Catalog

	Table of Contents
p. 20 of 26 BACK | NEXT Executive Summary I. Introduction II. The Urban Sector III. The Bank's Involvement in the Urban Sector IV. Objectives and Policy Priorities V. The Bank's Urban Sector Strategy A. Common Themes B. The Recommended Urban Sector Strategy VI. Implications for Bank Operations VII. Conclusion

Urban Sector Strategy : V. The Bank's Urban Sector Strategy

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A. Common Themes

98. Section IV illustrates the wide range of potential policy objectives and components that must inform and guide the Bank’s urban sector strategy. Several common themes that are based on these policy objectives must be incorporated into the overall sector strategy.

1. Country-Specific Emphasis

99. To emphasize institutional strengthening, urban management, and capacity building as policy priorities, a stronger focus must be brought to bear on local governance, social, and cultural characteristics. Hence a strong country-specific emphasis is required in project preparation. For example, the policy priority of promoting greater community participation in decision making will very much depend on the opportunities available in a particular DMC, based on the country’s form of administration and political climate.

2. Monitoring and Evaluation

100. The policy priorities in institutional development and capacity building highlight the need to identify adequate performance indicators for such “soft” project components. The Bank is addressing the problem at a general level as part of the drive for improved project performance using the project performance reports and the Project Performance Management System. However, more work needs to be undertaken on urban-specific indicators, building on the work undertaken by UNCHS and others on the subject. For all projects, resources will need to be allocated for the preparation of benchmark data and performance indicators as part of the monitoring and evaluation requirements, based on other Bank projects and research into best practice elsewhere. A minimum acceptable list of indicators of project success, and responsibilities within the local government or other executing agency for implementing the monitoring and evaluation system, need to be agreed before a project commences.

3. Information Dissemination

101. To support the implementation of policy priorities, the Bank needs a database of information on holistic approaches to urban development; urban management; and other themes, including research, best practice, and information dissemination. There is a major shortage of basic information on the operations of the urban sector in the Region, for example on the relationship of the formal and informal economies in cities and barriers to entering the informal economy. The Bank should build on its long experience of facilitating regional and subregional cooperation among DMCs and with outside research and information networks in the Region, such as the Urban Management Program and Citynet, to address these data gaps. Information dissemination activities should include public participation, a key enabling approach.

4. Target Countries and Subsectors

102. The identification of country and subsector priorities for future Bank assistance in the urban sector is complex. Bank interventions could diversify into new areas of lending, new countries, and new modalities of assistance. Three examples illustrate the possible approaches:

1. A geographic approach. The emphasis of urban sector assistance could be guided by the level of urban development and consequent country or regional priorities. Thus, the emphasis in South Asia might be on traditional health risk reduction through IUDPs, with components including water supply, sanitation, urban upgrading, informal housing finance, land management, and direct poverty reduction programs. In contrast, middle-income countries in East and Southeast Asia may have other priorities, such as the impact of high land values on shelter affordability, congestion, water resource management, industrial waste disposal, sewerage investments, and flood mitigation as urban areas expand into flood plains and low-lying areas. This approach would also recognize other common elements such as geophysical characteristics (e.g., approaches relating specifically to islands and small landlocked countries).

2. Support emerging market-driven economies. The Bank could target DMCs in East, Central, and South Asia in transformation to market-driven economies as candidates for long-term partnerships. In effect, the Bank would begin a new era of urban assistance, much as it has supported Indonesia and to a lesser extent other countries in their economic and social development over the past two decades. The Bank would continue to exert its comparative advantage of support to public sector projects, but would meet new demands for assistance in developing market-led approaches such as demand-driven service delivery and corporatization or privatization of government agencies.

3. A thematic approach. The Bank could develop programs to meet, for example, the particular needs of megacities in the Region. Targeting would be based on the fact that the problems of megacities in countries at different levels of development are converging under the influence of globalization. A program component could assist large-scale infrastructure needs in selected megacities using joint financing under the Bank’s private sector window. Another possible thematic approach would be direct and indirect programs to reduce urban poverty.

5. Choice of Project Location

104. The policy priorities in Chapter IV imply a gradual, rather than radical, change in urban project components over the next decade. However, a key issue in development of a sector strategy is the choice of project location. At the regional level, the impacts of decentralization, globalization, improvements in communications, and the growth of market-driven approaches to the delivery of services will combine to affect the locational advantages of towns and cities. Earlier attempts at spatial distribution policies, growth center strategies, and other regional development programs have had little success in influencing market forces. Competition between urban areas will increase, megacities will continue to expand, fast-growing secondary cities will continue to emerge, and much poorer urban areas in the rural hinterland will grow more slowly. The strategy implications are profound: for example, the PRC is concerned about widening differentials between the rapidly growing coastal belt cities and urban areas in the rest of the country, and Thailand about the disproportionate growth of Bangkok at the expense of the rest of country.

105. These trends imply that the Bank and DMCs will need to carefully select urban areas for assistance. Depending on the emphasis of the country operational strategy (COS), it may be efficient to develop a dual approach, addressing the needs of faster-growing (often larger) and slower-growing (often smaller) urban areas. At the same time, the need for sustained assistance in urban management implies that the Bank should establish long-term (at least 10-year) partnerships with selected DMCs to provide assistance at local and central government levels. As part of the COS, integrated projects should be based on the level of interest and commitment shown by city administrators in long-term partnerships with the Bank, and the steps they are willing to take to improve their urban management arrangements. Incentives may be very important. Where potential partner cities or towns have the authority to set their own pay levels, financial incentives for performance can be used to attract good staff. Where the cities do not have such authority, new or modified staff positions or civil service grades could be created to achieve the same ends.

6. Choice of Project Components

106. Component choice is an equally important element of the strategy and should result from a process that places beneficiary urban governments and communities at the center of the component selection process. The Bank must then decide whether to widen, narrow, or maintain the project scope, taking into account an assessment of city problems and priorities, institutional capacity of local government units and other relevant agencies, and consideration of the likely impact of the project. Persistent problems in the urban sector are the frequently poor quality of project preparation by some DMCs a result of resource constraints, the complexity of urban intersectoral relationships and impacts, and the weakness of many local institutions. Even without a sound feasibility study for a particular component, it may be included in the project if the city is willing to work with the Bank in the longer term, allowing time to include project preparation as part of the agreed TA.

7. Leverage

107. In a global environment of limited official development assistance, the Bank must carefully prioritize its urban sector lending and TA and leverage its resources wherever possible. The Bank can leverage additional flows of investments to DMCs by mobilizing increased cofinancing of projects and by promoting the development of capital markets in DMCs. Within the urban sector this is of particular relevance to the needs of megacities, where the scale of investments required is likely to be beyond the Bank’s resources. Such cofinancing will be obtained through forward planning and consultation with private stakeholders and other external support agencies. Project investments can also be used to leverage necessary policy changes and capacity building measures.

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