38418 2006 ANNUAL REPORT CONTENTS Foreword ii POVERTY OF THE URBAN ENVIRONMENT 1 The Challenge 1 The City as the Solution? 3 Time to Choose 6 Building a Sustainable City 8 CITIES ALLIANCE IN ACTION 14 Lessons from City Development Strategies 15 Lessons from Slum Upgrading Activities 22 Sustainable Financing of Investments 31 CITIES ALLIANCE MEMBERS' REPORTS 36 LEARNING AND COMMUNICATIONS 48 Lessons from the Chile Evaluation 49 Lessons from the Yogyakarta, Indonesia, Evaluation 50 Knowledge-Sharing Activities 52 Knowledge Products Review 63 CITIES ALLIANCE ORGANIZATION 72 The Consultative Group 73 The Policy Advisory Board 74 The Secretariat 77 FINANCIALS 78 Endnotes 89 Abbreviations and Acronyms 91 Cover photo: "The city of Muntinlupa, Metro Manila, lies on the edge of Laguna de Bay, the largest lake in the Philippines." © William Cobbett/Cities Alliance, 2006. 2006 ANNUAL REPORT FOREWORD Our governments welcome the increasing sense of urgency that is now being paid to the environ- ment. No matter how belated, the recognition of the environmental consequences of the world's growing population, increased industrial growth and wasteful and unequal consumption have signalled the need for fundamental shifts in policy, and in the way we all live. DR. MÁRCIO FORTES Minister of State, Ministry of Cities, Brazil O n behalf of the Governments of The world's slums are as much an environmental Brazil, Nigeria and South Africa, concern as they are a concentration of urban we are proud to present the 2006 poverty and social exclusion. The consequences Annual report of the Cities Alliance, which high- of inappropriate national policy frameworks, and lights the linkages between the urban environ- under­resourced and poorly managed cities, include ment, economic growth and poverty reduction. the appalling living conditions endured by the urban By focusing on citywide slum upgrading and city poor, the increased incidences of preventable dis- development strategies, and by insisting that it is eases, shortened life spans, and unacceptably high the city that takes ownership and actively leads death rates. the process, the Cities Alliance provides a platform We believe that our towns and cities have an for its members to learn from cities all over the increasingly vital role to play in creating the condi- world. tions for sustainable economic growth, improved Our governments welcome the increasing sense environmental management and poverty reduction. of urgency that is now being paid to the environ- To help cities achieve these goals, national govern- ment. No matter how belated, the recognition of ments need to be constantly looking for creative the environmental consequences of the world's ways to strengthen local governments, match their growing population, increased industrial growth increased responsibilities with real resources, and and wasteful and unequal consumption have sig- ensure that national frameworks help, rather than nalled the need for fundamental shifts in policy, hinder, the developmental role of local governments. and in the way we all live. We joined the Cities Alliance because of the lead- The debate on global warming, however, has ing international role that it plays in providing sup- largely obscured the local and human dimensions port to those cities and countries that want to change: of environmental degradation. For hundreds cities and countries that wish to break out of short- of millions of poor people, the state of the environ- term developmental models, and focus on the sys- ment is neither a global threat, nor a future prob- temic changes that are required to ensure sustainable lem. Its neglect and mis-management has been, for economic growth, a protected urban environment for some decades, a life-threatening, daily reality. the city, and a meaningful citizenship for its residents. DR. OLUSEGUN DR. LINDIWE MIMIKO SISULU Minister for Minister of Housing and Urban Housing, Development, South Africa Nigeria POVERTY OF THE URBAN ENVIRONMENT It is the very same set of policy issues that perpetuates urban (and rural) poverty, allows corruption and constrains economic growth, that also encourages urban environmental degradation, inefficiency, dislocation and decline. The Challenge very common goods, particularly through pollu- tion, greenhouse gas emissions, deforestation, and depletion of water resources. Rapid urbanization T in developing countries has resulted in dramatic he demographic changes expected over environmental deterioration, severely affecting the the next decades have been well re- growing numbers of urban poor, with the impact hearsed. Each year more than 60 million on water being most acute. people are added to the global urban population. In Latin America has very high levels of urbanization, the next 25 years, the world's urban areas will grow but the region is still managing the consequences of by an estimated 1.8 billion people. Almost all this a largely unplanned transition and decades of poor growth will occur in the developing world. How this governance preceding democratization. However, urban expansion takes place has extremely signifi- the most significant shifts yet in the global urban cant implications, both for efforts to reduce the neg- landscape are under way in: (i) Sub-Saharan Africa, ative impacts on health and the built environment, which has recently been described by the United and for efforts to safeguard the natural resource base. Nations Environment Programme (UNEP) as a re- Urban areas depend on environmental services gion under environmental assault,1 where most of the for their survival. Urban dwellers draw from the urban transition is still to occur; and (ii) Asia, which surrounding areas for the water they drink, the air already has the largest numbers of people in slums. they breathe, the energy they use, and the food they Governments and cities have a unique, yet lim- eat. Yet, these urban dwellers pose a threat to these ited, opportunity to learn from mistakes elsewhere RURAL AND URBAN POPULATION BY REGION IN 2005 AND 2030 5,000 Rural population 2005 (millions) Urban population 2005 (millions) 4,000 Rural population 2030 (millions) Urban population 2030 (millions) 3,000 (millions) 2,000 Population 1,000 0 Europe North Africa Asia Latin Oceania America America and the Caribbean Source: United Nations, World Urbanization Prospects: The 2003 Revision. POVERTY OF THE URBAN ENVIRONMENT 1 and to avoid the costly consequences of failing to adequately plan for an increasingly urban future. By embracing the positive impacts of urbanization, governments have the opportunity to spur eco- nomic growth, avoid social attrition, and prevent social conflict, widespread urban degradation, and human misery. Yet, for a variety of reasons, neither policy frameworks nor infrastructural investments have kept up with urban growth and the pressure on environmental services in the developing world. The most essential and difficult decisions are not being made; consequently, the really important choices--those with long-term consequences--are being made by default. These choices are, almost invariably, the wrong ones. At the beginning of the 21st century, more than two centuries after Charles Dickens railed against the conditions of the poor in London's slums, the majority of the world's towns and cities have no sewerage. Globally, two-thirds of the sewage from urban areas is sent untreated into lakes, rivers, and coastal waters. Each year more than 450 cubic kilometres of wastewater is dumped into streams and rivers that are in many cases the source of urban potable water, and hundreds of thousands of urban dwellers die each year from diseases attributable to Woon-Ying unsafe water or inadequate sanitation. Less than a Siu/ third of municipal solid waste is properly handled UNEP or disposed of. According to the World Health Environmental pollution from heavy industrial waste in Yangzhou, China. Organization (WHO), 3 million people die an- nually as a result of outdoor air pollution from ve- ultimately, inefficient pursuit. Diarrhoea is the sec- hicles and industrial emissions; 1.6 million, as a ond most common cause of under-five mortality, result of indoor pollution from the use of solid fuel, accounting for some 1.3 million deaths annually. mostly in developing countries. These urban environmental issues are among the Millions of children cross streams of raw sewage most pressing problems facing developing cities daily, in many cases right at their own front door. today. Urban environmental degradation is human Because millions of poor people, mainly women and degradation; it is not an issue that can be resolved girls, have only sporadic or no formal access to by technological innovation alone. The poverty of potable water, obtaining it is a time-consuming and, the urban environment is not a marginal issue: 2 ANNUAL REPORT 2006 BOX 1. LINKING POVERTY AND ENVIRONMENT IN HYDERABAD, INDIA W ith a population of over 5 million, Hyderabad, India, is beset with severe environmental problems. Water and air pollution and poor sanitation take a heavy toll on the quality of life of city residents, impacting the urban poor most severely. It is estimated that Hyderabad's urban poor consti- tute 30­35 percent of the population, with many living in slums along polluted water courses and drainage ways. The linkages between urban growth, development, environ- ment, and poverty were examined in a case study in 2001, which concluded that "there are clear indications that environ- mental conditions; lack of safe drinking water, sanitation, air and water pollution, etc., adversely affect the living conditions of the poor through impacts on health. The burdens of disease and disability lead to loss of man­days and income, and to higher health care and medical costs for the poor. Thus, invest- ments in environmental infrastructure are warranted on grounds of improving productivity of the poor apart from pro- viding basic conditions for economic growth and job creation. Pictures Strategies of poverty alleviation . . . need to consider invest- Still/ ments in basic civic infrastructure . . . as important instruments for poverty alleviation."a Edwards Mark a"Cities Databook: Urban Indicators for Managing Cities," CD-ROM version, Manila, Asian Development Bank, 2001. Slum housing crowding a canal in Mumbai, India. there is a clear and consistent relationship between best hope for a sustainable future. Urban areas will weak systems of governance, corruption, urban certainly be the most significant sites of the strug- poverty, and a degraded urban environment. gle. As Achim Steiner, UNEP's newly appointed executive director has noted, "The quest for sus- The City as the Solution? tainability will be increasingly won or lost in our urban areas.2 It is imperative, therefore, to view Cities occupy just 2 percent of the Earth's surface, cities--and the mayors who run them--as essential yet their inhabitants already consume 75 percent allies in the struggle against urban environmental of the planet's natural resources for goods and ser- decay and poverty, not as their cause." vices, and 80 percent of global carbon dioxide emis- Cities are already the world's economic engines, sions originate in towns and cities. Although it has accounting for almost 80 percent of total economic become conventional wisdom for some that cities growth. Cities are also proven poverty fighters. are threats to both the global and the local environ- Urban dwellers have higher incomes than their ment, the world's urban areas may actually offer the rural counterparts and consume less energy per unit POVERTY OF THE URBAN ENVIRONMENT 3 of economic output. Cities provide formal and poor, whether codified in legislation or merely informal businesses with the benefits of agglomera- enforced through administrative practice. tion, saving costs by sharing markets and services. The immediate policy challenge therefore is first to As centres of wealth generation, well-run and em- place the urban environment high on every city's powered cities can generate vast amounts of finan- agenda and for them to design development strategies cial capital that can be used to reduce poverty and that target the linkages between urban poverty, urban improve the quality of life for urban dwellers. environmental degradation, and poor policy frame- However, too many national government devel- works. A central part of the solution will include poli- opmental and environmental policy frameworks cies that take the urban poor into consideration and have not kept pace with demographic shifts or with treat them as citizens, as an economic resource, and as facts on the ground. Indeed, development agencies willing contributors to the creation and protection of and governments alike need to move beyond the an improved urban environment. tired, sterile juxtaposition of rural and urban pov- Among the most pressing issues requiring polit- erty and promote a developmental paradigm that ical leadership and vision, especially in sub-Saharan assists the poor on the basis of their poverty--and Africa and south and southeast Asia, is getting pub- their latent ability to actively contribute to eco- lic authorities to take immediate steps to prevent nomic growth--rather than on the basis of their the next generation of slums. For a policy issue of location. such pressing economic, social, and environmental Far greater attention needs to be paid to the con- importance, it is truly remarkable how it continues tribution that urban growth can make to the re- to receive such scant attention. National and local duction of rural poverty, whether by expanding policy makers and international development agen- markets, stimulating agricultural productivity and rural incomes, or providing new opportunities for employment and remittances.3 It is at the city level that the limitations of sec- toral and project-based approaches to growth and development are exposed and the links between weak governance, poor policy choices, urban pov- erty, and urban environmental degradation become inseparable. Indeed, the city is precisely where the issue of the urban environment becomes--or should become--a core issue of urban management and not, as development practice has long indi- cated, a peripheral add-on. The very same set of policy issues that perpetuates Pictures urban (and rural) poverty, allows corruption, and Still/ constrains economic growth also encourages urban UNEP/ environmental degradation, inefficiency, disloca- tion, and decline. Many of these policies stem from A.Appelbee an indifferent, often hostile, attitude to the urban Awaiting the prevention of the next generation of slums in Manila, the Philippines. 4 ANNUAL REPORT 2006 cies alike need to respond to this urgent issue imme- sustainable and will certainly impose huge economic diately, as the developing world has only a small and environmental costs on those societies and chil- and rapidly diminishing window of opportunity. dren that can least afford them. Different policy decisions are urgently required. Consider the current situation: This urban growth has often been popularized as the creation of one new city per day (or per week). In the next two or three decades, the world will This may be good for headlines and for presenta- undergo the greatest and fastest demographic tions, but it is far removed from reality. Few, if any, population shift in its history; cities will be completely new: most urban growth This shift will take place almost exclusively in will take the form of increased densities in existing the poorest countries of the world; urban areas--or more likely in existing slums--and Few local and national governments have done anything to prepare for urban population growth; and, On the contrary, most governments have been in denial about urban growth, resulting in a refusal to plan or prepare for orderly urban expansion. As a consequence, urban expansion has taken place, and continues to take place, on sensitive land that should be left undisturbed, along rivers or canals, in protected areas, on marginal and danger- ous land, and on watersheds needed for supplying water to critical reservoirs. Newly built up areas now lack adequate roads or water, sufficient land for public facilities, or green spaces to act as the city's lungs. If the current policy frameworks in most de- veloping countries remain unchanged, future ur- ban growth--increasingly as a result of natural urban population growth, rather than of rural­ urban migration4--will continue to take place in areas of lower density, on marginal and dangerous sites, or on the urban periphery, often beyond municipal jurisdiction. The degradation of the urban environment will increase exponentially. In summary, the absence of even minimal prepa- Alliance ration for an urban expansion that is as certain as it Cities is unstoppable, is inefficient, inequitable, and un- Refuse heaps along the banks of the Mukuru canal, Nairobi, Kenya. POVERTY OF THE URBAN ENVIRONMENT 5 through the addition of new slums and the conver- sion of the urban periphery into slums. If current policies remain, this new urban expan- sion will take place without: formal water supply, adequate sanitation, waste collection, sustainable energy, good governance, planning, and permission. But it will take place. Time to Choose It should be clear that there is an urgent need to establish long-term policies and legislative frame- works predicated on an urban future and the pro- tection of the urban environment. These would include policies to actively plan for urban growth; UNEP to maximize the positive impacts of urbanization; Environmental degradation in one of Mumbai's slums. to reduce the environmental footprint of cities through sustainable energy, transport, and other environmental measures; to empower cities and However, city leaders often resist making long- their mayors; and to optimize opportunities for all term political and financial investments, whether in citizens, present and future. making land available for low-income settlement, From the standpoint of local governance, higher providing urban green space, or ensuring citywide density urban growth provides an opportunity sewage treatment. Such investments do not fit into to develop concentrated, efficient infrastructure. the short-term political imperatives that often drive Water, sewage, drainage, and transportation sys- the development agenda. More importantly, many tems can be developed in dense urban areas at a cities have neither the revenue streams to finance much lower cost per capita than in lower density these capital investments nor the comfort of stable rural or urban-sprawl areas. It is far less costly to intergovernmental transfers to plan for the medium avoid environmental degradation than to live with and long term. its consequences or to repair its damage, just as Environmental resources should, therefore, be anticipating urban growth and preventing slums are viewed as long-term assets, vital to a city's future. A infinitely more efficient than belatedly dealing with truly complete urban accounting would recognize the damage to humans and the urban environment and value the natural capital that is essential to the 20 or 30 years later, as is still common practice. city and its residents' well-being. Forests, water- 6 ANNUAL REPORT 2006 sheds, wetlands, vacant land, mineral resources, and the quality of life of their citizens, while the most pol- other natural resources all have a value that the city luted or degraded cities show a high correlation with should recognize and incorporate into its balance the weakest governance and administrative capacity. sheet and, ultimately, account for. Establishing metrics and incentives for cities to Furthermore, the environmental costs of a deci- develop sustainably must become part of a compre- sion, such as a reduction in ambient air quality, the hensive plan. To help their cities prepare for a sus- loss of biodiversity, the impact on children's health, tainable future, urban leaders need to articulate a or the diminution in public health from increased sustainable urban vision. They cannot develop that pollution, are usually never costed or factored into vision simply through a top-down process and an- decision making. Similarly, industry often does not nounce it to the public. Sustainability requires a include the costs of pollution in the costs of produc- fundamental transformation in attitude and behav- tion. Instead, it shifts those costs to the general pub- iour at the personal level, as well as at the govern- lic in the form of respiratory illness, disease, and mental level. Developing the vision and strategic environmental degradation. However, those cities plan to accomplish it, therefore, must be a commu- that have successfully implemented the rule that the nity-based process that involves all stakeholders-- polluter pays have improved their environment and local governments alone cannot transform a city.5 BOX 2. ENVIRONMENTAL PLANNING IN CURITIBA, BRAZIL C uritiba is the capital of Paraná State, Brazil. Its popula- by recycling programmes, a model transit system, and large tion has doubled to 1.6 million over the past 30 years. amounts of green space (nearly one-fifth of the city is park- Curitiba is more than a city with a number of exceptional proj- land, with, on average, 52 square metres of green space per ects. The key to its success is the cohesive strategy--with a person and 1.5 millions trees planted by volunteers along the focus on improving life for residents and on integrated plan- streets). Per capita income is 66 percent higher than the ning--that underpins all its projects. Specific goals are social Brazilian average. The city's 30-year economic growth rate is inclusion, accessibility, public amenities, urban transparency, 7.1 percent, significantly higher than the national average of efficiency, and environmental sustainability for the city and the 4.2 percent. Transportation and land-use planning are but two metropolitan area. A unique aspect of Curitiba's strategy is examples that reflect the city's people-first strategy and the how it maximizes the efficiency and productivity of transporta- benefits of integrated urban planning and systemwide sus- tion, land-use planning, and housing development by integrat- tainability. More than 2 million people a day use Curitiba's ing them so they support one another in improving residents' inexpensive and speedy transit service. Although the city has quality of life. more car owners per capita than anywhere else in Brazil, car traffic has declined by 30 percent, and atmospheric pollution is the lowest in the country. Downtown areas have been The results transformed into pedestrian venues, including a 24-hour mall Curitiba has high rates of recycling: 70 percent of the city's with shops, restaurants, cafes, and a street of flowers tended trash. Residents who live in shanty towns get free groceries by street children. This vibrant pedestrian zone encourages and bus tickets in exchange for their bags of garbage. They tourism, which generated $280 million in 1994, 4 percent of have access to social programmes and health services funded the city's net income. POVERTY OF THE URBAN ENVIRONMENT 7 Building a Sustainable City many cities, environment and energy considerations should become part of the core CDS process.6 The city development strategy (CDS) supported by A CDS is a powerful tool mayors can use to the Cities Alliance provides a methodology for may- bring together the knowledge, information, and ors, business leaders, and citizens to develop a sus- expertise they need to sustainably develop their tainable vision for their cities and a strategy for cities. By integrating environmental issues into achieving it. So far, however, comprehensive ap- policy documents such as the CDS or poverty- proaches to environmental sustainability are not yet reduction strategy papers, local governments can mainstream in many CDSs; nor is the environmen- ensure that environmental issues are included in tal sustainability linked to economic growth, local and national development strategies.7 Planners poverty reduction, and the other urban challenges to in different parts of the world have used a variety of be met by a well-executed CDS. Given the chal- tools to identify environmental actions within lenges of urban poverty, the growth of slums, rising CDS-like overall plans, such as ecoCity planning, energy costs, the vulnerability of freshwater sources, Strategic Environmental Assessment (SEA), and and urban sprawl and related mobility costs, as well integrated development planning. Such strategies as the increased frequency of natural hazards in can inspire and motivate constituencies and create BOX 3. REDUCING INDUSTRIAL BOX 4. SUSTAINABLE URBAN DEVELOPMENT POLLUTION IN CUBATÃO, BRAZIL IN PENANG, MALAYSIA T I he city of Cubatão, in São Paulo State, Brazil, n the late 1990s, government leaders in Penang were concerned has demonstrated the success of the commu- about the growing pollution of rivers and nearshore waters, the nity activism approach. In the 1970s, Cubatão was deterioration in air quality from industry and automobiles, and the known as the "valley of death" because of the environmental impacts of rapid development. In response to these extensive pollution from unregulated industrial environmental threats, Penang leaders realized they needed to raise development. Pollution control in industrial plants public awareness of sustainability issues and involve the community in was virtually unknown. Instead, industry shifted the planning process. They began by creating the Sustainable Penang the costs of its pollution onto the general public. initiative, modelling a sustainable community indicators programme The poor, who lived among the toxic-waste dumps, after the successful Sustainable Seattle project. bore the brunt of these costs in the form of sick- The Penang leaders convened public forums and discussion round- ness and disease. tables around the island so that citizens could discuss ecological In a model of community activism, the city's sustainability, economic productivity, social justice, and cultural urban poor and others organized a citizen's associ- ation of victims of pollution and bad living condi- vibrancy. Participants identified sustainability indicators that could be tions and brought public attention to this travesty. In used to monitor the environmental quality and sustainability of their 1983, the state environmental protection agency island, and new citizens' groups were formed to promote water conser- took action to correct the situation. It passed new vation, recycling, and the use of public transportation. regulations that required the industrial polluters to As a result of this grassroots initiative, government, civil society, absorb the costs of pollution control and, in less and the Penang business community formed partnerships to tackle than 10 years, these new regulations resulted in environmental problems and develop a more sustainable strategic dramatically reduced pollution levels. development plan for the island. 