2011 Global Microcredit Summit

Commissioned Workshop Paper November 14-17, 2011 Valladolid, Spain

How Can Microfinance Contribute to Restoring Dignity and Transforming Lives in Urban Slums?
Written by: Rob Gailey, Director, Center for International Development, & Associate Professor of Business, Point Loma Nazarene University, San Diego, CA, USA Rebecca Harver, Spanish Major, Point Loma Nazarene University, San Diego, CA, USA

TABLE OF CONTENTS
Introduction.3 Slums Defined.............4 The United Nations Five Primary Aspects of Slums....10 Big Picture Issues (Positive and Negative)....12 The Role of Microfinance......15 Conclusion.29 Appendix ...36

How Can Microfinance Contribute to Restoring Dignity and Transforming Lives in Urban Slums?
Introduction

Improving the lives of slum dwellers is the best way to achieve all the Millennium Development Goals. Improved housing conditions and provision of water and sanitation will not only save lives among the very poor, but also support progress in education and health. (UN-HABITAT State of World Cities 2010/2011, as quoted in CLIFF, p. 6, 2010)

The worlds population will soon surpass 7 billion people. In 2008, for the first time in human history, the ratio of urban to rural dwellers passed the 50% mark. As the worlds cities absorb this tremendous growth in human population, housing and public services in these areas have not kept pace, particularly in less developed countries where overall population growth is more pronounced and urban crowding is most severe. The resulting challenge of the rise in informal urban settlements is becoming a central concern for governments and for those interested in poverty alleviation (Davis, 2004; Neuwirth, 2005; Mitlin & Satterthwaite, 2004).

This paper seeks to investigate the role that microfinance services may have in offering dignity and hope to people living in informal urban settlements (slums) around the world. 1 The paper begins by describing categories of slums used in the literature and what scholars view as primary drivers of slum growth and the impact slum settlements have on poor people. The paper then explores the five major concerns regarding slums that have been highlighted by the United Nations (UN) in relation to the Millennium Development Goals. This section concludes with a few important caveats to any big picture view of slums and how best to fix them.

For space and ease of reading purposes, this paper will use the term slums throughout the document. However, the word slum is first used in quotation marks to signify the authors preference for the term informal urban settlements to describe these communities. As one source suggests, [T]oday, the catch-all term slum is loose and deprecatory . . . it has many connotations and meanings and is banned from many of the more sensitive, politically correct and academically rigorous lexicons. However, this source goes on to state, [I]n developing countries, the term slum, if it is used, mostly lacks the pejorative and divisive original connotation, and simply refers to lowerquality or informal housing (United Nations Human Settlements Programme, 2003, p. 9).

The papers next section considers possibilities within the microfinance sector, particularly microfinance institutions, related to what is happening or could happen in addressing the United Nations five major slum issues. 2 This section of the paper considers each one of the five primary UN concerns. Every concern is further broken down into a) hopeful operations within microfinance, b) challenges that remain, c) possibilities/opportunities and recommendations, and d) research/analysis questions to explore. The paper concludes with a summary of the challenges and opportunities that exist in the microfinance sector to provide dignity and hope for people living in these growing informal urban settlements.

Slums Defined

Before one can adequately explore the role of microfinance in restoring dignity or transforming lives in slum areas, it is important to define and categorize the meaning of these informal urban settlements. In 2002, a group of slum experts in Nairobi defined a slum as a contiguous settlement where the inhabitants are characterized as having inadequate housing and basic services, and representing an area that is often not recognized and addressed by the public authorities as an integral or equal part of the city (UN-Habitat, 2003, p. 6). While slum areas highlight the significant physical and political inequalities that exist within cities, the UN-Habitat authors remind their readers that not all urban poor people live in slums and not all people who live in slums are poor (p. 4).

While urban slums are a growing concern and visual eyesore for cities in less developed countries, it is important to remember that slum-type areas have existed in urban settlements since the dawn of cities. Indeed, less than a hundred years ago, during the height of the industrial revolution, most of the major urban areas in Europe and North America had significant and blighted slums. Now, at the turn of the new century, more than three-fourths of urban dwellers in the least developed nations in the world reside in urban slums (United Nations Human Settlements Programme, 2003, p. 14).

For an excellent additional resource on this topic, please see the paper by Kelley and Baumann (2011), which also was commissioned for the Global Microcredit Summit in Valladolid, Spain.

Kinds of Slums

The UN has further categorized slums into slums of hope and slums of despair. Slums of hope are progressing settlements, characterized by new and mainly self-built structures. The dwellers are usually illegally present (e.g. squatters), and are in, or have recently been through, the process of development, consolidation, and improvement. In contrast, slums of despair are known for their declining neighborhoods, where environmental conditions and domestic services are undergoing a process of inevitable decay and degeneration (UN-Habitat, 2003, p. 5; UN-Habitat, 2007, p. 1).

The two broad slum categories of hope and despair are further delineated into narrower subcategories. According to the United Nations Human Settlements Programmes The Challenge of Slums (2003), declining slums of despair are further divided into old city centre slums and new slum estates. Similarly, progressing slums of hope can be delineated into semi-legal subdivisions and squatter settlements (p. 80). There are also urban settlements that reflect or include aspects of urban poverty and are similar to slums but are not always defined as such. Davis (2006) suggests that at the Metro-Core, formal settlements are composed of tenements, public housing, and hostels or flophouses, while informal settlements include squatters authorized and unauthorizedand pavement-dwellers. In the peripheral areas, formal settlements are composed of private rentals and public housing, while informal housing is composed of pirate subdivisions and squatters. Refugee camps are a third form of settlement lying in the peripheral areas (p. 30).

Once a slum is recognized and defined, it can be categorized based on different measurements. These include the origin and age of the slum, the location and boundaries, the size and scale, the legality of the space and buildings, the vulnerability of the people, and the development stages of the slum. Central slums comprise the inner-city slums, scattered slum islands are pockets or islands of slums spread throughout the city, and peripheral slums lie on the periphery or outskirts of the city.

The development stages of slum settlement are varied. Ongoing individual and community-led development suggest individual families taking initiative for improvements and showing greater community cohesion. Intervention-led improved slums are those where some intervention has been made to improve some aspects of the settlementwhether or not the intervention has positive or negative impacts varies and often depends on perspective. Upgraded slums are those that have gone through a fairly extensive upgrading and improvement program, usually through a government agency or private-sector non-profit. Incipient slum creation is the formation of new slums as poverty increases and resource accessibility declines.

