Thursday, 8 November 2012

Below the Radar: Why governments need to recognise the importance of the urban informal sector and migration for rural poverty reduction

By Priya Deshingkar

For millions of poor rural people across the globe, accessing urban labour markets is critical for survival and coping with seasonal adversity.   Their first point of arrival in a city is often an informal settlement or slum  such as Dharavi in Mumbai (with a population of 6.5 million) or Kibera in Nairobi (population of 1.7 million) and their first jobs are often in the informal sector. Early migration models viewed urban informal sector employment as a temporary staging post for new migrants on their way to formal sector employment. But decades of experience in developing countries has shown that the informal sector has persisted and grown, and graduation to the formal sector has been elusive.

In fact, recent assessments by UN-HABITAT indicate that the proportion of people living in slums exceeds the proportion of people living in officially authorised parts of the city in many parts of Africa and Asia. According to the State of the World Cities 2010/2011: Bridging the Urban Divide, the number of slum dwellers globally has increased from roughly 776 million in 2000 to roughly 827 million in 2010, despite the fact that 227 million people were rehabilitated through slum improvement projects. 

Most governments view informal settlements as hotbeds of crime,  filth and disease that cities need to be rid of. The policy response has been negligent at best, with slums continuing to have no services for decades, and demolition at worst where people are threatened with eviction without the provision of any real alternatives, as recent reports from Bangladesh, India, Kenya and Ghana indicate.  There are also (failed) efforts to keep migrants in rural areas through employment creation programmes – for example watershed development projects in India aim to reduce migration. According to the UN Demographic Yearbook 2009-10 an astonishing 67 per cent of all governments had policies to halt or limit rural-urban migration even in 2009.

This policy position is eloquently captured by Hernando De Soto, the Peruvian economist and author of The Other Path:  
When they arrived in the cities, however, migrants encountered a hostile world.  They soon realised that, while formal society had a bucolic vision of Peru’s rural world and acknowledged its right to happiness, no one wanted that other world to descend on the cities.  Assistance and development programs for rural areas were designed to ensure that the peasants improved their lot where they were, well away from the cities. Civilization was expected to go to the countryside; the peasants were not expected to come looking for it.

The genesis of these negative perceptions can be traced to theories of migration, urban unemployment and slum formation as well as ignorance related to the richness and dynamism of the urban informal sector.  Although participatory mapping of slums is gaining momentum, we have little understanding of the microenterprises that the urban poor are engaged in.  

Despite the persuasive arguments put forth by De Soto urging governments to recognise the economic contribution of workers in the urban informal sector, little has been done to address these concerns in developing regions of Asia and Africa. Where efforts have been made the results are impressive as in the case of research by Sumila Gulyani and Debabrata Talukdar in the slums of Nairobi: their results show that the urban poor engage in a range of micro-enterprises (retailing food and household appliances, small scale manufacturing, etc.). Contrary to older narratives that view the economic activities of the urban poor mainly as survival activities, their research indicates that such microenterprises can put people on a trajectory out of poverty.  

Nor is there any understanding of the amount of money that poor migrants to urban cities are able to send to their families back home.  Recent calculations by Adriana Castaldo, Priya Deshingkar and Andy McKay in 'Internal Remittances and Poverty', based on household surveys, comparing internal and international remittances in Ghana and India, two countries with marked regional inequalities and high levels of internal migration, show that the total sum of internal remittances far exceeds international remittances.  

Given that these remittances are from poorer migrants than those migrating internationally, and reach a larger number of poorer source families, the impacts on poverty are likely to be significant.  Remittances are critical for families in rural areas where credit and insurance markets are weak – the new labour economics of migration argument – and it helps them to eat regularly, send their children to school, improve housing and to pay for health care.  

Finally, systematic efforts are needed to understand and appreciate the economic contribution of  migrants.  Doug Saunders argued in his book Arrival City that migrants are the economic engines in cities across the world; indeed Deshingkar and Akter calculate that the economic contribution of migrants in India is 10% of the GDP.

Governments would do well to recognise people’s own efforts at managing risk and adversity in rural areas by migrating to towns and cities.  Urban and rural planners need to work together and recognise the reality of multilocational livelihoods and accept mobility rather than fighting it.

Priya Deshingkar is the Research Director of the Migrating Out of Poverty Research Programme Consortium at the University of Sussex