On informal housing supply restrictions and livelihood in informal settlements: Implications for sustainable development

Land use restrictions can curtail housing supply and lead to increased costs of accommodation, which can have adverse effects on livelihood among low‐income groups and thereby compromise sustainable development. However, limited studies have investigated housing supply restrictions in informal housing markets. To address this knowledge‐gap, this article analyzes a range of indicators of livelihood among residents of informal settlements and informal housing supply restrictions in Maputo, Mozambique and Nairobi, Kenya. The findings underscore that informal urban development is restricted to a far higher extent and livelihood in informal settlements is considerably more compromised in Nairobi compared to Maputo, despite that wages are higher in Nairobi and geographic factors likely curtail urban development to a higher extent in Maputo. The empirical evidence and economic theory reviewed in this article consistently indicate that antagonistic approaches to informal urban development in cities with large segments of the population financially excluded from the formal housing markets have comparable consequences to land use restrictions guiding formal urban development. Namely, that informal land users pay a price premium for basic shelter in such contexts due to the increased pressure on the housing markets and risk of loss of investments through forced evictions. On this basis, the article argues that unless viable legal housing alternatives are available, repressive approaches to informal urban development should be abolished while less restrictive standards for building and planning regulation should be adopted to expand provision of affordable legal accommodation and thereby enhance sustainable development.