A VT2 billion grant from the World Bank Group is set to reform unplanned urban settlements in Vanuatu and effectively improve the standard of living for many families.

It comes after the recent launching of the Vanuatu Affordable and Resilient Settlement (VARS) Project by the Vanuatu Government and World Bank.

The project is the first of its kind in the Pacific region and the total cost is less than a VT3 billion grant. The money will cover unplanned urban settlements, particularly 23 unplanned settlements identified by Vanuatu authorities.

Ministry of Lands director-general Henry Vira has welcomed the assistance from World Bank.

"Vanuatu is exposed to multiple natural hazards, rapid urban growth rates, serviced land provision is slow, costly, and limited to high income groups, and low-and middle-income earners move into unplanned settlements in high hazard risk land with limited land registration and services leading to low quality of living environments high incidences of preventable diseases, and low-quality housing stock and increasing disaster risk in the settlements," Vira said.

In 2016, the Government of Vanuatu requested assistance from the World Bank Group to address the growing problem of squatters in various disaster risk prone areas of Port Vila, he said.

There were two key questions for the technical assistance to focus on under the VARS, which are the future residential land and housing needs for low-and-middle income earners, and where and how the needs can be met given constraints of affordability and natural hazard risk.

The second is how the government can lead and enable activities and resources of public and private stakeholders to meet urban expansion needs, guide future development, and contribute to national economic growth and prosperity.

Vira said the capital city Port Vila was the government's and the country's main economic hub, accounting for an estimated 65 percent of GDP.

"The city has an estimated population of 66,000 people living within the municipal boundaries. The municipal area plus surrounding peri-urban settlements with strong economic and social connectivity to the city center is home to closer to 114,000 people, almost 40 percent of the nation's population," he said.

"In-migration from other islands accounts for most of the urban growth of 60 percent, with the remaining 40 percent from natural growth of the working age urban population.

"Urban-rural income differentials and rural underemployment are key drivers for people moving to Port Vila and smaller towns such as Luganville, in search of employment, better wages, health services, and education opportunities."

Vira said the pace of urbanisation limited institutional capacity, and resource constraints have impacted the quality and resilience of urban settlements in greater Port Vila and development over the past decades had largely been unplanned and unregulated, resulting in the emergence of 23 informal settlements within the municipality and adjacent peri-urban areas of SHEFA Province.

He said people and assets were increasingly locating in marginalised and hazard-prone areas, including floodplains, steep hillsides susceptible to landslides, and coastal areas exposed to tsunamis and inundation.

"Households living in unplanned settlements with insecure tenure are reluctant to invest in resilient structures, increasing their vulnerability," Vira said.

The VARS project embraces two priority approaches: retrofitting existing settlements through upgrading to improve services and resilience and developing new models for planned and serviced urban expansion.

Resident Representative of World Bank for Vanuatu and Solomon Islands, Annette Leith, said Vanuatu was one of the most highly prone and vulnerable countries in the world to natural disasters.

"The rapid pace of urbanisation and the growth of unplanned settlements adds a new dimension to this challenge," Leith said.

"I applaud the government and the people of Vanuatu for the many steps taken to build resilience through policies, investments, strengthening of institutions and building capacity at the national, provincial and community levels.

"I am pleased that the VARS Project will provide financial and technical resource to help implement some of these policies and provide resilient investments. This is an exciting project being led by the Vanuatu Government in partnership and with support from the World Bank."