Causes of Slums

Contrary to a common misperception that poor housing creates poverty, Seabrook (2007) argues, [I]t is the poverty that creates the sites of desolation where the poor people live, not the environment that creates poverty (p. 70). Yet, if poverty leads to informal and slum settlements, what is it that causes urban poverty? A number of different factors are at work to create or perpetuate poverty among urban dwellers: rapid rural to urban migration, tenure insecurity, and lack of access to basic services. Another major cause of slum proliferation among urban dwellers is poor public policies. The UN-Habitat program outlines several policy-related factors, including the failure to plan the city to cater for urban demographic trends[,] . . . the failure to address peoples needs, inequalities in access to services, insecurity of tenure, and inequalities between men and women (UN-Habitat, 2003, p. 3). Davis (2006) argues that historic and current pro-corporation and pro-wealthy policies are also significant factors in the creation of the growing slum populations. After referencing the UNs 2003 report, The Challenge of Slums, Davis concludes, [I]nstead of being a focus for growth and prosperity, the cities have become a dumping ground for a surplus population working in unskilled, unprotected and low-wage informal service industries and trades (p. 175). Indeed, rapid rural to urban migration, in large part due to deliberate business and political policies favoring urban areas, is one of the most well-known and enduring causes of urban slum formation. Economists Todaro and Smith (2009), in the latest edition of their book Economic Development, argue, [O]ne of the most significant of all modern demographic phenomena and the one that promises to loom even larger in the future is the rapid growth of cities in the 6

developing countries (p. 322). Mostly poor families living in rural areas and working in the agricultural sector began a mass migration to cities and crowded urban areas in such numbers that, since 1950, developing country agriculture has declined by 20 to 30%. The reason for this mass migration was the perceived benefits of life in the city. Over the past 60 years, as countries, even less-developed countries, have pursued industrialization, there has been a significant amount of job creation in urban areas, both in the formal and informal sectors. But the job opportunities have not kept pace with the migration and population growth that has occurred in these urban areas. In fact, any growth in job opportunities has in turn spurred ever greater rural to urban migration.

While urban areas were adding jobs, albeit not fast enough to keep pace with migration and population growth, international and national agricultural and manufacturing tax and subsidy polices were rapidly hurting rural economies and causing a significant decline in the ability of rural families to sustain family life through traditional subsistence farming. The combination of increasing rural poverty and a growingor perceived growingurban job market combined to cause millions to leave their villages and migrate to cities in hopes of securing a job that paid well enough to survive. Todaro and Smith (2009) make it clear that the mere hope of a formal sector job that pays well inspires people to move into urban areas even if the practical reality is that very few people actually acquire well-paying formal employment (p. 347).

Much like lotteries all over the world entice poor people to give up what few resources they have in hopes of striking it rich, the mere possibility of a steady job, not the real earned income of migrants, is what motivates rural families to move into cities. The citys informal sector is left to absorb the migrant overflow unable to find formal-sector employment. While many sectors in the informal urban economy have expanded and created jobs, the pace of rural to urban migration still exceeds the necessary job creation. Furthermore, these informal sector jobs normally do not come with job security, benefits, or a livable wage (UN-Habitat, 2007, p. 2; Todaro & Smith, 2009, p. 345). And, as with formal sector job growth, any growth in informal sector jobs creates unplanned incentives that further speed rural to urban migration.

The rapid population growth in urban areas caused by perceived job opportunities has led cities to become overwhelmed by humans who need a place to live, adequate water sanitation, safety, and other public services, such as hospitals and schools. The massive influx of people has left most cities and management systems unable, or unwilling, to adequately cope. Yet, vested interests in cities seek to use their power and wealth to protect certain assets and land from encroachment by newcomers, leaving few options but slums to absorb the urban growth (UNHabitat, 2007). The subsequent overcrowding in urban slum areas facilitates the so-called urbanization of poverty, driven, in large part, by a constant quest for better employment.

Many of the housing settlements created by rural migrants to urban areas are informal, lacking legal property rights and characterized by an insecurity of tenure. Secure tenure is the right of all individuals and groups to effective protection by the State against unlawful evictions (UNHabitat, 2003, p. 7). Insecure tenure is a major challenge for newly arrived urban dwellers and represents, arguably, the biggest contribution to slum proliferation. In an article entitled What are Slums and Why Do They Exist? (2007), UN-Habitat explains:

The lack of secure tenure is a primary reason why slums persist. Without secure tenure, slum dwellers have few ways and little incentive to improve their surroundings. Secure tenure is often a precondition for access to other economic and social opportunities, including credit, public services, and livelihood opportunities (p. 3).

Seabrook (2007) also acknowledges the complexity and importance of security of tenure and rightfully suggests that housing insecurity, more than any other issue, comprehensively impacts slum dwellers while also offering a disagreeable reminder of the circumstances that evicted the landless from rural areas in the first place (Seabrook, p. 71). Often, legal ownership is a prerequisite for receiving other services, such as credit, which could be used to improve housing conditions in slum areas.

In many poor countries that have male-dominated cultural, educational, and political influences, females face additional, in some cases insurmountable, obstacles related to security of tenure for land or houses. These gendered obstacles further contribute to the feminization of poverty among 8

the worlds poorest 2 billion people (Pearce, 1978; Rowe, 1991; Topouzis, 1990). The critical need for tenure is described later in this paper.

Another main cause of slums is governments inability to provide adequate services, such as healthcare, education, and sanitation for all people. The dearth of adequate, accessible, and affordable healthcare and education in rural areas is a key driving force spawning rural to urban migration. Yet the growing urban slums also lack appropriate healthcare, sanitation, and education services for their residents. Many slums are located on the periphery of cities, far from the main citys services and with limited, often expensive, access to the city center. Slum areas generally lack basic services such as sanitation and garbage disposal/pick up, with limited access to clean water or sanitary toilets sufficient to serve the population. For instance, of the 4.4 billion people living in developing countries, nearly three-fifths lack basic sanitation (Gershman & Irwin, 2000, p. 13).

