1. The financing of city services in Southern Africa

2. Strategic planning & financing implementation 1.What does the city need? 2.What can the city government provide? 3.What is the financial capacity of the city government? 4.How can additional resources can be obtained? – How does investment connect to strategic decision-making? – In which areas are investments most frequent? – Are spending & debt management schemes part of the strategies? – Do cities go directly to the market to raise funding? – The most critical questions for city creditworthiness in Africa? – How can financial sustainability be ensured? City treasurer`s perspective Key questions

3. Maputo What does the city need?  Built environment services Roads and storm-water drainage Refuse collection and disposal; street sweeping Water & sanitation (sewerage) Supply of electricity and gas Traffic lights and street lights Emergency services (ambulances, fire) Cemeteries, parks and sports facilities Public transport services Bus and taxi ranks; markets Town planning and building control Municipal policing (by-law enforcement) Environmental health services  Social services Health care (primary/ clinics/ vaccinations etc) Education (pre-, primary, secondary school) Social welfare (centres for orphans etc) Rental housing

4. Dar es Salaam Social services MinimalModerateFull Built environ- ment services Minimal Lusaka Ndola Dar es Salaam Arusha ModerateMaputo Lilongwe Blantyre Gaborone Port Louis FullWindhoek City government roles - nature & scale

5. Blantyre City populations (Vertical position = size of city economies US$b)

6. Total city spending (US$ m) Total city staff City staff/100 000 people City spending per person (US$ m) Dar es Salaam14715 41951449 Port Louis202 5001 667136 Lusaka181 88212912 Windhoek1601 755532484 Gaborone353 0001 266148 Maputo272 32518721 Arusha133 00075033 Lilongwe91 90027112 Blantyre92 00025011 Ndola1167013521 Maseru City government expenditure City government staff City government expenditure City government staff

7. Arusha City government finance: Issues 1  Under-empowered & under-resourced Trend has been to strip powers from city governments Decentralisation by name, centralisation in practise Limited built environment mandate City governments operate at a small scale and spend very little  Limited decision-making authority Senior staff appointments are often lengthy national processes Tax and tariff increases; new valuation rolls; similarly  Limited infrastructure financing If it happens on scale it is grant or donor funded

8. Windhoek  Under-performing revenue administration Despite the overwhelming shortage of resources Much of the tax base escapes being billed/ invoiced Debtors balances outstanding are often high Weak revenue relationship with residents and businesses  Significant human resource capacity constraints Skills shortage is universally acknowledged as serious/critical (especially key technical areas) Long period `acting’ appointments are universal Yet little serious effort (possibility) to address the gap? City government finance: Issues 2

9. Port Louis City financial strategies - 1  All city governments can improve their own financial performance Through a `city financial strategy’ Often amounts to a `turnaround plan’ Internal reform initiatives External reform initiatives  Objective: to put the city government onto a sound financial footing systematic and determined plan & effort must make operational surpluses, because the city government must invest  Requires city leadership with stature & maturity Dedicated management team Political & administrative insight & courage  Should be part of a city development strategy

10. Nampula  Internal reform programme Administrative, financial & revenue reforms Often a serious change management exercise Objectives and targets, `war room’, accountability for performance, etc  External reform programme Improve effectiveness of relationship with national government Address aspects of the inter-governmental fiscal relations  Customised capacity building for senior management Targeted at programme objectives City financial strategies - 2  Strategic planning & budgeting  Revenue administration (sometimes policy also)  Expenditure controls and accounting  Management capacity, accountability, performance  To obtain additional revenue powers  To obtain additional grant funds  To improve timeliness of grant payments  To obtain support for city strategy

11. Lilongwe Approach to capacity building  Change management intervention aimed at senior city management  Specific operational as well as capacity-building objectives  Programme of workshops Each building on the next Each with substantial supporting work Each requiring management team to take responsibility for tasks between workshops  Planned outcomes Achievement of operational objectives Enhancement of management team capacity Strengthening of change momentum

12. Mbabane Shadow credit assessment

13. Lusaka Financial capacity assessment 1 New valuation rolls in 2012 and 2017 Annual inflation of 7% Tax rate increases of 10% in 2012 and 2017 only Projected average annual cash flows : +US$ 0.7 m Some capacity to finance city infrastructure

14. Manzini Financial capacity assessment 3 New valuation rolls in 2012 only Annual inflation of 7% Tax rate increases of 10% in 2012 only Projected average annual cash flows : -US$ 0.9 m No capacity to finance city infrastructure

15. Gaborone Conclusion  City governments are often a relatively weak and small actor provider in respect of city needs National agencies are often the key actors for water, sanitation, electricity, major roads  Often impossible to get an overall quantified view of built environment needs Such a view is not the priority of anyone  Investments should take place in term of a capital investment plan drawn up through a process of strategic decision-making  Critical questions for city creditworthiness: in Africa are governance and accountability; strategic direction; revenue administration, economic base

16. The financing of city services in Southern Africa 25 th May 2011 Roland Hunter Hunter van Ryneveld (Pty) Ltd roland@caj.co.za