Understanding the Role of Development Finance Institutions in Providing Resilient and Sustainable Infrastructure in Rapidly Urbanising Cities

Darmstadt, Frankfurt, Internship

During the 2018 summer semester, Mundus Urbano 2017/19 student Rudolf du Plessis had the opportunity to work part-time in a “Werkstudent” position at the KfW Development Bank in Frankfurt. As a part of the Environmental and Social Compliance Centre, he had the opportunity to work closely with issues related to sustainable development, particularly in relation to infrastructure development projects. This written piece reflects on the relation between urban development, climate change and the role of international development financiers.


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A bridge over the Tana river in Kenya. Source: SGT R.A. Ward, U.S. Marine Corps, Wikimedia Commons

Introduction

Many cities globally are facing increasing infrastructure deficits as rapid urbanisation, climate change and slow global economic growth is increasing the need for cities to meet existing infrastructure backlogs. At the same time, there is increasing demand for new infrastructure that is climate resilient, sustainable and adaptive. In the global south, rapid urbanisation means that cities are finding it increasingly difficult to meet existing infrastructure backlogs with traditional funding sources such as service rates, property taxes and national grants. Given existing shortfalls in urban infrastructure finance, cities are increasingly in need of capacity building, financial resources and expertise in order to develop infrastructure that can assist cities to mitigate and adapt to the effects of climate change. It is in this intersect that the role of national and multilateral development finance institutions and their unparalleled experience in project finance, consulting and programme management has much to offer cities in the global south.

However, in order to be sustainable, the onus will be on cities to ensure future sustainability and resilience through comprehensive capacity building as the donor environment is shifting towards multipolarity. This article aims to provide an overview of the role of Development Finance Institutions (DFIs) and local governments in a changing development finance landscape. 

Growing Infrastructure Deficits

Currently, roughly 200 million people, or 62% of Sub-Saharan Africa’s population, live in slums. This disproportionate growth in informal areas is leading to increasingly unmanageable pressure on existing infrastructure – and governments are struggling to cope with growing demand for basic services. While Sub-Saharan African countries are advancing in terms of infrastructure provision, rapid urbanisation and ageing infrastructure networks are increasingly contributing to infrastructure and service backlogs. For example, according to the African Centre for Cities, while urban access to electricity decreased from 58% in 2005 to 57% in 2008, the absolute number of users increased by around 10 million during the same period.

At the same time, cities globally are becoming increasingly vulnerable to effects of climate change. Cities in low-lying areas in developing and developed countries alike are experiencing increasing incidences of disasters such as flash floods, coastline erosion and droughts. Cities such as Shanghai, Kolkata, and Dhaka are as vulnerable to natural disasters as those in developed regions such as Tokyo, Amsterdam and Miami. However, a key difference between cities in developed and developing regions is the ability of these cities to mitigate risks and adapt to climatic changes with appropriate infrastructure. For example, while a majority of Rotterdam is built on or below sea level, the introduction of adaptive infrastructure such as ‘water plazas’ and floodgates has allowed the city to become increasingly resilient to floods. Conversely, ageing infrastructure and uncontrolled urban expansion has led to cities such as Dar Es Salaam and Dhaka becoming increasingly exposed to floods and droughts.

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Coastal cities such as Dar Es Salaam are particularly vulnerable to floods. Source: Chen Hualin, Wikimedia Commons

The reason for this infrastructure shortfall is not only found in a lack of financial resources and funding – but in local and national government capacity to develop the requisite knowledge needed to develop these projects. Environmental Impact Assessments (EIAs), pre-feasibility studies to ensure ‘bankability’ and project preparation facilities are all critical steps towards implementing any infrastructure projects. These capacities are often in short supply at the local and even at national levels, particularly in the sub-saharan African context.

The role of DFIs

In order to allow countries with low capacities to access funding for costly development projects, traditional development finance institution such as the World Bank, the KfW and the African Development Bank  offer ‘package’ deals that combine low-interest loans with decades of consulting and research experience to ensure the environmental, social and economic sustainability of infrastructure projects. These institutions have over the past decade played an increasing role in assisting local and national governments in providing basic services as well as infrastructure to improve urban resilience and adaptability in urban areas. This is done in a number of ways, ranging from development policy support to infrastructure development – in combination with consulting, research and capacity development experience.

