ONE UN - Bankable Municipalities, Livable Cities (WUF13)

Great.
Hi.
Hello, everyone.
Welcome.
Good to see such a busy room.
I know that you're very excited, most likely to talk about bankable municipalities, viable cities, definitely talk about the topic that is one of the most important, how we're going to finance all of the transition technologies that we have been discussing throughout this World Urban Forum.
This session is co hosted by the World Bank and the Asian Development Bank.
But before everything, let me introduce myself.
Very nice to meet you.
My name is Priscilla Ngrads and I'm Associate Director at Climate Policy Initiative.
Within CPI, as we call it, I lead the CCFLA the City's Climate Finance Leadership Alliance is a big acronym, make sure that you get it.
CCFLA we are the main multi level and multi stakeholder coalition working in this free magical words and the urban climate and finance trying to support our knowledge, but also on collaboration and raising the advocacy and the attention around the need from cities for their climate transition, on the urban climate finance space.
We're definitely going to discuss all of these topics today and for this and for our welcome and introduction, I'm very happy to call Valerie Lv, who is the Vice President of infrastructure from the World Bank.
Thank you, Claps.
So Energy.
So thank you very much for the introduction and good afternoon everyone.
Welcome to all of you for this joint session costed as you said, by the World Bank and the Ajian Development Bank.
So it's a pleasure to have you with us today, city leaders, national institutions and development partners, private sector practitioners, of course, each bringing a distinct perspective to a challenge that none of us can address alone.
So I want to thank our co hosts from ADB and to the panelists for joining us.
This is an important conversation and the right time to have it.
More than half of the global population, over 4.5 billion person live in cities and derive 80% on the global GDP and account for 88% of private sector job creation 2010-2020.
Ongoing urbanization is arguably the single most significant structural transformation in the developing world.
Combined with overall population, gross urbanization could add another 2 billion people to cities by 2050 with close to 90% of that increase concentrated in Asia and in Africa.
The urbanization pressures I have described will be familiar, I think, to the people in this room.
Together with escalating climate risk, they are placing growing pressure on national and local governments to deliver greener and more resilient infrastructure and services, pressures that are particularly acute in low and middle income countries.
The investments required are not discretionary.
We need to do it.
Transport, water and sanitation, management of rapidly increasing volumes of solid waste.
And fluid protection.
We have seen that right here a few days ago are foundational to how city functions, grow, and manage risk.
I'm sure you'll hear about it.
The scale of the challenge is really massive across infrastructure and services in the investment need are substantial.
Strengthening public finance and improving efficiency remains essential but is not enough.
That's why mobilizing private capital is no longer optional if cities are to deliver at scale.
However, private investment in municipal infrastructure in developing economies is extremely constrained today and remains stubbornly low.
For example, of the 100 largest cities in developing countries, only 35 had issued municipal bonds by 2023.
And that's where the World Bank Group with the full set of its capacity want to be here to support.
The presentation you are about to hear, which is based on extensive World Bank research undertaken in multiple countries over the past decade, unpacks these numbers, analyzes the main reasons for all these turns and suggests some broad pathway for action.
Looking forward, the question is not whether to mobilize private capital, but how to do so effectively, responsively, and at scale.
The panel discussion we dig into what is holding cities black and what it will take to change the current picture.
What reforms are needed, what innovations are possible, and who needs to act and at what level.
We have city leads, national institutions, global development institutions, and private sector voices in the room.
That combination matters because no single actor can solve this alone.
The World Bank Group and the Asian Development Bank together bring substantial analytical and operational experience to this agenda.
I really look forward to a practical a change that moves from diagnosis to solutions and from solutions to actions.
Thank you very much.
Well, thank you so much, Valerie and I got your message.
We have two discretionary things we need to discuss today.
One, the climate transition, and the investment into it, which is not an option and private investment.
We hope to get those points and come back while the discussion.
But before doing that, we have a framework presentation from a leader in the city space, Roland White, who is the global lead City finance and Management at the World Bank.
So please come Roland to present us the data.
Yeah, you can clap now if you.
Okay Be careful what you wish for.
Good afternoon.
It's a pleasure to be here and to be able to address you on this critical issue which has risen visibly in the international discourse on urban development in developing countries in the last few years.
As Valerie mentioned, the World Bank has undertaken extensive research on this issue of commercial financing of urban infrastructure in developing countries.
The most fundamental finding is probably summarized, um, in this chart, which comes from a report that we released about a year ago.
Um.
What it does is contrast borrowing by municipalities from private sources in mature markets, which are represented in the blue bars with the situation in developing countries, low and middle income countries represented in the red bars.
This is all total debt stock as a percent of GDP.
Um, The US bond market, over 4 trillion now is very well known.
A little bit less known is that other countries like Japan as a percent of GDP, even have higher amounts of subnational, specifically municipal borrowing.
This has been going on for decades, indeed centuries in many of these countries and has worked as a very effective system for mobilizing finance for investment in urban infrastructure.
The situation in developing economies is entirely different.
There are about 24, 25 economies, developing economies where regulatory conditions, the fiscal fundamentals are such that municipalities can actually effectively access commercial finance, whether that's on borrowing or through PPPs.
In none of these countries is the quantum of borrowing more than about 3% of GDP, and in most countries, it's far less.
The other thing to notice about this is that this trend has persisted over a fairly lengthy period.
In fact, if you go back pretty much as far as we can find records, you will find that municipal borrowing activity from private sources in the leading countries in the developing world for this kind of activity, that's South Africa, India, Colombia, Brazil, Turkey, at no point does that move above about 2% of GDP.
When it comes to public private partnerships, as a percent of the total transactional volume in dollar terms of all PPP activity, municipal PPPs in developing countries account for less than 6% at the highest.
In recent years, there's been a fairly dramatic drop off of that transactional volume.
The reasons for this are profound.
The situation wouldn't exist if they weren't powerful factors driving this.
At the bank, we've developed an analytic framework for understanding the factors that drive the quantum and the character of the commercial finance market for municipalities, again, whether that's through borrowing or structured finance, PPP transactions, which essentially divides the main factors which drive this in any country at any time into three different dimensions.
Firstly, you have effective demand.
Effective demand determines how much municipal entities want to and can borrow or can raise in terms of equity to invest in PPP structures.
There are three aspects to this.
Firstly, really is a non fiscal issue, which is the absorptive capacity of municipalities to be able to take that finance and invest it in infrastructure.
One of the very interesting factors that we found in a study we did on India several years ago, was that there was a whole class of Indian cities, about 27 of them, of the biggest richest Indian cities, which had the capacity, if they had so wanted to increase their total stock of borrowing by 20 times.
