Local 2030 - Localizing the SDGs

Africa Regional Consultation towards the Fourth Financing for Development Conference

2 May Online 10:00 AM - 11:30 AM

Organized by Economic Commission For Africa, Local2030 Coalition, Global Taskforce Of Local And Regional Governments
Posted by Local2030 Coalition, UN

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Background

The Fourth Financing for Development Conference (FfD4), scheduled for 30 June – 3 July 2025 in Seville, Spain, marks a critical opportunity to reflect on localized finance and review progress on the Addis Ababa Action Agenda as it reaches its 10-year anniversary. The conference will address emerging trends in development finance, advocate for reforms in the international financial system, and emphasize the vital role of local actors in achieving the Sustainable Development Goals (SDGs).

Transforming and localizing the SDGs requires investments from diverse sources, coordinated within a coherent policy framework, and strengthened by public-private collaboration. FfD4 must therefore draw on successful models for local development financing, showcasing scalable tools and approaches adaptable to various themes, regions, and governance levels.

To this end, the United Nations Economic Commission for Africa, the Local2030 Coalition, and the Global Taskforce of Local and Regional Governments are co-organizing regional consultations that bring together experts and practitioners from public and private sectors to showcase the essential role of local finance in driving sustainable development through concrete actions and best practices.

Local finance in Africa

Bottlenecks

Local governments across Africa face significant financial constraints due to structural, regulatory, and institutional barriers. One major bottleneck is the lack of municipal creditworthiness, which prevents most African municipalities—outside of Nigeria and South Africa—from issuing bonds. This challenge is compounded by:

National credit ratings that limit municipal borrowing potential
Restrictive legal frameworks preventing local governments from assuming debt
High dependency on central government transfers
Local budgets dominated by staffing and operational costs, leaving little room for infrastructure investment

Additionally, fiscal decentralization remains underdeveloped, with local governments controlling only a small fraction of total public resources despite high expenditure mandates. The underfunding of urban infrastructure is a direct consequence of these constraints.

Another significant challenge is the dominance of informality in African urban economies, which limits tax revenue. A large proportion of urban employment is informal, making revenue collection difficult and costly. Many informal enterprises operate outside the tax system, leading to:

Over-reliance on a few large taxpayers
Economic distortions
Limited project preparation due to lack of technical expertise and institutional capacity to structure bankable projects

Opportunities

Despite these challenges, various opportunities exist to enhance local finance in Africa:

Pooled financing mechanisms—used in Kenya and South Africa—enable municipalities with low credit ratings to access financial markets collectively. These mechanisms diversify investment risk and improve creditworthiness.
Innovative financing tools such as green bonds, diaspora bonds, and crowdfunding can expand the financial base for urban development. For example, Ethiopia and Ghana have successfully issued diaspora bonds to tap into remittance flows for public investment.
Optimizing local revenue sources—like property taxes, land value capture, and vehicle taxes—can improve fiscal autonomy. Cities such as Kampala have significantly increased revenues by reforming and consolidating their tax systems.
International financial institutions are increasingly supporting urban investments through:
- Dedicated urban financing windows
- Risk insurance
- Project preparation assistance

Strengthening these mechanisms and building local institutional capacity will be crucial for unlocking Africa's urban finance potential.

Objectives and outcomes

Highlight efforts and experiences from Africa in sustainable local financing, showcasing the benefits of territorial, multi-actor, and multi-level approaches to achieving the SDGs
Spotlight Africa’s innovative financing mechanisms, amplify local successes, and advocate for increased subnational financing to advance the Addis Ababa Action Agenda
Develop an informal report with key messages and policy recommendations based on local practices and tools on localizing finance in Africa, to feed into the discussions of the Fourth International Conference on Financing for Development

https://bit.ly/44z9Ctp

2025-05-02 10:00 AM 2025-05-02 11:30 AM Europe/London Africa Regional Consultation towards the Fourth Financing for Development Conference Background The Fourth Financing for Development Conference (FfD4), scheduled for 30 June – 3 July 2025 in Seville, Spain, marks a critical opportunity to reflect on localized finance and review progress on the Addis Ababa Action Agenda as it reaches its 10-year anniversary. The conference will address emerging trends in development finance, advocate for reforms in the international financial system, and emphasize the vital role of local actors in achieving the Sustainable Development Goals (SDGs). Transforming and localizing the SDGs requires investments from diverse sources, coordinated within a coherent policy framework, and strengthened by public-private collaboration. FfD4 must therefore draw on successful models for local development financing, showcasing scalable tools and approaches adaptable to various themes, regions, and governance levels. To this end, the United Nations Economic Commission for Africa, the Local2030 Coalition, and the Global Taskforce of Local and Regional Governments are co-organizing regional consultations that bring together experts and practitioners from public and private sectors to showcase the essential role of local finance in driving sustainable development through concrete actions and best practices. Local finance in Africa Bottlenecks Local governments across Africa face significant financial constraints due to structural, regulatory, and institutional barriers. One major bottleneck is the lack of municipal creditworthiness, which prevents most African municipalities—outside of Nigeria and South Africa—from issuing bonds. This challenge is compounded by: National credit ratings that limit municipal borrowing potential Restrictive legal frameworks preventing local governments from assuming debt High dependency on central government transfers Local budgets dominated by staffing and operational costs, leaving little room for infrastructure investment Additionally, fiscal decentralization remains underdeveloped, with local governments controlling only a small fraction of total public resources despite high expenditure mandates. The underfunding of urban infrastructure is a direct consequence of these constraints. Another significant challenge is the dominance of informality in African urban economies, which limits tax revenue. A large proportion of urban employment is informal, making revenue collection difficult and costly. Many informal enterprises operate outside the tax system, leading to: Over-reliance on a few large taxpayers Economic distortions Limited project preparation due to lack of technical expertise and institutional capacity to structure bankable projects Opportunities Despite these challenges, various opportunities exist to enhance local finance in Africa: Pooled financing mechanisms—used in Kenya and South Africa—enable municipalities with low credit ratings to access financial markets collectively. These mechanisms diversify investment risk and improve creditworthiness. Innovative financing tools such as green bonds, diaspora bonds, and crowdfunding can expand the financial base for urban development. For example, Ethiopia and Ghana have successfully issued diaspora bonds to tap into remittance flows for public investment. Optimizing local revenue sources—like property taxes, land value capture, and vehicle taxes—can improve fiscal autonomy. Cities such as Kampala have significantly increased revenues by reforming and consolidating their tax systems. International financial institutions are increasingly supporting urban investments through: Dedicated urban financing windows Risk insurance Project preparation assistance Strengthening these mechanisms and building local institutional capacity will be crucial for unlocking Africa's urban finance potential. Objectives and outcomes Highlight efforts and experiences from Africa in sustainable local financing, showcasing the benefits of territorial, multi-actor, and multi-level approaches to achieving the SDGs Spotlight Africa’s innovative financing mechanisms, amplify local successes, and advocate for increased subnational financing to advance the Addis Ababa Action Agenda Develop an informal report with key messages and policy recommendations based on local practices and tools on localizing finance in Africa, to feed into the discussions of the Fourth International Conference on Financing for Development Economic Commission for Africa, Local2030 Coalition, Global Taskforce of Local and Regional Governments

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