Brazilian Design for New Urban, Middle-Class World

Countries across the global South are experiencing rapid urbanization as people move to cities for better economic opportunities — and this massive social change is creating new business opportunities. Those who recognize how fundamentally people’s lifestyles are changing will be those who will benefit from this big shift in populations.

Finding ways to live well in urban areas will be critical to determining whether this move repeats past urban failures — from the favelas of Brazil to the slums of India — or introduces a new way of living that is exciting and colorful. Design and designers will be critical to this change.

One young design company in Brazil, Sao Paulo-based furniture studio NUUN  (nuun.nu), is attempting to resolve a dilemma common across the rapidly urbanizing global South: How to create a design aesthetic that fits with the new way of living and being?

The company consists of designer and founder João Eulálio Kaarah and architects Renato Périgo and Carolina Sverner.

Périgo specializes in furniture and interior design, while Carolina Sverner worked with respected Japanese architect, Shigeru Ban (shigerubanarchitects.com), who is well known for designing buildings and houses made from paper and for creating easy-to-build homes for people after a disaster has struck (http://www.ted.com/talks/shigeru_ban_emergency_shelters_made_from_paper).

A collaboration among upcoming artists, designers and architects, NUUN tries to infuse its designs with a sense of “brazilianness”. Brazilianness is a modern aesthetic, made for modern lifestyles in the new urban landscape, that draws on aspects of Brazil’s culture and environment.

The young studio’s first collection of furniture offers simplicity. Called Eos, it tries to blend urban cosmopolitanism with raw nature. Brazil is known for its jam-packed urban cities as well as its vast expanse of Amazon rainforest. In practice, NUUN’s look is a mix of contrasts redolent of what used to be called brutalism: concrete mixed with glass, steel, wood and semi-precious gems. NUUN takes inspiration from NASA’s Earth Observation System (EOS): the collection vibes off of space satellites, antennae and the dry soil of the backwoods. NUUN says that “despite its Martian features, [the collection] is as Brazilian as it comes”. There is the modular Panorama sofa (http://nuun.nu/products/panorama) in five colors, capable of being re-shaped to fit a variety of living arrangements. A glass-topped coffee table with a concrete base and a side table with a carbon steel metallic structure to complement the sofa.

Elsewhere in the world of Brazilian design, footwear brand Grendene S.A. (http://ri.grendene.com.br/EN/Company/Profile) has become one of the world’s largest producers of footwear and made one of its founders a billionaire. And Grendene has boosted its international success by turning to another Brazilian success: supermodel Gisele Bündchen (giselebündchen.com.br).

Grendene began in 1971 and owns various successful shoe brands, including Melissa (melissa.com.br/en/), Grendha, Ilhabela, Zaxy, Cartago, Ipanema, Pega Forte, Grendene Kids and Grendene Baby.

It has six industrial zones with 13 footwear factories and can produce 240 million pairs of shoes a year. It undertakes all areas of production— from making its own moulds for the shoes to creating PVC (polyvinyl chloride) (http://en.wikipedia.org/wiki/Polyvinyl_chloride) – and handles its own distribution.

While Grendene is already a well-known shoe brand in Brazil, it wanted to expand its presence overseas to increase profits. Named after the two brothers who founded the company, Alexandre Grendene Bartelle and Pedro Grendene Bartelle, Grendene started working with supermodel Gisele Bündchen in 2002 to help her launch her own line of affordable flip-flops, iPanema (ipanemaflipflops.co.uk). The brightly colored sandals with elaborate patterns became an instant success.

But do celebrity endorsements really work? In the case of Bündchen and Grendene, the answer is yes. According to Forbes, 25 million pairs of the flip-flops and sandals are sold every year, accounting for 60 per cent of Grendene’s annual exports of about US $250 million.

Brazil was able to produce 864 million pairs of shoes in 2012, up 5.5 per cent from 2011.

Of these, 113 million pairs were exported to the United States, Argentina and France.

Brazil, like many other countries, has had to work out how it could compete with cheaper shoe imports from China. The strategy it chose was to target the growing number of middle-class people both in Brazil and elsewhere, as well as the high end of the market.

In 1979, Grendene created the Melissa brand, which has now become a coveted style leader. It collaborates with top design names such as Karl Lagerfeld and architect Zaha Hadid.

