THE GLOBAL CITY MAGAZINE 13831G Most Of~~~~~~ ReG o New _ About UrbanAge RBAN AGE-THE GLOBAL CITY MAGAZINE-provides you with a focus on urban affairs that is not available anywhere else in the world, By looking at cities through Lrr Urban on-the-scene reporting and provocative opinion articles, this magazine opens a door I ~ Proorfamme to world-class thinking about the latest policies, trends and initiatives in This issue of UrbanAge urban affairs. Whether it is how cities can create attractive investment strategies; is funded by the Federation of making the link between cultural heritage and economic growth; or investigating approaches to Canadian Municipalities (Canadian International Development alleviate poverty and housing shortages, the insights and resources on these pages are designed to Agency),the Detch Ministry of help cities-and the people who work and live in them-to realize their full potential. 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EDITORIAL BOARD REGIONAL EDITIONS EDITORIAL STAFF ALIOUNE BADIANE, Urban NIGEL HARRIs,University EMIEL WEGELIN, Institute of BEIIING:WANG JINGXIA,YU Li, MARGARET BERREN,Editor Management Programme, College, London, England Housing and Urban Develop- QIN FENGXIA, CAO XINXIN NICK HARRISON, Managing Editor Abidjan, Cote d'lvoire NADEZHDA KOSAREVA, Institute ment Studies, Rotterdam, and GAO J IAN, China ANNABEL BILEs, Assistant Editor YVES CABANNES, Urban for Urban Economita, The Netherlands Academy of Urban YVES CABANNES, Urban for Urban Economics, Planning and Design BoNoTom STUDIO, INC., Design Management Programme, Moscow, Russia Yu Li,ChinaAcademy of UrbanP Quito, Ecuador CHARLES LANDR,Comedia, Planning and Design, Beijing, CAIRO: RANDA FOUAD, ELLEN CALLOWAY, Photo Editor JAMES H. CACRR, Fannie Mae Stroud, England Chin UMPArab States NITA CONGRESS,Copy Editor Foundation,Washington, USA ROSERT H. McNuLTY, Partners ADVISORY BOARD Environment f, PATRICIADMORANCircutation CHARLES CORREA, Charles for Livable Communities, Al-Ahram Newspaper CorreaAssociates, Washington, USA G. SHABBIR CHEEMA, United QUITO: YVES CABANNES, Mumbal, India MOHAMAD MACHNOUK,Eco News Nations Development PETER CLAESSON, and VICTOR FALKENHEIM, University Beirut, Beirut, Lebanon Programme, NewYork City, RICHARD HUBER, UMP Latin of Toronto,Toronto, Canada LYNDSAY NEILSON, University of USA America and the Caribbean Sam Shwarz Caberr, CanerraAustalia JACQUES JOBIN, Federation of Moscow: NADEZHDA KoSAREVA MICHAEL FISHMAN,Sam Schwartz Canberra,Canberra,Australia Canadian Municipalities, and YELENA YELAGINA, & Co., NewYork City, USA GIOVANNI PADULA,0IMondo, Ottawa, Canada Institute for Urban RANDA FOUAD, Urban NewYork City,USA BAS M.VAN NOORDENNE Economics Management Programme, JONAS RABINOVITCH, United Ministry of ForeignAffairs, Cairo, Egypt Nations Development The Hague,The Netherlands ROGER GRAEF, Films of Record, Programme, NewYork City, London, England USA VOL6/ NO. I SUMMER 1998 Features DANA WICKWARI 5 The Shadow Economy I he one ^ 'I or -er ,er-s r,othe o - 0 i -ii sec-oa- c-ovide goods arid se vices to a th rd o-F t se Vor- ^S poclo1- or IJ -i e'a1ted s -c d,-c:u .o 'Cult, these Cid 2r1- c-e expei- a -suivi, -1 I rd '- a, essertia' o-- porert o- mnn ilL es' e cOoCn I, I 0 Microentrepeneurs:The Unacknowledged Lucr Coiir r Borrowers Financel :rstit Sions | ,'a. n A '-'e"car AllOtec are [or years gncved] rhe borrovw' 5g po.ue' sf en. 20orenocs ard sn,c I Li' nesses -l eo. Ierd-ng oc'ic es nowz acl nov.,'cce the rc. -sorn c circle of che sector~ a1rt re 'ocuc rn, su nris,nn-, D0,,v _ uesult MAPGARET BERGE`J A X D 14 A Conversation With Elaben Bhatt PATRA_E. HA CUATJEFjLE Eabe- Bhatt. -c-ers :i::vs- Gund a:ld i'ona: ta Sto L ',on Age .b-b - ncr phr Iosoph1 arc -.vor- conce--ri cg the st'ugLcl for p'caresc in deve1cf^-- - DOel _-nd -eute- issues MICH4EL SANIO 18 Waste Not,Want Not Ai cites D-iro t:-eraste thcc, pic c icc reaiec nc,/ eci on_necaI -raFeoges Sorrme eoDc- s u-i> trio a\5cc' a; so ' n,stor" -he -cfuse nto e-mI,zers Fo-r r-ta: ag-clLtr c re.ic cled c-tet ia,s ieo other prcdLcts FRAt..e HA S501 2 6 Mostar: BridgingThe GapThrough Design In Fiesta- Bcsr a-He7e2covan a t_.- oi A, li a 'ar a ,c local ,ro^n cesl,rel-s rIc po-aTe otIr he on-lt nd ,atuI- foLi --s to -etcre tcis se-e-e,o r ,-ed u ban space ard - ng Il- -e cv'.' dCC Lc celher Departmnents [M1, CscscT BLUti I 4 Editor's Note CH STI- I Auc-s F 21 Urban Indicators PA- FIC -. K C,-:C- 28 Portrait Of A City-Salisbury A- .Asri B t s 30 Cityscape NcELI PIF-c 32 American Urban Challenge A jDt Y Sci1.T 34 Reviews 35 Letters To The Editor 36 City Resource Guide 39 Urban Calendar C,- .F 1-rH T- 1- -sI, D_' - Harnessing Our Human And Economic Potential E RECOVER BOTH PEOPLE AND MATERIALS; we don't want to waste any human resource or natural material," said Michael Krause, director of the Green Institute in Minneapolis, Minnesota, when he was interviewed by Neai Peirce for this issue. His comment captures precisely the spirit of this Urban Age, since he was referring to the recognition and respect owed to people's daily endeavors. There is a point at which the industrial machine mimics nature. In biosystems, organisms consume each others' waste. In the eco-industrial parks of cities throughout the United States and Europe, Peirce describes industrial enterprises aspiring to mimic this symbiosis by using the waste and energy of each others' industry to fuel the production process.And, just as you thought we were running out of new buzz words, Peirce expands our lexicon: watch our for"green twinning," "byproduct synergy" and "eco-preneur." We easily extend this synergistic metaphor to an emerging rural-urban connection, whereby munici- pal waste is recycled for improved agricultural productivity.The talk these days is of material and energy U- at-e not exchange to keep cities and their environs functioning sustainably. In Michael Sanio's article "Waste Not, Want Not," cities are not seen as drains on natural resources, but as sources of energy as their waste t ; seen as c ra' t15 on rejuvenates tired rural soil that will in turn produce the crops to feed city dwellers. nat,a !2 reso.n ces, Krause's sentiments about using all available resources finds a humane expression in Elaben Bhatt's b"u-, - exhortations that we acknowledge and promote the role of the "People's Sector" in the global economy. Bhatt is the subject of our first Urbon Age profile, a regular feature that will endeavor to highlight the work o -negy as and philosophy of individuals whose contribution to cities and city life is particularly meaningful. > theirwaste Bhatt has spent her entire career working as a representative of the self-employed women of India. She talks to us of her belief in the power of the poor to organize, politicize and represent themselves. XSn Sf05 r stSre2 She is a daily witness of the need to give voice to women and families whose contributions to their urban, S :-i G national and global economies is usually discounted or ignored. Hers is an outrage born of experience, couched in truth. As Bhatt explains, the semantic impact of the term "informal economy" abruptly defines the legal status of the people in the sector while unwittingly casting the efforts and productivity of these one-billion work- ers in an ambiguous state. The right and need to work is asserted every day by the members of this shadow economy It is, in a sense, an economy born of necessity.The international debate, as defined in our feature by Dana Wickware, centers on the need to "legalize and formalize" the activities and status of its members. Recognizing the existing legitimacy of the work of so many begs the question of how to formalize their activities.The question is perhaps best stated when looked at the other way around: how can the mem- bers of the informal economy use the existing political system to attain sufficient political influence in order to increase and improve the provision of government services and benefits to their members? In this issue we also introduce our Portrait of a City department. Writers from around the world will share their personal histories and experiences of city life. Patrick French, this year's Sunday Times Young Writer of theYear Award winner loves and laments his town's demise in Salisbury, England. Another new department, City Indicators, contains the results of international research into statistics concerning a variety of vital city elements.We will provide you with this data in each future issue as a tool to gauge the successes and shortfalls of cities in all parts of the world. 4 UrbanAge SUMM-ER 1998 BY DANA WICKWARE - i my NAGAMMAL LAKSHMI rises at five and travels E X market on a train jammed with humanity. - , 10 hours a day, six daysaeek,selling vegetables r 8- - street market. in Madras, a south IndiM city ofteeming mil- *; =; Fhird floor of a public housing tenement locat- 3 * - * *. handsome, dark-skinned lowcaste widow Nagammal , 5! * a ce with her five children and two grandchildren.There is no K J \ L mily building and only a single toilet on the ground floor. But say the place is much better than one of the huge shanty slums i*;il Eii E wise live. g about Nagammal is her dignity, her energy, her resourceful- - ; - a a ty, and her good humor. In these and many other ways, Nagam- * * 3 i ; ds of millions of people across the globe who are at the base usually far removed from such lives, as the informal sector. .. - ~~~mal sector are everywhere.They are woman and children ~~ <~ garbage in Rio; they are child artisans doing dirty, danger- ! $iny lock factories in Aligarh; they are clutches of noisy, truculent ing fantastic embroidered pillow covers on New Delhi street cor- nds of da laborers living with their families on the pavements of niously constructed plastic tents; they are regal Senegalese ladies ~ digo fabric off rickety tables; they are hundreds of thousands of -y-.r-0 S U NM F 1998 UrbanAge 5 Governments are exe t fr the l w and workplace protect restauranteurs serving percent in Zimb ae t 80 percent in Benin, with a delicaces fromsmoke- median of49 ecn. nfv Asian countries, the cor- blackned oen shds on res ponding percentage range from 17 to 67 percent. i dusty roadsides; they are Althouggh the new iLO compilation is illuminating (it ~"4 sille Malgasycrafsmen also provides, data on informal sector gross national r1 _ Hep,airing f autoengines jproduct [GNPI, contributions), variations in census da- and other complexma- ta' clliection nethods limit country-by-country com- cn in\\; open lots::t ing heprvisinparisonis. A00X te rvc$o Antananar:$d40fiswervo; theyfcon-S are f Couer,ntingthen e of iformal sector workers Latio grdeerswithou an esrn hevleohir economic contribu- work pemits, ovingl tin safrial akbt echnically and because tend:ng th gree elus green the nitions of informal eonomic activity are so pr:l eincts of Beverly Hills flexi be and shifting.vPofessor Martha Chen of the and0 Greslenwich;thy are Harvard Institute forpnternational Development points fearles NigerianI toea- out that counting informal workers is frequently dis- tors ofere caening r- torted by the failure to include people engaged in laden motor scoo tr taxis commerce and service, activities-such as street, pave- in PfwortkHarouer-t they are ment and stall vendors, traders, money lenders, rick- h g toughgypsab drivers shaw driVers and head loaders-as opposed to those prowling the far reachs engaged in ma nufacturing. In some countries, such of Brokly : esi ein battered, hpeople number in the tens of millions and account for Dfourthu hand vehiles, a whoasignificant portiAon of GNP Wholly vIsible but url The importance of counting members of the in- seen,7en ucnt u formtrece statsticalal setoqr (and indteed, of all citizens) can hardly be ognied lborig ina gi ovestatd. Fr onle thing, the provision of government ant shaowecnomy, srvcsn bnftIs, f~rom public education to en- İ~ ~hat care He is they prvdcot ftegos adsrie con-~ ocmnto ao laws, depends on accurate esti- sumed oymanth the world hen r ofcitizens entitled to be served. and, coincidently wt tir pie ceworc arr unted, and who exist labors, they adblininvautotepoutof ofillhveth poeta oetbish an independent mainstreamn omies Avicgfr anigboltia power In many instances, those who desr ofiilrcgition must band to- gethe an,i fet on hmselves. SEWA-the There is muenting eic t infoermal smploy f ed W s Association-abased in Ahmed- is far larger than once thought. The Itrainl abad, I,1ndia has sucessfully pursued this strategy for Labour Office (ILO has estima4ted tha intepo- more than two decades. SEWA, which is really a labor est countries, 80 Percent of workers oprt nte union representing female informal sector workers, informal and agricultural sectors, while for middle- now has 250,000 members, enough to give the orga- income countries, the informal/agricultul gant political and sial influence. c6eeds 40 pOercent. On aeae30pretowok Thdifclyfacutlymsuring the size of ___________________ ers in developing-worl ciisaeifras cod h nomlsco silsrtdb he issue of women DANA WICKWARE ing to most estimates, In~ a few ~cases, this percentage who Work at home. According to Professor Chen, writes about is lower; in mrany, it is substantially higher, Accordfing income-producing work done at home and dominat- development and to a recent statistical ~comp i lation bythe ILb, of total" ed by woman islargely unrecognized and uncounted. heath are Heis urban employment, the informal-sector portion ac- Professor Chen contends that, in order to accurately of-e afroiane Freitr counts for 49,percent in Peru, 40 percent in Ecuador measure the work force in developing countries, both and 54 percent in Colombia. Among IS subshaa nterprise workers-those engaged in subcontract magazine Africa"n nations, urban in~formal employmnen aape- wrk-as well as those who are actually employed by centage of tot~al informa epomnt rane fo9 orpeaeiormal businesses~ muist be counted. 6 UrbanAge SUiMMER 1998 ws to individuals and enterprises that are officially invisible. TRADE MEMBERSHIP IN AHMEDABAD CITY, INDIA Bamboo Work "Recognizing and, more importantly, counting women's bility of the informal sector argues that technology, 'Weaving invisible paid work-that is, fully counting what we call privatization, deregulation and globalization have re- Cooking & Catering the gender reality-would challenge our empirical un- sulted in a decline in the number and nature of tradi- Bidi Rolling derstanding not only of the informal sector but of the tional formal-sector jobs, making them more like in- Embroidery economy as a whole," Professor Chen says. Figures formal sector activities. In the United States hundreds jariNVork presented in her recent paper show that, across the of thousands of middle-managers, engineers and tech- Block Pintin,g board, the overwhelming percentage of nonagricul- nical professionals have lost presumably secure salaried Paper Making tural, home-based work is performed by women.They jobs over the last decade as a result of corporate Agarbatti Making also reveal that home-based work often accounts for downsizing. Many of these individuals have become Bookbinding/Paper a significant, and sometimes very large, segment of all self-employed entrepreneurs offering their services Candlestick Making economic activity. For example, in the Argentinean to all comers on a contract basis. Blacksmiths cities of Buenos Aires, Cordoba and Rosario, 8 to I 0 Hernando de Soto, activist author of The Other Piastic Cement Bag Ceaners percent of workers in the manufacturing sector are Path, an influential book about the informal sector in Cleaners home-based. In the Philippines, 1 3.7 percent of infor- Peru, noted that the informal sector consists of"legal Chindi & Patchwork mal sector workers are home-based, while in both activities carried out in illegal ways." They are "illegal" LeatherWorkers Malawi and Botswana, 77 percent of enterprises are only because they are conducted outside of the tax Broom Makers Ironing Clothes home-based, and in Egypt the number is 53 percent. registration and licensure requirements imposed by Toy Makers municipal, state and national governments on busi- Potters nesses operating in the official, sanctioned economy. Garland Makers There are various, sometimes conflicting sometimes de Soto was one of the first people to document the Sewing Sequins on Sarees complementary, theories about why the informal sec- high financial and social costs of belonging to the in- Sweet Makers tor persists.The informal sector grows when, as re- formal sector. Consider for example, the co-proprietor Cutting Betel Nuts flected in stagnant or declining GNPF there is a lack of of a five-man factory making household cooking stoves Rope Makers growth in the formal sectonThis theory assumes, of out of recycled oil barrelsiThis unregistered, unlicensed, Spinners course, that growth in GNP generated by an ex- uncounted entrepreneur probably escapes the ne- Bobbin Fillers panding formal sector is followed by a decline in the cessity of paying licensing and registration fees and Fabric Painters informal sector However, experience shows that this taxes, or of adhering to whatever wage, hour and safe- Soap Makers is not necessarily the case.The informal sector is ex- ty regulations that exist. Bead Embroidery panding even in nations, such as India, that are expe- As an informal sector entrepreneur, the stove-maker Tie & Dye Workers riencing significant economic growth. India has a bur- will have little if any access to capital. or the ability to Fruit &VegetablesVendors geoning middle class (now estimated at roughly obtain short-term business loans at other than usuri- Uteasfls & Old ClothesVendors one-fifth of its nearly one billion people), yet 92 per- ous rates.The potential for expansion of the business Old SacksVendors cent of those who work in India (which is to say al- is thus limited, Moreover, with few if any rainy-day Cutlery Sellers most every adult and millions of children) continue to funds, the business is vulnerable to failure during tem- Fish Sellers do so within the informal sector porary dips in the market or unanticipated increases Ctoth Sellers In their recent book, Industrialization and the Small in the prices of materials used in the manufacturing Agr;culture (Farming) Firm, Donald Snodgrass andTyler Biggs point out that, process. Because everyone in the community-cus- Agricultura Laborers in some countries, regulatory barriers between the tomers and businesses alike-must survive under sim- Tobacco Workers informal and the formal sector are deliberately main- ilar pressures, profit margins from such businesses yield LiteracyWorkers tained to protect the interests of registered enter- barely more than subsistence livelihoods, and there is Midwives prises and their employees. In addition, governments little disposabie income to make the local economy Dairy Producers are exempt from the legal, if not the moral obligation grow. Head Loaders to enforce wage, hour and workplace protection laws Furthermore, our stove-maker's employees have Casual Laborers to individuals and enterprises that are officially invisi- no protections beyond those he chooses to give. Gum Colection ble. Inertia, lack of money, lack of political incentive or Whatever municipal and state laws there are regulat- Construction Workers pressure from powerful vested interests to preserve ing pay and working conditions will not apply to them Firewood Pickers the status quo all explain why governments ignore, or because, officially, they don't exist. They will not re- Animal Husbandry worse, harass large segments of their populations. ceive any of the employee benefits, such as housing Union Orgarnizers Another theory that may in part explain the dura- subsidies, that mainstream enterprises may custom- SUMMER 1998 UrbanAge 7 Informal sector workers are not eligible to participate in whatever social security İRs,, sC.Hnss programs exist. arily offer And, in some countries in order for the stream economy and its comparative comfort and se- In some business to survive, the stove-maker's children, or oth- curity. But the fiscal and bureaucratic barriers to be- er children, may be numbered among his employees. coming "legal," even if one wishes to do so, are often countries, It is probable that the stove-making enterprise will insurmountable. In a famous experiment, de Soto and be located on land-a little open area perhaps-with his colleagues established a small garment manufactur- this means unclear ownership. In informal sector communities, ing business. It took them nearly 300 days to complete this kind of squatting has been recognized as inevitable I I bureaucratic requirements at a cost (which incud- 80 percent or and necessary by the authorities. However in devel- ed