Dear Friends and Colleagues,
Following a long northern hemisphere summer the Local Development Finance blog has returned… After the initial COVID-19 responses, the focus of many local governments has largely moved to the monumental challenge of driving economic recovery, rebuilding local fiscal space and mitagating the continuing effects of this global pandemic whose impact is most acutely felt at the local level.
One critically important feature is that long term development plans and capital investment programmes must continue. This blog unites those who understand that local government finance is development finance and that local investment is a vehicle to accelerate the achievement of Agenda 2030. Our recent roundtable with cities and Development Finance Institutions discussed how the Covid-19 crisis has not halted work on high impact local investments but it has altered some of the calculations (see previous blog entry).
The global pandemic has hit towns and cities hard and the global recovery will be urban. On the 75th anniversary of the United Nations it is useful to reflect on the changed demographics of the world and the type of financial arrangements and institutions that are now required. When the UN began the world was predominatly rural with only 30% of people living in urban areas. By 2010 we reached a 50/50 share. Today around 66% of us live in towns and cities – a complete reversal of the situation at the founding of the United Nations.
This reality required a refreshed development paradigm and innovative financial thinking. In 2016 the New Urban Agenda was adopted at the United Nations Conference on Housing and Sustainable Urban Development (Habitat III) in Quito, Ecuador. It was endorsed by the United Nations General Assembly in December 2016. UNCDF shared its reflections on development financing and cities in the New Urban Imparative for Secondary Cities and increased its capacity in local infrastructure finance. UNCDF and UNDESA also published best practice case studies in Financing Sustainable Urban Development in the Least Developed Countries. In 2018 UNCDF began working with development finance institutions and United Cities and Local Governments (UCLG) in the Malaga Coalition for a global financial ecosystem that works for cities and local governments.
At the first meeting of the coalition in 2018, UCLG President Parks Tau argued that “it is time for the international community to admit the insufficient allocation of resources to meet the challenges of sustainable urban development“. With regards to the Financing for Development the UCLG President also stressed the need to monitor the commitment made by Member States in paragraph 34 of the Addis Ababa Action Agenda. Within the framework of the global agendas, Local and Regional Governments investment and budgeting are part of the needed paradigm shift. From the local level, innovative practices emerge, such as implementing inclusive and participatory decision-making mechanisms (SDG 16.7) or enhancing financial instruments to access Climate Finance such as the Local Climate Adaptive Living Facility (LoCAL).
It was agreed that a dedicated local government friendly investment fund would contribute to the goals of the coalition by making capital available at the right price and in the right format for local investments with high impact. Such a fund would also contribute to policy and regulatory reform through demonstration investments that could be replicated by others, particularly in co-financed with domestic financial institutions.
By the second meeting of the coalition in 2019, UNCDF and UCLG, with their technical partner FMDV had begun the International Municipal Investment Fund initiative to channel private sector finance from pension funds and other investors towards impactful projects sponsored by cities and local governments. Each project will deliver a measurable impact towards Agenda 2030 (the Sustainable Development Goals) and the Paris Agreement. The fund will be dedicated to developing country cities and will demonstrate practical examples of how expanded local fiscal space can drive development.
During 2019 UNCDF completed the transparent selection process for the third party fund manager. The coalition partners also began work on the submissions from an initial city self-assessment and open call for projects issued through the UCLG network. At the UCLG congress in Durban, November 2019 it was announced that Meridiam was selected as the Fund Manager for the International Municipal Investment Fund.
In January 2020 UNCDF launched the prospectus for the Technical Assistance Facility for the IMIF (IMIF-TAF) and provided some initial funding to enable work to begin on the IMIF pipeline. Thanks to the generous support of Sweden and Switzerland (through the BluePeace initiative) the IMIF – TAF is now operational. It uses UNCDF’s local development finance “dual key” pipeline management and investment structuring process – which in 2019 was awarded by the International Finance Corporation in the financial product innovation category at the SME finance awards. For the IMIF, the process is adapted to local government led infrastructure finance.
On Thursday 17th September 2020 at 09.25am New York time IMIF Technical Assistance Facility will be formally launched at the Global Governance Forum taking place during the UN General Assembly. The session of the Forum, chaired by Gro Harlem Bruntland former Prime Minister of Norway, will highlight noteable sustainable development partnerships on the occasion of the 75th Anniversary of the United Nation’s.
It is fitting that one of the chosen partnerships recognises that the world is now two thirds urban. Agenda 2030 is an urban agenda. The route to the SDGs is not an elevated expressway on concrete pillars; rather it is a winding route that passes through every town and city and builds sustainability, resilience and better living as it goes.
In two short years the inspiration of the first Malaga coalition meeting is becoming a reality. Many thanks to the numerous governments, cities and partners for the leadership, support and hard work that has coalesced to make this happen.
The event will be live streamed at the following link
Translation is available here