June 2008 • Vol. 14, No.

2

Habitat
Debate

In this
issue:
Joining hands ...................... 7
Urban lifestyles .................... 9
Urban-rural ........................ 14
Big foundations ................. 16

A look at Global Migration Problems

Working with the private
sector for better cities
U N I T E D
Vol 14 - No 2.indd 1

N A T I O N S

H U M A N

S E T T L E M E N T S

P R O G R A M M E
30/07/2008 9:49:23 AM

2

Habitat Debate June 2008

A Message from the Executive Director

I

t is fitting that we devote this issue
to our growing relationship with the
private sector around the world. For
it is the final issue of Habitat Debate.
As the agency moves forward with the
implementation of its new mid-term
plan, one of the first tasks we intend
to accomplish is the establishment of
a better, brighter and more modern
flagship magazine. To be called Urban
World, it will be a larger publication
covering a broader spectrum of UNHABITAT’s activities in each quarterly issue.
The new magazine will carry advertising from companies around the
world including those that have joined
the United Nations Global Compact.
Also known as the Compact, it is a
UN initiative to encourage businesses worldwide to adopt sustainable and
socially responsible policies which promote 10 principles in the areas of human rights, labour, the environment
and anti-corruption. It is the world’s
largest corporate citizenship initiative
and membership is voluntary.
Its aim is to have member companies incorporate the 10 principles as
part of their business activities around
the world, and to “catalyze” actions in
support of broader UN goals, such as
the Millennium Development Goals
(MDGs).
If we can achieve the Goals in cities at a time half of humanity is already living in an increasingly urban
world, we will achieve further wins.
And by 2030, three-quarters of the
world’s population will be living in
urban areas.
This huge transformation into an
urban world represents as much a
challenge for attaining the Goals, as it
does in problems wrought by climate
change. This is because urbanization
irreversibly changes our production
and consumption patterns.
Since up to three-quarters of global
energy consumption occurs in cities,
and an equally significant proportion of greenhouse gas emissions that
cause global warming come from urban areas, how we plan, manage and
live in our growing cities determines,

Vol 14 - No 2.indd 2

to a large extent, the pace of global
warming.
Global warming exacerbates existing environmental, social and economic problems, while bringing new
challenges. The most affected today,
and in future, will be the world’s urban poor, especially the 1 billion slum
dwellers. Their numbers are expected
to double by 2030 if present trends
continue.
UN-HABITAT is mandated to
help member States fight urban poverty and vulnerability by providing
secure shelter for all and improved infrastructure and services. To achieve
this, particularly within the complexity of climate change, we collaborate
with all spheres of government, civil
society and the scientific and professional communities.
In this quest we are only too
aware that the private sector is one
of the greatest untapped resources.
Innovative business leaders, around
the world are recognizing this, and
many are beginning to look at the
needs of those excluded from the global market, bringing them in as partners in growth and wealth creation.
Such creative approaches and part-

nerships are essential in catalyzing
vibrant new markets that can contribute to advancing inclusive growth and
development.
“Taking steps to address climate
change, uphold workforce standards,
or achieve higher levels of corporate
accountability is not just about the
financial success of companies or rewards from the market,” said UN
Secretary-General Ban Ki-moon. “It is
also about building a better future for
our children, our countries and our
planet. It is a call to our humanity.”
From the UN-HABITAT point
of view, well managed, inclusive and
equitable cities where every woman,
man and child feels safe, are not only
good for business, but essential to social stability and peace.
Through our new flagship magazine, Urban World, it is our intention
to keep our readers abreast of these
exciting developments with renewed
vigour and authority at the dawn of
our planet’s new urban era.

Anna Tibaijuka
Executive Director

30/07/2008 9:49:23 AM

Habitat Debate June 2008

3

Contents
Cover Photo
A breathtaking view of Singapore, a city constantly reinventing itself and setting new urban development standards. Singapore hosted
the first World Cities Summit 23-25 June 2008.
Photo ©: Singapore Urban Redevelopment
Authority.

A MESSAGE FROM THE EXECUTIVE DIRECTOR ..........................................2

OVERVIEW

The private sector – our vital partners ...........................4

Roman Rollnick

FORUM

Ahead of the Curve ............................................................... 6

Editorial Assistance

BASF and UN-HABITAT: joining hands ...........................7

Micro-mortgages for the poor ......................................... 8

Urban lifestyles ....................................................................... 9

opinion

Financing slum upgrading ...............................................12

Rural-urban linkages ...........................................................14

Forum

US Private Foundations .....................................................16

The Bottom of the Pyramid ..............................................17

NEWS & Events

................................................................................... 22

Editor

Tom Osanjo

Design & Layout
Irene Juma

Editorial Board
Oyebanji Oyeyinka (Chair)
Nicholas You
Lucia Kiwala
Anantha Krishnan
Eduardo López Moreno
Jane Nyakairu
Edlam Abera Yemeru
Mariam Lady Yunusa

Published by
UN-HABITAT
P.O. Box 30030, GPO
Nairobi 00100, KENYA;
Tel: (254-20) 762 1234
Fax: (254-20) 762 4266/7,
762 3477, 762 4246
Telex: 22996 UNHABKE
E-mail:
infohabitat.debate@unhabitat.org
Website: http://www.unhabitat.org/

ISSN 1020-3613

Opinions expressed in signed articles are those of the authors and do not
necessarily reflect the official views and policies of the United Nations Human
Settlements Programme (UN‑HABITAT). All material in this publication
may be freely quoted or reprinted, provided the authors and Habitat Debate
are credited.

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4

OVERVIEW

Habitat Debate June 2008

The private sector – our vital partners
As the United Nations widens its doors to embrace new partnerships with the private sector, UN-HABITAT
sees the business community as a vital partner for sustainable urbanization, writes Christine Auclair, Chief
of UN-HABITAT’s Private Sector Unit. This means engaging multinational, national and local corporations in
adopting socially and environmentally responsible principles. It means working together with the private
sector through policy dialogue, global advocacy, resource mobilisation, information and learning. And it
means operational delivery for better cities.

T

he UN has embarked on a broad
opening of its doors to non-state
actors, including business and civil society, as essential partners for change.
Given that we are now at the dawn of
a new urban era with half of us living
in towns and cities for the first time in
history, and given that towns and cities are growing faster than ever before,
the challenges are daunting enough.
But they are made considerably more
difficult by the crisis of widespread urban poverty with the global number
of slum dwellers forecast to rise from
1 billion today to an estimated 1.3
billion by 2020.
UN-HABITAT is keenly aware
that the private sector is not merely
a part of the solution, but instead a
vital partner that must be engaged if
the world’s cities are to achieve sustainability. More than ever before,
pressing urban challenges require
concerted approaches to land, basic
infrastructure and services, affordable housing solutions and accessible
housing finance systems that include
the private sector as a prime player.
Urban development requires that
considerable financial investments be
made in infrastructure and real estate,
both important national economic
sectors representing sizeable shares of
gross domestic product. The private
sector is key to driving economic development, contributing to employment and wealth creation. The old
French adage ‘Quand le batiment va,
tout va ’ (when the construction sector is well, all is well) is perfectly apt
as shown by the booming economies
of those countries that are driven by a
thriving construction sector.
Take China for example, which today accounts for half the global construction volume. It is also enjoying
one of the highest economic growth
rates worldwide. The China example needs to be contextualized and
should not be seen as the one and
only recipe for development, especial-