paying several bribes) that amounted to 32 times more of the oping cities with strong economic growth, land of the monthly minimum living wage in Lima at the time. course becomes more valuable; questions about le- population are gai ownership become more important and squatting becomes more problematic. Were the stove-making Many experts believe that allowing the informal sec- excluded from enterprise obliged to move, would it be able to find tor to come out of the economic closet, as it were, another suitable "free" location near its customers? If by assisting it to become economically stronger is the such programs. the business was required to buy land in orderto sur- most effective way to attack the poverty and ex- vive, where would it find the necessary credit? ploitation that burden so many of its members. Finally and perhaps most important, our stove-mak- There is sharp disagreement, of course, about how er, his employees and dependents, and millions simi- best to do this. Support of even the smallest mi- larly surviving in unacknowledged limbo have no po- croenterprises (including those operated by individ- litical voice. Consequently, they have no leverage with uals) has become a major component of development which to force their government to give them the mu- philosophy. Across the developing world, there are nicipal services and social benefits available to other hundreds of projects, some very large and many spon- citizens. Informal sector workers are not eligible to sored by international donors, aimed at improving the participate in whatever social security programs ex- economic and political functioning of the informal sec- ist. In some countries, this means 80 percent or more tor Thus, through institutions such as the Grameen ofthe population are excluded from such programs. Bank in Bangladesh, SEWA in Ahmedabad and the Informal sector communities are invariably the last- Working Women's Forum in Madras, millions of usually by decades-to enjoy municipal amenities women have for the first time, had access to small such as sewers, water, street lighting and maintenance. amounts of capital, producing significant improvements For most members of the urban informal sector, in their lives and raising the possibility that their chil- these are the harsh realities oftheir lives. Some, including dren will be able to move up the economic ladder our stove-maker, may eventually climb into the main- Look again at Nagammal, the Madrasi vegetable 8 UrbanAge SUMMER 1998 'Freak Banker" Tells How To Make Loans To Poor People seller. She has joined the Working Women's Forum DANIEL TALLANT and nas savings in the Forum's bank; most important, OHAMMEDYUNUS, FOUNDER OF GRAMEEN BANK and she has access to credit (less than $ 100) at reason- M self-described "freak banker," argued in a recent talk before able rates.The few extra rupees she saves each day international lending officials that the key to success in microfi- have enabled herto send her grandson to school. At nance is to turn the tables on traditional banking, do away with the micro-level, very small inputs, properly targeted can mimro-level therqy ofall ipeop's, properlves, ge conventions and get back to the roots of credit-i.e.,"trust." can improve the quality of people's lives. paigi ahntna ofrnesosrdb h'ol But fostering microenterprise will not be sufficient Speaking in Washington at a conFerence sponsored by the'World to improve the lives of hundreds of millions of infor- Bank,Yunus called for a revisionist approach to banking. Recount- mals. Some observers, while recognizing the good in- ing his experiences in setting up the Grarneen system in rural tentions underlying such activities, question whether Bangladesh in the early 1 970s, he noted the inflexibility of the bank- devoting limited resources to the poorest, most vul- irig sector's approach to the poor.A local banker told him at the ne-able segment of the informal sector, where mere time that "you simply can't lend to poor people, they won't pay day-to-day survivai is the rule, is of much value in im- back." Ignoring that advice, he gave U.S. $27 of his own money to proving overall economic conditions. proving overall preseonomic onditheionformal ec ymake a total of 42 loans to a single village community. Everyone, The very presence of the informal economy is it- self an indication of the needs and the rights of peo- he said, paid back-and on time. ple to work. It goes to the central conundrum that Enthused with the results,Yunus went baLck to the local banker confuses the international development community: and convinced him to provide $300 for more loans. Eventually, he how or should one legalize and regulate an economy clecided to go into the banking business himself. Now, nearly 30 that already exists? An overall imnprovement in eco- years later, Grameen Bank has made over $2. billion in microfinance nomic conditions in the informal sector is uncertain, loans, mostly to poor women, with a 98 percent repayment record. However, what can be achieved, when leaoers of the Yunus stressed that "the poor can and will pay, and should not sector organize themselves and their co-workers, IS scth leganit e assertio o ancia cegalkand po be marginalized by the banking sector.The banking sector has the legitimate assertion oftheirfinancial, legal and po- litical rights. Prosperity may in fact stem from such col- placed an unshakable stigma on the poor, excluding their access laboration.Then the question, of course, will be how to banking resources.Traditional banking mechanisms tend to alien- they define themselves: as informal or formal. a ate or ignore the poor, and generate loans based only on guaran- tees and complex legal structures-minimizing risk, but bypassing CITY INFORMAL EMPLOYMENT* the human element of trust altogether." Abidjan 64.6% Bucharest 6.0% Microfinance institutions need seed money for startup,Yunus Accra 69.5% Bujumbura 30.5% explained, adding that "while governments are not necessarily the Addis Ababa 61.0% Dar-es-Salem 56.0% best actors to regulate and direct the microfinance sector, they Amsterdam 2.0% Delhi 66.7% Amseruham 54.% Harae 66.7% can encourage the private sector and international organizations Arusha 54.6% Harare 16.6% Asuncion 41.0% Jakarta 33.3% to help devise appropriate regulatory frameworks to assist this Bandung 32.0% Kampala 45.6% fundamental shift away from traditional banking." Bangalore 32.0% Kinshasa 80.0% Recent initiatives by Grameen Bank include expanding its ser- Barbados 12.6% Lahore 60.0% vices to include telecommunications and textiles, setting up non- Bhiwandi 77.9% Lagos 69.0% profit and employee-owned "microcompanies" similar to the mi- Biratnagar 86.5% Lome 27.0% croenterprises it already encourages, and devising publicly sustained Bogota 53.8% Metro Manila 20.4% Bogota 53.8% Metro Manila 20.4% pension programs. Moreover, Grameen is bringing Internet ser- Bomnbay(Mumbai) 68. 1% Rio de janeiro 33.6% Bordeaux 1.9% Santiago 22.9% vices and telephone communications to villages that were once Brazzavlle 50.3% Zagreb 20.0% completely isolated, and is thus linking the rural labor force with service-oriented jobs in urban centers. Source:The Global Urban Observatory. Urban Indicators Pro- gramme Phase one 1994-1996, UNCHS. * Informal employment/undeciared employment: percentage of the J . D A N I E L T AI L LA N T is an urban specialist with the Urban Partnership employed population whose activity is part of the informal sector of the World Bank. SUMMER I998 UrbanAge 9 acknTheUnacnowedge y Lucy CONGER Latin American financial institutions are finally waking up. Microentrepreneurs are the principal providers of employ-ment in the region and they also make good borrowers. Banks and a variety of cr s are now offering microcredits that are just beginning to _t mul i~t~it economic resources of the informal sector. U&~~~~& ''K i~~~~~Mtco CmT's I6th century of laborers who make up the informar sector are in- ,6.asI, young men and old sit depenoent workers wno do not hold steady jobs, re- t~~ewalk Some have small ce;ve no workers' protection or benefits and make a ;; '|. Wr tool kits with them. In living-either in legitimate trades or in work outside ; of0 i I l l each, placed on the the margins of legality-in the so-called "black econ- d a a sigrj ~r d.~l ~a d omy." While the jobs and workng conditions of these a singse wor.But thy'l allmber vendors, household repairmen and craftspeople em- n ~~ dr~c'~~ ar ployed in thousands of cottage industries appear mar- ill att rhous on ginal and precarious, taken together they account for this hu p 5 b~ med or temorary a huge proportion of Latin American economies. tomorrow. ~ ~ ~ ~ ~ ~ ~ emloe i teinformal sector, and idvuaswork- Ten blocks away, in the Tepito district of the down- ing in microenterprises-defined by the Inter-Amer- town area,the sidewalks and alleyways are jammed with ican Development Bank (IDB) as businesses with few- plastic awnings shading makeshift tables stacked high er than I0 employees-produce from I0 to 50 with coveted merchandise: contraband electrical appli- percent ofthe gross domestic product (GDP) of Latin ances and counterfeit videos and cassettes.The trades- American countries, according to the International La- men and street vendors selling these goods daily clog bor Organization (ILO). In Mexico, the informal sec- the sidewalks of the extensive colonial downtown dis- tor accounts for 58 percent of new jobs according to trict that surrounds Mexico City's main square. But their ILO and Mexican social security statistics. Some ex- counterparts can be found in every major Latin Amer- perts estimate that in Latin America, 60 percent of ican city Overthe past two decades, here in Latin Amer- the population lives off the informal economy ica, migrants from the countryside, a population boom The informal sector is the major source of employ- and economic reforms that eliminated millions of man- ment for poor people in the region, and its economic ufacturing and government jobs have caused an enor- contribution as an employer far outweighs its contribu- mous expansion of the types of occupations common- tion to national output, says Marguerite Berger chief of ly referred to as the informal sector IDB's microenterprise unit.The size ofthe informal sec- Conventional wisdom has it that those who enter tor is much larger in poorer countries such as