8 ANNUAL REPORT 2006 hope within communities. The action plans that emerge from the CDS process can serve as a frame- BOX 5. BALANCING THE URBAN work to guide and direct all future city investments ENVIRONMENT IN MARIKINA and donor contributions to improve the quality of CITY, PHILIPPINES life for all citizens. M The adoption of a vision for the city and the arikina City is part of the national capital establishment of a CDS should lay the groundwork region of Metro Manila, in the Philip- for the development of a more sustainable approach pines. With a population of some 400,000, Marikina has used the CDS process and the to city management. The CDS should particularly urban karte as a tool for "understanding pres- address the interrelationships in city operations ent conditions and trends, identifying issues between land-use planning, transportation, energy, and problems, and measuring existing urban resource management, and economic development. policy and achievements, in order to guide Land-use decisions affect the efficiency of trans- future development goals and strategies". As part of its CDS, Marikina City has priori- portation systems, infrastructure design, energy sys- tized a balanced urban environment, which it tems, municipal service delivery, and economic defines as a good blend of urbanization and a development patterns. Many cities, such as Brasilia, healthy environment. Strategies to achieve this adopted land-use policies that mistakenly limited started with a zero-tolerance response to illegal urban density, on the assumption that density is encroachment on public space and sidewalks, bad per se. This approach escalated the cost of inner- targeting transgressors from all economic classes. city housing and drove the urban poor to the out- skirts of the city without adequate services or The city relocated thousands of low-income infrastructure, a model that cities continue to repli- settlements from along the river and cre- cate throughout the developing world. ated a bicycle path in their place; A fundamental flaw of many urban development Expansion of green areas continues, with patterns is that they encourage use of private cars, the city planting 1,000 trees every month; rather than emphasizing transport nodes with high- The city has focused on a comprehensive waste-segregation programme, under- speed public transport, or running campaigns to scored by a large-scale education and infor- promote cyclists and pedestrians. These develop- mation campaign. ment patterns sacrifice green space and pedestrian areas for parking and spatially separated urban functions. Highway construction and roadway maintenance costs strangle city budgets, and urban such as floods, droughts, and storms; and facilitate the air pollution is emerging as a key threat to health, spread of disease. All of these have the capacity to the environment, the economy, and the quality of exact a huge toll on a city's basic services, infrastruc- life. To address the issue, it is essential to integrate ture, housing, human livelihoods, and health. In spatial and transport planning. addition, the urban sprawl that results from design- Vehicle emissions also contribute to global warm- ing the city around the car requires the inefficient and ing, often described as the single most important costly expansion of the city's entire infrastructure, threat to our planet. Climate change will cause sea lev- ignoring the public transport systems that can provide els to rise; increase the incidence of extreme weather, mobility to the middle classes and the urban poor POVERTY OF THE URBAN ENVIRONMENT 9 alike. Sprawl necessitates the expansion of water sys- tems, sewer lines, drainage culverts, and electricity networks, at an extremely high cost per capita. Although cities are large consumers of electrical power, demand-side management of electricity can significantly reduce this major cost in the city budget. It is often more cost-effective for a city to reduce its consumption than to accommodate additional demand through additional electrical generation. A city can sometimes implement energy- efficiency upgrades without increasing lifetime costs. Energy-efficient buildings can use new insu- NOWAK-UNEP lating materials, natural lighting, and ventilation to Vehicle emissions also contribute to global warming. reduce energy costs. Solar water heaters, compact fluorescent lighting, windmills, photovoltaic sys- tems, and liquid petroleum gas stoves offer sustain- energy by not having to build and power new water able alternatives in many emerging economies. systems. The question is how to provide the popu- Along the same line, cities can reduce daily water lation at large with financially sustainable incentives demand by providing rebates to residents who pur- to adopt such programmes. To implement these chase low-flush toilets and low-flow showerheads. programmes, the city needs to make long-term This means the city or utility saves money and environmental decisions, and such decisions will BOX 6. PROVIDING WATER SERVICES FOR THE POOR IN NAKURU, KENYA N akuru Municipality, located in the Rift Valley, in Kenya, problems. The council and the CBOs together developed water has a declining economy, crumbling infrastructure, and kiosks to supply safe, clean, and inexpensive water, focusing a high growth rate. Water supply falls short of demand, result- first on one low-income, under-serviced area. The council devel- ing in many low-income residents using what is considered oped a plan to construct five kiosks throughout the Ronda­ less than sanitary water. With the nearest river 27 kilometres Kaptempwo community so that no resident would have to walk away, Nakuru relies on boreholes for half of its meagre water more than a kilometre to find water. Each kiosk was to be built of supply, which currently falls 15,000­20,000 cubic metres stone, connected to the municipal water main, secured at night, short of daily demand. In the absence of a local supply, the and large enough to house the tap and its attendant. urban poor must retrieve water from long distances or pur- With funding from the Incentive Grants Project, the city chase it at considerable expense from local vendors. built the water kiosks. As a commitment to its ongoing rela- To address these concerns, Nakuru Municipal Council under- tionship with the community, the council turned over almost took a Local Agenda 21 planning process, with the local commu- all kiosk management to a community organization, creating nity and community-based organizations (CBOs). As a result of well-paying, long-term employment for several individuals, as this planning process, the council identified water and environ- well as building the capacity of the group to take on similar mental management (notably of solid waste) as the two key challenges in the future. 10 ANNUAL REPORT 2006 change priorities in revenue generation and expen- diture in the city budget, further reinforcing the integration of environmental issues. A good example of this approach is the ecoBud- get tool developed by the International Council for Local Environmental Initiatives (ICLEI), which pro- vides a city with a method of controlling its con- sumption of natural resources and environmental goods; it also provides a framework for political deci- sion making with a long-term goal of environmental sustainability. Similarly, the SEA has become an important instrument for identifying, measuring, and monitoring the environmental impacts of poli- cies and programmes of the European Union. City partnerships with civil society can also help mobilize human and financial resources for sustain- able development. Nongovernmental organizations Pictures (NGOs) often have specialized expertise and a dif- Still/ ferent perspective from that of the city government, while organizations formed and run by the urban Karasek poor can be crucial actors in addressing brown envi- Oldrich ronmental issues. In many countries, these organiza- Bicycle traffic in Chengdu, China. tions engage in community-driven initiatives for slum upgrading, particularly related to housing and improvement of water, sanitation, and local environ- mental services. A national project for the urban environment in Thailand, for example, promotes BOX 7. SAVING ENERGY IN AHMEDABAD, INDIA cooperation between more than 1,000 community I groups and organizations working for locally based n Ahmedabad, India, city officials replaced incandescent bulbs in street lights with compact florescent lamps. This reduced power improvements to the environment in poor areas. consumption for street lighting by 81 percent and, as it had in Hon- These local projects, largely led by women, have sig- olulu, dramatically reduced labour costs, because of the longer life nificantly improved water supply and waste removal, of the energy-efficient bulbs. Ahmedabad also enjoyed significant precisely the kind of environmental issues that most energy savings by placing capacitors in their water pumps. This directly affect the daily lives of the urban poor.8 measure reduced power consumption by 12.6 percent, saving As can be seen from the examples in the boxes, over Rs 2.6 million a year. By replacing its steel water pipes with many cities have responded to the urban environ- bigger diameter polyvinyl chloride piping, Ahmedabad reduced fric- ment challenge, recognizing the centrality of the tion in the pipes and improved energy efficiency. This one change issue to the economic and social future of the city alone will reduce energy consumption by an estimated 1.7 million and its citizens. In addition, many good city man- kilowatt hours each year and save the city more than Rs 4.48 mil- agers are already taking climate change into ac- lion annually. count. Over 80 cities worldwide have signed the San Francisco Urban Environment Accords, which POVERTY OF THE URBAN ENVIRONMENT 11 BOX 8. REVITALIZING THE RIVERS IN CHENGDU, CHINA I n the late 1990s, Chengdu, the capital of Sichuan Province, closed down, 478 were provided with incentives to under- was one of the most polluted cities in southwestern China. take technological improvements, and 40 were moved to The Fu and Nan rivers, part of the drainage basin of the an industrial park outside the city; Yangtze River, cradle the city. Pollution and poor infrastructure Treatment--About 26 kilometres of water discharge pipe created drastic variations in river behaviour, causing fluctuat- was laid along the riverbank to collect and transport ing dry and wet seasons and constant flooding. Shantytowns sewage to the sewage treatment plant. emerged by the riverbanks. These had poor living conditions Chengdu's project is unique in that it makes use of all and became breeding grounds for disease and crime, deterring possible resources. Through a set of policies and strategies, the city's social and economic growth. the project depended on community, private sector and civil The municipal government took time to find a solution to society participation, and networking, to realize its goal. This the rivers' drastic deterioration. After public consultation, the project has proven that a municipality can rely on natural city officially launched the $100 million Fu River and Nan resources and human efforts to work toward sustainable River Comprehensive Revitalization Project. development. The municipal government has shown that by The project had a wastewater treatment component setting out and implementing innovative and integrative poli- focusing on two main aspects: cies it can respond to the social, economic, and environmental Prevention--Approximately 1,000 enterprises were recog- needs of the community. nized as polluters: 488 old and outdated enterprises were mandate a 25 percent reduction in greenhouse gas amount of the resources available for city develop- emissions by 2030. Undeterred by their govern- ment and very often have even less of the available ment's rejection of the Kyoto Protocol, 238 mayors talent needed for urban innovation. The task re- from 41 US states have committed to the US May- quires city governments to enter into partnerships ors Climate Protection Agreement, in which they with civil society, NGOs, the business community, agreed to meet or surpass the Kyoto targets.9 The and community organizations, all sharing a vision South African city of Nelson Mandela Bay has for the city's future and all willing to dedicate their recently taken the lead in providing renewable efforts and resources to the task. energy sources for its residents through a combina- Cities have already demonstrated that they are tion of solar water-heating systems, thermal de- proven poverty fighters. They also need the tools to composition of solid waste and sewage sludge, and act as custodians of the environment. Most African cogeneration technologies.10 and many Asian cities now need to provide their res- idents and migrants with ladders to escape poverty Conclusion and, in so doing, create the conditions to promote the economic growth and manage and protect the Building sustainable cities cannot be the job of urban environment for future generations. The cur- city governments alone--they control a very small rent model is not a sustainable option.11 12 ANNUAL REPORT 2006 UNEP/ Yoshida Binsyo Industrial pollution in Osaka City, Japan. POVERTY OF THE URBAN ENVIRONMENT13 CITIES ALLIANCE IN ACTION The process of city empowerment-- involving, as it does the sharing of powers and responsibility--requires actions at the national and city levels, where international institutions can be of great help. H owever uneven the process, interna- Lessons from City tional recognition is growing of the Development Strategies role that empowered cities can play in responding to the needs of citizens and in creat- The premise of the city development strategy ing the conditions that facilitate local and nation- (CDS) is that well-positioned and well-timed stra- al economic growth. Although lack of experience tegic interventions by the public sector, the private and skills is a very real constraint for many cities in sector, and civil society can significantly alter a the developing world, especially after decades of city's development path.1 In other words, a combi- acting as the administrative arm of national gov- nation of vision, leadership, and concerted action ernments, more and more national governments by local leaders and citizens can dramatically and recognize the long-term benefits of encouraging permanently alter a city. cities to act as autonomous partners in governance Cities in developing countries face enormous and development. challenges and considerable uncertainty, as have This evolving situation is a vital part of the con- many developed cities before them. These chal- text within which the Cities Alliance works and lenges include unprecedented rates of urbanization, focuses on helping cities to: poorly maintained and outdated urban infrastruc- ture, extreme urban environmental degradation, Prepare city-level strategies and investment and declining economic prospects. To compound plans based on realistic resource commitments; these difficulties, global warming is expected to lead Improve access of the urban poor to basic to rising sea levels over the next decades, threaten- services through citywide slum upgrading ing hundreds of millions of people in industrialized programmes; and developing cities alike. Adopt sustainable financing for investments Given a competitive and uncertain economic linked to domestic sources of capital. environment, developing cities need sound ap- proaches to most effectively use their limited finan- All these strategies are successful to the extent cial and technical resources and to attract new that they address the needs of, and enjoy the sup- resources and investments. However, while local port and consent of, the people for whom they are authorities may have some political authority, they designed. generally control only a small portion of the This chapter reviews the efforts of cities, nation- resources they need to put their cities on a new al governments, and their development partners to development path. The real resources they need are move towards scale in tackling issues of urban with private interests and civil society and can be poverty, economic growth, and good governance. mobilized through public, private, and civil society This review also provides an opportunity for us to partnerships.2 reflect on some of the lessons emerging from Cities A key function of a CDS is providing an oppor- Alliance grants explicitly designed to facilitate tunity for cities, higher levels of government, and learning and to promote a comprehensive develop- their development partners to define growth trajec- mental approach. tories that are inclusive. The CDS process would CITIES ALLIANCE IN ACTION 15 ideally operate at two mutually reinforcing levels. First, it would operate at a micro (city) level, enabling the city to pause; take stock of its core business, namely, facilitating the production of growth-inducing and environment-enhancing pub- lic goods; identify gaps; and then prioritize an inclusive and financially sustainable growth strate- gy. Second, it would operate at higher levels, with cities working in partnership with higher levels of governments to identify the systemic reforms need- ed to technically, managerially, and financially empower cities. A good example of this iterative process at work at two levels of policy and city actions is the Cities Alliance grant to cities in the Philippines; these cities Pictures range in size from small and fairly rural towns, such Still/ as Bais and Dumaguete, to large cities in Metro Schytte Manila, such as Muntinlupa City and Marikina Jorgen City. These city governments have used CDSs to The Manila skyline at a busy traffic intersection. take stock, identify infrastructure needs, and priori- tize, ensuring links to domestic financing. Investments are made in initiatives ranging from the need to strengthen intergovernmental fiscal rela- growth- and mobility-inducing facilities, such as tions. The LCP members are using CDSs to argue roads to connect fragmented cities; to environment- more systemically for strengthened fiscal capacities enhancing assets, such as compost yards; to major and in partnership with the World Bank's new line upgrading of slums in cities such as Marikina (see of credit of $100 million. box 5 in previous chapter). Similarly, but in a vastly different geographic and The way the League of Cities of the Philippines institutional context, the Oblast of Vologda has used (LCP) has used CDSs has neither subverted tradi- the CDS grants to redesign institutional issues of tional physical planning nor supplemented existing intergovernmental responsibilities for service deliv- processes. For example, the CDS, driven by econom- ery at the macrolevel, as well as to define a cluster- ic and environmental considerations, has identified based growth strategy for the Vologda region at the new investments in public goods; these investments microlevel. This experience has probably energized have been grafted onto the physical master plan, other oblasts, particularly Stavropol and Chuvashia, which of course has the statutory authority. The to use CDS grants catalytically, but embedding them CDS process has also identified key institutional in existing systems to mitigate the risk of reliance on constraints on the ability of the cities to create infra- unsustainable donor-driven approaches. structure. Of particular concern are the incomplete In contrast, recent evaluations from the Indian implementation of the Local Government Code and city of Hyderabad suggest that the CDS (see box 1 16 ANNUAL REPORT 2006 in previous chapter) insufficiently integrated key looking at impacts on the quality and quantity of state agencies involved in services such as water. This public goods that the cities are in the core business fact, along with the lengthy process, impacted neg- of producing, the prospects for sustainability and atively on the direct investments needed to give the replication improve. CDS process credibility in the citizens' eyes. Third, cities should never implement a CDS in Similarly, in Indonesia, the CDS had a mixed out- a vacuum: there is always an existing system, how- come, largely because of its failure to promote nec- ever imperfect, within a legal framework. The great- essary changes at the national level or to enable links est challenge for cities in the developing world is to with domestic financing. deliver on their core business: the proactive devel- At least three major lessons can be drawn from opment of environmental and growth-inducing CDSs to date. First, to spread effects across cities infrastructure. within a country and over time under conditions of This focus requires empowered city govern- imperfect decentralization, cities need to work with ments with the authority to create, finance, and pay the higher tiers of government to promote the for public goods for their citizens over time. A suc- necessary systemic and institutional reforms. cessful CDS will unblock institutional constraints Conversely, mere macro level strategies or intense and promote partnerships with national govern- microattempts that ignore institutional constraints ments, all classes of residents, and the private sec- tend to weaken the prospects of change. tor. In short, a CDS will almost invariably require Second, cities need to work with systems and a change in a city's assumptions, priorities, decision avoid the temptation of ad-hoc initiatives. When making, and power structures. national governments and their development part- What, then, constitutes a high-quality CDS? ners have a clear vision of their respective expec- The Mumbai CDS is a good example of a coalition, tations and measure outcomes at both levels by with defined roles, using the CDS as a thinking and strategic forum to identify better ways of creating infrastructure and managing the processes of growth and poverty reduction. The experience of the Cities Alliance to date points to the importance of several key strategic thrusts within a successful CDS. These include: Local governments playing a key role in facili- tating economic growth, the central feature of a CDS; Pictures Realistic assessments of the resources and Still/ opportunities available; and, Schytte The involvement of investment partners in the CDS process from the outset and the identifi- Jorgen Busy street scene in Ouagadougou, Burkina Faso. cation of domestic sources of financing. CITIES ALLIANCE IN ACTION 17 Economic growth--the key to urban poverty cally been characterized by high levels of distrust. As reduction--needs to be facilitated by local Yemen presently lacks domestic resources for local government. infrastructure investments, World Bank credits were to prove instrumental in implementing the The economic future of all countries will more CDS action plan. While these first investments are and more be determined in their urban areas. In an important, over the medium to long term the prime uneven process, decentralization is shifting power driver of the strategy will be the private sector. and resources to cities and their citizens, raising the Because of the nascent state of private sector devel- importance of good city management and a city's opment in Aden, investments are still low, but they economic performance. As the cities will increas- should increase significantly. ingly rely on their own economic abilities and Cities in different parts of the world have recog- advantages, a CDS should have a local economic nized that involving the domestic private sector, development strategy at its core. including small and medium-sized enterprises, Cities and local governments can play a critical microenterprises, and representatives of the infor- role by providing conditions that actively encour- mal economy, is critical to overall success. CDS age private investment, risk-sharing, and economic processes can give a voice to the private sector and growth. They can maintain the appropriate regula- thus help the local government define its facilitative tory framework; ensure the provision and mainte- role in private sector investment. nance of public goods, such as infrastructure and The Bobo-Dioulasso CDS in Burkina Faso has a essential services; provide an effective and impartial strong focus on private sector development. One of administration; and systematically tackle corrup- the major outcomes of the CDS in Karu, Nigeria, was tion. Evaluations of completed CDSs demonstrate the creation of the Business and Economic that partnerships and the quality of city governance Development Committee (BEDC) to represent local are really key ingredients of a successful CDS; businesses, which opened channels for discussion indeed, it is often the quality of urban governance between the private sector and state and local govern- that divides declining cities from prosperous ones. ments on local and regional planning issues. The The Aden CDS is instructive. Aden, the port CDS for the region around Yogyakarta, in Indonesia, city of Yemen, recognized that private sector devel- includes an important component on the local and opment was instrumental to its future. The city regional economy, and the CDS cities in the realized that to attract private sector investment, Philippines have built up a marketplace for private building trust in the quality and consistency of local investment through their active and innovative use of governance was a critical step. The subsequent eval- the CDS process. uation of the Aden CDS showed that the strategy However, there are limits to what can be achieved emphasized building investor confidence, improv- by one tier (or sphere) of government working ing the business environment, and streamlining alone. It is vital to coordinate city-level economic regulation. Local stakeholders praised the process as development planning with the processes at the positive and innovative, particularly for starting a regional and national levels, since policies at these dialogue between the private sector and local gov- levels directly and indirectly influence local econom- ernment in a country where relations between the ic growth and urban competitiveness. In Aden, as business community and government have histori- elsewhere, all levels of government make critical 18 ANNUAL REPORT 2006 Bank World/ Karam Stephen The port city of Aden, Yemen. decisions affecting private sector investment. Port development, poverty reduction, environmental and airport investments, for example, both essential conservation and protection, and, more generally to Aden's economic growth, are the responsibility of speaking, improvements in the living conditions of national-level officials. Both national and local pol- residents. icy and regulatory reforms will be needed to create an enabling environment for local enterprise devel- A realistic assessment of the city's resources and opment, investment, and growth. opportunities is key to implementable CDSs. Finally, within a national enabling framework, it is at the local level where policy, regulatory reforms, Good-quality assessments, undertaken at the and public investments can most effectively assist outset, are the underpinning of the CDS process-- the poorest residents. For example, in Niger, with the stronger the assessment, the more likely it is that the Dosso and Maradi CDSs, each city mapped the strategy can be targeted, which is particularly poverty at the neighbourhood level and analyzed important for pro-poor strategies. The initial assess- prospects for economic development, focusing par- ment should identify the main driving forces of ticularly on the challenge of reaching the urban change, scan the overall features of the city, focus poor. Although the process is still incomplete, the on some of the more important ones (an activity Niger government encouraged the growth of cities often called scoping), identify indicators, and set by implementing policies to enhance political benchmarks for measuring the changes that the decentralization, with official seats on municipal CDS process will trigger. councils being filled directly from local popula- Each city needs to understand and fully exploit tions. These councils now freely exercise their legal its comparative advantages and focus on those powers, particularly in such areas as local economic goods or services that generate broad-based employ- CITIES ALLIANCE IN ACTION 19 ment. Priorities in assessment processes include Lessons from CDS assessment processes demon- identifying ways of improving the city's overall per- strate the general importance of: formance and efficiency, fostering the national and international competitiveness of the city, and pro- Formalization and structure of the assessment moting broad-based employment that intentional- process; ly includes the informal sector in job creation. Links to wider and regional or national processes; In Egypt, the Alexandria Local Economy Capacity of groups involved in the assessment, Assessment and Competitiveness report included roles of elected leaders, use of external consult- two main reasons to explain why only 31 percent ants, and degree to which the cities make use of of the governorate's population was active in research and data from partners and other the labour market: age and gender. An estimated resources within the city; and, 51 percent of Alexandria's population is under the Stakeholder participation, breadth of participa- age of 20 years, and participation by women in the tion, and its aims (data or information input, labour force is very low. Yet, to respond to the 1.2 strategic insight, or validation of assessment). million increase in population expected over the next 15 years (from 3.7 million in 2006 to 4.9 mil- The early involvement of investment partners lion in 2021), at least 40,000 new jobs will have to is key to success. be created every year for new entrants in the job market. An essential element of a CDS that sets it apart Tourism is one of the sectors envisioned as from conventional approaches to local develop- underpinning the Alexandria CDS. This sector ment is the importance attached to identifying would include cultural heritage tourists, MICE potential investment partners as early as possible in travel (meetings, incentives, conferences, events); the CDS process. This serves two purposes. Most SAVE travellers (scientific, academic, volunteer, obviously, it allows for potential investment part- educational); summer and family holidays; cruises; ners--be they multilateral development banks, adventure travel (yachting, water sports, archaeo- bilateral overseas development assistance providers, logical diving); and festivals. The Alexandria CDS or private and public sector investors--to provide team has completed a comprehensive assessment of their own input. It also ensures that the strategy is the sector's weaknesses and growth potentials, based on a realistic and pragmatic assessment of the opening the way for the governorate to investigate financial situation and doesn't become a wish list some projects to develop the tourism sector, in part- for which funding is subsequently solicited. nership with the private sector. Examples of early planning