African cities operate below their economic potential, with six target cities functioning at under 40 percent capacity, according to an ECA-led initiative. Strengthening municipal finance is crucial for enhancing water, sanitation, and waste services while advancing SDG 11. Pilots in Addis Ababa, Kigali, and Lusaka demonstrate innovative solutions to bridge service gaps.
A capacity development initiative led by the Economic Commission for Africa (ECA), in partnership with UN-Habitat and UNCDF, reveals that African cities are far from realizing their growth potential. Assessments of six cities show they function below 40 percent of economic capacity, highlighting the urgent need for robust municipal finance to deliver essential urban services.
Service coverage varies significantly across these cities, underscoring that effective finance is not merely a fiscal tool but a core development strategy. Global challenges, including rising public debt, climate risks, and declining official development assistance, strain urban resources. Yet, tapping local economic potential could unlock substantial domestic revenue for infrastructure and climate-resilient projects.
Local governments worldwide implement up to 65 percent of SDG targets, a figure likely higher in Africa amid rapid urbanization. International commitments like the Addis Ababa Action Agenda and Sevilla Commitment stress mobilizing domestic resources, building capacity, and employing innovative financing such as blended finance and municipal development funds.
Key goals include modernizing digital systems for revenue collection to boost transparency, granting fiscal autonomy to reduce central transfer dependency, and fostering public-private partnerships for resilient infrastructure. Targeted cities are testing solutions: Addis Ababa's Reppie Waste to Energy Plant turns waste into electricity via public-private collaboration; mobile billing integrates water and waste fees for better collection; and efforts in Kigali and Lusaka involve private operators to expand coverage.
Obstacles persist, from weak fiscal decentralization and outdated property registries to low tariffs and limited digital tools. Recommendations span global financial reforms, national decentralization with predictable transfers, municipal digital upgrades, and innovative tools like municipal bonds. Successful pilots, such as linking fees in Addis Ababa and outsourcing in Kigali, have enhanced efficiency and revenue, paving the way for inclusive urban growth.