Urban infrastructure in Sub-Saharan Africa

Harnessing land values, housing and transport

Presented by Stephen Berrisford, Innocent Chirisa, Brandon Finn, 20 July 2015

Zimbabwe: property development and land based financing in Harare, example of land-based financing in a fragile state

Harare’s Context

• Economic Restructuring, Instability, Crash and Dollarization

• -Political Tension, Differing Central and Local Government Ambitions, Inactive New constitution

• -Rapid Urbanisation, Growing Housing Backlog, Peri-Urban Expansion

Institutional framework

• Fragmented and contested institutional responsibilities for infrastructure provision

• Political tension between national and local government

• HCC a beleaguered instituiton

Harare city council under strain

Planning and land use management in Harare • High level plans – e.g. Harare Combination Master

Plan (1992) and plans for new capital city to be constructed in Mount Hampden/Zvimba

• Rigid – if selective - adherence to land use controls, sometimes with harsh results

• Widening gap between formal plans and regulations and land development practice

• large scale sprawling, quasi-legal peri-urban residential development

• Nominally a very good land-based financing instrument: ‘the endowment’ – but money is lost in city operating account

Infrastructure profile

• Deceptive high scores on ‘access to infrastructure’ indicators

• No new capital investment in infrastructure

• No recent maintenance and refurbishment of infrastructure

Service % Access to Infrastructure

% Access to Infrastructure

Source Global Urban Indicators, 2009

UN-Habitat, 2009

Piped Water 92.7 90.3

Sewerage 87.1 94.5

Electricity 86.3 87.8

Capital budget for infrastructure

• Capital budget, 2014 • 2 % of operating budget • 7% - actual vs budgeted capital

expenditure

• Capital budget, 2015 • undeterred – 28% of total budget • undeterred – 157% of 2014

City budgets very difficult to understand and appear to bear little relation to reality.

Declining financial position of HCC

80

90

100

110

120

130

140

2009 2010 2011 2012 2013 2014 2015

Inde

x -2

014

=100

Harare City - Total revenue trend index

-

50

100

150

200

250

300

2009 2010 2011 2012 2013 2014 2015

US$

mill

ion

Harare City - Capital Expenditure

0

1

2

3

4

5

6

2009 2010 2011 2012 2013 2014 2015

$ (m

illi

on

) D

isb

urs

ed

Years

Zinara: Disbursements to Harare

City Local Council

Property development

All sectors constrained in terms of finance and infrastructure

• developers

• banks

• government

Innovation and desperation

Peri-urban residential sprawl

Co-ops, government and builders in quasi-legal set-up

Conclusions

1. The demand for property is high – economy growing, population growing

2. the supply of land is not a problem, especially in peri-urban areas

3. a good land value capture instrument exists (the ‘endowment’)

4. But a. private sector access to property finance is

tight, interest rates are high b. municipal finance is extremely weak c. the infrastructure backlog is huge d. urban governance is poor

End

Urban infrastructure in Sub-Saharan Africa – harnessing land

values, housing and transport