Istanbul, Türkiye on 30 October 2023 – On the sidelines of the World Cities Day commemoration, over 30 participants engaged in a High-Level Roundtable dialogue titled “Financing Sustainable Urban Future for All,” hosted by UNHabitat and Think City. The meeting aimed to discuss sustainable urban development’s current global financing landscape and provide recommendations on the strategic actionable next steps to enhance or rework existing financing mechanisms to catalyse sustainable urbanisation.
The sustainability and financial experts present sought to provide insights into the current state of urban financing and reflect on past and current recommendations for future sustainable financing. This objective stemmed from the fact that cities are the engines of global economic development, accounting for more than 80per cent of the Global GDP, but despite this, they face existential challenges, including being responsible for over 70per cent of the global energy consumption and its associated greenhouse gas emissions.
Speaking at the meeting, Arup Director Alice Charles acknowledged the financing gap: “We understand cities face a lack of capacity in local and regional government, creating a lack of bankable projects and assets for private capital; an exchange rate risk; and insufficient funds for emergencies.” Tan Sri Azman Mokhtar, Chairman of Lembaga Tabung Haji Malaysia (Hajj Pilgrims Fund Board), reflected that we are in a crisis for humanity hence the significance of financing urban development by revisiting the core principles – Public and Private sectors, Participatory, Power of technology and blended finance, and Proof of concept. Building on this perspective, particularly on public-private sector collaboration, Mahdiah El-Jed, ESG and Sustainability Strategy Lead at DIFC, said, “Government should focus on creating an environment that will attract capital, such as subsidizing the cost of issuance of sustainability instruments, as well as building the capacity of key players.” Dyfed Aubrey, SDG Cities Global Initiative Lead, also highlighted barriers that local authorities face in accessing capital, including the imbalance between shortterm office and long-term investment timeframes, the insufficient financial architecture, and the lack of effective capturing of all existing locality resources such as land. The experts unanimously underscored several critical points: the significance of integrating financing methods such as Zakat and profit sharing to enhance longterm social and caregiving dimensions; tackling the shortcomings of Multilateral Development Banks (MDBs) in mobilizing private finance and reducing project preparation costs; establishing a local finance framework for urban development; evaluating the required enablers and capacities within multi-level governance systems; and harnessing reporting mechanisms to align financial reporting with urban impact assessment.
In exploring the private sector’s role in bridging the infrastructure financing gap, UN-Habitat and the Cities Investment Facility (CIF) are exploring the formation of a knowledge hub on financing sustainable urban development as the 12th session of the World Urban Forum approaches. By focusing on financing sustainable urban development, this hub aims to consolidate and disseminate crucial information, strategies, and best practices. Further, CIF is dedicated to building a pipeline of investment-ready projects, which is crucial in bridging the infrastructure financing gap due to the lack of bankable projects in low and middle-income countries.