to attract invest- The success of Alexandria's consultative process ment, taken from Cities Alliance proposals and had a positive influence on the Egyptian govern- evaluations for 2005, are the following: ment, which recently decided to mainstream the CDS as a broader based approach to urban devel- China has abundant domestic capital available opment. The CDS strategic planning process is for local-authority investments in infrastruc- now mandatory for all other governorates, as artic- ture. In the case of the Chengdu CDS (see box ulated under the new "Unified Construction 8), the financial analysis established the city's Code". fiscal capacity to implement the resulting plan. 20 ANNUAL REPORT 2006 The analysis included an assessment of total built under the CDS process with GTZ­KfW, revenues and expenditures (on and off budget), UN-Habitat, the United States Agency for current and projected debt loads, adequacy of International Development (USAID), the operation and maintenance funding, and insti- Japan Bank for International Cooperation tutional setup. A first task was to create a com- (JBIC), and the Social Fund; most of them plete picture of the municipality's financial sit- were fully engaged in the CDS work in uation to use as a basis for discussions with Alexandria and showed a commitment to sup- investment partners and lenders. plying parallel financing or funding to the The Alexandria CDS process succeeded in project proposed in Alexandria. All these new attracting many new projects and investments investments and projects are coordinated and for the city to be financed by the Government designed within the scope of the new strategic of Egypt and donor agencies (GTZ­KfW, framework, which ensures a long-term sustain- UN-Habitat, Social Fund, Bibliotheca able development for the city. The commit- Alexandrina, Canadian International Develop- ment from all local stakeholders, central gov- ment Agency (CIDA), International Finance ernment, and donor agencies and the Corporation (IFC), and UNICEF­AUDI). successful broad-based consultation process The Government of Egypt has requested a established under the first CDS provide a tan- World Bank project, an Alexandria Growth gible asset for the next phases. Pole project, and an Aden Growth Pole proj- In India, as elsewhere, the defining trend of the ect (Specific Investment Loan), $100 million last decade has been decentralization and, with over five years, basically to implement the it, the growing recognition that cities need to three components of the CDS. The proposed transform themselves into proactive developers project builds on a strong donor partnership of infrastructure if they are to meet the chal- lenges of growth and urban poverty. This process of empowerment is the basis of the Government of India's national initiative, launched in 2005, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). The JNNURM has, as its fundamental premise, three interrelated actions that need to be taken so that cities can finance, create, and pay for basic infrastructure. These actions are: (i) insti- tutional reforms that empower cities; (ii) inclu- sive city strategies, with explicit recognition of the problems of the slums; and (iii) sustainable Pictures financing of city requirements through im- Still/ proved links to domestic markets. The entire process of implementation involves continual Ullstein--Joker interface with civil society, as well as having rat- View of the Bay of Alexandria. ing agencies do performance monitoring of the CITIES ALLIANCE IN ACTION 21 cities, promoting greater accountability of city Cities within the same country often suffer from governments' management and provision of many of the same obstacles and constraints. basic services. National associations of local governments can be The huge costs of JNNURM will be covered effective in obtaining the necessary political and by public sector finance from the central and programmatic support from national government. state governments, as well as by funding lever- National cities networks such as the League of cities aged from the local capital market by local urban of the Philippines (LCP), the South African Cities bodies. To apply for grants under JNNURM, Network (SACN), the South African Local the government requires eligible cities to: Government Association (SALGA), or the network of eight CDS cities in Latvia can offer valuable Formulate a medium-term City strategic support and capacity. Development Plan (CDP); Prepare project proposals; Define a schedule for implementation of Lessons from Slum reforms; and, Identify cofinancing sources to match gov- Upgrading Activities ernment funds. The second substantive platform of Cities Alliance assistance is support for cities undertaking citywide JNNURM holds the promise of making Indian slum-upgrading programmes and, thus, imple- cities more economically productive, efficient, equitable, and responsive to the needs of their pop- menting strategies that anticipate future urban ulations. growth and thereby help to prevent the growth of the next generation of slums. From the perspective of the Cities Alliance and Challenges its members, analysis of the global slum problem has The CDS can function as an extremely effective tool paid too much attention to debating the size and for raising the rate and sustainability of local econom- extent of the problem, rather than focusing on the ic growth, allowing local governments to move beyond mere administra- Bamako, Mali tion of the city to the stimu- lation of private sector investment and employ- ment generation. A good CDS helps local govern- ments identify priorities, improve administration, strengthen citizen involve- ment, and identify specific actions to reduce constraints on investment and employ- T1: 14-Nov-86 T2: 25-Oct-99 ment. Source: The Dynamics of Global Urban Expansion, Angel, Sheppard and Civco. p 115. 22 ANNUAL REPORT 2006 BOX 9. SCALING UP SLUM UPGRADING IN THAILAND "W e all need to think about the processes munities, which plan and carry out improvements to that will allow all "slum" and squatter their housing environment and basic services. The households in a nation to achieve the "significant Community Organisations Development Institute improvements" that the Millennium Development (CODI) carries out the Baan Mankong programme. Goals demand. Many upgrading and new housing Among the features of this programme are the development programmes have "significantly following: improved the lives of slum dwellers", but almost never on a scale that significantly reduces the prob- Urban-poor community organizations and their lem. In most nations, more is needed than just networks are the key actors, and they control the increasing the support to conventional upgrading funding and the management. They (rather than and new housing projects."a contractors) also undertake most of the building, In January 2003, the Thai government which makes funding go much farther and allows announced two new programmes for the urban for their own contributions; poor, seeking to reach 1 million low-income house- More than physical upgrading is involved. holds within five years. The first was the Baan Communities design and manage their own phys- Mankong ("secure housing") programme. This pro- ical improvements, stimulating deeper but less gramme channels infrastructure subsidies and hous- tangible changes in social structures and mana- ing loans directly from the government to poor com- gerial systems and instilling confidence among poor communities. The programme also changes their relationships with local government and other key actors; and, Urban-poor communities are developed as an integrated part of the city. People plan their own upgrading within the city's development frame- work, so their local housing development plan is integrated within city planning and CDS. The second is the Baan Ua Arthorn (We Care) programme, through which the National Housing Authority designs, constructs, and sells ready-to- occupy flats and houses at subsidized rates to lower income households that can afford rent-to-own pay- ments of $25­$37 a month. Pictures Source: Somsook Boonyabancha, "Baan Mankong: Going Still/ to scale with `slum' and squatter upgrading in Thailand", Environment and Urbanization 17 (1): 21­46. a. Somsook Boonyabancha, director of Community Organisations Development Institute (CODI) and founder Jearanaikul-UNEP and secretary-general of the Asian Coalition for Housing Bangkok cityscape. Rights (ACHR). CITIES ALLIANCE IN ACTION 23 main causes of the growth of slums, and identifying Another reason to move beyond debating the strategies that will allow cities and countries to mere scale of the problem is that it obscures the very address existing backlogs and get ahead of the curve. real progress being made in many cities and coun- Viewed from a global perspective, the prime tries in different parts of the world. In countries as cause for the proliferation of slums remains a diverse as Chile, Egypt, Ethiopia, Morocco, combination of weak governance and inappropri- India, the Philippines, Senegal, and Thailand, the ate policy frameworks, often guided by an anti- Cities without Slums message (United Nations urban-growth attitude and a deep-seated hostility Millennium Development Goals [MDGs] target toward the urban poor. The need for a decisive shift 11) is gaining momentum, with new policy initia- to forward-looking and inclusive policies is ext- tives and programmes being implemented. In these remely urgent, especially in much of sub-Saharan and other countries, the political will to upgrade Africa and in south and Southeast Asia. slums is growing, and the Cities Alliance is pleased Consider the known facts. Over the last 50 years, to be supporting more local and national govern- the global population living in slums has risen more ments in long-term, citywide and nationwide than 25-fold, from 35 million to more than approaches to tackle the systemic causes of inequal- 900 million. Much of this growth in slums is driv- ity, social exclusion, and economic decline. en by growth in the urban population, whether However, these trends need to be urgently scaled from in-migration or from natural population up, and also reinforced by more proactive assistance growth. Unless governments combine the vision from international development agencies, many of and resources needed to anticipate and provide for whom have yet to adopt forward-looking urban this urban growth--which is certain, predictable, policies. and unstoppable--this number could double again Building on its slum upgrading efforts to date, in the next 30 years. the Senegalese government, together with the Given current trends, with average urban densi- Association of Mayors of Senegal and with support ties declining at an annual global rate of 1.7 percent, from Cities Alliance members, is developing a this doubling of the developing world's urban pop- national Villes sans bidonvilles (Cities Without ulation will triple the size of urban areas.3 As a recent Slums) programme, with a 10-year action plan to landmark study pointed out, national and local upgrade existing slums and introduce policies to authorities in developing countries should be mak- avoid the development of new ones. ing realistic, if minimal, plans for urban expansion, Slum upgrading is a national priority in Mo- designating adequate areas to accommodate the pro- rocco, where a coalition of Cities Alliance members jected expansion, investing in basic trunk infra- is actively supporting a six-year nationwide Villes structure to serve it, and protecting sensitive land sans bidonvilles programme to provide decent from the incursion of new urban development.4 accommodation for the 212,000 households living Anticipating this growth is critical for cities and in urban slums across the country. countries if they are to benefit from higher perform- In Thailand, the government has undertaken to ance urbanization and have an impact on poverty provide and facilitate housing delivery for 1 million alleviation and prevention, environmental sustain- households over five years. Its ambitious and large- ability, and higher standards of living. ly home-grown cities without slums programme is 24 ANNUAL REPORT 2006 BOX 10. UPGRADING 200 BARRIOS IN CHILE C fact that Chile arguably now offers the highest capi- hile has a resolute history of targeted social tal housing subsidy in the developing world, it also investments and one of the most consistent has a growing underserved population that is below housing policies in the developing world. Over the the national standard of housing and is marginalized past three decades, Chile has centred its housing from the full range of services. policy on an ambitious and robust subsidy pro- Responding to this scenario, the new govern- gramme for housing the poor. The country has ment of President Michelle Bachelet has introduced implemented a wide range of housing programmes a bold and wide-ranging programme aimed at rem- funded through a combination of savings, subsidies, edying some of the more obvious inequities evident and credits at market rates. The centrepiece ap- in this society, some of which are legacies of the proach has been the large-scale production of mod- dictatorship. Hoping to avoid the more glaring mis- est but completed houses on serviced land for low- takes, which left some public-housing blocks under income households. Although this strategy has consideration for demolition, the administration is produced a large housing stock, it has also con- turning to shelter programmes as vehicles for social tributed to new social problems and the creation of inclusion. some ghettoes. In addition, the government has The Bachelet administration now places far struggled to reach the very poorest in its subsidy pro- more emphasis on consultative and participatory gramme and has had very limited success in attract- approaches to housing and urban development. ing the private sector as a risk-sharing partner in the Among the four priority programmes is a multidisci- bottom segments of the market. Notwithstanding the plinary programme to promote the integrated social regeneration of some 200 communities throughout Chile. It is a national programme of upgrading, community participation, and social integration; the goal is to improve the neighbourhoods and build communities of participating citizens. These poor neighbourhoods, or barrios, have the worst con- centrations of urban poverty and social vulnerability, or they represent significant social deterioration. The 200 Barrio goals are attainable because there are already good signs of progress and good experi- ences to build on. Recently, with the support of the GTZ and the Cities Alliance, a special Ministry of Housing programme made subsidies more accessi- ble to the poorest communities and encouraged municipalities to use them to upgrade housing and neighbourhoods. For example, Mayor Castro Medina, in the small municipality of Santa Juana, drew on the community-participation approach and Alliance helped the very poorest break out of appalling living Cities conditions and move into well-located, humane, and New housing scheme, Santa Juana, Chile. habitable housing. CITIES ALLIANCE IN ACTION 25 both unconventional and highly innovative and is base. The Dar es Salaam city council has also had based on a communal approach to citywide slum the foresight--lacking in so many other cities--to upgrading. include the design of a long-term sustainable This approach relies on a high level of social financing strategy for settlement upgrading as a mobilization and organization, with communities, central part of this citywide programme. local governments, and affected stakeholders plan- The Cities Alliance is supporting Metro Ma- ning an upgrading process to improve all commu- nila's Cities without Slums initiative to develop a nities within the city. The Thai initiative highlights 15-year citywide strategy that includes shelter and how citywide slum upgrading and CDS can go neighbourhood upgrading and components for hand in hand and, with strong community partici- social development and improved income security pation, take upgrading to scale. for the poor. The experiences will be closely moni- In China, where urban-policy discussions have tored and documented to inform policy and facili- generally focused on producing new urban areas at tate national replication. the edge of existing cities or on creating whole new For Nigeria's coastal city­state and former capi- urban centres in rapidly urbanizing regions, the tal, Lagos, the state government has come to see existing built-up areas, including an extensive hous- slum upgrading, and policies to prevent the growth ing stock built at least 20 years ago or more, have of future slums, as the only realistic option for been neglected. improving the lives of the poor. With a current esti- In the urban areas of Yangzhou, where about mated population of 11.14 million,5 larger than 15,000 apartments spring up each year, the munic- that of 37 African countries and growing annually ipal government is developing a citywide upgrading at 4.8 percent, Lagos is expected to be home to strategy that would incorporate the older stock of more than 17 million people by 2015. Close to buildings into the overall CDS, to maintain and support social and economic inclusion. In Tanzania, the Dar es Salaam city council and its three municipalities, Ilala, Kinondoni, and Temeke, have a citywide strategy to address the challenges of unplanned and unserviced settle- ments, working with the urban poor and the private sector to achieve a Dar es Salaam without slums by 2015. With approximately 70 percent of the population living in unplanned and unserviced set- tlements and the city attracting some 100,000 mi- grants annually, Dar es Salaam developed its strat- Pictures egy in collaboration with the national government. Still/ The strategy aims to prevent the growth of new Thege slums and overdensification by regularizing land tenure and issuing residential certificates to provide Charlotte security of tenure and increase the city's revenue Dar es Salaam, Tanzania, with the port in the background. 26 ANNUAL REPORT 2006 70 percent of the city's population currently lives in slums--and growing at 8.9 percent per year. These slums remain a stark manifestation of poor urban policy, particularly with respect to shelter and land.6 A major challenge under current budget con- straints is providing social services and developing infrastructure for this economy. The state of Lagos has an annual budget of about $650 million. By contrast, Mumbai and Jakarta--each, like Lagos, with populations of 11 million--have annual bud- gets of $1.6 billion and $1 billion, respectively.7 The demonstrated commitment of Lagos State's elected officials to formulate explicit development strategies in consultation with the private sector and civil society was catalytic in sparking an intense and comprehensive policy dialogue with the World Bank in 2003. Since then, through the use of cross- cutting analytic tools, Lagos has identified strate- gic, optimal and local interventions for private sec- Pictures tor-led job creation and improved service delivery, Still/ to tackle simultaneously growth and poverty reduc- tion. These include targeted investments in the Cleyne economic and social infrastructure sectors, as well Edgar Lagos cityscape. as substantial reforms for sustainability, some of which are being supported by the Lagos Metro- politan Development and Governance Project. In As already noted, the political will to undertake keeping with the partnership principles of coherent and sustain slum upgrading is evidently growing, donor efforts to support Lagos government priori- and more countries will soon rise to the challenge ties, the UK Department of International Devel- of developing city- and nationwide slum-upgrading opment (DFID) is working with Lagos to sustain strategies. Experience to date has underscored a the gains made by the state government on the rev- number of essential ingredients for sustainable enue side, while the World Bank is supporting upgrading strategies: improved budgeting, expenditure management and results monitoring. Additional support from Making slum upgrading a core business, the Open Society Initiative, the Ford Foundation nationally and locally, particularly through a and DFID complement Lagos' own pioneering ini- budgetary commitment; tiatives to enhance access to justice, particularly for Implementing necessary policy reforms related the poor. to land, finance, and institutional frameworks; CITIES ALLIANCE IN ACTION 27 Setting clear national and city targets and beneficiaries of which are the informal service engaging stakeholders in planning and providers or their intermediaries. The primary par- monitoring results to ensure public sector ties both lose--the local authority, because it does accountability; not receive the revenue for services rendered; and Mobilizing non­public sector resources, engag- the consumer, because he or she invariably ends up ing the private sector as a risk-sharing partner paying the highest unit cost for essential services. and engaging the slum dwellers themselves, The costs of parallel markets created by policy who have both the ability and the interest to failure--be they increased costs of services, lost promote upgrading; revenue, protracted governance problems, or the Recognizing and facilitating the contribution of premium paid by the poor--only reinforce the the informal sector to shelter production, eco- need to prepare for future growth and prevent new nomic growth, and the provision of services; slums. Ensuring open and transparent land markets, With respect to the huge challenge of upgrading to discourage corruption, patronage, exploita- the slums and providing new housing, the tion of the urban poor; Government of Maharashtra has decided to with- Promoting flexible approaches to resolve land draw from directly providing housing and main- ownership uncertainty and to provide secure taining certain buildings. It has concluded that con- tenure; stant state intervention over the past 30­40 years Integrating the poor into decision-making proc- has not led to any significant improvement in the esses and building the social capital in poor com- city's housing scenario.8 munities for sustainability; and, most critically, The scale of the problems is enormous: for Taking urgent steps to prevent the creation of example, an estimated 19,000 buildings, most of the next generation of slums. which are more than 50 years old, have been badly neglected as a result of rent-control policies. Else- Arguably, the world's slums constitute the great- where, it is estimated that the city will need to est concentration of development deficits. This recover some 100 kilometres of pavement from the issue cuts across the MDGs for poverty, education, families that have been living there, in many gender inequality, child mortality, disease, de- instances for more than 20 years. The city resettled graded environments, and so on. While the great- the first 83 families in 2006, setting an important est impact of slum upgrading would clearly be on precedent. Some 25,000 families are due to be re- the lives of slum dwellers, most particularly women settled over a two-year period. and children, social and economic benefits would Other major initiatives are the following: also accrue to society at large and the public and pri- vate sectors. Redevelopment of Dharavi slum, reputedly However, where local governments fail to pro- Asia's largest, over seven years, and the rehabili- vide services and the poor are left to fend for them- tation of some 52,000 families; selves, one of the most insidious outcomes is the Complete replenishment of Mumbai's ancient creation of informal, parallel markets, the main taxi fleet; 28 ANNUAL REPORT 2006 BOX 11. TRANSFORMING MUMBAI D efying its many sceptics, the ambitious trans- However, for Mumbai to significantly transform formation of Mumbai is beginning to take itself, the Government of Maharashtra believes that shape, and change is slowly becoming visible in this the metropolitan region will need to sustain an eco- enormous city. Driven initially by the private sector, nomic growth rate of 10 percent per year. Such an which had become increasingly concerned by the ambitious growth rate would require some funda- long-term decline of India's commercial capital, the mental reforms, including those that have been con- Government of Maharashtra is now leading efforts sistently neglected, even though they have long ago to transform Mumbai into a world-class city. been identified. The city of Mumbai lies at the core of the larger Central challenges include outdated regulatory Mumbai Metropolitan Region, which comprises regimes that constrain Mumbai's land markets and seven municipal corporations and 13 municipal often result in land and property prices that are councils and has a population of around 20 million. higher than in Manhattan or Shanghai. These prices The per capita GDP of the metropolitan region (Rs ensure that not only the very poor live in Mumbai's 62,000 [Indian rupees]) is more than double that of slums, which are currently home to about 54 per- the rest of Maharashtra (Rs 28,000).a cent of the population. The real estate market is con- strained by, inter alia, the Urban Land Ceiling Act and an outdated rent-control regime that does not allow the city to capture revenue from increased real estate values. Despite the extremely high real estate values, the state of the public infrastructure in Mumbai is extremely poor. The consequences of decades of underinvestment in infrastructure and maintenance, particularly in sewerage, storm water drainage, and solid waste management, were painfully exposed in the flooding that caused widespread damage to peo- ple and property on July 26, 2005. The Mumbai transformation is predicated on a number of core strategies to achieve a significantly higher rate of growth and greatly enhanced tax rev- enues. Central to the city's transformation is giving priority to improved infrastructure. The Government of Maharashtra has estimated investment require- ments of some $60 billion, focusing on the road and Pictures rail networks, reliable power supplies, the port and Still/ the airport, and water and sanitation systems. Boethling aAs of September 2006, the exchange rate was Joerg $1 = 46.67600 Indian rupees. Traffic on Marine Drive, Mumbai. CITIES ALLIANCE IN ACTION 29 MMRDA Mumbai Land Use Plan. 30 ANNUAL REPORT 2006 Redevelopment of Mithi River and the conse- Rational, predictable devolution of powers to quent resettlement of 3,600 slum dwellers; local authorities, with legal frameworks for Expansion of a rail-based mass transit system; borrowing; Completion of the dramatic Bandra Worli Sea Domestic market­oriented financial intermedi- Link Project and the Worli-Nariman Sealink aries working with cities; and, Project, a highway built above the sea and run- The fiscal space to enable affordable long-term ning parallel to and 150­200 metres from the interest rates for financing city infrastructure. shore; and, A proposed 22 kilometre six-lane trans-harbour Clearly, the actions needed to access finance and bridge, to be entirely funded by private equity. design city strategies reinforce each other. For pri- vate investors to feel comfortable lending to cities, The Cities Alliance has contributed to these broad-based inclusive investment plans and city- efforts by funding a number of World Bank studies level fiscal and managerial autonomy are key. These for the Government of Maharashtra and, more im- factors determine the markets' perception of credit portantly, by funding the Mumbai Transformation quality and enhance security for lenders. Naturally, Support Unit (MTSU). This unit provides dedicat- when assessing credit quality, commercial finan- ed and high-quality support to the Government of ciers attach a high value to the comprehensiveness Maharashtra and, in particular, to the director of and realism of investment plans and the predictabil- special projects, a post created specifically to ity of transfers and local management. oversee the transformation. City experiences in accessing markets show that the usual risks associated with political cycles are Sustainable Financing mitigated if the proposed investments are part of a broad strategy that has wide public support, are of Investments transparently procured, and are financed by taxes and charges affordable to the people they are de- Often, a measure of the sustainability of an urban signed to serve. For example, a wastewater invest- development strategy can be a city's continued ment based on affordable user charges and cover- access to domestic sources of finance. Cities can ing all sections of the urban population has a best secure this access by demonstrating a stable and predictable revenue stream over time, providing greater chance of finding private sources of credit comfort to potential investors. Key ingredients for than investments in better-off neighbourhoods linking city financing needs with domestic capital without sufficient