This document discusses key factors for successful implementation of land-based financing (LBF) for urban infrastructure development in Sub-Saharan Africa. It identifies six broad areas of concern: 1) demand for property, 2) an effective state, 3) an effective city administration, 4) ease of access to land, 5) active developers, and 6) access to property-related finance. For each area, it analyzes challenges and provides examples from cities in countries like Ethiopia, Kenya, and Zimbabwe. The document concludes that not many places currently satisfy all key success factors for LBF and that understanding local conditions is essential to designing effective, realistic financing instruments.

1. Urban infrastructure in Sub-
Saharan Africa
Harnessing land values, housing and transport
Presented by Stephen Berrisford
Research by Stephen Berrisford and Ian
Palmer
20 July 2015
Key success factors: implementing land-based financing

2. Six broad areas of concern
a) Demand for property
b) Effective state
c) Effective city
d) Ease of access to land
e) Active developers
f) Access to property related finance
15/04/21 2

3. Demand for property: level of
economic activity and population
growth
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Average Cape Town Addis Ababa Harare Nairobi
US$2015atPPP
GDP per capita - 2014 Disposable income per hh
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Average Cape Town Addis Ababa Harare Nairobi
GDP growth per annum 2014 -2020
Population growth per annum 2014 -2020

4. Effective State
4
Key elements:
• a legal framework that is sufficiently clear and unambiguous;
• reasonably transparent public (and municipal) financial
management;
• sufficient support to and for local government to carry out
LVC;
• technical capacity in place to implement.
Policy commitments (whether/not formally stated as such):
• no subsidising infrastructure for the well-off;
• accept that developers take on risk;
• accept that cities need infrastructure to drive growth.

5. Example: national state issues
affecting LVC
Three countries struggling to implement devolution, with
impacts on LVC potential:
• Ethiopia: political crisis in Addis Ababa, 2005; defeat of
opposition; then political re-alignment saw city
effectively empowered – and able to drive LVC
• Kenya: 2010 Constitution, devolution to address ethnic
tensions not urban efficiency – roles of new City County
Council still being determined, especially in relation to
urban development and infrastructure
• Zimbabwe: estrangement between national
government and cities led to stripping of cities of assets,
powers and revenue – leads to loss of underlying
rationale for LVC as city struggles to pay bills
5

6. Effective city
Two key dimensions:
1. Institutional framework – Nairobi and
Cape Town contrast – there has to be a
built-in logic to LBF
2. Organisational capacity
• Financial viability, including financial
management capacity
• Planning and land use management
systems
6

9. Organisational capacity
• There is a growing cadre of skilled built
environment professionals in the countries
and cities of the region – but it’s not
growing fast enough
• Key constraints are institutional
fragmentation and poor governance.
• Inadequate operational systems.
• Incentives for professionals to work for cities
are poor.
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10. City financial viability
10
0
100000000
200000000
300000000
400000000
500000000
600000000
2009
2010
2011
2012
2013
2014
2015
Total$
Harare City - Total Income
Total Income
$
0
5
10
15
20
25
2002 2004 2006 2008 2010 2012 2014 2016
ETB(nominal)
Addis Ababa - city revenue
Trend not
certain
A financially viable city can manage a capital account and, through this
account, raise finance for the provision of infrastructure

11. Ease of access to land
Two elements to land access for LVC purposes:
• secure land rights to hold and keep the land for a
predictable period (i.e. the land tenure regime)
• a system for giving formal approval to land development
projects, for identifying a point at which authorities can
determine that the land value has increased (i.e. land use
management system)
In African cities a wide range of different contexts in relation
to both these elements: legal traditions, customary legal
systems for land management, approaches to informality,
levels of corruption, underlying nature of land markets.
Without both elements of land access in place LVC is hard to
implement effectively.
11

12. Land use regulation
High degree of LU Control can create value
through
• creating scarcity
• synchronising LU approvals with infrastructure
investment
• promoting environmental quality
But: rapid urbanization, low market access by the
poor, low compliance thresholds and institutional
capacity constraints and dysfunction – all weaken
LU regulation.
Example: the different scenarios unfolding in
Ethiopia vis-à-vis Kenya
12

13. Active developers
• Concept of a developer – ranging from
fully private to fully public.
• Experience in three country case studies.
• Range of developers from 28 mini-case
studies
13

14. Owner
developer
(small
scale)
Conventional private developer
Conventional private developer
Household
s/
community
PublicsectorPrivatesector
(Smallscale)
Private
sector
(mediumto
largescale)
National or regional
government developer
(medium to large scale)
National or regional
government developer
(medium to large scale) City as
developer
(medium to
large scale)
City as
developer
Public entity as developer
(medium to large scale)
Parastatal as developer
(medium to large scale)
Residential
Commercial/industrial
KEY
Increasing control by city
Increasingopportunityforvaluecapture
THE NATURE OF DEVELOPERS
Owner
developer
(small
scale)
Owner developer
Private developerSmall private developer

15. Notion of a developer in three
country case studies
15
Each country’s approach predicated on different
notions of what a developer should be and do
• Ethiopia: state provides land, sets price and
prescribes development parameters
• Kenya: politicians and land speculators tightly
linked in role of developer
• Zimbabwe: ‘land barons’ developing peri-urban
farmland with tacit consent of authorities;
established developers compete for scraps in the
formal sector

16. Developers in 28 property development
sample in 22 countries
15/04/21 16
Type of developer No of projects and their
country location
Large scale private developer acting as
‘umbrella’ developer, working with smaller
scale developers (not identified).
3 (Angola, Kenya &
Rwanda)
Medium to Large scale partnership between
government and private developer
4 (Ghana, Cameroon, South
Africa, Zimbabwe)
Small scale partnership between government
and private developer
2 (Nigeria)
Large scale private developer undertaking
complete development
12 (Angola, Cameroon, Côte
de’Ivoire, DRC, Ghana,
Kenya, Senegal, South
Africa, Uganda, Zambia)
Small scale private developer undertaking
complete development
3 (Ghana, Nigeria, Rwanda)
Parastatal developer None identified in sample
Public sector developer, sometimes with 4 (Benin, Ethiopia,

17. Access to finance
• This is a difficult success factor to
understand at a regional scale.
• Extensive anecdotal evidence – and
obvious physical signs – that there is
finance for real estate development (more
so post-2008?)
• ‘access to banks per 100 000 persons’ – not
hugely helpful indicator

18. 18
3 f): Access to property-related finance
Banks per 100,000 population – 31 cities (World Bank statistics in ALICS database)

19. And so?
• not many places satisfy key success factors
• international evidence: LBF is hard to do
Understanding what will make LBF instruments
work more or less well:
• is essential to selecting and designing
instruments that will have a reasonable
prospect of effective implementation; and
• emphasizes the potential costs of imposing
overly ambitious instruments on already weak
systems.

20. End
Urban infrastructure in Sub-
Saharan Africa – harnessing land
values, housing and transport