Financing gaps in New Urban Agenda

Urban experts are warning that the New Urban Agenda does not go far enough on financing. Some fear it could pave the way for a surge in private development at the expense of liveable cities.

The honeymoon for the New Urban Agenda appears to be over. After near-unanimous enthusiasm over the final burst of negotiations that produced a consensus document earlier this month, critical voices are now growing over the document’s ability to turn its ground-breaking vision into a reality.

Much of the criticism concerns the lack of concrete municipal financing strategies. “I don’t think the New Urban Agenda helps us very much,” said Michael Cohen, director of the urban programme at the New School in New York. “It’s mostly about the ‘what’, but it doesn’t tell us much about the ‘how’.”

David Jackson of the UN Capital Development Fund, an investment agency for the world’s 48 least-developed countries, agrees, telling Citiscope that the vision set out in the New Urban Agenda “cannot happen without new ways of how secondary cities are financed”. Until this happens, secondary cities will fail to attract an ambitious middle class and migration will continue.

As Citiscope explains, part of the problem is rooted in the failure of last year’s UN Financing for Development conference in Addis Ababa to establish a new financial architecture to fund global development problems.

Instead, many countries prefer blended finance or public-private partnerships, which critics fear could lead to a surge in private development at the expense of quality urban living as governments scale back on funding in the belief that private funding in the hopes that the private sector will make up the difference.

According to Jackson, the ideal blended finance solution would contain three elements: first, it would incorporate concessional finance or loans with below-market interest rates as well as repayment plans tailored to the economic realities of developing countries. Second, it would draw on the domestic private sector such as pension funds, which have a large quantity of assets to invest in urban infrastructure. Third, public-sector financing would be an integral component of public-private partnerships.

“Without this blend, you will not get the long-term, predictable financing streams that local governments need,” Jackson told Citiscope.

The New Urban Agenda is expected to be adopted at the Habitat III conference in Quito, Ecuador next month. It sets the framework for global urbanisation efforts for the next 20 years.

 

Image credit: UN Photo/Kibae Park

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