Myths and realities of informal settlements: poverty traps or ladders?

Swelling informal settlements are among the country’s greatest social challenges. Shack dwellers are exposed to squalor and insecurity from living on unserviced and unauthorised land, which is a source of escalating frustration and angry protest. A coherent policy informed by whether these places serve a useful wider function is urgently needed, writes IvanTurok.
Almost one in five residents of South African cities lives in a shack. Most shacks are densely clustered in informal settlements. Shack dwellers are vulnerable to hardship and environmental hazards from overcrowding on poorly-serviced and often unsuitable sites. Pressure for land means these areas are intensely contested, and as such they are at the forefront of growing social discontent and violent protests, since people believe they are being denied fundamental rights.

The government at all levels is ambivalent about informal settlements.

The government at all levels is ambivalent about informal settlements. In the absence of a clear and consistent national or local policy, there are many piecemeal responses to this issue, ranging from small upgrade projects and disaster relief schemes to forcible evictions. The wholesale clearance by the South African National Roads Agency Limited (SANRAL) of 800 people from Lwandle, outside Cape Town in June 2014 was an example of the government’s heavy-handed response, subsequently declared illegal by the courts.

Shacks and social mobility

Part of the problem is a lack of knowledge about the impact of shack settlements on social mobility. There is little understanding of whether the sacrifices households make by living in unsanitary and insecure conditions pay off economically, and if they help or hinder human progress. In the absence of systematic evidence of the effects of informal settlements, implicit assumptions and myths flourish. This is not a sound basis for making policy.

A popular stereotype is that these are isolated enclaves occupied by illegal squatters who are anti-social, uneducated and desperate. Opportunistic ‘queue jumping’ is often said to be the motive; people select hazardous sites to invade to leapfrog others on the waiting list for free housing.

This caricature is far too narrow to understand the real dynamics at work. A better policy requires framing the issue in a way that covers the relationship between informal settlements, household motivations and urban labour markets. These processes can be summarised into two contrasting perspectives, namely informal settlements as ladders out of poverty, or as poverty traps (Table 1). Reality on the ground is likely to be a combination of the two.

Informal settlements lift rural households out of poverty and onto a path to urban opportunities.

Ladders out of poverty

In this view, informal settlements are transitory phenomena. They lift rural households out of poverty and onto a path to urban opportunities. They are affordable entry points into city economies where migrants obtain information, skills and contacts, with many advancing upwards and outwards to superior accommodation in better neighbourhoods.

Maintaining the substandard character of these reception areas helps contain the cost of living for workers with low-paid, entry-level jobs. People sacrifice poor living conditions to enhance their economic standing while acquiring new skills. People moving to shacks are motivated, tenacious and resourceful. They do so out of choice rather than compulsion, and in response to a labour market that signals higher demand in urban areas.

Living in the city gives people more hope than in the countryside because the opportunities are superior. Aspirations for a better life spur a stronger sense of purpose to overcome hurdles to personal advancement. Without the traditional sources of security in extended families and subsistence farms to fall back on, people are forced to help each other by building social networks.

Informal settlements also encourage people to generate their own livelihoods by giving aspiring entrepreneurs new-found confidence and capabilities. Informal enterprises benefit from cheap premises, local social networks and the lack of red tape.

The government’s main role should be to enable people to migrate towards urban opportunities. This means self-help, incremental upgrading and providing basic services. Further improvements would raise living costs and prohibit in-migration. The state should invest in people and let them choose how they live, recognising that shacks may be the only affordable way for them to gain access to the cities. It should encourage organic upgrading in sync with rising household incomes to avoid displacing poor families.

Some eke out a living scavenging garbage on landfill sites, recycling waste or collecting wood to sell on the roadside.

Poverty traps

The alternative perspective is far less sanguine about the role of shack areas in human development. They are seen as perpetual features of the urban landscape that demonstrate low social mobility. Urban labour and land markets do not adjust smoothly, and self-reliance is no match for the barriers that impede human progress.

People move to shack areas under duress, prompted by rural insecurity. Lacking the skills that employers expect, they end up at the back of the queue for jobs. Their best chances are for the lowest-paid, least desirable positions, where they tend to get stuck. Some eke out a living scavenging garbage on landfill sites, recycling waste, keeping small livestock or collecting wood to sell on the roadside.

Repeated job rejections sap morale, people detach from the world of work, and stress damages their subjective well being. Exposure to crime, violence and illness further undermines hopes and living conditions. Community cohesion is weakened by the strain on households, the competition for scarce resources, and the actions of gate-keepers who enrich themselves by extracting rents.

Shacks end up on marginal land exposed to the risk of storms, flooding, fire and disease. People suffer physical harm, psychological setbacks, disrupted livelihoods and lost property. Many behave as transient migrants, and remit any spare money to their families in rural areas.

Few shack dwellers advance onto the next rung of the housing ladder, and they only have access to second-class schools, healthcare and basic services, which dampen prospects of future generations. Shacks also burden the local tax base, because public service costs cannot be easily recovered.

Research is required to track whether households improve their economic status after moving into informal settlements.

Emerging findings

These perspectives have contrasting implications for government policy. The first suggests nurturing shack areas and investing in the people, while the second implies a more radical approach. Systematic research is required to assess which is most relevant to South Africa.

The author’s preliminary analysis using the Labour Force Survey suggested a mixed picture, with an element of truth in both conceptions. There was some sign of progression out of poverty in that many shack dwellers had jobs, yet the extent of improvement was limited for the vast majority whose jobs were low paid and insecure. Moving to the city seemed to have helped rural migrants to access economic opportunities, but the quality was modest. Limited upward mobility could be a reason why there is so much frustration and social unrest in these communities.

Further research is required to track whether, over time, households improve their economic status after moving into informal settlements. Another objective is to identify those settlements in which cities have the greatest positive impact on people’s prospects. A deeper understanding of the interactions between ‘people’ and ‘place’ is essential for more appropriate policies that support the upgrading of suitable settlements and the redevelopment of shack areas with serious locational problems.

Author: Professor Ivan Turok, acting executive director, Economic Performance and Development programme, HSRC.

This article is based on a paper written for the Research Project on Employment, Income Distribution and Inclusive Growth (REDI3X3) funded by the National Treasury.