An exemplary project in this regard is the KfW and World Bank’s projects to improve adaptability and resilience in Beira, Mozambique. Currently, Mozambique is experiencing increasing incidences of floods, erosion, cyclones and droughts and is one of the countries most affected by climate change globally. The KfW and the Word Bank have therefore supported development projects in Beira that foster inclusive, participatory and climate adapted urban development. During the first phases of the project, the KfW financed sluice structures and urban waterway rehabilitation projects in the River Chiveve to enable natural drainage and allow for flow regulation. To compliment these measures, backwater areas were rehabilitated in order to increase resilience to flooding. In the second phase of the project, polluted riverbank areas were converted into public green spaces that include sport facilities, a botanical garden, commercial spaces and water and sanitation facilities. Tfdarfhis allowed for a greater sense of community ownership, which can lead to greater sustainability and longevity of the project.

Development finance institution also have a role to play in terms of building local capacity and governance infrastructures. This is exemplified in projects such as the KfW’s support for decentralisation in Benin through the creation of the Fonds d’Appui au Développement des Communes (FADeC) budget transfer mechanism that allows for local governments to decide where allocate funds and invest funds according to local needs rather than national governments. This project also aims to build and strengthen local institutions that monitor the use of local funds and quality of infrastructure projects. Among other initiatives, this is achieved by carrying out audits in 77 municipalities in Benin in order to monitor whether public funds are benefiting local communities.

These projects highlight that although interventions in the built environment are critical, it is equally important that institutional support, local ownership and adequate management be fostered to ensure sustainable and adaptive infrastructure initiatives achieve their goals. This approach is echoed by scholars of sustainable development such as Jeffrey Sachs, who argues that in order to achieve development outcomes as outlined by the UN Sustainable Development Goals (SDGs), cities will require “good governance, public finance, and effective institutions”. This is critical in order to allow for cities to identify and deliver solutions in the age of climate change.

Shifting roles of DFIs and Multilateral Development Banks (MDBs)

However, while the role of MDBs remains important, as illustrated in the project above, these institutions are now in competition with emerging funders and increasingly the private sector. This emerging dynamic may have significant impacts on the development finance industry. While increasing competition may be a good thing from the perspective of borrowers as funders offer more innovative products and better terms. However, increased competition may lead to a ‘race to the bottom’ in terms of environmental and social governance as funders relax conditionalities in order to become more competitive. This is a criticism that has been levelled at the World Bank’s new Environmental and Social Framework that emphasises the use of countries’ own systems – as opposed to World Bank systems that are often perceived as too stringent. This shift will have wide ranging impacts – as smaller institutions such as the KfW similarly make use of World Bank guidelines.

While it is important that development financiers and governments continue to engage constructively to find beneficial modes of cooperation for all stakeholders, it is critical that local and national governments maximize the benefits accrued to them when dealing with development financiers such as the World Bank and the KfW. This is particularly relevant when considering the low levels of local capacity when planning for climate adaptive and resilient cities.

Development financiers and national entities should work together to enhance capacity building to ensure that greater competition between traditional and emerging funders does not translate into weaker standards and projects of lower quality. Capacity building should be widely promoted by development financiers such as the World Bank and KfW rather than simply suggested – while capacity building initiatives by these institutions should support and strengthen local government’s existing capacity-building initiatives.

Development finance institution should increase engagement with regional forums such as the Southern African Development Community (SADC) to provide opportunities for countries in the broader region to benefit, even if they are unwilling or unable to make significant domestic capacity-building commitments. These capacity-building efforts must be underpinned by a shift from project-specific capacity building initiatives towards greater technical assistance initiatives focused on local staff. Borrowing countries and local entities should also seek to expand their engagement with ongoing project preparation and capacity-building initiatives by MDBs such as the Global Infrastructure Facility, which will help to ensure that local capacity is sufficient to deal with projects marketed for private sector investment.

Furthermore, greater emphasis should be placed on decentralisation in order for cities to acquire sufficient resources from domestic sources (such as rates and taxes) in order to provide basic infrastructure such including schools, hospitals and clinics, drinking water and sanitation and access to affordable electricity. The KfW’s support for decentralisation in Benin is exemplary of such an initiative.

Conclusions

The changing dynamics between local and national governments and development financiers may hold significant implications for cities increasingly vulnerable to the effects of climate change – on the one hand, this may encourage countries to improve standards, improving overall environmental and social governance, while this may also lead to increasingly unsustainable forms of infrastructure as banks compete for business. Cities should become aware that while increasing competition between funders may mean better rates and fewer conditionalities, it can also mean greater opportunities for capacity building.

