Walk the path to credibility
There is a direct link between improving financial management, such as local government revenue collection, and raising private capital for infrastructure development.
Assumpta Gwatilinga, senior accountant for the City of Harare, Zimbabwe, said: “For the City of Harare, our main problem is the collection of taxes and fees. We have more compulsory expenses than we can collect.” she is not alone. Nearly 80% of municipalities participating in the Creditworthiness Program report that their municipality consistently has an operating deficit.
Participants in the first Credit Score Program developed a multi-year action plan to address challenges to achieving or improving credit scores, based on the results of a detailed self-assessment of the city’s finances.
“Maputo has a lot of big problems,” said Gracia Teresa Manguer, director of revenue for the city of Maputo in Mozambique. “The main reasons are the lack of decisive planning in spending, the size of the informal economy and the need to register real estate for tax purposes,” she said. Of over 200,000 properties in Maputo, only about 3,000 are currently registered.
Each action plan is tailored to a city’s specific circumstances and challenges and provides technical assistance on issues such as revenue and liability management, improving expense management and asset maintenance, capital investment planning, transaction planning, construction, and execution.
These are some of the key steps cities can take to get on the path to creditworthiness. The City Credit Score Program not only helps identify, collect, and manage “own source” revenues, but also helps strengthen government financial management policies and practices. The program also helps entities “lock in” revenue sources to structure debt deals for investment projects. Finally, we assist in coordination with the central government. This is essential to improve the legal and regulatory framework that allows city administrations to collect revenue and issue debt responsibly.
“Most African cities are invisible to investors looking for opportunities in subsovereign capital markets,” said James Close, program manager at the World Bank-backed Public-Private Infrastructure Advisory Facility (PPIAF). “This initiative has the potential to leverage private investment to fund the infrastructure cities need to meet residents’ demands for basic services and build resilience to the impacts of climate change.”
International partnerships for rural development
Participants in Nairobi included observers from the C40 Cities Climate Leadership Group, a network of large cities, and UN-Habitat, the United Nations’ human settlements programme.
“Credit quality is a critical step in enabling cities to finance the infrastructure they need to reduce their carbon emissions and become more resilient to the effects of climate change, particularly the effects of extreme weather events such as those seen in recent months in Buenos Aires, Jakarta, Johannesburg and New York,” said James Alexander, Director of Financial and Economic Development Initiatives at C40. “C40 looks forward to continuing to work with the World Bank to share the knowledge and transformative potential of credit.” Delivering valuable programs that leverage our network of global metropolises. ”
The Nairobi Credit Training Program was organized as part of the World Bank’s Low Carbon and Liveable Cities Initiative and was supported by the Public-Private Infrastructure Advisory Facility’s (PPIAF) Sub-National Technical Assistance (SNTA) Programme, Agence France-Presse de Développement (AFD), and the eThekwini Municipal Learning Institute (Durban, South Africa). Additional training is planned in South Korea, Colombia, and later India.
