© Christian Bobst

Why Urban Poverty is Underestimated and Misunderstood

BY: Craig Hatcher - 05. February 2024
© Christian Bobst

Until recently, cities were often overlooked in development policy and debates. Directing funding to urban areas was seen by many development experts as diverting resources away from where they were needed most and where most of the world’s poor lived – rural areas.

But equating development with rural development has slowly become less tenable in a world that is continually urbanizing. In 2007, for the first time in history, 50 percent of the world’s population was living in cities. Today, it has reached 56 percent and is predicted to increase to 68 percent by 2050, with most of this growth taking place in Sub-Saharan Africa and Asia.

This increasing and rapid urbanization calls for a new approach to understand the changing geography of poverty. The urban share of poverty is rising. In 2020, approximately 1.1 billion people were living in slums or slum-like conditions – that is, neighborhoods with poor quality housing, typically lacking security of tenure and with limited access to basic amenities such as water, sanitation, power and waste collection. This figure was 900 million in 2000, and UN-Habitat, the UN agency responsible for cities and settlements, predicts that this will increase to 3 billion by 2050. 

Despite these gloomy predictions on urban poverty, the transformative potential of urbanization is beginning to feature more prominently on the development agenda. If managed and planned effectively, cities have the power to lift people out of poverty. SDG 11 was adopted in 2015 and focuses on making cities inclusive, safe, resilient and sustainable. It is accompanied by the New Urban Agenda, a guiding document with pathways on how to reach that goal. More recently, COP28 highlighted the important role cities play in tackling climate change. Economists emphasize how cities generate 80 percent of the world’s GDP, while others highlight the importance of cities for innovation, jobs and income generation.    

Recognizing the scale and growing urgency of urban poverty as well as the transformative potential of cities led Helvetas in 2016 to collaborate with partners in harnessing the benefits and tackling the challenges of urbanization. Helvetas now has 14 projects across eight country programs that help shape urban policy, improve data on this problem, build community cohesion, and improve access to basic services and affordable and nutritious food in cities. Above all, we aim to amplify the voices of the most marginalized and under-served groups to ensure that cities develop according to their needs and leave no one behind.    

Underestimating urban poverty

So why has the development sector traditionally focused more on rural areas and rural poverty? Much of this has to do with how poverty is measured. Standard poverty measurements that are defined in absolute terms, such as the World Bank’s international poverty line, classify extreme poverty as living on less than $2.15 per day. Using this figure, it is determined that most of the world’s population living in extreme poverty live in rural areas. The World Poverty Clock indicates that in 2023 approximately 633 million people were living in extreme poverty; 580 million (just over 90 percent) of these people were living in rural areas and 67 million (just under 10 percent) were living in urban areas. If most of the world’s extreme poor live in rural areas, it comes as no surprise that most overseas development aid (ODA) is directed to tackle rural poverty.

Yet poverty lines hide as much as they reveal. According to David Satterthwaite from the International Institute for Environment and Development, standardized poverty measurements grossly underestimate urban poverty. Poverty indicators that are based on income required for non-food items are more closely aligned to rural poverty characteristics – but these are too low for urban areas where people rely more, or even solely, on income for food items and often have higher expenditures on housing, transportation and basic services. This means that millions of the urban poor are not counted in poverty statistics, producing an underestimation of the scale of urban poverty and leaving the voices of the urban poor unheard. This leads to inadequate policies that fail to effectively tackle poverty.

Multi-dimensional indicators offer more plural and nuanced accounts of poverty, but still tend to ignore key traits of urban poverty, particularly those prevalent in informal settlements, such as poor housing standards and living conditions. In measurements where basic services (e.g., water and sanitation) are considered, the target is set too low for urban areas, failing to account for the density of such neighborhoods and how urban services typically require different infrastructure (see Satterthwaite article).

Poverty statistics also tend to mask differences and deny the heightening inequalities that are more evident in cities than in rural areas. Urban averages – a single poverty statistic that applies for a whole city – fail to show sharp differences between neighborhoods within the same city. Cities are often described as having a higher number of urban services and better-quality service provision, but it is important to remember that close proximity to urban services does not equate to access for marginalized and under-served urban communities. Urban averages mask these differences and do not provide a granular account of urban poverty, as well as disguising the tensions that can exist between divergent communities living side by side.

Just as poverty is difficult to define and measure, there is also a need to unpack meanings of “urban” and what is classified as a “city.” Differences in these classifications can also lead to an underestimation of urban poverty. What is classified as a city varies from country to country: A settlement with 2,000 inhabitants might be classified as a city in one country and a rural village in another. This makes reliable calculations of a global urban population – and the extent to which those people are living in urban poverty – difficult.

