Pretoria, South Africa, 26 October 2021 – Leading up to the expected visit to South Africa by UN-Habitat Executive Director later this year, the Human Settlements Programme and South African officials are inching forward toward positioning urban development as driver of sustainable development.

The latest coordination efforts came through a workshop organised by UN-Habitat and the South African Department of Human Settlements last month on financing sustainable urban development with experts and practitioners from Ghana, Kenya, Senegal, and South Africa.

The participants discussed how African countries can harness the transformative power of urbanization.

The workshop It was part of the European Union-funded initiative on Financing Sustainable Development, requested by the European Parliament and implemented by UN-Habitat, which has been working to identify relevant measures to help mobilise financing for urban development at all levels of government.  

These efforts are timely as African societies face huge challenges in providing infrastructure and basic services for liveable and productive cities in view of rapidly increasing urbanisation. The matters have taken a turn for the worse since the COVID-19 pandemic has severely constrained the fiscal space of local governments in Africa undermining their ability to ‘build back better’.

The pandemic has drawn attention to the financing of cities and has exacerbated an already difficult financial situation of African cities. Secondary cities, in particular, have been struggling over the past decades to compete with capital cities for private investment and to effectively develop the institutional capacity needed to fully leverage existing tax authority and run efficient expenditure/procurement processes.

In his opening remarks during the workshop on financing sustainable urban development in Pretoria, Director-General of the Department of Human Settlements, Mbulelo Tshangana, said “we look forward to exchanging frankly on how to scale up, coordinate and leverage government’s investment in urban spaces, across sectors and spheres.”

Nardos Bekele-Thomas, UN Resident Coordinator in South Africa, said “financing plays a key role in turning cities into engines of productivity. Severe lack of balanced and systematic investment in urban development in key urban infrastructure jeopardises the potential productivity and liveability of cities in developing countries, hence enhancing access to financing sustainable urban development is critical.”

In his keynote speech, Prof. Ivan Turok, executive director of the Economic Performance and Development, Human Sciences Research Council of South Africa, said, “cities are potentially powerful systems of value creation and productivity, but they need investment in infrastructure, land and institutions to realise that potential and ensure the value is captured for the public good. (…) This needs integrated thinking, and investment planning requires a fine-grained understanding of local realities.”

During the second session of the workshop, Oumar Sylla , UN-Habitat Representative for Africa, helped consolidate the discussions around pressing issues such as bottlenecks in accelerating investment for productive and sustainable urban development, underpinning structural transformation, and improving policy and institutions needed to scale up productive investment in sustainable urban development.

The workshop also brought in the views of intergovernmental organisations.

Paolo Ciccarelli, Head of Unit, Sustainable Transport and Urban Development, European Commission, said urban development is one of the main vehicles to achieve top-tier goals of the EU.

Grzegorz Gajda, Senior Urban Sector Specialist with the European Investment Bank (EIB), explained that EIB has so far worked through the national government in Africa because of lack of credit worthiness of subnational entities. He stressed that three conditions are key for lending to non-sovereign actors: stable policies, bankable projects and creditworthy borrowers.

Megha Mukim, senior economist and team lead for the World Bank’s Competitive Cities, underlined the importance of leveraging private finance for urban infrastructure. Regarding cities` ability to borrow, she recommended to remove constraints at local and national levels in terms of fiscal and regulatory frameworks, and de-risking by national level or IFIs.

Within the next months, UN-Habitat will continue facilitating the discussion on possible pathways to financing urban development in the partner countries involved in the workshop