Vol 14 - No 2.indd 4

ly in today’s global quest for reduced
consumption patterns. However, the
link between urban development and
national development, correlated to
the private sector’s growth cannot be
underplayed.
In the present globalization of
trade and commerce though, there is
a general fear that the private sector,
in its struggle to meet international competition, might push governments to adopt urban policies less
dedicated to the needs of communities or social equality. There is also
concern that local governments are
becoming more visibly market centred, promoting ‘good business climates’ and courting the private sector
to lure jobs and money. Liberalization
leads to structural changes with critical implications for urban policy and
planning. It also has great impacts on
urban living conditions.
Civil society is continuously warning the international community
about the danger of such trends that
work to the detriment of the lower
income bracket in society and against
social development and security.
“While we already have decades
of experience working with governments in the developing world, we
now recognise the importance of
working with other development
actors, from grassroots civil society
organizations to multinational enterprises, to ensure that the poor are not
left behind,” said Mr. Mark Malloch
Brown, the former Deputy-SecretaryGeneral of the UN in a foreword to a
UNDP publication entitled, Private
Sector: Building Partnerships for
Development.
Preserving safety nets for the urban poor and strengthening local
governance capacity to balance market forces are important objectives
that the UN supports in its work. In
fact, it has to play a critical role in
bringing together the private sector,
governments – including local gov-

ernments – and civil society to keep a
balance that allows a harmonious urban development.
But while it is increasingly important for the UN to partner with the
private sector sphere, global civil society watchdogs have long warned
about the clashing motives of private
sector players – particularly multinational corporations – and the UN.
While business is about minimising costs and maximising profits, the
UN is about promoting international co-operation on development, humanitarian assistance, human rights
and security.
In that debate, the UN positions
itself by saying that the private sector can contribute in several ways to
the realisation of UN goals through
the mobilization of “financial resources, access to technology, management expertise and support for
programme”.
The recent Global Compact initiative and other UN voluntary projects
engaging the private sector have provided a new avenue for the UN to
work more closely with the business
community. The Global Compact
provides yardsticks and principles to
guide private the sector in their intervention. These are intended to
be socially and environmentally responsible. The Global Compact introduced strategic leadership for
UN-business-civil society engagement and a value-based platform for
responsible business practice. Beyond
values and principles, a lot remains to
be done to involve the private sector
as a key player in development related decision-making, policy formulation and implementation.
The Cardoso Commission on
UN-Civil Society Relations, the
Commission on Private Sector and
Development, and the Millennium
Project of the Secretary-General’s
2005 report, In Larger Freedom, all
challenge UN agencies and other in-

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Habitat Debate June 2008

5

OVERVIEW

UN-HABITAT Key principles of co-operation with the private sector
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;
have responsive labour and environmental practices. Business partners are encouraged to adhere to the
principles of the Global Compact - respect the protection of internationally proclaimed human rights and
not be complicit in human rights abuses; uphold the freedom of association and the effective recognition
of the right to collective bargaining, the freedom of association, the elimination of all forms of forced and
compulsory labour, the effective abolition of child labour, and the elimination of discrimination in respect
of employment and occupation; support a precautionary approach to environmental challenges, undertake initiatives to promote greater environmental responsibility, and encourage the development and diffusion of environmentally friendly technologies; work against corruption in all its forms, including extortion
and bribery. In addition, 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, promote access to affordable land and shelter. 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.
– from UN-HABITAT Guidelines for Working with the Business Community, 2007

ternational organizations to build
and strengthen their relationships
with the private sector, civil society
and other development actors.
UN partnership policy is also
being transformed into action and
UN programmes that are increasingly leveraging the knowledge, expertise and other resources from the
private sector to support the achievement of UN goals and targets. This
is particularly the case in the following areas:
n Policy dialogue bridging the
gaps between governments,
private sector and civil society particularly on regulatory frameworks and incentives,
the development of norms and
standards;
n Information and learning, global advocacy to share and disseminate knowledge as well as
organizing campaigns to raise
public awareness on UN goals
and programmes;
n Resource mobilisation sharing
and coordinating resources for
development projects;
n Results-based operational delivery on the ground jointly with
the private sector; and
n Investment and market mechanisms securing private investment for development.
For UN-HABITAT, this entails
for example the joint design and de-

Vol 14 - No 2.indd 5

livery of water supply and sanitation
in slum areas with global firms, support to housing finance mechanisms
for low income groups in partnership
with local banks, policy dialogue between governments and private sector lobbies to create incentives to
boost private sector delivery in housing projects for the urban poor.
The UN partnership approach
intends to go beyond the so called
clashing motives of businesses and
those of the UN. To concur with that
approach, the business community
seems to increasingly promote a new
discourse whereby those differences
are ironed out.
“What I’m saying to business is
that business cannot succeed in a society that fails - we have a clear business interest in helping to create
functioning societies that are good
places for doing business, otherwise
we don’t have a platform for doing
what we’re supposed to do,” said Mr.
Bjorn Stigson, President of the World
Business Council for Sustainable
Development.
To establish successful partnerships between the private sector and
the UN, it is crucial to understand
the motives and requirements of
both. At the same time, issues such as
climate change have triggered a new
quest for common objectives. The
private sector is increasingly aware
of the importance of sustainable so-

cial and economic development for
the successful conduct of its activities. Private sector actors also recognise the need to invest in human
resources and infrastructure in order
for businesses to thrive.
They need to invest in the city of
tomorrow.
UN-HABITAT has a key role in
supporting greater private sector engagement with sustainable urban
development objectives. Well functioning societies mean well functioning cities that allow smooth business
development which in turn drives
economies and ensures employment
as well as better quality of life in
cities.
Building and sustaining the city
with the private sector is a strategic direction for UN-HABITAT to
strengthen through involving the
business community in planning
and investing in the city, as well as
promoting the right technologies to
build socially and environmentally
sustainable urban systems.

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6

FORUM

Habitat Debate June 2008

Ahead of the Curve - the United Nations Global
Compact Cities Programme
The United Nations Global Compact Cities Programme (Cities Programme) positions business leaders
in a space that is otherwise rare, writes Stephanie McCarthy, Manager of the programme. It provides
a platform for business leaders to lead and engage in meaningful change to cities and enriches their
contribution towards the governance of sustainable cities and communities.

I

nitiated in 2003 by the former UN
Secretary-General, Mr. Kofi Annan,
the Cities Programme is a practical
application of the Global Compact
initiative, which serves as the world’s
largest global corporate citizen initiative and boasts membership of over
3,000 member organizations. It is governed by the International Secretariat
which liaises closely with the in-country convenor to facilitate the design
and development of a specific pilot
project.
To legitimize the methodology, the
so-called Melbourne Model was tested using an all-sector taskforce led
by the Committee for Melbourne.
The project examined poverty alleviation and focussed on the population
deemed ‘at-risk’ due to their inability
to pay utility bills. The three-year pilot
project gained interest and cooperation
from water, electricity and telephone
providers and successfully influenced
national policy to introduce customer payment options. The private utility
providers realised that the introduction
of payment-options schemes, were attractive to a wider clientele and improved their operational and economic
performance.
For example, the Melbourne Model
has been adopted in eleven cities and
has representation in each continent,
with a number of additional cities currently listed. The Cities Programme
attracts innovative leaders from the private, government and civil sectors who
demonstrate commitment to improve

the quality of urban life for existing
and future communities.
In San Francisco, the Business
Council on Climate Change initiative
is looking at how business can address
climate change. The project exemplifies good governance of intractable issues and has gained the interest and
commitment of more than 70 organizations, including Google and Gap
Inc. The Local Secretariat is focussed
on skills transfer and holds monthly
meetings for participants to learn practical tips that help improve business
sustainability.
The global steel giant, Tata Steel,
is leading the Local Secretariat in
Jamshedpur, India, and providing water and sanitation to over 50,000 households. At a site which was once without
any formal governance structure, Tata
Steel continues to demonstrate innovation and provide basic human needs as
well as facilitating regular community
engagement and training sessions.
In Porto Alegre, Brazil, the Villa
Chocolatão, a slum-reclamation project
determined to keep the local residents
at the front and centre of decisionmaking, is looking at ways of introducing a new neighbourhood designed by
disadvantaged people themselves for
themselves. The benefits will stretch far
beyond the basic provision of housing
and lead to improved social cohesion,
with long-term societal benefits.
Entry into the Cities Programme
provides businesses with a variety of
benefits, including international rec-

