Urban redevelopment and infrastructural rehabilitation have been suggested as the solutions to the rapidly declining urban centres in developing countries. In order to qualify for external loans and aid for such redevelopment efforts and to ensure the replicability of such projects, the principles of cost-recovery and cost effectiveness have been advocated. Many World Bankassissted urban development projects have been implemented, based on these principles. Unfortunately, these principles have become difficult or perhaps impossible to achieve in most of the past urban development ventures. Our hypothesis is that the abject poverty of the people and a wrong assessment of what the beneficiaries can afford may be the most important factors which make the principles unrealisable. The case study from Ibadan, Nigeria, reported in this article, confirms this hypothesis. The paper explores the capacity and the willingness of people to pay for urban improvement programmes. The study reveals that poverty is a major constraint to urban redevelopment in Nigeria. The people are found to be willing and able to contribute more in kind than in cash to urban redevelopment efforts. The paper identifies and discusses the implications of the findings for urban redevelopment in developing countries. © 1990, Sage Publications. All rights reserved.