Informal life in the megacities of the developing world

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Megacities in the developing world are a product of the rapid urbanization that began in the second half of the 1900s. In the 1970s, the capitals of countries in Latin America and parts of Asia swelled past ten million inhabitants as rural populations poured into urban centers. The pace accelerated through the 1980s and 1990s, driven by industrial expansion and global economic shifts that drew tens of millions more to cities across Asia and North Africa. By the 2000s, the phenomenon had spread widely, particularly to South Asia and sub-Saharan Africa, creating some of the fastest-growing urban areas in history.

Today, these megacities embody both the opportunities of modernization and the strains of overcrowding, inequality, and environmental stress. This rapid growth has created a divided urban landscape. Modern city centers with high-rise buildings, much like their counterparts in the industrialized world, often stand in sharp contrast to the vast informal settlements, commonly known as slums, that surround them.

Life in Informal Settlements

Life within these informal communities operates according to its own internal logic, distinct from that of the formal city. They are governed by an organic social order built upon the bedrock of kinship, friendship, and social networks. This framework is not an eccentricity; rather, it reflects a timeless mode of human organization that long predates the bureaucratic structures of the modern state.

Over generations, residents have cultivated self-sustaining systems of small-scale trade and casual labour, forging livelihoods and stability from the ground up. This reality is not an absence of structure but the powerful presence of a parallel social world. It possesses its own support systems that operate alongside--and often independent of--the regulated frameworks of the wider city.

Consequently, these settlements should not be reduced to mere vacuums of state neglect. To do so is to miss their essence as dynamic, adaptive communities, humming with their own distinct rhythms, economic vitality, and a resilient social fabric.

Common Characteristics of Informal Settlements

• Housing: Self-constructed and incrementally-improved makeshift housing.
• Infrastructure: Limited formal infrastructure, supplemented by informal, community-managed solutions.
• Land Tenure: Insecure and informal land occupation without legal protection.
• Basic Services: Reliance on informal vendors or shared, community-managed facilities.
• Waste Management: Lack of formal systems, creating informal recycling economies.
• Environmental Hazards: High vulnerability due to location on marginal lands.
• Economy: A self-sustaining local economy driven by small-scale trade and labour.
• Social Order: Strong, self-organized social networks providing governance and mutual support.

Important: These characteristics are commonly observed but are not universal; they vary significantly in nature and intensity across different settlements, cities, and countries.

Megacities (with populations above 20 million)

• Delhi (India)
• Dhaka (Bangladesh)
• Cairo (Egypt)
• São Paulo (Brazil)
• Mexico City (Mexico)
• Mumbai (India)
• Kolkata (India)

Megacities (with populations between 10 and 20 million)

• Karachi (Pakistan)
• Kinshasa (DR Congo)
• Lagos (Nigeria)
• Lahore (Pakistan)
• Manila (Philippines)
• Bangalore (India)
• Istanbul (Turkey)
• Rio de Janeiro (Brazil)
• Buenos Aires (Argentina)
• Chennai (India)
• Bogotá (Colombia)
• Lima (Peru)
• Jakarta (Indonesia)
• Bangkok (Thailand)
• Ho Chi Minh (Vietnam)
• Luanda (Angola)
• Tehran (Iran)

Informal Economies of Informal Settlements

The informal economy encompasses economic activities that operate outside government regulation, taxation, or formal oversight. In megacities of the developing world, fast-paced urban growth often outstrips formal job creation. As rural migrants flow to cities seeking better opportunities, the formal sector--factories, offices, or corporate businesses--cannot absorb the surplus labour. This mismatch drives many toward informal employment as a practical lifeline. For instance, in Lagos or Mumbai, newcomers might become street vendors hawking goods on crowded sidewalks or day labourers waiting at construction sites for temporary work. These roles require little upfront investment or formal credentials, making them accessible to those with limited resources or education.  

Globally, over 2 billion people are engaged in the informal economy, accounting for roughly 60% of the world’s workforce. In megacities like Jakarta, Mexico City, or Dhaka, large informal sectors exist alongside the formal economy, filling gaps in services and employment. Street vending, domestic work, and unregistered transport services—such as motorcycle taxis in Manila or cycle rickshaws in Kolkata—are common examples. While these jobs are often marked by lower productivity, unstable earnings, and no benefits like healthcare or pensions, exceptions exist. Some informal entrepreneurs, like food stall owners in Bangkok or garment workshops in Istanbul, can earn enough to support families or even hire others, blending informality with small-scale entrepreneurship.  

The prevalence of informal work reflects both necessity and opportunity. For many, it’s a survival strategy: domestic workers in São Paulo clean homes without contracts, while waste pickers in Cairo sort recyclables from trash heaps to sell for cash. Yet informality isn’t always a last resort. In cities like Nairobi or Bogotá, flexible informal roles--such as freelance tailoring or unlicensed tutoring--allow workers to adapt to shifting demands without rigid formal structures. Despite its risks, including job insecurity and lack of legal protections, the informal economy remains a critical engine of urban life, providing livelihoods where formal systems fall short and sustaining millions in rapidly growing cities.