geographic­demographic link- include: ages. Further, experience demonstrates that pri- vate capital requires greater security when invest- City development and investment strategies ments have been perceived as exclusive and with resource commitments and priorities con- procured on a noncompetitive basis. Public infra- sented to by the governed; structure, even if financed through private On-budget investments that make provision sources, is ultimately paid for from public sources for the needs of the urban poor of finance, such as taxes and user charges, and a CITIES ALLIANCE IN ACTION 31 including practitioners from the commercial sector. However, the weakness of the site is the lack of its interactivity with city-level practitioners. This problem is perhaps partially attributable to the dif- ficulties the MFTF encountered in organizing and energizing discussion on key challenges in different regions: fiscal space in Latin America and the Caribbean, messy decentralization processes in South Asia, and supply-side reform in the transi- tional economies. Getting the MFTF to organize action-oriented research on these issues might result Pictures Still in greater connectivity with city financing chal- lenges, especially if led by Cities Alliance members Edwards/ such as United Cities and Local Governments Mark (UCLG)--a natural grounding place for the MFTF Road construction in Bogota, Colombia. itself, in the medium to longer term. Sustainable Financing Activities demonstration of efficiency in procurement enhances community acceptance of pricing and, The Cities Alliance has supported initiatives on sus- hence, credit quality. tainable financing by way of partnerships between Recognizing this linkage, the Cities Alliance, as cities, national governments, and their develop- a learning alliance, has attempted to deepen its ment partners. Described below are some of the understanding of the cross-cutting nature of a initiatives that members have undertaken on both developing city's challenges and opportunities at the demand side and the supply side. both the macrolevel and the microlevel. First, through the Municipal Finance Task Force Demand-side interventions (MFTF), a space has been made available for cities, national governments, and their development part- From the perspective of sustainable finance, ners to process information from field experiences. demand-side interventions aim at empowering Second, the Cities Alliance gives grants based on cities to design, finance, and create infrastructure partnerships between cities and national govern- and pay for its use over time by blending market ments that improve the cities' prospects of linking finance and grants. Operationally, where grants are up with domestic capital. involved, this would imply the design of incentive- compatible grant systems with strong collection performance at the local level. The following case The MFTF Web Site study from Pakistan provides a good example. The MFTF Web site was launched in September The Cities Alliance has made available a CDS 2005. It has positioned itself as a considerable ref- grant to the Government of Punjab, one of the erence and archival tool and has a variety of users, most active provincial governments in implement- 32 ANNUAL REPORT 2006 ing decentralization. The province is using the transfers and their legal underpinning. The recent grant to develop a performance-based system that Cities Alliance grant to Zambia is an example of an will require local governments to link performance ongoing effort to move from ad hoc decision mak- with grants for identified prioritized investments. ing towards a more predictable system. Consequently, local governments will be required Since the 1980s the Zambian government has to produce CDS plans that take citizen demands taken away many revenue sources from the local and needs into account, identify priority invest- governments and failed to meet its obligations to ments, and lay out the improvements in adminis- pay the local government various rates and grants. trative, financial, and services delivery performance As a result, local governments have accrued un- needed for implementing such plans. The provin- sustainable debt (currently about Kw 65 billion cial government must also develop guidelines for [Zambian kwacha] collectively). The government the planning process, indicators to measure the per- has financed the settlement of debts with Kw 2.6 formance of local governments, and a monitoring billion in fiscal 2003, Kw 25 billion in fiscal 2005, system to ensure that the objectives of the grant and Kw 25 billion projected for fiscal 2006.9 A programme are met. Decentralization Secretariat has been finalizing a Alongside designing incentive-compatible grant medium-term decentralization implementation mechanisms, a key variable that supports market plan. A Cities Alliance grant supports the govern- financing is rational and stable transfers. Indeed, ment's efforts to improve the rationality of the financial markets and rating agencies tend to place transfer system. an emphasis on the institutional framework of the Sustainable financing also requires that the functional and geographical fragmentation of key services at the city level be addressed. In far too many cities, responsibilities for key services, such as water, are fragmented, with overlapping or competing functions or geographical areas. These confused institutional arrangements often have a negative impact on service delivery and accounta- bility and mitigate against sustainable financing. To some extent, the global trend of asymmetri- cal decentralization has exacerbated this frag- mentation, with significant mismatches between the devolution of responsibilities and the devolu- tion of powers, particularly the power to raise resources. Bank Stavropol and Chuvashia, two regions in Russia, World/ are still navigating an incomplete decentralization Huffman process, and the devolution of powers between the regions and the cities is not yet fully defined. The Edwin Lusaka cityscape. decentralization process requires clearer articulation CITIES ALLIANCE IN ACTION 33 of duties and responsibilities, especially for infra- main capitalization sources have been central bud- structure service provision, which affects the urban get allocations, donor loans, loan repayments, and poor. In the case of Stavropol, the issue of who bond issues sold to commercial banks. should provide service for central heating is ambigu- To strengthen its domestic market orientation, ous: half of the heating plants are owned by the FINDETER is using a Cities Alliance grant, cofi- region; the other half, by the municipalities. This nanced with the Public-Private Infrastructure separation of ownership has led to overcapacity and Advisory Facility (PPIAF), to develop a business the consequent inefficient use of scarce resources. plan and obtain credit ratings. The region thus needs an integrated regional devel- Apart from demand- and supply-side interven- opment strategy that aligns infrastructure needs tions, comprehensive reform of the municipal within a streamlined ownership structure, identifies financing framework helps cities and national gov- the need for investment in infrastructure, and ernments identify critical gaps in the enabling envi- empowers the region and its cities to raise financing ronment. An outstanding example of partnerships against funding requirements. between national and city governments and the pri- vate sector has been the Cities Alliance support for Ghana to develop a municipal finance framework. Supply-side interventions This ongoing work involves the specification of On the supply side, a typical constraint--which actions at the national and city levels in the regula- was particularly acute in Latin America in the tory framework and financial operating systems, 1990s--is the short maturities for borrowed funds. to put financing on a more sustainable basis. The The cramping of fiscal space has hurt infrastructure follow-up grant leading to a comprehensive review and growth in a most debilitating way and has been could be the basis of a World Bank investment compounded by the tendency for international blend with domestic resources. institutions to be fair-weather friends during times of austerity. Clearly, useful tools that lengthen Challenges and Opportunities maturities, such as take-out financing (ensuring credit availability after the expiry of, say, five years), The main lessons from development experience are could improve the capacity of local municipal the need for national governments and their cities financial institutions to act as genuine intermedi- to design frameworks to leverage scarce budgetary aries in the domestic capital market. The Cities resources with market finance. The frameworks Alliance grant for the Financiera de Desarrollo would, of course, vary across countries, but an Territorial (FINDETER) in Colombia is an exam- essential ingredient would be clearly articulated ple of such an initiative. authority and responsibilities for basic civic servic- FINDETER, a second-tier municipal finance es. These frameworks enable cities to raise institution, helps first-tier lenders finance sub- resources, create and maintain infrastructure, and sovereign infrastructure projects in Colombia. pay for their costs over time. Furthermore, serious FINDETER rediscounts 85 percent of bank loans decentralization of centralized finance obviously to local governments, thus enabling commercial facilitates local initiative with an incentive system banks to have renewed access to funds tied up in that rewards performance and punishes misman- long-term loans to municipalities. FINDETER's agement through local democratic processes. 34 ANNUAL REPORT 2006 International experience indicates that this A major threat to modern financing is the contin- process of city empowerment--involving, as it does uing use of scattered grants and traditional loans-- the sharing of powers and responsibility--requires however well intentioned--through national gov- actions at the national and city levels, where inter- ernments and, sometimes, international and bilater- national institutions can be of great help. Global al development institutions. These interventions risk experience also indicates that uncoordinated ac- distorting local incentives to tap domestic markets tions can result in suboptimal outcomes. For exam- and weaken the emerging opportunities for raising ple, financial intermediation that is dependent on domestic resources for city infrastructure. The scale external lines of credit and unconnected with and pace of urban demands are driving the move- domestic markets has proven unsustainable in the ment towards modern financing. This change will past. Similarly, without significant actions to pro- not be painless, as it requires sharing of power. The vide a rational and predictable sharing of revenues, challenge for cities, national governments, and their the capacity of cities to inspire confidence in local development partners will be to find an organized markets is likely to be limited. way of imparting momentum to this process. CITIES ALLIANCE IN ACTION 35 CITIES ALLIANCE MEMBERS' REPORTS In response to members' request for such during the 2005 Consultative Group meeting in Marrakech, the Secretariat developed and posted on the members' page of the Alliance's website a template to capture members' activities for the fiscal year for this and subsequent Annual Reports. Members were asked to: (i) provide an update on the current urban portfolio; (ii) highlight relevant policy decisions, events or other highlights from the past 12 months; and (iii), comment on biggest challenges they foresee in the medium-term to their efforts to achieve Alliance's goals. Thirteen of the 19 Alliance members decided to participate in the exercise and their various reports are reproduced on the following pages. BRAZIL In 2003, the Federal Government, through the Ministry of provision in a federal law that recognizes free registra- Cities and with Cities Alliance financial support, formulated a tion in land registration offices and the establishment of national policy to support sustainable land regularization in agreements with notary publics and public authorities to urban areas for the very first time. This was achieved through ensure title registration. the National Programme to Support Sustainable Land Regular- The revision of the federal legislation on urban land ization of Informal Settlements in Urban Areas--"Papel Pas- subdivision including a specific chapter on land regular- sado" (Signed Title Programme), coordinated by the national ization title (in final stages at the Federal Congress). secretary for urban programmes. The intermediation of land conflicts preventing forced The programme supports states, municipalities, NGOs and eviction and articulating negotiation processes that CBOs, and other public administration entities in the promo- ensure the right to housing. tion of informal settlement land regularization, eliminating The expansion of knowledge concerning the context of administrative and property barriers that have excluded these irregular land development in the country (letter to informal settlements from the so-called "legal city", through mayors, questionnaires and revision of municipal data). their full recognition within the formal, administrative, judicial systems of Brazilian cities. The programme's projected goal for 2006 (end of actual The Programme is based on the following strategies: government term) is to have begun the regularization process benefiting 1,000,000 families, out of which, 400,000 titles Direct support to municipalities, states, NGOs and had been delivered. By April 2006, the actions in progress had CBOs that promote regularization through the transfer reached 218 Brazilian municipalities in 26 States, benefiting of financial resources from the federal budget or the 1,031,069 low-income families with processes already under- transfer of lands that belong to the federal government way and 214,078 delivered titles. and federal government entities that have been occupied by the low-income population. Mobilization, capacity building and training of local technical teams, of legal professionals (such as public prosecutors, judges, notary officials, public defenders) and of community leaderships through workshops, courses and the distribution of support material as well as a vir- tual network to exchange con- crete experiences, with the objective of disseminating regu- larization concepts, instruments and methods. Alliance The removal of legal and admin- Cities istrative obstacles: Approval of a Jubilant residents with their property titles, São Paulo, Brazil. CITIES ALLIANCE MEMBERS' REPORTS 37 Canadian International Agence canadienne de Development Agency développement international CANADIAN INTERNATIONAL DEVELOPMENT ASSOCIATION (CIDA) CIDA's bilateral and partnership programmes, and other rele- A key outreach event took place on December 6, 2005, with vant Canadian institutions, are becoming increasingly aware of the visit of Mark Hildebrand, the then Cities Alliance Secre- the Cities Alliance, from its role as a global coalition in urban tariat Manager, to Ottawa. Mark made a presentation to CIDA development cooperation, to its efforts to (i) support the cre- staff on the work of the Cities Alliance, future directions, les- ation of city developments strategies; and (ii) facilitate slum sons learned, and linkages to the Third World Urban Forum upgrading to improve the living conditions of the urban poor. which was to take place in Vancouver in June 2006. He also met with officials of the International Development Research Cen- tre (IDRC), the WUF Secretariat, the Sustainable Cities Initia- tive (SCI) of Industry Canada, and the Federation of Canadian Municipalities (FCM), to explore partnership opportunities within the context of WUF III and beyond. Among other things, WUF III provided the necessary plat- form for the networking and the empowerment of cities to mobilize domestic capital for municipal infrastructure invest- Vancouver ment that the Alliance and its partners will harness to ensure a of sustainable implementation of existing and future city develop- City Aerial view of Vancouver--venue of the highly successful Third World ment strategies and citywide slum upgrading frameworks in the Urban Forum which was held from June 19­23, 2006. developing world. NORWAY Norway's support for urban issues, and to ameliorating the plight of the urban poor is as strong as ever. World Habitat Day in cel- ebrated October every year has been a contributing factor. Cele- brations for 2005 focused on urban financing with Mark Hildebrand, Cities Alliance programme manager as keynote speaker, together with representatives from other Alliance mem- bers, including UN-Habitat, Sida, USAID. The last two years have also witnessed a strong increase in Norway's development assistance for human settlement issues. UN-Habitat's Water and Sanitation Trust Fund, established after the World Summit on Sustainable Development (WSSD) in Alliance Johannesburg in 2002, has particularly benefited. Norway Cities became a member of the Cities Alliance's Steering Committee in Norway's strengthened support to UN-Habitat's Water and Sanitation Trust 2005 and this is expected to lead to extended future co-operation. Fund has enhanced its work in slums like Kibera in Nairobi. 38 ANNUAL REPORT 2006 AGENCE FRANÇAISE DE DÉVELOPPEMENT (AFD) AfD manages a portfolio of about 100 urban development projects in 30 countries and annually prepares about 12 new ones amounting to a commitment of 5150 million euros per year. Projects are financed by grants to less advanced countries (LACs) or by loans in middle income countries (MICs). As AfD promotes the central role of local governments to urban development, most of the projects are undertaken within a general decentralization framework in cities such as Nouakchott, Niamey, Ouagadougou, Coto- nou, and Accra. The rationale of the projects is to encourage the launching of an urban development strategy with a special emphasis on mass-poverty reduction and a support to urban management. AFD notably co- financed several city development strategy Satellite photo of project for the improvement of the peripheral districts of activities in Cotonou, Douala, Sfax, Tripoli Ouagadougou (Burkina-Faso). and other cities. Municipal contracts, based on the findings of financial, institutional and technical audits, also local governments (sub-sovereign finance), either directly provide a way to enhance the management capacities of the or via specialized institutions or, alternatively, by facilitating municipalities and to adapt the investments in regards of the their access to financial markets. This presupposes moving away needs of the concerned area. This tool is successfully imple- from one-off initiatives based on decisions to finance a specific mented in a number of countries like Senegal, Niger, Tunisia, project, and moving towards financing mechanisms that meet etc. Projects in dedicated sectors are also actively encouraged medium to long-term financial needs, such as the activities con- like transport (Vietnam, Tunisia) or waste management ducted by specialised financial institutions (Tunisia, South (Kenya, Mauritania). Africa). This kind of project is also under preparation in Jordan Direct financing to local authorities is sometimes the pre- and in Palestine. AfD also supports programmes at the national ferred approach in keeping with AfD's strategic objective to level: for example, housing in Algeria, and Morocco, and post finance not only central governments (sovereign finance) but earthquake rehabilitation in Algeria and Pakistan. CITIES ALLIANCE MEMBERS' REPORTS 39 GERMANY Update on Current Portfolio 2. Germany continues to support the Cities Alliance through its direct cooperation with its partners in the Urban issues addressing the urban poor in the German Devel- cities as well as through financial and personal support opment Co-operation are cross­cutting topics. Urban develop- of the Alliance's secretariat. ment is therefore integrated into 5 of 11 sector-focuses 3. Eschborn Dialogue/GTZ Spot- light 2005 Focus--Fascination-- Democracy, civil society and public administration Future: Designing tomorrow's Water and Sanitation cities/ "Development policy is Infrastructure and Transport increasingly turning into urban Economic development policy." Environment 4. KfW Panel discussion on rural- urban linkages in Bonn. Almost 15 percent of projects supported by the Cities 5. Megacities research programme of BMBF (Federal Alliance are prepared and implemented in close cooperation Ministry of Education and Science). This programme with ongoing development programmes co-financed from the consists of research projects on innovative strategies for German Governments bilateral programme (19 projects). sustainable urban development and implementation of integrated approaches to planning and management in Relevant Policy Decisions, Events or Other 15 Asian, African and Latin American cities. Highlights from the Past 12 Months 1. Cities and their role for the UN Millennium Develop- Biggest Challenges for the Medium-Term ment Goals, Development Policy in Dialogue with to Achieve Alliance's Goals Mayors Berlin, 11th of May 2005. In accordance with the Paris Declaration on Aid Effectiveness there is a notable shift from German bi-lateral development to multilateral cooperation. Moreover, within the bi-lateral cooperation Germany will consolidate its effort to concen- trate on cooperation with selected partner countries and focus on priority areas. In the urban sector the Millennium Development Goal 7- 11 will continue to be the focus of Germany's effort for the improvement of the living conditions of slum dwellers. Increas- ing global urbanization, however, demands that cross-cutting, all-embracing and comprehensive strategies will have to be devised to cope with the process. More emphasis should be laid on local revenues generation and financial management in order to mobilize further finan- cial resources for local governments in partner countries. Most Alliance important, new strategies to involve the private sector in the Cities financing and managing of the urban sprawl will have to be Chile Housing project sponsored by Germany through GTZ. found. 40 ANNUAL REPORT 2006 NIGERIA Update on Current Portfolio Biggest Challenge for the Medium-Term to Achieve Alliance's Goals Slum upgrading projects are ongoing in cities such as Kano, Lagos and Onitsha. The projects are aimed at improving the liv- Challenges include the following: ing conditions of the urban poor and also to tackle the high inci- Poorly conceptualized projects; dence of poverty and high unemployment through job creation Inadequate project management skills/capacity of gov- and empowerment initiatives. Participation is key to the proj- ernment officials, especially at local government level; ects with various stakeholders actively involved in the design, Inadequate financial resources; financing and implementation of projects to encourage owner- Inadequate technical capability; ship and sustainability. High unemployment levels/high incidence of poverty; Lack of adequate political will to initiate or sustain Relevant Policy Decisions, Events or Other projects; and, Highlights from the Past 12 Months Poor implementation of strategies/inadequate follow-up. Review of both national urban development and national housing policies. Ongoing review of the land use decree. Bank Establishment of a federal lands information system (FELIS). World/ Establishment of the national housing and urban devel- opment data bank. Carnemark Development of a national urban observatory which will Curt feed into the existing UN Global Urban Observatory. Craft straw industry in Lagos, Nigeria. SWEDISH INTERNATIONAL DEVELOPMENT ASSOCIATION (SIDA) Update on Relevant Policy Decisions, Events or Other Current Portfolio Highlights from the Past 12 Months Sida Urban Development Division is To present a few highlights from last year, Sida convened a sem- supporting a number of activities to inar entitled, "Creative Urban Finance for the Poor" with atten- alleviate the situation of the urban poor; dance from NGOs, donor agencies, universities, and commercial including several bilateral programmes banks. In addition, Sida also decided to support a large bilateral in Central America on housing finance, housing finance programme in Guatemala. Community-Led Infrastructure Finance Sida's urban policy, "Fighting poverty in an urban world," Facility (CLIFF), Slum Upgrading captured in a comprehensive publication titled, More Urban, Facility (SUF), GuarantCo and CGAP. Less Poor was successfully launched at the Third World Urban Forum in Vancouver in June 2006. CITIES ALLIANCE MEMBERS' REPORTS 41 UK DEPARTMENT FOR INTERNATIONAL DEVELOPMENT (DFID) Update on Current Portfolio Report, published in 2005, highlighted the problems of rapid urbanization in Africa, stressed the need for improved city man- In 2006, the UK government announced £41 million to sup- agement and made particular recommendations on scaling up port the Madhya Pradesh Urban Services Programme to investments in infrastructure. strengthen state delivery of quality services for the urban poor. In February 2006, the UK Parliament held its first ever Similar programmes in Andhra Pradesh and Kolkata are also debate on urbanization in developing countries. Members of being funded. Parliament called for a higher priority for urbanization on the The UN-Habitat managed Slum Upgrading Facility (SUF), international development agenda, with a particular emphasis which is now ready to commence pilot activities in Tanzania, on promoting security of tenure for slum dwellers, better urban Ghana, Indonesia and Sri-Lanka, and the Community-Led governance and the development of financial instruments for Infrastructure Financing Facility (CLIFF) in India and Kenya slum upgrading. continued to receive UK funding. Biggest Challenges Relevant Policy Decisions, for the Medium-Term Events or Other Highlights to Achieve Alliance's Goals from the Past 12 Months Urban management is a highly political process but too often is The Commission for Africa was launched by the British Prime seen as a technical issue. Going forward, DFID and other devel- Minister, Tony Blair in February 2004. The aim of the Com- opment partners will need to give greater consideration to their mission was to take a fresh look at Africa's past and present and role in supporting complex and highly politicized processes to propose a package of measures to achieve the Commission's such as decentralization. goal of a strong and prosperous Africa. The Commission's We will also need to be better at assessing and responding to the spatial dimensions of poverty, policies and institutions. Sim- plistic rural versus urban thinking is now largely discredited and policies need to support economic and livelihood systems along the rural urban continuum with planning integrated across lay- ers of government. In terms of financing the urban infrastructure gap, donors will need to be more effective at assessing, and where necessary increasing, the capacity of the public and private sectors to pro- vide basic services and infrastructure that supports economic growth. Increased resources and expertise will need to be lever- aged from the International Financial Institutions (IFIs), bilat- Bank eral donors and the private sector. World/ Carnemark Curt Market women in Mathare, Kenya, beneficiaries of a DFID support for sanitation services. 