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100 Managing Systems of Secondary CitiesMicro-credit recordin Toi market savinggroup, Nairobi.© Jack Makau/SlumDwellers International(2008)give them greater powers and responsibilities to engage in capital markets through theissuing of bonds, access to loans and other financial instruments to fund infrastructureand provide essential urban services. Development bank-lending for this purpose can,in some cases, bridge the gap for a while, but cannot substitute for well-establishedmechanisms to mobilize domestic capital.Increasing property tax and revenue collection: Very few local governments makesufficient effort to collect property taxes owing to them. Most land and property insecondary cities is not valued or taxed at market value and most local governmentsdo not have a proper record of property- or tax-collection records. The reform oflocal-government taxation-valuation systems is essential if cities are to become morefinancially self-sufficient and raise loans to fund the provision of infrastructureand other basic urban services. Several cities in developing regions, for exampleAhmadabad in India and municipalities in the Philippines, have established amarket-valuation system for land and property and have computerized theirrevenue-collection system, resulting in a more than doubling of income from localtaxes over a two-year period. These cities have shown remarkable improvements intheir economic- and social-development indicators.Improved financial-management systems: Most local governments in developingregions have not adopted good public-sector financial-management practices, suchas performance-based budgeting and accrual accounting methods. Consequentlycash-flow and financial-mismanagement problems are a common occurrence. Manylocal government-funded development projects and programmes experience longdelays and disjointed cash flow because of poor financial management, which increasesthe overall costs of government. These problems become compounded by the lack oftransparency and accountability in public-sector financial-management systems, whichprovide opportunities for corruption and rent-seeking practices.Cost recovery and affordability remain a significant problem with the provisionof infrastructure in most developing cities. The major problem with the financing ofinfrastructure, however, is not with costrecoverymechanisms, but with the lackof enabling mechanisms for local governmentsto gain access to capital to provideessential infrastructure to urban areas. Theproblem is not only one concerned withpricing structure, but also with the failureof systems for assessing usage, billings andcollections. A poor standard of service canalso reduce willingness to pay.There is very strong reluctance on thepart of many local authorities to close or
Overcoming the Challenges of Secondary Cities Development 101sell underperforming, loss-making public utilities for fear of creating unemploymentand reducing already inadequate services. While issues of community affordabilityhave to be addressed, loss-making public utilities erode the capital and financial baseof cities, leading to the neglect or underfunding of other public services. In manycases, poor government accounting is caused by a limited understanding of thefinancial performance of public utilities. A case study that provides a good example ofcost-recovery methods, especially in dealing with the urban poor is the Phnom PenhCommunity Development Project funded by the ADB, which involved a 50-50 infrastructurecontribution between local government and the community, demonstratingthe willingness of poor communities to invest in improved urban services (Khemero,2006). Ensuring utility-cost recovery from user fees is a best practice advocated by theWorld Bank to cover a utility’s costs in financing strategies for urban infrastructureprojects (Saghir, 2007).Improved Management and Utilization of Public AssetsMany cities have substantial land, fixed assets and infrastructure needed to provideessential urban services. However, poor planning and management of these assets hasled to significant underutilization or an inefficient use of them. Most cities do maintaina register of public land and assets, however many local governments have no idea whatit costs to maintain assets. There are several areas where secondary-city local governmentscan improve the management of urban assets.Many valuable assets, especially publicly owned land, property, buildings and transportsystems and corridors are underutilized and/or underperforming. Many assets insecondary cities are poorly maintained, resulting in inefficiencies and loss of revenueto local governments and utility agencies. A significant challenge for secondary cities isto improve the utilization of urban assets and utilities. There is also a need to introducemore market-based systems to curb excess demand and to enhance revenue to improvethe performance of infrastructure. The introduction of asset-management systems,management-information systems and maintenance programming are key requirementsto achieve improved utilization of urban assets and utilities (Leong, 2004).Furthermore, efforts to increase the private-sector involvement in the provision ofurban infrastructure and services is recognition, in part, of the failure of central andlocal governments to fund the demand for infrastructure and serviced land. Localgovernments will need to engage: in Public-Private Partnerships (PPP); Build, Own,Operate and Transfer (BOOT); Build, Own and Operate (BOO) and Build, Operateand Transfer (BOT) projects to be able to meet public-funding shortages for the provisionof basic infrastructure and services. The challenge of secondary cities is that manyhave very limited experience in PPP projects and this is often limited to small projectssuch as bus stations and markets. PPP offer ways for secondary cities to overcome theproblems of capital shortages for key infrastructure investments, together with efficient
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Contents1 Introduction 161.1 The Ch
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8.2 Policy and Programme Initiative
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Executive SummaryCities are becomin
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• Population size is still a dete
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ForewordAs the world completes its
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Introduction 17well behind more adv
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Introduction 191.3 Contents of the
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Secondary Cities: Definitions and C
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Secondary Cities: Definitions and C
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Bach Ninh, one of aseries of new ci
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Children earn a livingby transporti
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3Secondary City Urbanization Trends
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Page 108 and 109: 108Targeted Investmentsin secondary
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Regional Approaches to Secondary Ci
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International Development Assistanc
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What is apparent from the review of
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Key Messages and Concluding Reflect
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Annexes 209AnnexesThe annexes set o
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Annexes 211Annex 1 continuedPopulat
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Annexes 213Annex 1 continuedPopulat
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Annexes 215Annex 3Number of Cities
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Annexes 217Annex 4 continuedUrban I
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References 219ReferencesAbdel-Rahma
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References 221and reassessment of a
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References 223Roberts and T. Kanale
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References 225USAID (1984). USAID p
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Index 227planning failures, impacts
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Index 229urbanization and secondary
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Index 231colonial administrations,i
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References 233SECONDARY CITIES have
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