Policy Statement
of the
Executive Director of UN-Habitat
Mrs. Anna Tibaijuka
on the occasion of
the Opening Ceremony of the
22nd session of the Governing Council of UN-Habitat

Nairobi, 30 March 2009

Your Excellency The Honourable Clifford Everald Warmington, President of the Governing Council;
Distinguished Ministers and Mayors,
Heads of delegation and the newly elected members of the Bureau,
Excellencies,
Distinguished Participants
Colleagues,
Ladies and Gentlemen,

I am happy to begin our substantive deliberations with agenda item 2.  Once again allow me to extend my warm greetings to all of you and especially to those of you who have travelled from afar and hope that your stay will prove to be fruitful and enjoyable.

Mr. President,

Today we are consumed by a global economic and financial crisis, the dimensions of which are still unknown, especially in terms of its length and depth. But what is all too apparent is the short term effect. We are witnessing collapsing demand and shrinking economies in the north resulting in a dramatic reduction in world trade. This is affecting all countries no matter how prudent they may have been in managing their respective economies.

This is a new situation and coping with it requires not only a concerted effort by all but also new thinking and new institutional arrangements.

So where does UN-HABITAT fit into this maelstrom of events?

Poorly regulated housing finance systems and lessons learned

At the core of the initial problem was neglect to pay attention to the establishment of  affordable housing finance systems by Government which relied on people in  private financial institutions whose interests were far removed from the housing needs of the poor.  This led to the phenomenon of toxic debts that have undermined the most valued ingredient of banking, namely trust.   

I believe that there are several lessons that need to be learned in this debacle.

The need for global regulatory machinery that includes the issue of affordable housing finance
 
The first one is that in a globalised world economy, we need globally responsive regulatory mechanisms and machinery. The current financial crisis shares a common trait with the climate change challenge. Those who contributed the least to the problem – those who live on less than 2 dollars a day – are likely to suffer the most and the longest. While I would hope that some of our world leaders meeting later this week at the G20 in London will confront this structural issue head on, the fact of the matter is that the negative effects are already tangible on the ground.

They include housing foreclosures and job losses in the north affecting millions of women, men and children. They also include 100 million people who, according to the latest UN estimates, will join the ranks of the poor. 

How many of those 100 million are already living in life threatening conditions in slums? How many of those 100 million will be joining the ranks of slum dwellers? 

And this is the first instance where UN-Habitat fits into the picture.

By organizing the dialogue of this Governing Council on the theme of affordable housing finance in the face of the global financial crisis, this body is emphasizing to the international community that any lasting solution to the causes of the financial crisis must include due attention being given to the issues of affordable housing finance.  

Yet, a  vision of a need for a global facility focusing to assist delivering housing to the poor is not a new idea. From the outset, in 1972 in Stockholm at the First UN Conference on the Human Environment, the need to put in place global and national institutions for human settlements financing was discussed and agreed. It led to the creation of the Habitat and Human Settlements Foundation, as  a global shelter facility to assist in housing and municipal finance. However, as you are all aware this facility was never capitalized. It was only at your last session, after an hiatus of 35 years that Experimental Re-imbursable Seeding Operations were endorsed (ERSO). This initiative was therefore raised at the most appropriate time and has become even more important than at your last session.

Affordable housing is rarely adequate, and adequate housing is rarely affordable

Mr. Vice President;
 
A key conclusion that we can already draw from our experience in dealing with affordable housing finance is that the perennial problem of “affordable housing not being adequate” and “adequate housing not being affordable” cannot be left to the market place alone.

The sub-prime mortgage crisis that sparked off the current global financial crisis was the outcome of a one-dimensional approach to housing and a “one-size fits all” model of housing provision. It did not look at how to improve incomes to make housing more affordable. It did not look at how to make housing cheaper so as to make it more affordable. It did not, above all, look at the need to have a mix of tenures whereby poor people could access decent housing through the rental market as well as through home ownership.

Financial prudence and banking principles were simply thrown out the window. Financial engineering became the “in game” as different so called innovative products from brokers outcompeted with each other. Commissions and bonuses were collected, CEO payments rose into the stratosphere but  the risk remained on the one end with the borrowers and at the other end with the shareholders across the globe.

This model  pushed low-income families to live in expensive houses, while it encouraged better-off families to indulge in non-housing related consumerism using housing finance instruments, the so called mortgage refinancing or stripping.

Ethical issues aside, what this crisis has taught us is that affordable housing finance has to be part and parcel of the larger affordable housing equation.