Making a partnership with Bündchen is part of the company’s strategy to reach higher-income buyers.

And it is working: Grendene increased its export revenue by 50 per cent in 2013.

Co-founder Alexandre Grendene Bartelle became a billionaire according to Forbes World’s Billionaires list and is worth US $1.4 billion. He owns 41 per cent of Grendene S.A. and close to 40 per cent of the Dell Anno brand.

This is a critical lesson for manufacturers in the global South. Grendene had achieved strong market dominance at home, and was already benefiting from growing wealth among Brazil’s middle classes. But it was the overseas market that had the potential to clinch even more profits for the company.

Bündchen’s high brand profile has enabled the company to compete head-to-head with the well-known Brazilian flip-flop brand, Havaianas (havaianas-store.com).

Another modern design leader owned by Grendene, Dell Anno (lojasdellanno.com.br), is a maker of modernist cabinets and furniture.

Dell Anno only use wood from renewable forest sources, to protect and preserve the Amazon and other native forests. Dell Anno tries to recycle as much as possible: up to 80 per cent of the water used in manufacturing is recycled, and byproducts from the production process such as a sawdust, wood, plastic and cardboard are also reused.

Dell Anno makes a full range of furniture for kitchens, bedrooms, closets, home theatres, home offices, service areas, restrooms and commercial environments. Dell Anno uses research and development to study trends and advise customers on the best options. The brand offers its staff training to help standardize customer service, and also has an excellent blog covering developments in modern design around the world (http://www.lojasdellanno.com.br/blog/).

By David South, Development Challenges, South-South Solutions

Published: May 2014

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Global South’s Middle Class is Increasing Prosperity

The global middle class is on the rise – and this is creating both challenges and opportunities. As poverty rates have come down across the global South, many countries have seen a rise in the proportion of their population categorized as “middle class”. Globally, being middle class is defined as a person able to consume between US $4 a day and US $13 a day (ILO).

According to the Organization for Economic Cooperation and Development (OECD), most of this growth will be in Asia and the region will soon make up 66 per cent of the world’s middle class. Historical experience shows that members of the middle class quickly become absorbed in spending their accumulated capital on housing, equipment, industry and business, health and education. In countries with a growing middle class, policy makers need to show a strong interest in creating stable economic conditions to encourage this expanding consumption and domestic demand, the OECD advises.

Growth of the world’s middle class took off after 2001, with an additional 400 million workers joining this group. The McKinsey group of consultants found the total number reached 2 billion in a dozen “emerging nations” in 2010, collectively spending US $6.9 trillion every year (McKinsey).

Forecasters predict a further increase in the middle class across the global South will bring with it a surge in consumption (a combination of spending and demand). Areas being highlighted by various studies and reports include China’s small and mid-size cities, other areas of East Asia and Africa.

Middle class spending in these dozen emerging nations could reach US $20 trillion during the next decade – twice the amount of consumption occurring in the United States right now (McKinsey).

The result is a re-shaping of populations, with growing numbers of people now neither rich nor desperately poor, but landing in the middle of the income distribution.

And local competitors in the global South are fighting hard for these consumers on their own turf.

The Hangzhou Wahaha (http://en.wahaha.com.cn/) beverage maker in China has been able to compete against multinationals such as Coca-Cola and PepsiCo, according to McKinsey. It has turned itself into a US $5.2 billion business using a multi-pronged strategy: targeting rural areas, catering to local needs, keeping costs low and positioning itself as the patriotic choice.

And this change is also occurring in Africa, where a growing middle class is fuelling sales of refrigerators, television sets, mobile phones, motors and automobiles across the continent, according to the OECD. In Ghana, for example, car and motorcycle ownership has risen by 81 per cent since 2006.

According to the African Development Bank (AfDB), Africa’s middle class has reached 34 per cent of the population, or 350 million people. In 1980, it was 126 million people, or 27 per cent of the population.

Countries with the largest middle classes in Africa include Tunisia and Morocco, while Liberia and Burundi have the smallest number of people in the middle class.

The economic growth that is fuelling this middle-class surge is coming from a combination of increasing investment in the services sector, the tapping of the natural resource sector and better economic policies in the past two decades. Africa’s middle class is driving growth in the private sector and boosting demand for goods and services, most often also provided by the private sector.

