Business for Sustainable Urbanisation - Challenges and Opportunities

UN-HABITAT

Business

for Sustainable Urbanisation Challenges and Opportunities

Business Partnership for Sustainable Urbanisation Making cities better places to live, work and do business

Boxes, tables and figures Milestones Urbanization Scenario Reaching the Millennium Development Goals Slums - Key facts The markets at the “bottom of the pyramid” (BOP) The markets at the “bottom of the pyramid” (BOP), by region The United Nations Global Compact The Business Partnership for Sustainable Urbanization (BPSU) UN-HABITAT’s alliances with the business community Water and Sanitation project with Coca Cola and UN-HABITAT Veolia, UN-HABITAT and UNITAR: Access to Basic Services for All Initiative Community Managed Water Supply Scheme in India Alexandria’s solid waste management Ecological Plastic Inc., Costa Rica Inclusion of Salvagers in the Waste Management Process, Odi-Moretale, South Africa ‘El Ceibo’ Recycling cooperative, Buenos Aires, Argentina Opportunities for Value Chain collaborations in housing Cemex, Mexico Mutirões, Brazil ADAPT, Egypt Shelter micro finance Community-based shelter funds The Slum Upgrading Facility Global Housing Finance Practices The Community-led Infrastructure Financing Facility (CLIFF) Grameen Bank Housing Program, Bangladesh Acumen Fund and Saiban in Pakistan Incentives for solar systems in cities Photovoltaic solutions for off-grid households and business Public toilets and biogas plants with Sulabh Sanitation Movement, India Wind generators for domestic use Bio-diesel in Mali Bus Rapid Transit in Bogotá and Curitiba M-banking with Wizzit, South Africa

7 8 9 9 10 11 12 13 13 16 16 16 18 19 19 19 20 22 22 22 25 25 25 26 26 26 26 29 29 29 29 29 29 31

Acknowledgement This publication is a contribution to the First Stakeholders Meeting of the Business Partnership for Sustainable Urbanization (BPSU) to be held on 13 and14 April 2007 in Nairobi.

Acknowledgements and thanks go to all the persons who have contributed to this publication: Alan Aguilar and Christine Auclair, Partners and Youth Section, Monitoring and Research Division, Kulwant Singh, Water for Asian Cities Programme (Challenge 1), Liz Case and Christian Schlosser, Human Settlements Financing Division (Challenge 4), Vincent Kitio and Sara Candiracci, Energy and Transport Section (Challenge 5).

All rights reserved. No part of this book may be reproduced in any form without permission from the UN-HABITAT. Published by UN-HABITAT HS NUMBER Copyright © 2007 UN-HABITAT Printed by UNON, Nairobi, Kenya

Table of Contents Introduction UN-HABITAT and the business community Urbanisation challenges and the private sector Addressing the bottom of the pyramid Responsible Business Practices and Corporate Social Responsibility

4 6 8 10 12

Challenge 1: Water and Sanitation Deficient Financing of the water sector Business opportunities

14 14 15

Challenge 2: Waste management Reduce, recycle and reuse of waste Business Opportunities

17 17 18

Challenge 3: Shelter Housing solutions through value chain collaborations Low-cost, energy efficient, eco-friendly shelter

20 20 21

Challenge 4: Housing Finance and Real Estate Private institutions shy away from the low-income segment Business Opportunities

23 23 24

Challenge 5: Energy and Transport Fostering economic activity and raising standards of urban living Business Opportunities

27 27 28

Challenge 6: Information Technology Mobile banking a financial tool for small entrepreneurs in slums

30 30

References

32

Introduction The UN has embarked on a broad and continuous programme of institutional change and reform towards becoming a more effective and accountable institution.

One important part of this process has been the opening of the United Nations to non-state actors, including business and civil society, as essential partners for change.

We are now at a very significant turning point in history: The year 2007 will be the year in which for the first time, half of humanity will be living in towns and cities.

It marks the beginning of a new urban era.

It is projected that by 2030 that figure will rise to two-thirds. Make no mistake, we live at a time of unprecedented, rapid, irreversible urbanisation. The cities growing fastest are those of the developing world.

And the fastest growing neighbourhoods are the slums. Another and unacceptable feature of the new urban age is that 2007 will also be the year in which the global number of slum dwellers is forecast to reach the 1 billion mark.

Given the enormity of this challenge, UNHABITAT is well aware that the private sector is not merely a part of the solution, but instead is a vital partner that must be engaged if the world’s cities are to achieve sustainability. Private sector partnerships and the concerted approach to land, basic infrastructure and services, affordable housing solutions and accessible housing finance systems, are critical to practical sustainability in cities.

The private sector and the UN share common objectives of more efficient, productive and inclusive cities. The corporate sector needs specific conditions in order to run its business, and the UN is engaged

in improving the living conditions of people who will work and buy products and services from the private sector. The growth of slums and the deterioration of urban infrastructures are threats to business and the private sector has a major stake in maintaining the health of cities. For national and local governments, significant rethinking is required to embrace the private sector while ensuring healthy governance and safe regulatory frameworks that can make this happen.

The challenge is first and foremost to address the shelter and basic services needs of low-income segments in urban areas.

Doing this means exploring business models and untapped opportunities in cities while engaging the private sector to work towards a more sustainable urbanization.

A further challenge is to scale-up operations through new partnerships in order to address the daunting challenge of rapid urbanization and the growth of slums.

This publication provides an overview of the challenges, business opportunities and best practices in the different sectors that are part of the UN-HABITAT mandate.

These areas need to be explored if we want to achieve our commitment to the Millennium Development Goals and to efficient cities, where innovations can flourish and markets can expand towards new segments at the “bottom of the pyramid�.

I hope this publication will be a source of inspiration and debate for businesses and other partners engaged in the sustainable development of our towns and cities.

Anna Kajumolo Tibaijuka Executive Director UN-HABITAT

Introduction

Global corporate leaders are known worldwide for their engagement and contribution to sustainable development, and their commitment to the Millennium Development Goals. They are committed to eco-efficiency, innovation and corporate social responsibility. Sustainable urbanization should be part of their overall mission.

For small- and medium-size enterprises, which are key players in areas addressed by UN-HABITAT, increased participation in the policy debate, best practices exchange and access to leading-edge information on cities should open new business opportunities and new forms of partnerships to better meet their needs and address the demand in urban settings.

UN-HABITAT and the Business Community “Even though business focuses on economic growth and profit while the United Nations works to promote peace and security, reduce poverty and ensure human rights, the United Nations and business need each other. The work of the United Nations can be viewed as seeking to create an enabling environment within which business can thrive.”

United Nations Secretary General Ban Ki Moon The business community has played an active role in the United Nations since its inception in 1945. Recent political and economic changes have fostered and intensified the search for collaborative arrangements with the private sector.

Efforts to renew and reform the United Nations provide the overall rationale for closer cooperation and partnership between the United Nations and non-state actors, including the business community. A broad policy framework for cooperation with the business community was established under Secretary General Kofi Annan’s leadership.

The business community has a growing role in generating employment and wealth through trade, investment and finance and UN member states have increasingly stressed the importance of private investment in development. The business community is also increasingly appreciative of the role of the United Nations in promoting peace and security, providing norms and standards and addressing issues of vulnerability, poverty, environmental degradation and social conflict. All of this is seen as helping provide a stable and favorable framework for business and development.

UN-HABITAT’s mission is to promote socially and environmentally sustainable urban development with the goal of providing adequate shelter for all. Towns and cities are growing at unprecedented rates, leading to increased numbers of slum dwellers with little or no access to shelter, water, sanitation, education or finance.

UN-HABITAT acknowledges that sustainable urbanization cannot be ensured without the Address to UNA-USA Business Council, New York, 10 January 2007

help from the private sector.

UN-HABITAT is well aware that the private sector is not merely a part of the solution, but instead is a critical partner that must be engaged if the world’s cities are to achieve sustainability.

Private sector partnerships and technologies are key to practical sustainability in cities, particularly in delivering sustainable urbanisation at scale.

Given the challenge of urban poverty, and with 1 billion slum dwellers projected to rise to more than 1.3 billion by 2020, meeting Millennium Development Goal 7 targets 10 and 11 on slums, water and sanitation will require a concerted approach by all partners to land, basic infrastructure and services, affordable housing solutions and accessible housing finance systems through partnerships engaging the private sector. In order to do this, there is a need to improve understanding among decision makers regarding the role of the private sector and approaches such as public private partnerships.

In this process, two types of private sector partners need to be considered. One is the Global Leaders known worldwide for their engagement and contribution to sustainable development and their commitment to the Millennium Development Goals. These companies advocate for sustainable development approaches. They are committed to eco-efficiency, innovation and corporate social responsibility. They want to participate in policy development in order to create a framework that allows business to contribute effectively to sustainable development.

They want to demonstrate business progress in environmental and resource management and corporate social responsibility and to share leading-edge practices.

Small- and Medium-size Enterprises (SMEs) represent a wide range of private sector companies, from technologies to services, and are the main contributors in areas addressed by UNHABITAT’s mandate. They include profession-

As SMEs operate on the ground, they are likely to contribute a great deal to policy discussions.

They could expand their impact by exchanging best practices, demonstrating effective technologies that can address the challenging needs in cities and finding new avenues and business opportunities with new partners, be it city managers, NGOs, foundations and other private sector companies complementing their businesses.

Milestones 1972

UN Conference on the Human Environment convened in Stockholm to deal with the perceived threat of human activity to the environment.

1974

Habitat and Human Settlements Foundation established to mobilize finance and investment for human settlements activities.

