Lessons learned at Habitat III

By Naki B. Mendoza 24 October 2016

U.N. member states recently adopted the New Urban Agenda. Devex Impact reporter Naki Mendoza’s gives the rundown from Quito.

The global development community officially has a new international agreement. A year after approving the Sustainable Development Goals and 10 months after ratifying an international climate accord, nearly 170 U.N. member states officially adopted a set of global guidelines for sustainable urban development known as the New Urban Agenda at the conclusion of the Habitat III summit in Quito, Ecuador.

In a rapidly urbanizing world that is expected to see the share of the world’s population living in urban areas grow from around 50 percent today to 70 percent by 2030, the New Urban Agenda represents a common understanding among countries that the sustainable development of cities and urban settlements will inevitably influence global development at large.

But unlike the 2030 development agenda with its 169 targets and the Paris agreement which holds countries accountable to a gradually stricter set of climate commitments, the parameters for pursuing the NUA are more loosely defined. The four-day, 40,000-person Habitat III gathering in the Ecuadorean capital was billed a forum for implementation — an opportunity for country leaders and development stakeholders to put forward proposals that support the “paradigm shift” of how cities are planned, or action plans to enact ambitious pledges such as ending poverty and hunger “in all its forms and dimensions” that the NUA commits to do.

By that standard Habitat III fell short. There were few clear country-specific plans of action and far more academic discussions on public policies or affirmations by U.N. delegates of the humanitarian virtues outlined in the NUA.

“Decision-makers at the local level should have been more present to propose their solutions,” said Cristina Loaiza, a coordinator with the national planning department of Ecuador. “How are they going to manage the budget and who are they going to manage the budget with? Where are they going to get the money from? What kind of team they should have?”

Despite the lack of concrete proposals, and little private sector participation, Habitat III had many productive gains from the substance of the discussions that it fostered. Individual implementation plans, after all, are country specific and their details are perhaps less suited for a high-level U.N. forum.

Specific topics of the more than 100 side sessions at Habitat III covered virtually every aspect of development. But several recurring themes throughout the four days offered practical guidance for how countries can go about implementing the NUA in ways that are specific to their local contexts. Common agreements and shared experiences focused on the need for more integrated urban planning, closer policy collaboration between local and central governments and municipal finance reforms.

Integrated planning

Presenters from all industries — business, government and civil society — honed in on the imperative for integrated urban planning.

The current approach to urban planning, many said, is a siloed strategy in which urban development projects are planned in isolation.

“The development of services and activities takes place in disorganized ways, sectoral ways,” Enrique Garcia, president of CAF, the development bank of Latin America, told an audience in one session. “We build a metro here, housing developments there and some schools,” he added, referring to the weak linkages between the objectives of public work projects.  

When projects do share a common objective, it is often to serve the public sector’s interest, in the case of Latin American cities.

“We have planned cities to ease the problems of the government and not the problems of our citizens,” said Simon Gaviria, chief director of the national planning office of Colombia.

Governments, Gaviria said, prefer density in cities as a way to minimize the demands for new infrastructure or to better monitor safety and security. But it has led to badly planned cities and contributed to the rise of urban slums, he said.

“We have made, artificially, land incredibly expensive for our citizens. So when citizens come to our cities they go to the cheapest land possible,” Gaviria said.

Proponents of the NUA, by contrast, advocate a more holistic approach to urban planning in which the impact of any project or intervention is assessed across different sectors. A transportation design, for example, should take into account not just mobility issues, but public health, environmental degradation or seemingly disconnected aspects such as social inclusion or gender safety. And projects should be planned in coordination with ministries, municipal departments and other stakeholders who represent the range of those interests.

Local linkages

In order to build those integrated planning networks, cities must be more involved in urban planning processes at the national level, and municipal officials — mainly mayors — need have a greater say in the urban planning, financing and development of their cities.

The last point may seem obvious, but in practice, local officials, particularly in developing countries, can often be limited in their decision-making capacities. Aid projects and investments from multilateral development banks, for instance, might have municipal interests in mind, but they are typically negotiated by national governments with funding and implementation flowing from the top down.

“The donors [and] investors must have a straight link with the local government,” said Daviz Simango, the mayor of Mozambique’s second-largest city, Beira, in an interview with Devex.

But there are practical reasons for this approach. In part it is because national governments typically need to guarantee municipal debts.

“In some cases it’s useful, in others it’s not,” Gaviria told Devex. “Eliminating those national guarantees is key for a lot of cities that can work without national governments.”

The lack of a role in national policy planning, meanwhile, can be frustrating for cities wanting to pursue sustainable development plans at the local level.

Approximately 56 percent of the carbon footprint of Habitat III host city Quito comes from the transportation sector, but local officials have little say in related national policies, for example on fuel subsidies that fan consumer demand.

“We have no midterm plan for transport air pollution,” said Daniela Chacon, a former vice mayor of Quito. “There’s only so much local government can do when you have no control over fuel supply and price.”