42 ANNUAL REPORT 2006 US AGENCY FOR INTERNATIONAL DEVELOPMENT (USAID) Update on Current Portfolio USAID's support for urban development is focused on three core areas: (i) city management and improved service delivery, (ii) urban finance, and (iii) local economic development. Spe- cific activities include support for financing slum upgrading in India, South Africa and Morocco, youth employment training in 16 Latin American countries, local economic development Pictures planning and implementation in Eastern Europe, infrastructure Still/ financing in Mexico and South Africa, advocating for land Stark tenure and title deeds in Africa, and city management and plan- ning in over 25 countries. Friedrich Aerial view of Cape Town, South Africa, taken from Table Mountain. Relevant Policy Decisions, Events or Other Highlights from the Past 12 Months ner, Evensen Dodge International, advised the Cities of Tshwane and eThekwini on the restructuring of $1 billion of Globally, in 2005, USAID initiated partnerships between U.S. debt targeted for improved municipal infrastructure services. municipal managers and their counterparts in Mali, Ethiopia, Local governance strengthening and local economic develop- Russia, and India targeting solid waste management, disaster ment strategies are being applied in Indonesia, Lebanon, Jordan, preparedness, and local economic development. USAID field India, and Bangladesh. Asia missions are also adopting a water missions in Africa have adopted a new strategy that will focus on finance strategy beginning with the Philippines Mission which addressing urbanization through multiple sectors, such as in signed a loan agreement to finance 16,000 new connections and Zambia in which housing for 5,000 households will begin con- reduce unaccounted-for water over seven years through the struction in 2006. In South Africa, USAID's construction part- Municipal Water Loan Finance Initiative, a joint USAID-Japan- ese Bank for International Cooperation (JBIC) effort. Biggest Challenge for the Medium-Term in the Member's Efforts to Achieve Alliance's Goals Part of the difficulty in allocating funding and implementing activities for urban development is the multi-disciplinary nature of urban issues. A coordinated approach that addresses urban poverty reduction from a spatial lens is needed to achieve the Alliance's goals. However, USAID typically provides funding Pictures Still/ through a wide array of development sectors such as water and sanitation services, municipal finance, and service delivery. Stark Such a variety of programmes in urban issues spread across a Friedrich number of sectors can sometimes lack the coherence necessary Youths playing football by a power station in Mexico City. to effectively address urban poverty reduction. CITIES ALLIANCE MEMBERS' CONTRIBUTIONS 43 UNITED CITIES AND LOCAL GOVERNMENTS (UCLG) Update on Current Portfolio UCLG and Cities Alliance consolidated their partnership by signing two landmark project agreements: The first project will facilitate the development of MDG-based City Development Strategies and the integration of MDG-based targets into CDSs. The second supports the establishment of the UCLG Committee on Local Finance to advise UCLG members and the Cities Alliance on matters relating to municipal finance and resource mobilization, and to assist UCLG members to access current thinking and innovations on ways to increase the flow UCLG of long term finance capital to developing cities. UCLG Co-President, Paco Moncayo, Mayor of Quito, and Wim Deetman, Mayor of the Hague with Kofi Annan, UN Secretary General during the UCLG Relevant Policy Decisions, Events or Other Mayors Delegation. Highlights from the Past 12 Months Forum, governments recognized the role played by local author- Over 1000 cities and Local Government Associations expressed ities in increasing sustainable access to water and sanitation serv- their commitment to the MDGs by joining the UCLG Millen- ices and supporting integrated water resource management. nium Towns and Cities Campaign. Following this, Heads of State and Government explicitly recognized the role of local Biggest Challenges for the Medium-Term authorities in contributing to the achievement of the MDGs in to Achieve Alliance's Goals the outcome document of the Millennium +5 Summit. At the UCLG Executive Bureau meetings in Washington, Over the medium term, UCLG will be working to ensure that Mayors and local government leaders from across the world put more medium-sized cities in developing countries become municipal finance centre stage in their exchange with the World involved with the Cities Alliance and develop MDG-based City Bank President, who announced that the Bank wished to develop Development Strategies (CDS). UCLG's close involvement in its partnership with UCLG and develop new instruments to lend the Cities Alliance means that its global network of local gov- directly to local authorities without sovereign guarantee. ernments can be mobilized to promote MDG-based City UCLG has continued to promote the role of local govern- Development Strategies (CDS) to medium-sized cities. ment in the global development agenda. Following a strong With cities providing services for 50 percent of the world's contribution from the UCLG delegation at the World Water population and being called on to serve an ever greater number of citizens in the future, UCLG and its mem- bers will be calling for financing mechanisms to be decentralized to directly benefit cities. UCLG will be working with donors and inter- national financing institutions towards support for cities in the form of loans and international UCLG investment that really takes into account the White banners displayed on town halls as part of the UCLG, Millennium Towns and Cities Cam- priorities of local governments. paign `2015: No excuse! The world must be a better place.' 44 ANNUAL REPORT 2006 UNITED NATIONS ENVIRONMENT PROGRAMME (UNEP) Update on Current Portfolio Biggest Challenge for the Medium-Term to Achieve Alliance's Goal In fiscal year 2005, the Alliance approved six projects which UNEP is supporting financially and/or through technical The biggest challenge remains how to mainstream and institu- assistance. These include a CDS in Dakar, Senegal in cooper- tionalize the environmental dimension into Cities Alliance' ation with UN-Habitat, where UNEP is conducting an envi- activities. The Environment Initiative is a first step towards pro- ronmental assessment; a National Urban Development viding good examples and tools to Alliance members and Strategy in Bhutan, in cooperation with the World Bank, clients, but a lot more work needs to be done to elevate the envi- where UNEP is conducting an environmental assessment; an ronment to the same level as other Alliance application criteria. upgrading project in the city of Yangzhou, China for which UNEP will provide technical support; and an industrial restructuring project in Heilongjiang Province, China with the World Bank, where UNEP is playing an advisory role. Relevant Policy Decisions, Events or Other Highlights from the Past 12 Months UNEP's Executive Director has approved a UNEP­Cities Alliance strategy which has increased UNEP's involvement in Alliance activities in particular, and urban sustainable devel- opment in general. UNEP presented a concept note on the how to strengthen the environment component within the Alliance's activities to the 2005 Cities Alliance Consultative Group meeting in Marrakech, Morocco. Consequently, the Consultative Group requested UNEP and the Alliance Secre- tariat, in cooperation with UN-Habitat, to undertake an analysis of the gaps and best practices in sustainable urban UNEP/ planning, city development and slum upgrading. The out- come of this Environment Initiative will be presented at the Weiming 2006 Consultative Group Meeting, now to be held in Wash- Zhao ington, D.C. in November 2006. Severe environmental pollution from industrial waste in China. CITIES ALLIANCE MEMBERS' CONTRIBUTIONS 45 UNITED NATIONS HUMAN SETTLEMENTS PROGRAMME (UN-HABITAT) Update on Current Portfolio During the year under review, the work of the United Nations Human Settlements Programme, UN-Habitat, as the focal point for the coordinated implementation of the Habitat Agenda, the Declaration on Cities and other Human Settle- ments in the New Millennium and the Millennium De- velopment Goal 7, targets 10 and 11, drew UN-Habitat and its partners in government, regional and local authorities, and civil society closer to the lives of the urban poor than ever before. Relevant Policy Decisions, Events or Other Highlights from the Past 12 Months UN-Habitat At its 20th session in Nairobi in 2005, the Governing Council Dr. Tibaijuka with Stephen Harper, Canadian Prime Minister and other guests at the opening ceremony of WUF III in Vancouver. passed 21 resolutions on a range of subjects all pointing to the need for the international community to focus on the critical ronmental sustainability of the Millennium Declaration. UN- issues of rapid urbanization and the consequent urban poverty Habitat was running 99 technical programmes and projects crisis: The water and sanitation and health crisis in many cities under execution in 60 countries around the world, the major- and towns, a shelter trauma manifested in ever growing slums, ity of them in the least developed countries (LDCs). housing and shelter finance problems, land and property rights and lack of secure tenure. UN-Habitat developed two initiatives Biggest Challenge for the Medium-Term in the designed specifically to support the attainment of the slum Member's Efforts to Achieve Alliance's Goals upgrading and water and sanitation targets of Goal 7 on envi- Managing the slum crisis is arguably the biggest problem con- fronting humanity in the 21st century. UN-Habitat's latest research gives a measure of the challenge of the urban crisis: Asia accounts for nearly 60 percent of the world's slum population with a total of 581 million slum dwellers in 2005. Sub-Saharan Africa had 199 million slum dwellers constituting some 20 per- cent of the world's total. Latin America had 134 million mak- ing up 14 percent of the total. At the global level, 30 per cent of all urban dwellers lived in slums in 2005, a proportion that has not changed significantly since 1990. Given this context, the system-wide reform of the United Nations, which UN-Habitat fully supports, needs to galvanize its strength as never before in the quest for sustainable urbanization. It is our duty as mem- UN-Habitat bers of the Alliance to ensure that the rights and needs of the Ongoing reconstruction in Kabul, Afghanistan. urban poor are recognized and addressed. 46 ANNUAL REPORT 2006 WORLD BANK Update on Current Portfolio World Bank lending approvals for Urban Development quadrupled in fiscal year 2005 to $2.75 billion and reached $1.7 billion by the second half of fiscal year 2006. In addition to lending from dedicated urban units, the World Bank also lends to cities through other operational sectors like health and education, power, and transport. For fiscal year 2005, estimated lending to "urban spaces" was about $7.1 billion. Alliance The World Bank's urban development strategy prioritizes Cities livability, defined as a decent quality of life and equitable oppor- Katherine Sierra (World Bank) and Elisabeth Gateau (UCLG) sign cooperation agreements on MDGs­based city development strategies. tunities for all, including the poorest, to achieve a healthy and dignified living standard, using the three other strategic dimen- tion" which was organized in collaboration with the sions or pillars-good governance, bankability and competitive- Institute for Applied Economic Research, Brazil. This ness-to achieve this goal.1 event was successful in: (i) showcasing and promoting The World Bank has recently developed slum upgrading pro- applied urban research on land development and grammes in Jamaica and Brazil to explicitly address problems of poverty reduction in developing and transition crime and violence2. Approved housing sector programme loans economies; (ii) developing areas for collaborative re- to Mexico and Brazil take comprehensive approaches to address search and (iii) enabling discussion of experiences of upgrading in the context of reforms in land, finance and subsi- design and implementation of public policies as well as dies. In India and South Africa3 slum dweller organizations are developmental results of public programmes, and of setting many of the terms for upgrading to proceed and raising partnerships among researchers working on these topics. the bar for community participation in these or other operations. "Practitioners' Conference on Mobilizing Urban Infra- The World Bank and UCLG are collaborating with the structure Finance in a Responsible Fiscal Framework: Cities Alliance to help cities and local governments contribute Brazil, China, India, Poland and South Africa" in Janu- to National Poverty Reduction Strategies by developing MDG- ary 2005: This was organized in cooperation with the based city development strategies. governments of India, Brazil, CAIXA Economica Fed- eral, DFID, USAID and PPIAF organized in January Relevant Policy Decisions, Events or Other 2005. The conference addressed different dimensions Highlights from the Past 12 Months for reconciliation between fiscal policy and urban infra- Some of key events in the World Bank's operations in the structure investment: in policy design, analytical under- urban sector for the year under review include: standing, national and international debt rules, and the politics of policy implementation. Annual World Bank Urban Forum: The theme for this year's forum was "The Challenges of an Urbanizing Challenges to Achieving Cities Alliance's Goals World". Participants comprising more than 160 World in the Medium-Term Include: Bank staff, 35 external invitees and 9 donor agencies examined the challenges urban poverty, infrastructure, How to expand the options for financing instruments in governance, growth, spatial, vulnerability and political slum upgrading within the limits of fiscal space and economy. competing demands in client countries. Third World Bank Urban Research Symposium on Furthering empirical research in urban leading to "Land Development: Urban Policy and Poverty Reduc- stronger policy focus and investments in urban areas. CITIES ALLIANCE MEMBERS' CONTRIBUTIONS 47 LEARNING AND COMMUNICATIONS Learning and knowledge-sharing continue to be integral to the Cities Alliance's ongoing and completed activities, which the Alliance routinely analyzes to assess impacts and garner lessons, both substantive and in terms of its own grant procedures. L earning and knowledge-sharing continue ects, the major national instrument for allocating to be integral to the Cities Alliance's on- targeted subsidies for the urban poor. This funding going and completed activities, which mechanism encourages municipalities and organ- the Alliance routinely analyzes to assess impacts and ized community savings groups to apply for and bid garner lessons, both substantive and in terms of its on the subsidies and development funding. own grant procedures. The transition to new man- Principally, the municipalities take the lead, agement this year saw a strengthening of that focus, identifying communities and organizing the requi- with an increased mandate and budget for the site household savings groups, preparing technical Cities Alliance's communication and knowledge proposals, assembling land if necessary, and negoti- management remit. This has led to a corresponding ating with other stakeholders to package proposals increase in the number of knowledge products and to compete in a bidding process to access funds and initiatives the Alliance produces in partnership with subsidies. However, this can be a daunting effort, its members and partners and disseminates through particularly for smaller and weaker municipalities. an expanding network of not just members' distri- Likewise, many families seeking to participate find bution infrastructure, but also that of civil-society it difficult to navigate the process and need a lot of organizations and the media. time to accumulate the required savings. Continuing its practice of continual evaluation, Recognizing the obstacles and frustrations that the Alliance undertook onsite evaluations of com- weak municipalities and the poorest families have in pleted partnership activities in Chile, related to accessing the national housing subsidy programme, the country's national housing and upgrading MINVU, together with the German Agency for programme, and in Indonesia, where the Special Technical Cooperation (GTZ), the Association of Province of Yogyakarta had undertaken a city de- Chilean Municipalities, UN-Habitat, and many velopment strategy (CDS) to develop the region regional and local stakeholders, and with support and reduce poverty. from the Cities Alliance, set out to develop and test ways to strengthen municipalities and instruments to improve the access of the poor to national hous- Lessons from the ing subsidies. Chile Evaluation The implementation model developed and demonstrated the benefits of organizing and involv- For more than 30 years, Chile's housing policy has ing communities in the process of applying for centred on a robust subsidy programme for hous- national subsidies. The approach should serve the ing the poor. In 2001, the country's Ministry of country well as it embarks on its newly launched Housing and Urbanism (MINVU) launched a 200 Barrios programme of neighbourhood upgrad- series of shelter initiatives, including an ambitious ing. Other valuable lessons that have emerged from Programme for Dynamic Housing without Debt the activity are of relevance not only to Chile but that was to deliver 20,000 new houses and upgrade also to other countries embarking on large-scale existing neighbourhoods. These initiatives were to upgrading and shelter programmes. The lessons tap into a national Fund for Solidarity Shelter Proj- include the following: LEARNING AND COMMUNICATIONS 49 The responsible agencies effectively incorporate pro-poor policies into national shelter programmes by emphasizing the role of the com- munity in the process, be it training and organizing community savings groups to apply for the housing sub- sidy programme, defining house designs, or negotiating with the municipality; Municipalities have a clear and piv- otal role in such programmes. While local political will and leadership are critical, the general reality is that municipalities often need assistance Alliance to build their capacity as local organ- Cities izing agents for the delivery of pro- Signpost to Chile's Shelter project. poor shelter programmes; The integrated and participatory process is an important aspect of the shelter programme that Lessons from the Yogyakarta, should not be sidestepped. However, a lot of time and project management effort are re- Indonesia, Evaluation quired to identify and organize the participat- The Yogyakarta CDS was initiated in 2003, follow- ing households and to orchestrate different ing the success of the first CDS, which had focused levels of government, nongovernmental organi- on nine cities. The objective was to coordinate the zations (NGOs), and the private sector. The planning and development of the five jurisdictions challenge then remains one of finding ways within Yogyakarta, a small province adjacent to the to institutionalize the working relationship province of Central Java and located between the between the many players at all levels and rep- Mount Merapi volcano to the north and the Indian licate community development and participa- Ocean to the south. With a population of 3.3 mil- tion at a much larger scale; and, lion in an area of only 3,600 square kilometres, it is Institutional coherence of effort is a key factor the most densely populated province of Indonesia. for success, but this may require a considerable Only a limited part of the region is suitable for realignment of working relationships between agricultural production. Although 49 percent of the levels of government. Adjusting institutions to population derives its income from agricultural this approach is difficult, and third-party men- jobs, the sector contributes less than 15 percent of toring can serve this objective well, bringing the GDP. With few natural resources to support its together the various institutions and actors to weak economic base, unemployment is high, and in coalesce around the task. 2000 an estimated 30 percent of the people were living below the poverty line. 50 ANNUAL REPORT 2006 The CDS aimed to: The project made a demonstrable contribution to the province's efforts to reduce poverty by: Develop instruments for identifying visions for sustainable economic growth, balanced eco- Advancing poverty mapping and the institu- nomic development, and poverty reduction; tionalization of a participatory planning Disseminate the practical experiences of, and methodology; lessons learned, on how to place urban devel- Defining a regional investment programme; opment in a regional context for the benefit of Initiating pro-poor investments in trading other provinces and municipalities, both in facilities and slum upgrading projects; and, Indonesia and globally; Developing lending facilities within a local Propose programmes for institutional develop- bank for micro- and small businesses. ment and investment to promote regional development and poverty reduction and pre- Less successful were the: pare cross-regional financing plans (this third Creation of necessary linkages to the national component was closely linked to a prospective level, where much remains to be done to World Bank credit). improve the capacity of local governments to Alliance Cities Malioboro, Yogyakarta's busiest street. LEARNING AND COMMUNICATIONS 51 develop, finance, and implement their strate- (VSB) programme at the public policy forum that gies to reduce poverty; preceded the Consultative Group meeting for 2005. Creation of interregional economic synergies The Alliance was well represented at the Third with neighbouring provinces; World Urban Forum (WUF III), in June 2006 Integration of annual budgeting at the mu- which held in Vancouver, Canada, where it organ- nicipal and district levels across the five ized three networking sessions, and was a strong par- jurisdictions; and, ticipant at the Africities 2006 in Nairobi. In the areas Improvement of urban­rural linkages. of identification of knowledge gaps, capture, and dis- semination, the highlight was the release of the long- Key lessons include the following: awaited Guide to City Development Strategies: Indonesian decentralization is asymmetrical Improving Urban Performance,1 which is a rich, and incomplete, and fiscal decentralization is direct, and thought-provoking resource base for weak (fiscal decentralization lagged behind cities already undertaking or about to embark on the provincial government decentralization: con- strategizing process. Other major publications by trol over expenditures was decentralized, but Cities Alliance members include UN-Habitat's flag- control over revenues was not); ship report State of the World's Cities 2006/7,2 the A champion for the project is needed within World Bank­commissioned The Dynamics of Global the central government (provincial government Urban Expansion,3 and the Swedish International needs the active support of central government Development Cooperation Agency's (Sida's) More to advocate on behalf of the regional plan and Urban, Less Poor.4 For its part, the Secretariat also its investment priorities); took the first steps towards significantly upgrading its The many interesting experiences from the communications portfolio and strengthening its project need to be captured, and lessons need knowledge management plan for the capture and to be disseminated; documentation of the increasing volume of knowl- Participatory planning is essential; edge that the Alliance and its partners are generating. Investment linkages need to be diversified par- ticularly to reduce the dependence of the Morocco's Villes sans bidonvilles regional plan on the central government; and, Programme, Cities Alliance Public Policy More Cities Alliance members active in the Forum, Marrakech, November 2005 region need to be engaged. The sixth Public Policy Forum of the Cities Knowledge-Sharing Activities Alliance, hosted by the city of Marrakech and the Government of Morocco, focused on the national During the year under review the Alliance promot- VSB programme. The VSB programme is part of ed the urban agenda and key messages through the far-reaching Initiative nationale de développe- proactive participation at organizing major com- ment humain, aimed at reducing social disparities munication and knowledge events, in collaboration and fighting exclusion. with its members and partners. It worked with the More than 300 national, regional, and interna- city of Marrakech to successfully showcase the tional participants from 20 countries attended the Government of Morocco's Villes sans bidonvilles forum, November 7­9, 2005, which was jointly 52 ANNUAL REPORT 2006 with mandates to (i) increase the supply of serviced land for social housing and new residential develop- ments; (ii) promote partnerships with the private sector to provide low-cost housing and upgrade sub- standard housing; and (iii) implement the govern- ment programme for slum upgrading in partnership with local governments and the private sector. After one and a half years of implementation, the VSB programme has: Mobilized 3,400 of a proposed 5,000 hectares Alliance for the programme; Cities Built two new cities (Nour Zaer, near Rabat, Signature of an MOU with French Development Agency in and Tamansourt, near Marrakech); Marrakech. Declared four cities free of slums by the end of 2005 organized by the Moroccan Ministry of Housing Achieved full integration in the larger frame- and Urban Development, the City of Marrakech, work of the Initiative nationale de développe- the Near East and North Africa Urban Forum, ment humain; Holding d'Aménagement Al Omrane (see below), Fostered synergy between the various intra- and the Cities Alliance. ministerial departments; The VSB programme demonstrates the high Encouraged ownership by the walis, the gover- priority the government of Morocco attaches to nors, and local officials; improving access to and affordability of formal Mobilized public parastatals, such as Holding housing, especially for the urban poor. Formally d'Aménagement Al-Omrane, Établissement launched in October 2004 by King Mohammed régional d'aménagement et de construction, VI, the VSB programme aims to provide accom- and Groupe caisse de dépôt et de gestion; modation by 2010 to some 212,000 households Had positive effects on the lives of the slum living in urban slums across the country. In his dwellers; presentation at the opening ceremonies, Minister Facilitated the participation of NGOs and sim- of Housing and Urban Development Toufiq ilar organizations; and, Hjira outlined the three major objectives of the Gained the support of international organiza- programme: (i) stopping the proliferation of tions. slums; (ii) preventing the growth of new slums and promoting social habitat; and (iii) reabsorb- Sida Seminar on Creative Urban Finance ing existing slums. for the Poor, Stockholm, Sweden, To more efficiently manage the implementation December 2005 of the VSB programme, the government merged existing housing parastatals into a new structure, Sida convened a gathering of key stakeholders in Holding d'Aménagement Al Omrane, in 2004, urban finance to systematically examine the main LEARNING AND COMMUNICATIONS 53 infrastructure and shelter with longer term group lending, often coupled with regulatory change; Kathleen Wu (U.S. Agency for International Development [USAID]), who saw private sector­led growth as critical for achieving the MDGs. Ironically, although there may be excess liquidity, credit access is often limited, particularly for the urban poor. USAID offers global loans and bond guarantees for housing and infrastructure, and experience has shown Sida that home improvement microfinance loans Cross section of participants at the Sida Seminar on "Creative are particularly suitable for the urban poor; Urban Finance for the Poor." Mark Hildebrand (Manager, Cities Alliance), who highlighted the Alliance's focus on issues in providing urban finance and upgrading citywide and nationwide interventions. He infrastructure, services, and housing. Declaring was supported in this regard by Rajivan Sida's long-term commitment to housing and asso- Krishnaswamy (senior urban finance specialist, ciated infrastructure for a growing number of Cities Alliance), who suggested that the poor low-income earners, Rolf Carlman, head of Sida's need to be empowered to leverage budgetary Department for Infrastructure and Economic Co- resources with domestic capital to invest in operation, noted the pivotal role of urban finance in infrastructure. Challenges include sorting out a achieving Millennium Development Goals (MDGs) messy decentralization process by supporting where there is a need for innovative financing instru- the role of cities as proactive developers of ments to tap local and international markets. infrastructure; Some of the speakers at the seminar included: Malcolm Harper (Cranfield School of Management, Cranfield University; and Barbara Lee (on secondment to Sida from the Homeless International, United Kingdom), World Bank), who emphasized the seminar's who saw microfinance institutions (MFIs) as objective of sharing and discussing financing unsuitable for housing and citywide infrastruc- solutions targeting the urban disadvantaged; ture finance, because of the high interest Diana Mitlin (Institute for Development charges on retained savings earnings. MFIs Policy and Management, University of Man- could offer secured base loan credit--but sub- chester), who advocated the equal weights sector analysis, experimentation, willingness to of financial processes and of finance itself: fail, research, and subsidies are also needed. To whereas those with `"somewhat secure tenure'" provide cheap, long-term shelter credit, MFIs need access to finance for incremental housing need to know markets; find collateral substi- improvement, those with "less secure tenure"-- tutes; foster relationships with municipal and with no opportunity for individualized market other authorities; and adjust loan amounts, solutions--need collective action to improve terms, and target returns; 54 ANNUAL REPORT 2006 Sheela Patel (founding director, Society for the Presentations were followed by break out Promotion of Area Resource