1976

Habitat I Conference, Vancouver: World leaders started to recognise the consequences of rapid urbanisation, especially in the developing world.

1978

Establishment of the United Nations Centre for Human Settlements in Nairobi, based on the UN Habitat and Human Settlements Foundation and the Centre for Housing and Building, which was part of the UN Secretariat.

1988 The UN General Assembly, in its 83rd plenary meeting, adopts the Global Strategy for Shelter to the Year 2000 with the main objective of improving the shelter situation of the disadvantaged and the poor, and the fundamental objectives of enabling policies, “While the

private sector has almost invariably proved itself more efficient than the public sector in producing and distributing shelter, it cannot function without a matching ‘enabling’ framework provided by the public sector’.

1992 Agenda 21, Rio de Janeiro. Representatives of all of the major groups identified in Agenda 21– business and employers’ organisations, trade unions and workers, NGOs, indigenous peoples, local authorities, youth groups, women’s organisations, farmers and the scientific community –engaged in the development and implementation of policy frameworks for sustainable development.

1996 Habitat II Conference, Istanbul. The Habitat Agenda officially recognises partnership as a key principle for its future work, including the private sector as a key partner with which to engage. The successful implementation of The Habitat Agenda relies on the ability of many different actors within the human settlements sector to work in partnership. The Habitat Agenda describes ways to promote efficient land markets and sustainable land use, mobilize sources of financing and facilitate access to land and security of tenure.

2000 Millennium Development Goals: UN-HABITAT in charge of MDG Goal 7 –Targets 10 and 11 to improve the lives of slum dwellers, access to water and sanitation.

Launch of the UN Global Compact. UNHABITAT, as part of the UN family, supports the ten principles of the Global Compact.

2001 The UN General Assembly transforms UNHABITAT into a fully fledged programme and calls upon its Executive Director to revive and revitalize the Habitat and Human Settlements Foundation.

2002 World Summit on Sustainable Development.

The Johannesburg Declaration and the Plan of Implementation reaffirmed commitments made in the Earth Summit in 1991, and pledged allegiance to the MDGs, also recognising that the private sector is not only part of the solution, but a vital part that must be engaged if the world is to achieve sustainability.

UN-HABITAT and the business community

als in construction, technology and service providers (architect, planners, builders, real estate agents, etc.) that are involved in major urban infrastructure and construction projects. These actors are already engaged in policy dialogue with their governments locally, and work, on a modest scale, with the UN through professional associations and networks. Yet they do not yet work on a scale that takes the best advantage of market opportunities that can address both private sector needs and development needs.

Urbanisation Challenges and the Private Sector The private sector and the UN share common objectives of more efficient, productive and inclusive cities. The challenge is to harness profit towards sustainable urbanization.

The urban transition has been reached

We have entered into an urban millennium where, for the first time in history, more than half of humanity is living in towns and cities.

Close to 3 billion people, or about 40% of the world’s population by 2030, will need to have housing and basic infrastructure services. This translates into completing 96,150 housing units per day or 4000 per hour. The challenge is higher in developing economies, which are witnessing the growth of slums. Currently, more than one billion people are living in slums.

Over the next 25 years, over 2 billion people will add to the growing demand for housing, water supply, sanitation and other urban infrastructure services .

Housing Crisis

The housing crisis comes at a time when the global economy has demonstrated consistent economic growth. However, despite this impressive growth, poverty remains an “enduring problem” as approximately 64 percent of the population in Africa and South Asia still live below US$2 a day. Most critically, such low incomes prevent the poor from accessing better shelter.

The highest priority for UN-HABITAT is improving access to safe water and helping provide adequate sanitation to millions of low-income urban dwellers. World leaders have committed themselves to reduce by half the proportion of people without sustainable access to safe drinking water by 2015 and to halve by 2015, the proportion of people who do not have access to basic sanitation. UN-HABITAT is also committed to improving the lives of 100 million slum dwellers by 2020. Although the task is enormous, it is not insurmountable. Improving access to water and sanitation in low income urban settlements is possible.

UN-HABITAT, Global Report on Human Settlements, 2005

Private sector is a key player in reaching the Millennium Development Goals

It is not simply a matter of providing more money. Consumers have to be served by more efficient, responsive utilities and that means an increase in the role of the private sector in the management and financing of these utilities.

The UN Millennium Project estimates that upgrading slums and meeting Target 11 of the Millennium Development Goal on improving the lives of 100 million slum dwellers will require investing US$4.2 billion per year or $294 billion (US$440 per person) over the period 2005 to 2020. Much of the funding for slum upgrading will have to come from subsidies, loans, savings and self-help and donor contributions.

In order to ensure sustainable urbanization, cooperation with the private sector is a necessity, not just an option

Most private sector enterprises – from manufacturing to service industries – are based in cities, where they have access to the infrastructure, labour and markets necessary for their existence and growth. The deterioration of urban infrastructure, labour and markets is a threat to sustainable cities. The private sector has a major stake in maintaining the health of these urban settlements, so they can ensure their own sustainability.

Urbanization Scenario

• By 2030 it is expected that 60% of the world population will live in urban areas; almost 180,000 people are added to the urban population each day; • The urban population of developing countries is expected to reach 50% in 2020. It will double from 2 billion in 2000 to nearly 4 billion by 2030.

• Almost one billion people worldwide are living in slums. Without radical change that number could double in 30 years. By 2050, there may be 3.5 billion slum-dwellers, out of a total urban population of about 6 billion.

• Worldwide, 18% of all urban housing units (some 125 million units) are non-permanent structures and at least 25% of all housing (175 million houses) does not meet urban construction codes.

• For every 10 non-permanent houses in the cities of developing countries, 3 or 4 are located in areas prone to floods, landslides, hurricanes and earthquakes.

• When 4 or more people live together in one tiny room, they experience a loss of dignity and are susceptible to infectious diseases and domestic violence.

• In 2003, two-thirds of overcrowding was in Asia with half of the people (156 million) in Southern Asia. Africa ranked second in 2003 with 75 million suffering overcrowded conditions.

• Sanitation and health are interlinked. As many as 1.6 million people die annually as a result of poor sanitation and hygiene.

• In 2002, nearly half the developing world (2.5 billion) had no access to proper sanitation – Asia (1.98 billion), Africa (470 million), Latin America and the Caribbean (130 million).

• Between 1990 and 2002, some 1.1 billion people were able to access safe drinking water, a global rise in coverage from 77% to 83%.

• But the number of people without access to improved water will double between 1990 and 2010 from 108 million to 215 million.

• Only two-thirds of the global urban population gets water from a tap – Latin America and the Caribbean (89.3%) ranks top and SubSaharan Africa (38.3) at the bottom.

Source: UN-HABITAT, State of the World’s Cities Report 2006

Reaching the Millennium Development Goals (MDGs) Engaging business to achieve MDG 7 Target 10 Halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation

• 2.6 billion people live without access to appropriate sanitation • Investment must double from the current US$15 billion to $30 billion annually to achieve the MDG Target 10 • In Africa, on an average the requirement for water sector finance is 1.3 percent of GDP and 1.4 percent for sanitation.

• The share of private sector’s investment should increase in order to reach MDG target 10

Engaging business to achieve MDG 7 Target 11 Improving the lives of at least 100 million slum dwellers by 2020

• US$4.2 billion per year needed over the 20052020 period or a total $294 billion to meet MDG Target 11 • Funding for slum upgrading to come from subsidies, loans, savings, self-help, donors contributions • Private sector is a key player in reaching MDG target 11

Urbanisation Challenges

Slums - Key facts

Addressing the Bottom of the Pyramid Income per capita /year: Market: $12.5 trillion Market: $5 trillion

population: 1.4 billion population: 4 billion

$3,000 $20,000 <$3,000

4 billion people earning less than $3,000 per annum at the bottom of the pyramid The markets at the bottom of the pyramid (BOP)

There is a strong demand among the urban poor for better services, as well as a demonstrated ability to pay for those services from the urban poor themselves. The failure of governments and the private sector to provide adequate services is in fact a contributor to poverty. Slum dwellers often pay far more for water of poor quality than residents of wealthier neighbourhoods, where piped water is supplied directly by the city. Similarly, while rent is regularly paid to landlords by millions of slumdwellers, the quality of the shelter provided is usually very sub-standard and represents a major factor in the poor health and security conditions of people living in slums. In these and many other areas there are clear opportunities for improving the lives of the urban poor, through the provision of adequate services that the poor themselves will pay for.

For UN-HABITAT, the challenge is to address the markets at the “bottom of the pyramid”.

Developed by Prahalad, the Bottom of the Pyramid argument is that global firms have demonstrated their ability to create wealth around the world. But both the wealth created and the markets that these global firms reach, which are middle and upper class, do not yet reach most of the 4 billion people who live in relative poverty at the bottom of the economic C.K.Prahalad and Stuart L. Hart, 2002

10

pyramid. It is possible to expand the global market system to include those who now have no stake in it—to effectively grow the market at the bottom, providing direct benefits and expanded opportunity for poor communities.

Prahalad says: “We are not suggesting that private sector actions can solve all the problems of developing countries. Targeted international aid and improved governance will still be urgently needed. But it seems clear that the direct and sustained involvement of multinational companies could radically improve the lives of many people in poor communities and prove to be a powerful catalyst for development.”

