Twenty percent, or 5.32 million people, live in Nepal’s urban areas. Nepal has recently been touted as South Asia’s least urbanized country, yet also its fastest urbanizing country: at 14%, it has the region’s lowest urbanization rate, but the highest annual urban growth rate at 6.4%. Over the last ten years, urban population growth has been three times that of the entire country. The country’s rapid urbanization is exacerbating clear challenges, such as poor planning and inadequate infrastructure. Nepal’s cities — Kathmandu, Pokhara and Tansen, among others — are ill-equipped to handle the stress on already thinly stretched infrastructure and systems. “With the population of five of Nepal’s 10 largest cities growing at above 4% a year, managing rapid urbanization is essential for improving growth, creating jobs and reducing poverty,” said Tahseen Sayed, the World Bank Country Manager for Nepal.
According to the 2011 country census, Nepal’s population density is approximately 194 persons per square kilometer. Official statistics of urban population density have yet to be released, however, in the 2001 census, it was reported as 970 persons per square kilometer. Urban housing has emerged as a clear frontrunner on the government’s agenda: research by the Centre for Integrated Urban Development concludes that Nepal must build somewhere in the range of 329,711- 434,930 houses to meet the total population’s needs over the 2011-2021 period. There are no publically available statistics on the number of urban dwellings required to meet cities’ future needs, but it is fair to assume that the need is significant and growing.
In 2010, the Nepal-based urban anti-poverty NGO, Lumanti, estimated that 7-10% of the urban population lives in slums or squatter settlements. The capital city of Kathmandu, for example, has seen its squatter settlements more than double in less than 30 years: there were 17 in 1985, but in 2010, that number grew to 40. The growth of urban Nepal and of its squatter settlements highlight the country’s burgeoning urban housing challenge.
Historically, Nepal’s settlements have been spread out among its hills and valleys due to the country’s harsh climate and steep topography. In the 1950s, more than 80% of Nepal’s urban population lived in the Kathmandu Valley. The Valley has always played a central role in the country’s history and is a center for agriculture, industrial production and productivity, thereby stimulating population growth.
Most of Nepal’s fast-growing cities and towns are in the Terai plain. Domestic politics and climate change in the 1950s inspired the growth of large permanent settlements in Terai, Nepal’s southeast region. Before the 1950s, Terai – nicknamed Kalapani, or “poisonous water” – was not deemed hospitable and not just because of its mountainous landscape, but because of the prevalence of malaria. Two factors transformed Terai into a more habitable region: controlling the malaria epidemic, and capitalizing on economic opportunities arising from its shared border with India. Large-scale migration took place where people moved from hill settlements to the more fertile Terai plain, which had access to roads, administrative services and industry, among other necessary infrastructural needs. The Government of Nepal tried to develop Terai into a predominantly agricultural region, but by the 1980s, it was densely populated and claimed 65% of the country’s cultivated area, 34% of the country’s roads and 62% of its industries.
Today, the majority of Nepal’s large cities are located in the central region of the country or along the shared border with India. The rapid rise of Nepal’s cities, like many cities in the South Asia region, is not the result of planned development. The creation of new towns and cities has fueled urban population growth, but it is also important to note that the government has altered its understanding of what constitutes an urban area, or municipality. The definition of a municipality has been inconsistent and changed over the years, but finally, the Local Self-Governance Act of 1999 updated the definition by differentiating between the Terai belt and hill towns. This subtle realignment of what a municipality is effectively doubled the number of recognized urban centers within a decade (from 33 in 1991 to 58 in 2001), as well as inflated urban population numbers.
Rural-to-urban migration is obviously another key reason behind the surge in urban statistics. Until the 1990s, migration from rural villages was due to natural disasters or deforestation, limited supply of inherited land, lack of income-earning opportunities and limited access to civic services like education and healthcare. After the mid-1990s, however, rural-to-urban migration increased due to violence between Maoist insurgents and the central government. The threat of ongoing violence forced many rural peoples to move to urban areas: it is estimated that as many as one million rural people moved to cities due to political violence.
The Status of Squatters
Unplanned development and political instability have already intensified the challenges faced by urban Nepal. Like other South Asian cities, urban Nepal’s infrastructure is stressed and unable to meet the demand for basic services (e.g. poor water supply, inadequate sanitation and lack of waste collection, unsafe road conditions) and housing. Land prices have skyrocketed: the Nepal Land and Housing Developers’ Association cites a 300% increase in prices since 2003, whereas the country’s Department of Land Reform and Management shows that land prices and transactions in urban areas have not tripled but doubled, when looking at the 2008-2009 period.
High land and rent prices make housing unaffordable, particularly for the poor. A recent research paper on sustainable building design and construction in urban Nepal reveals that annual demand for urban housing is 34,980. More than 75% of Nepal’s urban population does not earn enough income to afford a standard 50-square-meter self-constructed house on an 80-square-meter plot of land on the outskirts of a city. It is estimated that 95% of the urban population cannot afford to purchase ready built property.
The prohibitively high pricing of urban Nepal’s housing has given rise to squatter settlements, or so-called slums (for which there is no word in the Nepali language), throughout the country’s urban areas. In 2009, Lumanti tabulated the number of squatter settlements and households in 17 municipalities across Nepal (Kathmandu not included) and found a total of 366 settlements with 30,701 households. In 2010, the result of a poverty mapping exercise indicates that there were more than 12,000 squatters living in more than 40 settlements in Kathmandu alone, and an additional 40% of squatters were illegally residing in public buildings, bringing the total squatter population closer to 20,000.