Apart from an appropriate oversight or regulatory framework, this equation is made up of an income component, a cost of construction  component, a cost of money component, a tenure component, and a market component.  In the vast majority of countries, these components need to be further broken down to account for gender specific needs and constraints.

History shows us that leaving one or more components out of the equation results in unsustainable and inequitable housing solutions and markets.

We will be sharing with you, in the days to come, how we are applying some of these lessons learned and principles in our own work in the areas of slum improvement and slum prevention. The ERSO pilots that will be signed in the course of this Governing Council are meant to test new models to handle some of these challenges.
  
The convergence of global and local development agendas

Distinguished delegates

The second lesson learned from the global financial and economic crisis is that we are at a turning point in the history of development theory and practice. 

For the first time, the two most salient global agendas – economic recovery and climate change – are inextricably linked with what was perceived until now as a national or local agenda, namely our very own Habitat Agenda.

While the current financial crisis extends beyond the initial crisis of poorly-regulated housing finance systems, most experts agree that one of the most effective ways of stimulating economic recovery - or avoiding the slide into economic recession - is public investment in housing and infrastructure.  China, the biggest creditor nation that is underwriting a significant portion of the economic recovery packages of the north, already decided last year to inject some $600 billion into its own economy, two thirds of it devoted to green infrastructure and pro-poor housing.

Experts concur that investment in housing and urban infrastructure, properly planned and managed, helps create jobs and stimulates demand across all sectors of the economy. They also concur that these forms of investments help position cities and countries more competitively for the future.

But there has been the good side of the crisis. It is more clear that housing is  undeniably not a social expenditure but productive investment. Developing countries should particularly take cue from the massive bail out packages that developed nations have made to revive this sector.

Although housing finance in developing countries is in permanent crisis as displayed by expansive slums, the sector has not been able to attract the attention it deserves from Government as well as their development partners. For example, it still remains a struggle to have housing deprivation recognized as a critical dimension of poverty. Few developing countries readily include housing development into their poverty reduction strategies supported by the World Bank or UN Development Assistance Frameworks.  Hopefully the work of UN-HABITAT will now become easier because a country that ignores investing in affordable housing finance is not likely to achieve sustainable development and social cohesion.

Our Global Report on Human Settlements 2005, which focused on “Financing Urban Shelter”,  established that housing is a repository of national wealth. For example, in 2003 mortgage loans in Europe accounted for 42% of the European Union’s GDP. In the USA this figure rose to 71%. Clearly, this is a testimony that the housing sector is at the centre stage of national economic well being and cannot be ignored by policy makers at all levels.

Cities and climate change

This brings me to the issue of climate change and the Habitat Agenda

It is no coincidence that climate change has emerged at the forefront of the international debate precisely at the same time as the world becomes predominantly urban. This is because urbanisation brings about irreversible changes in our production and consumption patterns. How we plan, manage and live in our expanding cities determines, to a large extent, the pace of global warming.

With just over half of humanity living in cities, cities already account for 75% of global energy consumption and a similar proportion of all waste. According to the latest estimates, cities contribute directly to about 50 to 60% of green house gas emissions.

There is no doubt that climate change exacerbates existing social, economic and environmental problems, while bringing on new challenges. The most affected today, and in future, will be the world’s urban poor – and chief among them, the estimated 1 billion slum dwellers.

It is only two weeks ago that the UN panel of scientists issued a new warning that the sea level is rising twice as fast as was forecast only two years ago, threatening hundreds of millions of people living in deltas, low-lying areas and small island states. But the threat of sea-level rise to cities is only one piece of the puzzle. More extreme weather patterns such as intense storms are another. Tropical cyclones and storms, in the past 18 months alone, have affected some 120 million people around the world, mostly in developing and least developed countries.  

Indeed, in some parts of the world, inland flooding is occurring more often and on a more intense basis. Not only are human settlements in low lying countries such as Bangladesh being affected, recurrent inland flooding has occurred recently in Europe, and for the first time in modern history, in large parts of Africa.

There is also the challenge of desert frontiers  advancing at an alarming rate due to a combination of droughts and deforestation, particularly in Africa.

All of the aforesaid  factors work together to increase the new phenomenon of environmental refugees in city slums on vulnerable land. When disasters strike this is a group most at risk. It is a vicious circle that has to be arrested and reversed.

The role of cities

It is crucial to recognize that cities and urban residents are not just victims of climate change but are also part of the problem. And if cities are part of the problem, that means they must also be part of any solution.

We all agree that mitigation measures are urgently required. However, to date, the measures we envisage at the global and national levels have yet to be accompanied by concerted measures at the city and local levels.