Altogether, that was about seven to 8 billion.
They had the capacity to do that, but they weren't doing it.
And the reason really is because the administrative structures within Indian cities are confined in such a way that they're unable to absorb funding, even grant funding when it's offered to them at full volumes, and so they have very little interest in going after capital which demands a price, which, of course, borrowed capital does.
Secondly, you have the funding base which municipalities require in order to raise finance.
So finance, of course, has to be repaid, whether it's a return on equity, whether it's debt service obligations in which there's an interest rate or a coupon, municipalities have to have the revenues in order to be able to satisfy those debt service obligations.
Um, and then finally, there's the quality of municipal financial management and the quality of municipal and transparency of municipal financial data, which investors need in order to make sensible investment decisions.
Without that data, or if they're not certain that municipal finances are going to be managed appropriately over the tenure of the loan, of course, they're going to be unable to take the risk decisions that are required for investment.
That's on the effective demand side.
On the other side, you have the supply of finance.
Really, this is about the financial sector and an investor community that has to be interested in this asset class.
Whether that investment community is represented on the capital markets, by institutions that will invest in municipal bonds, or whether it's represented by financial intermediaries that may be interested in specialist lending to municipalities.
You have to have something on the supply side to provide the supply once the demand is there.
Between demand and supply, you have the regulatory framework which intermediates the relationship between these two things.
That is really the system of laws and rules which national governments or in federal country, state governments promulgate in order to determine whether municipalities can borrow, what sources they can borrow from, how much they can borrow, the procedures through which they need to go to raise borrowed finance or to enter PPP transactions.
Then finally, what happens in the case of municipal default? Different to the corporate sector because, of course, a municipality cannot be wound up and that actually has profound implications for what happens if municipalities default on debt service obligations.
I Looking at this empirically now, if that's the conceptual framework, what our research shows overwhelmingly, is that the core constraints are to be found on the demand side and in the regulatory system.
Essentially, as I've mentioned earlier, in countries like India, even in South Africa today, where you've had a general diminution of managerial and technical capacity within even the larger city governments, you're finding constrained abilities of municipal institutions to absorb finance.
Weak municipal revenues.
In low and middle income countries, for example, property tax, which is the main form of local tax across most countries, property tax is equivalent to around about 0.3 to 0.6% of GDPs.
In mature markets, it's well over double that.
In India, for example, on average, the water service charges, which are charged by municipal utilities for the provision of water are capable of covering less than half of just the maintenance and operational costs of those utilities, let alone the capital costs.
They just are not the revenue streams there in order to be able to provide the funding base to attract the financing.
Then finally, in many of these countries, of course, you have poor financial management system, auditing quality is poor, or if audit reports are produced, often audit actions are not followed, and of course, you have a set of constraints there.
Um On the regulatory side, some countries have done a fairly good job of improving their regulatory frameworks.
Other countries have got some distance to go.
I'm going to give you one example, South Africa in order to demonstrate how these constraints play out.
The chart on the left shows you what's happened with South African municipal borrowing from both private and GFI sources going back as far as 2000 up until 2000 2024.
I want to point out two things to you.
The first is the inflection point, which occurs around about 2004, 2005.
What happened there was that after years of policy development and developing legislation, the Municipal Finance Act in South Africa was promulgated, which essentially created a new market oriented regulatory framework for municipal borrowing.
At that point, the cities and particularly the big cities actually had pretty robust financial fundamentals.
What you see a At that point that inflection point around about 2005, 2006, is that the supplier side follows and municipal borrowing begins to take off.
And it consistently grows and grows and grows until around about 2018, 2019, which brings me to the chart on the right hand side.
What you see there and this to be fair, is impacted by COVID.
That's the big shock that you see for the drop.
But at around about 2018, 2019, the fiscal fundamentals across the South African municipal system, this shows both larger municipalities and smaller municipalities begins to weaken.
All right.
It begins to decline, and to this day, it has continued to weaken.
What you begin to see, of course, is that the borrowing trend follows that.
Unable once the fiscal fundamentals weaken, the funding base erodes, unable to attract a financial investment from the private sector.
All right.
So what do we do about this? Essentially, all of the factors that I've mentioned can be divided into two types.
There are those factors over which central governments have control, like the regulatory framework that I mentioned earlier around municipal borrowing, but also things like the regulatory framework around the municipal accounting system, how well the audit authority is financed, how it does its job, how well it's supported, and so on.
Those factors are represented in the vertical axis.
On the horizontal axis, we have factors which fall under the control of municipalities.
These are factors like how well a municipality manages its own source revenues, how well they produce their financial data, what their budgeting is like, how reliable their budgeting systems are and so on.
These are factors that in many countries are under municipal control.
The overall attempt here needs to be For all of the actors in this room, whether you're a national government representative, whether you're from local government practitioner, IFIs, collectively, the job for any given city or class of cities in any given country is to try and move things along in the direction of travel through tackling factors which national governments control, tackling factors which municipal governments control up towards the right hand quadrant.
Here, we've just stylized a few cities to demonstrate where they are right now, you'll have a city like Cape Town, which is represented here, I believe, which exists within a pretty good ecosystem.
You've got a robust regulatory system in South Africa.
As I mentioned earlier, Cape Town has done a pretty good job of managing its fiscal fundamentals.
It's in a pretty good position and as a result, can and does go into the market regularly in South Africa and in fact, not long ago, concluded $150 loan with IFC.
Then you have other countries right at the bottom end like Nairobi, Darus Salam, where regulatory systems are poor and where municipalities themselves are fairly weak in terms of their financial management.
Let me end then by summarizing what this means concretely.
There are really three levels of action here.
Firstly, as I've implicitly, at least repeatedly stressed, one needs to fix the demand side fundamentals, strengthen the funding base of municipalities, improve financial management and quality of financial data, and expand the absorptive capacity of municipalities.
At the bank, we have multiple operations in multiple countries which have elements which try and tackle these problems.
We have global programs which do it.
There are many other institutions in the room which are also tackling these problems.
It is not a very glamorous business.
It is a difficult business.
It's a long term business.
It doesn't happen quickly, but without it, the constraints will remain absolute.
It has to be tackled and it has to be tackled on an ongoing basis.
Then secondly, in those countries where regulatory frameworks are poor or outdated or overly constraining, dialogue with national government policy dialogue and legislative reform needs to be considered in order to introduce more appropriate frameworks.
Then finally, in an imperfect world, while the fundamentals are being sorted out, and that's going to take a long time while the regulatory systems are being sorted out, and that's going to take a long time supply side action to try and stimulate the supply of municipal finance as needed.
