Financial resources are key to providing urban services and infrastructure and fostering inclusive and sustainable urban growth and development. 

This paper synthesises the insights and learnings on municipal finance from ACRC research across ten cities and seven urban development domains. The focus cities are Accra, Dar es Salaam, Freetown, Harare, Kampala, Lagos, Lilongwe, Maiduguri, Mogadishu and Nairobi. 

The domains are land and connectivity; informal settlements; youth and capability development; safety and security; housing; structural transformation; and health, wellbeing and nutrition. In particular, the paper examines the functional assignment of different sector responsibilities, and the expenditures related to them. It also explores the sources of funding and financing necessary to realise the expenditures under a city’s remit, namely the different types of revenues, including intergovernmental fiscal transfers, own-source revenues and development finance, as well as borrowing. 

The research shows that in the majority of ACRC cities, most functional responsibilities for urban services and infrastructure are either the responsibility of the central government or they constitute shared functions, where city governments tend to focus on implementation, with financing provided by the centre. In terms of revenue, most city governments depend on grants from central government, although there have been recent attempts at strengthening own-source revenue mobilisation. Municipal borrowing is still more the exception than the norm, despite increasing pressures for infrastructure investments.

Report by the Overseas Development Institute