How Can Microfinance Contribute to Restoring Dignity andTransforming Lives in Urban Slums?
Improving the lives of slum dwellers is the best way to achieve all the Millennium Development Goals. Improved housing conditions and provision of water and sanitationwill not only save lives among the very poor, but also support progress in education and health.
(UN-HABITAT State of World Cities 2010/2011, as quoted in CLIFF, p. 6, 2010)The world’s population will soon surpass 7 billion people. In 2008, for the first time in humanhistory, the ratio of urban to rural dwellers passed the 50% mark. As the world’s cities absorbthis tremendous growth in human population, housing and public services in these areas have notkept pace, particularly in less developed countries where overall population growth is morepronounced and urban crowding is most severe. The resulting challenge of the rise in informalurban settlements is becoming a central concern for governments and for those interested inpoverty alleviation (Davis, 2004; Neuwirth, 2005; Mitlin & Satterthwaite, 2004).This paper seeks to investigate the role that microfinance services may have in offering dignityand hope to people living in informal urban settlements (“slums”) around the world.
The paperbegins by describing categories of slums used in the literature and what scholars view as primarydrivers of slum growth and the impact slum settlements have on poor people. The paper thenexplores the five major concerns regarding slums that have been highlighted by the UnitedNations (UN) in relation to the Millennium Development Goals. This section concludes with afew important caveats to any big picture view of slums and how best to fix them.
For space and ease of reading purposes, this paper will use the term “slums” throughout the document. However,the word “slum” is first used in quotation marks to signify the authors’ preference for the term “informal urbansettlements” to describe these communities. As one source suggests, “[T]oday, the catch-all term ‘slum’ is loose anddeprecatory . . . it has many connotations and meanings and is banned from many of the more sensitive, politicallycorrect and academically rigorous lexicons.” However, this source goes on to state, “[I]n developing countries, theterm ‘slum,’ if it is used, mostly lacks the pejorative and divisive original connotation, and simply refers to lower-quality or informal housing” (United Nations Human Settlements Programme, 2003, p. 9).