Me just say that when it comes to supply side action, the key point here is to get the balance right.
It is possible and governments have done this, that in their enthusiasm to try and stimulate borrowing activity, they create government financial institutions or initiatives which essentially crowd the private market out.
They want municipalities to borrow, we'll create a GFI, we'll capitalize the GFI.
The GFI is put on level playing field with the private sector.
It has regulatory advantages, et cetera and ultimately those entities then make it very difficult for the private sector to compete and the overall impact is going to be a or a constrained amount of private finance flowing rather than opening up.
On the other hand, you can't do nothing.
You can't just let the market determine it, there needs to be an appropriate balance here with appropriate de risking mechanisms and so on also to be considered.
Let me stop there.
Thank you very much.
Great.
Thank you, Roland, for the map, the data, and the challenges.
Now let's discuss it, see what is happening in the ground and for this.
I'm very, wait, then I need to press the next.
Anyways, very happy to have our panel.
Oh, here they are here and please join me in welcoming Sanjaya Kush Resha from the Chairman and Housing and Urban Development Corporation from India.
Mayor Nasii Moya from Tishwani, thank you so much for coming.
Danielle Darling.
From the Urbanization and Cities Le from PWC UK, and last but not least, Srinivas Sompav who is Director of emerging Business in As from the Asian Development Bank.
So great.
And everybody here.
Let's start.
I want to start from hearing from the city side.
Mayor, I think based on experience and we saw some data from South Africa, definitely want to hear your thoughts on that if you see applied.
What are the challenges that you are facing on the ground, particularly assessing commercial finance, for investment in municipal infrastructure and borrowing and PPPs.
I think that graph on the PPP is a very interesting one, so we're seeing it lowing it down.
What are the main things cities like Tizwana can do to become more attractive for investment? Thank you so much and good afternoon to everyone.
You've created a problem because you put Cape Town.
You should have used another city Roland.
We don't like that.
But in all honesty, Cape Town remains our inspiration in the country.
I think they were able to start earlier on to do the right things.
And I don't think what they've done was out of the ordinary that in the country, we're learning in terms of what is it that they did and how can we, you know, replicate that in our cities.
But in the city of Sanne, since Roland covered most of the not general or generic points, but specifically in the city of Sanne, we have had financial difficulties, especially during COVID.
The recovery from COVID has truly left us in a situation where we had an unfunded budget for four years with an average of 4 billion deficit for four years.
Of course, that has an impact in terms of the strength of the institution, coupled with that for about four years ago, for the first time, our audit outcomes were not great.
In fact, we got adverse findings on our audit which had followed by qualified audit outcomes.
You can just imagine in terms of when we present ourselves to the market that we are not the attractive partner at all.
But now what we're trying to do, and we started this with me at the helm towards the end of 2024, the first thing that we did was to have clarity of vision.
From the leadership point of view because there is no entity that will want to partner with us if they don't understand what we're trying to do.
There are two priorities that we have in addition to ensuring that we do have financial stability, and of course, we improve our governance by improving our audit outcomes which have improved.
We then decided that we need to grow our economy and in growing our economy, we need infrastructure development because there is a backlog in infrastructure development.
And the second thing is that, and I think this is the project that World Bank is also involved in in the country is the trading reforms.
We are one of the metros that are participating in the trading reforms.
And so to repeat what Navalere said earlier, we have no choice but to go to the market.
But it always helps when we partner with entities that they understand our realities that when you come to Tana, you're not going to find Cape Town.
You're going to find Sanne with its own realities and a partner that can work with us from day one until we reach the objectives that we've had.
So as I'm saying, in terms of infrastructure development, we are looking for partners.
In fact, on the 29th of June, we are having an infrastructure investment summit in the city of Taney, where we will be putting out our water, electricity infrastructure, housing to the market.
But part of that conversation is to ask those partners, what is the best way to do this? Because we have not done it before.
But for us to do it, and this is the part of the question where you say, how are we preparing ourselves? Firstly, is to try and have stability of leadership in the institution.
There's no way that you're going to achieve the level of capacity of the institution if there is no leadership stability.
In our country, we've had a lot of instability, especially with the coalition governments that started around 2016.
The second thing is to ensure that we improve our audit outcomes.
To what Roland was talking about the financing systems.
If a partner can't be assured that once the money lands in the bank, it will be taken care of and it will be spent prudently and there will be value for money, and most importantly, that if we borrow, we'll be able to pay you back.
And I think that's something that we must not shy away from even in the way that we negotiated the agreements with the development banks.
But I think what is now important for us as the city of Turney is to ask municipalities like Cape Town, you've done it.
What can we borrow from the city of Cape Town? In terms of their approach to Triple Ps.
We've tried Triple Ps in the city of Tan.
The headquarters in Sane is an outcome of a TPP.
In the province where I am in Haden, there is a TP project of how train that was handed over to provincial government.
We've tried it, but it's been very slow to get to conclude a Triple P and through the national government, we've been able to refine the TOP regulation so that it doesn't take that long to conclude a Triple P.
As the government of the city of Tanne, we are fixing ourselves first so that we are able to better present ourselves to the market.
But we opened the door to the likes of World Bank to say, what is it that you can help us with? Because even the issue of technical capacity, it comes into play because we are attempting something that we have not done before.
So we don't only want to present ourselves where we get to the agreement about how you can help us finance, but how do we prepare for the financing? But also, as a last point, um, City of Tn is an unequal city.
Whatever partnerships and agreements we get into, they can't disadvantage our poor people.
We need partners who are very conscious about our social conditions as well, that when we partner with you, it can drive up the prices of water and electricity to a point where poor people won't be able to afford basic services.
But that's what we are trying to do.
Thank you.
Thank you.
Thank you so much, Mayor, very, very important points, I think, like the vision, the political issue, which is key, and we often don't talk so much about it, how you can maintain that stability.
I think you touched on a point that I'm going to move to the question for you Jaya, which is we need to work with partners that understand cities, our challenges, and particularly the social aspect of all this change and climate investment into infrastructure I think Huduco is currently the largest commercial lender to municipalities in India.
So Definitely, I think you are a partner that understands the cities, we see that in the Indian market, the lending market is still limited.
Can you bring us some light on what are the barriers for expanding this lending activities in India and how have you tried to address this? Sure.
Thank you and good afternoon.
It's a wonderful presentation that we had seen and a lot of things about the India was there in the presentation.
So Thank you so much for covering the idea.
But now we are in the ages that how we will convert our ULBs to a city as a growth hub.
A lot of emphasis has been done and towards the reforms and the regulatory requirement.
