Financing for African Cities Focus of Successful Public Advisory Forum

One of the highlights of the event was the launch of the book "Financing Africa’s Cities – The Imperative of Local Investments" by AfD Senior Urban Finance Specialist Dr. Thierry Paulais.
Emergent issues related to financing of African cities took centre stage at the highly successful Cities Alliance Public Advisory Forum (PAF), held 7 November 2011 in Maputo, Mozambique.
Designed to showcase the strengthened partnership framework of the new Cities Alliance, the Forum was co-hosted by the Alliance and the Public Private Infrastructure Advisory Facility (PPIAF), in collaboration with the Municipality of Maputo, the Associação Nacional dos Municípios de Moçambique (ANAMM), and Agence Française de Développement (AfD).
More than 200 people participated in the event, which featured a broad representation of national and municipal government officials, community groups and donor community all working on urban issues in Mozambique.
Formally opened by the Mozambican Minister of State Administration, Ms. Carmelita Rita Namashulua, the Forum offered Cities Alliance members and partners a platform for sharing knowledge and experiences on the critical issue of financing for cities. In the opening ceremonies, which were emceed by Councilor Louis Nhaca of the Municipality of Maputo, speakers reaffirmed the value-add of partnership and its significance to the addressing Mozambique’s urbanisation issues.
Morning and afternoon panels on specific sub-themes of the main theme were efficiently moderated by the Chair for the Cities Alliance Policy Advisory Forum, Clare Short. She provided the context for the ensuing discussions by painting the broad picture of the challenges and opportunities of urbanisation in Africa, with special focus on Cities Alliance’s new direction as defined by its revised Charter and through the Country Programme framework. She spoke in particular of the need to harness the energy and enterprise of slum dwellers to impact cities’ economic growth and national development.
Financing urban investments – the imperative of local investments
One of the highlights of the PAF was the launch of the book Financing Africa’s Cities – The Imperative of Local Investments by AfD Senior Urban Finance Specialist Dr. Thierry Paulais, who spent four years on secondment to the Cities Alliance Secretariat. The book is the main outcome of a partnership between AfD and the Cities alliance.
In a keynote address outlining the key messages of the book, Dr. Paulais spoke of the absolute need for a shift in paradigms and scale in response to the financing crisis in local governments. This shift is urgent due to the following:
  • Following decades of underinvestment, the situation in cities has actually degraded.
  • Real decentralisation is probably not progressing.
  • The urban challenge is underestimated.
  • $25 billion per year is needed for local investments.
  • Investment capacities by local governments are $ 10 billion per 10 years.
  • There is a lack of operators in land development.
  • The present “business as usual” trend is not sustainable.
  • Economic consequences are underestimated.
  • The need to improve the productivity of cities.
Dr. Paulais suggested a number of approaches, such as strengthening local governments, encouraging endogenous financing, bolstering financing tools, modernising financing systems, leveraging capital markets, mobilising credit institutions and instituting a regulatory framework for sub-sovereign debt.
Other financing options available to cities include: financing through land value capture and land development, where the city finances the city; increasing fiscal resources; and activities such as leveraging housing property taxes and boosting housing and construction.
Dr. Paulais also discussed a “Special Initiative for fragile cities”, necessary because fragile states account for one-third or half of all African countries. Further, there is the growing risk of an Africa divided along the lines of pre-emerging countries versus fragile states or cities. Fragile cities often find themselves in a double trap of poverty and of financing, with some caught in a vicious cycle for decades.
To support these fragile cities, the Special Initiative African sovereign funds would provide grants and support structural changes, leverage the often very dynamic local private sector and provide safety nets and worker welfare programmes. The Special Initiative would comprise multi-partners, including donors, foundations and the private sector.
Financing urban investments – the experience of Mozambique and Uganda
With knowledge sharing a key component of the PAF, the event featured a panel discussion on the Mozambican and Ugandan experiences of financing cities.
ANAMM Secretary General Dioniso Cherewa spoke of the need for the association’s 43 municipalities to work to promote exchanges of knowledge and programmes on financing. Mayors Rogerio Gaspar and Castro Safins Manuaca – of Mocuba and Nampula, respectively – shared overviews of their cities’ experiences in addressing urbanisation challenges.  
Mayor Chale Ossufo of Nacala honed in on the role of the cadastral system as the foundation for all integrated intervention in his city, while Emmanuel Becape from the Municipality of Beira said scarce resources available to city officials mandates judicious management and effective governance.
The theme of efficient management of urban investments and the central role of city managers was taken up by Roland Hunter, former Chief Financial Officer  for Johannesburg. He drew on a study commissioned by PPIAF through the South African Cities Network (SACN) on the State of Municipal Finance in Southern Africa to deliver these strong messages:
  • Cities need to be governed by strong city governments.
  • City governments need to dramatically improve their own performance, especially on revenue generation and on investing.
  • All city governments can improve through city finance strategies, internal and external reform initiatives.
  • City leadership is key – leadership with stature and maturity, a dedicated management team, political and administrative insight and courage.
The Uganda country programme experience in relation to the theme of the Forum generated the most interest and discussion. It provided stakeholders in the emerging Mozambique country programme an insight into the evolution of the mechanism and the early results and impact for urbanisation in Uganda.
Samuel Mabala, Commissioner for Urban Development in the Ugandan Ministry of Lands, Housing and Urban Development (MoLHUD), elaborated the Transforming Settlements of the Urban Poor in Uganda (TSUPU) programme, the context for its design as well as its ongoing rollout in five secondary cities in Uganda.
The overarching goal of TSUPU is to create inclusive cities without slums in Uganda in order to maximise the potential of urbanisation by proactively managing urban growth.
Outcomes so far are tangible and have greatly impacted urbanisation in Uganda. Not only is the entire programme being driven by the Ugandan government and citizenry – including being given local names in the different secondary cities where it is being played out – it is leading to important results:
  • An empowered urban citizenry
  • Improved access by the citizenry to services
  • The development of national urban development policies
  • Investment alignment – the Ugandan support to municipal infrastructure development is being funded by the World Bank to the tune of $130 million. 
A secondary city perspective on TSUPU was provided by the Town Clerk for the city of Mbale, Mr. Mafabi Mutwalibi Zandya, who outlined some of the more specific results of the programme in his city, including: the formation of community savings groups, which more than 5,000 members have joined; the undertaking of household enumeration, profiling and mapping; the election of leaders; lobbying and negotiation for access to opportunities; and stronger citizen participation in their own improvement programmes.
The potential for country programmes to greatly enhance investment opportunities that benefit slum dwellers was highlighted by Sheela Patel, Director of Shack/Slum Dwellers International (SDI), who shared lessons from the broad swathe of community groups and municipal partnerships in India, Africa and Latin America to reinforce the significance of  financing city investments that serve the need of the urban poor.