Sixteen months after adopting the New Urban Agenda (NUA) in Quito in 2016, the 9th session of the World Urban Forum (WUF) took place in Malaysia’s capital from 7th to 13th February 2018 with a focus on how to implement the NUA. The question of how it will be financed, and the extent of private sector involvement, were amongst the many issues to resolved, and the 9th session issued a call for private sector funding.
Running from 7th to 13th February and attended by over 22,000 delegates from 165 countries, UN-Habitat convened the 9th WUF in Kuala Lumpur (Malaysia). The week-long event brought together stakeholders from national and local governments, NGOs, community-based organizations and specialists from other related institutions and agencies to push forward the commitments adopted within the NUA, at the UN’s Habitat III conference in October 2016 in Quito.
The NUA outcome document, containing 175 paragraphs, sets out the (general and unquantified) commitments to be shared between Member States. These include reducing pollution in cities, providing safe, accessible and green public spaces, and ensuring that all citizens have access to basic services, all within inclusive cities where there is no discrimination. And urgent action is now needed: since 2009, over 50% of the world’s population lives in cities. These in turn are responsible for more than 60% of energy consumption and 70% of greenhouse gases. And furthermore, almost a billion people live in slums.
Indicators to be defined
Today, an enormous amount of work still needs to be done to implement the NUA and especially in terms of securing agreement on global monitoring mechanisms to measure progress and of the role of UN-Habitat, a small UN agency with limited resources, whose restructuring has often been announced on various occasions in the past. This must all happen within a framework based on the good will of Member States alone, in the absence of binding commitments.
Nevertheless, the existence of the NUA text – ratified at the highest international level – is a significant boost in itself. Member States use it as a point of reference. It already influences some domestic policies in the field of public financing, all the more so given that it echoes the objectives of the 2030 Agenda for Sustainable Development, adopted by the UN in 2015, and more specifically its Sustainable Development Goal number 11, to “make cities and human settlements inclusive, safe, resilient and sustainable”.
“Between 4,5 and 5,4 trillion US dollars are needed”
Nevertheless, there are huge hurdles to overcome, amongst which is the funding for the NUA. Whilst praising the NUA’s “transversal approach”, the French Development Agency (AFD) – which currently commits financing of around €9.5 billion a year for development projects – recognises that due to their more binding nature, international commitments to fight climate change made under the 2015 Paris Agreement tend to be more successful in terms of bringing projects to fruition. In any case, official development assistance constitutes a drop in the ocean compared with actual requirements. As part of a new multi-level partnership initiative ratified in May 2017 by UN-Habitat Member States, called the Implementation Facility for Sustainable Urban Development (IFSUD), the World Bank – which seeks solutions as much from national and local stakeholders as from the private sector (see inset) – recently announced that “between 4,5 and 5,4 trillion US dollars are needed to fill the urban infrastructure finance gap”. However, local-level stakeholders are now voicing concerns.
Illiteracy of local leaders
At one its recent events, the International Urban Development Association (INTA) underscored the risks associated with “financialisation” of cities from lack of regulation by public authorities. “Whole districts in countries such as China and Egypt have already sprung up that correspond neither to the financial means of the local population nor its actual requirements for living, and as a result they remain largely empty”, condemns Eric Huybrechts, Senior Architect and Regional/Urban Planner in charge of International Affairs for Ile-de-France Regional Planning Agency (IAU).
Meanwhile, Jean Pierre Elong Mbassi, Secretary General of UCLG Africa sounds the alarm: “in Lagos, Nigeria, money flooded in, to create a Dubai-style city on Victoria Island. Meanwhile no investors could be found when it came to finance for new roads”. His counterpart from UCLG Asia-Pacific, Bernadia Irawati Tjandradewi, highlights “the illiteracy of local leaders, in the South, in terms of financial matters and public-private partnerships” and the importance of educational programmes like those implemented by her organisation.
In her closing speech, UN-Habitat’s Executive Director, Maimunah Mohd Sharif, once again emphasised her much-cherished expression: that “every PPP should be a public, private and people partnership”. Several hours earlier, the UN’s Global Compact Cities Programme launched its Cities Partnership Challenge.
The Challenge will support the formation of innovative partnerships between city governments, private sector and civil society organisations, and will develop and improve skills at the local level. Projects chosen for development will be designed to attract “private sustainability finance”, with around 200 projects expected to be considered in the context of Horizon 2030. Think tank The Grand Paris Alliance hopes to bring together a number of the “Grand Paris” projects for submission to this Challenge. The call for expressions of interest is open until May 28.
“We know that our financing is very limited”
What has changed following the adoption of the New Urban Agenda?
The New Urban Agenda generated the political commitment that was needed to turn the implementation of its objectives for the creation of sustainable, inclusive, resilient and safe cities into an attractive proposition. But we know that our financing is very limited. Official development assistance represents barely 3% of the total amount that would be needed to finance missing infrastructures in developed countries as well as in emerging economies. The only way the New Urban Agenda can be implemented is by mobilising new finance sources, including from the private sector and PPPs.
How are you working to attract these new finance sources?
We are working with various approaches in terms of financing. On the one hand, we are seeking to build the basics: to reform the transfer system between central governments and local authorities, to strengthen the financial autonomy of local governments and to build their capacities to harness new sources of finance. The World Bank helps cities and national governments to construct the financial framework required to attract investments. But we must also innovate. Thus, value capture in combination with infrastructure creation is an essential instrument in terms of increasing sources of funding. This can happen ex-ante, through the sale of licences allowing additional developments, as has been the case in Brazil, or ex-post, for a fiscal return on cities’ public investment as has happened in Colombia and Ecuador.
In the corridors of the UN-Habitat headquarters, there is much talk of the benefits of a participative multi-level approach involving multiple players. But France has effectively been harnessing this methodology since 2011, when it created the French Alliance for Cities and Territorial Development (Partenariat Français pour la Ville et les Territoires, or PFVT), which brings together around one hundred different organisations that represent the diversity of “French expertise in urban development”. Jointly headed by the Ministries of European and Foreign Affairs, Ecological Transition and Citizenship, and Territorial Cohesion, the Alliance nurtured France’s contribution at the Habitat III conference. In Kuala Lumpur, it set up the “France Pavilion” and coordinated France’s sixty strong delegation at the conference. But none of the business players made the journey to Kuala Lumpur. And nor did any representative of the French government.