Centres [SPARC], groups focusing on how to make finance for hous- and chair, Cities Alliance Policy Advisory ing and infrastructure available to the urban Board;), who noted the importance of com- majority. Groups discussed differences and simi- munity-initiated self-help shelter schemes. A larities (and related issues and implications) relationship between organizations of the dis- between finance for housing and finance for infra- advantaged and banks exists in India. This rela- structure, and the role of financial institutions and tionship offers a platform for regular dialogue markets: "how commercial lenders can be encour- and negotiations for scaled-up interventions-- aged to make finance available for housing and with either party knowing each other's func- infrastructure for the urban poor" and "how local tions, including risk management and mitiga- private savings be mobilized by financial markets tion. Effective cooperation needs a community- to provide finance." The groups identified infra- driven process, governments willing to change, structure as a public good; individual housing, as a banking system that views informal sectors a private one. as a potential market, local all-stakeholder solutions, and familiarity with risks and miti- gation; and, UCLG Executive Bureau Meeting, Michael Mutter (UN-Habitat), who outlined Washington, D.C., February 2006 the objective of the Slum Upgrading Facility The Secretariat partnered with the World Bank to (SUF), which is to show that housing develop- host the first meeting of the United Cities and ment or upgrading projects can access domestic Local Governments (UCLG) Executive Bureau, capital markets for loans. SUF aims to scale up held in Washington, D.C., at the Preston Audi- serviced land for housing development, with torium of the World Bank Group. More than finance for all. Being multiphased, SUF also 200 mayors attended the meetings, convened at the aims to help attract local pri- vate financing in the domestic capital market. Pilot project financing mechanisms will be executed through 2006 in Ghana, Indonesia, Sri Lanka, and Tanzania; domestic capital for low-income housing and home improvement loans will be attracted, in collaboration with local banks, housing cooperatives, and special pur- Alliance pose vehicles (that is, joint Cities ventures to raise debt finance Left to right: Anthony Williams, Joan Clos, Bertrand Delanoë, José Sera, Paul Wolfowitz, in local capital markets). Paco Moncayo, and Clarence Anthony. LEARNING AND COMMUNICATIONS 55 invitation of Anthony Williams, District of national investment that really takes into account Columbia mayor and past president of the U.S. the priorities of local governments, can really trans- National League of Cities. form the daily life of citizens." Chairing the opening session, "Financing Local Development," World Bank president, Paul Cities Alliance at the Third World Urban Wolfowitz, said, "The World Bank is pleased to co- Forum, Vancouver, Canada, June 2006 host this event with the city of Washington DC, because we know that cities--and the people who Evidence of the Cities Alliance's renewed commit- make them run--have a vital role to play in creating ment to enhancing its communication and knowl- opportunity for some of the 1.2 billion people who edge-sharing focus was seen in the strong delegation today live on less than $1 a day." He added that it sent to the Third World Urban Forum which was mayors are "on the frontlines of these development held in Vancouver from 19th to 23rd June, 2006, challenges. The choices you make can either allevi- and its organization of three well-subscribed net- ate these challenges or aggravate them. And the poli- working sessions. cies you pursue can either draw upon the strengths Close to 15,000 people from over 100 countries, and opportunities of urban areas, or dilute them." representing governments, UN agencies, non- Wolfowitz stressed the importance of good gover- governmental organizations, urban professionals, nance and transparency in local management and local authorities, the private sector and academia, announced that the Bank wished to develop its part- attended the conference, convened by UN-Habitat nership with UCLG: "Traditionally, the World Bank and the Canadian government under the theme of worked exclusively through states, and today we have "Sustainable Cities--Turning Ideas into Action." a tool for financing private corporations. Now we are WUF III marked the 30th anniversary of the first trying to develop new instruments in order to lend UN Conference on Human Settlements, which was directly to local authorities without sovereign guaran- tees." He invited local governments, through UCLG, to collaborate with the World Bank. UCLG representatives underlined the need for the World Bank to decentralize its actions to direct- ly benefit cities. Such a move would recognize the fact that cities currently provide services for 50 percent of the world's population and that this figure is inexorably increasing. UCLG aims to improve the performance of cities, according to Bertrand Delanoë, mayor of Paris and president of UCLG: "The World Bank needs to recognize us as a partner. . . . We need support in the form of loans and naturally the World Bank can be our partner in Alliance this." Paco Moncayo, mayor of Quito and co- Dr. Manfred Konukiewitz of the German Development Cooperation, Dr. Sameh el Alaily Cities president of UCLG, declared, "Effective and trans- representing the Governor of Giza, Egypt, and William Cobbett of the Cities Alliance-- parent financial management, supported by inter- panelists at the GTZ/CA session of WUF III. 56 ANNUAL REPORT 2006 also held in Vancouver and led to the creation of ment: for example, sustainable transportation UN-Habitat. The WUF III Report will be sub- models that do not depend on fossil fuels (in mitted for consideration and appropriate action to Bayamo, Cuba, horse-drawn carriages were the 21st session of the UN-Habitat Governing introduced for public transport because of the Council in spring 2007. lack of petrol); hybrid public buses; waste man- Throughout the weeklong, well-organized con- agement initiatives introducing recycling ference, participants met in plenary, dialogue and options; cogeneration power plants; refuse- special sessions, and attended 13 roundtables and derived fuel plants; innovative public­private over 160 networking events, which explored vari- partnerships (contracting public services, such ous aspects of sustainable urban development. The as waste collection, to local community three networking events that the Alliance held in groups); and leapfrogging technologies. collaboration with its members and partners, were: The speakers promoted a new urban para- digm, seeing the environment as an asset; and How to integrate environmental aspects in cities as managers of natural ecosystems. Other city long-term strategic planning--hosted in key recommendations include managing urban collaboration with the United Nations Envi- growth and using ecosystem boundaries as city ronment Programme and the International boundaries; and taking a systems approach to Council for Local Environmental Initiatives. planning, instead of a sectoral one. Ecocity Speakers, including Jeremy Harris, former planning, the Local Agenda 21 process, and the mayor of Honolulu, Hawaii, and Mayor T. CDS were presented possible tools for sustain- Krishna Reddy of Hyderabad, India, highlight- able urban planning. ed urban sustainability as the major challenge Empowering cities to mobilize domestic of the future. They gave evidence of how cities capital--This session was designed to improve can benefit in multiple ways by factoring the understanding of the process required for cities environment into city planning and manage- to mobilize domestic capital for urban infra- structure investments. It highlighted the need for systemic interventions in situations of imperfect decentralization of responsibilities and powers to cities and identified actions needed at the city and provincial levels, as well as on the supply side. Practitioners representing each level of re- sponsibility in the municipal financing system underlined the theme with case studies. These included Cornelia Richter, director-general of the Planning and Development Department of GTZ; Jason Ngobeni, chief financial officer, Johan- Alliance nesburg, South Africa; Swaminathan Malathi, Cities commissioner of economics and statistics, Gov- Participants at a Cities Alliance session during WUF III. ernment of Tamil Nadu, India; and Mindia LEARNING AND COMMUNICATIONS 57 Gadaevi, executive director, Municipal Develop- a growing recognition of the need to address the ment Fund of Georgia. At the core of their discus- underlying causes of urbanization in order to achieve sions was the need for partnerships between cities, the vision of sustainable human settlements for all. national governments, and their development partners that are based on inclusive city strategies. Cities Alliance at the annual Congress of the Understanding local economies: tools and Federación Latinoamericana de Ciudades, methodologies--This session focused on Municipios y Asociaciones, Cali, Colombia, strategic planning for economic development. July 2006 Strategic planning requires city managers and private sector and local stakeholders to under- The Alliance's senior urban upgrading specialist, Jörg stand the local economy, including its con- Haas, represented the Alliance at the annual straints and prospects. Congress of the Latin American Federation of Cities, Municipalities and Associations (Federación Latino- Participants discussed the findings of the recent americana de Ciudades, Municipios y Asociaciones; study, "Cities Alliance Local Economic De- FLACMA), which took place in July 2006 in Cali, velopment Initiative", by the London School of Colombia. Present were more than 500 mayors from Economics and Kaiser Associates Economic Colombia and representatives from two-thirds of Development Practice which the Alliance, with Latin Americas' national municipal associations, the support of the government of the Netherlands, from bilateral donors and multilateral agencies, from commissioned to identify tools, methods, and NGOs, and from the private sector. The Congress good practices for cities taking steps to understand comprised high-level meetings, thematic sessions, their local economies. Local economy assessment dialogues, site visits, and cultural side programmes. was positioned as a crucial part of city develop- Speakers included the mayor of Cali, Apolinar ment strategy, and the more robust the assess- Salcedo, President Alvaro Ulribe of Colombia, and ment, the more likely a successful economic devel- Secretaries-General Guillermo Torro of FLACMA, opment strategy will be designed. Key elements of and Elisabeth Gateau, of UCLG. the study include (i) LED Indicators ­ key ele- ments; (ii) Tools and Sources for Data collection; (iii) Tools for Data Analysis; and (iv) Strategic Frameworks. Case studies were presented by Dr. Mostafa Madbouly who highlighted the Egyptian experience of strategic urban planning for local economic development; Glen Robbins of the University of KwaZulu, Natal, South Africa who presented a case study of eThekwini (Durban); and, Deepali Tewari of the World Bank who pre- Pictures sented the Karu, Nigeria local economic develop- Still/ ment experience. Pohl WUF III concluded with a call for strengthening Achim partnerships for urban development, as well as with Cali city centre. 58 ANNUAL REPORT 2006 4 Cities Alliance at Africities The Cities Alliance had a very successful outing at Opening the conference, Kenya's President Mwai the fourth African summit for local governments, Kibaki said that it was already becoming evident that which was held in Nairobi from September 18 to African countries will not achieve all the MDGs by 24, 2006. More than 6,000 participants represent- 2015 unless local authorities are strengthened: "The ing local authorities, central government, the African experience has shown us that in order to donor community, the media, civil society includ- achieve rapid progress in attaining the MDGs, it is ing the urban poor attended the triennial summit necessary to involve the people in the identification organized by the Municipal Development and implementation of the programmes, and to Partnership (MDP), United Cities and Local strengthen local authorities in order to attain sub- Government, Africa (UCLGA) in collaboration stantial progress towards development". with the government of Kenya and other partners, During 37 special sessions, 23 thematic sessions and focused on theme of "Building local coali- and roundtables, participants examined the current tions for an effective implementation of the state of the implementation of each of the eight MDGs in African local governments." MDGs and concluded : ". . . that Africa is serious- ly behind in meeting the targets." The fight to arrest this regression must rest with local authorities, who were adjudged `custodians of the goals'. Addressing mayors and other city officials at the session, Dr. Anna Tibaijuka, UN Under- Secretary-General and executive director of UN- Habitat said, "For the people of Africa, you are the closest institution that mediates the bulk of their everyday lives. Indeed, you are the ultimate custodi- ans of the MDGs," Her sentiments were echoed by Jean-Pierre Elong Mbassi, Secretary General of UCLGA, and chair of the Municipal Development Partnership, who said that "Unless local authorities in this continent are empowered to achieve their goals, no progress is going to be made." Achieving the goals will also depend on how well Alliance urbanization in Africa is managed. This, according Cities to experts, requires that local governments and key Catherine Farvacque (World Bank), Pelle Persson (Cities stakeholders take the challenge of urbanization seri- Alliance), Sithole Mbanga (South African Cities Network) and ously. "The movement and transformation of Colin Bruce (World Bank) at the "Rethinking Planning and Programming Processes" session at Africities 4. human settlements into urban centres cannot be LEARNING AND COMMUNICATIONS 59 Improving Urban Performance; and the South African Cities Network's State of the Cities Report 2006. Clients and visitors were able to freely avail themselves of these and other publications which the Alliance prepared for Africities, including the 2005 Annual Report, a basic informational brochure on Cities Alliance and a popular Africities poster with the thought-provoking mes- sage: "More Urban Growth . . . Less Rural Poverty", which, as intended, generated lively discussions. The Alliance also hosted, in collaboration with its members, the following sessions: Alliance Cities "Rethinking Planning and Programming The Kenyatta International Conference Centre, venue of Africities 4. Processes"--which discussed how integrated plan- ning and programming approaches support the stopped. It only needs to be managed and directed to development of well governed, environmentally sus- improve the wellbeing of Africans and the develop- tainable, productive and socially inclusive cities. ment of their nations", concluded Mrs. Tibaijuka. For the Alliance, Africities was a tremendous opportunity to implement reinvigorated knowl- edge and advocacy outreach activities. The Alliance Secretariat hosted a large booth to allow members to co-exhibit, an invitation which was taken up by the German Development Cooperation (GTZ), the South African Cities Network (SACN), the South African Local Government Association (SALGA), United Nations Environment Pro- gramme (UNEP) and Sida. These contributed to making Cities Alliance booth 819 one of the most visible, active and popular at the exhibition, host- ing a continuous stream of visitors enquiring about Alliance's members and activities and how to access Alliance learning and support. The booth was also the venue for the well- attended launches of the Alliance's recent publica- tions: The Urban Transition in Sub-Saharan Africa: Implications for Economic Growth and Poverty Alliance Reduction, by Christine Kessides of the World Cities Bank; Guide to City Development Strategies: Cities Alliance booth 819. 60 ANNUAL REPORT 2006 Alliance Cities Launching The Urban Transition in Sub-Saharan Africa: From left to right: Alioune Badiane (UN-Habitat), Christine Kessides (World Bank), William Cobbett (Cities Alliance) and Maryvonne Plessis-Fraissard (World Bank). Chaired by the World Bank country Director for of the Development Policy Centre, Nigeria, Ibadan, Kenya, Colin Bruce, speakers included Sithole Nigeria and former Cities Alliance Policy Advisory Mbanga, CEO of the SACN, Patricia Appiagyei, Board member, Elisabeth Gateau, secretary-general mayor of Kumasi, Ghana; Jane Weru, executive of the UCLG, William Cobbett, the manager of director of the Pamoja Trust, Kenya, Benedict Cities Alliance, and Abraham Tekeste of the Ethi- Bennett, mayor, City of Mbabane, Swaziland, and opian Ministry of Works and Urban Development, Catherine Farvacque of the World Bank. representing the Cities Alliance's newest member. The debate centred on the fact that cities have "The Positive Impacts of Urbanization"--This always been the driving force behind economic session formed the core of the Alliance's participa- growth and the birthplace of innovations. As tion at Africities. Chaired by Maryvonne Plessis- demonstrated by Kessides' work, economic growth Fraissard, World Bank Director for Transport and that has taken place in Africa in recent years has been Urban Development, it highlighted the opportuni- mainly urban-based. Local authorities have a crucial ties linked to the urbanization process on a conti- role in overcoming the salient intra-urban inequali- nent where more people are moving to the cities and ties, effectively combating urban poverty and getting where 70 percent of the urban population live in ahead of future slum formation. At the same time, slums. Anchoring the discussions was the presenta- there is need for national governments and their tion by the World Bank's Christine Kessides of the development partners to actively support local gov- Cities Alliance's recent publication, The Urban ernments and strengthen their voices ­ especially in Transition in Sub-Saharan Africa: Implications for the debate on economic growth and job creation. Economic Growth and Poverty Reduction, supported Together, governments, cities and their develop- by eminent speakers such as Prof. Akin Mabogunje ment partners can learn from the past, embrace the LEARNING AND COMMUNICATIONS 61 Excellency Nicephore Soglo, mayor of the city of Cotonou, and former President of Benin, Kader Dicko of Mali's Koutiala Municipality, Ibrahim Sadisu, chairman of the Business and Economic Development Committee of Karu, Nigeria, Alistair Fray of the Department of Provincial and Local Government, South Africa, as well as from repre- sentatives of MDP and the Cities Alliance. The rec- ommendations and conclusions emanating from the session were presented and endorsed during the political segment of the Africities conference by Father Smangaliso Mkhatshwa, President of UCLGA, who highlighted local economic develop- ment as one of the priorities of UCLGA for the coming years. "Rethinking Financing Policies"--organized in collaboration with Agence française de développe- ment (AfD). Once again, Africa's rapid urbaniza- tion became the point of departure for a debate cen- Alliance tred on how to finance the public investments Cities needed to cope with sustained urban expansion. Investments are needed not only to meet the new and rapidly growing requirements but also to fill positive impacts of urbanization, and prevent wide- the gaps created by many years of under-investment spread urban degradation and human misery. that have resulted in substantially overloaded infra- structure, including transport, power and water dis- "Local Economic Development in Africa."-- tribution systems. Environmental pollution and organized in collaboration with the Municipal substandard housing only compound the problem. Development Partnership. With Local Economic Speakers included Thierry Paulais of the AfD, Development (LED) in Africa gaining momentum, Mayor of Ouagadougou, Simon Campaore, Jean- the session discussed a new LED study commis- Michel Daclin of the city of Lyon, France, Maleye sioned by the Cities Alliance and the government of Diop of UNDP/PPUE (United Nations De- the Netherlands, sharing LED policy making and velopment Programme/Public-Private Partnerships practices as adapted and applied to a common LED for the Urban Environment), Thomson Banda of platform for Africa. The session enjoyed stimulat- the Ministry of Local Government and Housing, ing contributions from Jean-Pierre Elong Mbassi, Zambia and Crane Muleya of the Budget Office, secretary-general of UCLGA, Peter Beez, Swiss Ministry of Finance and National Planning, Agency for Development and Cooperation, His Zambia. 62 ANNUAL REPORT 2006 Knowledge Products Review employment, and mortality. In countries such as Bangladesh, Ethiopia, Haiti, and India, child mal- State of the nutrition in slums is comparable to that of rural World's Cities areas. For example, in Ethiopia, child malnutrition 2006/7: The in slums and in rural areas is 47 and 49 percent, Millennium respectively, compared with 27 percent in non- Development slum urban areas. In many sub-Saharan African Goals and Urban Sustainability cities, children living in slums are more likely than (UN-Habitat, 2006) rural children to die from waterborne or respirato- ry illnesses. Women living in slums are also more likely to contract HIV­AIDS than their rural coun- terparts. In most sub-Saharan African countries, HIV prevalence is higher in urban areas than in rural ones; in Kenya, Tanzania, and Zambia, HIV prevalence in urban populations is almost twice that Launched during WUF III, UN-Habitat's State of rural populations. These differences between of the World's Cities 2006/7: The Millennium rural and urban conditions are attributed to the Development Goals and Urban Sustainability argues poor living conditions in slums, which expose that the world's billion slum dwellers are more like- women and children to a variety of health hazards ly to die earlier, experience more hunger and dis- and often force girls and women to engage in sex- ease, attain less education, and have fewer chances ually risky behaviour. of employment than urban residents who do not The report also debunks some commonly held reside in a slum--what UN-Habitat has labelled beliefs about people living in slums. Contrary to the `urban penalty'. popular perception, young adults living in slums are "For a long time, we suspected that the opti- more likely to have a child, be married, or head a mistic picture of cities did not reflect the reality on household than their counterparts living in non- the ground," said Anna Tibaijuka, UN-Habitat's slum areas. In Uganda, for instance, 34 percent of executive director. "This report provides concrete evidence that there are two cities within one city-- young men living in slums head a household, com- one part of the urban population that has all the pared with 5 percent of young men living in non- benefits of urban living, and the other part, the slum urban areas. The report shows that the share slums and squatter settlements, where the poor of women heading households is greater in urban often live under worse conditions than their rural areas, except in Africa, where more rural women relatives. It is time that donor agencies and nation- head households. al governments recognized the urban penalty and The report comes at a time when the world is specifically targeted additional resources to improve entering a historic urban transition: in 2007, for the living conditions of slum dwellers." the first time in history, the world's urban popu- The report shows that slums and rural areas are lation will exceed the rural population. Towns and remarkably similar in terms of health, education, cities of the developing world, which are least LEARNING AND COMMUNICATIONS 63 upgrading and prevention policies or integrated slum upgrading and prevention into their broader poverty-reduction policies and programmes. What comes out clearly in this report is that slum formation is neither inevitable nor acceptable. "Running the poor out of town"--through evic- tions or discriminatory practices--is not the an- swer; rather, helping the poor to become more inte- grated into the fabric of urban society is the only long-lasting and sustainable solution to the grow- ing urbanization of poverty. Ultimately, as the developing world becomes more urban, and as the locus of poverty shifts to cities, development agen- cies will have to wage the battle to achieve the MDGs in the world's slums. Guide to City Africa Scorecard. Development Strategies: equipped to deal with rapid urbanization, will Improving Urban absorb most of the world's urban growth--95 per- Performance cent--in the next two decades. The majority of (Cities Alliance, migrants will be moving to small towns and cities 2006) of fewer than 1 million inhabitants. As cities grow, so do their slum populations. In many sub- Saharan African cities, the slum population accounts for more than 70 percent of the urban population. Slums in southern Asia, western Asia, and sub-Saharan Africa are growing as fast as the In response to constant demand from its mem- urban population in general. bers and cities alike, the Cities Alliance commis- A global scorecard on slums developed by sioned this guide, which was produced by Douglas UN-Habitat shows that countries such as Egypt, Webster, professor of global studies at Arizona Thailand, and Tunisia have not only managed to State University, United States, and Larissa reduce slum growth in the past 15 years but also Muller, assistant professor of planning at the made considerable investments in improving slums. University of Calgary, Canada. The guide is based These countries either developed specific slum primarily on assessments of CDS processes and 64 ANNUAL REPORT 2006 products by the Cities Alliance, its members, and The discourse at each stage is interspersed with its city partners. self-explanatory boxes charting unique developing- The Guide is a resource for cities in the developing and industrialized-city experiences of the CDS world that are about to start a city or city­region process--some successful, some not so successful, strategizing process involving local actors in govern- but always highlighting the lessons learned from ment, the private sector, and civil society, as well as these experiences. their international partners (development agencies, Five appendices at the end of the Guide provide international investors, and NGOs). The book is guidance on answering some of the questions Cities divided into two parts: part I first sets the context for Alliance partners asked during the CDS process the product itself: "The purpose of these guidelines is about the main themes. to improve the usefulness and positive impact of City Development Strategy (CDS) processes supported by the Cities Alliance" (p. 9). It also sets the context More Urban, for any city's undertaking of the CDS process: "The Less Poor: An role of a CDS process is first to shock an urban system Introduction to under controlled conditions, causing stakeholders to Urban Development be truly objective in assessing their situation, and then and Management to strategically deploy a limited number of actions to (Sida/Earthscan, enable the city to dramatically change its perform- 2006) ance" (p. 21, emphasis added). Part II outlines and discusses approaches to undertaking a CDS. Five substantive themes for CDSs to organize around are (i) livelihood, such as job creation, business development, and sources of household income; (ii) environmental sustain- ability and energy efficiency of the city and the Launched by Sida as part of its activities at the quality of its service delivery; (iii) infrastructure WUF III, More Urban, Less Poor is a well-written and and its spatial form; (iv) financial resources; and refreshingly direct addition to the policy debate on (v) governance. the urban agenda. Uncluttered in their language and The eight methodological steps to the CDS messages, the authors, Göran Tannerfeldt (Sida) and process examined in the guide are (i) initiating the Per Ljung (PM Global Infrastructure Inc.) introduce process; (ii) establishing the initial parameters and urban development in the context of a world under- the scope of the CDS; (iii) making an initial as- going massive urbanization, with the population of sessment; (iv) formulating a vision; (v) identi- cities projected to increase to more than 4 billion fying strengths­weaknesses­opportunities­threats within 15 years, mostly in the developing world. (SWOT analysis); (iv) setting strategic thrusts; This historic shift is producing dramatic effects (vii) building awareness; and (viii) starting the on human well-being and the environment. The implementation. most salient negative aspect of urban growth in LEARNING AND COMMUNICATIONS 65 developing countries is the condition of the urban State of the Cities poor. Their numbers are underestimated and grow- Report 2006 ing. At least 40 percent of people in developing (South African Cities countries are poor, and with present trends, in 2020 Network, 2006) there will be more than 1.4 billion slum dwellers. The MDGs' target 11 calls for significant improve- ment in the lives of at least 100 million slum dwellers by 2020. It is recognized that for such a target to be meaningful, the formation of new slums must also be prevented. Affordable land and services for housing another 600 million people are needed to halve the number of slum dwellers by 2020. In the view of the authors, unplanned shanty- The 2006 version of the State of the Cities Report towns without basic services are not an inevitable (SOCR) follows on the first report, produced in consequence of urbanization, and slums are not 2004, in providing a qualitative and quantitative explained by poverty alone. Urban misery also analysis of South Africa's largest cities and high- stems from misguided policies, inappropriate legal lighting the important role played by cities in driv- frameworks, dysfunctional markets, poor gover- ing the national economy and improving the lives nance, and, not least, lack of political will. of South African residents. Urbanization and economic development go hand With six chapters, SOCR 2006 takes further in hand, and the productivity of the urban econo- steps to examine what has been achieved during the my can and should benefit everyone. Proper solu- first municipal term of office under the new munic- tions, backed by decisive, concerted action, can dra- ipal dispensation, brought into being by The White matically improve living conditions for the urban Paper on Local Government, the Municipal Struc- poor. The book also examines how cities grow, their tures Act, and the Municipal Systems Act. It provides economic development, urban poverty, and hous- detailed information and analysis of trends that ing and environmental problems. It further ex- have affected urban development over the past five amines how to face these challenges through gover- years. But it also looks forward to the key challenges nance and management of urban growth, the and opportunities likely to be encountered in the finance and delivery of services, and finding a role years ahead. for development cooperation. Following an overview, the second chapter exam- The timing of this report is auspicious, coming ines the role and importance of cities in the global as it does in the midst of a deep ambivalence among and national contexts and how cities drive econom- many international development agencies about the ic growth. These global trends are mirrored in the importance of urban development and the role of national context, where there is evidence of rapid, towns and cities. As the report notes, "Urban pover- ongoing urbanization--more than half of South ty is different from rural poverty and a better under- Africa's population now live in cities and towns. standing of its nature is required from governments In a departure from the original focus on the and donors." 