Informal settlements accommodate more than 50 percent of the population of many cities. They are characterized by flexible, responsive, and affordable housing processes that enable families to extend and improve their dwellings over time. At the same time, their legal status is usually insecure, they are under-serviced by urban infrastructure, are often in unhealthy living environments, and in some cases are physically unsafe.

Government efforts to address these problems by constructing subsidized completed dwellings for low-income groups are seriously limited by cost and management capacity. By comparison, slum upgrading programs can provide security of tenure, adequate infrastructure, and local management capabilities to households and communities in existing informal settlements, at a fraction of the cost. In addition, sites and services (S&S) programs can redress the growth of new informal settlements and the proliferation of slums (which are growing by 5 percent per year in many cities) by providing secure access to land and services and enabling households to construct their dwellings incrementally as their resources allow at a significantly lower cost than conventional public housing programs.