In Dharavi, Mumbai, over a million people live in two square kilometers. Outsiders see chaos and squalor. But walk through its narrow lanes, and you'll find leather workshops, pottery studios, recycling operations, and restaurants—a billion-dollar economy humming beneath corrugated roofs. This isn't failure. It's adaptation at an extraordinary scale.

Slums house roughly a billion people worldwide, and that number keeps growing. We can view these settlements as problems to erase or as demonstrations of human ingenuity under constraint. The most effective development approaches choose the second lens—learning from what works before deciding what to change.

When families arrive in cities faster than housing can be built, they build it themselves. A plot of land near work opportunities gets claimed. Walls go up from whatever materials are available—cardboard, then plywood, then brick as savings accumulate. Neighbors negotiate boundaries. Pathways emerge from foot traffic. Within years, what looks like random sprawl develops its own logic: homes cluster near water sources, shops line natural thoroughfares, and community spaces form at intersections.

This self-organization produces remarkable results. In many slums, residents have created water-sharing systems, organized waste collection, and established informal security networks—all without government involvement. Social bonds become infrastructure. A newcomer finds housing through relatives, employment through neighbors, childcare through community trust. These networks accomplish what formal institutions often cannot: rapid, flexible adaptation to changing needs.

The efficiency is real but incomplete. Self-built neighborhoods lack what only public investment can provide: sewage systems that prevent disease outbreaks, electrical grids that don't cause fires, roads wide enough for ambulances. The innovation of slum communities deserves recognition, but so does their right to basic services that shouldn't require heroic improvisation.

Takeaway

Slums demonstrate that communities can self-organize complex systems, but this resilience doesn't excuse governments from providing the infrastructure that only collective investment can deliver.

Kibera in Nairobi isn't just Africa's largest slum—it's a marketplace of over 100,000 small businesses. Hair salons operate from living rooms. Mechanics repair motorcycles in doorways. Food vendors cook meals to order at every corner. Without formal employment options, residents create their own livelihoods. Necessity becomes the business incubator that expensive startup programs try to replicate.

The economic logic is powerful. Low rents mean low overhead. Dense populations mean concentrated customers. Trust networks mean credit without banks—a shopkeeper extends payment terms to known neighbors, a seamstress takes deposits from regular clients. These micro-enterprises often outcompete formal businesses on price because they avoid taxes, licensing fees, and regulatory compliance. That's not cheating; it's survival math in places where following every rule would make business impossible.

But informality has costs. Workers lack protections. Businesses can't grow beyond what cash flow allows. Property can be seized because ownership isn't documented. The goal isn't to romanticize informal economies but to understand them as rational responses to exclusion from formal systems—and to design policies that bring people into formal protections without destroying the flexibility that helps them survive.

Takeaway

Informal economies thrive because formal systems have failed to include the poor, not because slum residents prefer operating outside the law.

For decades, the standard response to slums was demolition. Bulldoze the eyesore, relocate residents to tower blocks on city edges, declare success. The results were predictable: people lost jobs when moved far from employment, social networks shattered, many returned to build new slums closer to work. Demolition didn't solve the problem—it just recycled it while destroying communities in the process.

Slum upgrading takes a different approach: improve what exists rather than replace it. Programs in Thailand, Brazil, and Indonesia have shown what this looks like. Governments provide land tenure—official recognition that residents own their plots. Once ownership is secure, families invest in improvements. Streets get paved. Sewer lines get installed. Electricity becomes legal and safer. The same community remains, but living conditions transform. Costs run roughly one-tenth of building new housing elsewhere.

The most successful programs combine physical upgrades with participation. In Mumbai's Slum Rehabilitation Authority projects, residents help design their new buildings. In Medellín, Colombia, the government built libraries, cable cars, and parks in informal settlements—treating them as neighborhoods worth investing in rather than problems to contain. Slum residents know what they need. The role of development is to provide resources and rights, not to impose solutions from outside.

Takeaway

Secure land tenure is often the single most powerful intervention—when people know they won't be evicted, they invest in their own neighborhoods.

Slums aren't the opposite of successful cities—they're cities in formation, built by people excluded from formal housing markets but determined to participate in urban opportunity. The innovation on display is real, and so is the suffering that shouldn't be necessary.

Development that works starts from respect for what communities have already created. It provides what only public action can deliver—tenure security, infrastructure, services—while preserving the economic vitality and social bonds that make these neighborhoods function. Slums teach us that cities belong to everyone who builds them.