Understanding Issues

How much urban poverty is there?

Extracted from: DANIDA Workshop Papers: Improving the Urban Environment and Reducing Poverty; December 5, 2000; Copenhagen, Denmark.

An urbanising world

There are some 1.9 billion urban dwellers in low- and middle-income nations in Africa, Asia, and Latin America and the Caribbean – representing more than two-thirds of the world’s urban population. At least 600 million of these have income and asset bases too low to cover the cost of essentials, and live in homes and neighbourhoods with such poor quality, overcrowded housing and inadequate services that their lives and health are continually at risk. Although there are still many more rural than urban dwellers in Asia and Africa and more rural than urban dwellers suffering poverty in these continents, there is a long-term trend towards increasing concentrations of population and poverty in urban areas. In addition, in many nations, a large proportion of ‘poor’ households have both rural and urban components to their incomes, and the inter-connected nature of rural and urban economies, migration flows, and movements of capital, goods and information make it increasingly difficult to consider ‘rural’ and ‘urban’ poverty separately.

Since 1950, the urban populations in Africa, Asia, and Latin America and the Caribbean have grown more than five-fold. These regions now account for most of the world’s urban population and most of the world’s largest cities. Asia is now home to close to half the world’s urban population and Africa now has more than 300 million urban dwellers – i.e. a larger urban population than Northern America.

Distribution of Urban Population

The scale of urban poverty

There is a large gap between the conceptual understanding of poverty and its measurement in both rural and urban areas. Poverty is understood to encompass many different aspects including inadequate consumption, inadequate income and asset base, and inadequate access to basic infrastructure and services. But in most nations, poverty is measured in terms of the population falling below income-based or consumption-based poverty lines. The result is that large sections of both rural and urban populations which official statistics classify as not being among the ‘poor’ still face serious deprivations because of very inadequate asset bases (and the concomitant vulnerability to stresses or shocks) and inadequate access to basic services.

In many nations, governments set income-based poverty lines too low. These are usually based on the cost of a ‘minimum food basket’, with some small additional amount added in recognition that there are non-food essentials that have to be paid for, such as the cost of housing, water, transport, health care and keeping children at school. But the size of this small additional amount is usually unrealistically low in relation to the cost of non-food essentials, especially for people living in areas where the costs of these are particularly high. The income needed to avoid poverty is usually particularly high in the larger and/or more prosperous cities.

Relying on income-based poverty lines (which assume that the income needed to avoid poverty is the same in all locations) to identify who is poor leads to large underestimates in the scale of urban poverty. One of the key characteristics of cities is that access to virtually everything is highly monetized – access to land, to building materials, to water, to a place to defecate, getting to and from work, child care and, often, even schools and health care. Where there is little public provision for basic infrastructure and services, costs can be particularly high. Underestimates of the scale of urban poverty are particularly high when use is made of an income-based poverty line that makes no allowances for differences in living costs between countries – as in the World Bank’s US$1 per person per day poverty line.

Establishing an appropriate poverty line to monitor changes in income poverty is also difficult. A poverty line should be set which reflects the income needed to avoid deprivation within each local context. For urban poverty, at the very least it should reflect the income needed not only to purchase sufficient food but also to obtain a secure shelter with adequate quality water, sanitation and garbage collection, to pay for transport and for keeping children at school, and to afford health care and medicines when needed. The ‘non-food’ monetary costs of avoiding poverty are generally higher in urban areas than in rural areas, as access to housing, resources and services are monetized – and usually particularly expensive in larger or more prosperous cities. But very few nations have income-based poverty lines that vary from place to place, reflecting differences in the income needed to avoid poverty. Where there is provision for this, it usually focuses on variations in the cost of food or variations in what the poorest 20 per cent of households spend on non-food items, which is not the same as the income level they need to avoid deprivation.

The multi-dimensional nature of poverty

Urban poverty is usually characterised by:

  • Inadequate household income (resulting in inadequate consumption of basic necessities), sometimes exacerbated by an uneven distribution of consumption within households, between men and women and between adult men and children.
  • Limited asset base for individuals, households or communities (including both material assets such as housing and capital goods, and non-material assets such as social and family networks and ‘safety nets’).
  • Inadequate provision of ‘public’ infrastructure and services (piped water, sanitation, drainage, health care, schools, emergency services, etc.)
  • Inadequate protection by the law – for instance, regarding civil and political rights, health and safety in the workplace, environmental legislation and protection from violence.
  • ‘Voicelessness’ and powerlessness within the political system – no possibility or right to receive entitlements, make demands within political systems or get a fair response.
  • Exploitation and discrimination (often on the basis of gender, caste, age, ethnicity, etc.)

The above list can be confusing for two reasons. The first is that there are many non-poor (and non-urban) groups who suffer from some of these deprivations – for instance, exploitation, inadequate protection from the law and a lack of political voice and power. The second is that there are multiple links between many of these aspects of poverty. For instance, three of the most common reasons for the inadequate provision of public infrastructure and services are: inadequate income to pay for provision; insufficient assets to cover connection costs; and a lack political voice and power to demand improvements – and often, poor groups also face discrimination in infrastructure and service delivery. But the list remains useful as a reminder, first, of the multiple deprivations faced by lower-income groups and, second, of the most powerful underlying causes of the deprivations.

Reducing urban poverty without economic growth

The almost exclusive focus by most governments and international agencies on defining and measuring poverty by income level leads to an assumption that economic growth is the only real means by which poverty will be reduced. Even leaving aside any reservations about the extent to which economic growth translates into increased real income for poorer groups (who are often in the weakest position to benefit from expanded economic opportunities), this also diverts attention from the many other ways in which poverty can be reduced.

Take, for example, the case of infrastructure and services. Although it has become unfashionable for international agencies to support these, the provision of good quality water and sanitation can increase poorer groups’ incomes directly because households who previously paid 10-30 per cent of their income to water vendors or kiosks and pay-as-you use toilets now get better quality provision which also uses less income. Good quality water and sanitation can also increase real incomes by greatly reducing the amount that was previously spent on health care and medicines as a result of water-related diseases and lost when income-earners were ill or had to nurse other ill family members. Housing schemes that really respond to the needs and priorities of low-income households can also reduce poverty – again reducing the health burden from infectious and parasitic diseases and accidents, and also providing security, a larger asset base and space for income-earning activities.

But ‘poverty-reducing’ measures outside of economic growth depend on local institutions that can ‘deliver’ for the poor on one or more of the different aspects of poverty listed above. The form of local institutions that can do so varies a lot with context; they can be community organisations, federations of community organisations, local NGOs, local foundations, municipal authorities or even, on occasion, national government agencies or local offices of international agencies.

In most instances, reducing urban poverty also has ‘political’ aspects since it has to include strengthening the bargaining power and the possibility to act of low-income or otherwise disadvantaged groups within their local context. This includes a greater capacity to negotiate for resources, to get more appropriate responses from local agencies (for housing, land for housing, water, sanitation, drainage, garbage collection, emergency services, schools, electricity, police, etc.), to successfully oppose anti-poor measures and to have their civil and political rights, and their rights to ‘public goods and services’ and to unpolluted environments, respected.