City officials often field complaints about poor air quality and have emissions reduction targets in mind. “But cities are not necessarily part of the conversation and we don’t have enough resources, competencies and institutional coordination mechanisms with national governments so that we can work together to achieve that goal,” Chacon said.

U.N. Secretary-General Ban Ki-moon (second from left) attends the opening of the United Nations Conference on Housing and Sustainable Urban Development. Also on the podium: Joan Clos (left), secretary-general of HABITAT III and executive director of the U.N. Human Settlements Program; Rafael Correa (center), president of the Republic of Ecuador; and Peter Thomson (right), president of the seventy-first session of the U.N. General Assembly. Photo by: Eskinder Debebe / U.N.

The politics of finance

The trillion dollar question, naturally, is how to pay for the next 20 years of sustainable urbanization. Surprisingly, a general consensus emerged at Habitat III that unlocking the funding for the estimated costs of the NUA is more of a political issue than a financial one. Reforming the way municipalities can raise and access financing was one of the most widely proposed solutions across all industries.

Financial markets can engineer different types of debt or equity instruments to fund infrastructure investments or projects for social impact. But in order to attract private capital, political frameworks need to be in place that incentivize investors and mitigate risk, many participants noted.

A frequent proposal put forward by civil society and intergovernmental organizations was a need for clear legal frameworks that mandate revenues transfers from central to municipal governments.

In some cases, almost 90 percent of revenues for municipalities in developing countries come from transfers from the central government, Marco Kamiya, the head of urban economy and finance for U.N. Habitat told Devex. “If that is cut, then some municipalities can’t offer services,” he said.

In other instances, central governments collect municipal taxes but don’t reinvest the revenues at the local level. “It’s important to be clear on the legal framework to make these sustainable,” Kamiya said.

Revenue transfer rules in Colombia, for example, distribute around $5 billion dollars quarterly in natural resource royalties from Bogota to provincial governments, Ede Ijjasz-Vasquez, senior director for the World Bank’s social, urban, rural and resilience global practice, said in one presentation.

If governments have more leeway to borrow in order to better match the scale of development projects with the start-up costs needed to get them running, it could also help address the challenge. Some governments in developing countries have well-intentioned limitations on borrowing to control debt levels that are imposed either internally through legislation, or from outside creditors. But they can also preclude certain scalable investments from taking off.

“No one is advocating borrowing without limits,” said Stephen Matzie, an investment officer with the U.S. Agency for International Development. “But capping borrowing … or limiting it to a certain percentage of annual operating budgets can be strapping.”

Reforms to boost the transparency of public budgets as a way to encourage more borrowing, were put forward in the many sessions. So too were calls for governments to devise national and city development plans that outline strategies that stretch beyond political election cycles. Investments for development require long-term horizons. But in practice, politicians can often prefer short-term projects that boost their political standing while in office.  

Missing from the conversation

Habitat III and discussions around best practices to implement the NUA may also be remembered for the dialogues that were missing.

Many of the calls for government reforms to attract private finance did not come from private investors themselves. Instead, they were made by representatives of government, intergovernmental organizations or civil society networks that promote public-private cooperation.

In general, Habitat III lacked a strong representation from the private sector, despite the importance placed on business and private industry in the opening paragraph of the New Urban Agenda. Very few residential and commercial property developers participated in the sessions, though their input will be key to how cities are designed. Private banks also had little representation, despite private capital being a cornerstone for financing the 2030 development agenda and related agreements.

Unlike the forums convened around the adoption of the Sustainable Development Goals or the Paris climate agreement which articulated a clear buy-in from the private sector, the opportunities and incentives for the business community to back the NUA were less clear at Habitat III.

Also missing from discussions on the NUA, civil society groups said, were strategies to deal with the rural poor.

“The New Urban Agenda assumes that urbanization is inevitable,” said Shivani Chaudry, director the Housing and Land Rights Network, a civil society organization.

The title of the document neglects the other half of humanity that lives in rural areas and accounts for three-quarters of the world’s poor population, Chaudry said. “Thirty-five percent of urban migration is from displaced rural populations,” she said, adding that “the agenda does not talk about the land rights of farmers.”

Yet as many participant noted, the NUA is not an isolated set of commitments. They exist within the broader scope of other international agreements for sustainable development. As the development community pursues the SDG targets or self-imposed national pledges to reduce greenhouse gas emissions, they will, in theory, be taking actions that reinforce common commitments outlined in the NUA.

As country delegates now return home from Habitat III to devise actual implementation strategies for the NUA, they will do so with more information on the best practices and policies to put those plans into action.  

Follow Naki Mendoza @mfbmendoza to keep up with Devex coverage on Habitat III. You can also read more about the #newurbanagenda.

About the author

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Naki B. Mendozamfbmendoza

Naki is a reporter for Devex Impact based in Washington, D.C., where he covers the intersection of business and international development. Prior to Devex he was a Latin America reporter for Energy Intelligence covering corporate investments and political risks in the region’s energy sector. His previous assignments abroad have posted him throughout Europe, South America and Australia.


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