9 largest cities, this chapter embraces an additional 66 ANNUAL REPORT 2006 12 cities and towns, providing an analysis of 21 key The Dynamics of urban areas. It takes note of the 26 key urban nodes Global Urban identified in the National Spatial Development Expansion Perspective being prepared by the Presidency and to (World Bank, 2005) be officially released at the end of 2006, arguing that these 21 key urban areas, which occupy only 2 percent of the land, contribute almost 70 percent of the national economy. These 21 key urban areas also accommodate many people living below the minimum level, suggesting that strategic invest- ment in cities can achieve two things simultaneous- ly: it can help the economy grow, and it can address the considerable challenges of poverty in cities. This chapter also explores urban­rural economic link- ages, urban poverty, and the importance of infor- Co-authored by Shlomo Angel, Stephen C. mality to the South African urbanization process. Sheppard, Daniel L. Civco, and others, this report The third chapter returns to the nine-cities focus examines the dynamics of global urban expansion of the original report, consolidating data on what by defining a new universe of 3,943 cities with pop- the nine cities have been doing over the last few years ulations in excess of 100,000 and by drawing a and using the same analytical framework--the pro- stratified global sample of 120 cities from this ductive city, the sustainable city, the inclusive city, universe. the well-governed city--as in SOCR 2004. It analyzes population data and satellite images Chapter four focuses on how the different cities for two periods a decade apart, in addition to look- have tried to address the challenges of city manage- ing at several measures of urban extent and expan- ment and development. The analysis is based on sion: for example, the authors calculated the built- surveys of the nine city strategies, enabling the team up area of cities and the average density of the to assess (1) city progress in the past five years; and built-up area. The report also presents and analyzes (2) ongoing challenges. data for 90 cities of the global sample of 120. The fifth chapter examines the emerging strate- Weighted averages of the built-up area and the gic agendas of national governments and how these average density, as well as compactness and conti- will influence South Africa's cities over the next five guity measures, and their change over time are pre- years, and the final chapter provides an overall sum- sented for nine regions, four income groups, and mary of the report. four city-size groups covering the entire globe. The analytical overview of South Africa's cities is The report found densities in developing-country complemented by six life stories of ordinary people cities to be some three times higher than those in and how they experience their cities. These stories cities in industrialized countries; and densities in all illustrate that ongoing urban­rural linkages, infor- regions were found to be decreasing over time. It mality, industrial growth, HIV­Aids, affordable argues that if average densities continue to decline at housing, and public transport are not only the con- the annual rate of 1.7 percent, as they have during cerns of urban policy makers but also the very stuff the past decade, the built-up area of developing- of everyday life for urban residents. country cities will increase from 200,000 square LEARNING AND COMMUNICATIONS 67 kilometres in 2000 to more than 600,000 square achieving these results. It argues that rather than kilometres by 2030, while their populations double. devoting more attention to debating the urban The central message of this study is quite clear: contribution to development in Africa, development developing-country cities should be making realistic, practitioners need to spend real energy unblocking it. yet minimal, plans for urban expansion, designating The book challenges several common myths that adequate areas to accommodate the projected expan- cloud discourse about urban development in Africa. sion, investing wisely in basic trunk infrastructure to It finds that urbanization in the region is neither serve this expansion, and protecting sensitive land excessive nor imbalanced relative to the experience from the incursion of new urban development. of other regions. Internal migration, which is not the main source of urban growth, does not account for urban poverty. Migration is favourable for both The Urban the sending and the receiving areas, and population Transition mobility benefits both rural and urban households, in Sub-Saharan as many retain a foothold in both areas to spread Africa: risks. Nevertheless, the absolute rate of urban Implications for growth creates a major management task, particu- Economic Growth larly in the secondary cities, which tend to be the and Poverty most underserviced, and in large cities. Reduction Although Africa has been frequently described as (Cities Alliance, World Bank, 2006) having a disconnect between urbanization and eco- nomic growth, in reality most of the economic growth that has taken place in the past decade derives from mainly urban-based sectors (industry Published in French as La transition urbaine en and services), particularly in better performing Afrique subsaharienne: Impacts sur la croissance economies. But cities have clearly not lived up to économique et la réduction de la pauvreté (Cities their productive potential, because of widespread Alliance 2006) neglect, inappropriate policies and bad manage- The Urban Transition in Sub-Saharan Africa elab- ment. Urban poverty is not mainly a function of orates on the salient points of the positive impacts of urban expansion; nor is it a sign of failure of the urbanization captured in the introductory chapter of urban economies in Africa. There is evidence that the Cities Alliance 2004 Annual Report. It discusses much of the deprivation in cities and the emerging the ongoing processes of urban and local government urban public health problems relate to the policy development in sub-Saharan Africa, how it can bene- and institutional failures that perpetuate social fit the countries, and what conditions are necessary exclusion and inequalities between the urban poor to achieve this outcome. Africa is facing close to a and the urban non-poor. doubling of its urban population in 15 years. Well-managed cities and towns support the Addressed to urban advocates and sceptics alike, national development agenda by providing market this report takes a hard look at what the urban tran- demand and remittances for the rural economy sition can offer to national development and what (implying a virtuous circle); fostering entrepreneur- support cities and local governments require for ship and economic modernization and diversifica- 68 ANNUAL REPORT 2006 tion; reducing poverty by offering a deeper labour development in Asia, a region where the urban pop- market, higher income earning opportunities, and ulation is projected to grow by around 70 percent, better access to services; and creating the practical to more than 2.6 billion people, over the next necessity for effective local governance and admin- 25 years. It examines urban development policies istration. But the simple concentration of firms and and good practice case studies in 12 countries of the people does not guarantee that agglomeration continent--Bangladesh, Cambodia, People's Re- economies will be realized. Much to the detriment public of China, India, Indonesia, Lao People's of the economy and competitiveness, many African Democratic Republic, Malaysia, Pakistan, Phil- firms are not experiencing the market efficiencies, ippines, Sri Lanka, Thailand, and Viet Nam-- ease of mobility, and low transaction costs that bet- highlighting examples of sustainability and dis- ter managed cities could deliver. Serious shortcom- cussing their replicability for other cities and ings in basic urban services, land, housing, and countries. In analyzing the case studies, the book urban transport and the severe shortage of fiscal uses a framework for systematically documenting, resources for local governments mean that urban comparing, and deriving lessons of good practice firms and workers prematurely experience the downside of urban concentration: diseconomies for sustainable urban development. Each good such as high land costs, degraded public areas, practice is assessed on its contribution to one or threats to public health, and emerging crime. Neg- more of the following: lect of urban management therefore reduces the benefits and raises the costs of the major private and Good governance public investment represented in cities. Better urban management Effective and efficient infrastructure and ser- vice provision Urbanization and Financing and cost-recovery Sustainability in Social and environmental sustainability Asia: Case Studies Innovation and change of Good Practice Ability to leverage international development (Asian Development assistance. Bank and the Cities Alliance, 2006) Lessons learned from good and bad practice have shown that to achieve urban futures in Asia, major changes, as proposed below, are needed in the way cities are developed and managed, in particular to address the large imbalance between demand and supply in the provision of infrastructure and services: Managed decentralization--All governments in Urbanization and Sustainability in Asia was com- Asia recognize that well-managed decentraliza- missioned to capture and disseminate knowledge tion is needed to improve local infrastructure about good practices in sustainable urban regional and services. LEARNING AND COMMUNICATIONS 69 Bank Carnemark/World Curt Bangkok cityscape along the Chao Phraya River. Institutional strengthening and capacity central government and develop their asset base, building--City governance and local institu- credit worthiness, and capacity to pay. tions need to be strengthened to have the capacity to meet the challenge of growing "Working with the cities. Cities Alliance-- Stakeholder participation--Decentralization Revised version 2005 relies on processes at the local level for fulfilling and Financing City local needs and for holding local authorities Infrastructure", accountable in meeting these needs and balanc- Villes en développe- ing priorities between all elements of society. ment, No. 69 Problems of coordination--Decentralization in (Cities Alliance rapidly expanding cities requires a common and Institut des strategy and a coordination framework to facil- sciences et des tech- itate the resolution of common issues and to niques de l'équipement manage interactions with rural areas. et de l'environnement pour le développement Local leadership--Local leaders play an im- [ISTED], September 2005) portant role in identifying issues, engaging the community, defining priorities and The Alliance strong communication and knowl- approaches, and mobilizing needed resources. edge partnership with ISTED also yielded fruit Financial sustainability and management--Local during the year under review first with necessary governments need to move away from general updating of the English and French versions of the reliance on revenue-sharing arrangements with Guide to Working with the Cities Alliance to more 70 ANNUAL REPORT 2006 accurately capture target audi- cializing in city infrastructure finance issues; and ences, the proposals process, Rajivan Krishnaswamy, Cities Alliance senior membership profile and co- urban finance adviser. financing details. This was fol- In the foreword to the newsletter, Katherine lowed later in the year with Sierra, co-chair of the Cities Alliance Consultative the copublication of a special Group and the World Bank vice president for sus- edition of the Villes en tainable development, noted that "while much développement newsletter, in international debate has focused on increased both English and French. It focused on the theme development assistance and debt relief, insufficient of financing city infrastructure, which was also the attention has been paid to local sources of invest- thematic thrust of the Cities Alliance 2005 Annual ment funds for infrastructure in the towns and Report. The eight-page bulletin features articles on cities where the urban poor live" (p. 1). Helping the topic by city finance experts, such as Juanita cities become proactive facilitators of infrastruc- Amatong, former secretary of finance of the ture provision is a critical development task, Philippines and a member of the Cities Alliance which requires "partnerships between cities, na- Policy Advisory Board; Jason Ngobeni, city treasur- tional governments and their development part- er of Johannesburg; David Vetter, a consultant spe- ners" (ibid.). BOX 12. CITIES ALLIANCE KNOWLEDGE MANAGEMENT PLAN D to IRIS and the Cities Alliance Website, designed to pre- uring the year under review the Cities Alliance serve information and knowledge from Cities Alliance activ- Secretariat formalized a Knowledge Management Plan ities on CDS and slum upgrading; to more efficiently manage the flow of knowledge and informa- tion resources, as well as policies and procedures. This plan-- A more interactive Cities Alliance Website based on an open-source platform and enabling better content manage- in effect, a Cities Alliance library--aims to: ment, easier navigation, searches, RSS, blogs, and easily Improve internal knowledge and information resources downloadable content; management; Greater interface with the World Bank's institutional docu- Provide the Cities Alliance Secretariat team, partners, and ment and records management system; clients with timely access to grant activity information, More systematic classification of tools made available to knowledge and publications sources. Cities Alliance clients and partners for planning and imple- menting CDSs and slum-upgrading programmes and key The basic features of the Cities Alliance library include: outputs from Cities Alliance-funded activities; and, An enhanced integrated projects database--an active, More systematic classification of references and other dynamic, and user-friendly Web-based database--related resource materials. LEARNING AND COMMUNICATIONS 71 CITIES ALLIANCE ORGANIZATION Membership in the Cities Alliance has continued to grow, with South Africa and most recently Ethiopia joining Brazil and Nigeria as developing-country members. I n accordance with the charter of the Cities Berlin, December 1999--Inaugural meeting, Alliance, its governance and organizational at which the Cities without Slums action plan structure includes the Consultative Group, was launched and the charter of the Cities the Policy Advisory Board, and the Secretariat. Alliance and its 2000 work programme were approved. The Consultative Group Montréal, June 2000--First Public Policy Forum ("Political Dimensions of Support for The Consultative Group--the Alliance's board of Cities"), at which the Consultative Group directors--is responsible for setting the Alliance's reviewed application guidelines and approved long-term strategy, approving its annual work the Cities Alliance Vision statement. programme and budget, and reviewing its achieve- Rome, December 2000--Second Public ments. The Consultative Group consists of finan- Policy Forum ("Local Partnerships: Moving to cial contributors to the Cities Alliance Trust Fund Scale"), at which the Consultative Group and the political heads of United Cities and Local approved amendments to the charter of the Governments (UCLG, the global organization of Cities Alliance Charter, the 2001 work pro- local authorities) and Metropolis (a world associa- gramme, and procedures to establish the Policy tion of major metropolises), who have pledged their Advisory Board and the Steering Committee. commitment to achieving Alliance goals. The Kolkata, December 2001--Third Public Consultative Group is co-chaired by the World Policy Forum ("Sustainable Partnerships for Bank's vice president for sustainable development City Development"), at which the Consultative and UN-Habitat's deputy executive director. Group reviewed procedures for the independ- Prospective financial contributors may serve as ent evaluation of the Cities Alliance and associate members for two years. Membership in the Cities Alliance has contin- approved the 2002 work programme. ued to grow, with South Africa and most recently Brussels, October 2002--Panel discussion at Ethiopia joining Brazil and Nigeria as developing- the European Commission ("Achieving the country members. Millennium Development Goal of Cities with- The Consultative Group has also set up the six- out Slums"), at which the Consultative Group member Steering Committee, a subset of its mem- reviewed the independent evaluation of the bers, to provide guidance to the Secretariat. Cities Alliance and approved the 2003 work programme. São Paulo, October 2003--Fourth Public Meetings Policy Forum ("Sustainable Financing Consultative Group meetings are held annually in Strategies for Cities and Financial Services for connection with a public policy forum designed to the Urban Poor"), at which the Consultative share the lessons learned from experience and Group approved procedures for developing- inform policy orientations and standards of practice country membership in the Consultative in areas related to the Alliance's goals. The follow- Group and approved the 2004 work ing Consultative Group meetings have been held: programme. CITIES ALLIANCE ORGANIZATION 73 eThekwini, November 2004--Fifth Public region. They provide guidance to the Consultative Policy Forum ("Making City Development Group on key strategic, policy, and regional issues Strategies Come Alive in South Africa"), at and support the implementation of Alliance activi- which the Consultative Group approved new ties. The Consultative Group established the com- Policy Advisory Board members and the 2005 position, terms of office, and operating procedures work programme. of the Policy Advisory Board at the December 2000 Marrakech, November 2005--Sixth Public Second Public Policy Forum meeting. The board Policy Forum ("Morocco's Cities Without brings together civic leaders and policy advisers Slums Programme"), at which the Consultative with a formidable range of public and private Group reviewed procedures for the second sector expertise that spans the leadership of com- independent evaluation of the Cities Alliance munity-based organizations, nongovernmental or- and approved the 2006 work programme. ganizations (NGOs) and their networks, local authority organizations, community banks, com- Members as of June 2006 munity savings and credit schemes, commercial The Consultative Group includes representatives of banks, and public sector financial institutions. the following groups: What they have in common is political experience and practical knowledge from working with poor Local authorities cities and the urban poor worldwide. United Cities and Local Governments The board meets twice a year and has eight Metropolis members: two from Africa, two from Asia, one from the Arab States, one from Eastern Europe, Governments one from Latin America and the Caribbean, and Brazil the Netherlands one from the industrial countries. The members Canada Nigeria serve on a rotating basis, typically between two and Ethiopia Norway four years. France South Africa For the Alliance's November 2005 Public Policy Germany Sweden Forum, held in Marrakech, the board's representa- Italy United Kingdom tive from the Arab States, Yousef Hiasat, then Min- Japan United States ister of public works and housing for Jordan, led a session on regional experiences in urban upgrading. Multilateral organizations In May 2006, the board gathered in Amman, Asian Development Bank Jordan, for its annual spring meeting, organized by United Nations Environment Programme board member and chief executive officer of Beit UN-Habitat Al-Mal Saving and Investment for Housing World Bank (Beitna), Yousef Hiasat, and hosted by the Greater Municipality of Amman. Board members took ad- The Policy Advisory Board vantage of the occasion to gain direct exposure to the strategic development planning and urban The Policy Advisory Board of the Cities Alliance is upgrading policies of the municipality and to learn composed of eminent urban experts from each of the innovative financing scheme that Beitna had 74 ANNUAL REPORT 2006 Mary Houghton is the president and director of ShoreBank Corporation, in Chicago, a commercial bank holding company with $1.7 billion in assets, organized to implement community development strategies in targeted urban neighbourhoods and rural areas. She is also an adviser to private banks and microcredit lending institutions in developing and transi- tion countries. Members as of June 2006 Juanita D. Amatong is a member of the Monetary Board of the Central Bank of the Alliance Philippines; former secretary of finance of the Cities Philippines; and a former executive director of PAB members mingle with residents during a visit to an urban upgrading site in Amman, Jordan. the World Bank Group. With an educational background in business, economics, and public administration, she has worked with interna- introduced for ground-breaking private develop- tional consultancies, in academia, and as a tax ment projects in the city. economist at the International Monetary Fund. The board meeting in Amman marked the She is a prime proponent of strong local gov- second rotation of the Policy Advisory Board ernment finance in the Philippines. members, as incoming members, José Forjaz, of José Forjaz is the chief executive officer and Mozambique, and Clare Short, of the United founder of José Forjaz Arquitectos in Maputo, Kingdom, filled the regional representative posi- Mozambique; former senior adviser for the tions of exiting members Akin Mabogunje and Mozambican minister for public works and Mary Houghton, respectively. Cities Alliance part- housing, dealing with housing policy, human ners hope to continue drawing on the wealth of settlements, planning, training, and institution experience and knowledge its two exiting members building; former national director of housing, have offered since the board's formation: responsible for regional and urban planning, housing, and social equipment, as well as train- Akin Mabogunje is an internationally re- ing programmes for basic and mid-level rural nowned African development scholar who has and urban planning technicians; former secre- published and lectured widely on urban man- tary of state for physical planning; and a former agement and spatial perspectives in the devel- member of parliament. Widely published, he opment process. He is chair of the Presidential has lectured at universities around the world Technical Board of the Federal Mortgage Bank and is now in his 15th year as director of of Nigeria and former executive chair of the the Faculty of Architecture and Planning at Development Policy Centre. Universidade Eduardo Mondlane, in Maputo. CITIES ALLIANCE ORGANIZATION 75 Yousef Hiasat is the chief executive officer of Clare Short is the United Kingdom's former Beitna, a leading investment and financial firm secretary of state for international develop- in Amman; former minister of public works ment. A Member of Parliament for more than and housing in Jordan, with responsibility for 20 years, she continues to represent the con- the country's road networks, government stituency of Birmingham Ladywood. Former buildings, and construction and housing sec- director of the Youthaid and the Unemployment tors; former director-general of Jordan's Unit, she also worked at the Home Office and Housing and Urban Development as director of All Faiths for One Race, a com- Corporation, the public institution responsible munity-based organization promoting racial for housing and urban development policies equality in Birmingham. A former opposition and housing schemes directed at middle- and spokesperson on overseas development, shadow low-income households; former principal minister for women, and shadow secretary of adviser to the prime minister of Jordan, on state for transport, she is a member of the housing and urban development issues; found- Helsinki Process on Globalisation and ing member and current president of the Democracy and an associate of the Oxford Morocco-based Near East and North Africa Research Group. Urban Forum; and president of the Jordan Paulo Teixeira is a councillor for the Urban Management Society. Municipality of São Paulo, Brazil; former Jean-Pierre Elong Mbassi is secretary- secretary of housing and urban development general of the Municipal Development of the Municipality of São Paulo, responsible Partnership for Africa, based in Cotonou, for the development of a large-scale slum Benin; secretary-general of United Cities and upgrading and land tenure programme; a Local Governments of Africa; and an experi- member of the United Nations Millennium enced practitioner in urban management and Task Force 8 on Improving the Lives of Slum slum upgrading. He is the organizer of the Dwellers; and a member of the UN-Habitat Africities Summit, the most important dia- Advisory Group on Forced Evictions. logue on decentralization in Africa. Ana Vasilache is founding director of the Sheela Patel is founding director of the Partners Romania Foundation for Local Society for the Promotion of Area Resource Development, a Bucharest-based NGO that Centres, in Mumbai, India, working in supports democratic processes of governance alliance with the National Slum Dwellers and decentralization and works to strengthen Federation and Mahila Milan in a federation the managerial capacities of local governments of community-based organizations of the in central, eastern, and south-eastern European urban poor, facilitating their direct participa- countries; and former head of the Settlements tion in addressing the problems of cities and Management Office in the Ministry of Public their relationship with informal settlements; Works and Regional Planning in Bucharest. and chair of Shack Dwellers International, a She has extensive experience with planning leg- global alliance of grassroots community feder- islation and designing and facilitating partici- ations of the urban poor. patory strategic planning processes. 