Millen, Irwin, and Kim (2000) explain how poverty, lifes basic necessities, and illness are intertwined: disease proliferates in communities lacking adequate housing, food, sewage, waste disposal, drainage, and clean water for drinking, cooking, and cleaning (p. 3). The governments failure to provide basic services and their inability to offer adequate land sufficient to handle all urban residents, combined with the governments lack of legal recognition of slum dwellers in terms of housing/land tenure, has led to severe overcrowding in the peripheral areas of cities. In many countries, slum dwellers living on land they do not have legal title to are first and foremost considered lawbreakers by their countrys government. In the worst cases, as the UN article The Challenge of Slums (2003) notes, urban poor people are trapped in an informal and illegal worldin slums that are not reflected on maps, where waste is not collected, where taxes are not paid, and where public services are not provided, and, sadly, officially they do not exist (p. 6). Thus, government failure and the lack of legal recognition of many urban residents significantly contribute to slum creation. And, unfortunately, these failures can produce a vicious cycle of slum development, as the distance of these peripheral areas generally means governments, even when they are willing, cannot afford to provide adequate community services in these areas. 9

The United Nations Five Primary Aspects of Slums

History The United Nations Habitat Program has outlined five necessities for urban slum dwellers or, rather, five areas that slum dwellers lack, related to a key target of one of the eight primary Millennium Development Goals (MDGs). Each primary goal of the eight globally agreed-upon MDGs for all nations is further supported by specific targets. MDG number 7 is to Ensure Environmental Sustainability, and under this goal is target 11, which states, Achieve significant improvement in [the] lives of at least 100 million slum dwellers, by 2020 (UNHabitat, 2003, p. 4).

In an effort to help nations, and the global community, achieve this target, a UN Expert Group suggested five components that characterized slums. The five components involved insecure residential status, inadequate access to safe water, inadequate access to sanitation and other infrastructure, poor structural quality of housing, and overcrowding (UN-Habitat, 2003, p. 6). In response to the five common deficiencies found in slums, the UN has suggested five alternative goals for improving slums that directly address the five stated challenges. The corresponding goals include access to safe water (a sufficient amount of water for family use at an affordable price . . . without being subject to extreme effort), access to sanitation (a private or public toilet shared with a reasonable number of people), secure tenure (protection against forced evictions), durability of housing (built on a non-hazardous location and has a structure permanent and adequate enough to protect its inhabitants from the extremes of climatic conditions), and sufficient living area (not more than two people share the same room). Based on these five aspects, a household in an urban area is considered a slum household if the individuals living under one roof lack one or more of these five aspects or conditions. (UN-Habitat, 2003 p. 7).

While these five attributes have been highlighted as key elements in slum elimination, their counterpart challenge list is not a comprehensive list of all of the characteristics and living conditions of slum dwellers. While these five key concerns are important elements of slum living and require further analysis, which is done below, other factors impacting the lives of poor people in slums include social exclusion, lack of jobs, lack of political power, and the fragility of 10

an informal economy. Unfortunately, the scope of this paper does not allow for a detailed exploration of these additional factors.

Access to Safe Water Water is a precious commoditythe most vital resource needed for human survival. Regular access to clean water is essential for avoiding debilitating health problems. Yet most informal settlements in urban areas are not connected to a functioning or adequate water grid, creating a major challenge for slum residents. Water vendors step into this void and will charge up to 200 times the regular price for tap water. The UN advocates that all slum dwellers should have access to safe, clean water (minimum 20 liters per person per day) that is affordable, of sufficient quantity, and accessible without excessive effort or time, particularly for children (UN-Habitat, 2003, p. 7).

Access to Sanitation Closely tied to the issue of safe and affordable water is the need for urban slum dwellers to have access to proper and adequate sanitation. Highly infectious excrete-related diseases, such as cholera and diarrhea, remain global health concerns as they continue to kill millions of people each year. Poor people lose billions of dollars in lost wages when they are too sick to work and they do not have proper health insurance coverage. The UN wants all slum dwellers to have a direct, private connection to a public sewer or adequate septic system and a pour flush latrine or a ventilated improved pit latrine that is either private or shared by no more than two households (UN-Habitat, 2003, p. 9).

Security of Tenure Insecurity of tenure is perhaps the most detrimental factor of all that impact urban slum dwellers because of its ripple effect on peoples other legal rights and financial options. The Challenge of Slums (2003) notes, the removal of tenure-insecurity related obstacles that prevent or constrain households from using their housing effectively as a productive asset is possibly the single most critical poverty reduction intervention (p. 109). Various types of tenure or home security, such as formal homeownership or private rentals, often are not available to slum dwellers because the legal process to obtain land is extremely lengthy and complex (De Soto, 1989, p. 136). 11

One of the greatest fears of people living in slums, a tangible fear that regularly undermines the value of their homes, is the constant threat of eviction. The Center for Housing Rights and Evictions (COHRE) claims to have documented more than 7 million persons, disproportionately more women than men, in 60 countries who were forcibly evicted from their homes in 20012002 (UN-Habitat, 2004, p. 4). Peruvian economist Hernando de Soto (1989, 2000) argues for the importance of granting property rights to poor people in urban areas as a way to facilitate slum dwellers being able to acquire a formal identity and a tangible asset that can be leveraged by them for productive purposes.

Durability of Housing This indicator is the most locally specific of the five major challenges. Local weather conditions, available housing materials, and cultural/regional construction protocols require local experts to help determine what is or is not considered durable. That said, certain locations are universally considered hazardous and unsuitable for human habitation. Furthermore, at a minimum, all building materials and standards can be expected to protect inhabitants from extreme climate conditions such as heat, cold, rain, and humidity (UN-Habitat, 2003, p. 12).

Sufficient Living Area Overcrowding in tight living spaces is a common occurrence in slum areas. The physical, mental, and social problems that arise from cramped living is acute, particularly in rooms where five or more people may eat, cook, sleep, and conduct all household activities. Problems are amplified when hundreds of such rooms/housing structures are clustered together in close proximity in a limited geographic space. The UN seeks to ensure there are limits to how many structures are located in a particular area and that the structures average no more than three people per room (UN-Habitat, 2003, p. 13).

Big Picture Issues (Positive and Negative)

The UNs five key attributes of slum living, as outlined earlier, are important to better understanding the circumstances and obstacles facing slum dwellers. However, material deficiencies alone cannot capture the totality of challenges that slum dwellers face. There are 12

some big picture issues, some negative and a few positive, that are important to consider when attempting to help people living in slums.

A significant feature of slum areas, as already noted, is that a lot of people live in a very limited geographic space. Often, the rural to urban migration that occurs in developing countries brings people from different ethnicities or language groups together and forces them to live in close proximity to one another. In places where different cultures must co-exist in tight living quarters, it can be hard to establish trust among different groups.

The level of social capital, or trust among people, may be too low for good community collaboration and dialogue to occur. Indeed, in places where broader social capital is lacking, tighter small-group social capital may flourish, pitting one group against another. Consider the rise of gang warfare in the favelas of Brazil as evidence of negative social capital (allegiance only to a tight-knit social group, often criminal in nature) against positive social capital that nurtures trust in the larger social community.