Businesses usually believe that profit is best achieved at the top or middle of the pyramid the 1.5 to 1.8 billion people with an annual income of $1500-20000 US). The wider market is at the bottom of the pyramid and comprises 4 billion people who have less then USD 3000 per year in local purchasing power. It is here that companies can make smaller profits but with a larger market. There are opportunities to expand the global market system in order to provide direct benefits and expanded opportunity to poor communities, while at the same time providing new opportunities for profit for the business sector .

Finding solutions at the “bottom of the pyramid”

At the bottom of the pyramid, the poor live in very high-cost economies. For instance, urban slum dwellers without access to municipal water pay 4 to 100 times as much for drinking water as do middle and upper class families. In slums, credit is unavailable, or available only from local moneylenders who charge unreasonable interest on a daily basis.

Addressing the “bottom of the pyramid” in urban slums by providing shelter and basic service solutions for the urban poor requires the involvement of large private sector companies.

It also requires involvement of local banks, Allen L. Hammond, William J. Kramer, 2007

Region Africa

BOP income (millions) total (PPP)

BOP share of total income (%)

BOP population (millions)

BOP share of total population (%)

42.9

70.5

486

95.1

3,470

41.7

2858

83.4

Eastern Europe

458

36.0

254

63.8

Latin America and Caribbean

509

28.2

360

69.9

Asia including Middle East

BOP population segment is defined as those with annual incomes up to and including $3000 per capita per year (2002 PPP).

Source: WRI, IFC, 2007

medium-sized enterprises as well as small entrepreneurs, mostly from the informal sector, who are essentially the drivers of today’s most developing urban economies. Partnerships between these different business levels as well as training of unemployed or unskilled labours are essential. While large numbers of unemployed people could be trained in construction jobs and small business enterprises, low income households could also channel part of their income to micro-credit schemes for upgrading their homes. This low income segment of society is simply too often ignored or neglected.

Because of this, slums are growing across the world and the untapped and unrealized resources that exist within slums and low-income people are being overlooked.

Addressing the ”bottom of the pyramid” markets requires new products and services – those that are marketable to low income groups and where risk is minimized. The mobile phone sector has been very successful in Africa and has developed innovative ways to reach the low-income market and still retain profitability.

When it comes to shelter infrastructure and housing finance, the challenge is of another nature, and risk needs to be alleviated by an external party or through alliances, establishing synergies, creating consortia, venture groups and investment funds aimed at seeding entrepreneurial ventures.

Working with all partners at the “bottom of the pyramid”

The challenge is to work with all partners at all levels of society: - small and medium-sized enterprises that are the key private operators on the ground; those already functioning as engines for practical action and innovation with the communities at

the bottom of the pyramid; - global private sector leaders that can provide business leadership; - government that can regulate, deregulate and provide incentives to business in order to expand to include the low-income population; - UN playing a brokering role, bringing different partners together and negotiating key issues and actions that can reinforce markets at the “bottom of the pyramid”.

The informal sector is central in addressing the needs of the urban poor, as most livelihoods in this sector are informal. The International Labour Organization estimates that more than 70 percent of the workforce in developing countries operates in the informal or underground economy. The informal economy averages 30 percent of official GDP in Asia, 40 percent in Eastern Europe, 43 percent for both Africa and LAC, so although informal, it is a formidable force in the economy.

The challenge is to start identifying and harnessing areas for profit towards sustainable urbanization and exploring untapped opportunities in cities.

This will require significant rethinking of the practices of the private sector and the visions of national governments to embrace the private sector. It means integrating informal economic activities and ensuring healthy governance and safe regulatory frameworks that can make this happen. For the private sector, this will require focusing on unique products, services and technologies that address the needs at the ”bottom of the pyramid”. That will require building adequate supply chain for products to reach their targets and building the necessary capacity in communities to utilize these products for their benefit.

11

Addressing the bottom of the pyramid

The markets at the bottom of the pyramid (BOP), by region

Responsible Business Practices

and Corporate Social Responsibility While philanthropy and charitable approaches undoubtedly make an important contribution to improving the welfare of individuals and cities, they only makes a small contribution to sustainable urbanization compared to core business functions. Corporate social responsibility (CSR) goes a step further by extracting social responsibility components from the private sector in line with their defined corporate goals.

However, in many cases, these approaches remain superficial, and do not truly address the ‘triple bottom line’, which demands a focus not just on the economic value added of business, but also on the environmental and social value.

There is a growing consensus that companies actively engaged in managing their impacts on sustainable development are more likely to perform better financially. Such companies not only introduce sustainable development standards in their approaches, but also develop human rights and core labour standards in their corporate commitments. They report their successes and failures to the public, using corporate social responsibility reports. The UN Global Compact initiative (see below), launched in 2000, reflects and supports businesses that have understood the value of such processes for their own corporate development.

The use of indicators for development by international development agencies and by corporations, such as the Global Reporting Initiative, present new opportunities to track private sector contributions to sustainable development.

Such tools allow corporations to move beyond traditional philanthropy towards strategic social investments with defined benchmarks and quantitative targets that budget and report on results on their progress. These new tools also allow for a clearer identification of business models that work.

The research on business models that address “bottom-of-the-pyramid” markets has become an avenue to move towards more inclusive and

12

socially responsive business approaches. In particular, new business models, tailored for the poor, can advance revised standards of sustainability and public trust. Businesses can also reinforce supply chain and capacity-building to strengthen small entrepreneurs, mostly in the informal sector.

So far, corporations and businesses have been shy about operating in the slums. They simply do not yet see the potential in this vast and asyet untapped market. “Bottom of the pyramid” approaches open new directions for new tailored business models that can address markets in slums areas. Slums offer large ecosystems of unrealized market opportunities and underused skills to be explored.

The United Nations Global Compact Launched in 2000, the United Nations Global Compact is an international voluntary initiative that brings companies together with United Nations agencies, labour and civil society to support ten principles in the areas of human rights, labour, the environment and anti-corruption.

The ten principles: Human Rights

1 Businesses should support and respect the protection of internationally proclaimed human rights, and 2 make sure that they are not complicit in human rights abuses.

Labour

3 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining, 4 the elimination of all forms of forced and compulsory labour,

Environment

7 Businesses should support a precautionary approach to environmental challenges, 8 undertake initiatives to promote greater environmental responsibility, and 9 encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption

10 Businesses should work against corruption in all its forms, including extortion and bribery.

Source: http://www.unglobalcompact.org/

The Business Partnership for Sustainable Urbanization (BPSU) The Business Partnership for Sustainable Urbanization is a strategic alliance of business companies, including foundations and other partners, working towards sustainable urbanization. UN-HABITAT’s brokering role in BPSU will be to promote dialogue between partners and help them take concrete action.

The partnership will also provide cutting-edge information on urbanization issues to help identify market opportunities as well as business models that work.

Objectives

• To disseminate and share first hand knowledge of the problems facing cities around the world, to stimulate private sector interest and create a framework that allows business to contribute effectively to sustainable urbanization.

• To identify untapped market opportunities and business models that work to address sustainable urbanization in order to attract business investment, particularly through corporate social responsibility.

• To offer brokering solutions between partners in cities bringing together business, local authorities, urban environmental activists and local communities.

• To encourage and initiate locally-driven initiatives that address the urban poor, such as the Slum Challenge local initiatives.

UN-HABITAT’s alliances with the business community UN-HABITAT seeks alliances with the business community that can help us fulfill its mission, by supporting its work, directly or indirectly.

UN-HABITAT’s alliances with the business community can take many forms: programmatic alliances, advocacy, fundraising support or in-kind contributions.

UN-HABITAT looks for partnerships with entities that display corporate responsibility in the community; make a positive contribution to the urban environment; have a record of socially-responsive behaviour; and have responsive labour and environmental practices.

Also, business partners are encouraged to adhere to the principles of the Global Compact (above). Business partners should show a commitment to developing and adopting policies, strategies and practices that facilitate the provision of basic infrastructure and urban services, including adequate sanitation and safe water, waste management, sustainable transport that is integrated and accessible to all, and access to affordable land and shelter. They need to demonstrate transparent and accountable management of services, as well as the inclusive delivery of those services in order to reach the urban poor. Business entities should also demonstrate willingness to engage in multi-stakeholders dialogue when appropriate.

UN-HABITAT gives special attention to some industry sectors working in the area of shelter and basic services and contributing to improving the lives of slum dwellers: construction, services and infrastructures, real estate, finance, energy and communication.

UN-HABITAT follows the Guidelines on Cooperation between the United Nations and the Business Community issued by the SecretaryGeneral of the United Nations on 17 July 2000. http://www.un.org/partners/business/otherpages/ guide.htm

13

Responsible Business Practices and CSR

5 the effective abolition of child labour, and 6 the elimination of discrimination in respect of employment and occupation.

CHALLENGE 1

Water and Sanitation

In the year 2000, there were 1.1 billion people without access to improved water supply, of which 16 per cent were urban dwellers, and 2.4 billion without access to improved sanitation, of which 17 per cent were urban. Most of the world’s governments and international agencies have committed themselves to the Millennium Development Goals, and more specifically the target of halving, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation. If this and related targets are achieved, billions of the world’s poorest citizens will be able to live healthier and more fulfilling lives.

Water is one of the most important issues in the world today. There are a number of reasons for that. First, access to water is a right and a basic need. Second, although water is the subject of only one of the goals contained in the Millennium Declaration, it is vital to achieving the others, such as poverty, education and gender equality. Third, access to clean water and proper sanitation, and attention to wastewater disposal and treatment, has proven benefits for public health. Fourth, effective water resources development and management are basic to sustainable growth and poverty reduction, in several ways.