ognition, intercity networking opportunities and invitation to a host of
high-level events and activities. At the
local level, it provides a platform for
the organization to develop working
relations with an eclectic group of leaders and innovators from government
and civil sectors. Above all, the Cities
Programme offers businesses a space to
create innovative solutions to complex
issues that benefit urban populations.
It is intended that over time, at the
city level, the project outcomes will be
translated to establish effective governance framework for other intractable issues that will influence systemic
change. At an international level, it is
envisaged that other city leaders will
be able to learn and tailor the adopted
governance approach to suit their local
context. This intercity learning is already happening between member cities on issues of climate change, utility
provision and housing.
The Cities Programme International
Secretariat is working with the Global
Compact to explore how the Global
Reporting Initiative may be adopted
effectively, and also enable the private
sector’s involvement to be recognized
within an international reporting index framework.
The International Secretariat is based
at the Global Cities Institute at Royal
Melbourne Institute of Technology
(RMIT), Melbourne, Australia.

The UN Global Compact Cities Programme helps cities around the world find innovative and practical solutions
to seemingly intractable social, economic or environmental problems. Based on the 10 principles of the Global
Compact, the idea is to help sort out difficulties with urban poverty and slums, poor transport, pollution and
poor sanitation. To join the programme, a city mayor sends a letter to the UN Secretary-General committing to
undertake a pilot project pledging concrete results. The programme is spearheaded by an international secretariat at Royal Melbourne Institute of Technology in Australia. Members of the UNGC Cities Programme so far include Asker, Norway; San Francisco, United States; Jamshedpur, India; Jinan, China; Kathmandu, Nepal; Auckland,
New Zealand; Honolulu, Hawaii; Kalmar, Sweden; Ulaanbaatar, Mongolia; Płock, Poland; Melbourne, Tshwane
(Pretoria), South Africa, Berlin, Germany; Le Havre, France, and As-Salt, Jordan. Further information: www.citiesprogramme.org

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Habitat Debate June 2008

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FORUM

BASF and UN-HABITAT: joining hands for tsunami
recovery in Sri Lanka
On Boxing Day 2004, a tsunami killer wave claimed more than 200,000 lives in Indian Ocean countries,
leaving countless more injured, destroying homes and communities of millions of people. Today, four
years after the devastation, people are still struggling to rebuild their lives across the region. Here,
Wolfgang Frosch, Manager of Social Foundation, Donations and Childcare at BASF, and Jaana Mioch of
UN-HABITAT recount a model of collaboration launched at a time of great need and pain.

T

he partnership between UNHABITAT and the chemical giant BASF began with a joint needs
assessment in the tsunami affected areas of Sri Lanka. The results showed
that nearly 90 percent of the smallscale industry had been destroyed,
including boats, and harbour infrastructure. The assessment led to the
development of a project geared towards fishing communities, one of
the poorest segments of the country’s
population.
Together UN-HABITAT and BASF
are building a new fish market and restaurant complex in Galle, a town on
the southern tip of Sri Lanka, in order
to replace the infrastructure destroyed
by the tsunami. The new fish market
and restaurant are expected to give the
devastated fishing community an economic boost by facilitating trade.
The project is designed to create
employment, support the local fishing
fleet and livelihoods, provide vocational training and promote tourism.
In this way, the initial investment in
physical facilities will have a multiplier effect on the employment, income
and wellbeing of the entire fishing
community. In a broader sense, the
project represents an economic upgrade for Galle and new revenues for
the municipality.
UN-HABITAT has broad experience and competencies in reconstructing homes and community
infrastructure, settlement planning
and disaster preparedness. It thus
forms an integral part of the United

A family gets a new home in Sri-Lanka. Photo ©:
UN-HABITAT

Nations’ inter-agency efforts to promote a smooth transition from humanitarian relief to long-term recovery
and rehabilitation. Throughout its activities, UN-HABITAT promotes a
community-driven approach, bringing affected families into the centre of
the disaster recovery process.
UN-HABITAT’s interventions in
Sri Lanka also included reconstructing homes, community infrastructure,
settlements planning and disaster preparedness. BASF supported these efforts with funding and, together with
its partners, provided technical and
construction expertise to support the

development of appropriate and sustainable reconstruction solutions.
The partnership between BASF
and UN-HABITAT has proven that
an effective and efficient response to
the humanitarian, recovery and development challenges of today requires
the multiple capacities and united strengths of complementary partners, such as the private sector and
the United Nations. BASF itself benefited from the partnership through
its exposure to the competencies and
successful business models employed
by UN-HABITAT. According to the
principle of “mutual benefit’’, UNHABITAT’s engagement with private
sector partners, in particular BASF,
has facilitated effective implementation, enhanced resource provision
and mutual learning.
While the construction of the fish
market in Sri Lanka continues, UNHABITAT and BASF are already
looking forward and will launch additional joint projects in 2008.
These include cyclone resistant
community centres in Bangladesh,
educational facilities in tsunami-affected areas in India as well as a
resource centre for children with disabilities in the Kibera slum in Nairobi,
Kenya. Another project on street children and slum upgrading in Brazil is
being considered for 2009. As a result of their increased number of joint
project activities, BASF and UNHABITAT now intend to engage in
a wider, strategic and longer-term cooperation agreement.

The chemical company BASF and its employees started a worldwide campaign to collect funds to begin rebuilding Indian Ocean countries hit by the tsunami. The employees’ donations and the matching contribution of the
company enabled the BASF Social Foundation to provide 3.8 million euros for various tsunami projects in the region. The foundation decided to work with reputed partner organizations to disburse the funds. UN-HABITAT was
selected for the main project in Sri Lanka because of the agency’s long-standing reputation for rebuilding and
revitalising communities affected by natural disasters. BASF and UN-HABITAT thus established a formal partnership in 2005 which eventually enabled the two organisations to combine their efforts in disaster relief and reconstruction for affected communities.

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FORUM

Habitat Debate June 2008

Private sector backs micro-mortgages for the poor
UN-HABITAT, the Global Housing Foundation (GHF) and Merrill Lynch signed a Memorandum of
Understanding on 25 October 2007 to explore ways of meeting the Millennium Development Goals
for improving the lives of the world’s slum dwellers. Here Axumite Gebre-Egziabher, the Director of
UN-HABITAT’s New York Office, Tim Wilkens, President, The Global Housing Foundation, and Laurence
Schreiber, Managing Director Merrill Lynch, explain how it will work.

