The previous blog entry detailed the three point policy agenda of the Malaga coalition for a global financial ecosystem that works for cities and local governments. This entry begins a series of posts that will highlight practical examples from this agenda.
The Covid 19 pandemic has directed attention towards one of the policy areas – the imperative to (re)build local fiscal space as a part of national recovery strategies and in doing so has underlined the importance of local government finance to accelerating this recovery. An upcoming blog will address this issue.
The continued influence of the Addis Abeba 2015 Financing for Development agenda is manifested by significant changes in the development finance system, most recently exemplified by the newly established ‘Developmnet Finance’ wing of the world famous Wall Street investment bank JP Morgan. An upcoming blog will also address this issue which is related to another of the policy areas – that of increasing capital flows for transformative financeable investments at the local level.
Up to 80% of the costs for public and private fixed assets are incurred after financing and after construction. Whilst there is a lot of talk to about blended finance and the infrastructure funding gap what is often ignored is the asset managment financing gap – which is equally important.
For this reason, UNCDF has joined forces with UN-DESA to launch a handbook for Asset Management together with a global online training course. The publication was widely peer reviewed and the material was drawn from the experience of UNCDF’s Local Development Finance team in the field, along with other partners. Many thanks to Navid Hanif and the team at UN-DESA for this excellent collaboration.
However, Asset Management should not only be seen as a cost, it is also an opportunity for income. Well-managed assets can actually increase local fiscal space, they can provide leverage for further investments and they can repay the initial financing many times over.
Furthermore, Asset management is a key feature of the citizen-state relationship at the local level. When people think of government, particularly local government, they often think of publicly owned features such as parks, schools, hospitals, transport systems lighting systems, water, electricity etc.
So when assets are well-managed people feel government is working, when they’re not well managed they can perceive that government is not working. Whilst sub-national and local government is often responsible for Asset Management it is often to the benefit of central government to make sure their local governments are capacitated to manage the assets because central government benefits from this wider recognition of a well working system. Of course a satisfied citizen is willing to contribute more to build the economy and contribute to tax revenue.
Therefore Asset Management is a fundamental feature of development and a challenge in terms of building the SDG’s and moving towards the sustainable development goals by 2030.
Asset Management is not a topic that often comes to mind, but actually is a fundamental prerequisite for meeting the sustainable development goals.
Finally, of course, infrastructure finance is something that has a long lead in time. The infrastructure of 2030 is being planned and financed now. For infrastructure 2030 is today. So, if you like, the Asset Management technology and processes we are counting on to meet the sustainable development goals are being sorted out at this moment.
Now is the time to get our act together to build our capacity and asset management and to rebuild local physical space, to build confidence in the citizen and to contribute positively to meeting the sustainable development goals including climate resilience climate requied to sustain our future on this planet .