UN Habitat research indicates that over 1 billion people globally live in substandard housing conditions, without access to infrastructure, including clean water, sanitation, roads and electricity.  The substandard housing problem is exacerbated by the phenomenon of premature urbanization, in which rural dwellers adversely affected by environmental change or internally displaced persons increase migration to unplanned urban areas, while natural growth in urban slums exacerbates the housing deficit. 

The financial resources required to address the needs of 1 billion slum dwellers are estimated by Rockefeller Foundation to be between US$ 1and 2 trillion.

The Millennium Development goals call for improving the lives of 100 million slum dwellers by 2020.  UN estimates of resources required to meet the MDG 7/11 goals are US$ 20 billion a year over the next 15 years (300 billion total), which is thought to be far above the current level of investment going into slum upgrading and prevention.

Investment needs of this size will require access to private capital markets sources as well as government and donor funding.

UN-Habitat’s Medium-term Strategic and Institutional Plan for the period 2008–2013 (MTSIP), which was adopted by its Governing Council in 2007 (HSP/GC21/5/Add.1), defines the following two strategic and institutional objectives for Focus Area 5:

To develop innovative pro-poor mechanisms for financing of housing and urban services and infrastructure and promote their up-scaling by appropriate development actors and investors.

To become a catalyst in creating innovative financing mechanisms for affordable housing, basic urban infrastructure and services, to be scaled up by institutions with greater resources at the national and global levels, e.g. international finance institutions.

In the context of the overall MTSIP goal of sustainable urbanization, the strategic result of Focus Area 5 is to increase sustainable financing for affordable housing and infrastructure, and thus help the maximum number of households to live in improved conditions.

Efforts to achieve this result center on two expected accomplishments (EA):
EA 1.                Raising financing for affordable and social housing and related infrastructure and increasing sustainable housing and urban development, and:
EA 2.                Increasing activity in municipal finance and affordable housing finance sectors globally.

Working in collaboration with World Bank, IFC and other major international finance players, and in response to the global financial crisis, UN-HABITAT can fill a vital niche in:

• Taking key early stage investment and credit enhancement roles
• Developing prototype lending structures
• Setting lending program eligibility standards to encourage environmental and public health-minded design for affordable and social housing
• Financing rental housing and progressive homebuilding to encourage affordability, and
• Documenting job creation resulting from investments in urban housing and infrastructure

With the activities to be undertaken in the context of Focus Area 5, UN-HABITAT has the potential to become a catalyst of global significance for financing affordable housing, urban regeneration and community development. The planned activities will support all other MTSIP focus areas.