Informal Work and Informal Dwellings

The relationship between informal work and informal dwellings reveals a profound integration of economic and spatial organization that reflects the organic nature of these communities. Rather than representing a breakdown of urban planning, this relationship demonstrates how people create coherent living and working environments that maximize both economic opportunity and social cohesion. In settlements like Dharavi, the proximity between home and workplace is not an accident of poverty but a deliberate spatial logic: where a metalworker's shop occupies the ground floor of his multi-story dwelling, allowing him to supervise production while maintaining family life, and where his neighbors' complementary businesses create a dense network of economic interdependence.

This spatial-economic integration generates unique advantages that formal urban planning often overlooks. The seamless blend of residential and commercial spaces eliminates commuting costs and time, allowing workers to respond quickly to market opportunities while maintaining strong community ties. A woman running a small textile operation from her home can simultaneously care for children, participate in neighborhood social networks, and adapt her working hours to family needs--a flexibility that formal employment rarely provides. These arrangements create what might be called "productive neighborhoods," where the boundaries between living, working, and community building dissolve into a unified social and economic ecosystem.

The incremental nature of both housing and enterprise development reflects a sophisticated understanding of resource management and risk distribution. Families gradually expand and improve their dwellings as their economic circumstances improve, while simultaneously growing their informal businesses through reinvestment and network expansion. This organic development process creates built environments that are precisely calibrated to the needs, resources, and social structures of their inhabitants--generating densities, mixed-use patterns, and economic clusters that formal planning struggles to replicate.

Rather than viewing the convergence of informal work and informal dwellings as a sign of urban dysfunction, it represents an alternative model of city-making that prioritizes social cohesion, economic resilience, and adaptive capacity over regulatory compliance or aesthetic uniformity. These settlements demonstrate how communities can create vibrant, productive urban environments through collective intelligence and gradual, responsive development, offering lessons about sustainable urbanism that extend far beyond the developing world.

Stories from Slums: Interesting Cases from the Developing World

Despite challenges, some informal settlements host surprisingly large-scale economic activities. These operations often emerge organically, filling gaps left by formal systems.

In Manshiyat Nasser, a Cairo slum nicknamed “Garbage City,” residents have built a vast informal recycling industry. Thousands collect, sort, and process waste from across the metropolis, repurposing materials like plastic and paper for resale. This decentralized system handles nearly 40% of Cairo’s trash, showcasing how slums can become hubs of specialized informal labour.

Dharavi, Mumbai’s sprawling slum, is another example. Beyond its residential density, it houses thriving informal industries: small-scale textile workshops, pottery kilns, and leather tanneries. These enterprises employ thousands, producing goods for local and international markets.

Neza-Chalco-Itza, a megaslum in Mexico City, sustains robust local commerce. Despite pollution and inadequate infrastructure, its millions of residents run shops, food stalls, and repair services, creating a self-reliant economy.

Orangi Town in Karachi stands out for community-led solutions. Residents constructed their own sewer system over decades, bypassing government inaction. This grassroots effort improved sanitation for hundreds of thousands, proving that slum dwellers can innovate under constraints. These examples reveal a paradox: while informal settlements symbolize urban inequality, they also foster resourcefulness, entrepreneurship, and complex economies that keep mega cities functioning.

Policy Trends: From External Imposition to Organic Recognition

For decades, governments treated informal settlements as chaotic deviations from planned order, resorting to mass evictions and bulldozing. These punitive measures consistently failed because they ignored the powerful social and economic logic underlying these communities—mistaking organic order for disorder.

A paradigm shift now recognizes and amplifies the self-organizing systems residents have built. In Orangi Town, Karachi, residents constructed their own sewer network over decades, improving sanitation for hundreds of thousands without government intervention. Thailand's Baan Mankong program enables communities to co-design infrastructure improvements, ensuring interventions align with existing social networks and spatial logic. Medellín transformed its favelas not through demolition but by building cable cars and library parks that connected hillside settlements to the formal city while respecting their internal organization.

Land tenure policies now tend to recognize long-standing claims rather than grant rights from above. Brazil's regularization programs validate decades of incremental investment in favelas, providing legal security that allows organic development processes to flourish. In Lima's pueblos jóvenes, securing tenure unleashed waves of self-improvement: families expanding homes, opening businesses, and strengthening community infrastructure.

Economic policies shift from criminalization to enablement. Instead of forcing informal enterprises into complex formal structures, cities like Bogotá create legal frameworks protecting street vendors while São Paulo provides microfinance that complements existing informal lending networks. Ghana's vocational programs for waste pickers in Accra build upon the specialized knowledge these communities have developed, enhancing rather than replacing their economic systems.