T

he partners set to work by launching a micro-mortgage financing initiative for low income housing
in Latin American cities for which
Merrill Lynch is expected to provide
initial financing of USD250 million.
It is important to recognize that the
three way partnership is based on the
framework of social responsibility and
accountability. The main objective is to
reach the working poor segment of the
world’s 1 billion urban slum dwellers
and offer them the opportunity to own
a quality home that can be financed on
a long term basis with a micro-mortgage, and in the process, help develop
or revive the local economy.
Local developers build the homes on
an agreed profit basis and local banks
provide the loans. The homes are designed to meet a minimum standard
for housing in each locality and contain
a bathroom, kitchen, individual rooms,
clean running water, a septic system
and electricity. Families currently living in slum areas will be selected based
upon their qualifications to repay the
micro-mortgage. Priority will be given
to women-headed households. Those
getting the mortgages can be teachers,
nurses, taxi drivers, or others who until
now have not had a source of long-term
financing to purchase a basic house and
rise out of the slums. The initiative is
focused on this segment of the slum
dwellers, those who live in overcrowded temporary shelters and lack security
of tenure, safe drinking water and adequate sanitation.
UN-HABITAT and the Global
Housing Foundation will execute the
initiative in close cooperation with
the communities, local authorities and
the government ministries in the pro-

vision of land and infrastructure at an
affordable cost. The initiative includes
community development work and financial literacy for the selected families. It will be governed by and operate
on the basis of respect for private property rights, the creation of secure lending practices, and wherever possible,
the promotion of gender equality and
the empowerment of women by requiring title to the homes to be in the woman’s name. Work has already started in
Nicaragua, Panama and El Salvador. It
is hoped that about 1,000 homes will
be completed by the end of the year.
Talks on taking the initiative elsewhere
in Latin America, as well as Africa and
Eastern Europe have also begun.
The initiative can transform the
lives of many slum dwellers into proud
home owners in a relatively short period of time. It incorporates water treatment systems to provide clean and
inexpensive drinking water. The qualifying families then have a home with
all the benefits of safety, security, elevated social status, and the uniting of
the family members in their household. State-of-the-art site planning is
also offered to give the developments a
strong cosmetic appeal.
The initiative brings together local
developers, banks, and municipal governments while developing minimal
housing standards for families making
the transition from the slums to their
first affordable home. The estimated
cost of a home for this initiative may
vary from USD6,000 to USD18,000
depending on the country. The local
banks qualify the home purchasers,
originate the micro-mortgage and service the loan even after it is sold. Most
of the local banks that originate the

loans also provide the developer with
the construction financing for the development. Once the originating bank
pools USD 1,000,000 of loans and seasons them for one year, they are eligible to participate in the Merrill Lynch
financing programme. Merrill Lynch
will then use its global distribution
platform to syndicate that risk into the
market for investors who want to own
socially responsible investments.
As indicated in the MOU, “to reduce
the costs of this loan syndication, UNHABITAT within the framework of its
experimental reimbursable seeding operations will mobilise grant resources to
provide credit guarantees on the portfolios. These credit guarantee terms
will be agreed upon by Merrill Lynch,
the Foundation and UN-HABITAT
on terms that are mutually agreeable
by all parties. It is envisioned that a
given level of credit guarantee would
allow four times that amount of financing to occur (i.e a USD50mm guarantee would facilitate up to USD200mm
of financing).”
The initiative is designed to be selfsufficient without relying on subsidies
after the initial start up period. Progress
reports of the initiative, including audit
reports, will be issued to ensure transparency and programme compliance
with the established standards.
The initiative is expected to revitalize the local economy involving the
construction of houses, creating local jobs, producing building materials and the circulation of money with
the local banks. It is hoped that the initiative will become the premier global programme which transforms the
lives of slum dwellers into proud home
owners.

The Global Housing Foundation was founded in 1999 by Rene Frank and enjoys Special Consultative Status with
the UN. It was established as an independent, U.S. and European based not-for-profit organization that leverages the expertise and resources of the private real estate community to build new affordable housing in innercity slums around the world. Merrill Lynch is one of the world’s leading wealth management, capital markets and
advisory companies, with offices in 38 countries and territories and total client assets of approximately USD1.8
trillion.

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FORUM

Urban lifestyles and better management
With half the world’s population now living in cities and that figure set to rise significantly in the coming
decades, the world faces new challenges in terms of urban design, planning and the management
of urban community facilities, says Dominique Héron who negotiated the sustainable urbanisation
cooperation agreement between the United Nations Institute for Training and Research and the Frenchbased multinational, Veolia Environnement. Here he gives a taste of interesting new facts and figures
carried in these pages from cities around the world.

V

eolia Environnement, the world
leader in environmental services,
with 320,000 employees in 68 countries, has provided tailor-made solutions to meet the needs of municipal
and industrial customers in water and
waste management, energy services
and freight and passenger transportation for the past 150 years.
It recently launched an Observatory
of Urban Lifestyles to forecast urban
lifestyle trends and understand the
lifestyle expectations of city-dwellers.
The French polling institute Ipsos was
commissioned to compile a comparative overview of contemporary urban lifestyles in 14 cities – Alexandria,
Los Angeles, Berlin, Beijing, Chicago,
London, Lyon, Mexico City, New
York, Paris, Prague, Shanghai, Sydney
and Tokyo. The results from the
Observatory are intended to guide
the design of appropriate services and
technologies by Veolia Environnment
to improve urban management.
A measurement and analysis tool,
the Veolia Observatory uses indicators to assess lifestyle changes in cities including citizen’s use of services,
infrastructure and facilities, leisure
and cultural activities as well as desire to stay in the city, among other
things. The Observatory further seeks
to identify the most pressing priorities of city dwellers. It examines their
views on environmental issues. The
starting point for an ongoing assessment, the Observatory’s studies are to
be regularly elaborated upon, updated
and expanded.
In all cities involved in Veolia’s studies, citizens expressed their concerns.
For example, in Shanghai, as in other cities, citizens feared a disruption
of the current harmony. They feel a
strong sense of attachment to the city,
despite the problems of traffic jams,
pollution and stress. While they place
less emphasis than other city-dwellers
on the cost of living, they appreciate
the safety of their city and, above all,
its economic dynamism and interna-

Vol 14 - No 2.indd 9

HOW YOU FEEL ABOUT YOUR CITY

Question:
When you think about the city where you live, what are the words that
best correspond to your current state of mind?
(Check up to 3 answers)
(8,608 respondents)
Love and hate, pride and indifference, the city crystalizes opposing

feelings in which the positive aspects always outweigh the negative.
It is as if the pleasure of living in the city sweeps aside the difficulties
encountered in city living. There were two exceptions to this in the
study: Beijing and Mexico City. In Beijing, stress was the overriding
descriptor, while in Mexico City, the main factors are feeling unsafe and
overcrowded.

30/07/2008 9:49:25 AM

10

FORUM

Habitat Debate June 2008

tional recognition. They are also twice
as optimistic as other city-dwellers
when it comes to the future development of their city and their living
conditions. However, they expressed
their concern about environmental
sustainability and over-population.
In the Chinese capital Beijing, as
in Shanghai, citizens appreciate life
in the city. In particular, they value the economic and cultural dynamism as well sense of safety. Very few
Beijing residents want to leave their
city. Indeed, 80 per cent would like
to raise their children there and have
great confidence in the future of their

We need more open
space, less traffic,
cheaper public
transport...that actually
works! A Londoner

CITY QUALITY OF LIFE CRITERIA

Question:
Among the following points concerning the quality of life in cities in
general, which do you consider to be the most important?
(Check up to 3 answers)
(8,608 respondents)

For most city dwellers, all cities combined, the quality of life depends
first and foremost on the cost of living and safety. In the wake of these
fundamentals, the respondents mention other aspects that make
their lives more bearable: the quality of the environment, the quality
of infrastructure, public transportation, etc. And lastly, factors such as
access to cultural and leisure activities.

