Putting Cities into the Core Business of

the World Bank

Elio CodatoNovember 11, 2005

Contents

I. The Bank’s Urban Strategy

II. Overview of Urban Lending

III. Major Initiatives in Urban Development

IV. The Future: Challenges & Opportunities

The Bank’s Urban Strategy

The Four Pillars:LivabilityCompetitivenessGood governance and managementBankability

Overview of Urban Lending

Urban: key volumes

Lending increased from $0.7 billion in FY04 to $2.7 billion (22 projects) in FY05, contributing to a record 12% of the WBG lending in FY05

Lending commitments 2000-2005: 7.8% Bank total

Average commitment per year: USD $1.46 billion (17 projects)

Portfolio at end 2005: USD $11.33 billion (121 active projects)

Pipeline commitments: USD $7.36 billion over next 3 years (82 projects)

Urban development8% - (17)

Trade & integration5% - (10)

Social prot & risk10% - (20)

Social dev/gender6% - (20)

Rural development10% - (27)

Rule of law2% - (7)

Public sector govern14% - (38)

Human development16% - (46)

Fin & pvt sector dev18% - (37)

Envir & natural res8% - (22)

Economic management

3% - (5)

Annual Average Commitment = US$ 20,162 MillionAnnual Average Number of Projects = 253

Bank LendingShare of Commitments (%) and number of

Projects by Theme, Annual Average FY03-05

Urban Theme LendingTotal Commitment and # of Projects, FY03-08

2,44

5.65

1,93

9.57 2,

591.

32 3,05

5.34

3,03

0.82

1,27

3.35

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

FY03 FY04 FY05 FY06 FY07 FY08

Bank Analytical Work

39.236.9

34.732.7

17.1

30.2

21.722.3

26.4

29.6

11.0

18.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Energy & mining Transportation Water/sanit/fld prot Urban development

Number of Economic and Sector Work for Infrastructure

FY03 FY04 FY05

Distribution of Active Urban Projects

Access urb serv/hous

43%

Municipal finance4%

Municipal governance

23%

Other urban dev30%

Portfolio Quality IndicatorsFY05

12.0

6.3

66.7

88.9

16.813.5

77.7

82.8

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

% At Risk % Commit at Risk % Realism % Proactivity

Urban Development Bank

Major Initiatives in Urban Development

Flagship Activities

• Assess Best Practice in Low Income Housing

Major effort invested in preparing a review of the Bank's lending for shelter over the past 30 years

• Share Cross-country Lessons in Financing Urban Infrastructure

Mobilizing Urban Infrastructure Finance in a Responsible Fiscal Framework: Lessons from Brazil, China, India, Poland and South Africa was held in Jaipur in January 2005.

Flagship Activities

• Core Indicators Database for Measuring Key Urban Activities

Urban Growth Management Initiative (UGMI): collecting core indicators data in a sample of 120 cities in 2005-2006; will feed into Habitat’s city database.

Third Urban Research Symposium Co-hosted by IPEA (Brazil) and held in Brasilia, in April 2005. 300 participants; focus on Land Development, Urban Policy and Poverty Reduction (260 papers submitted, 70 selected for presentation). Fourth Research Symposium to drill down on same themes. Supported by grant from SIDA.

Key Regional Activitiesa few examples

• The Urban Poor in Latin America175 million people (36% of the region’s population) live in poverty; more than half of the poor live in cities.

• Africa Region Urban Review• Cities in Transition: Urban Sector Review

in an Era of Decentralization in Indonesia• East Asia Regional Sector Strategy

Cities and towns already contribute at least 70% of the region’s economic growth; key challenges faced by cities and suggestions for policy responses.

New Flagship Activities

• Urban and the Growth Agenda —Assessing and Promoting the Economic Role of Cities

Develop a "toolkit" of instruments/approaches to analyze city economies, including investment climate issues, and to support a few case studies starting in FY06. (supported by DFID grant through Cities Alliance)

• Mainstreaming Urban in Poverty Reduction Strategies

Assess recent PRSPs from urban poverty perspective, identify where tools for urban analysis may need to be adapted, developed, or disseminated to better respond to demand for inclusion in PRSPs, and provide targeted assistance to country teams where good examples can be developed. (supported by DFID grant through Cities Alliance)

The Future: Challenges & Opportunities

The Future:Challenges & Opportunities

• Cities Alliance in Bank’s Global Development Facility (GDF) window 1 (permanent funding): recognition of the importance of working with local governments; Bank needs to leverage its activities through Cities Alliance (Latin America and the Caribbean Region, especially Brazil, offers a good model)

• Limited research and analytical work on urban development issues both inside and outside the Bank: investment in analytical/upstream work seen as key to position urban issues in the Bank and elsewhere

• New leadership at the Bank confirms the importance of infrastructure for development: urban services should be a significant part of this renewed interest

The Future:Challenges & Opportunities

• New corporate emphasis for the Bank: climate change and fight on corruption; local governments can play key role and need to be assisted in addressing their shortcomings in these two areas

• Subnational Development Program (lending without a sovereign guarantee)

• World Development Report (WDR) on the world’s transition to an urban society