“The liberalization of African economies has resulted in improved efficiencies and led to a rapid growth in the service sector, which has spurred the growth of the middle class,” Lawrence Bategeka, a principal researcher at the Uganda-based Economic Policy Research Centre, told The East African newspaper.

How important the middle class is to increasing consumption levels can be seen in the cases of Brazil and South Korea.

According to the OECD, both countries had similar income levels and growth rates in the 1960s. But by the 1980s, high income inequality in Brazil capped the middle class at 29 per cent of the population. In South Korea in the 1980s, the middle class population reached 53 per cent. This larger middle class population enabled South Korea to switch from an export-driven growth strategy to domestic consumption.

While Brazil wasn’t able to do this at the time, it has since made impressive gains in reducing poverty – from 40 per cent of the population in 2001 to 25 per cent in 2009. This has seen the middle class grow to 52 per cent of the population and boosted domestic consumption.

While a rising middle class in the global South is good news for improving human development and living standards, the OECD found much of the new middle class was vulnerable and could easily slip out of that category. They also often lacked enough income to purchase more expensive durable goods such as automobiles (OECD Yearbook 2012).

The success of this fragile but growing middle class will be key to how well the global economy fares in the coming years.

A new report by the UN’s International Labour Organization (ILO) argues that the global South’s growing middle classes are just the thing to spur growth across the wider world economy.

“Over time, this emerging middle-class could give a much needed push to more balanced global growth by boosting consumption, particularly in poorer parts of the developing world,” said Steven Kapsos, one of the authors of the report.

In Indonesia, an example of the economic impact of the middle class trend in action can be seen in the surging life insurance business.

Association of Indonesian Life Insurance Companies (AAJI) chairman Hendrisman Rahim believes the growing middle class are potential customers for the country’s thriving life insurance industry.

“They are the ones who have the need to be insured and can afford to purchase a policy. Extremely rich people are financially capable [of buying], but may not have the need. Extremely poor people have the need, but require financial assistance to be insured,” he said to the Jakarta Post.

As the Indonesian middle class increases, the life insurance industry is expecting to see revenue rise by 30 per cent in 2013.

By David South, Development Challenges, South-South Solutions

Published: February 2013

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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African Supercomputers to Power Next Phase of Development

Information technology developments in Africa have long lagged behind those in other parts of the world. But the transformation being brought about by the widespread adoption and use of mobile phones – each one a mini-computer – and the expansion of undersea fibre optic cable connections to Africa are creating the conditions for an exciting new phase of computing growth on the continent.

Despite the global economic crisis, Africa is on course to see annual consumer spending reach US $1.4 trillion by 2020, nearly double the US $860 billion in 2008 (McKinsey). On top of this, by 2050, a projected 63 per cent of Africa’s population will be urban dwellers. With Africa’s middle class the fastest-growing in the world – doubling in less than 20 years – matching computing power with this consuming urban population could unleash a treasure trove of opportunity for information technology entrepreneurs.

These developments are creating the conditions for game-changing computing in the next years. And this is encouraging the creation of a new supercomputer (http://en.wikipedia.org/wiki/Supercomputer) for Africa in Kenya that will double the total number of supercomputers in Africa. Hugely powerful compared to personal or commercial computers, supercomputers use cutting-edge technology to carry out high-speed calculations involving vast quantities of data.

Expanded supercomputing power brings numerous advantages to both economic and human development. It will radically alter what can be accomplished in Africa – allowing mass data processing to be done, highly complex and data dense applications to be run, and very large research projects to be conducted on the continent rather than overseas.

Increasing computing power in Africa will bring in its wake, it is hoped, a surge in economic and research opportunities.

It will help African researchers and scientists to undertake globally competitive projects, rather than seeing this work done overseas. It will also open up a vast range of possibilities for African entrepreneurs and businesses to do complex data processing, modelling and research and will enable them to become more sophisticated operations.

The new supercomputer, the iHub Cluster, is being built in the Kenyan capital by one of Africa’s pioneering information technology hubs – iHub Nairobi (http://ihub.co.ke/pages/home.php) – in partnership with Internet products and services company Google and microchip maker Intel Corporation.

Africa’s first supercomputer is located in South Africa and is ranked 497 in terms of computing power on the list of 500 supercomputers in the world (http://www.top500.org/).