These approaches recognize informal settlements as living laboratories of human-scaled urbanism. The sustainable path forward lies in learning from their adaptive capacity--their seamless integration of living and working, their kinship-based governance, their incremental development logic--and forging partnerships that empower communities to continue building from the ground up.

Video

An exploration of daily life and commerce inside Kibera, Kenya, one of the world's largest urban slums [11m 2s]

The video provides a look into the complex social and economic fabric of Kibera, highlighting the resilience and entrepreneurial spirit of its residents. It showcases various local businesses, from food vendors to artisans, illustrating a vibrant local economy. Despite facing significant challenges such as poor sanitation, limited infrastructure, and safety concerns, the community demonstrates a strong sense of perseverance and ingenuity.

REFLECTION FRAMEWORK

For all exercises, consider these overarching questions:

Power and Agency: Who has the power to define what counts as "legitimate" urban development? How do these exercises challenge or reinforce existing power structures?

Scale and Context: How do local innovations and solutions relate to larger global economic and political systems? What happens when successful local solutions encounter larger structural constraints?

Learning and Unlearning: What assumptions about cities, communities, and development have these exercises challenged? What new questions have emerged that you hadn't considered before?

 

Discussion

1. The text frames informal settlements as having an "organic social order" based on kinship and social networks. What are the potential strengths and weaknesses of a community governed this way compared to one governed by formal state laws and institutions? In what situations might one be more effective than the other? Compare and contrast the internal logic of informal settlements with formal city structures. What are the trade-offs of each approach?

2. Consider your own community or neighborhood. What informal systems and unwritten rules govern daily interactions? How do these compare to the formal structures (laws, regulations, institutions) that also shape your environment? In what ways are these formal and informal systems similar to or different from those in informal settlements in the developing world? What happens in your neighborhood when informal and formal systems conflict?

3. Consider the policy shift from "external imposition" (bulldozing) to "organic recognition" (upgrading). What practical and ethical challenges might a government face when trying to "enable" or "regularize" an informal settlement without unintentionally destroying the very self-organizing systems that make it function?

4. Traditional urban planning often measures success through metrics like building codes, formal employment rates, and regulatory compliance. The text suggests informal settlements demonstrate alternative measures of urban vitality: social cohesion, economic resilience, and adaptive capacity. How might we need to redefine what constitutes a "successful" city or community? What would urban planning look like if it prioritized these alternative values?

5. The text describes the "seamless blend of residential and commercial spaces" in informal settlements as creating unique advantages, while formal urban planning typically separates these functions. Reflect on your own daily life: How does the physical separation of home, work, shopping, and social spaces affect your relationships, time use, and sense of community? What might we gain or lose by integrating these functions more closely?

6. Informal settlements rely heavily on personal networks and relationships, while formal cities depend more on institutions and bureaucratic systems. Think about a recent challenge you faced. Did you solve it through formal channels (calling a company, filing a form, following official procedures) or informal ones (asking a friend, finding a workaround, using personal connections)? What are the strengths and limitations of each approach?

 

Critical Thinking

1. The author argues that the integration of work and home is a "deliberate spatial logic" that offers flexibility and eliminates commuting. To what extent could this be a romanticized view? Argue the counter-perspective: that this same integration could be a trap that limits social mobility, hinders business scaling, and exposes families to occupational hazards.

2. Analyze the examples of Dharavi, Orangi Town, and Manshiyat Nasser. What similarities and differences reveal about the conditions that foster successful informal economies?

3. Evaluate the statement: “Informal settlements are not an absence of structure, but the presence of a parallel social world.” How does this perspective alter common assumptions about poverty and urban disorder?

 

Further Investigation

1. Comparative Analysis: Select one megacity from the provided lists (e.g., Kinshasa, Manila, Lagos). Research the relationship between its largest informal settlement(s) and its formal city center. What specific economic, social, or infrastructural links and barriers exist between these two worlds?

2. Comparative Analysis of Informal Settlements: Compare the "slum upgrading" models of Medellín's cable cars and Thailand's Baan Mankong program. While both are cited as successes, what were their underlying philosophies, primary goals, and long-term impacts on community autonomy versus integration with the formal city? Which model do you find more replicable and sustainable, and why?

3. Digital Technology Study: Investigate the role of modern technology (e.g., mobile banking, GPS, social media platforms) in the informal economies of two different megacities. How is technology changing the way informal workers connect with customers, manage finances, and organize? Are these changes fundamentally empowering, or are they creating new forms of digital inequality and control?

4. Digital Informality Study: How do digital technologies create new forms of informal economic and social organization? Document and analyze informal digital networks in your community: Facebook marketplace sellers, Discord gaming communities, Instagram influencers, neighborhood WhatsApp groups, or online learning circles. How do these digital informal systems complement or challenge traditional formal institutions? What new forms of governance, trust-building, and economic exchange are emerging? How might these digital informal networks offer insights for understanding physical informal settlements?

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