14

Deficient Financing of the water sector

The “Water Sector” has many facets, but the most basic distinction is between water as a resource to be developed and managed for the benefit of all its functions and users, and water as a service, to be provided to its many users after abstraction from the resource. Both aspects need financing, and both are currently deficient.

The second facet of the water sector is the provision of services, and here again there are large global deficits. Africa has 38% of its population unserved by safe water and 40% are without sanitation. Asia has 19% without safe water and 52% without sanitation. Latin America and the Caribbean; 15% without water and 22% without sanitation. In the mid-1990s the breakdown of financial sources for water and sanitation was estimated to be domestic public sector 65–70%, domestic private sector 5%, International Donors 10–15% and international private companies 10–15%.

The water sector’s funding of investment from its own cash flow has shown little change.

International aid for water and sanitation has fallen in the last few years - (at $3.1 billion a year in 1999–2001, compared with $3.5 billion in 1996–98). Loans from the main MFIs to the water sector have shown a varied trend. World

The Asian Development Bank’s lending has been rising, though with year to year fluctuations ($275 million a year in 1996–2000, compared with $200 million a year in 1990–95).

Lending by the African Development Bank has also been rising, although at a lower level than those mentioned above. International private investment and commercial bank lending, never large, have suffered from the general decline in private flows since their peak in 1996–97.

Water and sewerage projects received only 5.4% of all private commitments to infrastructure in the 1990s.

Business opportunities

The pool of private companies with the resources and willingness to invest in water and sanitation remain an invaluable source of know-how and potential for innovation. In the framework of well designed Private Sector Participation (PSP) schemes, they could be essential actors in responding to the needs of a rapidly urbanising world.

It is acknowledged that there is a need for partnerships to maximize the benefits that both public and private sectors can contribute to the water and sanitation sector. Private sector

participation in the water sector is expected to bring greater efficiency to management, mobilize investment funds for sector development and bring autonomy of operations through legal contracts. One of the rationales for private sector involvement is for increasing access and improving the level of service through benchmarking and reducing non-revenue water. The main private public partnership options include establishment of public autonomous water and wastewater companies, service contracts, management contracts, leases, concessions, ‘Build, Own and Transfer’ (BOT) contracts and full or partial divestiture.

There is no denying the fact that there are controversies over private versus public water and sanitation provision. Still, there are enough opportunities where both private and public operators can be made to provide better services to poorer sections in the low income areas.

Private sector participation can bring private finance to the sector. There are many small and informal enterprises which are finding good business opportunities, even in low income areas, for improving water and sanitation to deprived households. In principle, there is agreement that private enterprises operating in low income settlements provide better services to those who do not yet have adequate access to water and sanitation. There are ample examples of availing such business opportunities which can be replicated.

15

Challenge 1: Water and Sanitation

Bank annual lending approvals for water and sanitation averaged $1.1 billion in 1999–2001, slightly down (from $1.25 billion in 1990–98) but with great year-to-year variation.

Water and Sanitation project with Coca Cola and UN-HABITAT

Hoping to restore some of the goodwill that made its flagship product a global icon, CocaCola Co. has gone on a clean-water kick in the developing world. In Kenya, Coca Cola Co. is providing water supplies, treatment and storage systems, sanitation and hygiene education in schools and four communities in a western Kenyan province. So far, Coke and its bottlers have spent $13.4 million on water-related efforts. Another $35 million is budgeted for 2007, including community water projects, investments in waste-water treatment, and other work. Coke has 70 community water partnerships in 40 countries with groups such as CARE and the U.S. Agency for International Development. Coca Cola India is investing in 270 rainwater harvesting structures, with 50 more planned this year. Coca Cola India is also contributing US$ 150,000 to undertake several activities in the water and sanitation sector in partnership with UN-HABITAT on demonstration projects relating to water conservation, sanitation initiatives in slums, community awareness raising programmes on water usage, sanitation and conservation.

Veolia, UN-HABITAT and UNITAR: Access to Basic Services for All Initiative

This initiative seeks to develop an international standards framework on how to build effective and fair public-private partnerships that improve the delivery of and access to, basic services. The process brings together various actors – public and private, local, national and international – with the goal of developing a

16

reference frame of their respective rights and responsibilities in the provision process. For companies, such a framework creates a more predictable environment for investment and operations. The impetus for the initiative came from Véolia Environnement (formerly Vivendi), a French company involved internationally in local utilities management of water, energy equipment, waste and public transport.

Community Managed Water Supply Scheme in India

The Asian Development Bank took up an initiative of promoting Small Piped Water Networks in Manila, Philippines; Hanoi, Vietnam and Ahmedabad, India by involving local small scale water providers. UN-HABITAT, as the ADB partner, developed a similar model in the three cities of Madhya Pradesh, India, where local private sector entrepreneurs, in association with the community are providing piped water supply to individual households on a full cost recovery basis. The framework allows for: (a) adoption of a demand-responsive approach along with community participation in the project; (b) community’s full ownership of the assets; and (c) 100% responsibility of O&M with the community.

These are quick-win projects implemented over 8-10 months and are under implementation in selected slums settlements of the project cities of Gwalior, Indore and Jabalpur in Madhya Pradesh (India), one of which has already been launched.

Waste Management Appropriate management of solid waste is essential to the health and well-being of urban populations, and this in turn helps ensure the productivity of businesses. In most developing cities, garbage is left uncollected on the streets each day, acting as a feeding ground for related health and infrastructural problems. Increases in urban waste volume are due principally to increasingly affluent lifestyles, rather than urban growth. The urban poor â&#x20AC;&#x201C; particularly those living in slums, with little or no access to solid waste collection and adjacent to open dumps - are particularly vulnerable.

Reduce, recycle and reuse of waste

Despite many good practices from around the world, inappropriate technologies, particularly for solid waste collection and disposal, still exist in many developing countries. Donor-provided equipment is often unsuitable for the composition and nature of the waste while collection vehicles are frequently ill-suited to extremes in climate or road conditions. This results in a large proportion of vehicles being out of use.

Additionally, inappropriate operation and lack of maintenance of waste handling equipment is a major cause of breakdowns.

However, in many developing countries, highly efficient solid waste collection and disposal equipment is being produced by locally developed technologies, and consequently, bottlenecks in the collection and carrying to disposal points of solid waste have been eliminated in those countries.

The challenges to be faced will dramatically increase in the next 30 years as a result of both the rapid growth of developing cities and increases in per capita waste production. However, it is becoming clear that assertive efforts to reduce, recycle and reuse can greatly contribute to solutions. In particular, local authorities should design environmentally-sound urban strategies to address unsustainable patterns of consumption and production. In this process, there is

growing evidence that the private sector needs to be involved.

Business Opportunities

In cities of developing regions, as much as 70 percent of waste can be organic materials. Not only is this a reclaimable resource in itself, but recycling can also help reduce demand for valuable and scarce landfill space. In addition, organic waste disposed of in landfill areas greatly increases greenhouse gas emissions. In cities where its use in agriculture is a possibility, composting would be a sensible option.

Challenge 2: Waste Management

CHALLENGE 2

Although the small-scale private waste management sector is often forgotten, it can play a key role in a city’s overall waste management strategy. The incorporation of micro-enterprises and informal waste recycling cooperatives in the municipal solid waste management system has shown interesting results. Addressing the “bottom of the pyramid” can be done through the promotion and development of recycling cooperatives, which also provide a way of upgrading the living and working conditions of informal waste pickers, resulting in increased livelihoods.

Privatization contracts and legislation should be flexible enough to permit the entry of smallscale service providers, particularly in lower-income areas. In Delhi, 100,000–150,000 waste pickers currently collect 12-15 percent of the 6,000 tonnes of waste generated daily. Rationalization of waste collection, however, would not be sufficient without creating sanitary disposal capacities, in the form of either sanitary landfill sites, or recycling or incineration plants.

18

Alexandria’s solid waste management The private French firm Veolia Environnement and the Governorate of Alexandria have joined hands in the first public private partnership in the Egyptian waste management sector. The main objective is to provide integrated management for the 1 million tons of waste generated every year by the over 5 million inhabitants in the Governorate of Alexandria, from collection and cleaning to treatment, and final recycling. The partnership also includes compost applications, the rehabilitation of two old dump sites and the collection and treatment of medical waste.

The scheme provides employment for 4,500 city cleaners, and is responsible for for the collection and treatment of 2,500 tons of waste every day (3,100 tons during the summer). The success lies in the fact that 100 percent of the waste is treated, while 150,000 tons of compost are produced and sold every year to local farmers, thus boosting farming in the area.

The waste project has been registered for a listing as a certified Clean Development Mechanism (CDM) within the framework of the Kyoto Protocol, because it involves landfill gas recovery expected to reduce greenhouse gas emissions by approximately 3.7 million metric tons over the period 2005-2015.

Plasteco´s mission is to convert the banana plastic waste, that could last 500 years buried underground, into new competitive self-supported massive end products, suitable for the community. Therefore, Plasteco collects, reuse, and recycle plastic scrap to develop into new products. Plasteco has also developed the technology for converting the granulated recycled plastic into roof tiles and poles for sustaining banana trees. The main environmental impact of Plasteco’s initiative is the 37% reduction of the banana plastic waste pollution. This means 350 tons per year from the total of 950.000 tons spread across Costa Rica’s farm areas. Plasteco is cleaning almost 17.500 hectares per year from a total of 48.000 ha.

