Empowering Africa’s Urban Centers: Making the Case for Financial Independence

Africa is undergoing swift urbanization. As detailed in the OECD report, *Africa’s Urbanisation Dynamics 2025*, our cities are expected to support 1.4 billion people by 2050—twice the present population. Yet, this growth is happening in cities that lack the financial resources to shape their own destinies.

Numerous African cities struggle with generating revenue, obtaining loans, or managing capital effectively. They depend heavily on national governments for financial backing and long-term strategies but often encounter delays and inadequate budget allocations.

This scenario has real-world consequences.

Cities find it challenging to develop the essential infrastructure—such as roads, housing, power, sanitation, and public transport—needed to accommodate their growing populations. Climate change intensifies these challenges, with flooding, droughts, heatwaves, and other environmental disruptions affecting cities more frequently and severely, damaging infrastructure and depleting scarce resources. Thus, cities must build infrastructure that is not only larger but also more resilient and capable of enduring climate challenges.

Nonetheless, they often lack the necessary tools for prompt responses.

The Urban 20 (U20) initiative brings together mayors from significant G20 cities to offer insights to national leaders at the upcoming G20 Summit in Johannesburg this November. The recent African Mayors’ Assembly in Tshwane—held under the Urban 20 banner and in Africa for the first time—focused the discussion on a crucial question: How can we finance the infrastructure needed for 1.4 billion urban Africans when our cities lack the essential authority to raise and utilize capital?

While some cities, such as Johannesburg and Nairobi, have operational systems, they are under considerable strain. Others are just beginning. Across the continent, the demand remains staggering.

The African Development Bank states that Africa needs between $130 billion to $170 billion each year for infrastructure development. However, international lenders typically require three main conditions for financing city projects: consistent revenue streams, a proven capacity to repay loans, and established institutions. Most African cities do not meet these criteria, resulting in a catch-22 situation: they require infrastructure to generate revenue, yet they need revenue to fund the infrastructure.

This makes it encouraging that U20 leaders convened to create a G20 strategy for Africa that addresses pressing issues based on real experiences rather than Western templates.

A central theme in discussions was the decentralization of fiscal authority. Essentially, this means giving cities more control over their finances. Local governments across Africa are trapped in outdated, centralized funding structures. National governments maintain control over financial resources, causing cities to wait for budget disbursements, thereby limiting their ability to plan, borrow, or build at the urgent pace their citizens require.

This leads to a significant bottleneck. Without fiscal authority, cities cannot pursue financing partnerships, access capital markets, or adequately address vital infrastructure needs. They are effectively excluded from the investment landscape.

A collective appeal arose from the Assembly, conveyed in a letter signed by numerous mayors to African finance ministers: Unshackle us. Allow cities genuine fiscal authority—the ability to generate, manage, and spend revenue, access capital markets, and establish financial partnerships. Without this, discussions on climate finance and urban resilience remain purely theoretical.

African cities also need innovative financial models rooted in our realities, not merely adapted solutions from Europe or North America. Strategies effective in London or Washington cannot simply be applied to Maputo or Lusaka. Our frameworks must take into account informal development, youth unemployment, weak revenue bases, and diverse infrastructure legacies.

At Ntiyiso Consulting Group, for example, we’ve seen successful strategies in action. Cities that improve revenue collection and service delivery can unlock local capital. Municipal bonds, blended finance, and public-private partnerships can thrive if cities are empowered to plan and account effectively.

African cities also need a type of “Urban African Union”—a regional coordination mechanism that facilitates the sharing of innovative practices and presents a united front to international partners. The financing gap is too great for individual cities to tackle alone, but collective action could reveal new opportunities.

The U20 Assembly was crucial as it proposed a new approach to African urban development. Cities with control over their financial futures can strategize for long-term growth, while those reliant on national budget allocations remain reactive to crises.

The next steps require specific policy changes: constitutional amendments that ensure municipal fiscal authority. We need regional frameworks that encourage cross-border collaboration and international partnerships that reinforce local capacities instead of circumventing them.

African cities are not flawed replicas of municipalities from the Global West—they are unique economic entities that demand tailored tools. The U20 summit sparked discussions on what these tools might look like. The pressing question now is whether African governments possess the political will to deliver them.

By 2050, the fate of African cities will greatly influence the global economy’s trajectory. Ensuring effective urban financing is a global necessity.

— Alex Mabunda, CEO of Ntiyiso Consulting Group.

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