«JOn On July 5th and 6th 2016, The City Prosperity Initiative - Metropolitan Cities (CPI-MC) International conference on Municipal Finance and Urban ...»
City Prosperity Initiative - Metropolitan Cities (CPI-MC)
Municipal Finance & Urban Economy
On July 5th and 6th 2016, The City Prosperity Initiative - Metropolitan Cities (CPI-MC) International conference on
Municipal Finance and Urban Economy was held at the Palais des Nations, in Geneva, Switzerland. UN-Habitat and
International City Leaders (ICL) are worked together to promote the City Prosperity Initiative (CPI) in Metropolitan Cities (CPI-MC) and jointly hosted this conference. This engaged mayors, the UN, NGOs, bankers, and sovereign wealth funds, with a series of Key Note speakers and panelist discussions.
The Conference presented and discussed the challenges and opportunities municipalies are faced with, with regards to municipal finance. This included the process of developing mutually beneficial relationships between financial institutions and municipalities, corporate and social responsibility, and propelling investment in sustainable development.
The Conference also introduced the establishment of the CPI-MC Global Fund and a Global Municipal Finance Programme (GMFP), and the strategies and mechanisms to establish a platform for discussion regarding the development of the UN-Habitat/ICL CPI-MC Global Fund.
5-6 July, 2016 Palais des Nations Geneva City Bank Of Iran
During the course of this conference experts had the opportunity to discuss relevant innovations, and provide their expert opinions on recent developments in municipal finance and alternative financing mechanisms. This conference brought together a variety of experts from fields ranging from Financial Technology, Urban Infrastructure, Sustainable Development, and City Leaders.
The first objective of this conference was to start a dialogue among experts regarding municipal finance in order to enhance the capacities of city leaders for better financial management. The second objective of the conference was to serve as a platform to introduce the CPI-MC Global Fund; a fund that will assist city leaders in implementing the outputs of the CPI, and a funding mechanism for urban change.
• Introduction to the CPI-MC
• Bridging the Finance Gap
• The relationship between CPI and SDG’ s
• Preparations for Habitat III
• Introduction of the CPI-MC Global Fund
• Urban Finance Innovations for Sustainable Developments
• Innovative Islamic Finance
• Current challenges cities are faced with, and emerging innovations
• Solar Energy, Energy Efficiency and Management
• Municipal Infrastructure Solutions
• Clean Water - Infrastructure Solutions
• City Bank of Iran & Iranian Municipal Finance Summary of CPI-MC International Conference Panel Discussions Foreword from Dr. Clos
Dr. Joan Clos Introduction from International City Leaders Mr. Reza Pourvaziry welcomed the delegates to the CPI-MC International Conference by emphasizing the importance of sustainable financing and engagement from various investors from different fields. He stated, “In the field of urban issues we are faced with huge, multi-dimensional resources, and these resources are found in the place of investors, private sectors, public sector and stakeholders, we need to find a way to engage all fields”. The CPI is a tool that encourages engagement, and the Global Fund will assist cities to build these relationships. The CPI-MC Global Fund is one of the main programs of the CPI-MC; it can assist cities working towards achieving urban SDGs and the 2030 agenda. The CPI-MC International Conference established an ongoing dialogue on creative access to resources; all cities can then share access to the same playing field. This conference was the first step in enriching the dialogue on municipal finance and has provided all involved organizations with the Reza Pourvaziry, Dr. Pourzarandi, & Honourable Mayor Tourkshvand during opportunity to move forward in the efforts towards acheiving opening remarks sustainable urban development.
The CPI and Urban SDG’s Dr. Eduardo Lopez Moreno, Head of Research and Capacity Building at UN-Habitat introduced the City Prosperity Initiative as a global monitoring framework, for the urban SDGs. It is a tool that incorporates various spatial indicators, and supports multi-scale data collection in order to connect cities with their country and obtaining Urban SDGs. During his introduction to the CPI, Dr. Moreno welcomed the CPI-MC Global fund, stating, “The Global Fund can create a new social, global contract to connect different levels of government, and to connect different levels of financial institutions, to operate changes directly related to the CPI and urban SDGs”. This fund can give cities the possibility of connecting to the CPI platform of action, and the outcome of this conference will help to define the contours and objectives of the fund.
Dr. Marco Kamiya addresses the conference & introduces the GMFP City Bank of Iran & the Iranian Municipal Banking Experience Dr. Pourzarandi introduced City Bank of Iran to the conference. He mentioned how it specializes in various aspects of sustainable urban development, which contributes to the process of urban managment in a number of municipalities in Iran. For a long time, city leaders in Iran insisted on establishing a municipal bank in order to support municipal projects. Thus, mayors of such metropolitans as Tehran, Mashhad, Karaj, Tabriz, Isfahan, Shiraz, Qom, Qazvin and Ahvaz fulfilled this goal early 2009, after obtaining required certificates and licenses from Central Bank of I.R.
Iran; and City Bank (Shahr Bank) of Iran officially commenced its operation. The Bank was established in order to meet the needs of its citizens and provide high quality services to municiaplities. City Bank of Iran has mobilized
significant financial resources and has already supported a number of infrastructure projects, including:
• Imam Ali Highway project in Tehran;
• Two-story Sadr Highway, Nyayesh tunnel in Tehran;
• Highway project in Karaj;
• Issuing bonds to implement huge municipal projects in most Iranian cities; and
• Granting facilities to construction activists.