Source: UN-HABITAT Best Practices Database, 2000. http://database.bestpractices.org/

‘El Ceibo’ Recycling cooperative, Buenos Aires, Argentina In Argentina, the economic crisis has forced many people out of jobs and into scavenging. In Buenos Aires alone it is estimated that there are 25 000 cartoneros and more than 14 cartonero cooperatives. One such cooperative is Cooperativa El Ceibo, founded by women, with 102 members, who are mostly women. This cooperative has established a collection and sorting facility and developed sales agreements using one private sector intermediary. They also work on a garbage processing enterprise to recover paper, glass, metals, plastics, and household items and recycle them.

Source: http://www.worldbank.org/urban/urbanforum2005/

Inclusion of Salvagers in the Waste Management Process, Odi-Moretale, South Africa Scavengers were involved in the improvement of uncontrolled and unhealthy waste dumps in the Odi-Moretale Province in South Africa.

All dumping sites have been identified and analyzed, including the waste volumes and the source of generation. The provincial department’s main objective was to establish registered waste disposal sites and to manage them effectively, and, in the process, to accommodate the salvagers. At each site, a leader manages the salvage team and acts as the spokesperson with the site operator. Clean drinking water and toilet facilities, as well as health care and education facilities, are provided to the workers.

Source: UN-HABITAT Best Practices Database, 2002. http://database.bestpractices.org/

19

Challenge 2: Waste Management

Ecological Plastic Inc., Costa Rica

CHALLENGE 3 Shelter

More than one billion of the worldâ&#x20AC;&#x2122;s total urban population live in inadequate housing, mostly in slums and squatter settlements of the developing world. Improving the housing conditions of one-sixth of the worldâ&#x20AC;&#x2122;s population constitutes a massive economic, social, and environmental challenge. Over the next 25 years, over 2 billion people will add to the growing demand for housing, water supply, sanitation and other urban infrastructure services. What is critical when considering this number is the order of magnitude. Close to 3 billion people, or about 40% of the worldâ&#x20AC;&#x2122;s population by 2030, will need to have housing and basic infrastructure services. This translates into completing 96,150 housing units per day or 4000 per hour .

Although the statistics are daunting, from a business perspective, this reality represents a significant untapped market.

While some progress in addressing the housing demand has been achieved at the policy level, private initiatives have generally benefited middle-income rather than low-income families in developing countries. Faced with almost no formal options, the poor use a variety of incremental and informal means to meet their shelter needs. Informal systems are still the dominant shelter producers in many developing countries - an estimated 60 and 70 percent of the current housing stock in Mexico and Brazil is built informally, because current value chains are not adapted to the needs and realities of this growing low-income market . And while a number of bottom-up initiatives, through the active involvement of community groups in housing initiatives, have emerged, the majority of businesses in the housing sector still consider low-income populations to be an unattractive and risky target group.

UN-HABITAT, Global Report on Human Settlements, 2005

20

Housing solutions through value chain collaborations

As presented by Ashoka at the 2006 World Urban Forum, housing solutions for the poor might reside in promoting hybrid value chains of collaboration. While an increasing number of businesses are starting to explore low-income market opportunities, most of them soon realize that they need to learn more about these markets and find innovative ways to access them. In the meantime, the citizen sector has built grassroots networks and alternative service delivery systems and demonstrated significant outreach capacities to low-income families throughout the developing world for many years. These networks cover a diverse array of specialized services targeting basic human needs like education, healthcare, and access to financial services.

While by themselves most of these networks are not profitable, they constitute an outreach infrastructure that can serve multiple purposes, one of which is the delivery of valuable products and services to the poor. These networks are the cornerstone on which to establish a new delivery infrastructure capable of reaching hundreds of millions of people through marketbased solutions. Civil society organizations must sensitize themselves to the possibility of building new types of commercial collaborations that would facilitate their access to the specialized infrastructure and financial resources typically available only to businesses, and to significantly increasing their impact .

At the same time, businesses will need to change their perception of the citizen sector, recognizing them as co-designers of solutions and finding ways to compensate them fairly for the assets and skills they bring to the partnership. Alternatively, they could also consider adopting and scaling-up specific elements of social innovations developed by civil society organizations. From providing access to basic Schmidt Stephanie, 2006

Opportunities for Value Chain collaborations in housing Construction process 1. Main barriers to serve low-income markets profitably

• Small individual transactions • Limited financing available • Limited construction skills • Lack of existing distribution channels in slums

2. Potential value proposition of citizen organizations

• Organize communities • Create demand for better environment / change mindsets • Aggregate demand (for construction materials for example) • Provide alternative distribution channels • Provide technical assistance (create new skills and employment opportunities)

3. Examples of main players needed • Construction material companies • Distributors • Constructors (large and small) • CSOs

Low-cost, energy efficient, eco-friendly shelter

The construction industry in developing economies is facing an immense and apparently worsening problem of required materials shortage aggravated by rising prices. In most countries, frequent shortages have led to further increases in prices and profiteering, thus Ibidem

marginalizing more and more people who wish to build homes and shelter.. The consequent impacts are severe: skyrocketing housing costs and expanding unplanned settlements in urban areas, and an ever-deteriorating housing quality in both urban and rural settlements.

Together, public policy and private investment should facilitate an adequate supply of cost-effective building materials, construction technology and bridging finance to avoid the bottlenecks and distortions that inhibit the development of local and national economies.

By improving the quality and reducing the cost of production, housing and other structures will last longer, be better protected against disasters and be affordable to low-income populations and accessible to persons with disabilities, which will provide a better living environment.

More and more, businesses promote the use of innovative composite materials based on local resources from forestry, agriculture, natural fibres, plant materials and other local resources like agricultural and industrial wastes available within small geographical regions. Besides meeting the needs of the housing sector, the industrial production of these composite materials would greatly help in environmental protection, energy efficiency and employment generation in the manufacturing sector.

Cemex, Mexico

CEMEX, Mexico’s largest and the world’s third largest cement company, created two key programmes to tap into the large poor population of Mexico, where 60% of the people survive on less than $5 a day. Patrimonio Hoy targets the low income, do-it-yourself homebuilder segment of the population. It is set up like a microcredit scheme, with small lending groups, but the savings are used to purchase cement and other building materials. Patrimonio Hoy tripled the rate of cement consumed by low income, do-it-yourself homebuilders. CEMEX has not developed lower cost or lower quality products for low-income markets but offers its standard products. In addition to cement, supply includes more than 200 other building materials provided by other distributors. New members receive free advice from an architect/ engineer about design, planning, selection of

21

Challenge 3: Shelter

services (water, sanitation, electricity) to distributing building materials, there are multiple value-added steps that constitute the housing value chain. Businesses will be able to enter low-income markets more rapidly and profitably if they learn to tap into the knowledge and resources of citizen organizations. Multi-partner collaborations are required to create an “ecosystem” because many services are interdependent and feed each other (such as access to land, basic services, financing and the construction process).

materials, and construction techniques. This assistance is very valuable to do-it-yourself homebuilders who can waste up to 30 percent of materials due to inappropriate methods.

More than 130,000 families have gone through Patrimonio Hoy, improving their living conditions and building rooms faster and at an average of 80 percent of previous costs. Patrimonio Hoy aims to reach over one million families by 2010. It does not currently target the very poor; instead, it targets those earning between US$1,825 and US$5,475 per year, mostly in urban and peri-urban areas.

Source: United Nations Development Programme (2004), Unleashing Entrepreneurship: Making Business Work for the Poor, Commission of the Private Sector for Development, New York: United Nations Development Programme. Page 32

Mutirões, Brazil

In Brazil, low-income communities have a long history of banding together in the form of social movements to press the government to provide land, services, etc.

At the same time, unwilling or unable to rely completely on the state, these communities have come together after work and during weekends to construct their homes and neighborhoods themselves through mutual selfhelp projects called “mutirões” - a phenomenon that occurs in many developing countries. In spite of a more lengthy process, the community approach reduces costs. It is also instrumental in teaching self-management and numerous administration skills to the community. While mutirões are not new, the practice of leveraging them as a matter of public policy to help meet the growing demand for low-income housing is relatively recent. In São Paulo, Bairro Legal arranged for designated communities engaged in mutirão

22

to receive microcredit for building materials.

Two banks partnered with the municipality to provide the financing.

Source: Schmidt Stephanie, Ashoka, 2006

ADAPT, Egypt

Between 1966 and 1986, 80 percent of the housing built in Egypt was shanty housing built by local masons or the residents themselves. The “slum upgrading” market is thus a significant center of demand for quality construction materials and techniques. ADAPT is working with low income communities to meet this demand in a sustainable way. The organization uses local ingredients common to the ancient Egyptians, along with treated waste products like rice straw, cement dust, and iron-fabric leftovers to produce environmentally-friendly building materials that are high quality (certified by the Egyptian government) and low cost (30 percent below standard alternatives).

ADAPT involves local youth in the material innovation and production processes and trains them in design and construction—for example, using the traditional Kasbah layout with small alleys for women, central courtyards, and double walls and ceilings to make indoor spaces cooler. These youth then act as catalysts, spreading their skills in their communities. Two of ADAPT’s early settlements in Algeria, totaling 220 units in 1985, have expanded to more than 20,000 units through this mechanism.

Source: Ashoka, 2006. Hany El Miniawy

Housing Finance and Real Estate Housing finance and real estate are key elements in housing and infrastructure development. In most countries, the development process heavily relies on private sector activities. Consequently, businesses can and does play a vital role in achieving sustainable urbanization.

In housing finance as well as in the real estate sector as a whole, a wide range of private actors are involved. The contribution of private businesses is crucial in the finance, construction and management of housing. In housing finance, the importance of private capital for mortgage lending and construction finance is evident.

