This paper analyzes the problem of cost-recovery from participants in a major squatter upgrading and site/service project in Lusaka, Zambia. It evaluates the project with respect to five requirements, the fulfillment of which is suggested as necessary for achieving a satisfactory rate of re-payment: (i) the project must be affordable; (ii) the participants must understand the nature of their financial obligation; (iii) the system of collection of payment must be efficient; (iv) incentives and sanctions must be adequate and appropriate; and (v) there must be consistent political support for cost-recovery. The evaluation indicates that though the Lusaka project was affordable by most of the participants, it did not fulfill the four other requirements. The paper concludes with additional guidelines for the design of future projects.
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