Bolivia, the informal sector are workers unable to find work Peru and the Central American nations than in the LucY C ON GER in the formal sector or who are blocked from creat- wealthier economies like Argentina, Chile and Uruguay reports on Latin ing formal, incorporated businesses due to legal costs Especially in the poorest nations of Latin America, the American economic and the expense of paying benefits to employees.To- informal sector is vital to every aspect of economic life. andfinancial topicsfor day, though, there is a new view-that some, at least, According to Mauricio Silva, president ofFundacion Gen- Institutional Investor in the informal sector enter voluntarily either to ob- esiss, a nonbank financial institution based in San Salvador magazine and tain training as an apprentice, or to gain flexibility so 50 percent ofthe workforce and 80 percent ofthe work- Emergnewspar as to tend children while at work or to earn better ing poor in tiny El Salvador are employed in the infor- pay as the self-employed owner of a business. mal sector and informal enterprises produce 85 percent By and large, the growing army of tens of millions of the goods and services consumed by the poor 10 UrbanAge SUMMER I998 Borrowers The informal economy is strong in numbers and in diversity. According to Enrique Ghersi, co-author with Herrando de Soto of The Other Path, the now classic 1 986 book on Peru's economy, it is a force *n commerce, industry transportation and construction. Most of these informal professions have burgeoned a, _ with the growth of Latin American cities.The itiner- ant merchants who have taken to the streets to cre- ate an alternative to commerce are the most familiar - - representatives of the informal sector. Informal In- dustrialists include artisans and craftspeople who are employed-illegally-in manufacturing, typically in tex- tiles, furniture-making and automotive repairs, notes ,. Ghersi. As cities have expanded, nonregulated trans . portation services run by independent operators have sprung up to provide jitney and van routes to the out- lying slumns. Finally, the self-built housing that is home to the millions who live in squatter settlements ring- , - ing most Latin American cities constitutes an impor- 'vK tant informal construction industry. These types of activities illustrate several of the fundamental characteristics of the informal sectorTyp- ically, informal activities are more concentrated in ser- - , vices than in industry, are less capitalintensive than in of - . . the formal sector and supply the local market rather than the export sectorThe workforce in the informal block the entry to storefronts, and tense political bat- To some, the sector is lower skilled than in the formal sector and is ties are being waged over how to tax and regulate informal sector paid lower wages, says Ulrich Lachler, an economist unregistered or unincorporated businesses. On an- i working for the World Bank in Mexico. And, across other front,the United States is.through its free trade IS a source of the board, productivity is low. Ghersi writes that in Pe- agreement with Mexico, pressing for a crackdown on income for ru, the informal sector accounts for about 60 percent counterfeit goods including pirated audio and video- those who of the hours worked but produces only about 38 per- cassettes, clothing and shoes. might not cent of GDP The capacity for savings in the informal This last touches on the broad and ambiguous is- otherwise find sector is low: Silva notes that in El Salvador, fewer than sue of illegality and the informal sector In some cases half of those employed in the sector produce a sur- and places, informal sector activities are outright illegal, work. To others, plus. In Peru, perhaps only 70 percent of the street but practically untouchable. In Mexico, one-third of the it is seen as a vendors manage to survive or stay above the pover- country's economic activity is reportedly in the black way to avoid ty line while about 20 percent generate savings, says economy-which is by definition part of the informal laws and taxes. Gustavo Riofrio, Director of Urban Programs for De- sector: this activity includes sales of contraband appli- sco, an applied research institute focused on urban ances, adulterated liquor and stolen car parts. "There and rural development in Lima. is an organized underworld, and forthat reason it's not With its rapid expansion in the past decade, the so easy for the Finance Ministry [customs and licens- informal sector has become a focus of growing con- rig agents] to get into the distribution and warehous- troversy. In Latin America, street fights have broken rig centers of illegal merchandise," Luis Carlos Moreno, out as police try to clear sidewalks of vendors who general supervisor of customs, told Reforma newspa- SUMMER 1998 UrbanAge i I The debate is about how to define the sector, assess its economic contribution and how to develop government ar per recently. Meanwhile, in Peru, informal sector activ- by rnformal businesses. Needed fiscal reforms would ities are "illegal but not criminal" and lack legal protec- create a single tax-instead of separate taxes on in- tion. Enrique Ghersi, writes that "Informality is a situa- come and property-and set a flat tax rate, Fiscal re- tion whereby people want to work legally, but cannot form in Peru, cites Lucano, ircreased the number of [and] work in that area of relative illegality created by taxpayers from 5,000 to 500,000; in Bolivia, innova- the legal cracks in Latin American society." tions in bank supervision have helped strengthen four The grey areas where the informal sector oper- banks that specialize in microfinance. ates may be viewed in different ways, says LachlerTo To provide assistance that will stimulate the eco- some, the informal sector is positive because it gives nomic activities of the informal sector also takes spe- the unemployed a place to work when they could not cial adaptations on the part of those institut ons and overcome barriers to formal employment.To others, systems that have developed over the decades to work the informal sector is seen as an evasion of laws be- with the formal sector For example, the housing con- cause it circumvents contributions to the tax and so- struction of the informal sector needs mechanisms to cial safety net systems. promote upgrading, says Riofrio of Desco.There is an Fewer than Informality reflects a much broader problem, argues underlying assumption that if land titles are issued to Fernando Lucano, project coordinator ofthe Microen- squatters, development oftheir settlements will auto- five percent of terprise Unit at the IDB. People who live and work in matically follow-when, in fact, housing will remain sub- the informal sector including many families who have standard. "The process of formalization that is neces- rnicroenterpriseS migrated from rural areas to cities, can claim a status sary and desirable demands an enabling strategy to that is only informal. "They lack identity: they have no upgrade homes so that housing and not only land can hlave access to identity documents, no land title; their house, their chil- be formalized," Riofrio explains. Once houses meet the f ,Drma credits in dren, their business have no status. It is a problem of requirements for property titles, mortgage borrowing formal credits In social identity,' which, he says, affects as much as 50 per- becomes possible. Desco is administering a program Latin America. cent of the labor force in Latin America. Formal recog- with a bank to make small credits available for up- nition ofthe identity and assets-home and business- grading homes in southern Lima. would help the informal sector become integrated into Others who work with the informal sector concur society and gain access to credit, Lucano explains. "There is a potential for higher quality service providers,' The growing awareness over the past decade of says Marguerite Berger ofthe IDB, which is funding or- the importance of the informal sector is fueling de- ganizations that help clusters of microenterprises pur- bates about how to define the sector assess its eco- chase production materials or perform quality control noomic contribution and analyze how to develop prop- or marketing. Strengthening the small businesses ofthe er government and credit policies for independent informal sector "demands a subsidy, especially of soft- workers and their small-scale businesses. "Sustainable ware so they have access to information, technology development is not possible," Silva points out, if a coun- and institutional development services including infor- try "doesn't think of microenterprises and develop mation systems and a methodology for collecting pay- special policies for microenterprises." Silva's organiza- ments," says Silva of Fundacion Genesiss. He notes that tundaFundacion Genesiss, provides credits to the in- the formal sector-and especially the commercial banl- formalsector. It is just one of an increasing number ing system-has received privileges from national poli- any v nety of official and independent programs and cies that have helped it develop and modernize. w e n~nge of credit mechanisms aimed at reaching Most programs that work with the informal sec- out oethe self-employed. tor are built around "microcredit," or small credits that r o work with the informal sec- are suited to the needs of informal small businesses. tor, an,o to reach the entre- Take Fundacion Genesiss, for example. In only I 8 pren nat operate outside most months of operation, Genesiss has become a self-fi- for i ,oe nt and municipal poli- nancing nonbank credit institution. Most of the busi- cies recognize the businesses nesses it helps are involved in street vending, others as fo Lucano. He proposes that produce manufactures ranging from belts and purses government n yax structures and allow banks to shirts and rag dolls.The sales of these microbusi- to recognize solidary guarantees to cover risks on nesses range from US$1,700 to $3,500 per month. loans to microenterprise so they can easily be used Fully 85 percent of Genesiss clients are people living 1 2 UrbanAge SUMMER I998 -eldit policies for microenterprises. below the poverty line, which in El Salvador is the to save on the exorbitant rates charged by loan sharks, equivalent of a family income of $135 per month. As and had used the savings