A lot of things we had already put in place, the systems, the institutions, the, the regulatory framework, A 22 cities in India had already came out with the municipal bonds, so I'm very happy to declare here.
Maybe the amount will be less around 1 billion USD, but 22 cities are ready and we are planning for another 100 cities that they will come out with the UL B bonds.
Government of India is incentivizing issuance of the bond, but at the same time, as it was shown in the presentation, that it is not the money which is required for the UL Bs, it is the capacity uh, to absorb that kind of projects, to return that kind of money, to have that kind of governance, reforms, user charges, and that is the way we are working ahead.
Government of India has came out with a very ambitious program of around 50 billion USD, wherein the 25% will go as a grant.
So it's a VGF that is viability gap funding, to make this project viable, bankable, and sustainable, and the balance 25% will have to come by the state government.
So you see in the project which requires 100 rupees of the investment, the 50% will come from the state government either or the central government and 50% has to be put in by the private sector player to make it bankable.
There are policies for the user charges also which are in place by the states and the private sector has to come and invest their money and for which HCre as a financial institution will be supporting these financial institution.
It will not alone the lending part that we will be catering.
We will be converting and repurposing Htcore into more of a developmental financial institutions, and we are into the process of repurposing the institution.
We will also handhold the cities for issuance of the We will also work towards identification of the assets and formulating the projects, then converting into the bank projects.
We are also discussing with the World Bank and the ADBs to get the support regarding the best practices and how the capacity addition can be reinforced within our cities.
So a lot of things that we are doing, and this is one of the biggest program.
And now we are transforming from general subsidy based support to the UL Bs to the bankable project creation for the UL Bs.
The money will go from the government of India only if there is a bankable project.
At the same time, government has also came out with the reform incentives under the 16th Financial Commission for all the urban local bodies.
This is big change in the thought that we are going forward for the bankable projects in the ULB.
We had also came out with the partial guarantee fund, wherein the ULBs which have population less than one lacs, the 70% of the loan will be guaranteed by the partial credit guarantee fund, so they can come out with a project and the 70% will be taken care of by the government through this fund, because lenders were not initially attracted to fund these kind of projects.
So these kind of initiatives are taken and, uh, then we are also working towards the convergence because whatever we are doing and the subsidies are flowing into the water or sanitation or the waste.
So all these things will be converged to make the layered kind of bankable projects, and we are supporting our country in a way.
Thank you so much.
Thank you.
Thank you so much.
I think you mentioned a couple of A couple of points that Roland was pointing out in his last summer slide around how do you fix the demand side on capacity, but particularly, I think the supply side, which I think you brought an important and very important point around how in your institution in India, you are combining 50% of public to actually bring in the risk finance from the private the private sector and how this has been bringing results.
David, jumping to you on that private side.
So what are the factors that you could bring to the table now on the limiting of the flow of commercial private capital into municipal infrastructure? Thank you and good afternoon everyone.
Yeah, let's take a step back on that point of guarantees and credit enhancement being maybe one of the solutions that can help bring forward private capital.
I'll take a step back to give a very generalized view of why a private sector lender or corporate might have second thoughts about investing with or to a municipality or its projects.
I I think the first has been covered already is one around fiscal credibility.
In many markets, the private sector is held to extremely high accounting standards and high levels of transparency.
I believe that some private sector organizations would not always feel that same level of rigor and integrity is demonstrated by their public counterparts.
Now, just to be clear, this isn't a polemic on local authorities or cities.
I'm absolutely a pro cities person.
Um, as it were, but I do believe that there is sometimes a fiscal credibility gap that we need to recognize, albeit often for very important reasons, which are often human and socially driven.
Second thing I'd mention is the return profiles that most investors would be looking for.
That might be in terms of tenure, so long term investments aren't suitable for all types of investors, and also the rate of return that can be achieved through human basic services, much of the time in the case of infrastructure, cannot be expected to compete with the opportunity cost of other data center opportunities, for example, elsewhere in the world.
So when you're allocating your capital based on a return profile, are you going to come to municipal infrastructure first or last, right? So there's just a reality again to, you know, in generalized terms, the attractiveness of the market.
There's a couple of things that can be solved easily.
So I'll just mention that often we hear a lot about ticket size, meaning some of the investments at municipal levels are simply not offered at the scale that some institutional investors would like to be involved in.
Some would say, Well, we need to be $50 million, $200 million before we would participate and only as part of a multi lending structure, and therefore, projects need to get really big.
That can be solved in different ways by pooling different sector investments or even working across larger geographies, but it can be an issue.
Maybe the final point that I mentioned is the matter of political risk.
I mentioned exchange currency risks as well perhaps, but political risk might be one of the biggest challenges that the private sector has not fully understanding the national or local politics in some circumstances and knowing that often local politics can have a significant bearing over different government priorities in particular, which some of those investments might be exposed to.
So it's a risk thing, I'm afraid, for the private sector and the solutions that we can have on the supply side can address many of those, but I just wanted to lay out on a factual basis, those are the five or so reasons why it's difficult.
Great.
Thank you so much, David.
Definitely a blendt overview of the challenges.
But hopefully, as we know that it's not an option, right? I think that was the message we got from the beginning that we have private investment playing around infrastructure.
So maybe Sid Nivaas to you, ADB multilateral Development Bank, public funding.
So how can you help to tackle that challenge? How can we bring more commercial financing for cities and is it a priority for you and ADB and why? Thank you very much.
Maybe I'll pick up the Y first because it's easy for me to narrate the story.
75 of Asian GDP comes from urban areas.
In 20 years' time, 50% of global urban population will be in the Asia Pacific region.
So if we can't get finance coming into municipalities and urban areas, means that you're going to be styling the growth of 50% of the global population.
That's the scale that we're talking about.
Yes, indeed, it is a priority for us.
Um, unlocking commercial capital is extremely important for us and we have strategy 2030 that actually tells us in terms of what we could do.
That's more on the corporate side.
But looking more specifically around cities, uh, we have a livable cities program that we have been running, and recently our corporate evaluation department uh looked at it and has recommended one critical element, which is very common in Ming Zang we've been discussing about this jointly in India, which is how do we get access to private capital coming into municipalities in India.
The challenge for us is, and as that seemed Hotk was also alluding to, at this moment, the cities are just simply unbankable and point that David was also making.
The journey for us is, how do we make cities more ready and credit worthy counterparts to a private counterparts.
We've done a number of things and we are doing a number of things.
One is to look at what are those policy drivers that we could help.
We're starting from upstream, if you like, help cities uncover those policy binding constraint that could be addressed.