Banks and other financial institutions also play an important role in mobilizing private savings and facilitating personal financial management. Developers, contractors and real estate agents are instrumental in making the step from identifying market demand to construction and delivery to the market. This is especially for the provision of private rental housing, where real estate investors and housing companies are critical players. Private capital and engagement can also be crucial for funding local infrastructure investments as the increasing number of Public Private Partnerships (PPP) demonstrates.

However, to be able to fulfill its role and explore the potential in delivering goods and services, the housing finance and real estate sector requires a conducive policy framework that enables profitable and secure market interactions.

Only if the right conditions exist in terms of macro-economic policy, land markets, urban planning and infrastructure provision, but also in terms of lending regulations and effective foreclosure mechanisms, can the private sector engage in a partnership for sustainable urbanization. Encouraging private sector engagement is especially important for addressing the shelter needs of slums dwellers.

Private institutions shy away from the low-income segment

In many countries, there are deficits in the legal and economic frameworks for the housing

finance and real estate industry, particularly as far as low-income housing provision and finance are concerned. As a result, investors, private financial institutions and developers shy away from engaging in the low-income housing sector and they instead focus their attention on middle and higher income residents. The reluctance to engage in housing and real estate segment is very much due to deficits in the urban development process, which make investments in the sector commercially unattractive or extremely unsafe.

The key challenges that frequently deter private entrepreneurs from venturing into the low-income housing segment are as follows: • A lack of macroeconomic stability, making return on investments unpredictable; • Deficits in the regulatory basis for housing development and finance: effectiveness of property titles, foreclosure mechanisms; • Unattractive regulatory and fiscal framework for banking, saving and lending; • Ineffective and non-transparent land management; • Slow and unpredictable urban planning, lack of building control; • Insufficient public infrastructure provision and maintenance due to financial and management constraints; • Absence of effective and targeted housing assistance frameworks for low-income residents; • Lack of consumer information and protection on finance; • Insufficient recognition of housing finance in informal arrangements (e.g. by way of microfinance) • High cost of housing due to inappropriate standards; • High cost of housing due to inappropriate building materials and inefficient techniques, and; • Limited research and knowledge dissemination in housing markets and finance.

Therefore, the key challenge is to address these factors which restrain the private sector from engaging in a development process geared towards sustainable urbanization.

23

Challenge 4: Housing Finance and Real estate

CHALLENGE 4

Business Opportunities

If the deficits listed above can be addressed, and if working housing finance and real estate systems can be established, the housing finance and real estate sector in any country could provide healthy and affordable shelter and infrastructure options to achieve sustainable urbanization.

Opening the housing and mortgage market for the bottom of the economic pyramid

Even with the imperfect regulatory and economic frameworks in the real world, businesses can extend their reach to lower-income residents and still operate on a profitable basis. In most developing countries there are vast growth opportunities - the current volume of housing construction is often less than one tenth of what the actual housing need would be.

Therefore, there is a wide market waiting to be served – one billion low-income slum dwellers represent one of the largest target groups in the world. Going “down-market” provides extraordinary growth potentials, since the medium and higher market segments are frequently saturated. Substantive and long-term growth can only be expected in the affordable housing sector.

Investment and the Private Sector

Generally, public and private actors have to recognize that the vast majority of the investment needed in the housing sector will be borne by the private sector. Even in developed countries with a strong public financial engagement in housing, most funds are provided through the private sector. Therefore, to achieve a real difference in housing delivery, the private sector has to be encouraged, by supportive policies, to extend their reach beyond their traditional market segments of upper and middle class citizen to the urban poor. At the same time, they need to consider new and innovative products and mechanisms to effectively reach this new, as-yet untapped market – ones that suit the local conditions.

To make this happen, private entrepreneurship and ingenuity would have to establish a mass market for decent and affordable products

24

in housing parallel to experiences in other economic sectors. As historical examples show, providing alternative housing options for the poor is also the best way to address slums. And it is obvious to everybody that the poor in today’s slums desperately need alternatives.

By venturing into this under-served market, developers can offer decent housing options at prices that are affordable to low-income residents, using efficient construction techniques and appropriate building materials. The banking community should be encouraged to apply appropriate lending requirements for poor residents, but also enable access to bank accounts, which is the central prerequisite for initiating the process of saving and borrowing.

Moreover, the formal banking sector should establish links to the growing number of microfinance institutions.

The Role of Government

That is not to say that the housing finance and real estate sector is expected to deliver low-cost housing and infrastructure alone. Even when private developers and investors are willing to engage in housing finance and low-cost housing provision for the poor, governments have to develop the right regulatory and macro-economic frameworks, and local resources must be leveraged from the urban poor themselves.

For the private sector to venture into low-income housing at a larger scale, effective policies are a precondition. National governments in particular have an important role to play by enabling markets to work in housing finance and construction. First, they should provide a framework for housing developers and investors. This requirement spans macro-economic policy and favorable banking legislation to a transparent land registry, setting appropriate standards and an effective building approval process.

A further key responsibility of governments is to provide the necessary infrastructure for human settlements. The direct provision of roads, water and sewer lines is a genuine task of local governments, and national government should support this by creating the right conditions to enable municipalities to fulfill their role. This applies particularly to financing and the intergovernmental arrangements for revenue sharing.

Above all, experience across the globe shows that even in highly-established housing markets, there is a need for targeted support for lower income residents. Therefore, an effective system of social housing is needed to enable decent and affordable housing options for the poor. This is not to say that social housing must be directly provided by the government (which is part of an older paradigm), but targeted support can be achieved via financial incentives (for instance reduced interest rates or land at discounted prices) and contractual arrangements regarding the selling price or the rent.

Modifying existing rules and policies at national and local levesl can be part of a long-term political and administrative process. UN-HABITAT is working with national and local governments to create conditions for efficient housing markets and improved access to housing finance to establish a productive and effective real estate industry catering for all parts of society.

Achieving sustainable development and housing finance is a complex process, and one that requires new approaches and tools. There must be involvement of a wide range of public actors â&#x20AC;&#x201C;such as local and national governments, utility companies or other service providers â&#x20AC;&#x201C; and private actors â&#x20AC;&#x201C; such as real estate investors, financial institutions, developers, contractors, housing companies and individual citizens as home-owners or tenants. This complexity bears challenges but also represents an opportunity to share some of the costs and risks of low-income housing and slum upgrading.

Shelter micro finance

The majority of urban poor households can only afford to build incrementally in stages as financial resources become available. Shortterm, small-scale loans of one to eight years, in amounts of US$500 to 5000 are more useful for incremental development than the long term, large value loans favored by the mortgage markets. Small housing loans, disbursed through housing micro finance institutions, are some of the most promising developments in housing finance during the last decade. In the context of large numbers of new low income

households in cities over the next two decades, it is important to increase the number of lenders in the housing micro finance sector rather than concentrate only on mortgage finance.

Guarantees are important in broadening the appeal of micro finance institutions to lenders, this requires that Governments set up guarantee funds to allow for greater risk-free lending to low income households.

Community-based shelter funds

Another significant trend in the last decade has been increasing interest in shelter community fund group loans. Community-based financing of housing and services has been used for both settlement upgrading and for building on greenfield sites, and, in a context where small loans are evidently successful and where there is an increase in poverty; it has many advantages for low-income and otherwise disempowered households. Source: UN-HABITAT, GRHS, 2005

The Slum Upgrading Facility

Within UN-HABITAT, the Slum Upgrading Facility (SUF) is a technical cooperation and seed capital facility with a central objective: to mobilize domestic capital for slum upgrading projects and activities. Domestic capital can take the form of community savings and resources, commercial capital through banks and other formal financial vehicles, and public finance through various forms of government support. SUF is currently piloting a series of new financial products and activities in Ghana, Indonesia, Sri Lanka and Tanzania.

SUF is supporting a partnership with the HFC Bank of Ghana, which is working with CHF International on creating low-income finance products including a home improvement finance product. In Tanzania, SUF is working with partners on credit facilities for housing cooperatives. Community-wide slum upgrading programmes are underway in Sri Lanka, with private bank participation planned for both mortgage and construction loans. In Indonesia, a fund to blend government subsidies, local revenue and commercial bank finance to offer low income home improvement loans is being prepared. In Kenya, partnerships are being developed with local financial institutions, as with the Jamii Bora Trust, which was originally

25

Challenge 4: Housing Finance and Real estate

Targeted Support for Low Income Residents

established with 50 street families in Nairobi and now has 130,000 members. Jamii Bora has developed a low-cost housing programme worth over US$12 million, with members borrowing money but also building their own homes.

Global Housing Finance Practices

In Senegal, banks have financed mortgages for low-income groups and public water supply.

In India, ICICI is extending a wide range of financial services to the poor. In Kenya, Faulu Kenya, a micro-finance institution, issued social bonds to the extent of Kenya Shillings 500 million (about US$7.0 million) on the Nairobi Stock Exchange in 2005. Part of proceeds will be utilised for housing. The West African Economic and Monetary Union (WAEMU) established the Regional Solidarity Bank (BRS) in 2004. The BRS will, in turn, establish subsidiaries in each of the countries in region.

The purpose of these institutions is to create uncollateralized, but sound financial products for poor in association with commercial banks.

These initiatives present an opportunity to attract private capital into slum and urban upgrading.

