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THE RAMPHAL INSTITUTE
THE RAMPHAL INSTITUTE

KEY ISSUES AFFECTING LARGE, FAST-GROWING COMMONWEALTH CITIES AT UN HABITAT III, QUITO

Introduction The UN Habitat III Conference in Quito, Ecuador, following COP 21 in Paris, will bolster global commitment to sustainable urbanisation. The rise in human population in urban centres has made urbanisation a key development concern. This is becoming increasingly important in large Commonwealth states, where city populations are rising fast, due to inward migration, longer life spans and still high birth rates. Big urban centres are drivers of economic growth, centres of technological innovation, and gateways to new and emerging markets. But they also present disturbing challenges with poverty and sharp economic inequalities, environmental pollution, inadequate and poor infrastructure, high crime rates and insecurity, and poor basic services.

The Ramphal Institute has a particular interest in urbanisation issues as they affect the largest Commonwealth cities in the developing world, with their associated squatter settlements. Since 2013, the Institute’s megacities project has focused on the challenges of urbanisation and development in three megacities Dhaka (Bangladesh), Lagos (Nigeria), New Delhi (India), and one urban metropole Gauteng (South Africa). The project examines the challenges confronting these urban centres in three major areas governance, finance, and inclusive service delivery.

This advisory note is to assist Commonwealth delegations attending the UN Habitat III Conference. It sets out issues affecting many fast-growing cities in the Commonwealth -- cities with less than 10 million people, as well as the small but increasing number of cities that have attained megacity status with more than 10 million inhabitants. It draws on the Ramphal Institute’s current research to provide recommendations for civic leaders and national governments.

Governance: Are governance arrangements for megacities conducive to solution of the problems they face?

Our findings show that that the capacity of city administrators to address their development problems depends on level of their autonomy. Governance arrangements in our case study cities are complex. This is reflected in the managerial and institutional challenges city administrators grapple with where the powers of central government seem overbearing.

For instance, while Lagos enjoys the status of a state in Nigeria’s federal governance structure, undue centralisation of power in the federal capital limits its capacity to address pressing development problems of the city. The Nigerian federal government has constitutional control over matters such as policing, highways and inter-state roads, rail transportation, airports, seaports, power (electricity), natural resources, and other significant resources.

In Bangladesh, Dhaka as both political and economic capital, inevitably occupies a strategic position

in Bangladeshi national politics. Although the city governance arrangement revolves around two administrative units Dhaka North City Corporation, and Dhaka South City Corporation, its affairs is managed by dozens of central government agencies. Both city corporations are headed by mayors who have little power over these agencies.

A similar problem is inherent in the governance arrangements for New Delhi. Since the city is the

political capital of the State of Delhi, and the Government of India, the central government’s influence can be overwhelming. For example, the Lieutenant Governor of Delhi is appointed by the President of India on the advice of the central government. Unlike other Indian states, the Delhi Police is accountable to the Government of India, and not the state government. It may be noted as an aside that in the United Kingdom nowadays, the Metropolitan Police are responsible to the Mayor of London.

What can be deduced from our case studies is that the absence of effective decentralisation of political power from national governments to city administrators seriously damages the largest cities. For instance, the deplorable state of state of federal roads in Lagos contributes to the chaotic traffic situation. Lagos requires express permission from the federal government to invest in infrastructure like railways and power generation. City administrators confront similar challenges in Dhaka and New Delhi. The relationship between local authorities and the central government is also impacted by political realities on ground, especially where different political parties control the government at the central and local levels.

Finance: What are the key issues affecting finance in megacities?

The key problem that emerges from our case studies is that fiscal decentralisation is too limited. This makes centrally allocated revenue too big a source of financial support for these cities. It constitutes over 60 percent of all government income in Lagos. It also accounts for a significant portion of revenues for Dhaka and Delhi. The lack of fiscal decentralisation also limits the revenue generating capacity of these cities as major sources of income are controlled by central government. For instance, fees and taxes at airports and seaports are under the purview of the central government.

Although internally generated revenue (IGR) is a potential source of income for these cities, two issues undermine IGR collection. The first is the limited scope of activities from which taxes can be collected. For instance, Value Added Tax (VAT) is collected by the federal government in Nigeria, and shared disproportionately among the three levels of government Federal, state and local. The

second is the low percentage of people and economic activities captured in the tax bracket. Many economic activities lie outside tax, due to the strength of the informal sector in these cities, while the wealthiest often avoid paying. Capturing a city’s real economic performance in the tax system is

a challenge, but doing so will boost the revenue base. Doing this might entail strengthening the

capacity of revenue collection agencies through manpower training, latest technology, and adequate staffing.