We're also putting together several project preparation facilities that help prepare projects better, bring that discipline of programmatic service delivery and not just jump to PPPs.
We're looking at PPPs as one of the procurement options that cities have in a programmatic infrastructure delivery program rather than going a one off of a transaction.
The third bit is then to look at capacities, both financial, governance, and institutional, trying to identify how their accounting standards could be strengthened, how the market regulator looks at these things, and what can we do? Many of them don't even have proper books, so what can we do to help them in improving their bookkeeping? And then start to develop a pipeline of investment project under the capital investment plan and identify which of them would be the most appropriate one which we could prepare to take them to the market.
So in doing that, certainly we structure financing solutions, and what we have done, particularly in the case of municipal infrastructure, that's the last point and I'll come back to that maybe subsequently if you have time, is to really look at our public sector financing.
ADB, for those of you who may not be very familiar, we are both a public sector lending and private sector lending together, unlike the World Bank Group which has IFC and IBRE What it allows us to really look at our public sector lending as an instrument to de risk downstream private sector opportunities and also look at how we could structure PPP transactions that then unlocks capital for us.
We are in a very interesting position for us to really look at the whole spectrum together to have a solution that unlocks more private capital.
But the journey is rather difficult because there aren't going to be that many cities which are going to be ready.
So we have to take a very long term view, identifying those cities which are going to be ready.
So for example, if we look at places like India where urban challenge Fund has been announced, we would like to anchor on them and identify what are those entry points where commercial capital can be released, where we can support bond issuance, and where we can structure PPP transaction.
Thank you.
Great.
Super interesting.
You deserve the lapse too.
Particularly because the question will be scale.
We need to make sure that these pipelines are built in a programmatic approach.
Mayor, I know that you have to leave, so I'm going to go back to you now.
I think you mentioned on your first speech about that you're creating the vision.
You're thinking about the future structuring and like, looking back and trying to structure how are you going to integrate these different types of financings.
And then I wanted to know from you, how important do you expect commercial financing to be a source of capital in your city in the next five, ten years? So is there within your plan? And I think also, like, what are the roles that central government, of course, but like development partners, the people that are here in this room that I see a lot in this table, but also in the audience, what they can do to help unlock this commercial financing? I think maybe let me start by saying what we have done with our infrastructure portfolio, we mapped out our infrastructure demand for the next ten years, and we costed it at 58 billion grands.
That's across the water, electricity, housing, and roads infrastructure.
So that's the backlog that we need to find 58 billion grand in a space of ten years.
And if you're looking at our own contribution, it's not even 10% of that we've put in our capital budget for this financial year.
So you can see that there will be a great demand for private sector to come in and to assist.
Hence, we are having the infrastructure investment summit in a couple of weeks.
But in terms of the first one, in our city, the reality in the short to mid term is that we're still going to rely on different sources of revenue.
The first one is the revenue that we raise ourselves, the property rates, from electricity consumption, water that we collect.
But the challenge that we have the reason why we can't rely on that revenue to cover the cost of infrastructure development is that the unemployment is rising.
The number of households that are able to pay for services is shrinking.
These are the reason why I'm quite sensitive that when we look for partnerships, we have this reality that until as a country we resolve our economic situation, this is the reality that we are talking about, but also it means that our ability to raise revenue is quite limited.
We do receive conditional grants.
Now we also get performance based grants from the trading services reforms, but that is just a small margin of our budget.
We have now started aggressively to adopt the off balance sheet approach where we say, take the asset do what you need to do with it, get your profits and retain what is ours at a setting point.
It's because of our limited financial abilities to, for instance, to make contributions in these partnerships and that goes with Triple P.
We're quite reluctant to go on Triple P or go to an agreement that will say, if the project costs 2 billion rent, you must contribute 30%.
At this stage, our city cannot afford to only prioritize one asset over the other.
So there's a lot of sharing of revenue that we have.
So that's our reality in terms of how does the short to mid term looks like for the city in terms of the financial development, how we can get help.
And the reason why I'm quite frank about what we are working with sometimes, and Dan is saying that, you know, not that he doesn't prefer cities.
Cities are different animal from national governments, because there's a lot of considerations that you need to make, and cities don't perform the same, they're not the same.
And so in terms of what I think, and I'm not only talking about Tan, is that there's a lot that is being said about the different funding models, but not a lot of information is getting shared about the successful ones where we can learn from.
Um, for instance, I know Cape Town has had successful projects at Takin and these are the municipalities in our city.
But that information, we don't readily share among ourselves.
As a result, each municipality starts from scratch.
When you have an entity like World Bank, World Bank must be aggressive in selling the success stories so that municipalities don't start from scratch.
Then, um, And I think this one we must emphasize a lot, that the money can be in the bank, but if you don't know how to manage that money, you're going to ruin many relationships.
The technical capacity and the transfer of skills to the employees of the municipalities is quite important.
In one panel yesterday, I was making an example that we now starting to change designs of certain infrastructure because we are responding to climate change.
They are managed by people who got their degrees 20 years ago, but we have not upskilled and reskilled the employees.
And so it may sound soft, but these are the people whose money is in your hands when the political leadership is not in the room.
So part of what I think is important for us as municipalities is the partnership must starts from day one.
Not when you say the project is prepared, but you must understand the municipality from day one and walk the walk with them, whether it is the identification of projects.
Sometimes we put the projects that we think is the correct project to put to the market only to find out that's not the project that you know, the correct project is one of those but also just the assessment of the institutional capacity.
I can sit here and tell you all the beautiful things about Swan, but what are the independent indicators that you as the financier can go through and say, either the city is ready or not ready and when the city is not ready, please keep it moving instead of getting the city into too much trouble because you give them money a year later, they are on the headlines, they haven't paid even the first installment.
Then in terms of that's on the technical aside.
As the amount it takes for these projects to take off is just too long.
In a cycle where you know that you have this committed leader for five years, you want to do as much as possible in a short space of time, but you don't want to compromise quality.
That is the other one that when we have learned how to do these projects, let's try to frustrate the process.
I think the last one is the issue of accountability.
I I don't know whether it differs from one region to another.
But I think in South Africa we have gotten a wake up call through the trading reforms, the performance based grants.
If you do what you're supposed to do, you get the.
If not, you're not going to get them.
Of course, it's got wide implications because you have this money in your bank, you have promised the communities projects are coming and you're not getting it.
But I don't think that banks must be lenient when it comes to accountability with municipalities, especially in regions where there is political instability and you try to institutionalize the work that you are you know, while you appreciate the leadership of political leaders as well.