Too often slums are places where crime is prevalent. It is hard to develop positive initiatives in slum communities when peoples lives are at risk or their assets are easily stolen. In areas where police have little or no control and cannot enforce the law and in areas where the police are corrupt and will not properly enforce the law, it may prove futile to work toward the rights of slum dwellers to be granted tenure of land or houses, and to advocate for protection from evictions.

Conversely, on the positive side of the big picture issues, population density can be useful. Because urban slums have many people living in a very limited space, more people can be provided government and community services if these services are operated efficiently. Thus, urban areas can offer access to education, healthcare, and transportation more cost-effectively to more people than the same services and same level of service offered to people in rural communities.

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In a similar vein, the close proximity of urban slum populations offers businesses more efficient outlets to a larger number of customers. This efficiency is important for formal businesses, but it is even more important for businesses operating in the informal economy. Thus, urban slum areas offer great opportunities for informal business start-ups and business growth, helping people to gain access to jobs more quickly. That said, two of the primary drawbacks to businesses operating in the informal economy is that they avoid most regulations, putting customers at risk of unscrupulous business practices, and they do not pay taxes, reducing government revenue that could be re-directed toward community services and improvements.

Among the several big picture issues to consider in any discussion regarding urban slum renewal, however, and perhaps the hardest one to confront, is the notion that any significant improvements in urban slums will likely result in hastening the already significant and overwhelming rural to urban migration. Creating a better environment in an urban slum can attract or pull more rural dwellers to consider making the move into the city, swelling urban populations even more. Because most countries political and economic preferences already favor urban areas at the expense of rural communities, most people living in rural areas live in abject poverty and are poorer than their urban counterparts. Todaro and Smith (2009) point out that even just a promise or hope of better conditions in an urban area (despite practical realities) can influence rural peoples decision to migrate. Unfortunately, the better the improvements areor more accurately, the better the perceived improvements arethe larger the percentage of people who may choose to migrate, thus swelling the slum areas even more and potentially making conditions worse. Those wanting to delve deeper into the big picture issues of slums should review the organizations and authors listed in Appendix A of this paper.

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The Role of Microfinance

Introduction This section will be formatted a bit differently from the earlier sections of this paper. Each of the UNs five key issues related to slums will be listed either one at a time or in pairs where appropriate. Under each of the key areas will be listed the following four sub-categories. The first sub-category will describe hopeful operations from various nonprofit/non-governmental organizations, including microfinance organizations, which are addressing particular key issue(s) in slum communities. The second sub-category will explore challenges that remain for involvement in the particular key area(s). This sub-section will address all microfinance services but give particular focus to the challenges faced by microfinance institutions (MFIs) in addressing the particular key concern(s). The next sub-category describes possibilities/opportunities or recommendations for microfinance service providers related to the key issue(s), again focused mostly on MFIs. The final sub-category will list a few research/analysis questions that scholars or monitoring and evaluation staff can explore further related to the particular key area(s). The information will be listed by bullet point rather than in full narrative in order to focus on the primary highlights in the limited space available. Readers are encouraged to utilize the listed resources to gain a more detailed understanding of the examples given as well as consult the organizations and authors listed in Appendix A of this paper.

UN Considerations: Access to Safe Water and Access to Sanitation Historically, microfinance programs have avoided offering loans that related to water provision because water and sanitation services were perceived to be the sole domain of national and local governments. Recently, however, a few organizations have launched microfinance products that provide communities (large-scale investments) or households (individual families) with financing for more affordable and/or more accessible clean water and sanitation services. Partnerships between, and collaboration among, multiple organizations is required to get the proper mechanisms and oversight in place.

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Hopeful Signs from the Microfinance Sector In Pakistan, WaterAid partnered with a local organization, Anjuman Samaji Behbood (ASB), to work with communities and government authorities. ASB provided community members with loans initially to purchase links to the citys water supply and eventually to purchase sewer connections to the citys drains. Water.org (formerly WaterPartners) has invested significantly in microfinance-based water and sanitation initiatives. An early investment was done with a womens self-help group (SHG) called Gramalaya, which is operating in rural and urban areas of Tamil Nadu, India. Gramalayas urban efforts were in the city of Tiruchirappalli. The Indian MFI BASIX Bank provided training to Gramalaya, which adopted sound practices from the microfinance sector. Over a period of three years, from 2004 to 2007, Gramalaya disbursed nearly $200,000 (a grant for loan fund from WaterPartners) to 201 womens self-help groups (118 urban, 83 rural) helping 2,163 members with both water and sanitation improvements. In the urban area, an 18% interest rate was charged and the repayment rate was 100%. This partnership was so successful that an additional 24,000 group members acquired almost $400,000 in water and sanitation loans from commercial banks, internal SHG savings, and government subsidies. Eventually Gramalaya created a completely new MFI, called GUARDIAN, which is specifically designed to provide micro-loans for water and sanitation projects. Gramalayas specific emphasis on hygiene promotion activities to their SHG members helped generate greater interest in clean water and sanitation and helped spur interest in investing in such improvements (Arney et al., 2008). Globally, Water.org launched a new microfinance initiative called WaterCredit. WaterCredit operates in India, Bangladesh, Kenya, and Uganda by partnering with 23 organizations, including MFIs, self-help groups (SHGs), and non-governmental organizations (NGOs). While some of these partners work in rural areas, many operate in urban areas, particularly in slum communities. As of June 2011, more than 51,300 loans have been made, with an average loan size of $120. More than 90% of the clients gaining access to these loans are women and the global repayment rate since 2007 stands at 97%. See Kelley and Baumann (2011) for details of this program in the slums of Dhaka, Bangladesh. 16

An important article for those interested in learning more about this topic and to review some helpful case studies is Innovations in Financing Urban Water & Sanitation (Trmolet et al., 2007).

A recent study on supplying water on credit in urban Morocco (Devoto et al., 2011) finds households are willing to pay a substantial amount of money to obtain a private tap in their home, even when free public taps are close by. The research found no improvement in health gains from using a private tap but did find an increase in the quantity of water drunk and a substantial time gain for the treated households. The study also found significant improvement in well-being among households with a private tap despite the additional financial cost for the connection. In places where public water is a source of tension between households, private home connections can reduce conflict and improve social integration.

Practical Action (http://practicalaction.org/welcome-to-practical-action) is a UK-based international NGO that has sought to combine waste management, urban composting, and slum improvements with income generating options for slum dwellers. This is not a MFI but an organization that thinks creatively about turning waste into small businesses.

The Community Fund for Sanitation in Poor Urban Neighborhoods (FOCAUP) in Senegal worked towards creating a sustainable credit and savings program, begun in the 1990s (Gaye & Diallo, 1997).