Vol 14 - No 2.indd 10

city, especially its economic performance. They are however concerned
about the quality of the environment,
housing conditions and traffic congestion and would like the city to be
smaller and less densely populated.
Veolia Environnement sees an urgent need for a comprehensive approach to deal proactively with the
world’s increasing urbanisation. It
needs to respond to the challenges
faced by local authorities, who are increasingly concerned with environmental conservation and sustainable
development, as well as establishing
quality services at competitive prices. Research, development and training play a central role in Veolia’s
approach, in order to anticipate future needs and to implement effective technologies and services tailored
to the expectations of these partners.
The partners are the political decision-makers, government leaders and
industrialists who have to manage the
cities of tomorrow.
Veolia Environnement is also directly involved in urban services and
infrastructure projects thereby complementing the work of its partners.
For instance, Veolia Environmental
Services, a leading operator in waste
management in China since 1992,
won two recycling contracts in 2003
in the Shanghai area enabling it to
show how waste can be turned into
a resource. Veolia Water has been
present since 1997, dealing in water production and distribution as
well as waste water management. It is
now present in 20 Chinese provinces. Dalkia, the Veolia energy branch,
signed its first contract in 2003, and
is particularly active in heating and
cooling networks.
The entire urban challenge of the
coming years rests on concrete solutions to enable municipalities and
governments to respond to their development needs. Veolia Environnement
presumes that such solutions are only
sustainable if they take account of the
aspirations of city-dwellers and vital
challenges such as healthcare and environmental protection.

30/07/2008 9:49:26 AM

11

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Habitat Debate June 2008

Asking you about your city - the Veolia Observatory of Urban Lifestyles
Five continents, 14 cities, more than 8,500 opinions …
This first wave in the Veolia Observatory of Urban
Lifestyles, the Ipsos 2007 survey was conducted in 14
cities on five continents. The cities were selected for their
specific features in order to establish a diversified panel
of lifestyles and cultures.
A quantitative study was used to collect homogeneous
data used to compare “views of the city” with regard to
points as sensitive as the sentiment of attachment or
rejection, the ability to meet quality of life expectations,
the city’s ideal size and even confidence in its future.
A qualitative study involved collecting people’s opinions
in focus groups to draw a lively and evolving portrait of
the city as “experienced” by those aged 20 to 27.

n

live in their city on a day-to-day basis;
n consider the quality of life in their city;
n see the future for their city;
n give their notion of the ideal city
The sample of respondents included 8,608 people aged
from 15 to 70. The 14 cities covered by the survey along
with the number polled in each were:
n
n
n
n
n
n
n
n
n

The analysis of the results revealed four major topics,
each raising one or more factors experienced universally
by today’s city dwellers in how they:

n

n

n

perceive their city;

n
n
n

Alexandria: 614
Beijing: 625
Berlin: 633,
Chicago: 607
London 617
Los Angeles USA: 600
Lyon: 608
Mexico City: 611
New York: 606
Paris: 620
Prague: 606
Shanghai: 628
Sydney: 630
Tokyo: 603

THE QUANTITATIVE PHASE
The survey was managed
over the internet by Ipsos
panel members. In Prague
and Alexandria, because of
relatively low internet access
among households, the survey
was done face-to-face at the
respondents' homes
The sample of respondents
included 8,608 people aged
from 15 to 70 years, in the 14
cities covered by the survey
as follows:
Alexandria: 614 - Beijing: 625
Berlin: 633 - Chicago: 607
London: 617 - Los Angeles:
600
Lyon: 608 - Mexica City: 611
New York: 606 - Paris: 620
Prague: 606 - Shanghai: 628
Sydney: 630 - Tokyo: 603

High density housing in Hong Kong. Photo ©: UN-HABITAT/X. Zhang

Vol 14 - No 2.indd 11

Each sample was compiled using
the quota method reflecting the
available
socio-demographic
data (sex, age, profession and
sector in most cases).

30/07/2008 9:49:26 AM

12

OPINION

Habitat Debate June 2008

Contrasts in financing slum upgrading with the
private sector
There has been a long history of attempts to introduce commercial finance and repayment mechanisms into
‘slum upgrading’, but not many have been successful. Here Michael Mutter, Senior Adviser at UN-HABITAT’s Slum
Upgrading Facility (SUF), looks at the agency’s work with commercial banks at different levels in Ghana to find
some of the answers.

T

he Facility’s Pilot Programme in
Ghana provides us with a series of
interesting case studies looking at different forms of finance that the Slum
Upgrading Facility (SUF) has supported. There are three approaches.
Microfinance for Home
Improvement
Support has been given by the Slum
Upgrading Facility to the concept known
as Boafo Microfinance Services Limited), a
joint venture between HFC Bank (Ghana)
Ltd and CHF International, a USA based
international NGO concerned with cooperatives and community housing finance.
Three microfinance products were developed. One is the ‘Home Improvement
(HI-5) Loan’ for anything related to home
building. The second is the ‘SELF-Drive’
(Salaried employees loan fund) for any consumer-related use like education, health, or
house furnishings. The third is the ‘Busy
Bee’ product used for business expansion
or procurement of business assets.
The outcome has been a thriving business for the more general microfinance
products, but little call on the Home
Improvement product. This is partly because in Ghana there is a high proportion of rented accommodation. But it is
also because the timing was not coordinated with the more structured communitydriven projects.
Urban Poor Funds
These are funds developed out of community-driven ‘savings and loans schemes’
based on simple ‘merry-go-round’ principles amongst the urban poor. Peoples
Dialogue Ghana, a local NGO linked
with Slum Dwellers International, has
helped various local federations of slum
dwellers form a larger fund known as the
Ghana Urban Fund for the Urban Poor.
This fund can leverage commercial finance
from local banks, by acting as first loss
guarantors – based on the principle of collectively guaranteeing each other.
It was formed to spearhead the ways
in which slum dwellers’ groups can better
plan and design their future accommoda-

Vol 14 - No 2.indd 12

tion, bringing in other actors, and demonstrating how they would build their
own houses. A site at Ashaiman, near
Tema, will be used for a first demonstration project. This in itself is designed to
lead into the third SUF area of support,
the Local Finance Facility.
Local Finance Facilities
The major obstacle facing slum dwellers and their municipalities alike is the
lack of a planning facility that can coordinate the plethora of requirements for

upgrading and new redevelopment or relocation low income housing projects. It
generally defeats all concerned. However,
with the introduction of the time-based
discipline of the private sector, and commercial banks in particular, the impetus
to solve problems such as land certification, or bringing into line the timetable
for local infrastructure development, becomes solvable – through this collective
multi-stakeholder interest group, the special purpose vehicle known as the Local
Finance Facility.

The local community is involved at every level. Photo ©: S. Mutter

30/07/2008 9:49:27 AM

Habitat Debate June 2008

13

OPINION

The Ten Principles
Launched in June 2004 the ten principles of the United Nations Global Compact are listed below.
Human Rights
Businesses should:
Principle 1: Support and respect the protection of internationally proclaimed human rights; and
Principle 2: Make sure that they are not complicit in human rights abuses.
Labour Standards
Businesses should uphold:
Principle 3: the freedom of association and the effective recognition of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labour; and
Principle 6: the elimination of discrimination in employment and occupation.
Environment
Businesses should:
Principle 7: support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption
Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

Each Local Finance Facility is set up
as a company limited by guarantee on a
not-for-profit basis. In Ghana, these have
been demand-driven municipality by municipality. So the one for Tema Municipal
Assembly can build on the work of the
Urban Poor Fund. It can take forward
the kind of commercial financial packaging required, thus bringing together all the
upgrading requirements for land, infrastructure, access, realistic construction cost
estimates. This also includes repayment
mechanisms agreed by the slum dwellers, and any other subsidy arrangements
already negotiated, to put before a commercial bank’s credit committee for a loan
agreement.
What is interesting is first how well
these Local Finance Facility companies
manage the problem-solving processes for
all requirements, and second how they are
locally owned and promise to be self-sustaining on a long term commercial basis.
What are the lessons learned?
Has the combination of these three approaches broken the mould – the inability
for commercial finance to form a significant part of slum upgrading processes? The
lesson is to attempt to coordinate the timing of all three levels of finance – not easy
when they originate from different funding
programmes. In an ideal world, all three

Vol 14 - No 2.indd 13

would be brought into practice at the same
time, and would reinforce each other.
By introducing the private sector as a
major element in the process, the commercially financed projects find ways of over-

coming obstacles and moving forward on
their own momentum, rather than relying
on externally-driven processes. This is real
sustainability and a promising way forward
to a world without slums.