Carbon trading instruments were considered a solution but recently have been put under pressure by the financial crisis and need to be revisited. We shall need to take immediate actions to make our cities more sustainable by revisiting our land-use plans, our transport modalities, and our building designs. There is a unique opportunity to bridge our global efforts in emissions control with local efforts to improve the quality of life and the productivity of our cities. Our cities are, after all, the driving force of our economies, and what better measures can we take to improve economic productivity and to green our cities than to reduce traffic congestion, improve air and water quality, and reduce our ecological footprint. 

At the same time, there is a growing consensus that we must take immediate adaptation measures to reduce vulnerability. Yet, here again, we have yet to recognize the need to plan our cities and settlements to prevent loss and destruction of lives and properties.  In the view of UN-HABITAT, the time to act is now and the place to act is in the cities of the world. Cities not only have to take preventative measure, they must plan to offset the worst.

In this respect, there is no doubt that local authorities will be the front line actors in finding local answers to these global challenges. There are no one-size fit all solutions and each local authority will have to assess its own risks and vulnerability and plan accordingly, whether in coping with rising sea levels, cyclones, droughts, flooding, desertification, environmental refugees, in addition to already existing problems.

It is obvious that local authorities, especially secondary cities in developing countries that are growing the fastest, will be the most severely tested by these challenges. These cities, despite their rapid growth, contribute a minimal share to global greenhouse gas emissions. Yet they are the cities that are most at risk in terms of suffering the impacts of climate change.

For this reason, I am happy to announce that we are working very hard with the secretariat for COP15 and with our local authority partners – United Cities and Local Government (UCLG) in ensuring that cities and climate change figure prominently as an agenda item at COP15. The access of local authorities to the adaptation fund is of particular relevance in this undertaking. I believe a number of you are also active in this process that will culminate in an new climate protocol to be concluded in Copenhagen next year.
 
The role of the UN-Habitat

Distinguished delegates,

It is in this context and in response to these challenges that UN-Habitat has launched two new initiatives.

The first initiative is the World Urban Campaign. This Campaign is coordinated by UN-Habitat and is designed as a global advocacy tool to elevate the visibility of and attention accorded to the twin challenges of urbanisation and sustainable development. It mobilizes a wide range of partners representing all major stakeholder groups to share their knowledge and experiences in sustainable urban development and to better inform public policy.

The second is the Cities in Climate Change Initiative. This is designed to support local action. It focuses on supporting the efforts of government agencies and local authorities in adopting more holistic and participatory approaches to urban environmental planning and management, and the harnessing of ecologically sound technologies. The Initiative uses adaptation as a starting point to engage people, their local authorities and the private sector in risk abatement action. In doing so it recognizes that the effects of climate change on cities are not class, age or gender neutral and that special efforts are required to reduce the differentiated risks and vulnerabilities to these segments of the population.

Business matters

Mr. President,

Allow me to conclude by turning to our business at hand. We have tried our best to ensure that this 22nd session of the Governing Council will run smoothly and efficiently.  

I believe we have made considerable progress in following up on the resolutions of the 21st session of the Governing Council. This includes, first and foremost, the ongoing implementation of our Medium-term Strategic and Institutional Plan (MTSIP). The two areas where the secretariat is particularly interested in your feedback is on the Habitat Country programme Documents within the framework of the Enhanced Normative and Operational Framework, and our recently completed results framework to refine and smarten up the MTSIP. This latter document will serve as the basis for continuing reform including results-based monitoring and reporting, the delegation of authority, enhanced accountability and efficiency.

These and other matters including our Work programme and Budget, our Gender Equality Action Plan, and our collaboration and cooperation with our partners both within and outside the UN system are all clustered under Agenda Item 5 and the Committee of the Whole.

The dialogue on affordable housing finance, which was suggested by the General Assembly, will hopefully be another highlight of this Governing Council. We have with us two very knowledgeable specialists serving as facilitators and moderators and an interesting panel of experts that should enable us to further inform the General Assembly on this matter. 

Finally, we have the report of the Committee of Permanent Representatives and a set of draft resolutions to feed the work of the Drafting Committee.

In summary, we hope to make this a fruitful and businesslike governing council that will consolidate our gains, on the one hand, and provide us with further guidance and vision for the future.  

I am confident that the Distinguished delegates will find this  session not only   intellectually stimulating  but also a source of  practical  applications to solve the problems of the day. UN-STAFF are available to assist you as far as possible in your discussions.

I thank you for your kind attention.