ACTogether in Uganda has mobilized community members into several sanitation committees, and each one takes special days for cleaning their respective settlements. This focus on health and hygiene has enhanced the use of settlement-wide savings schemes. These efforts were developed by slum communities that are organized in savings and credit networks with an intention of influencing health-related programs at city and national levels (www.actogetherug.org/program-components).

While not directly water and sanitation related, Jami Bora in Kenya and Grameen Bank (via its off-shoot program called Grameen Kalyan) are able to offer low-cost health insurance to their clients. This provides clients with an important asset to counter poor and inadequate water and sanitation services in their communities. If clients get sick, they are able to recover more quickly and return to work with adequate health care provisions.

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Patrick Kelley, director of International Housing Finance for Habitat for Humanity, notes the emergence of metafinance, where a group-guaranteed loan is used for community infrastructure such as water and sanitation needs rather than for an individual family shelter (Kelley, 2010).

Challenges that Remain for MFIs to be Involved Financing water and sanitation projects at either the household or community level is complex and requires sophisticated loan products and a willingness to collaborate with other organizations and work closely with local and national government agencies. Financial innovation and the creation of new systems to reach the final mile of service into communities do not mean that truly poor people will be served. Indeed, some of the examples provided of MFIs financing urban water systems relate to areas where households hold tenure to their land and/or house. Finding services that work for slum dwellers that do not hold land tenure will remain a challenge for MFIs for years to come. MFIs may require a mental shift on several levels. Due to its complexity, water and sanitation financing must be driven by demand, rather than forced by supply. MFIs that are used to encouraging clients to start businesses by accessing the loan products they offer must shift their approach and better respond to demands by households and government agencies regarding water and sanitation issues. The demand for financing must come from the community, and the larger infrastructure pieces usually must come from governments. Also, in most cases, household water and sanitation improvements will generate lower profit (or cost-savings) margins for households than typical business loans. Subsequently, households will need lower interest rates on the water-related loans and also will require more time to repay their loans. MFIs wanting to engage in these kinds of loans will need to adjust their expectations and cash flow management accordingly. Indeed, some levels of subsidies may be necessary. For instance, the WaterPartners/Gramalaya partnership, described in the hopeful section above, included subsidies at several levels of the program (Arney et al., 2008, p. 9). Finally, institutional sustainability is a core pillar in microfinance orthodoxy. Yet MFIs venturing into water and sanitation loans may jeopardize their credibility in this regard. That said, as capital investors, UN agencies, and local and national governments consider the economic

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possibilities and the breadth and depth of outreach MFI organizations can offer, they may be willing to structure partnership agreements that help rather than harm an MFIs financial bottom line.

Possibilities/Opportunities or Recommendations With the emergence of WaterCredit in the marketplace, any MFI that has avoided venturing into water or sanitation lending should re-consider, particularly in the four countries where WaterCredit operates. WaterCredit serves water and sanitation needs in both rural and urban communities. MFIs operating in urban slums, particularly in countries where Slum Dwellers International is active and mobilized, should work with local communities and local government agencies and nonprofits in the water and sanitation arena to explore possible partnerships. There are now plenty of resources available to guide collaborations using existing partnerships for guidance. For MFIs operating in Central America and interested in community-wide water solutions, it may be worthwhile to explore a partnership with the water organization Healing Waters International (http://www.healingwaters.org/). To support educational endeavors for clients and their children that can help reduce health problems connected to poor water and sanitation services, MFIs can replicate or partner with organizations such as Fonkoze in Haiti (http://www.fonkoze.org/) or Edify (http://www.edify.org/). Edify offers educational services and/or loans to private schools to help foster greater educational opportunities for clients. BRAC in Bangladesh (http://www.brac.net/content/about-brac-education) is another example of an MFI using educational tools to assist clients in a more holistic fashion rather than with credit alone.

Research/Analysis Questions to Explore Replicate the recent Morocco study but in an urban area where free public water is not so easily accessible. It would be interesting to see if private water access improved health measures in such a circumstance. It makes economic sense for households to pay money or invest in gaining access to cleaner water (less costly and uncomfortable illnesses), cheaper water (budget savings), 19

or more readily accessible water (increase in time not spent getting water). However, personal benefits at the household level that come from sanitation improvements are less tangible. Therefore, it may be a challenge to convince families to invest in such improvements. Further research is needed into marketing household sanitation benefits. For two possible options for women in urban slums to operate micro-businesses (similar to the phone ladies of Grameen Bank), see Peepoople (http://www.peepoople.com/showpage.php?page=6_0) and Sustainable Health Enterprises (http://www.sheinnovates.com/index.html).

UN Consideration: Security of Tenure As stated earlier in the paper, security of tenure is probably the biggest challenge faced by slum dwellers. Slums dwellers want assurances that they will not be evicted from their homes arbitrarily or without warning or compensation. To gain a certain level of permanency and control allows people living in slums to invest in home upgrades for their families without risk of losing their investments. Gaining legal ownership of a home and/or plot of land provides slum dwellers with a viable asset to leverage for different funding needs as well as a legal address to call their own for economic, employment, and political reasons.

Hopeful Signs from the Microfinance Sector In Cambodia, the Solidarity and Urban Poor Federation (SUPF), a partner of Slum Dwellers International (SDI), was started in 1994 as a savings scheme. SUPF/SDI invited officials from local and national government offices to join community members from informal urban slums on integrated exposure trips to India, South Africa, and Thailand. The friendly bonds that were forged on these trips, and the learning that took place, helped the Federation secure free alternative land for families displaced by development projects (Asian Coalition for Housing Rights, 2001). SUPF partnered with the Asian Coalition for Housing Rights and local municipalities to set up the Urban Poor Development Fund (UPDF), which became the first community-managed resettlement project. By April 2008, 222 communities with 13,622 members in Phnom Penh and 354 groups in all of Cambodia with more than 20,000 members total had organized savings groups. Loans are made to communities, not individuals, and the communities must have 20

