Africa is urbanising at a historically rapid pace coupled with an unprecedented demographic boom.
Central and municipal governments are being overwhelmed by the rapid growth of Africa’s cities.
By 2050, about 56% of Africans are expected to live in cities.
This poses major policy challenges as urbanisation in Africa – and the ways in which that growth occurs – marks one of the most significant opportunities for achieving global sustainable development.
Today, funding Africa’s urbanisation is a key issue while keeping in mind that African cities can be actors of structural transformation.
Africa’s cities and towns are engines of progress that, if harnessed correctly, can fuel the entire continent’s sustainable development.
Municipal bonds is an option.
Municipal bonds enable local governments to rew can show an adequatean cities of CAPE TOWN, JOHANNESBURG, TSHWANE, and EKURHULENI and DOUALA in Cameroun, have issued bonds not backed by a sovereign guarantee, although other cities have investigated its feasibility.
A number of Nigerian States raised almost US$2bn in 2008 6 11.
But Africa’s sub – national bond market is still in its infancy.
In most African countries sub – national entities are not allowed to borrow.
Few municipalities are able to establish creditworthiness based on cash flow, debt profile and credit history to allay investor concerns about repayment of the loan.
Few can show an adequate record of strategic planning, debt management and competent administration.
A successful bond issue is dependent on a credible investment plan, proactive communications and good timing.
There is a chronic shortfall in urban financing and diversification of funding is urgently required.
Substantial investment in infrastructure is now among the most pressing priorities.
Public debt levels are mostly well below 50% of GDP, a rule of thumb being that 40% is sustainable in emerging countries;
Diversification of borrowing sources is evidence of sensible management of public debt while disciplined debt management is crucial, based on sound institutions able to manage risk.
Time has come to show an active, innovative approach when it comes to funding Africa’s urbanisation.
Time has come to really shape the future of Africa !