It is located in the “Tsessebe cluster” in Cape Town’s Centre for High Performance Computing (http://www.chpc.ac.za/).

“With mobile devices coming in multiple cores, it is important for developers to be exposed to higher performance computing; we are hoping to debut at a higher level than ‘Tsessebe cluster’,” Jimmy Gitonga, the project team leader for the iHub cluster, told Computer World.

Africa suffers from poor supercomputer capacity and this has had a knock-on affect on everything to do with economic development. The iHub supercomputer hopes to help universities and colleges to gain competitive edge and be able to undertake more complex research in the fields of media, pharmaceuticals and biomedical engineering.

“In Africa, we need to be on top of the mobile scene, its our widest used device,” Gitonga told Computer World.

Some of the practical applications for the iHub supercomputer in East Africa and the Horn of Africa include improving weather forecasting and drought prediction, increasing the ability to give advance warning of droughts and famines in the region.

“Most of the United Nations agencies and international agencies operating in the region have extensive field research on how to tackle natural disasters in the region. Imagine if they had affordable space where they can meet with developers and test resource-hungry applications,” Gitonga said.

The iHub also wants to offer the services of the supercomputer to researchers and organizations who have had to go abroad to have their data processed. The iHub supercomputer hopes to be used by mobile phone developers, gamers, universities and research institutions.

In the last two years, China had pushed the United States out of the number one spot for supercomputers. The Tianhe-1A located at the National Supercomputing Center in Tianjin (http://www.nscc-tj.gov.cn/en/), China, was the fastest computer in the world from October 2010 to June 2011.

For those looking to see how they can make the most of the growing supercomputer capability in Africa, examples from other countries offer a good idea. Supercomputers can be used for weather forecasting, climate research, oil and gas exploration, physical simulations like when testing aircraft, complex modelling for medical research, processing complex social data necessary for delivering effective social programmes or running modern health care systems.

By David South, Development Challenges, South-South Solutions

Published: October 2012

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

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India’s Modernizing Food Economy Unleashing New Opportunities

Increasing prosperity in India is reshaping the country’s relationship to its food. A number of trends are coming together that point to significant improvements to India’s long-running problems with food supply and distribution. This matters because India, despite its two-decade economic boom – and increasing middle-class population – is still home to about 25 per cent of the world’s hungry poor, according to the World Food Programme (WFP).

According to Indian government figures, around 43 per cent of children under five are malnourished and more than half of pregnant women between 15 and 49 suffer from anaemia (http://en.wikipedia.org/wiki/Anemia), a consequence of poor diets (WFP).

Many Indians go hungry despite the fact that the country grows enough food for its entire population. The problem isn’t lack of food but a wasteful system that fails to distribute affordable food efficiently and to make participating in the food system a viable income source. Farming employs as much as 70 per cent of Indians. But many work small plots of land, are heavily in debt and earn a meagre income.

However, a number of developments are improving the efficiency of India’s food system and modernizing the way it works.

There are signs that big changes lie ahead: New restaurants exploring foreign cuisines; modern supermarkets; online food shopping services; food academies teaching new skills; food gurus proselytising for new approaches; and a thriving publishing and media sector.

They are creating new jobs, increasing price competition and encouraging more modern delivery, marketing and distribution systems.

In 2011 the introduction of global supermarkets into the Indian marketplace became a hot debate. The Indian government announced it would open the marketplace to global competition and foreign direct investment (FDI), but put the move on hold in December after an outcry by political parties and protests by small- and medium-sized retailers fearful it would harm livelihoods. The Indian supermarket sector is a market estimated to be worth US $475 (The Guardian).

One retailer that is already bringing international methods to Indian retailing is the Best Price chain of wholesale stores. Best Price is a joint venture between U.S.-based Walmart and Bharti Enterprises, one of India’s largest business groups. In 2007, Walmart India made a deal with Bharti Enterprises to set up a cash and carry business called Best Price Modern Wholesale. The first store opened in 2009, and by 2012 there were 15 outlets.

By teaming up with Walmart, Bharti Enterprises gets to learn from one of the world’s leading retailers and a pioneer in efficiencies, logistics, supply chain management and sourcing.

The stores have all the hallmarks of modern food selling – warehouses, sophisticated inventory control, hygienic conditions and connection to new information technologies (http://www.indiaretailing.com/bharti-walmart-II.asp).

