OPINION | Empowering African cities a matter of urgency for growth

Africa is urbanising at an unprecedented pace. By 2050, nearly 60% of the continent’s population will live in cities, placing immense pressure on local governments to provide infrastructure, services and sustainable economic opportunities.

Yet, despite the promises of decentralisation, African municipalities remain under-resourced, underpowered, and underprepared. It is time to radically rethink the fiscal architecture of our cities — and to invest in the municipal finance expertise that will allow them not merely to survive, but to thrive.

Let us begin with a simple truth: cities cannot build what they cannot finance. The growing demand for housing, clean water, sanitation and transport infrastructure cannot be met through unpredictable central transfers and outdated tax systems.

According to UN-Habitat and other researchers, a significant infrastructure deficit is widening across the continent and, if left unchecked, it will undermine Africa’s demographic dividend and economic growth potential. 

Local governments are often perceived as the weakest link in public finance, but they are, in fact, the front line of development. From Nairobi to Dakar, from Lagos to Joburg, it is cities that must manage climate adaptation, enforce land use planning and connect citizens to public goods. To do this, they need financial autonomy — the authority not just to spend, but to raise and manage their own revenues.

This is where the first bottleneck emerges. Despite having the mandate to collect revenue, many municipalities lack effective tools and capacity. Property taxes, for example, are among the most efficient and equitable sources of local revenue.

Yet, across Sub-Saharan Africa, property rolls are outdated, the systems that map and record land ownership (cadastral systems) are incomplete and tax compliance is low. In some cities, a lack of trained property valuers has left municipal authorities flying blind.

Innovative models do exist. In Sierra Leone, reform programmes in cities like Bo and Makeni deployed locally trained teams using GPS-enabled devices to map and value properties, with support from development partners. These reforms reduced corruption, increased trust and boosted revenues.

Similarly, in Kenya the implementation of a single business permit system significantly increased local revenues by simplifying licensing and creating one-stop shops for businesses. These examples illustrate that with the right mix of political will, technical assistance and community engagement, municipal revenue mobilisation can be transformed.

But autonomy without capacity is a recipe for failure. Too many municipalities lack skilled financial officers who can manage budgets, assess project viability and negotiate credit terms. Without strong financial management, cities cannot attract private capital or issue municipal bonds, even in markets where legal frameworks allow it, as in SA.

In Joburg and eThekwini, successful bond issuances were underpinned by robust financial governance and creditworthiness. In contrast, cities like Dakar and Kampala, despite growing populations and needs, remain locked out of capital markets due to fiscal centralisation and weak financial records.

The path forward must combine four pillars: improved local revenue systems, strong intergovernmental fiscal frameworks, deeper financial management capacity, and innovative financing strategies.

First, we must invest in modernising local tax systems. Leveraging satellite data, geographic information system (GIS)-based registries and digital payment systems can expand the tax base while promoting transparency.

Simpler parametric methods of property valuation, based on factors like building materials and location, offer a practical way forward for many African cities.

Second, national governments must be bold in aligning fiscal policy with the principle that “funds follow function.”

Third, capacity-building cannot be an afterthought. Municipalities must be able to prepare bankable projects, conduct cost-benefit analyses and produce credible financial statements. This calls for long-term training programmes in partnership with universities and development partners, as well as better working conditions to retain skilled personnel.

Finally, we must unlock alternative financing pathways. The proposed 2025 SA Budget’s commitment of over R1-trillion to public infrastructure over the next three years, including allocations towards water, sanitation, and logistics, will remain underutilised unless municipalities can raise matching funds or build viable co-financing models. Municipal bonds, land value capture, public-private partnerships and green funds can all play a role, but only where governance is strong and local institutions are empowered.

• Monkam is associate professor of public economics and head of the public policy hub (at the University of Pretoria.