-First meeting in Dar es Salaam focuses on local finance challenges in African LDCs
In
collaboration with the Financing for Development Office of the United
Nations Department of Economic and Social Affairs and the Government of
Tanzania, UNCDF launched a global series of expert group consultations
on municipal finance in Dar es Salaam, Tanzania on 29 February – 1 March
2016.
The
meeting brought together a unique set of practitioners, local government
representatives, academics, policy makers and the private sector from
African countries, as well as UN entities and other development
partners. In an interactive format, experts exchanged their experiences
and suggested policy measures on how municipal governments especially in
the Least Developed Countries can access long-term finance to implement
the ambitious 2030 Agenda for Sustainable Development.
“According
to figures from the United Nations, 1.2 billion people live in over 650
secondary cities in developing countries. Yet most government finance
and development aid is directed to central government agencies whilst
private finance often avoids local governments”, said David Jackson,
Director of Local Development Finance at UNCDF. The Africa expert
consultation is the first in a series of regional consultations that aim
to pave the way for increased and more effective international
cooperation on subnational finance as called for Addis Abba Action
Agenda and reaffirmed in the preparation of the Habitat III Conference
later this year.
The
discussion delved deep into lessons learned from fiscal, political and
administrative decentralization experiences across African LDCs, many
involving UNCDF support. There was a consensus view that enabling and
empowering local authorities to unlock resources for long-term finances
requires a holistic approach to municipal finance. Sound financial
management and improved internal revenue generation including through
effective property taxes, user fees, and land value capture can pave the
way for better access to private and public domestic finance.
“Collaboration
between banks and local government in Africa has to step up. Both
actors have to meet in a middle area called trust where they share
strategy, ambitions and solutions” said Ms. Zienzi Musamirapamwe, Head
of Public Sector, Corporate and Investment at Barclays South Africa.
Central government support and a conducive governance environment are
equally important and intergovernmental fiscal transfers will remain a
key source of local government finance.
Participants
noted that many municipalities in Africa have come a long way in
getting their finances in order while promoting affordable access to
essential services for all. Experts discussed the positive experiences
of an increasing number of African cities such as Dakar and Kampala
City, both of which have received investment grade ratings from
well-known regional rating agencies. The progress of secondary African
cities has also been reviewed and noted.
According
to Khady Dia Sarr, Program Director, Dakar Municipal Finance Program,
development is primarily local; and finance is one of the keys to
development. “We have to strengthen local authorities in Africa to tap
into capital markets to respond to the needs of populations.”
“Decentralization
is essential, especially fiscal decentralization” said Youssouf Séga
Konaté, Technical Adviser, Ministry of Decentralization of Mali. Experts
also agreed that successful decentralization hinges on a carefully
sequenced series of policy measures. It is a process that requires
continuous assessment of what works and what doesn’t and policies can
change down the road. The discussion also featured lively exchanges
between local authorities and central government representatives,
including on the appropriate level and types of fiscal transfers and the
authority for municipalities to borrow. Participants agreed that good
communication and buy-in from all stakeholders are crucial factors for
success.
Mr.
Shomary Mukhandi, Director, Regional Administration and Local Government
– President’s Office in Tanzania, gathered from the discussions that
there is a need to consider other feasible ways of financing local
government infrastructure development projects to meet and reduce the
fiscal gap between actual needs and available resources. “We have learnt
some valuable lessons from participating in this key meeting. Pertinent
issues have been raised in improving municipal finance that can be
applied by local governments in Tanzania to stimulate and improve local
economic growth.”
The
consultation will result in a publication that summarizes major findings
and provide some general guidelines for policy makers at the
international, national and local levels of the Least Developed
Countries. In addition, the published results will feed into the
discussions leading to the Habitat III conference later this year, which
should focus on how to implement the global agenda through cities.
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