City Bank of Iran fully supports the goals of the CPI-MC Global Fund, and believes that by providing support to municipalities around the world it will facilitate sustainable growth and development, and assist in the achievement of the SDG’s.
financiers with the appropriate projects. A feasibility assessment is the first step necessary in order to ensure this is a process that would work for the CPI-MC, and provide the proper support for this initiative. This fund would provide opportunities for municipalities and organizations to build their capacity and strengthen their projects through the vast availability of resources.
Current Challenges Cities are Facing Lourdes German of the Lincoln Institue of Land Policy asks “What are the challenges cities are facing, and what are the financial innovations available for cities to address their problems”. Currently approximately $5 Trillion USD is estimated as necessary to pay for the urban infrastructure to support 2.5 billion in population growth expected in cities. A framework is needed to promote fiscal health & advance inclusive, safe, and resilient cities that can deliver services to citizens and meet infrastructure needs. What do they do when they have stressors on their budgets? Ms. Germane poses these questions to the discussion panel during the first day of the conference.
Lourdes German during the Financial Innovations panel discussion Islamic Finance Innovations We need to look at all of social financing that is there. One form of innovative financing is the Islamic Financing Model. The presentation of this system is not meanto be evocative, however Iran is a pioneer in the use of this model, along with Indonesia, Malaysia, and the UK Government, also follow suit. There is currently a gap in development funding, and a rise in Islamic finance, how can this growth be directed towards development funding. Islamic Finance is often called Ethical Finance, and it can be used to connect SDG’s with a moral, ethical principal.
Thre are a variety of difference Islamic contracts available – debt based or equity based, hybrid models, based on sales, agency, partnership agreements, etc. A Sokuk is a type of investment vehicle commonly used in in Islamic Finance.
There are a number of different types of sukuk and IDF, including Green sukuk, Health sukuk, recovery and refugee relief sukuk, socially responsible investment funds. These sukuks are more than social finance, but are geared towards public goods and service. Isamic finance thrives because it is not just about money making or speculative opportunities, but it is all based on real economic processes. There has a be a sense of government invovlement in each sukuk. Profit based and profit sharing. Siraj presents two examples sukuks currently, successfully in use; the Hajj Fund Sukuk and the Garuda Corporate Sukuk. These bonds are doing very well and have raised the capacity of funding for each project. Islamic finance is not just about sukuks but also different types of Siraj Sait presenting Islamic Finance Innovations contract methods (loans, bonds etc). We already have the potential for these this type of finance to support the SDGs Urban Finance Innovation for Sustainable Development Financing is a critical part of implementing SDG’s and A shift to a more compact urban development could reduce infrastructure capital requirements by more than 200 billion a year over the next 15 years. However there are a number of challenges for municipal finance and urban sdg’s; a lack of environment for proper investment, legal and regulatory issues, mismatch between investment needs, and available resources, lack of credit worthy governments, and a lack of capacity to properly asses infrastructure needs and financing options. In order to enable contribution of local and regional resources it is important to adopt proper fiscal reforms.
In order to build sustainable urban infrastructures, projects will need to be designed with a different approach from the past. It is necessary to define common methodological frameworks to assess projects and redirect financial resources accordingly. Public finance alone will not be able to mobilize all the resources to support SD investments; it will be necessary to identify new and innovative financing solutions, Appropriate methodological frameworks and tools are needed to assess the sustainability of projects and redirect financial resources accordingly.
Global Data Excellence Global Data Excellence is a software company founded in Geneva that has created a revolutionary system to support and manage connections. This can align people within an organization. This is called a ‘Data Excellence Management System’.
Dr. el Abed demonstrated the system that creates a network linkage between different data systems including, enterprise data, customer data, context data, and regulator data. Philip Weights mentioned that this is exactly the type of data system necessary for his presentation of the Municipal Finance Network; this type of network can begin to connect all cities with the necessary projects, people, finances, and documents (regulatory, exemplary, logistics, etc) in order to learn the different successes and failures of similar projects, and strongly move forward with their own. The Data Excellence System can provide business value within 5 or 6 years of use. It provides an organization with stewardship, education, and systematic governance. This builds trust and transparency, leading to an intelligent enterprise. The scale of the DEMS system ranges from single organization to city scale.
Municipal Challenges & Natural Resources One of the things that municipal finance and cities are faced with is the curse of oil and gas (among other natural resources).
Countries that are very wealthy with natural resources often have troubles capitalizing and efficiently distributing wealth through out the country. Growth models are often directed towards centralized model where the state can control all resources and properly allocated all resources however the alternative option becomes working from the ground up, and empowering municipalities to find solutions for their own issues. The innovations available for city financing are not necessarily new, but are being recycled. Rajinder specifically demonstrates the crowd funding resources is not a new style of funding, but has been in existence in numerous countries for a number of years. Mr. Jhol relates to Yoel Seigel’s notion that governance is a key issue in believes in the funding capacities of cities. Often there are strong projects available, and the funding is circulating, however it gets held up by the lack of local governance regulations and processes to protect the investor, or the lack of regulations often make it difficult for a project to get off the ground. Rajinder Jhol during the ‘Infrastructure Solutions’ discusssion panel Sustainable Water Impact Investment Nicholas Lorne and Brieux Michoud are cofounders of Waterpreneurs who are focusing on impact investing, specifically micro credit and product equity for small local entrepreneurs.