EMERGING ISSUES FOR CITIES OF THE FUTURE IN THE GLOBAL SOUTH

Bellagio, Italy – 23th Sep 2015 UN HABITAT Urban Economy Branch

Marco Kamiya, Unit Leader

UN HABITAT - Urban Economy Branch

Bellagio, Italy: Alternative Metropolitan Financing Models

Kibera, Nairobi, Kenya

All Challenges in Cities are about

Urbanization and more specifically about the Quality of Urbanization

The Future is Urban

Source: World Urbanisation Prospects 2014

Population Living in Urban Areas 1950-2050

Source: UN Urbanisation Prospects 2014

Latin America highly urbanized, Asia and Africa following fast

Urban and Rural Population 1950-2050

Source: UN Urbanisation Prospects 2014

5

What is good Urbanisation?

It is the one that creates a virtuous circle between the

economy and finance, improving

well-being of citizens

Very imperfect but basic proxy is

sustained increases in GDP per capita.

ISSUE 1: Population Growth and Expanded CitiesDemographic Dividend or Time Bomb?

Source: UN DESA http://populationpyramid.net/

Population Pyramids to 2040

ISSUE 2: De-Industralization and JobsGrowth doesn’t generate enough jobs

Source: UN ECLAC

Growth and employment in percentages (1992-2010)

ISSUE 3: Spatial Layout and MobilityHow do people get to Jobs

Source: World Bank, http://blogs.worldbank.org/sustainablecities/making-urbanization-work-africa-0

Distance to Jobs in Nairobi, 60 minutes radius

8%

14%

People who walk only can access 8% of jobs

People who take a “matatu” (minibus) only can access 14% of jobs

ISSUE 4: Financing InfrastructureWho pays the bill?

Cost of Planned City Extension in City of Rubavu, RwandaUS$160 million, but budget is only US$16 million per year

Source: UN-HABITAT (2015)

ISSUE 5: Municipal FinanceDecentralization and power but without money Local Budget per Capita

in Secondary Cities Globally (USD, excluding borrowing)

Source: UN-HABITAT (2015)

Medellí

n (CO)

Bogotá

(CO)

Qaliobia

(EG)

Santa

Marta (

CO)

Silay

(PH)

Iloilo

(PH)

Cagay

an de

Oro (PH

)

Rubav

u (RW)

Nyaga

tare (

RW)

Nampu

la (M

Z)

Nacala

(MZ)

0

50

100

150

200

250

300

350

From Transfers Locally Generated

Equally important ISSUES: Legal FrameworkClimate ChangeHousing and SlumsInequality and PovertyGender and Youth

The Three Legged Approach

Productivity = Good Urban Planning

+ Succesful Implementation of

Plans (Legal Framework and

Municipal Finance)

Sustainable Urbanisation can be achieve unlocking the Benefits from Economic Concentrations

Three Main Tasks: 1. Plan for Cities that Work

• Public Space• Mobility and Layout• Street Connectivity• Adequate Density• Slums Upgrading• Mixed Use

Main Challenge: Plan and implement city planning that creates efficient economic concentration

Problems to avoid: 1. Caracas: Traffic congestion makes

commuting times more than three hour, reinforcing informality.

2. Nairobi: Public space is 11%, out of 50% ideal level.

3. Cities in global South: urban sprawl is increasing, making service delivery expensive.

Residential Density and Services Expenditures

0 5000 10000 15000 20000 25000 30000 350000

10

20

30

40

50

60

70

f(x) = 17665.2574696181 x^-0.823008798345646R² = 0.84667011048301

Residential density (inhab/km²)

Ener

gy u

se p

er ca

pita

for p

rivat

e tr

ansp

ort

(GJ/

cap.

y)

Source: Urban Morphology Institute

Residential density in Grand Paris

Residential density in City of Johannesburg

The elasticity of energy use per km² for transportation with regard to residential density is about 0.18

15

Plan well ! The City you design will stay for at least 150 years

Source: World Bank (2010).

Infrastructure Built and Inertia to Change

Three Main Tasks: 2. Invest in Institutional Frameworks

• Land Readjustment• Plotting Codes• Building Rights• Land Registration

Main Challenge: Unlock Land Wealth, make it possible to purchase and extract value

Problems to avoid: 1. India: Lacks a transparent system to

purchase land, the current Eminem domain system is outdated and arbitrary.

2. Rwanda: Land registration process have several actors, and technical capacity is improving but limited. Heritage from different laws systems is complicated.

3. Egypt: progress but bottlenecks related with the authority of central governments and municipal authorities.

PILaR Project. La Candelaria. Medellín

Three Main Tasks: 3. Build Sustainable Municipal Finance

• Land Value Sharing• Property Tax with

Land Registration• Income and Services• Financial

Management• Creditworthiness

Main Challenges: Focus on endogenous sources of revenues and move to more complex financial products.

Problems to avoid:1. Peru: Decentralization of budget had two

results, in several provinces there is no capacity to implement.

2. Africa, several countries: Only 4% of the land is registered, 60% of cities are informal.

3. South East Asia: Municipalities too small to collect taxes, the effort cost more than the income.

Series10

2

4

6

8

10

12

14

Last Baseline -Local Revenus

Series10

2

4

6

8

10

12

14

Five Year Target 2020

Potential Revenue Generation Combining Land Value Sharing with Municipal Finance (Kiambu County , Kenya)

Source: UN-HABITAT (2015)

Financial Ideas from Global South

For example: 1. Mexico, Colombia, Brazil: Municipal Development Agencies in Latin

America, Banobras in Mexico, Findeter in Colombia, Caixa in Brazil.2. India: Development Corporations for Infrastructure in India,

Jawaharlal Nehru National Urban Renewal Mission.3. Philippines: Performance-Based Funding through Matching Grants.4. Indonesia: Capacity Building for Urban Infrastructure Management

in Indonesia.5. Uganda: Municipal Development Program, KCC linking registration,

property taxes and revenue enhancement.6. Myanmar: Small Scale Public Private Partnerships in local

governments

Emerging Issues for Cities of the Future in the Global South

Marco Kamiya

Long-term decline in built-up area densities in 25 selected cities

Urban sprawl is increasing making city management more expensive and less competitive

Source: UN Habitat (2013).

Planned City Extension in South Dhahram, Saudi Arabia

Source: UN Habitat (2013).

Challenges and Opportunities in the Global South

Challenges: • Urbanization must generate growth and Jobs.• Then, Good Urbanisation is needed, this must improve agglomeration

economies.• The urban economy to unlock its potential needs: Planned City

Extension, Legal Framework and Municipal Finance.• Financing is insufficient, development Banks and pooled finance

mechanism are needed.• …then converting investment in cities in productive poles.