A favela is the Brazilian equivalent of a shanty town, which is generally found on the edge of the city. They have electricity, but often not formally.
Favelas are constructed from a variety of materials, ranging from bricks to garbage. Many favelas are very close and very cramped. They are plagued by sewage, crime and hygiene problems. Although many of the most infamous are located in Rio de Janeiro, there are favelas in almost every large Brazilian town. In Rio one in every four Cariocas (as the inhabitants are called) lives in a slum.
A favela is fundamentally different from a slum or tenement, primarily in terms of its origin and location. While slum quarters in other Latin American countries generally form when poorer residents from the countryside come to larger cities in search of work, favelas are unique in that they were created as large populations became displaced.