UN-HABITAT: State of the World’s Cities report

Mrs. Anna Tibaijuka, Executive Director of UN-HABITAT said that the crisis should be viewed as a “housing finance crisis” in which the poorest of poor were left to fend for themselves.

"Clearly you cannot have a harmonious society if people are not secure in their homes," she told reporters at news conference to launch of the State of the World's Cities 2008/2009 , a flagship report published every two years by the UN agency.

"The financial crisis we are facing today cannot be seen as an event -- it is a process that has been building up over time and this process now has bust." She said governments had to provide cheaper homes for those on lower incomes because the supply of affordable housing could not be left entirely to the market.

The UN-HABITAT said income distribution (measured through Gini coefficient levels) varies considerably among less-developed regions with the divide most noticeable in African and Latin American cities. In both regions, the gulf is often extreme compared to Europe and Asia, where urban inequality levels are relatively low.

South African cities top the list of the world’s most unequal cities,
followed by Brazil, Colombia, Argentina, Chile, Ecuador, Guatemala and Mexico. Urban inequalities in this highly unequal region are not only increasing, but are becoming more entrenched, which suggests that failures in wealth distribution are largely the result of structural or systemic flaws.

Mrs. Tibaijuka said the proportion of people living in slum conditions in wealthy countries could rise because of the credit crunch. With 1 billion people already living in slums at the dawn of the new urban era, the report warned of unrest should governments fail to tackle the urban poverty crisis more seriously.

"I would not be surprised that, if we did another global survey on people living in slum conditions without security of tenure, this number will have increased in developed countries as a result of this crisis," she said referring to a recipe for riots and social upheaval to which the financial turmoil might lead.

"I am not surprised that world leaders are now seizing on the matter because without leadership, without governance, it is a clear test of social tensions," she said.

Background - Not so harmonious cities

In many cities around the world, wealth and poverty coexist in close proximity: rich, well-serviced neighbourhoods and gated residential communities are often situated near dense inner-city or peri-urban slum communities that lack even the most basic of services. Here the expert in charge of UN-HABITAT’s State of the World’s Cities report, Eduardo Lopez Moreno, explains the report’s latest research on a divide so prominently marked by electrified fences and high walls often patrolled by armed private security companies with killer dogs.

Income distribution (measured through Gini coefficient levels) varies considerably among less-developed regions with the divide most noticeable in African and Latin American cities. In both regions, the gulf is often extreme compared to Europe and Asia, where urban inequality levels are relatively low.

All too often it is not the actual degrees of inequality that matter, but the perceptions of it. And nothing defines that perception better perhaps than the example of a sign with a skull and cross bones carrying the warning “armed reaction” on a high electrified fence cocooning a suburban Johannesburg home.

When gross inequalities are associated with unjust systems that perpetuate poverty, curb upward mobility and exclude the majority, you have a formula for trouble. Put another way: when inequalities are perceived as the result of unfair processes or the unequal distribution of opportunities, people are less likely to accept them. Indeed such perceptions can nurture high crime rates, social unrest or even conflict.

There is no doubt that social unrest and insecurity reduce incentives for investment and force governments to increase the amount of public resources devoted to internal security – resources that might have otherwise been spent on more productive sectors of the economy or on social services and infrastructure.

Inequalities take various forms, ranging from different levels of human capabilities and opportunities, participation in political life, consumption, and income, to disparities in living standards and access to resources, basic services and utilities. Although the traditional causes of inequality – such as spatial segregation, unequal access to education and control of resources and labour markets – have persisted, new causes of inequality have emerged. These include inequalities in access to communication technologies and skills, among others.

A society simply cannot claim to be harmonious if large portions of its population are deprived of basic needs while others live in opulence. A city cannot be harmonious if some groups concentrate resources and opportunities while others remain impoverished and deprived.

Income inequalities not only threaten the harmony of cities, but also put the harmony and stability of countries at risk, as they create social and political fractures within society that threaten to develop into social unrest or full-blown conflicts. An excessive distributive polarization of income and wealth challenges social cohesion in many parts of the world, and the demands for narrowing social distance are in fact demands for social inclusion, social mobility and equal opportunities; in short they are demands for human dignity.

In Africa, urban income inequalities are highest in Southern Africa. South Africa stands out as a country that has yet to break out of an economic and political model that concentrates resources, although the adoption of redistributive strategies and policies in recent years have reduced inequalities slightly.

Unfortunately, rising economic growth rates in several African countries have not reduced income or consumption disparities. Instead, urban inequalities in many African cities, including Maputo, Nairobi and Abidjan, remain high as wealth becomes more concentrated. In general, urban income inequalities in African countries tend to be higher than rural income inequalities, and Northern African cities tend to be more equal than sub-Saharan African cities.

From many countries around the worlds, the evidence suggests that the benefits of economic growth are not realized in societies experiencing extremely high levels of inequality and poverty. Societies that have low levels of inequality are more effective in reducing poverty levels than those that are highly unequal.

Inequalities also have a dampening effect on economic efficiency as they raise the cost of redistribution and affect the allocation of resources for investment.

Levels of inequality can be controlled or reduced by forward-looking mitigation efforts on the part of governments. UN-HABITAT analysis of urban inequalities in 28 developing countries indicates that since the 1980s, nearly half of these countries managed to reduce levels of urban inequality while enjoying positive economic growth.

- UN-Habitat.org