At Helvetas, we pay particular attention to smaller, emerging towns and support municipal governments and civil society organizations with managing urban rapid growth and the challenges this can bring. These towns often lack resources, adequate governance structures and available expertise in comparison to larger cities. Sometimes these towns are classified as “rural” in their country context; though they display all the characteristics of a city, official definitions have not caught up with the reality on the ground. This is common in Nepal, for example, where some rural municipalities are experiencing a profound transformation as a result of rapid population growth, where they quickly shift from a small village to a bustling urban center. This poses numerous challenges from a social, infrastructural and governance perspective. For newly elected local governments, planning the sustainable development of a village that grows at a very fast rate is anything but easy. Helvetas is supporting two emerging cities in Nepal with these challenges, Simta in Karnali province and Harion in Madhesh province in the Terai region. 

Misunderstanding urban poverty

Urbanization alters the character of poverty. As well as vastly underestimating the number of urban poor, urban poverty has been misunderstood, leading to ineffective approaches and policies to tackle it.

Informality is one aspect of poverty that requires a different approach in urban contexts. Informal settlements – also referred to as slums – are spatialized manifestations of poverty in cities. These communities are often located on the edge of a city, but are also found in city centers with higher land values, where the threat of eviction from development pressure is greater. Residents of informal settlements live in poor quality, overcrowded housing, lack safe and reliable water supply, are poorly served for sanitation and waste collection, and typically do not have access to quality healthcare and schools. Settlements are often built on land unsuitable for construction and susceptible to disasters such as landslides, fires or flooding. Residents living in such settlements typically suffer from malnourishment.

Slums conjure up images of large, sprawling settlements in megacities such as Dharavi in Mumbai, popularized by films like “Slumdog Millionaire.” These places have even become popular with tourists who are keen to experience their uniqueness and vibrancy. Yet slums are found in most cities, including smaller ones, and are a vital part of our work at Helvetas that targets interventions towards the urban poor.

We work in the secondary cities of Singida and Mbeya in Tanzania, Cox’s Bazar in Bangladesh and Sucre in Bolivia, where informal settlements are not as vast as somewhere like Dharavi, but the residents are experiencing similar challenges – poor service provision, threats of eviction, disasters, malnutrition, among others. They are also often caught up in the political dynamics of the city, with residents of such settlements typically seen unfavorably as “outsiders” or “land grabbers.”    

In Bangladesh, malnutrition is a key challenge in the country’s informal settlements. A study revealed that 63% of children in four of Dhaka’s slums were malnourished and 58% were stunted, while 83% of households were affected by food insecurity. Helvetas supports families living in informal settlements in Cox’s Bazar, a city in the southeastern part of Bangladesh, who struggle to access sufficient healthy and nutritious food. The project works with partners to raise awareness of healthy diets and food hygiene practices, to promote the adoption of good food safety standards and practices among food handlers and traders, and supports urban gardening in the city. The project also benefits from exchanges between the City of Zurich and Cox’s Bazar municipality so that both cities can learn from each other and find common solutions to tackle food system challenges.  

According to UN-Habitat, 41 percent of Tanzania’s urban population live in slums. In Helvetas’ recently launched project, Sauti na nafasi, meaning “voice and space” in Swahili, we have begun to work with the municipal government and civil society partners to improve the lives of those living in informal settlements in the city of Singida. Activities will focus on strengthening the security of land tenure for residents and improving basic community facilities and infrastructure.  

Cox Bazar, Bangladesh | © Franca Roiatti
Rubi Akter, 30, tends her homestead garden in an informal settlement in Cox's Bazar, Bangladesh.  © Franca Roiatti
Mbeya, Tanzania | © Yusuf Msafiri
Soweto market in Mbeya, Tanzania. © Yusuf Msafiri
Sucre, Bolivia | © Mauricio Panozo
Pedestrian Day in Sucre in Bolivia. © Mauricio Panozo

What’s next for urban development?

Cities are now firmly on the development agenda. OECD highlights that an estimated 65 percent of the 169 targets behind the 17 SDGs will not be reached without the involvement of cities. And there is increasing acknowledgement that the battle against climate change can only succeed if cities take center stage, and that cities play an important role as economic powerhouses for broader regional and national development.

Placing the transformative role of cities on the development agenda is a positive step forward, but is it enough? There is still lingering donor reluctance when it comes to adequately directing resources towards tackling urban poverty. Development approaches and policies also tend to remain informed by initiatives implemented in rural settings, which are ineffective when applied to an urban setting. More needs to be done to improve measurements related to urban poverty and inform awareness of its true extent, while ensuring the urban poor have a voice in decision-making so that solutions for urban challenges are developed with their needs and demands in mind.

Urban Engagement

In 1960, only 1/3 of the global population lived in cities. Today, it’s 55% and growing. Helvetas looks for ways to ensure that this rapid urbanization benefits the poor and the marginalized.

Voice, Inclusion & Cohesion

In many countries where we work, men and women are unable to claim their rights and participate actively in decision-making processes.