NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, April 13, 2012

SANTA MONICA, Calif. (MarketWatch) — Approximately 180,000 people are added to the urban grid each day, according to the United Nations. That means, according to other estimates, that nearly 100,000 housing units are needed — every day, all around the world.

The new settlements are occurring mostly in slums, where population growth and housing needs are converging at an explosive pace. Some 1.8 billion people will be slum dwellers by 2020, according to the UN.

It doesn’t have to be this way.

Affordable housing in the developing world is a gaping hole in the impact investing sector, where capital is put toward social and financial return.

“Assumptions have been made that those at the bottom of the pyramid simply cannot access dignified housing due to having low incomes which, in turn, has led to rising dialogue amongst NGO and impact investing circles of the need to push the housing microfinance industry forward” as such loan structures are the only ones deemed affordable,” says Ruban Selvanayagam, partner-director at the Fez Ta Pronto Construction System.

“Subjectively speaking, this indirect acceptance of slums as part of the future carries huge business and practical risks given the already over-burdened state of developing world cities and the impending magnitude of slum growth,”Selvanayagam wrote in an article for the online magazine Social Earth on the topic.

He is right, of course. Slum dwelling is and should be unacceptable. It brings all sorts of torrents, from crime to environmental hazards.

To be sure, there are real estate firms that have embarked upon affordable housing ventures. But these have largely been domestic endeavors here in the United States.