Responses to the Crisis An Urban Perspective

1. Responses to the CrisisAn Urban Perspective Judy Baker The World Bank

2. Impacts in Cities • Cities are being hit hard • Decline in fiscal resources • Local Governments constrained • Job losses and wage reductions in urban industries • Manufacturing, construction, financial, service sectors • Reductions in remittances and reverse migration • Social unrest • Stark inequalities are more visible in cities • Urban areas more prone to protests, riots, social unrest

3. Impacts in Cities • Urban Poor are particularly vulnerable • Previous crises show that urban households felt the impacts disproportionately • Heavy reliance on cash economy • Lack of agricultural production for consumption • Poor will fall into extreme poverty • Children, women particularly vulnerable

4. Crisis Responses: Urban Areas • Cities will be part of the solution • Important driver of growth and job creation • Infrastructure investments in cities are critical to growth, jobs, building lasting assets for economic and social development • Employment impacts of infrastructure: • First round – Direct employment • Second round – demand for construction materials • Third round – spending by workers • Use of local resources (labor, material, contractors), has positive impacts on local economy

5. Priority Urban Investments under Crisis • Goals: growth, job creation, mitigating poverty impact, social equity • All can be designed to include labor-intensive approaches • Urban Infrastructure Funds (UIFs, MDFs) • Financing instrument for lending to local governments, utilities, communities • Slum Upgrading • Enormous demand (1 billion in slums, poor conditions, at great risk- health, environmental) • Investments in water and sanitation, electricity, roads, drainage, community and social infrastructure • Local labor can be used

6. Priority Urban Investments under Crisis • Affordable housing • Bank has had limited involvement • Microfinance for incremental housing (spur investment at the household level and create supply of rental housing) • Rehabilitation, maintenance and operations • Often neglected • Repair of roads, maintaining water systems, drainage, community facilities • Investing now reduces costs in the long-run

7. Urban Investments • Urban Agriculture • Can provide for consumption, generate income, employment, positive environmental impacts • Estimated that 15 percent of food production is in urban • Issues of health and sanitation, requires TA • Slum prevention • Providing affordable land for purchase • Can spur private investments in housing, transport networks

8. Other Responses • Targeted Safety Nets • Conditional Cash Transfers • Challenges in urban; targeting, transitory populations • Public Works Programs • Can be very effective in crisis • Need to ensure that works are relevant, wage rates are set low • Example: Urban Poverty Project Indonesia

9. WBG response: Infrastructure Recovery and Assets (INFRA) • Under Vulnerability Fund (GFRP, IDA Fast Track, Rapid Social Response) • Infrastructure spending as a fiscal stimulus • Coordinated Response (IFC, MIGA, WB) • Platform includes: • Direct Finance • Parallel Finance • Concessional Finance (OBA for slum upgrading) • Diagnostic Tools being developed (water and sanitation, energy, transport, ICT, urban) • Funds being identified (GPPs, donors)