Sustain and diversify activities and financial resource for Local Government Financing Institutions in Africa

  • July 27, 2018

  • New York, United States

Jaffer Machano
Programme Manager Municipal Investment Finance

Christel Alvergne
Regional Technical Advisor

Eloïse Pelaud
Consultant Municipal Investment Finance program


Since 2016, through the Municipal Investment Finance (MIF) program, UNCDF work in 4 countries -Cameroon, Madagascar, Mali, Niger-, in partnership with RIAFCO -Network of African Financial Institutions for Local Governments- , FMDV - Global Fund for Cities Development- and with financial support from the World Bank’s PPIAF -Public-Private Infrastructure Advisory Facility-, to identify the most effective ways to sustain and diversify local government financing institutions (LGFIs) financial resources in order to reinforce and to support local authorities financial resources.

At a time when recent major international agreements (the New Urban Agenda, the Sustainable Development Goals, the Paris Agreement, the Addis Ababa Action Agenda) are recognizing the leading role played by local authorities in development challenges, the question of the location and diversification of funding is a matter of pressing concern. In Habitat III Conference hold in Quito, Ecuador in October 2016, the role of LGFIs was recognized as catalysts for national and international public, institutional and private financing to foster sustainable, resilient, inclusive local development. The New Urban Agenda had officially encouraged development partners to create or strengthen LGFIs.

RIAFCO, an innovative network of LGFIs from across Africa, was created in 2014 with precisely this aim in mind. The network, which currently has seven members, seeks to foster peer-to-peer institutional and technical exchange, to promote inspiring practice, to disseminate innovative models and to give its members a voice in international processes and with technical and financial partners.

As part of a programme entitled “Promotion of Municipal Financial Markets through Capacity Building and Knowledge of African Municipal Development Funds”, partners promoted knowledge and shared of experiences on municipal finance.

The overall outcomes of the program were that LGFIs -and local authorities- in African countries have a better understanding of opportunities and enhanced skills to innovative sources of finance through the RIAFCO network :

Output 1: Knowledge products and capacity building tools (publications, online resource center, studies, toolkits for capacity building for LGFIs) are developed to strengthen understanding of municipal finance and its regulatory/policy context amongst RIAFCO members :

  • Comprehensive diagnostic report on institutional, regulatory and financial resource sustainability and diversification for LGFIs in Africa ;
  • Development of a knowledge platform and a RIAFCO website ;
  • Survey of RIAFCO members evaluating effectiveness of knowledge products and identification of gaps.

Output 2: RIAFCO’s leadership capacities are strengthened to enable it to formulate a strategic vision on how to promote municipal finance in African countries.

  • Strategic vision and action plan on municipal finance developed for RIAFCO;
  • RIAFCO brochure targeted at LGFIs, donors and other partners;
  • Formulation of a curriculum of training tailored to LGFIs in Africa;
  • Combined workshop and training for RIAFCO members on how to promote municipal finance in their countries.

One of the main outcome of the program is a comprehensive diagnostic report, that aimed to explore how LGFIs could diversify and sustain their financial resources. This cross-cutting summary compiles the findings of four separate studies, each looking at a different RIAFCO member country. Each study had a specific entry point:

  1. Access to innovative climate adaptation funds for Cameroon’s FEICOM;
  2. Implementation of the FNP for Madagascar’s FDL;
  3. mobilization of additional funding for technical assistance, equalization and LA operational support for Niger’s ANFICT;
  4. Access to lending for LAs with support from Mali’s ANICT.

This summary puts the findings of these four studies into context and seeks to identify key lessons, as well as potential avenues for RIAFCO to explore as part of its mission to support LGFIs. This study identifies the most effective ways to sustain and diversify LGFIs’ financial resources so that they are better able to support local authorities (LAs) in the countries where they operate to bolster their own financial resources.