The Community-led Infrastructure Financing Facility (CLIFF)

CLIFF is a further example of an urban poor fund capitalized by donors and designed to act as a catalyst in slum upgrading through providing strategic support for community-initiated housing and infrastructure projects. The goal is to increase the access of urban poor communities to commercial and public sector finance for medium to large-scale infrastructure and housing initiatives. It does this through a variety of means including: providing bridging loans, guarantees and technical assistance; undertaking medium-scale rehabilitation projects; seeking to attract commercial, local and public sector finance for further schemes.

Grameen Bank Housing Program, Bangladesh

In Bangladesh, with approximately 70 percent of the population at the “bottom of the economic pyramid” by global standards, access to formal financial services is severely constrained.

However, Bangladesh is also home to Grameen

26

Bank (GB) - a microfinance pioneer which seeded an industry that now serves over 50 million people worldwide. Its key innovation was to substitute peer support for traditional forms of security, such as proof of income or collateral, by lending through solidarity groups.

Contrary to conventional wisdom of financial institutions, Grameen ventured into giving loans to the shelterless to build houses for themselves based on the philosophy that investment in shelter for the poor is productive.

Rather than a consumption item burdening the poor, it is a vital investment to increase productive capacity and overall well being of a family.

Its strategy for providing housing microfinance is two pronged: leverage the same organizational infrastructure it uses for income generation loans, and restrict eligibility to members who have effectively developed credit histories for four years. This reduces the cost and risk associated with a housing loan product, making it commercially viable. Approximately US$200 million has been disbursed for housing through the Grameen Bank and over 621,341 houses have been constructed.

Source: www.grameen-info.org

Acumen Fund and Saiban in Pakistan

Financing a home mortgage to a person making less than $4 a day would be a daunting task anywhere. In Pakistan, Acumen Fund’s venture capita, Saiban, a housing development nonprofit, is working to establish a mortgage guarantee facility to stimulate a private mortgage market for the poor. This is done through informal developers’ ability to create affordable housing supply. It provides poor squatters with access to plots of developed land in several settlements at affordable rates, thus providing them with secure residential tenure and public utilities in areas where they would normally have no real access to property or such services.

Acumen Fund and Saiban’s goal is to provide 6,456 poor urban families with housing in a planned residential community. Acumen Fund operates like a venture capital firm for the poor, providing resources, both financial, in the form of loans, equity investments and occasional grants, and intellectual.

Source: www.acumenfund.org/

Energy is a central challenge in the overall issue of sustainable urbanization. Making cities better places to live in and do business must start by improving access to energy. Manufacturing, construction, transport, communication, education, information, health and medical facilities in cities all need reliable energy. Energy is central to all aspects of human welfare and recognised as a prerequisite to the achievement of the Millennium Development Goals at the World Summit on Sustainable Development in 2002. Lack of clean, affordable energy is part of the poverty trap. Achieving increased energy levels will mean improving urban and environmental sustainability.

In todayâ&#x20AC;&#x2122;s cities, sustainable transportation systems are also crucial to fostering economic activity and raising standards of urban living. The negative impacts of urban transport, including hazardous levels of air pollution, congestion, noise, sprawl, and threats to public safety restrict the potential for greater economic growth and happiness.

One of the most salient features of life in the 20th century has been the rise of the private automobile, which has completely reshaped urban life. Automobiles are major consumers of nonrenewable energy and major contributors to carbon emissions. Vehicular emissions are rising at a rate of 2.5 percent each year. The human consequences of this energy-generated pollution can be quite significant. In Mexico City, high levels of pollution are estimated to cause over 6500 deaths each year. In China, air pollution is estimated to cause anywhere from 170,000 to 280,000 deaths annually. On top of the human toll registered in these figures, there are growing financial costs as well. In developed countries, air pollution is estimated to cost around 2 per cent of GDP; in developing nations such pollution can cost anywhere from 5 to 20 per cent of GDP. On a global scale, the health costs of

urban air pollution are thought to approach US$100,000 million annually.

Finding a transport model that meets societyâ&#x20AC;&#x2122;s need to move freely, communicate, and gain access to jobs, education, hospitals, and other facilities - all without sacrificing essential human or ecological values - is thus a primary challenge of sustainable development.

Fostering economic activity and raising standards of urban living

Urban population growth has increased the demand for modern energy services. In many developing countries, the demand often exceeds power generation and distribution, resulting in frequent power rationings. With rapid urbanization, power rationing will become more frequent in the years to come if new capacities and management systems are not put in place.

This will severely hamper economic growth and the quality of life of populations.

The rapid expansion of secondary cities in many developing countries, with their growing thirst for energy, is a major cause for concern, especially when it comes to delivering affordable and reliable energy for both the formal and informal sectors. The challenge of providing modern and reliable energy is critical to the pursuit of sustainable development. This is especially the case when it comes to finding alternatives to wood fuel, which is depleting forests and water catchment areas.

Another more important challenge is climate change, seen as the most serious global environmental challenge facing humankind in the 21st century. Towns and cities are the main producers of greenhouse gas emissions from the burning of fossil fuel, particularly from transport.

Climate change is also impacting drastically on the energy sector. Drought reduces the power generation capacities of hydro-electric power plants with significant consequences for both social and industrial sectors. Power rationing affects water supply, industrial production and

27

Challenge 5: Energy and Transport

CHALLENGE 5 Energy and transport

commerce and directly hits businesses and jobs.

Billions of people still rely on traditional biomass as their primary source of energy. The World Health Organisation estimates that 1.6 millions deaths per year, of which 60 % are women and children, are associated with indoor air pollution from the use of biomass.

Recent UN-HABITAT studies show that the urban poor, and especially slum-dwellers, are particularly hard hit by lack of access to modern energy. They pay more for their cooking, water and electricity than wealthier people connected to the service networks, and they pay this penalty simply because they are poor.

Transportation systems define the quality of life for millions of city-dwellers worldwide.

Unfortunately, the negative impacts of urban transport, including hazardous levels of air pollution, congestion, noise, sprawl, and threats to public safety, restrict the potential for greater economic growth and happiness. The rise of mega cities with more than 10 million people, has only amplified these problems. Growth rates of private vehicle ownership in the developing world continues to soar, despite the fact that automobiles consume non-renewable energy and cause considerable pollution.

In response, decision-makers should promote sustainable solutions to urban transport dilemmas, integrated energy and environmental planning, and better income generation for the urban poor by linking energy and transport service provision with livelihood creation. While rapid urbanization is associated with an attendant rise in energy demand and its problems, many of the negative effects of urbanization can be at least partially mitigated by innovative energy policies.

Business Opportunities

Energy is one of the key driving forces of economic growth. A two per cent increase in power generation capacity can add one per cent growth in Gross Domestic Product. This clearly demonstrates the importance of energy in economic development and social transformation. Countries that develop over time do so in tandem with improvements to their power sector. No country in modern times has substantially reduced poverty without investing in energy production, distribution and manage-

28

ment. This is because cities are the driving force of our economies and where 75 per cent of total energy is consumed.

Given the challenges ahead, non-conventional energy options and renewable energy technologies are key to increasing access to energy for household and business use. However, in order to make the alternative options workable, governments need to adopt policies that enable the widespread use of solar energy, mini-hydro technologies, wind generation and improved bio-fuels. Also, programmes should be put in place to empower people and their communities, including the informal sector, to play an active role in power generation and distribution. Individuals and small scale enterprises can be encouraged to sell energy to the grid. The widespread dissemination and application of these systems and options could yield significant benefits for the urban and rural poor and could diversify sources of energy.

Supporting and enhancing the utilization and implementation of renewable energy sources could provide for more than half of our future energy needs without depleting primary energy resources. Renewable energy currently accounts for about 11 percent of the worldâ&#x20AC;&#x2122;s primary energy supply. With appropriate coordination by governments, communities, the private sector and citizens, along with maximizing the efficiency of how we use energy, it would be possible to reach a target of 60% for the contribution of renewable energy to the world total supply.

Business opportunities clearly reside with nonconventional energy options and renewable energy technologies -- solar energy, mini-hydro technologies, wind generation, improved biofuels -- in areas where energy is not available to businesses and households but undoubtedly needed. These are the deprived urban areas where man power is available but because of poor services, developing businesses is almost impossible. These are the areas where the poor pay a very high price for deficient services.

As for the transport sector, what is needed is an influx of public and private investments that can finance the promotion and implementation of sustainable solutions for reducing vehicular emissions and traffic congestion. Opportunities

Incentives for solar systems in cities

All buildings less than 27m high in Israel are required by law to be equipped with solar water heaters. As a result, over 80 percent of domestic hot water is provided by solar energy, representing an estimated 3 percent of the total primary energy. The municipality of requires that all new residential buildings be equipped with solar water heating. Several other Spanish municipalities have followed suit, leading to a tenfold increase in solar heating nationwide.

Other Europeans cities provide financial incentives to people willing to install energy saving devices.

Photovoltaic solutions for off-grid households and business

A small company in India, Solar Electric Light Company (SELCO), and the NGO Solar Electric Light Fund (SELF), provide photovoltaic systems to households at an affordable cost, with financing options. Orb Energy is building solar power for commercial and residential units for the Indian market.

Public toilets and biogas plants with Sulabh Sanitation Movement, India

This company has been promoting the construction of public toilets connected to biogas plants to provide clean energy for households in India. Effluents from the production of biogas are used as manure or are simply discharged safely into the environment without causing pollution. The biogas generated from this anaerobic digestion process is used for cooking, street lighting and electricity generation. A modified diesel engine can run on biogas by connecting the gas to its air filter. High-density settlements, slums, public markets and schools are ideal for toilet biogas plants.

