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How to improve housing affordability, adequacy and resiliency to meet the needs of low-income households?

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Informal settlements can be defined by being geographically, economically, socially, and politically disengaged from broader urban systems.

They can also be excluded from opportunities and decision-making.

Living in informal settlements disproportionally affects certain groups. They often sit on the periphery of urban areas and lack access to markets and resources.

Sustainable development target 11.1 measures access to adequate housing and upgrading of slums. But it’s one of the SDG targets that’s regressing. Meanwhile, the absolute number of people living in informal settlements has continued to increase, and by 2018 it exceeded one billion people.

Projections for 2030 estimate a further increase in the number of people living in informal settlements to 1.2 billion. The most significant proportion of this increase is occurring in Africa.

So how does informality contribute to unaffordable and inadequate housing? What is this relationship, and what can we learn from it to create practical solutions?

How is Informality a Contributing Factor to Informal Settlements?

With the lack of proper planning, urbanization, and everything centralized, such as jobs and schools, the cities are not prepared for the influx of people working in these locations. It forces individuals to devise their own means of housing.

People who are well connected to the government, have money and resources are the ones who invest in these shelters. These informal service providers identified a gap and provided cheap housing to low-income earners.

There is an argument to be made that informality is forced as a result of barriers to entry. It arises due to the difficulty of accessing formal, registered housing.

It could be that a household cannot afford a formal dwelling that’s approved, so they construct their own that is considered informal. Sometimes it’s due to the costs of registering a business and pulling together all the aspects required to be functional such as bookkeeping and legal advice.

There are also rigid financial systems that don’t recognize small-scale providers or households that earn incomes differently. There are insufficient statutory processes such as accessing title deeds. Finally, there are broken value chains that don’t connect to one another. Everything from registration to maintenance is not linked, and it forces low-income earners to make a plan that overrides these failures.

Beyond the Four Walls

It’s essential to look at housing beyond four walls and a roof over the head.

You have to look at the services these individuals get access to. You need to look at public spaces that are accessible. You should see if it’s connected to the city grid, sewers, and clean water. Often all these essentials are provided by someone else at a higher cost. Sometimes it can be up to 150% more than what someone in a formal settlement will pay.

It can’t be left to the market either. For developers, it’s about profits. They don’t see slums as something worth investing in. Instead, they would prefer to develop in housing for middle and high-income properties where they can build, get a return on their investment, and move on to the next project.

The Climate Impact

There is a case to be made that adequate housing is unaffordable and affordable housing is inadequate. If you add the topic of climate change into the conversation, you could also add that inadequate housing is also unaffordable.

If individuals can access housing informally by quickly putting something together, that inadequacy is also expensive. It costs even more over the long term. There are high expenses for the household, the city in regards to consumption of resources, the nation, as well as the planet.

The Five Components of Informality

The first component of informality is durable housing. It’s because when the topic of informal settlement is raised, the first thing that often comes to mind is substandard housing.

The second one is sufficient living space and the issue of overcrowding due to how many people live in a house. It has become even more prevalent during the pandemic as it has made it more difficult to isolate when there is little room to do so.

Access to services is the third one. These include basic needs like safe water. Poor hygiene and limited access to clean drinking water cause diseases such as diarrhea and cholera, very common and potentially lethal. Additionally, If there is no plumbing connected to the home, then households must find ways to attain it.

It leads into the fourth component of informality, which is sanitation. Does the informal settlement have access to sewer drainage? If not, it can have significant health repercussions.

Finally, there is tenure, and it relates to how long these people have survived in these informal settlements.

If we’re able to tease out the definitions of slums and look closer at these components of formality, it identifies something that is quickly solvable.

The Informal Sector

Did you know that the informal sector is the largest employer across Africa?

It could be for many other parts of the world too.

These individuals may also be working formally to make ends meet. But a lot of money is coming into this sector, and traditional financial systems don’t know how to respond. Therefore, the procedures in place to support good housing processes are inaccessible to that market.

Urbanization rates are so significant that cities can’t cope. There has to be some way to enable and recognize the informal sector as an opportunity to solve the problem, especially as many have stated that informality has won.

Do you want to be part of the solution? Sign up to find out about upcoming events, interviews, and articles on the future of housing.

Moderator: Chris Herink – Vice President, Program Effectiveness at Habitat for Humanity International


  • Joseph Muturi – Chair of the Slum Dwellers International (SDI) Board of Directors (Kenya)
  • Kecia Rust – Executive Director and founder of the Centre for Affordable Housing Finance in Africa (CAHF) (South Africa)
  • Anaclaudia Rossbach – Regional Manager for Cities Alliance in LAC and Manager of the Global Programme on Informality (Brazil)
  • Stephen Seidel – Senior Director, Global Program Design and Implementation at Habitat for Humanity International (USA)