IN a groundbreaking announcement, the African Development Bank (AfDB) has pledged to boost its investment in cities, recognising their pivotal role as Africa’s economic engines. AfDB President Akinwumi Adesina revealed this commitment during a high-level forum for mayors held on Thursday, coinciding with the Africa Investment Forum 2023 Market Days in Marrakech, Morocco.
The forum, jointly organised by the African Development Bank and Big Win Philanthropy, convened mayors and governors from major African cities, including Lagos, Dakar, Addis Ababa, Abidjan, Kigali, and Nairobi, along with representatives from governments and financial and development institutions.
Adesina outlined the bank’s strategy, emphasising greater autonomy and fiscal responsibility for cities and towns. AfDB plans to use debt securities to provide increased financing, develop improved mortgage financing for accessible housing, and offer additional regulatory space for municipalities to raise financing through municipal and green bonds.
The bank will channel its Urban and Municipal Development Fund (UMDF) to support cities, allocating 60 percent of the $50 million budget for the 2023-2027 period to urban project preparation, 20 percent to urban planning, and 20 percent to municipal access to financial support ecosystems. Additionally, AfDB aims to provide about $2bn in lending to cities and municipalities in 2024.
This commitment is timely, given that Africa’s urban population is projected to nearly triple by 2050, reaching 1.5 billion inhabitants. To address the challenges of urbanisation, African countries will need to invest about 5.5 percent of their annual GDP in cities, totalling around $140bn per year.
Adesina highlighted the significance of the Mayoral Forum as a catalyst for collaboration between financial institutions, cities, states, and municipalities. He stated, ‘It launches what we hope is the beginning of new collaboration… to accelerate the growth and development of Africa.’
The forum included a presentation of a new report commissioned by AfDB, titled From Millions to Billions: Financing the Development of African Cities.’ The report stressed key strategies for cities, such as creating enabling environments, boosting revenue flows, enhancing fiscal autonomy, and improving creditworthiness.
Adesina noted that AfDB disburses $2bn annually for projects positively impacting urban areas across Africa, covering housing, transportation, clean water access, and sanitation systems. He also announced new funding for cities, directing the UMDF to support urban projects and planning, with $2bn in projected lending for 2024.
The commitment to invest in cities aligns with the rapid growth of Africa’s urban population. Cities, as engines of economic growth, require infrastructure and services to meet escalating demands. AfDB’s commitment, alongside other development partners, plays a vital role in fostering sustainable growth and development in African cities.