established savings clubs with at least 10% of the loans requested already in their savings accounts. More than US $2 million in loans has been disbursed to almost 9,000 families (Phonphakdee et al., 2009). By the end of 2010, the Malawi Homeless Peoples Federation, an affiliate of SDI, had negotiated successfully for land for more than 3,000 members in several urban areas. There are more than 15,000 registered members in the Federation who are actively saving in both rural and urban areas. MFIs and other NGOs are getting more involved in providing house loans for urban dwellers. In 2010, the Malawian government passed a bill in the national assembly regulating microfinance efforts. Almost 10,000 housing loans have been issued by five organizations in Malawi. The most is by Habitat for Humanity of Malawi, which has issued 7,000 such loans (Manda et al., 2011). In Bangkok, Thailand, two groups have helped families in nine canal settlement urban communities with housing loans through helping to facilitate community savings groups. One is Community Organization Development Institute (CODI), which has provided loans for upgrading of slum homes. The second is a group of local NGOS from the Chumthonthai Foundation. Both organizations work with the national Baan Man Kong (secure tenure) housing programme (Usavagovitwong & Posriprasert, 2006). Equitas Birds Nest, a pilot initiative of the Equitas Development Initiatives Trust (EDIT) based in Chennai, Tamil Nadu India, has worked with nearly 100 homeless, pavementdwelling families to identify affordable rental accommodation. Despite negotiating and procuring a secure dwelling for each household, most clients were reluctant to move for fear their livelihoods would be jeopardized. Prior to physical transfer, the EDIT team provided households with skills training and assistance in establishing new livelihoods, mostly home-based activities such as candle-making, soap-making, incense stick rolling, and the like. EDITs clients moved into housing once they had the confidence that the new livelihood could sufficiently replace the old one; after a 6-month moratorium, each household assumes the rent payments on its own. UN-Habitat, which partners with 25 MFIs to help expand affordable housing loan products, has established local finance facilities in Ghana, Indonesia, Sri Lanka, and Tanzania (each capitalized with US $1.5 million) to help encourage domestic banks and MFIs to develop sustainable housing loan products (Case, 2010). 21

In Angola, Development Workshop offered their KixiCasa housing microfinance model through their MFI partner KixiCrdito. Housing loans were provided to their best clients in addition to normal bank loans on offer. Terms were for 10 months to one year and loans ranged from $800 to $2,500. The purpose of these loans was to allow clients to invest in their homes incrementally. KixiCrdito does check with local government officials to ensure the clients receiving the loans are living on land that will not soon be the target of redevelopment. Development Workshop continues to advocate for property rights or recognition of temporary occupation rights for slum dwellers. From an initial 51 loans (80% women, 97% repayment rate), KixiCrdito expanded the KixiCasa program to another 250 clients. This time, though, clients were not just entrepreneurs but included civil servants and other salaried employees who had access to more stable incomes that could be regularly garnished from the employers as needed (Cain, 2007). Also, see Kelley and Baumann (2011) for more details.

The Working Womens Forum (WWF) in India organizes women into cooperatives. WWF was started in 1978 with 800 women. WWF now has more than 1 million members who are co-owners of the organization. Each group of 10 women has a leader, and all leaders are members of the governing body. The governing body works to address issues involving gender equality, including land tenure, in both urban slums and rural communities.

Jamii Bora in Kenya has worked extensively to provide microfinance services to former beggars and has involved gangs in rebuilding destroyed communities in urban slums after the 2007 riots. Jamii Bora built an entire community, called Kaputiei Town, which was started in 2003. Kaputiei Town is in a rural, former agriculture area located in Kisaju, Kajiado District. Clients of Jamii Bora who live in urban slums are allowed to purchase their own land/home in this town. Included in this town is a commercial and industrial area. The costs of developing the land and infrastructure are shared between the residential and business areas. Loans from Jamii Bora are charged between 8.5 and 10% interest with 10- to 15-year repayment schedules. Members can live in a three-bedroom home for a mortgage of US $32 a month (http://www.jamiibora.org/kaputei.htm).

A report from the Asian Coalition for Housing Rights (ACHR), which partners with SDI, describes a meeting of federations from Asia and Africa that noted the groups helping 22

more than 40,000 families in Africa and more than 100,000 families in Asia with tenure security through their community-based savings and credit programs (Asian Coalition for Housing Rights, 2008). ACTogether in Uganda has mobilized community members to leverage strength in numbers, advocating local governments for land tenure rights as well as the rights of citizens to obtain an official address, an ID, and a passport, and to have reliable and regular access to police and emergency services. The communities are supported to conduct settlement profiles, mapping, and enumerations to gather valuable information on the status of land ownership in the settlements, which enables them to engage government and private land-owners. The communities started an urban poor fund, where members access small loans to support land acquisition processes and land-sharing approaches (www.actogetherug.org/program-components). One thing MFIs have done in some countries (i.e. Kosovo, Bolivia) has been to work toward creating credit bureaus for poor people where none had existed or linking microfinance clients to existing credit bureaus in country (Rozycki, 2006). One of the biggest challenges poor people in slum areas face is a lack of formal identity and legal address that allows them to prove themselves to entities operating in the formal economy. Credit bureaus can offer people with good track records in the informal economy a way to leverage their good reputations to a larger audience, even the formal financial markets. While MFI-supported credit bureaus may not directly assist slum dwellers with land tenure, they help hold people accountable and provide some form of legal and formal recognition that can then be used by community groups to advocate for greater tenure rights. Community-Led Infrastructure Finance Facility (CLIFF) is a finance facility, supported by the UKs Department for International Development and the Swedish International Development Cooperation Agency that supports 29 projects in India, Kenya, and the Philippines benefitting more than 800,000 slum dwellers. CLIFF leverages outside funds/grants to support revolving loan funds managed by implementing partners, some of which are MFIs. In less than 10 years, CLIFF funds have been used by local implementers to build more than 15,000 community sanitation blocks in India while also

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supporting hundreds of other families with land tenure, relocation housing, and slum housing improvements in India, Kenya, and the Philippines (CLIFF, 2010).

Challenges that Remain for MFIs to be Involved Land tenure is very much a government issue. Outside of a strong advocacy role, MFIs have limited power to change government policies and actions. Several political and economic interests want things to remain in placesome want to protect their highquality, low-density land from the masses, while others benefit from extracting high rent from slum dwellers (via bribes paid, higher rates paid for basic services like water, etc.). If a land tenure opportunity includes having people relocate to rural areas from urban slums to purchase their homes, it may prove difficult to garner large interest in such a program. The urban slum problems remain for the vast majority of people, and only a few families engage in a reverse rural to urban migration to gain land tenure. When individual clients in a group solidarity program achieve tenure, sometimes they lose interest in helping other group members achieve the same benefit. MFIs need to create mechanisms, like Habitat for Humanitys sweat equity (where people have to donate a set amount of time before they are eligible to get a home), so that group solidarity continues to work until all members have benefited. House-related financing is different than business-related financing, requiring different structures and management/loan officer skill sets. MFIs may have a hard time expanding services in this area without significant disruption to normal operations. Mortgage loans, particularly where land title is included, require much larger capital amounts than traditional loans for business activities. Because clients do not generate a large or fast return on housing-related investments, interest rates generally have to be lower and loan terms often have to be longer than what MFIs are used to providing for business loans. These realities make it hard for MFIs to expand into these unique loan products without additional assistance and collaborations.