Best Price Modern Wholesale employs 3,710 people, and the stores sell more than 6,000 items, a mix of food and non-food products. It claims 90 per cent of the goods and services are sourced locally.

Food is a highly volatile and politicized issue in India. High food inflation – which reached 12.21 per cent in November 2011, according to India’s Finance Minister Pranab Mukherjee – has led to political tensions. Inflation has driven up the price of staple foods, essential commodities and imported products.

At the same time, India’s commerce ministry has forecast that 10 million jobs will be created if foreign supermarkets are allowed to set up in India. Many of these jobs will be in logistics as more efficient, modern methods shake up India’s food industry. Poor logistics in the Indian food sector means that as much as 40 per cent of produced food does not reach consumers. This waste comes at a high cost in a country with 50 million malnourished children.

New jobs are already being created in the country’s restaurant industry.

While there have always been high-end restaurants in India’s cities, the gastronomic scene has received a recent boost from expatriate Indian restaurateurs returning from the competitive London, Tokyo and New York scenes, bringing skills and experience from some of the most demanding kitchens in the world.

One example is Megu, a restaurant in New Delhi’s Leela hotel(theleela.com/new-delhi-megu.html) that sells Japanese-influenced food.

Such cuisine is being called “elite Indian international gastronomy”, according to The Guardian newspaper.

“We are aiming at the affluent traveller or the ultra-rich local,” Aishwarya Nair, a senior executive at the Leela, told The Guardian. “The idea is to give people a taste of globalization. In our restaurant you don’t know you are in India. You could be in New York, Japan, anywhere.”

That appeals to many newly affluent Indians, food critic Vir Sanghvi told the newspaper.

“The food (at somewhere like Megu) doesn’t matter so much as the experience and the glamour,” Sanghvi said. “There is a lot of money outside the traditional elite now and these people are looking for ways to spend it on something that seems sophisticated.”

The new food fascination is also leading families who once would have employed a cook to watch 24-hour TV channels about food. This programming changes habits and encourages buying new foods and exploring new flavours.

Market analysts believe these trends are likely to continue. A middle class with spending power has been growing in India for almost two decades, and forecasts see the number of middle class Indians reaching 250 million by 2016.

“With bigger and better restaurants and international food brands coming in to the country, it’s only a matter of time before fine dining finds its place among a growing cosmopolitan population,” said Siddharth Mathur, manager of the independent Smoke House Room restaurant (facebook.com/SmokeHouseRoom).

Online food shopping in India is also thriving. Research by Juxt found that 65 million people use the web in India, four-fifths of whom shop online. Murali Krishnan, head of eBay India, told the BBC that the country could become one of the top 10 e-commerce hubs in the world by 2015.

Online grocery services include MyGrahak.com, which calls itself “India’s Largest Food Store” and offers home delivery of food, toiletries and pet supplies. Another is Greenytails.com, which brings together multiple food retailers into one online shopping website and is based in Bangalore and Hyderabad.

As an example of the spin-offs that can be created from rising interest in food culture, there is the story of Nita Mehta. Considered one of India’s most celebrated cookbook authors, Mehta (nitamehta.com) not only publishes recipes but also runs a chain of cooking academies.

As she tells it, her interest in cooking was always there and she started experimenting at home with new recipes for her friends and family. The response was encouraging and she started teaching people how to make ice cream in her home. Curious students flocked to her classes to learn how to make flavours like mint, chocolate chip and mocha.

Following on this success, she started teaching classes in baking, Chinese cooking and what she calls “multicuisine”.

The lessons soon turned into a cookbook, which she wrote after doing her household chores. But her battles had only begun: publishers were not interested so she self-published. She called her publishing company Snab Publishers and released her first book, “Vegetarian Wonders”. It was modestly successful but it was with her second book, “Paneer All the Way”, that things got cooking. Her publishing company has now produced 400 cook books and sold 5 million copies. She has won international awards, does TV cooking programmes, has established several cooking institutes in New Delhi and teaches classes in the U.S., Canada, Britain and other countries.

With successes like Nita Mehta, the Indian food revolution is well underway.

