unplanned development led to tragedy in 2017, when more than 1,000 people lost their lives in a devastating landslide. Due to a lack of urban planning, the absence of governmental oversight and a chronic lack of affordable housing, it’s estimated that nearly 40% of housing developments in Freetown have been built in medium- or high-risk areas.

But if treated as an opportunity rather than a burden, housing can actually strengthen community health, education and economic outcomes, according to a landmark report by the International Institute for Environmental and Development (IIED).

If housing in informal settlements was improved on a global scale, life span would jump an average of 2.4 years. More than 730,000 lives would be saved each year around the world, preventing more deaths than if malaria were eliminated. Up to 41.6 million more children would be enrolled in school worldwide.

A global push to improve informal settlements would have a transformative economic impact. Some countries’ GDP would increase as much as 10.5%. Sierra Leone fits into that category: GDP would jump from about US $4 billion to nearly US $4.5 billion. The economic and human development gains from the improved housing would exceed the costs in many cases. A 2019 World Bank study estimated that ensuring residents have access to water, sanitation and other key infrastructure would require low- and middle-income countries spend between 2% and 8% of their GDP.


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Three steps to meet the SDG on housing

These insights underscore the importance of Sustainable Development Goal (SDG) 11, the so-called cities and human settlements goal, which outlines the goal of decent housing for all by 2030. Unfortunately, a 2021 report from Habitat for Humanity International found that SDG 11.1 was actually regressing. We are seeing stagnation instead of progress toward the goal.

Governments must prioritize adequate housing, especially for those struggling to survive in today’s overcrowded settlements. That means increasing financial commitments by an order of magnitude and making meaningful policy changes.

Here are three steps that governments — and leaders in both the public and private sectors — can take to alleviate this growing housing crisis:

1. Prioritize land tenure security

Ensure residents of informal settlements have secure rights to the land they inhabit.

This has already happened on a large scale in countries such as Honduras, where civil society organizations and municipal governments came together to form diverse commissions that developed policy recommendations around housing and land, negotiating approval of the recommendations and then monitoring their implementation. Through their advocacy and technical assistance, more than 1 million people have improved access to their land rights.

In Freetown, addressing tenure security in informal settlements is a challenge, as local land use planning is under the authority and control of the national government. It is imperative that the national authorities empower municipal officials to govern land titling and housing standards. This collaborative approach would tenure security and access to basic services in informal settlements, such as clean water and sanitation systems.

Freetown City Council has convened a consortium of NGOs under the Transforming Lives programme to address the affordable housing crisis in the city. The consortium, led by Catholic Relief Services, are focusing their combined effort in two of the most vulnerable communities prone to flooding events. This work aims to improve infrastructure services in these settlements, addressing land tenure for existing residents and the provision of higher density housing on sites at lower risk to flooding.

2. Expand finance for housing

For residents of Freetown’s informal settlements and countless other cities, traditional avenues of housing finance are simply not accessible. Microloans offer hope by providing individuals with the means to access capital for housing improvements and upgrades. They exhibit similar characteristics to traditional mortgage loans, but their smaller size helps make them more accessible to families with lower incomes.

But microloans aren’t enough in countries such as Sierra Leone, where the estimated cost of turning the country’s more than 800,000 housing-deprived households into adequate shelter is USD $6-7.5 billion. The interest rates for mortgages from commercial and state-owned banks is high, limiting opportunities to finance for affordable housing. To finance affordable housing, the City Council and other agencies will need to work with private developers in identifying more economically sustainable solutions such as part-ownership or rent-to-buy schemes, giving tenants more affordable payment terms of 10–15-year periods.

3. Strengthen climate-resilient housing

Informal settlements are highly vulnerable to the impacts of climate change. The public and private sectors can work together to support and invest in community start-ups specializing in low-cost, climate-resilient homes and locally sourced building materials. For example, an NGO based in Sierra Leone, Home Leone, has over the past 5 years been developing affordable housing utilizing low-cost construction techniques, and providing facilities to meet the basic needs of communities and an integrated approach to housing development for low-income communities.

We must act now to pave a stronger foundation for the more than 10 billion people expected to inhabit our cities by 2050. This starts with the urgent improvement of housing in rapidly expanding informal settlements worldwide. This long-overdue investment will more than pay for itself by building more resilient, prosperous and equitable communities for generations to come.

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