Possibilities/Opportunities or Recommendations Savings is a crucial mechanism for acquiring tenureand group solidarity plays an important role in motivating people to save. 24

Advocating for change is more successful in larger numbers. Group solidarity is also good for holding governments and individuals accountable to promises made. When it comes to tenure, some forms of subsidies (from governments or larger organizations) are required to facilitate the larger infrastructure shortfalls. Poor people living on the margins of society cannot be expected to pay the full cost of urban recovery.

Research/Analysis Questions to Explore To help stem the tide of rural to urban migration, MFIs can advocate for governments to improve rural services to help keep families remain anchored in rural areas. MFIs can also establish and/or expand their own microfinance services in rural areas to improve access to financial services for people in rural communities. A number of the largest and most well-known MFIs in the world can use their influence to advocate for a reduction in, or elimination of, western agricultural subsidies to improve global agricultural equality. If rural areas in developing countries could gain greater economic benefit from their work, there could be a significant reduction in rural to urban migration. MFIs, like those in East Africa, that are working with cell phone companies to offer lowcost, dependable remittance services allow urban dwellers to get more cash into the rural areas, which can help boost the economic condition of rural dwellers. It will take time and resources to do well, but MFIs should explore partnerships with local universities and aid agencies or government agencies to reflect on the local context. Research is needed that can help differentiate between the areas in need of subsidies and the areas where full-cost-recovery approaches can be used to facilitate greater land tenure for slum dwellers.

UN Considerations: Durability of Housing and Sufficient Living Area The UN considerations for housing durability and sufficient living area are local, contextspecific issues. Often these issues are interconnected, in that living space may be limited due to the construction materials available to build homes, and the available building materials may, in turn, limit the size of a home. Because of the work of organizations like Habitat for Humanity and numerous microfinance organizations, this issue has received the most attention. 25

Interestingly, even though most MFIs do not currently offer a specific housing loan, estimates are that 20 to 30% of all current MFI business loans are used by clients for housing-related purposes (Kelley, 2010).

Hopeful Signs from the Microfinance Sector The Self-Employed Womens Association (SEWA) of India, which has offered housing and infrastructure loans to its members in urban slums since the 1970s, launched a sister organization called Gujarat Mahila Housing SEWA Trust (MHT) to improve the housing and infrastructure conditions of poor women in the informal sector. MHT and SEWA have partnered with a local municipality (Ahmedabad Municipal Corporation) to form the Parivartan project. The Parivartan project has helped more than 30,000 slum dwellers improve their physical environment. Costs and management of the project are shared between the municipality, SEWA (and its sister organizations), and the community members (Biswas, 2003). PlaNet Finance is piloting a project with local MFIs in South Africa through their Micro Energy Alliance (http://www.reciprocity.co.za/images/stories/attach/MEA%20Teaser.pdf). The Alliance links large suppliers of renewable energy products with community-based microentrepreneurs. The entrepreneurs receive a loan from a MFI and then purchase energy-efficient products, such as solar-powered water heaters, from the larger suppliers. The Alliance also works with MFIs that will lend to clients living in urban townships to purchase these energy-saving products, helping to lower energy costs for slum dwellers. The clients pay back their loans through the money they save from the energy-efficient products, and the entrepreneur then pays back the MFI from his/her increased sales (Chongo, 2010). In the Philippines, a moderately successful government-led housing program called the Community Mortgage Program (CMP) had, by December 2008, benefited more than 200,000 Filipinos who were at risk of eviction because of the lack of secure housing and tenure. Organized community associations partner with NGOs to develop land by borrowing funds from the CMP at a state-subsidized interest rate. These loans last for 25 years. Groups can range from 9 to 300 people and the loans are made to the association, 26

so individual household financial records are not a factor in the decision. CMP manages two kinds of projects. On-site projects allow illegal settlers to formalize claims by purchasing land from the owners where they currently dwell. Off-site projects involve relocation to another area (Mitlin, 2003; Llanto, 2007; Wikipedia, 2011). ACTogether in Uganda mobilizes slum dwellers to design and construct their own model homes, which they show during public events to housing professional and government workers. This allows poor people to discuss and debate what house designs are best suited for their needs (www.actogetherug.org/program-components). Kenya Rural Enterprise Programme (KREP) has partnered with a technology organization called Intermediate Technology Development Group (ITDG) to provide loan packages to community-approved applicants to purchase low-cost housing technologies. The applicant must contribute at least 10% of the amount borrowed, and interest is 20% a year on a declining balance (Mitlin, 2003).

Challenges that Remain for MFIs to be Involved Housing construction materials and size of dwelling issues are localized. Also, these issues are inter-connected to localized challenges involving tenure, population density, and legal options. What may work for an MFI in one region of the country may not be feasible in another region. And, what may work for an MFI in one country may not work for MFIs in another country. Material costs for slum improvements can be prohibitive. Even if an MFI can negotiate cost savings due to bulk purchases, manufacturing plants can be far away, increasing transportation costs. Maintaining security of the building materials while building is another major concern in slum areas. Government regulations for home-building (often historic laws that have yet to be changed) can make slum improvements very costly or virtually impossible. Due to the high concentration of people in slums and the uncertainty inherent in informal employment, MFIs must be diligent in tracking their clients repayments and cautious about clients becoming too indebted if more than one MFI is operating in a slum area. The recent microfinance crisis in India is an example of this dangerand many of the

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problems arose in slum areas where there was a high concentration of people (Gokhale, 2009).

Possibilities/Opportunities or Recommendations MFIs should consider bulk buying of home-building products and pass those savings on to their clients interested in home improvements. Incrementalism is a term used to describe slum dwellers who seek to improve their dwelling bit-by-bit as they can afford improvements, even if land tenure is not secured (Bradlow, 2011). MFIs serving clients in urban slums that need more space or improved housing should explore new home loan products. These housing loans should be in addition to business loans, and the MFI should give preferential attention to home-business clients who can use the home loan to make improvements that will impact both their homes and their businesses. For MFIs that cannot legally accept savings, the MFI should find a partner that is able to collect savings and try and organize community-group savings for housing and infrastructure improvements. Portable ATMs might provide mobile saving services while also functioning as cost-effective loan collection receptacles. BRAC, both in Bangladesh and in Uganda, is exploring mobile technology communication options for slum dwellers to acquire affordable healthcare (Davis, 2011). An important book that addresses microfinance opportunities in relation to housing is Daphnis and Fergusons Housing Microfinance: A Guide to Practice (2004). MFIs should facilitate community mobilization among their urban slum clients to advocate for improved government services (water, sanitation, roads, etc.) as well as request resources to fight local crime and various levels of corruption.