Explaining new financing systems in Ghana. Photo ©: S. Mutter

30/07/2008 9:49:27 AM

14

OPINION

Habitat Debate June 2008

Working for rural-urban linkages – small and mediumsize enterprises
The combined impact of globalization and rapid urbanization in developing countries highlights the close
economic interaction between urban and rural areas. Never before has rural development depended so much on
cities as the engines of national economic growth, the main market place for adding value to rural produce and
the interface for global trade and investment. Although improved rural-urban linkages are largely determined
by large-scale investments, Frederico Neto and Ananda Weliwita of UN-HABITAT say private small and medium
enterprises also can play a crucial role in forging rural-urban linkages.

I

t is increasingly recognized that
small and medium enterprises
(SMEs) can generate new income and
employment in both urban and rural areas through improved marketing linkages between the two areas.
Over the years, UN-HABITAT has
launched various programmes and initiatives to promote the rural-urban
linkages approach to development,
with special focus on SMEs.
For example, the United Nations
Development Programme (UNDP),
UN-HABITAT and the Indonesian
Government jointly implemented
the Poverty Alleviation through RuralUrban Linkages (PARUL) programme
in Indonesia. Its objective was to integrate lagging Indonesian regions into
the mainstream national economy by
connecting rural producers to urban
and international markets. The programme paid particular attention to
clusters of economic activities associated with key local export commodities
and promoted public-private partnerships. The private sector played a critical role in mobilizing resources for
the enhanced production and trade of
those commodities.
In the late 1990s, PARUL implemented a programme in South
Sulawesi to encourage farmers and
traders to set up small-scale village
units to undertake the initial processing of cashew fruit into cashew nuts.
These were then sold either direct-

ly to local stores or to factories in cities such as Makassar, where they were
further processed, packaged and supplied to urban consumers in other cities in Indonesia and beyond.
This public-private partnership was
successfully implemented in collaboration with the National Association
of Cashew Nut Processors, local government departments and three
small-scale private firms. The project
was successful in adding value to cashews before they were sold for further
processing by urban SMEs. It also
raised incomes and created jobs in
both urban and rural areas. A considerable growth was observed in both
gross sales and net income (Table 1).
A similar project, Rural-Urban
Partnership Project was implemented in Nepal. In this initiative, also
supported by UN-HABITAT, traditional producers in rural areas were
organized into small-scale commercial enterprises to link their skills with
existing manufacturing units in urban
areas. It paid particular attention to
the promotion of public-private partnerships for the provision of urban
services to rural areas. This included,
for example, the provision of agricultural technology to farmers and setting up cyber cafes in rural areas.
Lessons learned from both countries have led UN-HABITAT to establish the Rural-Urban Linkages Support
Programme to promote regional and

national development strategies. The
support programme will focus initially on strengthening rural-urban development linkages in east Africa’s Lake
Victoria region. UN-HABITAT is
taking the lead in the implementation
of the Lake Victoria Local Economic
Development Programme in collaboration with the Food and Agriculture
Organization,
the
International
Fund for Agricultural Development
(IFAD), the International Labour
Organization (ILO), the United
Nations Industrial Development
Organization (UNIDO), the World
Food Programme, and the Common
Fund for Commodities
The first concrete outcome of the
Lake Victoria programme is a ruralurban linkages project in Tanzania
and Uganda that will help rural banana-based drinks producers secure
markets in urban areas. With cooperation from national governments
in both countries, UN-HABITAT,
UNIDO, FAO and CFC are providing financial assistance to two small
private sector companies for the construction of industrial facilities for banana-based drinks. The project will
add value to banana drinks produced
by farmers for urban markets, through
improved quality, preservation, packaging and marketing.
The goal is to alleviate poverty in
the region and to improve links between rural products and urban mar-

Impact of processing cashews on income in South Sulawesi, Indonesia, 1999-2000
1999 Harvest
(unprocessed)

2000 Harvest
(processed)

Percent change

Gross sales
IDR 1,000s

59,773

89,908

50.4

Price IDR / Kg

4,388

25,885

489.0

Net Income
IDR 1,000

8,519

17,351

103.6

Source: H. Evans, “Policy Implications for RNFEs: lessons from the PARUL project in Indonesia”, CIPPAD Working Paper No. 4, Los Angeles, 2002

Vol 14 - No 2.indd 14

30/07/2008 9:49:27 AM

Habitat Debate June 2008

PRIORITY CHANGES FOR FUTURE GENERATIONS

Question:
In your opinion, to make future generations want to stay in the city, what
priority changes need to be made? The city in which you live
would have to be…
(Check up to 2 answers)
(8,608 respondents – 14 cities)

“In an ideal city, things would be perfect. Everyone would be happy,
people would reach out to each other, there would be no solitude, no
pollution, no cars.” A Parisian
“Tomorrow’s city will be white, green, transparent. A quiet place.”
A Sydneysider

15

OPINION

kets. It will generate additional jobs
and income in participating farms and
in and around the processing plants.
Major beneficiaries will be local women engaged in the production and sale
of banana-based beverages in the Lake
Victoria region.
Several important lessons have been
learned from the above mentioned initiatives. First, there is a need to look
beyond the traditional rural versus urban dichotomy which still characterizes much of the debate on rural and
urban development. Rural development in a rapidly urbanizing and globalizing world relies increasingly on
cities, whose success, in turn, depend
on adequate investments in urban and
regional infrastructure and services.
Second, the rural-urban linkages
framework offers an excellent platform
to enhance UN interagency collaboration. It is a common area in which a
wide range of UN agencies with different mandates can still work and deliver “as one”.
UN-HABITAT’s past experience
shows that measures to strengthen rural-urban linkages should not only
focus on large-scale investments in
transport and communication infrastructure, but also on helping small
and medium-sized urban-based enterprises build marketing links with
rural areas. The latter can go a long
way towards generating much-needed income and employment for both
the urban and the rural poor and,
in the process, contribute towards
the achievement of the Millennium
Development Goals.

Ismailia, Egypt. Photo ©: UN-HABITAT/J. C. Adrian

Vol 14 - No 2.indd 15

30/07/2008 9:49:28 AM

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Habitat Debate June 2008

US Private Foundations consider an urban future
International foundations, long known for undertaking innovative and path breaking development work in
rural regions of the global South, are increasingly broadening their interest to explore the challenges of urban
communities, write Darren Walker, Vice President, Rockefeller Foundation and Chris Williams, Director of UNHABITAT’s Washington office.

T

his should come as no surprise
given the growing demographic evidence and the palpable deprivation apparent to any visitor to urban
centres in the developing world. That
one in six of the world’s population
lives in slums has not gone unnoticed
to the philanthropic community in
the United States. In short, the face of
poverty is increasingly urban or, alternatively, global poverty is urban poverty. Recognizing this, some private
foundations are directing grants that
promote solutions through innovative
and creative approaches.
Foundations play an enormously valuable role in elevating important issues
into discourse on global poverty that far
outweighs the actual value of their grant
making. They help set public agendas,
signalling priorities that influence domestic policy, research, news media, and
popular perception.
The prioritization by foundations of
the urban dimension of poverty and of
the opportunities associated with sound
management of urban growth is therefore an important development and will
hopefully contribute to a critical mass of
interest by a diverse array of stakeholders
in urban issues. This is particularly so in
countries such as the United States where
urban policy does not feature prominently in foreign assistance programs or in the
poverty reduction initiatives of international nongovernmental organizations.
The Rockefeller Foundation and the
Bill and Melinda Gates Foundation are
among several philanthropies that are exploring an urban agenda in their respective grant-making programs.
In 2007, at its Bellagio Conference
and Scholar Center, the Rockefeller
Foundation organized a Global Urban
Summit, a series of meetings over the
course of a month on housing finance, water and sanitation, health, climate change
and urban planning. An array of urban
experts from five continents – a mix of
activists, practitioners, researchers, investors, slum dwellers, private sector leaders,
and policy makers – shared ideas about
solutions in the respective areas of the urban challenge.