Wind generators for domestic use

Craftskills Enterprises, a small engineering company based in Nairobi’s Kibera slums, manu-

factures and installs small-scale wind generators for domestic use to produce electricity for household needs. The “windcruiser” generators can provide enough electricity to run domestic lighting, television and radio, the fridge, computers and other home appliances. The company has installed over 50 wind generators so far in both urban and rural areas. According to the manager, Simon Mwacharo Guyo, the price could come down dramatically if the demand increases.

Bio-diesel in Mali

Bio-diesel systems using vegetable oils such as jatropha oil cause less pollution. Mali, a country without oil reserves, has started production to reduce its dependence on imported fossil fuel. With a grant of 4 million US dollars, Mali plans to have a number of cars running on bio-diesel by 2009. The project uses a modified diesel engine to drive a generator that provides 10 hours electricity daily.

Bus Rapid Transit in Bogotá and Curitiba

Energy efficient public transport solutions have been successfully implemented in Bogotá, Colombia, and Curitiba, Brazil. The Bus Rapid Transit (BRT) systems save fuel and substantially reduce green house gas emissions at relatively low cost. Important achievements have been possible, such as reducing traveling times by 50% for trips made within the system, reducing noise and gas emissions by 40% in the city, making zones around the trunk roads safer; decreasing accident rates by 90% in the corridors where the system operates, reducing automobile use by 40% during peak times and improving public space. This system has also allowed real estate developers to build new properties in specified locations, with the confidence that the public would have easy access to their commercial and residential areas on the transit lines.

29

Challenge 5: Energy and Transport

for the private sector in rapidly sprawling towns and cities are: • Promoting the substitution of cleaner alternative fuels and technologies, e.g. crop residues for agro-industries and households, and natural gas in industry and transport (compressed natural gas, liquefied petroleum gas, ethanol and biodiesel).

• Promoting the use of lower-sulphur and lead free fuels.

• Promoting energy efficient public transport solutions and non-motorized transport options.

CHALLENGE 6 Information Technology

As a small information technology and critical ingredient in developing business, mobile phones are spreading at an extraordinary rate.

Countries with high mobile phone penetration have higher rates of economic growth.

According to a study a developing country which has an average of 10 more mobile phones per 100 people between 1996 and 2003 would have enjoyed per capita GDP growth that was 0.59 percent higher than an otherwise identical country. The survey also found a number of other benefits from mobile phone ownership.

For instance, it has shown that 62 percent of small businesses in South Africa and 59 percent in Egypt said they had increased their profits as a result of mobile phones, in spite of increased call costs.

The combination of powerful phones, inexpensive networks, and voice-accessible Internet applications—for obtaining market prices, health information, or government services—may further open up the Internet to large numbers of new users. In any event, it is clear that ongoing innovation in technology will help increase the potential of markets at the “bottom of the pyramid” . In urban slums, where the quasi totality of households and business are unbanked and rely on cash transactions in less-than-safe environments, the reduced cost of communication and IT potential for funds transfers is good news for improving access to livelihoods.

Mobile banking a financial tool for small entrepreneurs in slums

Millions of people do not have access to bank accounts. The World Bank estimates that in many countries, over half the population is “unbanked” – has never had a bank account.

Without this, many poor urban dwellers are stuck in the informal, cash economy. They cannot save securely or borrow money except at very high interest rates from micro lenders. For them, there is a significant need for affordable transactional banking. Many urban workers have left their rural families in search Centre for Economic Policy Research, 2005 Allen L. Hammond, William J. Kramer, 2007

30

of jobs in the cities, and they need to be able to remit money to their families who do not live with them. People also need to be able to pay expenses, such as rent, without having to stand in a queue at a rent office that might be far away from where they work or live. With the explosion of mobile phone use, the situation has changed. Electronic funds transfer systems have contributed to the very high growth of prepaid mobile services in these market segments.

While the poor tend to be excluded from traditional banking, mobile penetration is on the verge of changing that access, especially in Africa. In 2000, fewer than 8 million Africans had a mobile phone, now it is estimated that over 100 million of the continents’ 900 million people have a mobile phone. What is needed is transactional technology that involves no additional expense for the customer. For the urban poor without a bank account, mobile banking, or M-banking, is an easy and cost-effective way of paying for transactions.

The use of a mobile phone to conduct payments and banking transactions (m-banking) is at an early stage, but because m-banking uses the existing rapidly expanding mobile phone infrastructure, it has the potential to spread quickly and affordably among “unbanked” people. With m-banking, anyone with access to a cell phone has a place to keep his or her savings without needing a traditional bank account.

Mobile banking involves the use of a mobile phone or another mobile device to undertake financial transactions linked to a client’s account, but also involves access by mobile device to the broader range of banking services, such as account based savings. M-banking is one of the newest approaches to the provision of financial services through ICT, made possible by the widespread adoption of mobile phones even in low income countries. Mobile banking is a bridge that brings traditional banking and payment services to users of handheld mobile phones.

Existing telecom networks provide the telecommunications infrastructure for delivery of

M-banking with Wizzit, South Africa

South Africa’s first cell phone-based banking facility was designed to provide the “unbanked” and “underbanked” with an affordable alternative to the mainstream banks. It works like this: with a Wizzit account, you don’t have to go anywhere to do your transactions. You can use your cell phone to send money or pay an account. All you need is the other party’s account details and bank branch number. A customer can make deposits at a bank or at any post office. They scan the debit card, take the cash, and then immediately credit the

account. The customer gets a text message to prove it, and can use commands on the cell phone to check the balance, transfer money, or pay a bill. The debit card can also be used to buy things or to withdraw cash. Providing banking to the unbanked is the core business of Wizzit, demonstrated by the low fees (there are no minimum balances and transfer charges are cheap). In addition, Wizzit only employ previously unemployed people and train people from within a community to market the product and to open accounts.

References Allen L. Hammond, William J. Kramer, Robert S. Katz, Julia T. Tran, and Courtland Walker, The Next Four Billion - Market Size and Business Strategy at the Base of the Pyramid, Washington: World Resources Institute, International Finance Corporation, March 2007 C.K.Prahalad and Stuart L. Hart (2002), The Fortune at the Bottom of the Pyramid, Strategy + Business, Issue 26.

Carpenter, George and Peter White (2004).

Sustainable Development: Finding the Real Business Case.”Corporate Environmental Strategy: International Journal for Sustainable Business, vol. 11, No. 2.

Millennium Project (2005). Investing in Development. A Practical Plan to Achieve the Millennium Development Goals. Report to the Secretary-General. New York: United Nations Development Programme.

Schmidt Stephanie (2006), Housing the Poor

by Engaging the Private Sector and Citizen Sectors: Social Innovations and ‘Hybrid Value Chain’. Paper submitted by Ashoka: Innovators for the Public at the World Urban Forum, Vancouver.

UN-HABITAT (2005). Financing Urban Shelter, Global Report on Human Settlements, Nairobi: United Nations Human Settlements Programme.

United Nations (2003). Enhanced cooperation between the United Nations and all relevant partners, in particular the private sector.

A/58/227 (http://www.un.org/business.)

United Nations (2005). Business Unusual, New York: United Nations Global Compact Office.

United Nations Commission on the Private Sector & Development (2004). “Unleashing Entrepreneurship: Making Business Work for the Poor.” Report to the Secretary-General of the United Nations. New York: United Nations.

31

Challenge 6: Information Technology

mobile banking services. Strategic partnerships with modern banks enable the fulfillment of banking services that were traditionally delivered through branch offices, ATMs and the Internet. So how can banking on a mobile phone help the poor? It is about giving millions of poor people in the developing world access to financial services for the very first time. The proliferation of mobile communications in developing countries has created a potential to bring a wide range of financial services to an entirely new customer base.

M-banking services, from a customer perspective, must provide perceived value that exceeds cost. The service provided must include convenience (accessibility and easy to use, “bank in a phone” saves time), affordability (SMS text messaging is cheap and reduces the costs of remittances), functionality (there is no need for new inventions, only new delivery vehicles), safety (there is no need to travel and carry cash), and flexibility (allowing consumers to make payments remotely). Those who are currently “unbanked” now have an opportunity to become engaged in the formal banking sector. Banks are dependent on deposits, and mobile banking can help convert cash-underthe mattress deposits into bank deposits, and thereby adding cash available to the bank. Even though the amount of deposits and transactions of poor are small, they make it up in numbers.

The same gain can be delivered to the GSM provider. Based on simple SMS text messaging, they can earn revenues for each transaction.

Telecom companies are not offering m-banking out of kindness, but as a way to attract new customers by doing what they already do well, - processing millions of tiny transactions.

For merchants, m-banking can increase sales through impulse purchasing, and improve security through reduction of cash handling.

UN-HABITATâ&#x20AC;&#x2122;s mission is to promote socially and environmentally sustainable urban development with the goal of providing adequate shelter for all. With towns and cities growing at unprecedented rates, leading to increased numbers in slum dwellers with little or no access to shelter, water and sanitation, UN-HABITAT is well aware that the private sector is not only part of the solution, but a vital partner that must be engaged if the worldâ&#x20AC;&#x2122;s cities are to achieve sustainability.

Given the challenge of urban poverty and with 1 billion slum dwellers projected to rise to more than 1.3 billion by 2020, meeting the Millennium Development Goal 7 targets 10 and 11 on slums, water and sanitation, will require a concerted approach to land, basic infrastructure and services, affordable housing solutions, and accessible housing finance systems, through partnerships engaging the private sector. In order to do so, there is a need to improve understanding among decision makers regarding the role of the private sector and partnership approaches.