But I think for me, these are the things that when you sit with us as political leaders, we are able to be honest with you when we are not on a platform like this to give you the true sense of the municipality, so that when you work with us, you work with us based on reality, not based on the framework that was designed in a university far from us.
So it helps so that you can determine whether we are a true partner to have or not, whether we are ready or not.
Thank you so much.
Great Dane.
Yeah.
Thank you for the honesty because it's true.
The point that you mentioned before, understanding the financiers and particularly development institutions that are working in this space need to know the cities.
It's easy to come and say, I want bankable projects, whereas my pipeline, but it doesn't work like that when you're thinking about a municipality.
Great points.
Thank you so much.
And I and I want to highlight another point that you raised that I think is so much important.
How we often start from scratch and we need to see more cooperation among development institutions.
We have been working within CCFLA on the project preparation side for many years trying to bring these institutions together and what we see, sometimes even we have different institutions giving project preparation support for the same city in a similar sector and they talk with each other.
We see repetition still, although we talk a lot about cooperation.
Very good points.
Then I'm going to move up to you because I asked this question about five years, ten years, and then maybe we're going to throw that in the private sector cycle, giving the factors that constraint commercial financing for municipalities.
How do you see the market in five, ten years? What level of growth do we need to see? Well, what is going to be the next graph that Roland will put out here in the next who for us? It's going to be up, down.
Give us a perspective.
I'll try.
Thank you.
I'll be more positive this time.
Roland and I presented ten years ago having three in Quito.
I won't draw a graph between then and now, but I will look forward, exactly.
There is no more tenures the moment is now.
I just want to acknowledge that context is everything.
I think for lower income cities and countries and middle income cities and countries, there's going to be very different journeys and just want to recognize that there are different tools and instruments open to everyone.
The foundations have been set out well already, I think, getting the absolute basics and the accounting right is really important, getting the insurance there, balancing the budgets, just building that track record so that whether you're working with national, international investors, that there's a clear understanding that you're reliable because that's one of the key things investors are looking at.
I talked about myself being a supporter of cities.
We talked about the immense amount of wealth that is created in cities.
I know we hear a lot about this over the year, the power cities to generate wealth, jobs, the economy.
It's still true though, and that's where I feel really positive is that that is the investment opportunity.
If you ask the investor, should I go and invest somewhere else? No, I here because this is the biggest investment going and the greatest opportunity.
We've just got to work out how.
I could see an enormous explosion in the development of municipal finance over the next ten years.
But it's got to be built on solid foundations.
It's got to be a responsible pathway.
It really turns my stomach when I see cities jumping to wanting to do a green bond or set up an SPV to do a very specific piece of project finance when it's not natural for them.
It's not in their capability and their ability to repay and comply with the contracts as part of that structure.
It's not possible.
Then what happens is that bad news example, even if it's one in ten, fires around the world and all the investors repeat to themselves, I told you, don't invest in local government.
It never works.
We've got to really work on a high integrity foundation to get to the places we need to be.
But we do need to move beyond the basics.
I think we talked a bit about opening up open source revenue opportunities.
I think that's much more within the natural capabilities and build towards, I guess, what I would call transition structures.
I'm actually the example in India from a credit enhancement perspective is a really good one, but also maybe national governments setting up something like urban development funds that can recycle through local authorities and cities to help them demonstrate and build that track record of repaying loans, but within a national context.
So there's a bit of security there and the ability to, I guess, experiment and prove what can work.
We can get those things to work and start to expand and scale that and importantly, unlock the value of land fundamentally in cities, which is where a huge amount of the collateral will come from in these arrangements, then something really special could happen.
I'll be super optimistic but very cautious about the pathway, how to get there.
I really do think, and this is not a at you point.
I really think It's a great opportunity for development institutions, IFIs to focus on this area a lot more than we have historically.
There's really not been a scaled focus on this.
There's lows of economic wider social benefits available.
I think we're not even picking the low hanging fruit in that regard.
I definitely agree with that point that was already made.
Thank you.
Great, Dan.
That's so good to have some optimism, don't turn on the TV because let's just hear Dan speaking and be positive that we're going to solve this issue.
I think you brought some interesting examples like potentially urban development funds.
Some cities have been doing this, in some governments.
Sanjaya, back to you and particularly trying to connect the dots a bit on what Dan mentioned around the role of the public public finance, national governments.
The India municipal lending market is quite heavily dominated by government, dominated government lending and participation and support.
And this goes generally by states guarantees and buyers of municipal bonds.
They are often government financial institutions.
Could you give us the why, how and how can we bring more commercial financing in the Indian market? I think you are partially right.
Okay.
Uh, some cities are really good in India, and they had gone beyond the government financing and the state government guarantees and that kind of support, and they had already issued the bond that governance structure is there, assets are identified, and these assets are being converted into the detailed project report, which is a bankable bond, the formulation had been done.
But if you see in India, there are around 6,000 URBs that are there and around, out of 6,000 only 160 cities are bankable grade cities.
So yes, you are right that there is a problem and states are supporting that through the Financial Commission support or some state government support, and most of the cities are only earning around 30% of the total expenditure, and that is why this Urban Challenge fund has been created, and we are adding the credit credit worthiness out of this funding support as well as the 50% VGF that is viable TGF funding also.
But going forward, if you see there is a lot of pressure, a lot of push, and a lot of commitment.
Political commitment is there from the government of India, not only in terms of the funding, but also the legislative support, the policy support, and the oversight monitoring support from the government.
And I'm very sure that the movement will be slow, but the progression will come a lot of leverage and the synergies that we are using.
To just give you the example, quite a couple of projects we had already implemented, which are through the PPP mode since they are into the water sector.
In the drinking water sector, the PPP players they are in one of the city like Hyderabat.
The water tariff policies are already set in at least seven states across the country.
Water may be free, but it is metered and state governments are supporting.
So if it is metered, it is monitored and um one point of time the PPP player will also come, and we are trying to make these kind of sectors bankable.
In energy sector also, like ULBs make a lot of expenditure into the energy segment.
So a lot of replacement of the conventional energy by the renewable energy to have that cost arbitrage projects has already been implemented in some of the cities and against that, the pool bonds are issued.
So uh, future is bright.
I am very sure that when we meet next time after one year, a lot of project under the Urban challenge fund will be sanctioned and there will be a business model, there will be a financial model, and the PPP players will be there on the ground to work on those projects.
Thanks.
Great.
Thank you.
Just to clarify, it's not a problem at all, that we have government funding in India, it's very good and it's needed to try to bring you touched on the important point of legislation and this enabling framework and situation that we heard before too.
So Sinivas let me go to you, and then I think we can wrap up thinking on the development partners.