Though Nepal’s urban squatters, or slum-dwelling population, are but a fraction of what is seen in neighboring countries, the problem is snowballing into a serious social issue for the small country and threatens to become even more so as urban population numbers continue to rise. Similar to the slum-dwellers of other countries, residents of squatter settlements are the most disenfranchised urban citizens. They face many difficulties, chiefly insecure tenure that gives them illegal or unacknowledged status as a citizen.
The National Shelter Policy
From 1956 until 1985, the Government of Nepal treated the housing sector as a “social service,” where it thus remained a “neglected and low priority sector in the country’s national economic development plans.” The classification of housing changed after 1985, when the government treated the sector separately from other social services. Also up until this point, the government did not assign high priority to the urban sector in spite of its important role in the national economy. Between 1985 and 2007, the budget allocation for housing and urban development ranged from 0.5% to 2%, with spending between NPR1.58bn (US$215,112) to NPR23.04bn (~US$3.14m) for the same period.
In the wake of political upheaval in the 1990s, the government realized that it needed to a draft formal housing policy to ensure ‘shelter for all,’ especially poor and low-income families. In 1991, then, the government drafted the National Shelter Policy of 1996. It depicted the government “…as a facilitator with a role limited to provision of basic services and regulatory mechanisms, while the private sector was envisaged to take the lead role in housing provision.” At the time of drafting the policy, the total housing need for 1996-2006 was determined to be approximately 2.5 million units where 17%, or 433,600, units were required in urban areas. Additionally, it was found that 59,700 urban dwellings needed to be upgraded.
Though a promising start, the 1996 policy has yielded disappointing results. The biggest problem for the policy’s efficacy is the fact that there was no agency put in place to oversee and implement it. Since no clear roles or responsibilities were delineated in the policy, there was much inefficiency, such as duplication of efforts, gaps, conflicts and competition that, arguably, harmed the housing sector more than helped it.
Building an Inclusive Housing Sector
Today, the government has plans to update the National Shelter Policy to address the needs of Nepal’s growing urban housing challenges, specifically targeting housing for the urban poor, upgradation of slums and assisting squatter communities. The government enlisted the help of UN-HABITAT to study its urban housing sector, the findings of which were published in a 2010 report entitled “The Urban Housing Sector Profile Study.” The report is meant to guide the government’s understanding of the urban housing sector and to frame appropriate policies and recommendations in the face of rapid urbanization.
There have been initiatives put into place to support more inclusive housing in urban Nepal. For example, the Kathmandu Urban Development Project was executed during the government’s ninth Five-Year-Plan (1997-2002) to improve municipal infrastructure in the Kathmandu Valley. This project was the first of its kind: the municipality borrowed funds for urban infrastructure from external sources such as the Asian Development Bank. In January 2001, a different initiative, known as the City Development Strategy of Kathmandu Metropolitan City, was groundbreaking because it marked the first time a local government recognized squatters as part of the urban development agenda; they could no longer be ignored.
Most other efforts in the housing sector, though, rely heavily on private sector funding. The government has yet to make the budgetary commitment necessary to tackle the issues at-hand. Take, for instance, the government objective of safe and cost-effective housing by promoting systematic settlements. The strategy behind this ‘Long-term Development Concept of Kathmandu Valley’ proposed new housing infrastructure, as well as the establishment of satellite towns or settlement centers. As part of this project, a budget of NPR1.5m (US$20,400) was earmarked to improve slums and squatters’ settlements. The remaining funds needed to support and implement this plan, however, depended on getting private sector money, which has proven to be difficult.
There are numerous private organizations working in Nepal’s housing sector, but their role as a large-scale housing provider for low-income groups is minimal. There does not seem to be a robust presence of low-cost building and construction industries promoting low-cost building materials. The UN-HABITAT report cites “anecdotal evidence” that some squatter settlements have been undergoing improvement, but these initiatives are “informally” executed by NGOs. More than the central government, a handful of local government bodies are beginning to provide services to urban poor communities (i.e., water supply, construction of community schools), but again, these solutions are peripheral to meeting housing demand.
The housing sector, as it stands, has prohibitively high barriers for the poor to address on their own. Over the last 30 years, the Government of Nepal has prioritized the country’s housing sector, but ineffectively. It has taken the initial steps to set the tone of what a national housing policy can look like, but without oversight, these efforts are for naught. The urban poor face substantial challenges – the most critical challenges being legitimizing their rights to urban land or housing and housing finance. These challenges have created the expanding squatter population in Nepal’s cities, as well as in the cities of neighboring countries.
Updating the National Shelter Policy is one step in the right direction: the relatively new urban housing environment needs to be accounted for in any national housing policy. Nonetheless, that being said, Nepal does not suffer from a dearth of government policy; it seems to lack appropriate follow-through. There are multiple stakeholders (e.g. central and local governments, private companies, land brokers, builders, NGOs) in the housing sector, and each one has a role to play. Each stakeholder may have seen limited efficacy as an individual within the housing sector, but the government needs to somehow bridge the gap between these stakeholders to build a more robust, conducive network to support urban housing for the poor. Such networks are supporting low-income housing projects throughout India, where stakeholders see that the opportunity is ripe to support underserved urban housing markets. As the government reshapes its policy with an urban focus, it should learn from the successes and failures of its neighbors with respect to designing and encouraging an inclusive housing sector.