Discussion Synthesis Part 1: The Urban Poverty Challenge
Urban Value Chain Development 2008
On-Line Conference April 29 – May 22, 2008

Discussion Questions Part 1: The Urban Poverty Challenge

• Why focus on urban poverty? Are we leaving out rural people and communities?
• What are the most critical challenges for the urban poor? Let’s break these down. Is it jobs? housing? crime? representation and democracy? land tenures ?
• What are the key opportunities for today’s cities to address these challenges?

(In addition, participants were asked to introduce themselves and raise key questions.)

Part 1: The Urban Development Challenge
Question 1 – Why focus on urban poverty? Are we leaving out rural people and communities?

• Urban poverty is significant, but rural poverty cannot be ignored.
• A focus on rural-urban linkages is important because rural and urban areas are linked economically and socially – i.e. rural producers provide input, rural laborers find jobs through social networks based on their geographic and ethnic origin.
• Urban development can partly be understood as the development of services in cities, such as water and sanitation services. It is also the development of rural areas into “urban” areas, with proper infrastructure and systems capable of sustaining economic development and population growth.
• By developing urban areas, we are generally not requesting that resources be diverted from rural work, and ultimately we are serving many of the same people because of rural-urban migration, and support to rural communities in the form of urban workers.

Question 2: What are the most critical challenges for the urban poor? Let’s break these down. Is it jobs? housing? crime? representation and democracy? land tenure?

• The World Bank projects that greater proportions of the world’s poor will live in urban areas as the twenty-first century progresses. While cities become more modern around the world, the growth of slums has led to pollution problems, unemployment, deficiency in basic services, and food security issues.
• One concern is over the flood of rural populations into urban slums, fueled by rural poverty, and in many cases, conflict. Many migrants are young. This need-based migration may have positive and negative implications on the urban poverty dynamic.
• On one hand, the influx of large amounts of needy, ethnically and regionally diverse populations into cities may make the urban environment less stable and development efforts more difficult. On the other hand, these migrants have shown resilience, flexibility, and a desire to improve their lives which are key elements to entrepreneurship.
• Former rural dwellers are no longer tied down by village traditions, and have far more opportunities in cities. New migrants need to find new skills and linkages, but may benefit from networks of former neighbors in cities, networks that could potentially create an interface for value chain development.
• Another problem is that basic services that the government provides for rural populations, such as schooling, are not provided for in urban areas. Consumer demand for food products often outstrips supply, leading to high prices. While economic opportunities are higher in cities, the cost of living is also higher, and families often have to spend a disproportionate amount of their income on goods and services that rural, agricultural regions get for relatively little.
• Women are often marginalized by slum development efforts that tend to focus on the most prominent entrepreneurs, which are usually men. This is a mistake, as many of the most forward-looking and productive entrepreneurs are women.
• Unless poor urban households are able to engage in growth oriented enterprises, as opposed to subsistence enterprises, conditions will likely not change sustainably. Growth oriented enterprises requires beneficial linkages in value chains. This can be pursued through formal channels, where wages, social protection, and productivity are higher, or through informal channels, which offer more flexible and community-oriented opportunities.
• A distinction must be made between different types of “urban” and different types of “poor”. Urban environments encompass both towns and cities. Towns act as connectors within rural areas, and often are areas of economic stagnation. Cities, on the other hand, are huge, cosmopolitan centers of opportunity, beacons to globalization. The poor, likewise, cannot be put into a homogenous group. Some poor communities are impoverished with very little opportunity to see economic gains; others are clearly in a period of movement out of poverty; still others are newly poor in countries or communities facing aggregate growth problems.

Question 3: Key Opportunities for Today’s Cities to address these challenges – has not been dealt with a lot, but will be the focus of Part 2

Part 2: Urban Solutions – The following are comments made so far that are particularly relevant to the discussion of Urban Solutions

• Informal linkages have proven to be a key component of rural enterprise development programs. Because cities are far denser, it is likely that these linkages already exist, and therefore need to be identified and understood by practitioners.
• A key aspect of finding solutions to urban poverty is through direct consultation with urban communities, who are aware of the problems facing them and their dreams for the future.
• Value chain development and strengthening social networks are crucial for poverty reduction in urban areas.

• Part 3: Value Chain Development* – The following are comments made so far that are particularly relevant to the discussion of Value Chain Development

• VC approach has strong potential for urban poverty alleviation – perhaps even more so than in rural settings.
• Many value chains are both rural and urban – we need to focus on linkages. In practice many urban value chains and MSEs in urban areas are agro-based and involve food processing and trading. So, urban value chain development can have a rural impact as well.
• While in rural areas, a key element of the value chain approach is to develop these linkages between value chains and actors, in cities they may need to be identified and understood to be incorporated into an economic development strategy.
• Need for urban services like water, sanitation’ etc. are some areas where exclusive urban value chains can function and here the role of the Government, private sector and civil society gains utmost importance.
• In the VC context there is also a need to look at the vulnerabilities of small business entrepreneurs as they are introduced into high risk business environments. Most migrants do not come with inherent skills and entrepreneurial abilities to compete in urban environments. Traditionally cheap labor and not skills remain the advantages of poor countries and as a result poor get relegated to low income, low entry barrier jobs. Pro-poor value chain development would need to integrate them into formal economy or value chains where productivity, wages and social protection gets progressively higher.
• Women have been traditionally restricted to low skilled petty trade and often do not involve in businesses that have a high turnaround. Also women who are left back in villages are considered passive players and not a major policy focus. In addition, many urban women are more socially mobile, more empowered, more entrepreneurial, which presents opportunities.

• Social Networks are important and do not get enough attention: Social networks are important because most transactional relations are based on characteristics like affinity, village, ethnicity and technical competence plays a role only at a later stage. While lack of social networks creates an entry barrier into new urban markets for many, their presence may be also an enabling factor or low cost channel to provide effective livelihood support. Thus there is a need to recognize the role of such networks and how they can be leveraged to improve the efficiency of the value chains.

• Informal linkages: what is the place and role of informal intermediaries vs. “lead firms”? When and how do we mobilize informal sector traders, vs. when and how do we link small enterprises to formal sector larger firms?

• VCD should also take into account the fact that economic dynamics vary between cities and towns as cities are hubs of opportunity but towns often tend to stagnate. It may be also useful to explore the relationship between spatial clustering and integration of producers into value chains as the value chain perspective directs the attention to buyers and markets from a local focus. VC promotion is also workable compared to other models, when buyers get involved early on in the market and follow a clear business and market logic, rather than operating with subsidies.

Thanks to everyone for your contributions!