to move their children to a with many similar microfinance institutions, Genesiss better school or to take them more frequently to the selects its borrowers based on personal factors, es- doctor or to take a vacation. MIcrocredits, then, sup- pecially cash flow and the presence of a co-signer to ported the production and employment-creation ef- guarantee the loan, says Silva.To encourage borrow- fects of microbusinesses and promoted savings which ing, Genesis sends promoters to make personal con- brought social gains."The best Latin American micro- tact with entrepreneurs. finance institutions demonstrate better solvency ra- In recent years, the number of nonfinancial insti- tios than conventional banks and profitability ratios of tutions and nongovernmental organizations (NGOs) around 30 percent in dollar terms," says Lucano. involved in microcredit has proliferated. In 1994, at There is another intangible, social gain from pro- the first Summit of the Americas in Miami, such im- viding credits to informal entrepreneurs who feel in- portance was attached to microcredit that a forum t rnidated and culturatty inferior when they go to a was created to discuss the micro, small and medium conventional bank. "When a person gets credit, it business sectors in the hemisphere.The IDB, which means he [or she] is worthy of credit and has digni- will provide $500 million in funding for microcredit ty," says Lucano. Becoming a borrower expands the programs over the next five years, has developed a hor zons of the microentrepreneurs. "We treat them typology of institutions that provide loans to mi- as people who are ofthe same quality:the poor have crobusinesses. Fewer than 5 percent of microenter- aways been told they can't get ahead," says Norber- prises have access to formal credits in Latin America. to Roque, the coordinator for savings and loan soci- The great majority are exposed to very high cost cred- ety promotion in Mexico's central state of Guanajua- its such as those derived from usurers and informal to.The municipal government of Mexico City has just suppliers of merchandise, says IDB specialist Fernan- launched a Fund to Consolidate Microenterprises in do Lucano. Among institutions specialized in micro- the Federal District which in its initial phase will ex- credit, some banks have branch offices dedicated to tend loans of $2,300 to 2,000 entrepreneurs includ- small business lending, while a few regulated financial ing artisans, furniture-makers, vendors in public mar- institutions channel their entire portfolio to micro- kets and operators of small pharmacies, hardware entrepreneurs. Also working in the field are NGOs stores and dry cleaners. specialized in microcredit lending and services and Among economists, there is a debate about the "generalist NGOs" that provide a variety of services current-and projected-expansion of the informal to the poor, including microcredits. sectorTraditionally, it was thought that the informal The potentia for growth among microcredit lenders sector expands during downturns in the bus ness cy- is great. A clear example is Banco Sol dario, S.A. (Ban- cle because contractions in the formal sector would co Sol), in Bolivia, an affiliate of Accion International, an d -ive people into informal employment. In an upturn, NGO based in Boston which has built a network of then, the informal sector would contract. However, The best Latin American micro-finance institutions demonstrate better solvency ratios than conventional banks. morethan 25 microcredit insttutions-19 ofwhich are some economists takethe view that the informal sec- in Latin America since it began lending operations in tor is driven by peop e who enter voluntarily. The 1973. With 76,200 clients-the vast majority of them World Banlk's Lachler notes that during times of busi- microentrepreneurs-Banco Sol accounts for 40 per- ness expansion, informal businesses increase because cent of all borrowers in the entire Bolivian banking sys- it s better to go on your own in a time of upswing. tem. In 1997, the bank posted a return on equity of While those issues continue to be explored among 23.7 percent wth loan delinquency of.2 I percent. economists, advocates are calling for a more positive The benefits of micro-lending are c ear. A recent view of the informal sector "Microenterprise is not an long-term study of the micro-lend ng branch of the alternative phenomenon in the economy," says IDB Banco de Desarrollo de Chile, a private bank, showed President Enrique Iglesias. Entrepreneurs and owners that loans had accelerated the process of saving among of microbusinesses are the principal providers of em- microbusinesses, says Lucano. Borrowers were able ployment in the region," he says. U SUMMER 1998 UrbanAge 1 3 A Conversation Wit' ..R 7 77 :EN ATT IIS THE FOUNDER and former secretary general of the Self-Employed Women's m, ~~2j*'1 Association (SEWA), a women's labor movement and organization formed in 1972 and based in Ahmedabad, India. SEWA, with a membership of 250,000 poor and self-employed women workers, aims to organize other women workers and their families to obtain full employment | ~4V and economic self-reliance. TWENTY YEARS AGO, Bhatt pioneered the understand better their conditions and lives. creation of micro-lending to the poor and Urban Age: Implicit in your work has developed access to credit for thousands of always been the notion of the "wealth of the X self-employed women. The SEWA Bank, poor" How have you translated this under- founded in 1974, has some 67,000 members standing of the poor into your philosophy? and working capital of 15 million rupees. In Elaben Bhatt: Economic poverty is a 1996, the bank received a Best Practice Award moral collapse of the affluent. Affluence co- at the Habitat I conference in Istanbul. existing with poverty is an absolute theft. Bhatt has spoken often of the struggle The society that eaves millions unemployed for women in particular-to break the cycle cannot morally justify its economic system- < of subsistence, deprivation and survival that no matter how high its growth. Full em- characterizes the life of the world's poor She ployment is the cornerstone of any moral your national statistics-the formal sector has some answers: access to credit and pro- and rational economic model. UA: Is the statistical veil hanging over ductive resources, action, organization and UA: Exclusion has been another central the informal sector in India a major part of leadership. focus of your work.You say that the poor the problem? One of her main assets, says a colleague, are excluded because their contribution is EB:Yes; we have to make these people is her ability to be a istener. She speaks soft- invisible or unrecorded in the national eco- more visible, For the past year, SEWA, along ly and in a few well-chosen words. Results- nomic statistics. with agencies like the United Nations De- oriented she is, but Bhatt is among the few EB: It is unfortunate that our economy ve opment Fund forWomen (UNIFEM) and who knows how to get her way without be- is divided by experts into a formal sector the International Labor Organization (ILO), ing overly aggressive.We talked to her about and an informal. I wonder who decides what has been working on some statistical pro- her philosophy and beliefs concerning devel- is formal, what is not formal. The workers, jects.We have come up with some data on opment, poverty and gender; about man- producers, entrepreneurs are not cate- the contribution ofthe informal sector I think agement. eadership and responsibility.What gories.They are like the rest of India's work- it is very important to remove this "statisti- kind of progress has been made in the strug- ing population.They are distinct only to the cal invisibility,' as you put it. Because they are gle for equality for the poor; what kind of extent that their work status is more un- invisible, they have no voice. Informal sector progress must we still seek? We look to her stable, more vulnerable, more neglected. workers are not represented anywhere. for some answers as to how one can view Our social welfare, our social security mea- UA: How can that be addressed? the poor and think about them in order to sures are limited to those you can count in EB: The challenge today is to design structures and mechanisms for promoting MARGARET BERGEN is editor of Urban Age. PATR.ALEKHA CHATTERJEE the full participation of the informal sector- is Asia correspondentfor Urban Age and a New-Delhi basedjournalist who specializes in what I call the People's Sector-in the development issues. broader economy But the People's Sector 1 4 UrbanAge SUMMER 1998 DS C <2 BY MARGARET BERGEN AND PATRALEKHA CHATTERJEE .. . Elaben Bhatt (left) is admired for her ability to listen. She assists poor and self-employed women workers through micro-credit lending, organization and training. _ m 9 _ U r e _K~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~SME 998 Urang 15 _ - }: "Informal sector workers are distinct only to the extent that their work status is more unstable, more vulnerable, more neglected. C)ur social welfare, our social security measures are limited to those forest produce is still owned oy the state and inaccessible to gatherers and produc- y,ou can count in your national statistics-the formal sector." ers.An enabling policy should recognize the bureaucratic barriers to growth of the Peo- ple's Sector and remove them. Furthermore, many resources-land, must have access to decision-making and re- used to only be birth attendants now per- forests, water bodies, even corporations and sources in reality, not just in name. People form pre and postnatal work, and they teach companies-are owned by the state. Many do participate in the decision-making family planning and immunize infants. Locai of these could be more productively used process where there is a suitable mecha- agricultural universities provide training for and could generate more employment if nism, for example multi-partite boards, women farmers in drip irrigation, and rag they were handed overto the People's Sec- where all concerned parties are adequate- pickers have been trained to weave rag rugs. tor. For example, lakes can be managed by ly represented.These boards give the Peo- The incentives for initiating capacity- fishermen's groups; handloom corporations p e's Sector an opportunity to decide and building