While development banks are increasingly shifting towards ‘loosening’ conditionalities, countries will have to improve in-house capacity to ensure infrastructure is sustainable, resilient and adaptable. This will not only allow for countries to access funding from a broad range of sources, but also to  ensure that local communities are more resilient against the rapidly shifting weather patterns and climate change.

In the urban era, cities will be at the frontlines in the fight against climate change – and they will need all the help that they can get.


Rudolf du Plessis is a Mundus Urbano student from South Africa. Before joining MU he was a researcher for the South African Institute of International Affairs’ Economic Diplomacy Programme, where his work focussed on African infrastructure development and the role of Multilateral Development Banks, Development Finance Institutions and emerging funders such as China. He holds a degree in International Relations from the University of Pretoria and a Masters degree in China studies focussing on China’s trade and investment policies. His research includes the role of development finance in cities in the global South, Green Finance and infrastructure development. 

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Project management in urban discipline: Managing processes in highly complex and highly unpredictable work environments

Darmstadt

MU students in Darmstadt closed the winter semester with the class on Project Management (PM) with our guest lecturer MU alumna Prof. Lauren Ugur. Let’s take a look at the dynamics and outcomes of this top-priority course.


The complexity of urban systems makes managing the overall processes of urban development practice exceptionally challenging. As urban professionals, our motivation is to contribute to improving the living conditions of societies who are most in need and to take up the journey to implement our ideas with good intentions to the best of our ability. Like any journey, only through solid preparation can we actually effectively manage processes. Without a thorough understanding of the contexts, complexities, and functioning of urban systems, we are plugged in but not switched on.

BlogPhoto1Students working on their project on solid waste management in Bangladesh.

The simple reality is that, with traditional PM we cannot control the systems with which we work. Due to their complexity, uncertainty is a reality and we need to learn to not only accept it but proactively work with uncertainty and dynamic change. We therefore need non-traditional approaches to PM if we are to improve project success rates.

That’s why activating approaches towards a very thorough understanding of PM is crucial: Only through an in-depth understanding of management processes can students appropriately adapt traditional management tools to the international development project environment.

During this recent 2-week course, MU students elaborated on their own projects which addressed some urban problems such as water scarcity in Cape Town, facilitating organic growth to rejuvenate urban areas in decline as in the example of Amsterdam, solid waste management in Bangladesh, developing societal approaches against domestic violence and alcoholism in Ontario. 

Projects on demographic challenges in Amsterdam (left) and water scarcity in Cape Town (right).

The students had the opportunity to use numerous traditional PM tools from SWOT to 5C, CPA, and PERT, from Gannt charts to stakeholder analyses and to apply them to their specific contexts. But this activity represents just the basics—the real focus of the course goes beyond the basics of traditional PM and gets the students to understand and be able to work with more agile forms of management which are essential for dealing with the highly complex and therefore also highly unpredictable environments in which we work.

The one-to-one application of traditional PM tools has limited effect on ensuring project success and therefore it needs to be better understood and critically reflected on what PM tools offer, how they can/should be adapted to different projects and used more flexibly. Thus, the focus of the course is on understanding the effects that decision-making and the information rendered through use of PM tools has on the management process in an iterative manner consisting of project solution cycles that incorporate feedback throughout the process of problem identification, project planning, and potential implementation.

What students have to say

Marina: “I worked on the project which dealt with the water scarcity in Cape Town. Being a huge undertaking, our group work sessions were intense in the amount of information we had to research, handle, disassemble in order to understand the management, the direction, the leadership drive behind that project. However, this exercise with all the tools it involved proved extremely useful, as later on I had to go back on my experience with project management and use it for my work during my internship. I guess the lesson learned is that project management takes an equal amount of personal development and professional skills/experience to be able to handle immense amount of workload and information of high complexity.”

Susan: “The most interesting point of Project Management course, for me, was developing a customized integrative framework within which all the steps of conceptualizing the issue, formulating the question, analyzing the situation, conducting the process, and developing the product were reciprocally linked. It was also an eye-opening experience for me as an urban planner/designer, playing a project management game, to realize how concerns and considerations simply change depending on one’s position in either side of the table!”


