The UN Capital Development Fund (UNCDF) along with the Financing for Development Office of the United Nations Department of Economic and Social Affairs (UN-DESA) held a two-day Asia expert consultation on municipal finance in least developed countries (LDCs) in the Sukosol Bangkok Hotel on the 5th and 6th of September, 2016.

The event highlighted the importance of strengthening municipal finance in the Asian LDCs for the implementation of the 2030 Agenda for Sustainable Development, including the Sustainable Development Goals (SDGs) and the Addis Ababa Action Agenda (AAAA). Practitioners, local government representatives, academics, policymakers and the private sector from Asian countries, as well as UN entities and other development partners, exchanged experiences and discussed policy measures to ensure that subnational governments can respond to the challenges of financing sustainable development at the local level. The meeting built on the previous regional expert consultation in Africa, which was held from 29 February-1 March 2016 in Dar es Salaam, Tanzania.

“Improving municipal finance is not a technical issue. It is a major challenge for the world to ensure the implementation of the 2030 Agenda for Sustainable Development at the local level,” said David Jackson, Director, Local Development Practice Area of UNCDF.

Participants emphasized the need for a mind shift in the international policy debate on municipal finance and decentralization. Enhancing municipal finance is not a technical issue but rather a major global objective that is crucial to implementing the 2030 Agenda for Sustainable Development at the local level. Similarly, decentralization should not be just a question of politics, but must be turned into a powerful process that helps local authorities meet their development objectives. At the same time, municipal finance is a holistic concept that places as much emphasis on improving local public financial management systems, own source revenue generation and intergovernmental transfers as on new and innovative borrowing mechanisms. Lively discussions took place on how cities and local authorities in LDCs could be empowered to leverage budgetary resources with domestic capital to invest in infrastructure.

In this context, it was noted that, in addition to revenue constraints, many local authorities in LDCs face severe limitations in determining their own spending priorities. Municipal reforms must be embedded in a conducive regulatory environment that allows for greater spending flexibility at the subnational level. Much emphasis was also put on the need for greater resources and capacity building. A well-resourced and highly-skilled professional municipal workforce can help transform cities into livable places that will withstand the social and economic pressures of rapid urbanization.

The meeting resulted in a range of concrete actionable commitments, including the creation of a regional hub for municipal finance and the formulation of national action plans on subnational finance by all participating LDCs.

“If we localize the development agenda we need to localize development data. We don't know enough about the levels of fiscal, administrative and political decentralisation in many LDCs, the composition of their local revenues, their system of intergovernmental transfers, or why they have succeeded or failed in tapping private finance for long-term investments,” said Daniel Platz from the Financing for Development Office, UN-DESA.

In addition, UNCDF and the FfD-Office of UN-DESA will prepare a publication that summarizes major findings of the regional consultations and provides some general guidelines for more effective international cooperation on municipal finance while taking the different local contexts into consideration. The publication will provide substantive inputs to the Habitat III conference in October 2016 in Quito, Ecuador, and the Annual Economic and Social Council Forum on financing for development follow-up (the Financing for Development Forum).

About UNCDF

UNCDF is the UN’s capital investment agency for the world’s 48 LDCs. With its capital mandate and instruments, UNCDF offers “last mile” finance models that unlock public and private resources, especially at the domestic level, to reduce poverty and support local economic development. This last mile is where available resources for development are scarcest; where market failures are most pronounced; and where benefits from national growth tend to leave people excluded.

About the FfD-Office of UN-DESA

The Financing for Development Office is part of the Department of Economic and Social Affairs of the United Nations Secretariat. The distinctive function of the FfDO is to provide effective substantive secretariat support for sustained follow-up within the United Nations to the agreements and commitments reached at the International Conferences on Financing for Development, as contained in the 2002 Monterrey Consensus, the 2008 Doha Declaration on Financing for Development and the 2015 Addis Ababa Action Agenda.