mechanisms at the local level are and yarn companies could be handed over negotiate with authorities-for better work enormous.These mechanisms help gener- to weavers' groups. conditions, zoning laws, licensing require- ate more income by improving the efficiency Infrastructural and management support ments, price setting-and to deveiop rela- of subsectors of the local economy-for which only reaches this sector incidentally tions with the business world.This generates example, dairy, poultry and agroprocessing. should be funneled into the people's en- visibi ity for the People's Sector and gives Training also helps improve local quality terprises. Credit policy today discourages them the strength to take political action. standards and decreases costs by improv- the formation of these enterprises with its Such boards encourage all parties to learn ing efficiency, Capacity building increases the exclusive focus on the small individual bor- to work together Building such participato- purchasing power of the self-employed and rower or on large corporate borrowers. ry structures is the most important mech- lets them improve their living standards and This policy should be changed to allow anism for poor peopie. consumption patterns.AII this indicates that more credit to reach these enterprises. UA: At the national and global levels, an investment in the People's Sector is an But perhaps the most important enabling how can we promote recognition and par- investment in the economy as a whole. policy is to recognize this sector, its vast size, ticipation of the People's Sector? UA: What other measures are needed its employment potential and its people- EB: The enterprises of the poor need beyond training? centered enterprises. Once it is recognized to move beyond survival if national and EB:The People's Sector can only flour- and given a place in the national economy, global economics are to be transformed. ish if policies and the economic environment full and better employment will follow. The nternational economy as a whole will give it the space to do so. With a little en- UA: To what extent has SEWA's work be unable to grow to its full potential un- couragement-and in spite of much against been replicated in other organizations, ei- less it takes along the majority of the world's it-this sector has survived and grown in ther in India or in other countries? working population. Is it not in our collec- the last decades. An enabling environment EB: The basic elements of SEWA are tive self-interest to open the world of fi- would allow further growth-resulting in organizing poor self-employed women nance and enterprise to the vast majority enhanced employment, better earnings and through work, building economic organiza- of the working population? more control of producers over their own tions for them like unions and cooperatives, UA: What specifically should be done? economics. creating viable links between a country's EB: To strengthen their businesses, the The first of these policies should be lib- grassroots and its macro policies, and com- poor need access to capacity-building mech- eral laws that allow for many different types bining struggle and development through anisms.They need opportunities to upgrade of democratic economic organizations, like peaceful means. Many grassroots women's skills as well as to take advantage of avail- cooperatives.These laws should allow for organizations work more or less on these able information on new technologies, bet- maximum control for their members, with lines in India. Specifically, there are SEWAs ter-too s, improved product design and ex- the government only having the right to in Uttar Pradesh, Madhya Pradesh, Bihar Ker- port opportunities. prevent gross misuse of funds. ala, Delhi and in Durban (South Asia), in ad- Where skills upgrading for the self-em- The People's Sector labors under heavy dition to Gujarat. ployed has been tried, it has significantly in- bureaucratic controls. Raw materials can on- UA: What do you see as SEWA's par- creased their productivity and income. In ly be obtained by licenses, cooperative banks ticular accomplishments? India, for example, traditional midwives who are not allowed to operate in large areas, EB: I see several. First, our strategy of 16 UrbanAge SUMMER 1 998 joint act;on between union and cooipera t;ves to fight poverty and exploitatior Sec- ond, we've created a cadre of "can do" women. Iliterate women ser-ve on the SE- WA Bank board; they manage cooperatives, - teach, produce videos. In fact, our best cam- era person is a fruit seller. And the SEWA Bank board director who recently gave the keynote address at the International Policy Forum held in Delhi-a forum organized by Women's World Banking and atvended by seven finance ministers-she was a used gar- ment dealer entirey through women's participation. Cooperative Bank asked us "How can you Third, SEWA women are becoming fear- We've successfully initiated and led a cam- register a body made up of these people? less."I am not afraid of my employer, village paign for the ILO Convention on Home- They are illiterate women; they are slum headman, the police, or my husband," said work. dwellers.They won't repay." But I am opti- Bashiranbibi, one of our members,to Hillary UA:You say your plans include bringing mistic. I think attitudes are beginning to Clinton when she visited SEWA. "political visibility" to informal sector change, even if the progress is slow. UA: What plans do you have for the women. If the numbers are in their favor, UA: Your work at SEWA is tied to the growth of SEWA? why doesn't it translate into political clout? Ghandian philosophy of promoting eco- EB: To make a strong presence in the EB: Because these people are not or- nomic independence and organizing for so- mainstream-in the labor movement, in the ganized. Politicians see them as voters but cial change. Do you think these principles microfinance sector, in rural development- not as informal-sector voters.They are seen are as valid today in your struggle for recog- and to create political visibility for informal as different groups: Harijans (low castes), or nition and equality as they were in Ghan- sector women. Specific major struggles that Muslims or Christians. I am a great believer di's t me? we are involved in include developing leg- in organization, and I believe that if they EB: Yes, they are as valid today as be- islation for the employment rights of home- could be mobilized, not on caste or religious fore, and they will always remain valid be- based workers in India; developing a statu- lines but as part of the People's Sector, cause these are the basic, fundamental tory national policy on street vendors; things woulcl change. tenets of human life. Has any problem in transferring the nursery raising and planta- UA: Who is your fiercest critic? the world been solved by violence? As soon tion activities of the Forest Department to EB: The educated urban middle class. as you lift a stone to hit your opponent, it local village women's groups; and improv- Their minds are so closed.They have no turns into a law-and-order problem and ing and correcting statistics on the informal idea-rather, they don't want to know how ceases to be a public cause and you lose sector, particularly those related to their much these people in the informal sector public support. contribution to national income. contribute.When you tell them that in In- Employers prefer the SEWA union to UA: In the last 25 years, how have self- dia, 92.5 percent of the total working pop- other unions because it is truthful; it never employed women workers in India made ulation is part of the informal economy, tells lies. SEWA goes on strike or stops work their mark? when you tell them that in a city like only as a last resort when all channels of EB: We've created some awareness of Ahmedabad 67 percent of the labor force negotiation are totally closed.We invariably the economic contribution of the women is in the informal sector, they don't believe inform our opponents before we take any of the informal sector-people who previ- it.Worse still, the educated urban middle direct action. Our demands are minimal and ously were invisible, literally and statistical- class refuses to accept that these people al- carry moral weight.These are practices of ly. Also, those who were considered "ur- so need services. Ghandian principles. bankable" have been proved quite the UA: What about policymakers? Do they Ghandi had deep faith in the leadership contrary through SEWA Bank, where the have the sarne attitude? of women in social change. I believe that in repayment rate on average has remained EB: Of course. Our policies are based a fight for equity and social justice, where about 96 percent.We've brought about an on the model of industrialized countries. For love and nonviolence are the weapons, 80 percent decline in forced migration from example, when we went to register the women are the natural leaders of such a the desert district of Banaskantha: this was SEWA Bank, the registrar of the Urban fight. U SUMMER 1998 UrbanAge 1 7 BY MICHAEL SANIO >;eKi 'A'1t1 V't4H1 proble1m of increased waste rQrjtun cfat1ers and reduced soil fertility and ~ 0 .; w t ries within it the main ingredient dll sol 4tionI: The world can no longer ;rn - s 11ed ' wastes to be wasted. ioN THE NEXT 30 YEARS, there will be 2 to 3 bilion more people on the planet. Almost all of l a n . them-95 percent-wiu lve n developing coun- tries.To keep pace with this population growth, word food supplies will need to double by 2025. But this challenge to increase food production-c r n D by over 2 percent a year-comes at a time when soil degradation has already signifcantly reduced the fer- tility of over a quarter of the world's agrncultural land. t 7 In the past, agricultural production could be increased e a by dedicating more land to farming or by irrgation. t Today, though, arable land and fresh water are in far tp shorter supply. Future growth must come from ex- - panding b[ological yield, which can only happen if soil productivity is improved. Something else is expected to happen by 2025: Urban waste will more than quadruple. nomic Cooperation and Development 36 percent of MICHAEL By then, 70 percent ofthe world's population will the waste fow is food orgarden waste. Organic mat- SA~NIO is the be urban.The consequent increases *n solid