As part of the 4th International Conference on Financing for Development (FFD4) programme, the OECD/SWAC Secretariat, in partnership with the African Development Bank, hosted a webinar on urban financing. Watch the replay to explore why investing more—and better—in African cities is essential for inclusive, resilient growth.
Following the launch of Africa’s Urbanisation Dynamics 2025: Planning for Urban Expansion, this second session in the series brings together experts and policymakers to explore specific, urgent and interrelated aspects of urban growth: land governance, urban financing and housing.
Financing cities: The need to invest more and better in Africa’s urbanisation
Over the next three decades, Africa’s cities will double in population, adding 704 million new urban residents and bringing the total urban population to 1.4 billion by 2050. Africa will be the continent with the second-largest urban population after Asia. Climate change is happening amid this transition. A world that is 2°C warmer will introduce even more extreme weather events across the continent, both in intensity and unpredictability (e.g., extreme heat, heavy precipitation, floods and drought).
To leverage the opportunities and address the challenges brought by urban growth, African governments must significantly increase urban investments – whilst ensuring resilience to climate change. These include capital investments in main infrastructure (transportation, utilities), public services, housing as well as public and green spaces. Beyond infrastructure, key investment needs also include social expenditure in education and health.
The demand for urban financing will increase with urban expansion. However, current levels of spending in African cities are very low and do not meet the needs of rapidly growing urban populations. In some cases, existing investments – or under investment – locks cities into climate vulnerabilities, making future efforts to build resilience significantly more costly. The current urban financing system faces problems both in quantity and quality. Understanding the barriers cities encounter to finance vital urban projects and implement urban plans is crucial to plan for sustainable urbanisation.
The existing financing environment – with its multitude of actors and initiatives – constitutes a complex system that many cities, particularly smaller ones, struggle to navigate. Challenges exist throughout the entire financing chain, from identifying viable projects and plans, to securing capital investments and establishing sustainable and perennial revenue streams to support ongoing operations. In addition to structural barriers such as regulatory constraints and limited fiscal capacity, closing the financing gap also requires making available investments funds more effective.
African cities need to better align investment spending with the actual needs and realities of their residents and businesses. Cities require access to reliable and predictable transfers from the national government but should also have the capacity to raise revenues to address local needs. At the national level, financing urban expansion requires a long-term, strategic approach to urban development. This must be translated into coherent governance, planning and regulatory reforms to scale up investments in Africa’s urbanisation.
This webinar brought together urban experts, municipal financial officers, finance professionals, and decisionmakers to answer key questions behind this topic: What are the current needs in terms of urban finance, who can best respond to them and through which tools? Who are the key actors involved and how do they coordinate? What are fast growing cities trying to finance? How do some of these projects contribute to improving the overall financing environment? What are the obstacles to achieving the desired levels of investment and successfully delivering these projects?
