Putting Cities into the Core Business of the World Bank Elio Codato November 11, 2005

Contents I.The Bank’s Urban Strategy II.Overview of Urban Lending III.Major Initiatives in Urban Development IV.The Future: Challenges & Opportunities

The Bank’s Urban Strategy The Four Pillars:  Livability  Competitiveness  Good governance and management  Bankability

Overview of Urban Lending

Urban: key volumes  Lending increased from $0.7 billion in FY04 to $2.7 billion (22 projects) in FY05, contributing to a record 12% of the WBG lending in FY05  Lending commitments :  7.8% Bank total  Average commitment per year:  USD $1.46 billion (17 projects)  Portfolio at end 2005:  USD $11.33 billion (121 active projects)  Pipeline commitments:  USD $7.36 billion over next 3 years (82 projects)

Bank Lending Share of Commitments (%) and number of Projects by Theme, Annual Average FY03-05

Urban Theme Lending Total Commitment and # of Projects, FY03-08

Bank Analytical Work

Distribution of Active Urban Projects

Portfolio Quality Indicators FY05

Major Initiatives in Urban Development

Flagship Activities Assess Best Practice in Low Income Housing Major effort invested in preparing a review of the Bank's lending for shelter over the past 30 years Share Cross-country Lessons in Financing Urban Infrastructure Mobilizing Urban Infrastructure Finance in a Responsible Fiscal Framework: Lessons from Brazil, China, India, Poland and South Africa was held in Jaipur in January 2005.

Flagship Activities Core Indicators Database for Measuring Key Urban Activities Urban Growth Management Initiative (UGMI): collecting core indicators data in a sample of 120 cities in ; will feed into Habitat’s city database. Third Urban Research Symposium Co-hosted by IPEA (Brazil) and held in Brasilia, in April participants; focus on Land Development, Urban Policy and Poverty Reduction (260 papers submitted, 70 selected for presentation). Fourth Research Symposium to drill down on same themes. Supported by grant from SIDA.

Key Regional Activities a few examples The Urban Poor in Latin America 175 million people (36% of the region’s population) live in poverty; more than half of the poor live in cities. Africa Region Urban Review Cities in Transition: Urban Sector Review in an Era of Decentralization in Indonesia East Asia Regional Sector Strategy Cities and towns already contribute at least 70% of the region’s economic growth; key challenges faced by cities and suggestions for policy responses.

New Flagship Activities Urban and the Growth Agenda — Assessing and Promoting the Economic Role of Cities Develop a "toolkit" of instruments/approaches to analyze city economies, including investment climate issues, and to support a few case studies starting in FY06. (supported by DFID grant through Cities Alliance) Mainstreaming Urban in Poverty Reduction Strategies Assess recent PRSPs from urban poverty perspective, identify where tools for urban analysis may need to be adapted, developed, or disseminated to better respond to demand for inclusion in PRSPs, and provide targeted assistance to country teams where good examples can be developed. (supported by DFID grant through Cities Alliance)

The Future: Challenges & Opportunities

Cities Alliance in Bank’s Global Development Facility (GDF) window 1 (permanent funding): recognition of the importance of working with local governments; Bank needs to leverage its activities through Cities Alliance (Latin America and the Caribbean Region, especially Brazil, offers a good model) Limited research and analytical work on urban development issues both inside and outside the Bank: investment in analytical/upstream work seen as key to position urban issues in the Bank and elsewhere New leadership at the Bank confirms the importance of infrastructure for development: urban services should be a significant part of this renewed interest

The Future: Challenges & Opportunities New corporate emphasis for the Bank: climate change and fight on corruption; local governments can play key role and need to be assisted in addressing their shortcomings in these two areas Subnational Development Program (lending without a sovereign guarantee) World Development Report (WDR) on the world’s transition to an urban society