Inequality in cities: Dimensions of urban inequality and mitigating strategies

Global challenges such as migration, digitisation, and climate change are deepening existing inequalities and highlight the urgent need for a sustainable transformation. This is especially true for cities, where the urban population is expected to double by 2050. As millions of people live in increasingly dense urban environments, cities face serious challenges – but they also offer many opportunities for positive change. To explore these issues, the German Development Cooperation (GIZ), on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), commissioned Dr Paula Nagler to analyse key aspects of urban inequality and identify promising strategies to reduce them, with a focus on cities in the Global South.

Cities: where inequalities coexist and intersect with one another

Before delving into challenges and solutions, it is essential to acknowledge that defining and measuring inequality is a complex process. It takes many forms – monetary and non-monetary, vertical and horizontal – and these often reinforce each other. A key distinction is between inequality of opportunities, such as access to education or healthcare, and inequality of outcomes, such as income or wealth. Tools like the Gini index and the Inequality-adjusted Human Development Index help track disparities across societies. All these aspects and dimensions are visible in cities, where multiple forms of inequality coexist and intersect with one another.

Challenges and mitigation strategies

Rapid growth in cities across Asia, Africa, and Latin America brings multiple challenges, including overburdened infrastructure, expanding informal settlements, and rising environmental pollution. These issues contribute to pronounced local inequalities, placing additional burdens on both cities and their inhabitants. Common examples of inequality include limited access to public transport and adequate housing. The impact is especially severe in developing countries, where social security systems are limited. High urban inequality often leads to social instability and increased crime rates – particularly violent crime – weakening social cohesion and community spirit.

Urban planning is a critical area, with challenges including providing safe and affordable mobility and services for residents of informal settlements. Solutions should focus on expanding accessible and reliable public transport – especially connecting poor communities and informal settlements to job opportunities – and on participatory upgrading of slums that involves local residents.

Climate-sensitive urban development is also crucial. Air pollution, water scarcity, and rising temperatures caused by climate change disproportionately affect poorer populations. Cities should reduce reliance on fossil fuels by adopting electric public transportation and improving waste management. Nature-based solutions can improve water access, while expanding green areas and tree cover can help cool cities – especially in disadvantaged areas where homes often lack insulation and residents cannot afford air conditioning.

Two other key areas covered by the study are sustainable construction and municipal financing. Sustainable construction poses a challenge due to the high energy demands of building, heating, cooling, and lighting. Improving energy efficiency and investing in sustainable building practices – potentially inspired by traditional architecture – can help reduce energy needs. Increasing municipal financing is essential to enable investment in services. Cities can raise funds by adopting new technologies, revising tax policies, and engaging local communities. Innovative models supported by international organisations, such as the World Bank, offer great potential.

The study presents inspiring best-practice examples – from gender-sensitive rebuilding efforts in Ukrainian cities to improved communal finances in Dakar, Senegal. These examples aim to motivate researchers, policymakers, and government officials alike to address urban inequalities.

"Ultimately, cities must recognise that addressing inequalities requires comprehensive and integrated approaches to ensure a holistic urban development agenda."

Reducing inequalities

The report offers several actionable recommendations, such as:

Strengthening local institutions to provide a solid foundation for all subsequent action.
Promoting participatory approaches to engage local populations and better understand their needs, rather than relying on top-down solutions that may not align with local realities.
Investing in infrastructure – especially mobility and housing – to reduce poverty by improving access to opportunities.
Improving public health by enhancing air quality, expanding green infrastructure, and ensuring access to clean water to improve living conditions for the poor.
Revising tax strategies and combining them with support from international programmes to boost municipal finances.