and liq- ter in developing countries accounts for a staggering executive director uda waste wil add to the already tremendous pres- 50 to 75 percent of the total waste stream. Lack of for the World sures on botn the urban areas and surrounding hin- proper treatment for these waste streams is one of Engineering terlands that must absorb the impacts of that growth. the most serious health issues confronting the word Partnership for But in this problem lies a solution: the organic ma- today. In fact, 5.2 million people, includ ng 4 mullion Sustainable terials in all tnat waste can be used to fertilize and en- children, die each year from diseases caused by in- Washingonment. rich degraded soil. pr-oper disposal of sewage and solio waste. In devel- Washington DCOrganic mnatter forms the bulk of municipal waste: oping countries, less than I 0 percent of urban waste among member states of tne Organisation for Eco- is treated-and only a sinaIl proportion of this treat- 18 UrbanAge SJMMER 1998 URBAN WASTE STUDIED t. """'[""""HE IDEAS AND INFORMATION from the accompanying -> '| ~ article were drawn from the recently completed report "Reuse ~~~ ~~~~ I ~~~~~ of Urban Waste for Agriculture:An Investment Progr-am for Progressive Action." This report completes Phase I of a cooperative wraste recycling initiative focusing on the beneficial agricultural uses of municipal organic waste undertaken by the World Bankc, the United Nations Develop- ment Programme (UNDP), the private sector, and non-governmental organizations (NGOs) This initiative arose from a meeting,"Recycling Waste forAgriculture: The Rural - Urban Connection," held at the World BankWashington, D.C., . ~~~~~~~September 23-24, 1996. The meeting was co-chaired by Maurice F. Strong, Senior Advisor to the President-World Bank and Henry J. Hatch, I l l wD gi l l ilPresident-World Engineering Partnership for Sustainable Development. l | D S 3 | | - .The problems of accumulating waste in cities and the potential for making organic materials available to increase agriculture productivity were discussed at the meeting. As was the recycling of all wastes in contrast to conventional linear end-of-pipe solutions. Participants agreed on the need to advance waste recycling. In particular, developing theoretical frameworks and methodologies, adopting cutting-edge technologies, and undertaking demonstration projects were suggested. This report presents the rationale for such a program by addressing the two-fold problem of increased waste in urban centers and reduced soil i~ F - - gf / mfertility and productivity. It also describes an approach to undertake three L3 =.M soil. demonstration waste recycling projects and the creation of as many as ) ~~~~~17 additional waste recycling projects in a subsequent phase. The report also provides the rationale for further developing this ed waste meets acceptable standards. initiative to Phase 2 where the initial three projects will require financial These two phenomena-diminishing agricultural support for the pre-investment studies and possibly for full productivity and inadequate waste disposal-can be seenuctivasy problem ofresctvey wsthe rursai can urban implementation. A budget of $2 million should be established for Phase 2 seen as problems of, respectively, the rural and urban sectors. By and large, both sides currently address their and administered by a multidisciplinary Consultative Group for Recycling problems separately. Cities produce large volumes of Waste. During this phase, the initiative will deliver three pre-investment organic residues, while farms consume great quanti- feasibility studies, provide a focal point for waste-to-agriculture actiities, ties of chemicals and/or humus to produce food and fiber The urban sector dumps waste in landfills, incin- and manage an information clearinghouse to serve UNDP, theWorld Bank erators, streams or the ocean, while the rural sector and other interested parties. depends upon imported fertilizers, pesticides and her- SUMMER 1998 UrbanAge 19 By 2025, urban waste will more than quadruple. bicides. Both sides' infrastructures are based on these fields near cities.These fields were fertilized with ur- patterns, which are reinforced by public policy. ban waste collected by municipalities. But there is another approach:waste recycling-the * As part of the three-phase Cairo Sludge Disposal use of urban waste to promote agriculture.This pro- Study sludge from all of Cairo's wastewater treatment duces a closed circle of organic production (agricul- plants is being used as well as composted sludge from ture), consumption (human and industrial activities) and the piiot composting plant in Alexandria to determine reuse (rather than disposal) that connects the urban the fertilizer values of different types of sludge in var- and rural sectors. Fortifying soil with waste and reus:ng ious cropping situations. wastewater can help sustain the land and alleviate pres- * Building on the success of the Ganges River Action sures upon urban waste management systems. Plan, India has launched a National River Action Plan Organic wastes generated in urban centers-com- to help rid 19 rivers of municipal and industrial waste. postable municipal sold waste, wastewater ard In the Ganges Action Plan, 1,000 kilometers of sewer sludge can, when properly collected and processed, lines were laid and several wastewater treatment plants be used to feed depleted soils. More than half of a were constructed to make available a large quantity of typical urban landfill consists of soiled paper degrad- treated wastewater and sludge for agricultural use to able sludge, yard wastes and food wastes. By chang- supplement irrigation and fertilizer needs. ing the composition of the waste that is taken in- As these examples show, waste management tech- separating food garbage from trash-and properly nology does not have to be extremely sophisticated. processing the mix, rich compost can be made avail- Many technologies such as composting, water conser- able to improve soil fertility and biological activity. vation and water purification are truly ancient. On the While not a magic bullet, recycling urban organic other hand, there is also room to try out new ap- wastes for fertilizer irrigation and aquaculture can help proaches. Because there are virtually unlimited resources address several urgent problems, including food and of municipal waste with which to experiment, all of water shortages, inadequate urban sanitation, deplet- these differing approaches can be tried simultaneous- ed soils and environmental degradation. Iy in order to arrive at new best management practices. Many good examples-from both the developed The arguments for waste recycling are thus both and developing worlds-exist where urban waste has numerous and compelling. In any case, the present sit- been safely and effectively collected, treated and uation cannot continue.Today's approach to waste is reused for agriculture in a comprehensive and inte- worse than merely wasteful. Not only do both rich grated manner and poor communities continue to squander valuable * In rural areas of Senegal, composting animal manure potential resources by treating them as troublesome with crop residue has substantially increased crop yield, wastes, but these vast "wasted resources" are disposed and, over the past several years, reasonable millet and of in ways that seriously-and sometimes irre- sorghum yields have been harvested from farmers' versibly-pollute our water soil and air U Waste Recycling Related Web Sites For information on waste recycling efforts that work, start with these sites: *3 U World Engineering Partnership for Sustainable Development-Recycling Waste for Agriculture: http://wvwwwenet.org and http;//aoss.engin.umich.edu!recycling/wepsI * Food and Agriculture Organization of the United Nations: http://www.fao.org! _ 0 U World Bank (contains summaries of Bank-financed waste projects): http://www.worldban,<.org/htm /extd r/toc.htmI * United Nations Development Programme-Sustainable Human Development: nttp:!/www.uncp.org/ * U.S. Department of Agriculture Conservation and Production Research Laboratory: http://www.cprl.ars.usda.gov/ 20 UrbanAge SUMMER 1 998 Taking The Pulse Of Cities BY CHRISTINE AUCLAIR Urban indicators are measures thiat call our NDICATORS AREVARIABLES, or functions of sev- attention to particular urban phenomena such as eral variables, that measure particular real-world phenomena over time. Because of their ability to housing availability, infrastructure developmerit, clarify and synthesize problems and complex issues aEccess to services urban investment and in a few numbers they have become an increas- g ingly common component of city management around productivity, urban security and pFollution. the world. But just what is an indicator? To understand this, we need to first differentiate among data, processed data, statistics, indicators and indices. evance to policy issues and which point toward success- Disaggregated raw data are unprocessed numbers;these ful outcomes for policy. No wonder that in Arabic, the are of little value in devising policy. Data that have been word indicator is "pointen'' Indicators are usual y highly verified, c assified and adjusted are processed data or sta- aggregated and have easily recognizable purposes. At the tistics and can provide the basis for ad-hoc evaluations to highest evel are indices, such as the Consumer Price In- help describe particular conditions and trends. Even though dex, the Human Development Index or the City Deve - statistics may be based on data that have been verified, clas- opment Index, which combine different indicators into a sified and adjusted, their relationship to policy outcomes single number useful for comparison overtime and space. may still be difficult to understand and apply Urban indicators are measures that call our attention _ Indicators are statistics selected specifically for their rel- tc, particular urban phenomena such as housing avail- DATA COLLECTION AND QUALITY UNCHS provided the workbooks of Indicator lists and mnethodologies to data collectors. The data col- lectors around the world-consultants, statistical departments of ministries in charge of urban devel- opment and technical department of municipalities-were asked to make use of secondary sources for indicators, documenting their sources wherever