Population Reports, May-June 2003

The Urban Poor

Most poor people in developing countries live in rural areas (140). But urban poverty is wide-spread, too, and it is growing.

The World Bank estimates that, worldwide, 30% of poor people live in urban areas. By 2020 the proportion is projected to reach 40%, and by 2035 half of the world's poor people are projected to live in urban areas (96).

In 1988 the World Bank estimated conservatively that some 330 million urban poor in the developing world were living on less than US$1 a day (1 51). In 2000 the estimate had increased to 495 million (153). In over half of developing countries with data on poverty, as defined by the countries themselves, at least one urban resident in every five lives below the national poverty line (157) (see Table 3).

Sub-Saharan Africa has some of the world's highest levels of urban poverty, reaching over 50% of the urban populations in Chad, Niger, and Sierra Leone. Countries of North Africa and the Near East have urban poverty levels near or

The World Bank sets the income poverty line at US$1 a day per person for international comparisons (157).

Developing countries often set their own income poverty lines, usually defined as the income needed to buy a specified amount of food plus a few essential nonfood items (138). below 20%. In Asia the highest percentages are in India, at 30%, and Mongolia, at 38%. In Latin America and the Caribbean, levels of urban poverty vary widely/from 8% of the urban population in Colombia to 57% in Honduras (157) (see Table 3).

These income-based statistics should be interpreted cautiously; the true extent of urban poverty is greater than they suggest. Poverty levels estimated on the basis of income alone do not account adequately for the larger numbers of people with such impoverishment as inadequate housing and lack of clean water and sanitation (74, 89, 132).

Moreover, urban poverty may be even more debilitating than rural poverty because in urban areas, unlike rural areas, access to virtually all goods and services depends

Table 3

Percentage of Population Living Below the National Poverty Line in Urban and Rural Areas

* New statistics released by China's Ministry of Civil Affairs indicate that 6% of the nation's 320 million urban residents five in extreme poverty (4).

Source: World Bank, 2002 (157)

Population Reports

Region & Country Urban Rural


Cameroon 1984 44 32

Chad 1995-96 63 67

Ghana 1992 27 34

Kenya 1992 29 46

Lesotho 1993 28 54

Madagascar 1993-94 47 77

Niger 1989-93 52 66

Nigeria 1992-93 30 36

Sierra & Leone 1989 53 76

Tanzania 1993 24 50

Zambia 1991 46 88

Zimbabwe 1990-91 10 31


Algeria 1995 15 30

Egypt 1995-96 23 22

Morocco 1998-99 12 27

Tunisia 1990 9 22

Yemen 1992 19 19


Bangladesh 1995-96 14 40

Cambodia 1997 21 40

China 1998 <2' 5

India 1994 30 37

Laos 1993 24 53

Mongolia 1995 38 33

Nepal 1995-96 23 44

Pakistan 1991 28 37

Philippines 1997 21 51

Thailand 1992 10 15

Vietnam 1993 26 57


Brazil 1990 13 33

Colombia 1992 8 31

Costa Rica 1992 19 25

Dominican Republic 1992 11 30

Ecuador 1994 25 47

El Salvador 1992 43 56

Guatemala 1989 34 72

Honduras 1993 57 51

Nicaragua 1993 32 76

Panama 1997 15 65

Paraguay 1991 20 28

Peru 1997 40 65

Trinidad and Tobago 1992 24 20

on having a cash income. Furthermore, services that governments usually provide free in rural areas, such as schooling, usually carry costs for households in urban areas--for example, school fees and expenditures for school uniforms, books, and transportation (3, 104). Urban residents have to buy most of their food, while rural residents grow a substantial portion of their own food, and food prices often are higher in urban areas than in the countryside. Urban households spend 60% to 80% of their income on food (101) and pay up to 30% more for it than rural households (1).

Insufficient Incomes

Many developing countries experienced economic crises during the 1990s (156). Consequently, poverty has spread as wages have fallen and the prices of goods and services have risen. As wages slip, people buy less, and the falling demand for goods and services puts even more people out of work. In several Asian countries urban managers and central government officials have reported that the region's economic crisis is particularly harming urban economies. Urban workers have lost jobs and income due to reduced demand for manufactured goods, transport, and other services. In addition, prices of food, utilities, and essential imported consumer goods have increased as currency values have fallen (3).

Most urban poverty results not from unemployment but instead from the lack of well-paying, steady jobs. The unemployment rate itself is relatively low in urban areas of most developing countries (41,100). For example, in 155 surveyed cities in developing countries, three-quarters had unemployment rates at or below 15% (157). Nevertheless, poverty has risen has fewer people can find steady jobs with adequate wages.

As economic conditions worsen, a growing percentage of people shift from employment in the formal economy to work in the informal labor market. In 30 of 40 developing countries surveyed by the International Labor Organization (ILO) in 1999, employment in the urban informal sector constituted over one-third of total urban employment. Urban informalsector employment ranged from 15% in Turkey to 84% in Uganda. Participation in the urban informal sector was highest in sub-Saharan African countries, with rates above 50% in two-thirds of countries surveyed (56).

Employment in the informal sector is less secure, and incomes are lower than in manufacturing and other formal-sector jobs (2, 28, 56). The informal sector is characterized by unincorporated businesses owned by households and small-scale enterprises, based on casual employment, kinship, or personal and social relationships rather than contractual arrangements (56).

