Africa's Cities Need Meaningful Authority to Thrive

Listen:

Since the late 1980s, urban governance in Africa has moved towards greater decentralization. In 1990, nearly half of municipal assemblies and executives in Sub-Saharan Africa were appointed by the central government, rather than elected. By 2017, just a quarter of local assemblies and executives were appointed, a decline of 50 percent. The share of countries with elected assemblies and appointed executives also fell from 23 percent in 1990 to 16 percent in 2017. Today, 60 percent of countries have an assembly and executive that are democratically elected. In practice, however, the transition to nominally local control of Africa's cities has proven to be a largely symbolic exercise. Africa's cities do not possess the authority and autonomy necessary to execute on the tasks needed to accommodate the highest urbanization rates in the world.

Transitioning to the effective provision of key infrastructure and services at the local level requires two essential ingredients. First, it necessitates a clear regulatory and administrative framework that delineates which powers and responsibilities are in the domain of the municipal government and which are left to the central government. Second, it requires the power to raise revenue at the local level to fund these powers and responsibilities. The majority of African cities lack both.

As of 2018, cities in only 10 of the 54 countries in SSA enjoyed responsibilities clearly defined in the constitution, statutory laws, and regulations of their country. Most others were, at best, missing relevant pieces of legislation or regulation. At worst, some cities must contend with inconsistent and conflicting legal frameworks; ambiguities that lead to a situation ripe for the (often arbitrary and extra-legal) recentralization of power by the central government.

Only cities in South Africa, Zambia, and Zimbabwe have the full authority to determine the tax base and rates, collect revenue, and access financial markets. Cities in most other countries face varying degrees of national control over taxes and access to financial markets, limiting the ability of these cities to act independently of their central governments to provide services and infrastructure.

These sub-optimal governing arrangements should not come as a surprise, even though they appear to cut against the trend of greater political decentralization. Throughout Africa, opposition parties have been elected to power in major cities. In response, ruling party leaders have slashed the power of municipal governments to prevent the opposition from gaining support sufficient to offer a genuine electoral challenge at the national level.

For example, Ugandan President Yoweri Museveni cut certain political and fiscal powers from Kampala authorities whose officeholders were members of an opposition party. Some cases are even more blatantly partisan— in Namibia, the president was given the power to appoint regional governors in territories where the ruling party is in the minority. Dakar was set to issue its first municipal bond in 2015 with support from the World Bank, USAID, and the Gates Foundation when Senegal's central government suspended its permission to do so two days before the official launch.

If Africa's urban centers are to enjoy adequate provision of infrastructure and services, the decentralization of governance must be complete— not partial. The responsibility of delivering most services to residents should lie with local governments. Their principal binding constraint to effectively providing those services is decision-making authority, including the ability to raise revenue, and not their technical capabilities. When local governments can combine decision-making authority with revenue-raising authority, service delivery can be improved.

Given the population projections for Africa's megacities over the next 80 years (Lagos - 88.3 million; Kinshasa - 83.5 million; Dar es Salaam - 73.7 million), these municipal governments must be able to properly take charge of their services and infrastructure or risk undoing genuine progress made in reducing the share of the population in slum housing. Urbanization without industrialization already undermines the extent to which urbanization is helping to alleviate poverty across Africa as it did for China, Europe, and Europe's former settler colonies.

Receiving political and administrative authority over services and infrastructure without sufficient revenue to provide them would be disastrous for urban governments. There are various channels which, given clear authority from the national government, municipal governments can tap to generate revenues.

Land value capture is one such channel. Taxing the value of improved land (among other land-based revenue tools) can help guide public investment that promotes sustainable economic development around critical infrastructure like water, sewage, electricity, and transit lines. A thorough land registration effort like Rwanda successfully completed in 2012 could pave the way for the introduction of various land-based streams of revenue generation, among a host of other economic benefits.

Land-based taxation comes with the added benefit of avoiding much of the distortionary effects associated with other types of taxes. As cities across the continent sprawl outwards, a strong focus on infrastructure planning, land use, and land titling can help manage growth patterns and limit informal settlement.

The aforementioned municipal bond is another important channel that city governments should be able to access. In recent years, both Dakar and Kampala sought to issue municipal bonds. Both successfully demonstrated to independent credit ratings agencies that the cities were investment-grade assets and local investors had expressed interest in purchasing the bonds. Dakar's bond offering was shuttered as mentioned earlier, and Uganda's central government set the city's borrowing limit at an exceedingly low level.

While neither of these cases proved successful, they do show that in the absence of political constraints, Africa's cities have the capability of issuing municipal bonds to finance their major projects. Successful municipal bond offerings in Johannesburg and Cape Town, as well as bond offerings from Kenyan utilities, further demonstrate the potential of such instruments in financing an expanded role for city governments across Africa. Constraints on municipal finance and first and foremost political, rather than technical, obstacles.

Africa's cities are well-poised to take advantage of the benefits of agglomeration and become engines of growth and development. But for these cities to deliver on that promise, national governments must be willing to remove the shackles they have placed on municipal political, administrative, and revenue-raising authority. Cities are not polities to be constrained, but engines of growth to be empowered through greater freedom.