So what are the main things the development partners can do to tackle municipal commercial finance agenda.
What is your role in this space and how much scope is there for this collective action on this agenda? Last but not least, what are the forms they might take? How long you want to answer.
I could be here the whole evening.
Stay with us.
It is a very loaded question the scope is so vast that we have to take a systemic view on that.
If I'm a city manager, if I'm a mayor, I'm fighting battle on every front.
I've got to have support on project preparation.
I have to think about institutional strengthening, I have to improve my cred worthiness.
I have to look at market development, I have to take a long term view.
When I look up to development partners, the challenge is that many of these pieces sits across various partners.
I think there is a lot of inward looking for ours to see, how do we bring these various pieces together? I think one of the most critical things that different partners can do is to address the demand side.
It's a reality because when I started working in project finance industry 1997, one of the things I learned was there is enough money available, but they are not bankable projects.
That statement, I think I heard it four times just today.
So either you're not getting anything right or there is demand that's really growing.
I think probably the truth lies somewhere in the middle.
I think what we really need to be looking at, how do we develop better? Structured projects that can actually attract capital, not necessarily private capital only because even when it comes to development capital projects are not getting prepared very well.
The point that CMD Hdcore was also making, I think one of the reasons why they are looking at new initiatives is that.
The second bit is about readiness, the pathway that we need to take.
Dan was also alluding to that.
Can we try to identify those that can be progress in terms of commercially financeable municipalities, bring them forward.
Take a look at what can we do in terms of taking them through a transition? And then building the framework in terms of looking at the systems, the transfers that are required because many of these municipalities purely rely on grants.
How do you unlock capital? Most of the cities have lots and lots of unused land, buildings that are not really commercially exploited.
Is there a way you could unlock capital from them that shows up that balance sheet against which then you can actually have collaterized structure that you could borrow from? Public expenditure management is becoming very, very important in these areas.
I think again, a space for us to work together.
I was saying this in another panel this morning that blended finance, I think becomes very, very critical, particularly where we know that a certain amount of blended capital can sit in a capital track.
We can actually make projects work through, whether you have a first loss provision or a facility that could help.
Guarantees certainly would help.
Viability gap funding, some countries have done it well, some have not so there are lessons to be learned from there.
I'd be a little bit cautious on how this should be used, Dan touched upon pool financing mechanism, particularly for small scale municipalities, and then try to create replicable platform so that you could scale it up.
A single transaction.
I think one last point, I would probably say that collectively as DFIs, MDBs, and IFIs, I think we also need to change your mindset.
Deal here, a deal there, a PPP, a bankable PPP transaction there.
It's all great.
But I think we need to really transition from bankable PPP transaction to bankable municipalities, bankable cities.
Unless we bring that transformational thinking and move from transactional thinking, that's where you'll actually be able to unlock capital because you have to really look at the entire ecosystem, not just go after one single deal.
That would be my last thought as to how development partners could come together.
Thank you.
It's your last and it's very well connected with the title of the sanction that is actually Bankable Cities thinking more broadly to the city itself.
We're going to have time, I think, for one or two questions before we close questions, comments.
I see a lot of interest in your faces around the bankable cities topic.
Who wants to come in to ask any question or have any comment? Okay.
I see one hand there.
Don't be shy.
We're good.
Good evening everyone.
My name is T planner Lillian Ana Sikh from Abujan Nigeria I am from the private sector anyway.
I want to ask the panelists to exptiate more on how the private sector can truly affect the aural communities.
Because where I am coming from, we're basically at the city.
So but from every indication, I think the people that really need the United Nations assistance are mainly the rural communities.
So I want more explanation on how the private sector can actually impact the rural community.
Thank you.
Great.
Anyone else wants to join before? Yes.
I think we have thanks.
I just want to take control one my sister said, in today's world where there is a lot of violence going on in communities, how do we ensure that we are able to bring them these areas into development process? Because everybody wants to develop.
But then the current methodology is that 1% of the world is owning 99% of the wealth, and rural areas where communities live are turned into war zones, and then they are mass migrating into this has to be that peace as a critical element for urban planning.
Peace as a critical option for investment, I think is something that we just want to put it as a footnote.
Thank you.
Good.
Anyone else? Oh, sorry.
Thank you.
Dan, you mentioned the opportunity for cities to leverage the value of land.
Could you share an example of a city that has done this successfully to attract investment? By the way, sorry, I didn't introduce myself.
Yes, please from the ERT.
Great.
I'll go to you.
We have a question around rural and urban and of course, we all know here it's like there is no disconnect between these two words, although we are all the time now here in the World Urban Forum talking about cities.
And the rural movements towards cities also going to have a big impact on how we urbanize, if you can bring any thoughts on this topic and love your question, Liza around how can we value land and this big asset for cities.
Any of you very quick, please because we don't have a lot of time.
Yeah, you are right.
I'll start from the last question.
It is very relevant for us.
Land monetization measures were not new and we all know that the way urbanization had been done across the world.
It is the monetization of the land which has feed the value for that.
In present times, it is more relevant within the urban sector, how the ULBs will prepare the bankable projects.
It starts from the monetization of the land.
Of course, additional FARs can be given more than the normal, floor surface areas can be enhanced.
Good parking projects because parking is a big problem, at least in India, we know that the parking projects, whatever has been already implemented, they had been a very bankable kind of models.
A lot of historical towns, a lot of religious towns are there, and we are creating a bankable business models and the PPP players are being attracted and we are creating a kind of aero cities and the hotels and that kind of zones as well.
So it is only the monetization of the land and we are creating land as an asset, land as a bank so that, uh, wherever and whatever we are doing, starting from the airports or ports or roads, all these lands has to be monetized, which is across these roads or the metro stations, the transit oriented development.
So these are all the examples that as a country that we had adopted, and we are continually monetizing our lands.
And regarding the Madam statement, it is factually 100% correct that peace has to be there for making the projects bankable.
So there is no doubt about that.
Yeah.
Maybe I'll also do the same reverse order starting from land monetization.
I think the experience that we've seen across developing world is that land monetization is usually very site specific rather.
So if you have a piece of land, I'm trying to redevelop it and put it out on the market.
What we haven't really done, at least in the emerging markets, is a really site based development plan.
And what do I mean by that? If you look at one or rather three good examples within one city comes to my mind where actually EBRD is located right now, was a marshy swamp land.
Canary Wharf was nothing but smashy Salt plan and where we see the development, you go to see King's Cross.
It's how the transformation has happened and the reason why that's happened it's not looking at one single plot, but looking at an area based development and that I think is very important.
We talked about relaxed planning permissions, FAR regulations, transferable development rights.
