Local Businesses and Slum Redevelopment

Cross posted from Searchlight South Asia which is a monthly newsletter created by Intellecap for the Rockefeller Foundation to report trends in urban poverty in Bangladesh, India, Nepal and Pakistan

Slum redevelopment and rehabilitation projects are often in a state of deadlock: any significant change requires more resources and land. However, availing of more resources and land requires significant change on the ground. Reflecting the magnitude of the challenge, several ambitious slum redevelopment projects have either been ineffective or have become notorious non-starters. For example in Dhaka, a study conducted in 2011 found that the Bhasantek Rehabilitation Project, started in 1998, had failed to provide shelter to evicted slum-dwellers. In India, plans to redevelop Dharavi have been discussed since 1997 with little progress.

Public opinion of slum redevelopment projects argues for and against redevelopment. The middle- and upper-classes, especially those living close to a slum community, are gratified by the expected improvement to their surroundings. However, the urban poor are by-and-large suspicious of such initiatives, predicting them to be inequitable.

This is largely due to the manner in which redevelopment projects have been handled in the past. Historically, the urban poor have not been included in plans for redevelopment, nor in efforts to relocate them. When provided, temporary facilities are woefully inadequate, and the living and working needs of the urban poor are rarely incorporated into the design of new buildings. Promises of project deadlines and available facilities at redeveloped sites are rarely kept. While real estate developers seem to gain from redevelopment efforts, the urban poor realize little value for themselves, resulting in a historic distrust of developers and redevelopment efforts. Local enterprises in particular have been hard hit, due to both a need for increased investments, as well as the opportunity cost of having to move locations twice over.

In spite of poor historic performance and perceptions, there are new models emerging that indicate a change in how developers approach redevelopment projects, and these efforts finally seem to address the critical issue of building trust within urban poor communities.

What Works

Currently, there seems to be two models of slum and cluster redevelopment that work. One is promoted by private developers such as Omkar. They offer temporary residential facilities that are as convenient as can be made possible. These private developers design the redevelopment project for dual purposes: to build low-income, high-rise housing and commercial space for slum-dwellers, and to build luxury apartment complexes or commercial space. The sale of luxury apartments or commercial space then more than covers the costs of redevelopment projects.

The second model is coordinated by not-for-profit entities, such as trusts, along with private partners like design firms. In this model, the government provides funding while not-for-profit entities are involved in community mobilization and facilitate development of the master redevelopment plan. This model typically has no for-sale luxury component, and the redeveloped area often remains entirely with the erstwhile slum residents.

A critical component for the success of these two different models is community mobilization and engagement; model success depends on including the community, recognizing their needs and addressing them effectively. This has been recognized and included in the “Delhi Declaration,” after the International Conference on Inclusive Urban Planning in New Delhi on February 18-19, 2013.

While non-governmental organizations (NGOs) have traditionally been able to work with the community based on their longstanding goodwill and familiarity with residents, private companies are now adopting a similar approach with intense community engagement over a shorter time period. Private players are able to increase their efficacy by enabling their field people to make small, on-the-spot investment and design decisions that will help solve relatively simple problems as they crop up.

Irrespective of which model of redevelopment is adopted, the greatest challenge is building trust within urban poor communities where education is low and most transactions informal. Convincing such communities of the value of written agreements and contracts, and helping them understand design, financial projections and other aspects of the project can be very time- and resource-intensive with no guarantee of results.

Aside from private and not-for-profit players, the critical stakeholder group that holds the keys to the success of any redevelopment project are local businesses, resident employers of informal workers and home-based workers, many of whom are women.

Enterprise Concerns

Most slum communities are hubs of informal entrepreneurial activity. These enterprises are vital not only for the micro economy of a slum, but also to the wider macro economy of a city and its country. Since these enterprises provide livelihoods to the local urban poor, it is understandable that any redevelopment proposal is met with serious reservations regarding the cost of temporary dwellings, re-establishment, loss of customers and maintenance costs of the new buildings.

Given the impact local enterprises have on the urban poor, any redevelopment proposal is likely to affect enterprise owners and employees. Not only would productivity and revenues suffer in the short-term during the transition period, but also, the enterprises will incur costs in moving their machinery and equipment. This uncertainty of enterprise tenure would prevail until construction is completed on the redevelopment project and possession handed back over to slum-dwellers, whereupon local entrepreneurs have to undertake the exercise of moving back to their original place of business. For enterprises that are directly interacting with customers, this could translate into a significant financial loss since they are unlikely to spend additional time or money looking for shops in another location.

Another important concern is the time needed for redevelopment and the probability of a project being completed on time. In the event of project delays, the financial losses to these slum enterprises may mount on account of extended leases at temporary locations, and a costly change in plans and schedules.

For most local entrepreneurs in slum communities, the long-term concern is the location of the shop post-redevelopment, the amount of space available and the suitability of that space for their enterprise. In most redevelopment plans, proposals are dominated by new multi-story buildings, as opposed to single-story homes, in order to make space for roads and other infrastructural amenities. As a result, many existing enterprises would need to find a new way of conducting business; the benefits that came from proximity and visibility to the streets may be lost, thereby making the possibility of losing existing and new customers a serious challenge.

Enterprises may be offered a choice between a smaller space on the ground floor of a redeveloped building or a larger space on a higher floor. The suitability of the solution depends on the nature of the business. For example, retailers would prefer to have their shops on the ground floor and close to a street, even if it means a smaller shop area. On the other hand, service providers may be more amenable to the idea of a higher floor with larger area.