However, corruption and mismanagement are also major issues hurting the finances of too many megacities. Corruption is linked to tax evasion and underpayments. Mismanagement contributes to poor returns from public sector investments often financed through development loans, aid and grants.

Services for all: Do megacities prioritise inclusive service delivery?

Basic service delivery is a challenge in our case study cities. Essential services are often limited in supply and may only be available in suburbs populated by the rich and affluent, and scarce in squatter settlements. High migration into these cities has put a strain on public infrastructure. There

are almost 5,000 slums in Dhaka. Only 15 percent of the city’s population have access to sewage connection, while 30 percent have no access to proper sanitation. Despite being in a South African region which is highly industrialised, 25.8 percent of Gauteng’s working population are unemployed. Most of the public infrastructure currently serving Lagos was developed in the 1960s and 1970s. Water supply is only available for 2.9 hours daily in New Delhi and less than 20 percent of the water waste is treated.

Urbanisation has widened the gap between the rich and poor in these cities. One result of this increasing gap is exclusionary development, manifested in the separation of poorer settlements from those of the rich and middle class. This has allowed individualised solutions to societal problems to thrive. It is now common for individuals to solve their water, sanitation, or power problems by drilling bore holes, digging soakaways, and using generators.

From our findings so far, the lack of inclusive delivery of too many services stems from a number of factors. The first lies in politics, and an absence of political will among stakeholders who could make a difference. Reforms are required to guarantee inclusive service delivery in many areas simultaneously: healthcare, education, sanitation, infrastructure including roads, electricity and transportation, food security and social services areas of focus. The second factor is the absence of both effective institutional mechanisms and legal frameworks to deliver the services. The third is the lack of capacity to ensure services are distributed equitably among competing ends across the different demographic groups ethnic, class, caste, gender, age, disability.

Smart cities: What do megacities understand by the concept of the smart city?

Megacities, like smaller urban centres, are gradually warming up to the idea of an improved quality of life for their inhabitants by using urban informatics and technology. ICT is now more common in revenue collection, traffic management, waste management, in schools, hospitals, law enforcement, and in civic administration.

City officials are aware that ICT can reduce cost and enhance the quality and performance of urban services and infrastructure. ICT has allowed city administrators to monitor services, infrastructure, and collect data through the use of sensors integrated with real-time monitoring systems. The information and knowledge gathered are keys to tackling inefficiency and other identified gaps in governance and administration.

Compared to those in the North, our case study cities still face serious challenges. The following features are apparent in smart cities in developed countries. The first is orchestration intelligence -- where cities establish institutions and community-based problem-solving and collaborations. The second is empowerment intelligence -- where cities provide open platforms, experimental facilities and smart city infrastructure in order to cluster innovation in certain districts. The third is instrumentation intelligence -- where city infrastructure is made smarter through real-time data collection, with analysis and predictive modelling across city districts.

Conclusion and recommendations

This advisory note has addressed four pertinent questions affecting megacities in the Commonwealth located in the Global South. The exponential increase in human population living in urban centres suggest the issues arising in our case study cities will be duplicated in many more by 2030. Extreme urbanisation interacts with other key development issues and requires continuing attention and cooperation between governments, civic leaders and the communities affected. We advise that the following issues should be addressed at Habitat III by Commonwealth delegations in planning implementation of the Quito declaration, especially those representing large and fast- growing urban centres.

1. Emphasis should be placed on proper devolution of power, to ensure city officials have the constitutional authority to address city-level development problems. Current governance arrangements make the task of city administrators difficult, and sometimes impossible.

2. Emphasis should also be placed on fiscal decentralisation to ensure adequate revenue is available at the city level. Fiscal decentralisation should enhance the revenue generating capacity of these cities as tax powers move from the central to the local level.

3. Emphasis should be placed on effective and inclusive service delivery. The massive influx of people into urban centres often changes demographics across racial, tribal, gender, religious, and ethnic lines. As such, service delivery should be sensitive to the changing realities of these cities.

4. Emphasis must be placed on use of effective emerging technologies in managing the complex affairs of our largest cities. Technology can be cost effective. It also enhances the quality of service delivered and the performance of civic infrastructure. More importantly, ICT analytics should be deployed in strategic sectors like revenue collection, traffic management, policing, waste management, and urban renewal.

5. Finally, emphasis should be placed on proper planning for the short, medium and long term. Planning should be holistic, democratic and must cover the needs of future generations of city dwellers. The lack of planning for the long term has led to mistakes in the past. It must be avoided by other cities experiencing exponential population growth.

Note prepared by Dr Adesoji Adeniyi, Research Associate for the Ramphal Institute Megacities Programme, Adesoji.Adeniy@ramphalinstitute.org

October 2016