Catalog

	Table of Contents
p. 22 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 VI. Implications for Bank Operations A. Lending and Technical Assistance B. Staff Resources C. Research Priorities VII. Conclusion

Urban Sector Strategy

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117. The continued rapid urbanization of the Region and the dominant role of urban areas in the economic health of DMCs indicate the need for further intervention and accelerated investments in institutional development, capacity building, and infrastructure and service provision. The Bank has a central role in supporting such investments and the urban strategy is designed to guide Bank actions in meeting these expanded demands. The strategy has a number of implications for Bank operations.

A. Lending and Technical Assistance

1. Sector Loans

118. The strategy emphasis on institutional and capacity building assistance in support of improved urban governance and management will require an increasing use of sector and program sector loans. The typical DMC urban sector comprises a large number of towns and cities of varying sizes and widely varying needs and resources. While the larger cities will offer opportunities for project-type lending, in some cases involving cofinancing, many smaller towns and cities can be reached only through sector or sector program-type loans. A proactive, flexible style of operations needs to be developed.

2. Long-Term Relationships with Clients

119. For the enhanced role of local governments and communities in project selection, institutional strengthening, and capability building to be effective, longer-term relationships between the Bank and client DMCs and their local governments will be required, and a longer-term and more flexible funding modality. This would provide the opportunity for continuing support for changing TA and project investment priorities as cities develop their management capacities; become more effective democratic institutions; and thus understand their weaknesses, opportunities, and priorities better.

3. Preproject Investigations and Commitment

120. City governments will need to demonstrate commitment to improving their urban management procedures in order to qualify for assistance. Where multicenter urban projects are proposed, criteria for participation can encourage urban centers to compete for entry. Cities and towns should improve revenue collections, management efficiency, etc. as a precondition of program participation. In parallel, and in addition to the normal fact-finding mission, the Bank should arrange for 1-2 months of preproject investigations of public and private stakeholders on priority subsector needs, institutional arrangements, and private sector/community capacity, as a contribution to subsequent project design. Where relevant, workshops or seminars should be held.

4. Institutional and Governance Issues

121. To place greater emphasis on institutional and governance issues, the Bank will require a deeper understanding of country-specific influences on project design, as part of the development of stronger national policy frameworks. The Bank should renew efforts to complete country urban sector profiles and strategies (with a 5-10 year horizon, updated as necessary), and use these to form the basis for recommending long-term partnerships between the Bank, the DMC, and cities.

5. Coordination between Programs and Projects

122. While most urban sector assistance will be developed and implemented by the water supply, urban development and housing divisions of regions east and west, other divisions (such as transport and communications) will develop projects with important urban linkages and impacts. Coordination can be reinforced by project department staff working closely with programs department, and other staff to ensure that urban initiatives in a DMC are coordinated with the relevant COS and country assistance plan.

6. Urban Sustainability

123. To help ensure that sustainability is achieved, performance indicators needed to measure project outputs and impacts will be identified as part of the project appraisal. This will be of particular importance in the preparation of stand-alone projects or project components dealing with institutional development, governance, and capacity building, where quantifiable indicators are more difficult to identify.

7. Involvement of Resident Missions

124. Resident missions should become more involved in sector institutional development issues, particularly those related to programming and implementation, in line with upgrading of their staff.

8. Expanded Regional Activities

125. To support the Bank’s program for the urban sector, regional activities should be expanded. The Bank should prepare regional TA programs on priority issues such as urban management, rather than single projects. The Bank should join programs of assistance to DMCs in cooperation with regional institutions such as the Urban Management Program for Asia and the Pacific and the UN Center for Regional Development. This would leverage the Bank’s human resources and accomplish capacity-building work at a lower cost than could be achieved by the Bank alone.

9. Flexible, Responsive Programs

126. The Bank’s program for the urban sector in a particular DMC must be sufficiently flexible to enable projects to be accelerated, slowed, or even canceled depending upon the needs demonstrated and commitments shown by participating cities. Similarly, flexibility will be needed for emergency programs with an urban focus, such as the current social protection programs for Indonesia and Thailand.

B. Staff Resources

1. Increased Bank Human Resources for the Urban Sector

127. The proposed growth and widening of Bank activities in the urban sector will increase pressure on the limited staff resources in each division. The increased use of sector and sector program loan modalities may help to achieve greater productivity with existing staff, but an additional management will be required by more flexible lending operations. A major constraint to such operations will be the number of staff available to manage and administer it. Without increasing the Bank’s total staff numbers, two options are (i) to increase the number of Bank staff devoted to the urban sector, to more accurately reflect the increasing importance of the sector in national development strategies; and (ii) increasing involvement of staff from related divisions (e.g., infrastructure, environment).

2. Improved SkilIs and Technical Expertise

128. The increased emphasis in the strategy on institutional, governance, and capacity building themes, as well as emphasis on “new” areas of assistance such as urban transport and environmental management, will require new staff skills, which can be achieved by retraining current staff and/or recruiting appropriate specialists. All relevant staff should have training in crosscutting concerns such as poverty alleviation, privatization, and corporatization. Consultants should be available, on a retainer basis or as staff consultants, to help meet skill shortfalls. In addition, experienced urban sector practitioners from DMCs (such as city administrators, chief officers, city engineers, treasurers, and other senior technical officers) can be used to review and confirm the practicability and sustainability of programs and projects.

3. Project Performance Management Skills

129. The goal of the Bank’s project performance reports and proposed Project Performance Management System is to increase the focus on sustainability and development impact of projects, as well as improve physical performance. To facilitate this in the urban sector, project reporting will include monitoring and evaluating a range of policy and institutional issues. Project administration staff will need training in these skills.

C. Research Priorities

130. There is inadequate understanding of the increasingly complex operations of social, economic, environmental, and institutional systems making up urban areas in the Region. Moreover, earlier models of urbanization in the Organization for Economic Cooperation and Development member countries are not necessarily relevant to DMC experience. For example, megacities present new challenges in urban administrative responsibilities, employment creation, environmental management, and infrastructure provision. Not enough is known about the internal workings of local governments in the Region, for example their use of community involvement, incentives to staff, treatment of informal settlements, and financial management. Research priorities include the following:

1. urbanization: further research on the complex forces of urbanization, where urban growth is occurring, and the impact and effectiveness of strategies to guide urban growth;

2. poverty reduction: the impact of direct and indirect policies for reducing urban poverty and increased social equity;

3. decentralization: evaluation of the process and impact of decentralization policies on urban development, quality of life, and the level of public participation;

4. urban governance: mechanisms to ensure greater transparency, accountability, predictability, and civic participation in local government decision making;

5. community participation: best practice mechanisms for increased community participation and the relationship to improved sustainability;

6. private sector involvement: issues and trends related to increasing the role of the private sector in the provision of urban services;

7. informal settlements and the informal economy: approaches and policies for dealing with informal urban settlements; the dimensions and role of the informal economy on urban economic productivity;

8. urban environmental management: policies and techniques for improved environmental management, including controls, incentives, market-based instruments, and the relationship to sustainability goals;

9. local government capacity building: approaches to and overall impact of capacity building initiatives; the relationship between interventions, resulting strengthened capacity, and improved urban management processes; and (x) local government finance: analysis of local government financing systems and use of market-based approaches.

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