Another significant concern of urban poor entrepreneurs and enterprises is the suitability of the planned buildings and infrastructure for their business. Enterprises that work with oversized raw material, such as timber and wrought iron, often need to transport and store them in close proximity to their workplace. Even relatively lightweight raw materials such as rags and scraps come in voluminous bulk packaging. The standardized design of the redeveloped tenements may offer less opportunity for such business-driven space customization. Businesses such as tanning shops and potters, amongst others, are likely to need customized infrastructure that has to be incorporated in the master redevelopment plan.

Lastly, but arguably most important, is the fact that the cost of maintaining residence and work in a redeveloped building is an aspect that gets little attention in the planning process. While the durability of makeshift homes in slums may be inferior, seasonal maintenance requirements, such as fortification during the rainy season, can be easily and inexpensively met. However, high-rise buildings would constantly require resources — electricity to run elevator banks or to pump water to rooftop tanks for general building use. In addition, these buildings require expensive diesel power backup to reliably maintain essential services during times of power outages.

There is little data available to compare the direct and indirect maintenance costs of living in informal slum dwellings versus brick-and-mortar buildings built as redeveloped housing. However, anecdotal evidence suggests that the urban poor often vacate the redeveloped property that they receive and resume living in a different slum community due to the new, higher maintenance costs, as well as the profit potential of renting or selling a newly redeveloped residence to complement other income generation efforts.

Learning from Bhendi Bazaar

Bhendi Bazaar is a settlement in south Mumbai that is over 100 years old, and while it is not a slum, there are some unique aspects to its redevelopment that are worth understanding as lessons for slum rehabilitation. Age, a dense population and lack of infrastructure upgradation has left the area with narrow and squalid dead-end alleyways, crumbling buildings that are dangerous and unfit for human habitation, and limited water and sanitation facilities — not unlike many slum communities. The majority of the buildings in the area are chawls, or lower-middle class housing with shared verandas and bathrooms, and often rented out to several families.

The Bhendi Bazaar Redevelopment Project (BBRP) received environmental clearance in March 2013. It is currently the first major cluster redevelopment project in Mumbai and is being overseen by the charitable Saifee Burhani Upliftment Trust (SBUT). The Trust has engaged several reputable private firms and consultants to work on this project.

The plan covers 16.5 acres of land, a notably small area compared to Dharavi’s sprawl of over 500 acres, for instance. The project affects more than 20,000 people, compared to Dharavi’s over 600,000. The plan includes about 270 buildings with 3,200 residential houses between 100 to 300 square feet each, and over 1,200 businesses.

The master plan has gone through several participatory iterations. Abbas Master, the CEO of the BBRP, emphasizes inclusive and secular planning. “From the very beginning of the project, we took a participatory approach to the project and involved all the stakeholders through focus group discussions. Apart from this, we had involved representatives from various businesses, where we discussed all issues that will affect them and their suggestions during transit phase of the project and their preferences in the development of the Master Plan as to what kind of environment needs to be for commercial to flourish.  All communities residing in the area were involved, and the Trust clearly communicated that the redevelopment was to benefit all of them.”

Since residents chose a high-street shopping design for the redeveloped locality while participating in the master plan development exercise, most existing enterprises will continue to face the street even after redevelopment. The design has incentivized enterprises to move to higher floors if they so choose by providing larger shop areas. While customizing construction for specific enterprises is still a challenge, it is overcome by appropriately allocating area on the higher floors when possible.

The Trust is using smart design to ensure that the redevelopment is green, easy to maintain, and stays cool. The proposed towers are organized by height to allow the cooling sea breezes to reach residents. The project has been designed to consume less electricity than market standards, and by recycling and sewage treatment, it discharges less sewage. This addresses concerns around the availability of water and electricity, and also reduces the need for air-conditioning, as well as the overall maintenance costs of the buildings.

Interestingly, the project makes no distinction between the residences that would be allocated to current residents and those that are earmarked for sale. This has ensured that existing residents are treated on-par with new buyers. However, this has only been possible due to the unique not-for-profit nature of the project. “The project is run under the aegis of His Holiness Dr. Syedna Mohammed Burhanuddin  Saheb, and profits, if any, are earmarked for community and neighborhood development initiatives. This has greatly enhanced the trust of locals in the project,” Abbas explains.

He also points out the primary difference between the Bhendi Bazaar project and other slum redevelopment projects is education. “The residents of Bhendi Bazaar are engaged in various businesses and are educated. Our Project is under the Urban Renewal Scheme as against the scheme for Slum Redevelopment under which the Dharavi Redevelopment Project is. In comparison to Dharavi, the size of our Project is smaller and more manageable,” he says. This, along with tenure security, are aspects that will need to be addressed in all upcoming slum redevelopment projects.


It is the people – the urban poor – not the buildings, that are at the center of slum redevelopment. Many of these people are entrepreneurs or self-employed, and are looking for means to protect and expand their livelihoods. Due to the long drawn-out process and uncertainty of outcomes, redevelopment projects on large expanses of slum-dwelling land are viewed with suspicion.

Entrepreneurs and their enterprises in slums are a critical stakeholder group for redevelopment. While tenure is a long-recognized challenge that needs to be addressed for slum-dwellers, education seems to be another significant area for intervention. However, both of these are long-term interventions and progress is slow.

As a starting point, however, building trust with urban poor communities by carefully identifying their concerns and addressing them can mean progress. The BBRP example reiterates that projects and services for any community, including the urban poor, cannot afford to be poorly conceived, designed and implemented.

There is, in fact, a pressing need to make slum redevelopment projects greener, cleaner and less polluting than before. This would make resources such as electricity and water less of a concern and add to the chances of the urban poor actually living in them by making the maintenance costs less burdensome.

If more such initiatives could be undertaken, there would be greater precedent of whether collaboration between the community, and private and not-for-profit stakeholders provides the “perfect” equation for equitable redevelopment for the urban poor and the city.













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