Prof. Dr. Lauren Ugur is an urban development and management professional. She holds a PhD in Urban Sociology and a MSc in International Cooperation and Urban Development both from the Darmstadt University of Technology, Germany, as well as a first-class Master of Business Administration (MBA) from the University of South Australia. Professionally, Lauren holds a Professorship in International Tourism Management at Heilbronn University of Applied Sciences. She draws on her diverse background, focusing her research interests on the environmental, social and institutional complexity that determines how organizations, public and private, are able to deliver integrated planning interventions to address contemporary urban issues. Prior to this appointment, Lauren held a Professorship in Tourism and Event Management at Frankfurt International School of Management (2014-2017) and worked as the Consortium Manager for the Mundus Urbano program “International Cooperation and Urban Development” (2009-2014).

ICUP receives AESOP Certificate of Quality!

Darmstadt, Grenoble, Mundus Urbano Consortium

We are so proud to announce that our partner programme in Grenoble, Master of International Cooperation in Urban Planning (ICUP), recently received Quality Recognition by Association of European Schools of Planning (AESOP) until 2022.

According to AESOP, “this programme fulfils the European quality standards of planning programmes according to the AESOP Charter, complemented by an effective internationalization of teaching and learning processes.” AESOP’s mission is to promote excellence in planning education and research, and by quality recognition, to make the best of the plurality and diversity of approaches.

Mundus Urbano students have the possibility to choose to study this programme during their second year at the Institut d’Urbanisme et de Géographie Alpine and are awarded a double degree in Urban Planning.

For more information on the programme please visit:

icupiug.wordpress.com/

facebook.com/urbanoIUG/

Annual Consortium Meeting in Darmstadt

Darmstadt, Mundus Urbano Consortium

As always, it was a great pleasure to host the annual consortium meeting and to welcome the administrative team of the programme in Darmstadt. The Consortium was represented by: Annette Rudolph-Cleff and Nina Gribat (Technische Universität Darmstadt), Federica Gatta (Université Grenoble Alpes), Carmen Mendoza Arroyo and Raquel Colacios (Universitat Internacional de Catalunya), and Carmen Tata and Paolo Paesani (Università degli Studi di Roma ‘Tor Vergata’). The Consortium made a selection of the new students for the 2018/20 intake and planned the forthcoming academic year. Special thanks to Nebojša Camprag (Consortium Management), Anaïs-Marie De Keijser (Programme Management) and Edith Subtil (Programme secretariat). We meet again soon!

MU students take over!

Darmstadt

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Mundus Urbano proudly announces: Our student initiative Medium page is now available to the world! It hosts opinion essays from our current students in Darmstadt with reference to the coursework of Mundus Urbano. Our page is launched with its very first entry titled Navigating the complexities of slum upgrading by our student Rudolf du Plessis following a weekly module with Aditya Kumar. Visit https://medium.com/@mundusurbano and stay tuned for the updates to come!

 

Our 10th year anniversary

Conference, Darmstadt, Mundus Urbano Consortium

Mundus Urbano consortium celebrated ten years of its successful operation on the 7th of October 2017 at Christoph-Georg-Lichtenberg-Haus in Darmstadt. More than 100 alumni, lecturers and friends took part in the whole-day programme, during which they shared not only the most valuable experiences and thoughts, but also used the opportunity for networking and exchange. To see some photos from the event, please follow this link: http://bit.ly/10YearsMU

During the opening session, the founder of the consortium Kosta Mathéy reflected on the early establishment challenges from the year 2007, as well as on some of the major achievements during the early programme development phase. Coordinators of the partner universities, Carmen Mendoza from Universitat Internacional de Catalunya in Barcelona, Carmen Tata from Università degli Studi di Roma Tor Vergata in Rome, Jean-Michel Roux from Université Grenoble Alpes in Grenoble, and Annette Rudolph-Cleff from Technische Universität Darmstadt highlighted some major results of the cooperation and shared perspectives on potential strategies for the future.

The following session opened the floor for the alumni. The focus was on research and academia in a world of cities, on which the guest speakers shared their perspectives: Maria Ustinova (World Bank, Russia), Mbongeni Ngulube (KU Leuven, Belgium), Luciana Dornelles Hosannah (GSSI, Italy), Andreas Brück (TU Berlin, Germany), and Natasha Aruri (UR°BANA, Germany). The session after that emphasized experiences and perspectives of the alumni involved in urban development practice. This session hosted presentations from Alexandria Novokowsky (The United Nations World Food Programme, Italy), Brenda Perez-Castro (Consultant at Habitat for Humanity International, Asia Pacific), Lukas Hoye (GOPA, Germany), and Ulyana Vynyarchuck (former Sector Manager EU Delegation, Ukraine). The sessions were chaired by Nebojša Čamprag, Anaïs De Keijser, and Kosta Mathéy, and discussed by Nina Gribat and Pierre Böhm.

