Barriers to raising and deploying finance for sustainable urbanisation include: a lack of capacity and resources in local government; siloed working and poor multi-level governance; political instability; legal or institutional barriers to accessing loans or tax revenue; high interest rates; and a lack of creditworthiness or guarantees at the local level.
In order to promote multi-level governance and finance, countries could use sub-national funds such as EFSD+, which guarantees national governments against defaults at a local level.
Participants highlighted the importance of bipartisan, long-term political and economic commitments. In addition, the aggregation of multiple projects, in collaboration with local government, can increase financing return for investors while ensuring long-term strategic direction.
Revenue generation activities are vital to increasing planning capability and improving municipal creditworthiness. Land value capture can help to fund public infrastructure through levies on developers and landowners. Other methods of revenue generation include sovereign wealth funds; asset management; and packaging and selling of debt.
Other solutions included local finance frameworks, which allow cities to rapidly assess which financial instruments would work for a project. In, addition, local delivery units can advise cities on financial mechanisms from the design stage to delivery and can offer loans to municipalities.