possible. Indicators and data were collected for the ur- ban region (defined as the built-up or densely populated area containing the city proper suburbs, and continuously settled commuter areas). However some data were collected for the metropolitan area. When it was possible, data were disaggregated by sex. When secondary data were not available, esti- mates were made using groups of experts. Several stages of follow-through and comment were un- - dertaken to verify and correct data, and meeting of consultants were held in several regions to discuss and adjust the results. A high level of accuracy was not required for this first survey although it was rec- ommended that data be accurate enough for policy purposes. An approximate result was considered C HRI S TINE better than no result at all, since this provides a benchmark for future, more accurate, estimates. AUCLAIR is an advisor to the Urban DATA Q' UALITY Indicators Programme - Many of the data provided were of surprisingly good quality, particularly from the poorer countries, of the United uations which are often considered to have a low capacity for data collection. Despite the lack of direct train- Settlement (UNCHS)- ing in most of the collectors, data quality was good and reporting was comprehensive. with approxi- (Habitat) in Nairobi, mately 30 percent missing values only for the key indicators (considered to be a very good result for Kenya. international collections). c SUMMER 1998 UrbanAge 2 1 ability, infrastructure development, access to services, ur- ban investment and productivity, urban security and pol- DEF'NITION lution.The House price-to-income ratio is a good ex- citytcityaas dfine ample of a single indicator which conveys the greatest a t ph e r bet amount of information on the overall performance of E housing markets. By measuring the number of annual household incomes necessary to buy a new house, it pro- p p vides a quick measure of the availability of housing and smpinluivetntlsepos)TeUtdNa land and the accessibility of households to the housing de edures market.The ratio takes values ranging from around I in are u sub-Saharan Africa to values as high as I 5 in metropoli- terntoa constentoa consaepb Cities tanTokyo.The considerable variation in values in appar- ih reulrl b te .N ently similar countries directly reflects the availability of generate housing and land under different policy regimes.CA ULTO 0 vrrore wealtlh | Since 1995 United Nations Centre for Human Set- more wealth ~tlements UNCHS (Habitat) has been developing a Glob- Thfisinovstkgtenaoalpdutnechnu- than do al Urban Indicators Database as part of the Istanbul Habi- R idsryahen tat Agenda.The Database currently contains more than m ilt nations as 20,000 entries related to major policy questions around e a whole. the world. It includes only city-level data and focuses pri- o o fm i c manily on cities' physical conditions. The database con- sists of a set of background data and 40 key urban indi- cators classified in six modules: n th • Socio-economic Development mh assme tha the r .E alizedcuntries,14percetinLatnAmeric Infrastructure com is t m h y i l * Transport use in most of the cases ba t i n r i Environmental Managementm db mn c t - U Local Government first metho is p r for accuracy but t secondj pro- c Housing eies a des eNote th the city t is a pro- The base year or reference period is 1993. Almost al of the world's most populous countries are included t to in the database.The Global Urban Indicators Database d ues hiitirlilbealyd contains 237 cities, 37 percent of which are located in Africa, 1 8 percent in Asia/Pacific, 1 4 percent in Industri- REUT alized countries, 1 4 percent in Latin America and the Caribbean and 14 percent in transitional economies of Eastern and Central Europe. Arab States' cities account (e al )Acmaio fct rdc ogosntoa for only 5 percent of the database. pd so a Overall,tnree-quarters of the cities in the database are in the developing world; the others are from industrialized Tbe1sostedfeec ewe iyadntoa rd countr.es and transition economies.The least developed ucsbrein world is highly represented, and this major bias should be *Hg ae fieulte:(e al )Tect rdc taken into account in any comparative analysis.pepesniAfcas33imslsthnnhglynd- In terms of city size, the sample of cities is quite bal- tilzdcutisteAinct rdc s2 ie es anced, with large cities of more than I million inhabitants constituting 37 percent of all cities in the database, medi- Ltnmrc n h aiba,nterbSae n umn sized cities (between 300,000 and I million), 29 per- tetastoa cnme l aetesm siae cent, and smaller cities of less than 300,000 population, lelofiycnmcoupthslvlisaut1tms 34 percent. lestaofhgldeeoecie, 22 UrbanAge SUJMMER 1998 U) _ _ _ _ _ _ : : _ _ _ _ _ _ _ _ _ _ _ _ - 0 TABLE i City ProductTo GNP Difference Percent 50 40 30 - 200 10 Note: Results are derived z from 1993 city product deaa -iO3 0 forf '50 cites 5 inUN.\HS1 -20 Global Urban Indicators -30 Database, Cities of: Africa Arab States* Asia Hig LatinAmericaAnd Transitional Resutts should be taken Wit caution eince Arab Inoustrialized The Cribbearn Economies Cities. Contact: UNCHS (Habitat) Contacc: Judy van Hemert. Executive Contact. Dr. Stephen Osborne, -- Fukuoka Office Tel. 81-92-724-7121: Secretary, International Society for Director of the Voluntary and Non- _ fax: 81-92-724-7124; e-mail. City and Regional Planners, profit Research Unit. Public Services habitat.fukuoka@unchs org Mauritskade 23, 2514 HD The Management Group,Aston Business ' Geneva, Switzerland-July 6-8, 1998. Hague.The Netherlands. E-maill School,Aston University, First General Assembly of the isocarp@bart nl:Web site' Birmingham B4 7ET, UK.Tel. 121 - International Forum of Reseai-chers http//www.soc titech ac lp/isocarp 359-3011; fax. 121-359-1148; e-mail 1" on Human Settlements International Madrid, Spain-October 14-17, 1998. s.p.osborne@aston.ac.uk - Conference on Research State and Public Administration Brasilia, Brazil-March 29-April 2, Community for the Habitat Agenda. Reform Contact: Calle Herrera 1999. Space Syntax: Second Contact. Secretariat. Forum of Toro, Quinta CLAD, Sector Los International Symposium. Contact Researchers on Human Settlements, Naranjos, Las Mercedes,Apartado Mark David Major, Space Syntax c/o CERFE.Via Monte Zebio. 32, Postal 4181, Caracas 1010-A, Laboratory,The Bartlett School of Rome 00195, Italy.Tel. 39-6-323- Venezuela.Tel 582-924-064/925-953; Graduate Studies, 1- 19 Torrington __ 2505/3600-1480, fax. 322- fax: 582-991-8427; e-mail. Place, University College London, 1218/3600-1485, e-mail: clad@clad.org.ve; Web site: London WC I E 6BT, UK Tel: 44-171 - __ cerfe@pronet.it/ce.r.fe@agora stm.it http://www.clad org ve/congres3.html 813-4364; fax. 44-171-916-1887: e- Fukuoka, Japan-July II - 1 3, 1998. Beijing, China-October 14-1 7, 1998. mail mark malor9ucl.ac.uk;Web site: _- Third Asian-Pacific City Summit:The Sixth International Conference on http>llwww.spacesyntax com Cities Sustainable Growth in the Computers in Education- Global Asian-Pacific Region. Contact Asian- Information on the Net.Web site Educational Programs Pacific City Summit Office. Fukuoka http:lvwww nltu.edu cn/icce98/ --- City Hall.TelI 81-92-711 -4022, fax Des Moines, Iowa-October 15- 17, Cambridge, Massachusetts-August - 81-92-733-5097: e-mail f- 1998. Symposium celebrating the 3-21, 1998. Program on Fiscal summit@fukuoka-srp co.jp Decentralization and Financial -- award of the I12th World Food Prize.MaaentoRgialndLcl ___ Sydney,Australia-July 15-18, 1998. Urbanization and Food Security Management of Regional and Local The Twentieth Century Urban Contaci: Herman Kilppei; Executive Governments. Contact: Dr. Roy Kelly, Dii-ector, Progr-am on Fiscal c Planning Experience. Contact. Dr Director. Ruan Companies, 601 K D - Robert Freestone, IPHS Conference Locus, S uite 350 Des Moines, IA Decentralization and Financial Management of Regional and Local Convenor, Faculty of the Built 50309, IJSA Tel 515-245-2411: fax G I Tax Environment. University of New 515-245-3785; e-mail: Pogram, Harvrdaw ol,56 South Wales. Sydney NSW. 2052, wsp@netins.net Massace avene Cambridge, Massachusetts Avenue, Cambr-ldge -- Australia.TeI. 61 -2-9385-4836; fax, New Delhi, India-December 14-16, MA 02138, USA Tel: 617-495-4748; _- 61-2-9385-6264, e-mall 1998 International Seminar on fax 617-495-0423;e-mail. __ iphs98@unsw.edu.au Urban Infrastructure- Financing and pfd@hiid.harvard edu London, England-August 1-3, 1998. Pricing Contact Executive Director, a __ International Conference on Human Settlement Management I NTr i Cultural Attitudes Towards Institute, New Delhi. India Tel: 91- Settlement Studies and Technology and Communication 11-469-1834, fax. 91-11-464-1292; Development (CASSAD) Is holding -- (CATAC98). E-mail e-mail- a number of training programs catac98@arch usyd edu.au,Web site thsp.plIsm I sprntrpg.ems.vsnl.net.in throughout 1998.The sublects range - _ from GIS and its applications, waste - http:l/www.anch.usydeduau/-fay/catac/or Maui, Hawaii-January 5-8, 1999. 32nd management and the preparation of http://www.drury.edu/faculty/ess/catac/ Annual Hawaii International environmental impact statements. - Victoria, British Columbia- Conference in System Sciences: Contact Coordinatoi;Training September 26-29, 1998. Information Technology in Program. CASSAD, No 3,Ayo International Downtown Association Developing Countries. Contact- Adekunle Close, New Bodija Estate, 44th Annual Conference Quality of Sandra lIaney. Conference Box 20775, U.l Ibadan, Nigeria.Tel: -- Life. Preserving, Restoring and Administrator, HICSS-32 234-2-810-2726; fax 234-2-810- Celebrating Downtowns. Contact: Conference Office, College of 4536: e-mail. -- International Downtown Business Administration, University cassad@inforweb.abs.net * = Association, 910 17th Street. NW, of Hawaii. 2404 Maile Way, C-202 Suite 21 0.Washington. DC 20006, Honolulu. Hawaii 96822.Tel: 808- USA.Tel 202-293-4505; fax: 202- 956-3251; fax 808-956-9685, e-mail. 293-4509: e-mail question@ida- hicss@hawaii edu Web site. downtown org http://wwwcba hawaii edu/hicss C uririEF I -, UrbanAge 39 ... More than a Picture The high resolution aerial photographic solution For further information and a free guide to aerial photography contact: ____Cities Revealed, The Geolnformation Group ,307 Cambridge Science Park, Milton Road Cambridge CB4 4ZD Tel: 01223 423 020; Fax: 01223 425 787 Co an