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World Bank Urban and Local Government Strategy
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Cities in Transition
Winds of change affecting urban areas and local governments underscore the importance of urban development to national goals |
At the threshold of the 21st century, cities and towns headline the World Bank's development campaign. Within a generation, the majority of the developing world's population will live in urban areas, while the number of urban residents will double, increasing by over 2 billion inhabitants.
Cities and towns are not only growing in size and number, they are also gaining new influence. The urban transition offers significant opportunities to improve the quality of life for all individuals, but whether this potential is realized depends critically on how cities are managed and on the national and local policies affecting their development.
Across all countries over time, urbanization accompanies sustained economic improvement and, when well-managed, can be an important contributor to broad-based social welfare gains. The development of urban areas is also closely linked to the rural economy through the exchange of labor, goods, services, information and technology, capital, and social transactions that benefit residents in both locations.
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Neglecting urban issues leads to significant social and environmental costs, however. In the two most urbanized regions that the World Bank serves, Latin America and Europe/Central Asia, over half of the poor already live in urban areas. By 2025, two-thirds of the poor in these regions, and one-third to one-half of the poor in East and South Asia, will reside in cities or towns. The nature of urban poverty is more than an income or employment issue, and is also characterized by squalid living conditions; risks to life and health from poor sanitation, air pollution, crime and violence, traffic accidents, and natural disasters; and the breakdown of traditional familial and communal safety nets. Urban populations are also particularly hard hit by macro-financial shocks, such as the recent crises in East Asia and Russia. Urban environmental degradation has the most immediate effects on poor urban residents but also has serious national and global impacts.
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Why Support the New Urban and Local Government Strategy?
The growing importance of cities and local governments calls for a renewed World Bank assistance strategy geared to serving national, as well as corporate, objectives of reducing poverty, promoting broad-based growth, protecting the environment, and supporting effective institutions. Achieving these objectives requires a closer working relationship with the local governments which are assuming greater responsibilities for delivering services that have direct impacts on people's daily lives, in partnership with national governments and the communities themselves. In addition to the core urban development activities of municipal management, housing reform, and delivery of local public services, the global urban agenda is expanding to include diverse issues such as local economic development, capital market access, real estate market reform, urban cultural heritage, disaster mitigation, and public safety.
The motivation for this new strategy stems from the growing demand for World Bank assistance from newly-empowered local governments, as well as from the realization that urban development activities could and should have a greater impact on raising the living standards of the poor and promoting equity. The World Bank holds over three decades' worth of operational experience in urban lending and sector work that provides a strong basis for response.
The ultimate aim of this renewed strategy is to promote sustainable cities and towns that fulfill the promise of development for their inhabitants—in particular by improving the lives of the poor and promoting equity—while contributing to the progress of the country as a whole.
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The Urban Assistance Program is Guided by a Vision of Sustainable Cities
The Urban and Local Government Strategy proposes an agenda for working with both national and local governments to develop sustainable cities, which are first and foremost:
- "Livable"--committed to ensuring that the poor achieve a healthful and dignified living standard; that provide systems for adequate housing, secure land tenure, credit, transportation, health care, education, and other services for households; and that address environmental degradation, public safety and cultural heritage preservation for the benefit of all residents. And to be livable, cities must also become:
- "Competitive"--providing a supportive framework for productive firms, to promote buoyant, broad-based growth of employment, incomes and investment.
- "Well governed and managed"--with representation and inclusion of all groups in the urban society; with accountability, integrity, and transparency of government actions in pursuit of shared goals; and with strong capacity of local government to fulfill public responsibilities based on knowledge, skills, resources and procedures that draw on partnerships.
- "Bankable"--that is, financially sound and, at least for some cities, creditworthy. Financial health of municipalities requires the adoption of clear and internally consistent systems of local revenues and expenditures, transparent and predictable intergovernmental transfers, generally accepted financial accounting, asset management, and procurement practices, and prudent conditions for municipal borrowing.
To pursue these four interrelated objectives, the proposed strategy argues that the World Bank needs to view the city holistically, as an integral unit of assistance and analysis, representing a specific spatial, social, political, environmental, financial and economic context--a microcosm of sustainable national development. Within this holistic perspective, the Bank would intervene selectively to support cities and countries where there is a strong commitment by stakeholders to shared objectives, and would aim to scale-up urban assistance to meet the urban challenges. The Strategy will further require the Bank to reinvest in its own urban knowledge and capacity, and to work through strengthened partnerships.
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Building Blocks of the Strategy
Four main activities are proposed for new emphasis of the World Bank's urban support:
- Formulation of national urban strategies--helping constituents understand and articulate how the urban transition can contribute to national goals of broad-based growth and poverty reduction, and identifying the economic roles and development requirements of different types of cities within the country.
- Support to city development strategies--facilitating participatory processes by which the local stakeholders define their vision for their city, analyze its economic prospects, and identify priorities for action and for external assistance to implement the strategy.
- Scaling-up programs of services for the poor--including through upgrading of low-income urban neighborhoods based on community-based initiatives that are supported by a wide coalition of public and private sector partners.
- Enhanced assistance for capacity-building--supplementing "retail" municipal management operations by supporting intermediary networks, such as municipal associations, as mechanism for "wholesaling" technical assistance, training and sharing of experience; and providing direct advisory services outside of lending operations on a variety of urban management issues.
The above activities would be in addition to the World Bank's core business of urban development (lending and nonlending assistance for municipal management and municipal finance intermediation, housing and real estate market development, urban environment, urban cultural heritage preservation, disaster management).
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Launching the Urban and Local Government Strategy
Achieving greater impact in urban development assistance depends on expanding internal and external partnerships, reinforcing staff skills, acquiring greater resources for professional learning and research, knowledge-sharing, and providing more complete treatment of urban issues in the World Bank's country assistance strategies. The Urban Anchor, through the UNCHS/Habitat, has initiated the "Cities Alliance" to support the strategy's implementation. This partnership aims to mobilize US $25 million over the next three years to support city development strategies and scaled-up programs of services for the poor.
Enthusiastic commitment by the whole institution to the strategy would significantly raise the profile and effectiveness of the World Bank's support to urban development by mustering a broad internal and external coalition and catalyzing additional funding from partners. Such an effort would be a fitting demonstration of the World Bank's abiding faith in the future of a world of cities. |
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