Within the informal sector the urban poor work in a variety of jobs--for example, as street vendors and petty traders; as taxi drivers and in other small transport; in personal services such as shoe shining; in security services such as night watchmen or car parking attendants; in janitorial services; and also begging and commercial sex (14, 28, 37, 101). These diverse activities share the common thread of low status, low wages, long hours, and often dangerous and insecure conditions.

Inadequate Housing and Services

Around the world over 1 billion urban residents live in inadequate housing, mostly in slums and squatter settlements, where living conditions are poor and services are insufficient (137). One-quarter of all Urban-housing units in developing countries are temporary structures, and more than one-third do not conform to building regulations.

The situation is worst in sub-Saharan Africa, where 60% of urban housing units are temporary structures, and about half do not conform to building regulations (134).

Urban slums include both high-density dwellings, such as high-rise apartments, and squatter settlements and shanty-towns, where people occupy vacant land and illegally build shacks for themselves (134). Many illegal settlements are built on land poorly suited for housing--for instance, on floodplains or on steep hillsides--and are especially prone to damage from natural disasters (132) (see p. 13).

Slum residents usually lack security of tenure--that is, the right of legal access to and use of the land and buildings they occupy (133). Each year several million urban dwellers are forcibly evicted (132). An estimated 20 million to 40 million urban families are homeless, some because they have been evicted and some because they cannot afford any housing, even illegally (137).

It is particularly difficult for the urban poor to obtain tenure because property registration processes are inefficient, complicated, and expensive (137). The process is even more difficult in the case of informal settlements. Many governments hesitate to legalize them for fear of encouraging even more illegal settlement (3, 120).

Legal housing, however, usually is too expensive for the urban poor, or it is scarce (132). Outdated government regulations controlling land acquisition and construction of housing, coupled with rapid urban population growth, have made land scarce, which in turn has inflated housing prices. Estimates from various countries show that it would take low-income households 15 to 30 years of saving 30% to 50% of their incomes to afford a legal house meeting minimum standards. In reality, most of the urban poor earn too little to save any money at all (3). Further more, they lack access to credit from commercial lending institutions (132).

People in slums often must pay more for services than other urban residents, and they receive services of lower quality (137). The scarcity of public water supplies forces many low-income urban residents to use other water sources, often private water vendors who charge many times the public rate (136, 150). In Istanbul, Turkey, water from private vendors costs 10 times the public rate, while in Mumbai (formerly Bombay), India, vendors charge 20 times more (83). Poor households often spend 5% to 10% of their incomes to buy water (44, 136).

Health Burdens

On average, the health of urban residents in developing countries is better than that of rural dwellers, in part because urban areas usually offer better health care and healthier living conditions than most rural areas.

Infant and child mortality rates are lower in urban areas than in the countryside. The average child born in an urban area has a much better chance of survival than does a rural child. In 54 of 57 countries with data from the Demographic and Health Surveys (DHS), infant mortality rates--deaths before age one per 1,000 live births-were lower in urban than in rural areas. Similarly, child mortality rates---deaths to children ages one to five per 1,000 children surviving to age one--were lower in urban than in rural areas in 56 of the 57 surveyed countries (30).

Within urban areas, however, the urban poor face many more health risks than the average urban resident. In 17 of 18 countries studied with DHS data, for example, infant mortality was higher in the less developed urban areas than in the more developed urban areas (with level of development indicated by access to piped water) (7) (see Figure 4). Health conditions for the urban poor are sometimes even worse than they are for the rural poor (7, 161, 163).

In large cities of developing countries, child mortality is highest among children whose mothers recently migrated from rural areas and those who live in low-quality housing (11). The extent of childhood illnesses is closely related to poverty levels and to the quality and extent of health care, clean water supply, and sanitation (132).

Access to services. The urban poor are more vulnerable to poor health and environmental hazards because they are more likely than others to lack adequate housing, sanitation, and other basic services (107, 132). In each of 32 developing countries with DHS data, poor urban households were less likely than other urban households to have access to basic services, including piped water, a flush toilet, and electricity. Poverty status was defined by household ownership of certain consumer items, such as a refrigerator and television, as well as housing quality, including the number of sleeping rooms (48).

Basic services needed for good health often do not reach the urban poor because municipal authorities do not recognize many informal settlements for political and administrative reasons, and thus these areas are not eligi ble for services. In some cases, slum areas are not classified as urban precisely because they lack services (120).

Also, as noted, the urban poor often settle on land not suitable for housing. Extending infrastructure such as roads, water mains, and sewer lines can be difficult because of rough terrain. Moreover, such neighborhoods often are developed haphazardly, without planning to allow space for infrastructure. In order to lay water or sewer pipes, the utility authorities often must remove or relocate many houses (120).

In addition, governments and donor agencies give low priority to providing such services as primary health care, basic education, family planning, water and sanitation, and nutrition, according to an analysis of 17 developing countries around the world (45). The UN and the World Bank agree that, on average, 20% of national budgets in developing countries and 20% of international aid should be allocated to extending these basic services to all people----both urban and rural. In the 17 countries studied, however, the average expenditure on these services was only 12% of total government spending--from 8% in Lebanon to 17% in Nepal. Similarly, in few instances did spending on basic services account for 20% or more of donor assistance (45).

In urban areas the poor usually suffer most from a lack of basic services but are the last to be included in urban

planning and infrastructure improvements. Their disadvantage mainly reflects their lack of political power influence (137).