Honorable Minister Joshi,
Dear Alex Trepelkov,
Ladies and gentlemen,
Thank you all for attending today’s side event on “Urban Finance as a Game Changer for LDCs”. I thank the Financing for Development Office of DESA and the United Cities and Local Governments (UCLG) for co-organizing this discussion.
Local and urban finance is recognized in the Addis Ababa Agenda for Action, the SDGs, and the recent New Urban Agenda as a key enabler for so many development objectives, including the socio-economic transformation that is required to put LDCs on a swift and sustainable graduation path.
Today, fiscal resources and domestic capital markets are not investing in local governments and local economies in a way that promotes sustainable and equitable growth. In too many LDCs, the benefits of growth bypass many populations.
While only about one-tenth of the world's largest urban areas are in LDCs, thirty of the thirty-five most rapidly growing cities are in these countries. However, urban growth is not limited to capital cities only, but is having a profound impact on secondary cities and towns as well, many of which are growing at a rate of 5% annually. This means cities are doubling their populations every 14 years.
While some bigger cities may be able to cope with these pressures, many secondary cities and peri-urban areas in least developed countries find themselves on the frontlines of meeting the SDGs, but lack the financial resources to fulfil their mandates.
The future development of the LDCs, and their ability to meet the SDGs, will increasingly depend on how well urbanization is managed and financed in their cities and towns.
Local governments are ultimately in charge of providing basic and essential public goods and services, investing into critical infrastructure, and expanding economic opportunities to an ever-growing number of people. Their expanding range of responsibilities in realizing sustainable development for all will require the full and sustained support of the international community - national and local governments; donors; UN agencies; organizations like UCLG, which do so much to bring the voices of cities and local governments to the table; and the private sector, all actors present here today.
Such international cooperation must support the development of local infrastructure, revenue mobilization, local debt management, and direct lending from financial institutions, while ensuring the meaningful inclusion of local communities in decision-making processes.
That is one of the core messages of the book we are very proud to be launching jointly with DESA today. Titled “Financing sustainable urban development in the Least Developed Countries”, it is the first of its kind to examine specially the opportunities and challenges related to municipal finance in secondary cities in LDCs.
The book provides an overview of the multi-dimensional challenges LDCs face in financing sustainable development at the local level from the political, institutional, and economic perspectives. It explores the interlinkages between the different dimensions of municipal finance, including revenue generation, financial management, and long-term capital formation.
Most importantly, the book illustrates concrete country experiences in meeting related challenges through a wide range of case studies from local governments in LDCs. Alex will share with you a more detailed overview of some of our key messages shortly.
At UNCDF, we recently established a Municipal Investment Finance Programme, whose main goal is to increase the capacity of local governments in LDCs through access to sustainable sources of capital financing.
In line with the book’s recommendations, we aim to unlock public and private capital investment, while transitioning local government finances from traditional pure grant funding to a broadened mix of financial sources. We will do this, for example, by helping local governments broaden their tax revenue base; by strengthening their public financial management systems; and by helping local governments to get credit rated.
We invite all partners to utilize this book as a basis to strengthen local, national and international cooperation on municipal finance, and to further deepen engagement with local governments in support of the 2030 Agenda.
I look forward to today’s discussion on how to strengthen the financial ability of LDC cities and other subnational governments to meet the SDGs and help transform their economies.