Research/Analysis Questions to Explore Localized MFI research is needed to explore various affordable home designs, the availability of low-cost housing materials, and various home improvement loan products that might be utilized by slum dwellers.

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Consider the value that art might play in improving the lives of urban slum dwellers. The 2010 TED winner, French artist JR, offers a way to restore a sense of dignity and personal storytelling of the people who live in slums (Kennedy, 2010).

Conclusion

Slums, like the cities that give them birth, are organic and fluid entities. A number of complex, interrelated pieces push and pull on peoples lives in ways that are difficult to track, understand, or change (see Shenoy, 2011 for a case study from northern India). Indeed, a positive change in one area can have unexpected and unwanted negative consequences in one or many other areas. As cities around the world continue their rapid pace of growth, it is likely that the slum areas associated with these cities also will grow. Clearly, life in these slums is hard and people will continue to find the circumstances there challenging and difficult to change.

Beyond the multi-layered, interconnected aspects of a specific slum area are the many highly nuanced relationships among people between rural and urban areas and between informal slums and the more formalized parts of a city. These relationships are diverse and very complex, but they must be considered when exploring any plans for urban slum transformation. Indeed, it may be that the most cost-effective, practical, and successful way for MFIs to help transform the lives of people living in urban slum areas is to expand dynamic, useful, and effective microfinance services to more people still living in rural areas. If MFIs operating in rural areas can offer the necessary and desired financial products and services for a community, they may help stem the flow of rural to urban migration, thus reducing the growth pressures on informal slums and helping the existing slum dwellers.

That said, there is a role for urban-based MFIs to serve populations living in urban slum areas. Sustainable, pro-poor microfinance institutions can create products and services that help slum dwellers gain better access to water, sanitation, housing, and even tenure. The work will not be easy and will require an MFI to have a collaborative and patient spirit to work effectively with communities, governments, and other organizations. MFIs and their staff will need to be flexible in their product and service offerings, while remaining disciplined in their customer service 29

operations and fiscal responsibilities. In several countries, support networks, from donors to local government agencies, are looking for ways to partner with MFIs and leverage the MFIs financing expertise to fund new service and product endeavors. MFIs that want to serve vulnerable and marginalized people in urban areas will find that the tools of microfinance, if used carefully and properly, can be effective and transformative vehicles in the lives of poor people living in slums.

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Web Sources: www.actogetherug.org/program-components (last accessed: October 10, 2011) http://www.brac.net/content/about-brac-education (last accessed: October 10, 2011) CLIFF. Annual review 2010. http://www.homeless-international.org/cliff_ar2010_small/ (last accessed: October 10, 2011) http://www.edify.org/ (last accessed: October 10, 2011) http://www.fonkoze.org/ (last accessed: October 10, 2011) http://www.healingwaters.org/ (last accessed: October 10, 2011) http://www.jamiibora.org/kaputei.htm (last accessed: October 10, 2011) http://www.peepoople.com/showpage.php?page=6_0 (last accessed: October 10, 2011) http://practicalaction.org/welcome-to-practical-action (last accessed: October 10, 2011) http://www.reciprocity.co.za/images/stories/attach/MEA%20Teaser.pdf (last accessed: October 10, 2011) http://www.sdinet.org/ (last accessed: October 10, 2011) http://www.sheinnovates.com/index.html (last accessed: October 10, 2011) http://www.ted.com/talks/robert_neuwirth_on_our_shadow_cities.html (last accessed: October 10, 2011) http://www.unhabitat.org/ (last accessed: October 10, 2011) Wikipedia. Community mortgage program. http://en.wikipedia.org/wiki/Community_Mortgage_Program (last accessed: October 10, 2011)

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Appendix A Global Agencies and Authors Working on Slum Issues

While the issues confronting slum living are complex and the solutions challenging, there are organizations and researchers trying to address these issues on behalf of the global community. Below are some key organizations and authors exploring the big picture issues of slums and also conducting the latest research and reporting on key slum issues.

Global Agencies A significant resource for information and activities is the United Nations Human Settlements Programme, or UN-Habitat (http://www.unhabitat.org/). UN-Habitat takes a large-scale, public policy-oriented approach to addressing the problems of slums.

In contrast, Slum Dwellers International (SDI) is a grassroots community-led organization that mobilizes slum dwellers to address issues prevalent in their own communities. SDI (http://www.sdinet.org/) is a network of community groups from 33 countries that focuses on the localized needs of poor urban dwellers. As a legal, independent entity, SDI has created a platform for poor peoples concerns and issues to be shared across cities and countries. SDI uses their strength of numbers to offer a unified voice to governments and international organizations regarding policies, practical concerns, and future strategies of slum living.

Both UN-Habitat and SDI have extensive (and free) libraries of resources available on their websites. The website materials include case studies, reports, and recent research on the challenges of slums and opportunities to replicate workable solutions for people living in slums. Combined, these two organizations offer substantial information, from differing perspectives, for policy makers, practitioners, and researchers, and should be consulted by any organization attempting to help people living in urban slums. Many resources from these two organizations are cited in this paper.

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Authors A widely read and oft-cited scholarly resource regarding urban slums is Planet of Slums by Mike Davis (2006). Investigative journalist Robert Neuwirth has written about life in urban slums in his book Shadow Cities (2005) and he has shared a TED talk on the subject (http://www.ted.com/talks/robert_neuwirth_on_our_shadow_cities.html). Diana Mitlin (2003, 2005) and David Satterthwaite (2004, 2005) individually have authored or co-authored a number of scholarly articles and book chapters on urban slums. Together, they authored one book (2001) on environmental problems facing urban areas and later edited a book entitled Empowering Squatter Citizen: Local Government, Civil Society, and Urban Poverty (2004) that includes case studies from several slums in different regions of the world. Erica Field of Harvard University published an important study from Peru (2005) that explores property rights and residential investments.

The organizations and authors outlined above serve as good references to better understand slums and the impact slums have on poor people living in urban areas. Anyone interested in working on slum issues would benefit from reviewing the above resources. In addition, people considering offering some form of financial services to slum areas should become familiar with the organizations/resources described in the sections of this paper focused on microfinance practitioner operations. Because slum living is complex and varies by geographic/cultural location, it is important to access a number of sources for ideas and possibilities.

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