By David South, Development Challenges, South-South Solutions

Published: March 2012

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

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Indian City Slum Areas Become Newly Desirable Places to Live

 

With India’s urban economy experiencing rapid growth, its slums – once seen as the most undesirable places to live in the country, if not on Earth – are attracting the attention of affluent residents and developers inIndia’s rapidly expanding cities. The prosperity inIndia’s cities has made these areas’ proximity to business and entertainment zones highly desirable. In turn, this has led to slum dwellers either upgrading their homes and in the process boosting their value, or being offered the opportunity to sell their rudimentary dwellings to real estate agents and property developers.

For some, this could be a great leap forward in income and opportunity; for others, it could mean exploitation and hard choices, weighing up the cash boost against moving out of the slum area.

How to best handle slum areas in urban and peri-urban communities will be a major challenge for most countries in the South as they continue to urbanize.

India’s phenomenal economic growth rate – forecast to be 7.9 percent this year by the Asian Development Bank, after averaging 7.7 percent per year over the past decade – has been the force behind an expanding middle class population, now estimated at 50 million people (McKinsey). Forecasts see it swelling from 5 percent ofIndia’s population to 40 percent by 2025.

With 30 percent of the population living in urban areas and cities contributing 60 percent of the country’s GDP and 90 percent of government revenues (Wall Street Journal), city-dwellers’ fate is critical to the functioning of the economy.

According to the 2001 Indian census, slums make up 25 percent of all housing and 26 percent of urban households lack access to sanitation facilities.

But Indu Prakash Vaidya, a 32-year-old housewife, is part of new trend in India’s city slums. Vaidya lives in a small shanty house in Mumbai with no running water, no sewage services and a jerry-rigged electrical connection.

Vaidya’s home is a just a single room for the five people in her family. They sleep on the cement floor and the ‘kitchen’ is a two-burner gas stove. The dwelling is so poorly constructed that they have to move around inside the room when it rains outside to avoid getting soaked.

But her humble home has been valued at US $24,000 by people looking to buy it.

According to real estate agent Hari Ram, the average price of a 91 square metre shanty home in Mumbai is now US $46,000.

“Shanties as small as 120 square feet… are as expensive as US $93,000,” Dinesh Prabhu, a construction company owner, told NDTV television.

Sixty percent of Mumbai’s 21 million people live in slums. And many are now finding themselves the subject of a property boom. This has led to the bizarre spectacle of luxury high-rise buildings sprouting up in a sea of slum housing. The slums are attracting the attention of those with money because many busy city workers face long commutes and are desperate for homes closer to work and entertainment areas.

The value of living close to the action is summed up by one slum dweller:

“People would kill to be in a place like this,” said slum dweller Sundar. “There are four local train stations close by. And the bus stop is a stone’s throw away.”

Some say this real estate boom offers enormous potential for the poor.

“All I can say is, given the current real-estate rates, those slums are invaluable,” said Sharad Mahajan of the Pune-based nonprofit organization Mashal (http://mashalindia.org).  Mashal focuses on the problem of urban shelter and also implements housing projects. It has been working in the Dharavi slum area with theMaharashtra government on its redevelopment. The slum is well-known for its representation in the film Slumdog Millionaire, and the area is next to the Bandra-Kurla Complex business district of Mumbai. Mashal has been mapping the area, home to 60,000 families, to make sure the redevelopment is fair to the families living there.

Land tenure is an issue however. Many slum dwellers do not have official title to the land they live on. Over time, they have become semi-official places to live as governments have hooked many up to electricity and drinking water. Issues of corruption and exploitation are also other problems that need addressing if this real estate windfall is to actually benefit slum dwellers.

Typical slum dwellers are day labourers and poor migrants. But others are people who good easily afford to live somewhere else but don’t want the long commutes to work.

“It is simpler and less expensive to live here,” said Sankaralingam, a plastic merchant, who estimates his annual income at around US $9,300: an amount that could get him a home somewhere nicer.

For Indu Prakash Vaidya, the dilemma – to sell or not to sell – makes for some painful choices. While her current home is prone to flooding during the rainy season, she feels she would have nowhere else to go if she sold the home.

Yet the pressure to sell is great and elemental.

“I have three children, and their education and well-being need to be taken care of. Financial constraints can push me to sell this shanty in the future, then where will I live? I will have nowhere to go,” she told NDTV.

By David South, Development Challenges, South-South Solutions

Published: December 2011

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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