To direct significant capital towards financing projects that are inclusive, SDG compliant, masterplan-integrated, and align with UN-Habitat’s existing geographical footprint.
To support local governments to develop financeable and sustainable infrastructure projects and enable flow of capital into urban projects by guiding them through the processes of ideation, feasibility, development and financial close.
Recent estimates put the global annual municipal infrastructure funding gap over US$3.2 trillion. While there are several factors contributing to the gap, one of the primary obstacles relates to the lack of investment-ready projects. Local governments in low and middle-income countries often lack the funding and institutional/technical capacity required to ensure that project preparation is performed according to international standards and the requirements of international financial institutions or potential investors. There is significant global private capital available not only for bridging this gap if projects are developed properly and are considered bankable by investors/lenders, but also for supporting implementation financing to boost sustainable development and address rapid urbanization.
Cities have unprecedented importance as the need for an economic recovery from COVID-19 coincides with the urgency to accelerate the achievement of the SDGs in this Decade of Action.
Cities currently host 4.2 billion people (55% of the world’s population) and materially impact their surrounding territories. By 2050, 68% of the global population will be urbanized as the global urban footprint will nearly double.
By 2050, cities will see their populations swell by 2.5 billion people, almost entirely in developing and emerging economies – 90% of this growth will occur in developing countries.
Through interconnectivity with surrounding cities and human settlements the movement of goods, services and skills across a rural-urban continuum is enhanced, thereby encouraging greater national economic development.
Through international trade connections cities can specialize in certain productive sectors and generate economies of scale that both contribute to and benefit from the global economy.
Cities currently generate around 80% of the world’s economy and there are close links between levels of urbanisation and per capita GDP. Likewise, by bringing together diverse groups of people, ideas, cultures and backgrounds, cities have become hotbeds of innovation, and through networks of universities, companies, research centers, religious and cultural institutions, cities have been able to promote ideas and advance knowledge and technological development.
Rapid urbanization is fueling cities’ infrastructure needs. Yet a US$3.2 trillion annual global investment gap, to realize this infrastructure, currently exists.
Cities are a major force for positive transformation if well planned and supported through investment. As the world seeks to recover from the economic losses wrought by COVID-19, become resilient to pandemics and impacts of climate change, accelerate SDGs achievement and improve quality of life, an unprecedented level of investment in cities is required for infrastructure development.
To bridge the municipal infrastructure funding gap and catalyze progress on the achievement of the 2030 Action Agenda, UN-Habitat and UNCDF have designed the multi-stakeholder Cities Investment Facility Programme (CIF).
The Cities Investment Facility (CIF) is a multi-stakeholder initiative that strives to unlock significant capital flows to inclusive, sustainable urbanisation projects. Through its three pillars – Cities Investment Portal, Cities Investment Advisory Platform and Cities Investment Vehicles – the Cities Investment Facility supports project promoters with (i) the marketing of their projects to a global audience of construction finance providers; (ii) advice regarding the ideation, feasibility, development, and financial closure processes; and (iii) funding (both grant and private capital) for these processes, with the goal of securing construction financing from other external lenders and investors.
By convening and preparing a pipeline of SDG compliant bankable infrastructure projects, the Cities Investment Facility makes a significant contribution to achieving the UN’s Agenda 2030, as cities and urban infrastructure enable economic activity and growth.
History of CIF
The Cities Investment Facility emerged as a Legacy Initiative from the Tenth Session of the World Urban Forum (WUF10) held in Abu Dhabi in 2020, following a showcase event that tested the convening power of UN-Habitat in the field of sustainable urban infrastructure investment and established a platform with the private sector to address this issue.
CIF was identified as contributing to the agenda of the Sustainable Development Goals (SDGs) and the Cities Global Initiative Flagship Programme (FP 5) of UN-Habitat, as it is a key mechanism through which SDG Cities can ensure a continuous pipeline of SDG-assessed, de-risked, verifiable impact investment opportunities in cities worldwide.
The CIF Concept Note was formally reviewed by a selection of high-level executives from international banks and asset managers in a joint workshop held by IBM and UN-Habitat in April 2020. Following this workshop CIF strengthened its project documentation, working with partners to develop a detailed proposal for the CI Advisory Platform and CI Portal.
In June 2020, CIF was presented to the UN-Habitat Executive Director, UN-Habitat Executive Board and later to all UN-Habitat colleagues at a well-attended brownbag.
The success of the brownbag led CIF to create a network of focal points from each regional office and division of UN-Habitat. This has enabled CIF to work closely with the whole house and remain relevant to a diverse range of urban challenges. Having undergone all preparatory stages, CIF was approved by the Pre-Project Review Committee (PRC) in September 2020.
In conjunction with the consolidation process of CIF, the team undertook a formal procurement process to identify and onboard implementing partners for each of its rung. CIF has proceeded in discussions and the construction of partnership agreements with Think City, GDI, Gensler, Resilient Cities Catalyst, Smart Cities Network, Southpole, Teri and CDP Consortium, EMIF, Reall and Blendlab.
For the purpose of incorporating investable urban development projects into its pipeline, CIF also launched internal and external call for proposals between 2020 and 2021, inviting its focal point and external parties to participate. Between CIF Secretariat and CIF Project Selection Committee, a project assessment scheme was developed to select the most promising proposals to be supported, subject to availability of funds and related resources, by conducting pre-feasibility and feasibility assessments, providing SDG alignment and non-financial impact verification for projects, de-risking projects and getting them over the hurdle from concept to investable stage and connecting projects with aligned investors, in the framework of the 11th Session of the World Urban Forum in June 2022.
In April 2022, an MoU was signed between the United Nations Human Settlements Programme (UN-Habitat) and the United Nations Capital Development Fund (UNCDF) . The partnership between UN-Habitat and UNCDF looks to leverage each organization’s distinct strengths in order to support sustainable finance at the local level. One of the main axes of this collaboration is financing sustainable cities through the joint implementation of the Cities Investment Facility (CIF). This includes investing in small and intermediary cities, including developing and deploying innovative financial models. It includes support to this portfolio with capital grants, technical assistance grants, loans, reimbursable grants, bond issues and investment guarantee mechanisms. It includes the origination and management of pipelines of investible projects for consideration by city-oriented financiers. UNCDF’s dual key pipeline management system and UNCDF’s project structuring / due diligence capacity will be deployed to support these pipelines.