76 ANNUAL REPORT 2006 BOX 13. MARK HILDEBRAND, MANAGER, 1999­2006 A s manager of the Cities dysfunctional land markets, unresponsive financial Alliance Secretariat from its systems and a fundamental lack of political will."b inception in 1999 until his retire- The plan put forward six foundational key actions to ment in February 2006, Mark improve the lives of 100 million slum dwellers by Hildebrand was instrumental in 2020. It was the first time anyone had presented the establishing the Cities Alliance as a challenge of slums so directly, or so clearly articulated global coalition of cities and their a global urban development target. development partners. The target subsequently became Target 11 of the Following the establishment of the Alliance's modus Millennium Development Goals and as such, slum operandi and the criteria for governing its activities, the upgrading became one of the world's development Cities Alliance produced the Cities without Slums action priorities, something on which all national governments plan, under Mark's personal direction. Launched in would be required to report progress, both to the Gen- December 1999 by President Nelson Mandela of South eral Assembly and, far more importantly, to their own Africa, who had agreed to act as patron of the Cities populations. without Slums action plan, it went on to be adopted by The Cities Alliance's members thank Mark Hildebrand the world's heads of state in the United Nations for his leadership and vision. Millennium Declaration.a The action plan was short, and it was bold. Noting a. Office of the United Nations High Commissioner for Human Rights, that slums and squatter settlements were growing at an United Nations Millennium Declaration, General Assembly Resolution alarming rate and projected to double in 25 years, it 55/2 (September 8, 2000), stated that "slums are the product of failed policies, b. Cities Alliance, Cities without Slums: Action Plan for Moving Slum bad governance, corruption, inappropriate regulation, Upgrading to Scale, (Berlin, December 1999) p. 1. The Secretariat Csorba, Ildiko ­ Programme Assistant Einfeldt, Christiane ­ Research Analyst The Alliance Secretariat, housed at the World Bank Haas, Jörg ­ Senior Programme Officer headquarters, carries out the Alliance's mandates Henderson, Susanna ­ Programme Assistant and manages its operations. Merrick, Andrea ­ Programme Officer Milroy, Kevin ­ Senior Operations Officer Staff as of June 30, 2006 Persson, Pelle ­ Senior Programme Officer Akporji, Chii ­ Communications Officer Puspa, Erika ­ Knowledge Management Analyst Aubry-Kendall, Françoise ­ Resource Rajivan, Krishnaswamy ­ Senior Urban Finance Management Assistant Adviser Chabrillat, Pascale ­ Urban Economist Rama Krishnan, Venkateswaran ­ Financial Cobbett, William ­ Manager Management Specialist CITIES ALLIANCE ORGANIZATION 77 FINANCIALS In 2006, nearly 30 percent of core funds were approved for programmes in sub-Saharan Africa. Fiscal Year 2006 Highlights Cameroon, Ghana, Mozambique, Rwanda, Senegal, South Africa and Zambia. D There were also record funding approvals for uring fiscal year 2006, Cities Alliance programmes in Asia, with total allocations of members sponsored nearly $12 mil- $3.5 mil. lion in approved core funding al- A major new non-core (earmarked) funding locations, and more than $29 million in total allo- commitment by the Government of Italy resulted cations. Both figures established new records for the in approval of $7.2 million in support of the Alliance. These activities are linked to $2.0 billion statewide slum upgrading programme in Bahia, in committed or prospective investments, bringing Brazil. Final approval was also provided for the the Alliance's links to investment to more than $8.2 $10 million allocation from the UK-Department billion over the past six years. for International Development (DFID) to UN- Since the Alliance's founding in December 1999, Habitat's Slum Upgrading Facility (SUF), which its members have pledged more than $100 million in will initially focus on mobilizing domestic capital financing and approved $92 million of funding for slum upgrading in four countries--Ghana, applications. Nearly $54 million has been disbursed. Indonesia, Sri Lanka and Tanzania. Significant new programmes were started during New non-core funding of $750,000 was provid- the year in all developing regions. Nearly 30 percent ed by Japan for Asia CDS activities; £600,000 by of core funds were approved for programmes in DFID to support the Alliance's knowledge genera- sub-Saharan Africa, with $4.4 million in total allo- tion and learning activities, to enhance the Alliance's cated for programmes in Benin, Burkina Faso, engagement with United Cities and Local Govern- ments; and, $225,000 was con- tributed by Norway to support Millions of U.S. dollars the Alliance's urban finance ini- tiative. Sweden also renewed its $150 support for a Cities Alliance Cities Alliance pledges to date: US$101.3 million advisor to work with clients in Cities Alliance pledges paid-in to date: US$80.5 million southern and eastern Africa, and $100 had previously provided funding for a secondment to the Cities Alliance Secretariat staff. The Asian Development $50 Bank renewed it membership in the Alliance for three years, and South Africa joined Brazil and Nigeria as developing country $0 members of the Alliance, sign- 2001 2002 2003 2004 2005 2006 ing a membership agreement for $250,000 over five years. FINANCIALS 79 S O U R C E S O F F U N D S F Y 0 0 ­ F Y 0 6 ( U n a u d i t e d ) (US$ as of June 30, 2006) SUMMARY Type of funding Pledge Paid-in Core funding 42,235,000 36,017,672 Non-core funding 51,375,000 37,771,958 Non-core secretariat funding 7,678,000 6,688,405 Total funding 101,288,000 80,478,035 Donor Pledges Duration Paid-ina Core funding ADB 1,250,000 2002-2003, 2005-2007 500,000 Brazil 150,000 2004-2006 50,000 Canada 1,500,000 2000-2001, 2003-2006 1,585,293 France 1,200,000 2000, 2002-2005 1,190,327 Germany 2,200,000 2000-2007 1,744,052 Italy 3,080,000 2000-2006 2,632,905 Japan 1,750,000 2000-2005 1,750,000 Netherlands 2,750,000 2000-2004 2,750,000 Nigeria 50,000 2005 50,000 Norway 2,530,000 2000-2005 2,612,086 South Africa 250,000 2006-2010 Sweden 4,125,000 2000-2007 2,829,383 UNEP 1,000,000 2003-2006 900,000 UN-HABITAT 200,000 2004-2005 200,000 United Kingdom 6,600,000 2000-2005 6,977,299 United States 1,750,000 2000-2006 1,500,000 World Bank 11,850,000 2002-2007 8,746,326 Total core 42,235,000 36,017,672 Non-core fundingb Canada 75,000 2004 73,608 Italy 13,135,000 2001-2008 7,461,948 Japan 4,250,000 2000-2005 4,250,000 Netherlands 350,000 2003-2004 350,000 Norway 2,075,000 2002-2005 2,131,802 Sweden 6,070,000 2003-2008 5,544,861 United Kingdom 22,620,000 2001-2008 16,794,736 United States 2,100,000 2003-2007 465,000 World Bank 700,000 2001 700,000 Total non-core 51,375,000 37,771,958 Non-core Secretariat fundingc World Bank 3,043,000 2000-2002, 2006 3,043,000 UN-Habitat 2,033,000 2000-2007 1,633,000 Sweden 685,000 2005-2007 455,405 Other 1,917,000 2001-2007 1,557,000 Total 7,678,000 6,688,405 Note: Fiscal year covers the period July 1 through June 30. a. Amounts may vary from amounts pledged because of exchange rate fluctuation. b. Non-core funding is earmarked for a specific facility, region, or activity. The facilities include the Community-Led Infrastructure Finance Facility, the Cities Without Slums Facility for Sub-Saharan Africa, the Community Water & Sanitation Facility, and the Slum Upgrading Facility. c. Secretariat funding includes in-kind funding for staff secondments from UN-HABITAT, Germany, the United Kingdom and the World Bank Staff Exchange Program with the Caisse des dépôts et consignations. 80 ANNUAL REPORT 2006 U S E S O F F U N D S , F Y 0 0 -- F Y 0 6 ( U n a u d i t e d ) (US$ as of June 30, 2006) SUMMARY FY06 Cumulative Funding source Allocations Disbursements Allocations Disbursements Core activities 11,810,882 6,474,244 40,958,800 25,271,717 Non-core activities 17,246,680 5,596,686 50,820,907 28,503,379 Total uses of funds 29,057,562 12,070,930 91,779,707 53,775,096 APPROVALS BY TYPE OF ACTIVITY FY06 Cumulative Region Core funds Non-core funds Core funds Non-core funds City development strategies 4,409,231 616,100 12,724,243 3,012,720 Scaling up upgrading 2,787,000 14,736,580 11,776,111 36,965,492 CDS and upgrading 2,864,651 1,719,000 10,908,446 5,150,195 Secretariat 1,750,000 175,000 5,550,000 5,692,500 Total approved grants 11,810,882 17,246,680 40,958,800 50,820,907 APPROVALS BY REGION FY06 Cumulative Region Core funds Non-core funds Core funds Non-core funds Sub-Saharan Africa 3,410,000 1,060,000 8,623,240 2,672,620 Asia 2,470,651 1,019,400 9,608,076 3,202,000 Eastern Europe & Central Asia 571,000 0 2,159,227 0 Latin America & the Caribbean 1,507,000 6,958,280 6,068,165 14,377,475 Middle East & North Africa 979,231 0 3,613,231 0 Global/Multiregional 1,123,000 8,034,000 5,336,861 24,876,312 Secretariat 1,750,000 175,000 5,550,000 5,692,500 Total approved grants 11,810,882 17,246,680 40,958,800 50,820,907 SECRETARIAT EXPENDITURES Expense FY06 FY05 FY04 Cumulative Operational Secretariat staff 910,708 885,442 516,468 4,112,571 Consultants, other labour 52,387 951 14,480 466,916 Travel 342,524 374,504 234,195 1,605,464 Other costs 36,798 24,945 24,901 698,410 Subtotal 1,342,417 1,285,842 790,044 6,883,361 Management and administration Secretariat staff 772,551 782,318 673,563 4,110,787 Rent, computing, other costs 293,068 273,658 191,803 1,091,870 Subtotal 1,065,619 1,055,976 865,366 5,202,657 Total 2,408,037 2,341,818 1,655,410 12,086,019 FINANCIALS 81 N E W A N D O N - G O I N G A L L O C A T I O N S (US$ as of June 30, 2006) Grant Start amount (US$) date Country Activity SUB-SAHARAN AFRICA 380,640 Mar-03 Burkina Faso CDSs and local Poverty Reduction Strategy Papers for the local governments of Bobo- Dioulasso, Banfora and Ouahigouya FY06 330,000 Apr-06 Burkina Faso Strategy for Developing Greater Ouagadougou and Improving Basic Infrastructure and City Services in Underprivileged Areas FY06 330,000 Apr-06 Benin Development Strategy for Greater Cotonou FY06 500,000 Cameroon Urban Development and Poverty Reduction Strategy: City of Douala and its Greater Urban Area 580,000 Jul-04 Ethiopia, South Africa Participation of Johannesburg and Addis Ababa in the Johannesburg--Addis Ababa Partnership Programme 75,000 Jul-03 Ghana Preparing for a CDS in the Kumasi Region FY06 75,000 Oct-05 Ghana Preparatory Assistance for Ghana Municipal Finance and Management Initiative FY06 75,000 Oct-05 Mozambique Slum Improvement Demonstration Project for Maputo City FY06 500,000 May-06 Mozambique Improving Water and Sanitation in Quelimane City 245,000 Mar-04 Niger CDSs for Poverty Reduction for Dosso and Maradi 215,000 Jul-03 Regional Building Partnerships for Cities Without Slums in Eastern and Southern Africa 215,000 May-04 Regional Cities Without Slums: toward implement- ing a support programme for countries and cities of Western and Central French- speaking Africa 246,600 Dec-04 Regional Housing Upgrading Finance Initiative FY06 240,000 May-06 Rwanda Financial Management Modernization and Development Strategy for Kigali FY06 380,000 Apr-06 Senegal Greater Dakar Urban Development Strategy FY06 430,000 Senegal National Programme for Slum Improvement and Slum Upgrading in Senegal's Cities: "Senegalese Cities Without Slums" 82 ANNUAL REPORT 2006 N E W A N D O N - G O I N G A L L O C A T I O N S (continued) (US$ as of June 30, 2006) Grant Start amount (US$) date Country Activity SUB-SAHARAN AFRICA (Continued) 500,000 Mar-04 South Africa South African Municipal Water and Sanitation Partnership Initiative 75,000 May-05 South Africa Preparation of the South African National Upgrading Support Programme FY06 500,000 Sep-05 South Africa Support for the Preparation of 2006 State of South African Cities Report FY06 500,000 Jun-06 South Africa Upgrading for Growth: Implementing the Breaking New Ground Policy within Ekurhuleni's City Development Strategy FY06 535,000 Jun-06 South Africa The Tshwane Sustainable Human Settlement Strategy and Financing Plan 500,000 Jul-04 Swaziland Development of a Comprehensive Urban Upgrading Programme for Mbabane 360,000 Sep-04 Tanzania Action Plan to Upgrade All Informal Settlements in Dar es Salaam by 2015 FY06 75,000 Jun-06 Zambia Linking CDSs to Zambia's Emerging Intergovernmental Fiscal System ASIA 215,000 Nov-05 Bhutan Bhutan National Urban Development Strategy and Thimphu City Development Strategy FY06 298,450 Dec-05 China Urban Upgrading Strategy, Yangzhou FY06 500,000 Oct-05 China Economic Revitalization by Cities in Heilongjiang Province FY06 250,000 China Shanghai Development Strategy in Regional Context 70,000 Oct-03 India Tamil Nadu Urban Land Market Assessment for Chennai, Coimbatore, and Tiruppur 450,000 Feb-03 India Scaling-up the Provision of Universal Minimum Sanitation to slums in cities 182,600 Jul-04 India Community-Led Sangli Toilet Construction Activity 495,000 Jul-05 India Transformation of Mumbai into a World Class City 180,700 Feb-05 India Hyderabad City-Wide Slum Upgrading Action Plan FINANCIALS 83 N E W A N D O N - G O I N G A L L O C A T I O N S (continued) (US$ as of June 30, 2006) Grant Start amount (US$) date Country Activity ASIA (Continued) 154,700 Mar-05 India Visakhapatnam City Development Strategy and Slum Upgrading Action Plan FY06 184,268 Dec-05 India City Development Strategy for Hubli- Dharwad FY06 478,300 India Cauvery Agamana--Extension of Water Supply and Sanitation Services to the Urban Poor in Bangalore City FY06 237,933 India City Development Strategy for Pro poor Economic Growth for the Heritage City of Agra FY06 500,000 Nov-05 Mongolia Citywide Pro-poor "Ger Upgrading Strategy and Investment Plan" (GUSIP) 75,000 Feb-05 Pakistan Towards a CDS System in Punjab 500,000 Mar-05 Philippines Integrated Approaches to Poverty Reduction at the Neighborhood Level--a Cities Without Slums Initiative FY06 541,100 Oct-05 Philippines City Development Strategies in the Philippines: An Enabling Platform for Good Governance and Improving Service Delivery FY06 500,000 Jul-06 Philippines A Metro Manila `Cities Without Slums' Strategy 500,000 Sep-01 Regional City Networking and Investment Marketplace Development initiative in Asia 248,320 Jul-04 Democratic Republic City Upgrading Strategy for Urban Dili of Timore Leste 250,000 Jul-04 Vietnam CDSs in Medium Cities EASTERN EUROPE AND CENTRAL ASIA 500,000 Jul-05 Azerbaijan City and Regional Development Strategies in Azerbaijan 458,427 Mar-03 Latvia Cities Programme--CDS for Economic Development FY06 71,000 Mar-06 Moldova Moldova ­ City Development Strategy 230,000 Jul-05 Russian Federation Vologda Development Strategy Alliance FY06 250,000 Sep-05 Russian Federation Stavropol Regional Development Strategy-- Financial Assessment and Investment Review 84 ANNUAL REPORT 2006 N E W A N D O N - G O I N G A L L O C A T I O N S (continued) (US$ as of June 30, 2006) Grant Start amount (US$) date Country Activity EASTERN EUROPE AND CENTRAL ASIA (Continued) FY06 250,000 Sep-05 Russian Federation Chuvash Republic Regional Development Strategy--Financial Assessment and Investment Review LATIN AMERICA AND THE CARIBBEAN 165,700 Feb-02 Brazil Anti-poverty and Anti-Exclusion Socio- economic Action Plan: City Networks for Development and Social Inclusion (Rio Grande do Sul) 500,000 Dec-04 Brazil National Urban Development Policy: Support to the National Programme for Land Tenure Regularization and Socio- Environmental Risk Prevention in Precarious Settlements FY06 450,000 Oct-05 Brazil Strategies for the Sustainable Planning, Financing and Implementation of Low- Income Housing and Urban Development Policy (Municipality of São Paulo) FY06 7,208,280 Dec-05 Brazil Bahia Integrated Urban Development Programme--Viver Melhor/BIRD: Techni- cal and Methodological Assistance Project FY06 232,000 Apr-06 Brazil Enhancing Territorial Equity and Social Inclusion in Brasilia's Land Markets 324,120 May-04 Colombia Slum Upgrading and Land Tenure Regularization 298,000 Apr-05 Colombia Housing and Land for the Urban Poor FY06 500,000 Jul-06 El Salvador Preparation of an Urban Development Strategy for the Region La Paz in the Department of La Paz and San Vicente FY06 75,000 Sep-05 Guatemala 0 256,445 Nov-02 Jamaica Kingston and St. Andrew Sustainable Development Plan 879,195 Jul-04 Regional Scaling Up Successful Methodologies in the Latin America and Caribbean Region (Italy) MIDDLE EAST AND NORTH AFRICA 74,000 Jul-05 Egypt Preparatory Assistance Proposal for Egypt Urban Sector, Slum Upgrading and City Development Strategies FY06 350,000 Dec-05 Egypt Alexandria City Development Strategy for Sustainable Development: Phase II FINANCIALS85 N E W A N D O N - G O I N G A L L O C A T I O N S (continued) (US$ as of June 30, 2006) Grant Star amount (US$) date Country Activity MIDDLE EAST AND NORTH AFRICA (Continued) 75,000 Mar-05 Iran Preparatory assistance to the Ministry of Housing and Urban Development for the institutionalization of the CDS into the urban planning process in Iran 200,000 Mar-04 Jordan Greater Amman Development Strategy FY06 379,231 Lebanon Al Fayhaa Sustainable Development Strategy 295,000 Aug-01 Morocco Upgrading project for the Koraat Sbaa neighborhood in Tetouan 245,000 Apr-03 Morocco Metropolitan Cooperation in the Tetouan Region: the Role of the CDS 490,000 Sep-05 Morocco Partnership Framework Agreement for Ministry of Housing and Supporting and Monitoring of the Programme Urban Development "Cities Without Slums" 250,000 Feb-05 Regional Establishing a Regional City Development Strategy Facility at the Arab Urban Development Institute (AUDI), Riyadh, Saudi Arabia 200,000 Jan-05 Yemen Medium to Long Term City Development Strategy for Local Economic Development for Hodeidah and Mukalla Cities FY06 250,000 Yemen Sana'a City: Medium to Long-Term City Development Strategy for Sustainable Development GLOBAL AND MULTIREGIONAL ACTIVITIES 100,000 Nov-04 Global Knowledge Dissemination--increase (website, publications) FY06 150,000 Nov-05 Global Knowledge Generation and Learning-- increase FY06 75,000 Nov-05 Global Consultative Group and Public Policy Forum meeting--increase (Marrakech) FY06 100,000 Nov-05 Global Policy Advisory Board Semi-Annual Meeting increase FY06 15,000 Nov-05 Global Technical Peer Reviews--increase 10,000,000 Oct-02 Global Development of the Community-led Infrastructure Finance Facility--UK Department of International Development funding 2,300,000 Apr-03 Global The Development of the Community-led Infrastructure Finance Facility--Swedish International Development funding 86 ANNUAL REPORT 2006 N E W A N D O N - G O I N G A L L O C A T I O N S (continued) (US$ as of June 30, 2006) Grant Start amount (US$) date Country Activity GLOBAL AND MULTIREGIONAL ACTIVITIES (Continued) 249,666 Feb-03 Global Building a Solid Foundation: Overcoming the Obstacles to Scalability of Housing Microfinance for the Poor FY06 1,750,000 Jul-05 Global Secretariat Budget FY06--Core Trust Fund FY06 175,000 Jul-05 Global Secretariat Budget FY06--Norway Non-core FY06 75,000 Nov-05 Global Final Project Evaluations--increase 75,000 Dec-04 Global Capacity Enhancement for Direct Sub- Sovereign Borrowing 127,000 Jul-05 Global Municipal Finance Task Force 75,000 Jan-05 Global Strengthening CA Collaboration with UCLG 250,000 Feb-06 Global Developing MDG-based CDSs 250,000 Feb-06 Global UCLG Municipal Finance Commission FY06 517,000 Apr-06 Global Mainstreaming Cities Alliance Engagement with UCLG 685,000 Feb-05 Global Secondment to Cities Alliance Secretariat (Sweden) 3,000,000 Apr-05 Multiregional Slum Upgrading Facility (SUF--Pilot Programme FY06 7,000,000 Jul-05 Multiregional Slum Upgrading Facility (SUF)-- (incr.) Pilot Programme 242,500 Mar-05 Global Incubating Local Economic Development (LED) Partnerships 525,000 Mar-05 Global Advancing the Cities Alliance Knowledge Generation and Dissemination Agenda (DFID)--including MFTF and Urban Finance cofinancing FY06 75,000 Dec-05 Global CLIFF Independent Evaluation FY06 610,000 Oct-05 Global Enhancing Urban Development in National Policy Dialogues FY06 240,000 Nov-05 Global CA Independent Evaluation 2006 FY06 125,000 Nov-05 Global CA Management Succession FY06 100,000 Jan-06 Global CA Urban Environment Initiative FY06 75,000 Jan-06 Global Peer Review on Slum Estimations FINANCIALS87 A C T I V I T I E S C L O S E D O R C A N C E L L E D D U R I N G F Y 0 6 Grant Completion amount (US$) date Country Activity SUB-SAHARAN AFRICA 249,000 Sep-04 Ethiopia Addis Ababa CDS 75,000 Jun-05 Ethiopia Ethiopia Housing Sector Study 74,750 Jun-05 Nigeria Preparatory Assistance for Lagos Strategy Development 750,000 Jun-06 South Africa South Africa Cities Support and Learning Network ASIA 900,000 Mar-05 China City-Region Development Strategies 98,065 Terminated Aug-05 India Improving Access of the Poor to Basic Urban Services in the Ludhiana Municipal Corporation 250,000 Jun-05 Indonesia Yogyakarta (DIY): Regional Development and Poverty Reduction Plan through Strategic Urban­Rural Linkages and Regional Integration 250,000 Dec-05 Mongolia Development Strategy for Secondary Cities 31,000 Sep-04 Philippines Preparation of a Proposal on Strengthening Urban Shelter Programmes in the Philippines 600,000 Aug-05 Regional South Asia Regional Adviser LATIN AMERICA AND THE CARIBBEAN 560,000 Jun-05 Brazil Building an Enabling Strategy for Moving to Scale 5,565,000 Mar-06 Brazil Salvador, Bahia, Technical and Social Assistance Project 498,400 Jun-06 Chile Local Development Strategies for Housing Solutions to Overcome Poverty 500,000 Cancelled Panama Public-Private Partnership for the Provision of Sanitation Services in La Cabima, Panama City 250,000 Dec-04 Peru Metropolitan Lima City Poverty Strategy 213,500 Mar-05 Regional Build capacities in Urban Knowledge Management MIDDLE EAST AND NORTH AFRICA 200,000 Feb-06 Egypt Alexandria CDS for Sustainable Development 250,000 Jun-04 West Bank Establishment of an Integrated Strategic Planning Process and Gaza for the Neighboring Towns of Ramallah, Al-Bireh and Beitunia 150,000 Jun-04 Yemen Aden Medium- to Long-Term CDS for Local Economic Development GLOBAL AND MULTIREGIONAL ACTIVITIES 500,000 Jun-05 Global Pro-Poor slum upgrading frameworks in India, the Philippines and South Africa 1,450,000 Jun-05 Global Secretariat Budget FY05--Core Trust Fund 75,000 Jun-05 Global Secretariat Budget FY0--Norway Non-core 225,000 Sep-05 Global CDS Impacts Study 70,312 Jun-06 Multiregional Support for Slum Upgrading Facility Pre-Implementation Plan 88 ANNUAL REPORT 2006 Endnotes Poverty of the Urban Environment 1.Press release of August 28, 2006, accompanying the release of Africa's Lakes: Atlas of Our Changing Environment (Nairobi: UNEP, 2006). 2.Achim Steiner, UNEP Press Release on the Third World Urban Forum "Burying Urban Myths on the Environment." 3.Christine Kessides, The Urban Transition in Sub-Saharan Africa: Implications for Economic Growth and Poverty Reduction (Washington, D.C.: Cities Alliance, 2006). 4.See State of the World's Cities 2006/7 (London: UN-Habitat and Earthscan 2006). 5.See Guide to City Development Strategies: Improving Urban Performance (Washington, D.C.: Cities Alliance, 2006). 6.Guide to City Development Strategies, op cit., p. 3. 7.Ecosystems and Biodiversity: The Role of Cities, brochure (Nairobi: UNEP and UN-Habitat, 2005). 8.Strategy for Denmark's Environmental Assistance to Developing Countries 2004­2008 (Copenhagen: Royal Danish Ministry of Foreign Affairs, 2004), p. 13. 9.See Carbon Copy, newsletter (Washington: World Bank, July 2006). 10."Major Renewable Energy Investment in Nelson Mandela Bay", press release by Nelson Mandela Bay Municipality, (August 2006). 11.The first substantial draft of this chapter was prepared by Jeremy Harris, formerly Mayor of Honolulu, Hawaii, one of the most articulate and passionate champions of sustainable cities. Revisions to the draft were based on continuous inputs from the team at UNEP, led by Julia Crause, as well as comments received from a number of eminent contributors, including Peter Palesch of GTZ Bangladesh, Tony Pellegrini of the Centennial Group, and David Satterthwaite of the International Institute for Environment and Development (IIED), as well as members of the Cities Alliance Secretariat, which bears ultimate responsibility for any mistakes. Cities Alliance in Action 1. See Guide to City Development Strategies: Improving Urban Performance (Washington, D.C.: Cities Alliance, 2006). 2. This introduction draws heavily from the Guide to City Development Strategies, op. cit. 3. Shlomo Angel, Stephen C. Sheppard, Daniel L. Civco, et al., The Dynamics of Global Urban Expansion (Washington, D.C.: Transport and Urban Development Department, World Bank, 2005). 4. Ibid. 5. World Urbanization Prospects, New York: United Nations Department of Economic and Social Affairs, 2005] 6. Shlomo et al. (2005), op. cit. 7. Ibid. 8. Comment from the background note on the Mumbai Transformation Project, produced by the Mumbai Transformation Support Unit (2006). 9. As of September 2006, the exchange rate was $1 = 4,022.90 Zambian kwacha. ENDNOTES 89 Members' Contributions 1. Gilbert, Roy (2003) Improving the Lives of Poor People by Investing in Cities, Washington, D.C., The World Bank, pp. 9. 2. World Bank (2002) Brazil Progressive Low Income Housing: Alternatives for the Poor. Washington, D.C., The World Bank, pp. 14. 3. Although South Africa is not a case where Bank lending for upgrading is contemplated. Learning and Communications 1. Cities Alliance, Guide to City Development Strategies: Improving Urban Performance (Washington, D.C., Cities Alliance, 2006). 2. UN-Habitat, State of the World's Cities 2006/7:The Millennium Development Goals and Urban Sustainability--30 Years of Shaping the Habitat Agenda (London and Nairobi: UN-Habitat and Earthscan, 2006). 3. Shlomo Angel, Stephen C. Sheppard, Daniel L. Civco, et al., The Dynamics of Global Urban Expansion (Washington, D.C.: Transport and Urban Development Department, World Bank, 2005). 4. Göran Tannerfeldt and Per Ljung, More Urban, Less Poor: An Introduction to Urban Development and Management (Stockholm and London: Sida/Earthscan, 2006). 90 ANNUAL REPORT 2006 Abbreviations and Acronyms Note: All monetary amounts are US dollars unless otherwise indicated. ADB Asian Development Bank AfD Agence française de développement (French Development Agency) Beitna Beit Al-Mal Saving and Investment for Housing (Jordan) BEDC Business and Economic Development Committee, Karu, Nigeria BMBF German Federal Ministry of Education and Science BMZ Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung CAIXA Brazil's Housing and Urban Development Bank CDP City Development Plan (JNNURM) CDS city development strategy CGAP Consultative Group to Assist the Poor CIDA Canadian International Development Agency CLIFF Community-Led Infrastructure Finance Facility DANIDA Danish International Development Agency DFID Department for International Development (United Kingdom) FCM Federation of Canadian Municipalities FINDETER Financiera de Desarrollo Territorial (Colombia) FLACMA Federación Latinoamericana de Ciudades, Municipios y Asociaciones GDP gross domestic product GTZ Gesellschaft für Technische Zusammenarbeit (German Agency for Technical Cooperation) ICLEI International Council for Local Environment Initiatives IDRC International Development Research Centre (Canada) IFC International Finance Corporation (World Bank Group) IFIs International Financial Institutions ISTED Institut des sciences et des techniques de l'équipement et de l'environnement pour le développement (France) JBIC Japan Bank for International Cooperation JNNURM Jawaharlal Nehru National Urban Renewal Mission (India) KfW Kreditanstalt für Wiederaufbau (German Development Bank) LCP League of Cities of the Philippines MDG Millennium Development Goal MFI microfinance institution MFTF Municipal Finance Task Force MINVU Ministry of Housing and Urbanism (Chile) MMA Mumbai Metropolitan Region (India) MTSU Mumbai Transformation Support Unit (India) NENA Near East and North Africa Urban Forum NGO nongovernmental organizations PPIAF Public-Private Infrastructure Advisory Facility SACN South African Cities Network SALGA South African Local Government Association ABBREVIATIONS AND ACRONYMS91 SCI Sustainable Cities Initiative SEA strategic environmental assessment Sida Swedish International Development Cooperation Agency SoCR State of the Cities Report SUF Slum Upgrading Facility (UN-Habitat) UCLG United Cities and Local Governments UN-Habitat United Nations Human Settlements Programme UNEP United Nations Environment Programme UNICEF United Nations Children's Fund USAID United States Agency for International Development VSB Villes sans bidonvilles (Cities Without Slums programme) (Morocco) WHO World Health Organization WUF World Urban Forum 92 ANNUAL REPORT 2006 Project Coordinator: Chii Akporji Design: Circle Graphics, Inc. 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