This is an archived USAID document retained on this web site as a matter of public record.
Administrator J. Brian Atwood
National Association of Realtors
"Making Cities Work"
Washington, D.C., May 16, 1997
U.S. Agency for International Development
Thank you, David [Michonski]. It is a pleasure to be here
today. The National Association of Realtors is one of our key
partners in overseas development, and I am a great admirer of the
expertise and enthusiasm you bring to the table.
In February of this year, I met with Nathan Booth, Vice
Chair of your International Committee, and several of his
colleagues. Among other things, my visitors reiterated that the
National Association of Realtors and related organizations wanted
to work with USAID in supporting not only our housing activities
overseas, but also our larger task of helping improve overall
urban conditions in countries in which the agency works.
I want to salute the National Association of Realtors for
acknowledging the importance of dealing with the broader urban
conditions in the developing world. Not only does this work
make a tremendous difference for people living under very
difficult conditions -- in many cases literally a life and death
difference -- improving life in the developing world also means a
great deal to this nation.
Let me be clear: I am the first to argue that private
investment must drive the engine of lasting social and economic
development. But there is a more fundamental point. Many
companies will not make initial investments in projects like urban
infrastructure in a developing country until they have some basic
reassurances that their investment will be reasonably safe and
given fair treatment under the law. That is why America's public
and private sectors working together, such as we are doing, is so
important.
Business leaders such as yourselves are well aware of the
structural impediments that block more robust investment and
trade in the developing world, and you are naturally eager to see
these obstacles addressed by developing countries with assistance
from the U.S. and other donors. In turn, we are equally eager to
see investment flows follow our efforts to foster reform in the
developing world. Thus, it is not surprising that it has been the
business community who has spoken out most forcefully when
Congress has looked at cutting the already modest foreign
assistance budget.
We have seen groups like the Corporate Council for Africa
bring together American and African business leaders and
government officials with the purpose of developing more
effective ways of linking U.S. business to Africa. We have seen
the Business Alliance for International Economic Development --
a coalition group composed of a wide variety of Fortune 500
firms and others -- advocate very forcefully that America's
economic prospects demand that we stay engaged abroad through
investments in our foreign assistance program. We have seen
groups such as your own reach out to a diverse audience to speak
about the need for America's international leadership. I would
like to see more linkages of this sort in the future. They offer
tremendous potential and I applaud your efforts in this regard.
You will be pleased to note that after I met with Nathan
Booth, I asked my senior managers to take a comprehensive look
at all of USAID's programs that address urban issues and to start
to refocus our efforts in a coherent strategy engaging all our
bureaus, sectors, and partners. As we work with increasingly
constrained resources it is absolutely essential that we focus our
efforts where they can leverage the greatest impact.
Because all of the agency's resources are so very tight, this
does not represent a bold new initiative, but it does represent a
modest and important effort to better coordinate our urban
programs.
In many regards, this coming century will be defined by the
accelerating trend of urbanization around the globe. The growth
of "mega-cities" -- massive and sprawling urban centers -- has
already received a great deal of attention in the press and at
international gathering such as Habitat I and II. While the
growth of mega-cities garners headlines, perhaps more attention
should be paid to projections by organizations like the United
Nations that portray how sweeping a phenomena urbanization
truly has become. The UN estimates that by the year 2015, cities
with a population of more than one million are expected to nearly
double in Latin America; going from 118 cities to 225. In Asia
the growth is even more rapid, the number of million-plus cities
will nearly triple -- from 359 to 903. In Africa these cities of a
million citizens will nearly quadruple -- going from 59 to 225.
Worldwide, by the year 2025, the urban population is expected to
double to a total of about 5 billion people -- representing 63
percent of the world's population.
These changes are unprecedented. And like every profound
change in human history, these developments can be either very
positive or very destructive. And while I am a good loyal
Democrat, President Reagan did have great insight when he said,
"The very key to our success has been our ability, foremost
among nations, to preserve our lasting values by making change
work for us rather than against us."
There are many positive aspects of urbanization -- greater
opportunities for economic growth and education, improvements
in the status of women, a decline in birth rates and improved
communication. Unfortunately, there are many downsides to
such rapid urbanization. The sheer speed of the growth of cities
in the developing world is leading to large-scale breakdowns in
many urban systems and markets. Cities have always been the
prime engines of economic growth. If these engines slow down,
then trade and development opportunities suffer. It is clear, in
view of this rapid urbanization, that our agency's development
goals cannot be realistically achieved unless developing countries
have cities that work.
How do we define "cities that work?" There are five core
attributes that define urban centers that work for development and
not against it:
* These cities are safe and healthy places to live, where
natural resource management is a part of urban planning;
* These cities have basic infrastructure and housing that serve
all their citizens and businesses;
* These cities have robust economies where citizens have real
opportunity to improve their own lives;
* These cities promote democracy and allow their citizens to
shape their local institutions; and,
* Lastly, these cities are hubs for regional problem-solving.
I believe that USAID can play an important role in
addressing urban issues in the twenty-first century and we are
pursuing several avenues to make this a reality.
First and most important, USAID intends to build a new
series of alliances and enhanced partnerships. We are seeking to
more effectively influence and improve the urban programs
undertaken by the multilateral development banks and the other
bilateral donors. Institutions like the World Bank and the
Regional Development Banks have overall funding resources
which far outstrip our own. It is essential to work with these
institutions to ensure that their funds go to cities that can't yet
finance their own needs on a market basis, and let the private
financial markets, both domestic and international, support the
needs of cities that are credit-worthy.