Vol 14 - No 2.indd 16

The Rockefeller Foundation’s board
followed up by identifying urban issues as one of five priority areas for programming. Foundation staff have made
a number of initial grants. These include support to the University of Cape
Town African Cities Network, Slum
Dwellers/Shack Dwellers International,
The African Population Health Research
Consortium, and the World Bank Road
Safety Facility Fund among others. The
Foundation has also made its first grant
to UN-HABITAT to further develop its
innovative financing facility for affordable housing and basic services.
Also present at the Urban Summit
were representatives of other philanthropic groups like the Bill and Melinda
Gates Foundation. Drawing upon the
discussions, the Gates Foundation elected to establish their own variation of support to urban issues – a set of “learning
grants” aimed at strengthening urban
poor movements, not-for-profit organizations, and NGO/commercial hybrids.
This culminated early this year in grants
to Slum/Shack Dwellers International,
the Cooperative Housing Foundation,
and the Development Innovations
Group, respectively.
While the impact of urban grantmaking by private foundations has not
yet been felt, early indications are quite
encouraging.
The media houses in the United
States picked up quickly on the Gates
Foundation grant to Slum and Shack
Dwellers International. The result was
the popularisation not only of SDI, but
more importantly, of slum dwellers taking organized actions to improve their
own lives. Rather than working for the
poor, a billionaire of Bill Gates stature is working with the poor to identify ways for them to leverage their savings
and mobilize financing to upgrade their
slums.
Policy makers in the United States
have also taken note of the importance
private foundations are placing on urban poverty. While a policy debate unfolds in Washington, D.C. in the run-up
to the general elections, a small but committed group of research and policy in-

stitutions and legislators are discussing
ways of radically reforming US foreign
assistance. Urban issues are entering that
debate thanks in part to private foundations through the precedents they are setting through their grant making.
Perhaps most interestingly, the decision by private foundations to “go urban” in their international grant making
activities, has spurred a dialogue between international and US community development organizations, financial
intermediaries, and investors. Many US
foundations have long-funded community development corporations and finance
and development intermediaries like
Enterprise Community Partners and the
Local Initiatives Support Corporation.
Some of these donors are now encouraging lateral North-South exchanges to understand how models from the
United States might have applicability in
the Global South.
Importantly, there is now recognition
that urban knowledge-transfer should not
be limited to traditional North-South dialogue, but rather to South-South networking. For example, Rockefeller
Foundation’s support of the African
Cities Network is meant to facilitate cross-learning and empowerment
of Southern institutions. It is envisioned that a network of institutions
in Africa, Latin America and Asia will
emerge to share local policy and practice
lessons that have the potential for impact
in different contexts.
Private foundations have by no means
launched a comprehensive strategy to
meet the challenge of urbanization and
slums. A shift in thinking has occurred,
however, among a number of key foundation that believe urban development is
critically important, and that investing in
innovations to making cities work will go
a long way to eradicate poverty.
The ripple effect of private foundations on the popular conscience, policy makers and on creative North-South
and South-South linkages suggests that
their increasing focus on the global urban agenda is positive and well worth
deepening.

30/07/2008 9:49:28 AM

Habitat Debate June 2008

17

FORUM

Doing business at the Bottom of the Pyramid

T

he UN General Assembly President Srgjan Keri recently urged the business community “to develop
new markets in the developing world by providing goods
and services for the poorest ‘bottom billion’.” Addressing
a seminar in New York in May 2008, he added: “It is time
to go beyond philanthropy by leveraging the core business
of those present in support of achieving the Millennium
Development Goals and making a profit.
Businesses have traditionally focused on profit to be made from
the middle up. According to C.K. Prahalad and Stuart L. Hart in
their 2002 article, The fortune at the Bottom of the Pyramid, there
are an estimated 4 to 5 billion people living on less than USD2
per day.
With the global number of slum dwellers set to rise from 1 billion today to more than 1.3 billion by 2020, slums globally constitute a sizable share at the so-called Bottom of the Pyramid.
It is a fact that, at the bottom of the pyramid, the urban poor
live in very high-cost economies. For instance, slum dwellers without access to municipal water pay 4 to 100 times as much for
drinking water as do middle and upper class families. They also
pay 30 to 50 percent more than in other areas on some food items
sold by the spoonful. And some companies are at last starting to
understand this.
One study in India found that brands selling in sachets and
small packets were the most successful in the slums leading some
companies to open shops in slums, and change the rules of retailing with throwaway prices in chain outlets by providing essential
items at rates generally below those of the market. It gives the poor
access to cheap goods nearer home.
We know that in slums, credit is traditionally unavailable, or
available only from local money-lenders who charge unreasonable
interest. The challenge is to find ways to mobilize small savings
from low income families to finance shelter.
A now famous success story comes from CEMEX, Mexico’s
largest and the world’s third largest cement company. Its Patrimonio
Hoy project aims to reach over 1 million low income families by
2010 through a micro credit scheme whereby savings are used to
purchase cement and other building materials. New members receive free advice from an architect or engineer about design, planning, the selection of materials, and construction techniques.
UN-HABITAT is working in this direction through its Slum
Upgrading Facility by assisting developing countries to mobilize
domestic capital for their own slum and urban upgrading activities. (See article page 12).
While an increasing number of businesses are starting to explore
low-income market opportunities through new technologies, most
“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.” C.K. Prahalad
and Stuart L. Hart in their 2002 article, The fortune at
the Bottom of the Pyramid.

Vol 14 - No 2.indd 17

of them soon realize that they need to learn a lot more about these
markets and find innovative ways to access them. Civil society organizations need to learn how to build new types of commercial
partnerships that will involve those at the Bottom of the Pyramid.
This ultimately requires significant re-thinking of private sector
practices. It also means that national governments need the vision
to inspire more business ventures through incentives that can respond to sensible needs in slums. It involves integrating informal
economic activities and ensuring healthy governance and safe regulatory frameworks that can make this happen.
For the private sector, this requires focusing on unique products, services and technologies that address the needs of the poorest. For sure, the Bottom of the Pyramid approach is no magic
potion, but it is certainly a step further in reaching out to the urban poor. – Christine Auclair

GOAL 7, TARGET 11
To improve the lives of at least
100 million slum dwellers by 2020

Source: UN-HABITAT

30/07/2008 9:49:28 AM

18

News & Events

Habitat Debate June 2008

UN-HABITAT joins hands with architects
UN-HABITAT and the International Union of Architects (UIA) in
June embarked on a five-year cooperation plan to ensure sustainable urban development and liveable, inclusive cities. The
agreement was announced in the Italian city of Turin at the
23rd World Congress of the International Union of Architects.
The collaboration between the two organizations focuses
on policy debate and formulation, advocacy and campaign
work, as well as operational delivery

Celebrating five years of water cooperation in
Asia

Asia-Pacific Ministerial Conference on
Housing and Urban Development
The second Asia-Pacific Ministerial Conference on Housing
and Urban Development (APMCHUD) was held in the Iranian
capital, Tehran. Drawing government ministers and representatives from 37 countries, the three-day meeting 12-15
May 2008, agreed an action plan that focuses on urban and
rural planning management, urban slum upgrading, water
and sanitation, housing finance and natural disasters.

