Morro de Providência is generally referred to as the first ever 'favela' - It was  originally used as a temporary settlement by many veterans of the Canudos War who had been promised housing and employment by the government following the war. 

the soldiers camped out and built temporary housing at the base of  Providência hill, as it was near the offices of the Ministério da Guerra (ministry of war), waiting for a resolution to their situation. it is likely that there was some construction left after the removal of the morro Cabeça do porco (pig head hill), which was previously located at the base of providência hill.

the soldiers eventually renamed the providência hill as 'morro da favela,' in reference to a location where they fought the canudos war that was replete with a plant called 'favela' (Cnidoscolus quercifolius), also referred to as 'faveleira' and 'faveleiro.'