Adesina harps on autonomy of municipalities as catalyst for investments, economic growth in Africa

African Development Bank (AfDB) President, Akinwumi Adesina on Thursday pledged greater commitment to the development of cities and stressed the need for increased investment and autonomy for municipalities, the continent’s engine for economic growth.

The Bank chief spoke at a high-level forum for mayors titled: “Leveraging Cities and Municipalities for National Development,” held on the sidelines of the Africa Investment Forum 2023 Market Days in Marrakech, Morocco.

The meeting, co-organised by the African Development Bank and Big Win Philanthropy (https://www.BigWin.org/), brought together mayors and governors of several major African cities including Lagos, Dakar, Addis Ababa Abidjan, Kigali and Nairobi, and representatives of governments and financial and development institutions.

“The Mayoral Forum launches what we hope is the beginning of new collaboration between financial institutions, cities, states and municipalities, to accelerate the growth and development of Africa,” Adesina said in welcoming remarks. “It also shows the priority that the partners and investors in the Africa Investment Forum will place on improving investments in sub-national level projects,” he added.

The session also included a presentation on a new report on African cities, titled From Millions to Billions: Financing the Development of African Cities, commissioned by the African Development Bank.

Speaking on behalf of the Mayor of Marrakech, Deputy Mayor Professor Khadija Bouhrachi said the city of Marrakech is a hospitable city to all visitors. While cities are magnets for their promise of higher incomes, governments needed to invest in services, green spaces, highly diversified markets and decent, well-paying jobs, she said, “Economic performance plays a crucial role in the smooth running of our economies.”

Jean Pierre Elong Mbassi, the Secretary General of United Cities and Local Governments of Africa (UCLG Africa), said the future of this continent was linked to the way policy makers could make cities more attractive and welcoming for populations and young people.

“Bankers need a change of perspective when dealing with local governments. Thanks to this event for trying to push for this,” Mbasse said, adding that research and innovation would be important considerations as well.

From Millions to Billions: new report reveals the challenges and opportunities for Africa
Findings of the report show dramatically rising population numbers: African urban population is expected to nearly triple in the next 25 years, reaching 1.5 billion inhabitants by 2050. The city of Lagos will be home to approximately 24.5 million people in 2050 – more than 32 times its size when Nigeria gained independence in 1960, the report states.

To meet this challenge, it is estimated that African countries will need to invest about 5.5% of their annual GDP in their cities, approximately $140 billion per year.

Dr, Astrid Haas, economist and co-author of the report said the report took a “bottom-up” look at the diverse budgets of 10 African cities. “Urbanization is the megatrend that is reshaping the African continent,” she said, “No country has ever developed without an urban plan.”

The report underlines several key strategies for cities: Creating enabling environments, increasing revenue flows to cities, vision, improving fiscal autonomy and credit worthiness.

Stating that “cities provide the engine of economic growth” Haas shared success stories from across the continent and the world such as China, Brazil, Cape Town and the city of Abidjan – with its “bold and intentional investments in transport.”

“The time to think big is now; African cities hold the power. Let’s act boldly to ‘transform Africa’s future for generations to come,” Haas said.

Jamie Cooper, CEO of Big Win Philanthropy praised Ethiopia which has been a trailblazer in reducing malnutrition and its mayor Adanech Abebe, who was present, for her role in transforming her city. In less than a year Addis Ababa has closed more than 100 streets on Sundays to cars, so that children and families can walk and play. Abebe has also committed to creating 12,000 playgrounds in the capital, Cooper said.

“Everyone has their own vision. We look forward to continuing your plans with you,” Cooper said.

African Development Bank pledges more for cities and urban areas

The African Development Bank disburses $2 billion per year to projects and programs that have a direct positive impact on urban areas across Africa, Adesina said. These projects cover a wide range of areas, including housing, transportation, access to clean water and improved sanitation and sewage systems.

It also has an Urban and Municipal Development Fund (UMDF), which supports15 cities, with technical assistance, capacity building for integrated urban planning, governance, project preparation, and broader urban management, including municipal fiscal management.

But the institution will go further, Adesina said. “While the Mayors are working hard to tap into this and other sources of public financing, greater priority needs to be given to attracting private investments into cities.”

He outlined four ways in which this could be done: by providing greater autonomy and fiscal responsibility to cities and towns; using debt securities which could deliver greater financing; by developing better mortgage financing to make cities more livable with access to affordable housing; and by providing additional regulatory space to raise financing on local capital markets by posting municipal and green bonds to boost their own financing.

Adesina gave some additional good news of approvals by the institution’s Board of Directors: The UMDF, which has $50 million mobilized for the period 2023-27, will be directed to support cities and municipalities divided in a ratio of 60% for urban project preparation, 20% for urban planning and 20% for municipal access to financial support ecosystems.

“In addition, the African Development Bank will provide projected lending of approximately $2 billion in 2024 toward your cities and municipalities,” Adesina announced.

“To support your efforts as mayors to expand investments in your cities, the Africa Investment Forum will now start to prioritize bankable projects that can secure investments for cities,” Adesina said. “We will dedicate the AIF for special sessions on cities as a permanent agenda,” Adesina said. “AIF will prioritize bankable projects from governors and mayors inside cities and municipalities.”