Finally, World Café session provided a platform for several parallel sessions to explore issues about making an impact in the field, challenges of intercultural communication, urbanization in higher education, ways of strengthening the alumni network, and urban planning and emergency architecture in the field of international cooperation. After the hard work, the event was concluded with a reception and dinner, and with melodies of Mundus Urbano alumni DANA Band, Frederico Duff de Azevedo (guitar and vocals), Reza Mahdi Daniswara (guitar and vocals), and Pinar Bilgic (vocals).

Mundus Urbano consortium wishes to extend its gratitude to everyone who made it to actively participate in the event, providing thus valuable contributions for the years to come!

Today is the first day of classes!

Darmstadt

#MundusUrbano classes have officially started today with the warm welcome words from Prof. Rudolph-Cleff and MU administrative team. As always, we are so proud and thrilled to welcome this international and interdisciplinary group of students from Bangladesh, Belarus, Brazil, Canada, Colombia, France, Greece, India, Indonesia, Iran, Japan, Jordan, Kyrgyzstan, Pakistan, South Africa, Turkey, Uruguay, the USA, and Yemen, who unite in dealing with the highly complex issues of #InternationalCooperation in #UrbanDevelopment.
We wish you all a productive and successful time in Darmstadt!

Celebrating 10 Years of Mundus Urbano

Conference, Darmstadt, Mundus Urbano Consortium

Programme Description:

09:00-10:00 Registration

10:00-10:30 Opening Session: remembering the past, envisioning the future
Since its creation in 2007 more than 200 alumni have graduated from Mundus Urbano and have become leading figures in the field of urban development. Collaboratively, the founder of the program and the current coordinators will chronologically reflect on the programme’s milestones and present potential strategies for the future.

10:30-12:00 Research and academia in a world of cities
One third of the Mundus Urbano alumni opt for an academic career. In urban studies researchers have to cope with highly complex contexts leading to a variety of contestations and requiring an array of differentiated methods and approaches. Which lessons learnt can we get from alumni who have taken up this challenge? This session will be concluded by an open discussion.

12:00-14:00 Lunch break

14:00-15:00 Keynote lecture
Bridging the gap between theory and practice is certainly one of the greatest challenges that urban profesionals have to deal with. Prof. Grubbauer from HafenCity University Hamburg will challenge some of the existing discourses and highlight directions for an open discussion.

15:00-16:30 Managing the urban: practitioners’ perspectives
As an interdisciplinary profession, in a world of segmented and saturated job markets, Mundus Urbano alumni have the opportunity to redefine their professional identity. How can the benefits of this situation be reaped while simultaneously minimising potential threats? This session will equally be concluded by an open discussion.

16:30-17:30 World Café Session: hosting conversations that matter
Through this easy-to-use method for creating collaborative dialogue the aim of this session is to explore issues that matter. A platform is provided where everybody can engage in the search of collective discoveries on the following topics:
– From an altruistic idea to making an impact in the field
– Communication between cultures and disciplines in international cooperation
– Preparing for a complex professional field: tackling urbanisation challenges in higher education
– Bridging the gap among urban professionals: a strong and vibrant alumni network

17:30-18:00 Wrap-up and closing remarks

18:00 Reception and dinner
What’s a birthday without a party! After a whole-day programme and engaging discussions, the event will be concluded with a delicious buffet accompanied by the melodies of the Mundus Urbano alumni DANA Band. Don’t forget to bring your dancing shoes! 🙂

Celebrating 10 Years of Mundus Urbano

Darmstadt, Mundus Urbano Consortium

Dear Mundus Urbano alumni and friends,

For the past 10 years the Mundus Urbano Program has been providing urban professionals and researchers with innovative solutions required to address the increasing needs in the field of international cooperation in urban development.

To celebrate this occasion we are happy to invite you to join us for a day of discussions, exchange of experiences and networking in Darmstadt on October 7th, 2017.

The programme in PDF version can be downloaded here.

We look forward to your presence and participation, please send us a confirmation to mail@mundus-urbano.eu before September 15th.

Kind regards,
Mundus Urbano Team