No other donor has America's specialized expertise in
municipal and housing finance. The U.S. has a distinct
comparative advantage in this area that can be very helpful to
developing world cities in making the transition to market-based
financing. In my view, this leads directly to the need for a
stronger alliance of U.S. partners committed to the goal of
making cities work. This is where you come in. We need your
input, your skills, and your experience to help us to determine
how to most effectively use our scarce budget resources in a joint
effort to resolve some of these pressing issues.
Over the years, USAID and the National Association of
Realtors have had a mutually beneficial relationship. USAID's
housing and other urban policies and goals have been influenced
and educated by your organization. For example, our policies
promoting secure land tenure and private land markets in the
developing world come directly from the work of the National
Association of Realtors. NAR has technical advisors working
with USAID in seven countries.
One recent example is the Eastern Europe Real Property
Foundation, led by your hard working past President, Norm
Flynn. In Eastern Europe and the New Independent States we are
helping nations move from command economies to private sector-oriented, market-driven ones. The importance of these
privatization efforts is difficult to overstate, and they represent a
major foreign policy initiative to help ensure that these nations
make a permanent transition to free markets and open political
systems. Since 1993, USAID has helped 11 countries in Europe
and the New Independent States privatize more than 151,000
enterprises and draft legislation against monopolies and other anti-competitive practices.
As these countries struggle to make the transition to a
market economy they must establish entirely new political and
economic systems. The Eastern Europe Real Property
Foundation has helped to make free markets much more of a
reality in a rapidly changing Eastern Europe. Private sector real
estate associations in five transition countries have signed bilateral
cooperation agreements with the National Association of Realtors.
These agreements mark the rapid maturation of the real estate
professions in Central and Eastern Europe and the New
Independent States.
With funding from two USAID Cooperative Agreements and
additional NAR support, the Real Property Foundation has
assisted 30 real estate associations in 8 countries with a combined
membership of 60,000 real estate brokers, appraisers and
property managers. The emphasis has been on building strong
local and national associations that will continue to prosper long
after the end of external assistance. The Real Property Foundation
trains real estate practitioners in technical, managerial and
organizational skills. Many of the leaders in the real estate field in these countries
have traveled to the U.S. to attend NAR Conferences or to
participate in training. Exposure to real estate as it's practiced in
the United States has been a real eye-opener for some. The
President of the Russian Guild of Realtors, an organization that
now has more than 20,000 members, recently said that he didn't
have any idea as to what a free real estate market was until he
came to the United States.
This is an excellent example of how the Clinton
Administration, American business and grassroots organizations
can work together to secure one of the most important foreign
policy efforts of our generation. By employing the expertise of
U.S. organizations like the International City Managers
Association, the National Associations of Realtors and of Home
Builders, Fannies Mae, and others, USAID has helped those
groups develop valuable overseas business contacts.
We want to design a realistic program, in consultation with
the NAR and other in the American business community, that
will help create the policy and market conditions needed to
facilitate the participation of U.S. businesses in broad-based urban
activities around the world. Considerable work has already been
done, successfully, in this area by USAID, but I see a need to
coordinate these activities better. And I see increasing business
opportunities for some of you coming out of this effort.
Our collective challenge is to build upon past efforts and our
own rich American urban experience. U.S. models for
improving housing and urban conditions are widely recognized as
among the most successful in the world, and knowledge of these
models is in great demand in USAID-assisted countries from
Eastern Europe to India to South Africa. In many of these
countries, USAID efforts in urban development are already
helping to create the policy and market conditions that facilitate
private sector engagement in environmental and shelter
improvement programs overseas, particularly for water,
wastewater, solid waste, and shelter programs.
I'm sure that most of you know of our very successful
Housing Guaranty Program. For over three decades, this has
been the Agency's primary instrument for addressing shelter and
urban development issues worldwide. It's been an efficient way
to use scarce foreign assistance dollars to meet the U.S.
government's overseas development objectives, providing water,
sanitation, and a roof over the head of very low-income families.
Each dollar of budget authority under this program has on
average produced about seven dollars of development assistance.
This program has helped open international markets for U.S.
financial services and environmental equipment and services, and
had generated over $3.4 billion in interest income to U.S.
investors.
A successor to the Housing Guaranty Program has just been
endorsed by the House International Relations Committee. It will
likely go to the floor some time after Memorial Day. This
successor program, called the Development Credit Authority, will
give us much more flexibility to work in urban areas and will
provide a sound financial basis for all our credit activities.
Though it is not clear at this point what the after of the
authorization bill will be, we would like to see the Development
Authority come into being.
We continue to see credit as an important tool in our
development toolbox, a unique tool for development assistance.
Credit provides borrowers access to long-term finance not
otherwise available commercially, and can often mean the only
means to provide affordable housing or urban infrastructure for
low-income urban households
We hope that Congress ultimately supports our credit
programs. But in addition, it's also time for the Agency to
determine how it can best use its grant resources more effectively
to advance the needs of urbanization in the developing world.
In conclusion, let me just say that as we enter a new century
we face tremendous challenges in the cities of the developing
world. The actions we take today, may well decide whether
these become sprawling centers of disease, poverty and despair or
places of hope and lasting economic opportunity. I look forward
to USAID and the National Association of Realtors building upon
an already strong partnership and I wish you all the best. Thank
you.
Thank you.
This is an archived USAID document retained on this web site as a matter of public record.
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Last Updated on: July 18, 2001
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