What Are the Causes of Informal Settlements?

A residential formation built without legal permits to utilize the land or located outside of an urban development scheme is known as an informal settlement, according to the United Nations Economic Commission for Europe. In most cases, housing has been improvised and lacks basic infrastructure such as sanitation. Approximately 1 billion people, or one in six people live in informal settlements or slums worldwide, according to UN Habitat. Numerous socio-economic factors underlie the growth of informal settlements globally.

1 Poverty

According to the United Nations Economic Commission for Europe (UNECE), poverty and social ostracism are the primary causes of informal settlements in most nations. Governments around the world grapple with fiscal deficits and therefore promote and subsidize industrial sectors that can revitalize the economy. Public budgets for the rehabilitation of urban areas ratchet downward, thus impairing the ability of governments to effectively address the problem of informal settlements. In low-income nations riddled with high unemployment, people struggle to put a roof over their heads. Even in Western Europe, six percent of city dwellers reside in substandard housing characterized by perilous living conditions.

2 Urbanization

In 2007, a global tipping point was reached when more than half of the Earth’s population was residing in urban zones. According to the International Federation of Surveyors, urban areas will house another 500 million people in five years. Job opportunities and increased prospects for material gain have fueled the rapid growth of megacities, those urban areas that support a population of at least 10 million. To date, there are 19 megacities worldwide. By 2020, it is estimated that this number will increase to 27.

Megacities have caused dramatic social and economic disruption. Governments are unable to manage swelling responsibilities. Therefore much growth takes place outside of any formal planning and administrative processes. In developing countries, 30 percent of the urban population dwells in informal settlements. Ninety percent of new city housing in sub-Saharan Africa is improvised and typically constructed in high risk sites that are also exposed to climate change impact.

3 Ineffective Housing Policies

Although governments have implemented policies to provide housing for the urban poor, their efforts have proved futile. According to Housing the Urban Poor, several governments have pursued anti-urbanization policies. They have evicted people from informal settlements, razed the housing, and sent the dwellers back to the countryside. These measures fail to stem the tide of urban migration. Other tactics have included subsidized public sector housing and incentive schemes for private real estate developers to move down market. As their options dry up, governments have resorted to a “blind-eye” approach. They furnish basic services to informal settlements and only evict squatters if they need the land.

Kay Tang is a journalist who has been writing since 1990. She previously covered developments in theater for the "Dramatists Guild Quarterly." Tang graduated with a Bachelor of Arts in economics and political science from Yale University and completed a Master of Professional Studies in interactive telecommunications at New York University.