Norway boosts support for UN-HABITAT

UN-HABITAT and the Asian Development Bank celebrated
five years of working together to improve water and sanitation in the world’s most populous region. As more than 5,000
delegates from 60 countries met for the inaugural Singapore
International Water Week conference and the World Cities
Summit, the two institutions pledged tighter cooperation
in their joint quest to achieve the Millennium Development
Goals for poverty reduction.

Norway will provide UN-HABITAT with funding to the tune
of USD 25.6 million to help implement a new medium-term
strategic plan aimed at strengthening the agency, sharpening its focus on urban poverty reduction around the world,
and improving its internal management. The agreement was
signed by Mrs. Tibaijuka and Ambassador Elisabeth Jacobsen
on 3 April. It provides for the provision of NOK 62 million (USD
12.2 million) for 2008 and NOK 68 million for 2009, subject to
Parliamentary reserve.

Bahrain prize for Ougadougou

Upcoming events

The Green Brigade project that has 2,000 women cleaning up
the streets of Ouagadogou in Burkina Faso, is the winner of
this year’s Shaikh Khalifa Bin Salman Al Khalifa Habitat Award.
A joint initiative of the Kingdom of Bahrain and UN-HABITAT,
the award carries a cash prize of USD 100,000.

A helping hand from the Secretary-General
Young people drawn from two Nairobi slums are set to be the
first beneficiaries of a donation by UN Secretary General Mr.
Ban Ki-moon administered by UN-HABITAT.
During a 2007 visit to Kenya he said he had deeply moved at
the poverty in Kibera, the largest slum in Africa. He pledged
a donation of USD 100,000 to help train young people living
in Nairobi’s slums.

Yokozuna gives muscle to UN-HABITAT water
programme

World Habitat Day,
Monday 6 October, Luanda, Angola
United Nations Day,
Friday 24 October, New York.
The World Urban Forum,
Fourth Session, 3-6 November, Nanjing China
World Aids Day
New York, Monday 1 December,
Conference of the Parties to the United Nations Framework
Convention on Climate Change (UNFCCC),
14th Session, 1 – 12 December 2008 in Poznań, Poland

In May, Mrs. Tibaijuka met Japanese wrestling grand champion, Yokozuna Hakuho. A Mongolian national he agreed to
be the agency’s Water-for Life Special Envoy. The giant wrestler, who met Mrs. Tibaijuka with his wife and daughter, came
to Japan at age 15 and is today a Japanese national. He was
particularly concerned at desertification caused in part by
over-grazing.

In memoriam: Lucy Githaiga
It is with a deep sense of loss and great sadness that UN-HABITAT announces the passing of our beloved colleague and friend, Lucy Githaiga, who died
early on Monday, 14 July after a sudden illness. A Kenyan national who had
served with the agency for 15 years, Lucy leaves four children. It was only
in recent weeks that Lucy was promoted from the Press and Media Unit, to
serve in a senior position in the publications unit. “Lucy had a passion for her
work, and she was a loving mother. We grieve with her family at this tragic
loss,” said Mrs. Tibaijuka.

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30/07/2008 9:49:29 AM

Habitat Debate June 2008

News & Events

19

UN-HABITAT OFFICES
Headquarters

Liaison Offices

UN-HABITAT

New York Office

PO Box 30030, GPO,
Nairobi, 00100, Kenya
Tel.: +254 (20) 762 3120
Fax: +254 (20) 762 4266/4267/
4264/3477/4060
E-mail: infohabitat@unhabitat.org
Web: www.unhabitat.org/

UN-HABITAT New York Office
Two United Nations Plaza
Room DC2-0943
New York, N.Y. 10017, U.S.A.
Tel.: +1 (212) 963 4200
Fax: +1 (212) 963 8721
E-mail: habitatny@un.org

Regional Offices

Geneva Office

Africa and the Arab States
UN-HABITAT Regional Office for Africa and the
Arab States
P.O. Box 30030, GPO,
Nairobi, 00100, Kenya
Tel.: +254 (20) 762 3221
Fax: +254 (20) 762 3904/3228
E-mail: roaas@unhabitat.org
Web: www.unhabitat.org/roaas/

Asia and the Pacific
UN-HABITAT Regional Office for
Fukuoka Office 8th Floor,
ACROS Fukuoka Building 1-1-1 Tenjin,
chuo-ku, Fukuoka 810-0001, Japan
Tel.: +81 (92) 724 7121
Fax: +81 (92) 724 7124
E-mail: habitat.fukuoka@unhabitat.org
Web: www.fukuoka.unhabitat.org

Latin America and the
Caribbean
UN-HABITAT/ROLAC,Rua Rumania, 20, 22240140 Laranjeiras, Rio De Janeiro, RJ
Brasil
Tel.: +55 (21) 2265 9960 / +51 (21) 2265 9946
Fax: +55 (21) 22058777
E-mail: rolac@habitat-lac.org
web: www.unhabitat-rolac.org

Poland
UN-HABITAT Warsaw Office, ul. Krucza 38/42
00-512 Warsaw, Poland
Tel.: +48 (22) 661 97 23
Fax: +48 (22) 661 97 24
Email: office@unhabitat.org.pl
Web: www.unhabitat.org.pl

Vol 14 - No 2.indd 19

UN-HABITAT Liaison and Information Office,
International Environment House 2 7, Chemin
de Balexert CH- 1219 Châtelaine, Geneva,
Switzerland
Tel.: +41 (22) 917 8646/7
Fax: +41 (22) 917 8046
E-mail: unhabitat@unog.ch

European Union Office
UN-HABITAT Liaison Office to the European
Institutions and to Belgium Rue Montoyer 14
(2nd Floor) B-1000 Brussels
Tel.: +32 (2) 503 3572/1004
Fax: +32 (2) 503 4624
Email: unhabitat.support@skynet.be
unhabitat.admin@skynet.be

Russian Federation
UN-HABITAT Executive Bureau in Moscow, 7
Building,13, 1-st Magistralnaja str. Moscow,
123007, Russian Federation
Tel:+7 95 930 62 64
Fax:+7 95 930 03 79

Jordan
UN-HABITAT Office in Amman
No 4, Abdallah Al-Jazzar Street, Zahran,
North Abdoun, Amman, Jordan
Tel.: +962 (6) 5924889
Fax: +962 (6) 5931448

Serbia
UN-HABITAT Office in Belgrade
Office building of RK Beograd - Makenzijeva
57 11000 Beograd - Serbia and
Montenegro
Tel.: + 381 (11) 34 04 162
Fax: + 381 (11) 34 04 162
E-mail: ligia.ramirez@unhabitat.org.yu

Information and
other offices
India
UN-HABITAT Information Office
5th Floor (East Wing)
Thalamuthu Natarajan Building
(CMDA Building)
Egmore, Chennai 600 008, India
Tel.: +91 (44) 2841 1302
Fax: +91 (44) 2851 6273
E-mail: unchssp@md2.vsnl.net.in

China
UN-HABITAT Beijing Information Office
No. 9 Sanlihe Road
Beijing 100835
People’s Republic of China
Tel.:+80 10 6839 4750 4750, 68350647
Fax:+80 10 6839-4749
E-mail: office@unhabitat.org.cn
www.mohurd.gov.cn/habitat.

30/07/2008 9:49:29 AM

A MAGAZINE CHANGING

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Correspondence
Editorial Assistant, Habitat Debate, P.O. Box 30030, Nairobi 00100, Kenya.
E-mail: habitat.debate@unhabitat.org Website: www.unhabitat.org Telephone: (25420) 762 3120, Fax: 762 42 64.

Vol 14 - No 2.indd 20

30/07/2008 9:49:36 AM

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