That then allows the private sector to come in and actually take a long term view.
Then you connect jobs and work rather than you don't have dormitory towns, which I think was some of the lessons that we've learned.
There is really a lot that we can do in terms of unlocking capital uh, in land monetization, transit developments have really shown in developing countries how you could bring jobs and work together because rapid access to city centers become very, very critical.
And with regard to the earlier two points, I think they are very fundamental.
One of the lessons we all have learned is that there is really no in some of the cities, at least, there is a rural urban continuum.
And if there is a way we could create economic opportunities for people who are actually the migrants who are coming into the cities and create those opportunities, create those wealth building in those areas, probably you will see not only balanced regional development, but more economic opportunities where then you could see a much wider benefits of urban growth and urban prosperity that could then be spillover.
The economic regional development becomes very critical.
It hasn't been done enough, but I think there is a huge opportunity to look at precisely the point that you are saying.
Thank you.
Dan, Yeah, I agree with that entirely.
You mentioned Canary Wharf.
That was a development corporation structure, which has been a legislative or part of the regulatory framework in the UK for 45 years or so.
Otherwise, it wouldn't have happened, I don't think.
That's one example, but maybe that's a whole another session on municipal development corporations.
Just on the land value piece.
I think that's a very good riverfront example Amabad as well, whereas value capture has been a core component.
It's not a panacea, just to be clear, it's just where all the money is, it can be utilized responsibly.
Some basic actions that need to happen is first that land needs to be titled, It needs to be tradable, digitized, ready to be commoditized in a healthy way.
Getting the fundamentals right and that does not exist everywhere by any stretch of the imagination is pretty critical.
The regulatory framework then is really important, and this is a political issue big time as well.
Those are some of the foundations that need to be put in place and then there's a lot of choices around how you actually realize land value.
Um, the idea generally would be to use it for good.
So if you believe in compact, dense cities that support a better quality of life, a more climate compatible development pathway, et cetera, then that can work, but we need to be thinking about social inclusion and accessibility, commercial all at the same time.
Um.
One example very quickly, last example we look at the moment of We helped the Hanoi and Ho Chi Minh City governments reform their planning laws to encourage TOD as they build out their metro systems at scale.
And because that only happened last year in a legislative sense, we won't see the proceeds of that immediately, but I'm just personally quite excited about now the potential for those two cities to grow in a very different way in a very high value way, and I hope in the right way.
So lots of examples, and there was a great session yesterday from colleagues on that that you might be able to watch on rewind, as it were.
Thank you.
Great.
Thank you.
So Hopefully, this was one of the sessions you liked it the most, definitely one of mine.
Super interesting.
So I'm going to highlight what was what I found super relevant.
I think, you pointed out one thing that we have been talking for decades now about bankable projects, right? Like, can we still see all the lack of pipelines? So maybe there's something we're not doing right on that front, like around capacity, project preparation.
The mayor also highlighted that we need to know cities well.
We cannot just come to the city, ask for a bankable project and think it's going to be the solution to increase investments and this goes to commercial and public ones too.
We need to understand better the challenges.
Accountability, then we heard you to hear.
We need to have A Sana, the fundamentals, responsible foundation for the season.
We need to keep the positive.
And hopefully in ten years, five years, Roland, we're going to have you back here showing us a lot more positive graphs than we had this time.
Without further ado, I want to call to close another leader, very important one in this space, Ming Zhang, who is the World Bank Grou Director for Urban subnational Tourism and Disaster Management to say a final words for us.
Thank you very much and glad for our panel.
Thank Thanks a lot.
Thanks Priscilla and thanks a lot to all the panel members.
I personally found this discussion really, really interesting.
I learned quite a lot and it's actually in many ways, for me, very inspiring.
I see the bottle not just half full, it's actually getting fuller and fuller.
Let me explain what are some of the things that I feel.
Just going back to Roland's framework, a effective demand policy and supply.
You know, I can see from what the mayor was saying, there are cities you can do on the demand side, you know, clean up your audit, try to increase revenue to the extent possible.
Get have a capital investment.
What one of the things I like is a not only working on the capital investment plan, but also start to look at the financing plan for that investment and then look at what's your own source and what are the other sources.
I feel like that just getting the house in keeping and just getting the demand, there is progress there in South Africa context, also through the national government, through the treasury, you have the metal trading projects, which is actually through the performance grant to increase the fundamentals of the service delivery and the financing.
I think that effective demand may not be progressing faster enough, but it's progressing.
One reason I think maybe we feel we keep talking about lack of bank projects is because we have more cities that the more infrastructure needs.
If you look at maybe Cape Town, Beijing ten years ago, 20 years ago, they didn't have those capacity.
Now, they can do all these projects without any help.
Now I'm sure there are a lot of progress, but also there are more cities coming, so more challenges.
So I think on the effective demand side, there's a lot happening that can be done.
I think on the policy side, there's also a lot of changes that I can see happening.
I mean, Sanje a talk about the India, the Urban challenge fund, which I think is really game changer, really try to provide strong incentives for cities to rely on more your own source revenue and relying on commercial financing.
I think that will change the whole game on how urban infrastructure is financed.
That national policy is having impact and then on the supply side on the people who provide financing, Again, I'm really glad to hear Sanji talking about hardcore, not only just try to provide the commercial loans to sub national, but also you are looking at a market maker, facilitate the issuing of municipal bonds for the private sector to come.
I think that's for kind of enlighten the Roland mentioned the government financial institution.
The role of GFI is very to some extent tricky because at the beginning, you need the government financial institutions to help the municipal politics to getting the borrow provide helping on the project preparation, but also you need a role to provide a role as a market maker to facilitate the private investment.
I think that's something that Hardcore is starting to doing.
Then from the World Bank FC and also from ADB side, I think that we're collectively supporting this kind of efforts.
Last time when I was in India talking to some of the investors, they actually resonate what David said about from investor perspective for what's needed for a municipal bond in India to become an asset class that investors would feel comfortable to include that as a part of the portfolio for long term investment.
I think that probably still has a long way to go.
But you mentioned we're issuing 22 municipal bonds already and aiming 100.
If you can get that scale and have a reliable issuance of high quality municipal bonds.
Over time, it can be interesting market for private financing.
Anyway, so for me, I'm actually quite excited about what's happening and I'm very glad that we also work very well with ADB, partner together on the policy side, on the lending side, and organizing this session.
Thanks a lot again to all the panelists, to everyone for active participation.
I think we conclude this session.
Thanks a lot to Priscilla, for a really effective moderation.
With that, let's give a clap to everyone.
Yeah.
Thank you.
Thank