Issues, Challenges, and ADB's Approach

Key issues and trends

Rapid urban population growth. In 2008, more than half of the world human population, 3.3 billion people, lived in urban areas. By 2030, this is expected to balloon to almost 5 billion. Most of this growth will be in developing countries. The urban population of Africa and Asia is expected to double between 2000 and 2030 (UNFPA, 2007).

Rise of megacities. Urban centers are increasing in size and number. At the beginning of the last century, there were only 11 megacities in the world with populations of more than 1 million each. By 2030, UN predicts that there will be more than 500 cities in the world with populations of more than 1 million each; more than half of these cities will be in Asia. In addition, the peri-urban areas in many big cities are rapidly expanding.

High urban poverty level. Asia's poor represent about 70% of the world's poor-nearly one in three Asians is poor. Almost 25% of Asia's urban population is poor, and the rate is increasing, as there is a continuous influx of poor people into cities.

Inadequate basic services. Large number of Asian cities cannot adequately provide urban basic services to the increasing number of urban residents. Less than half of the cities population is covered by water supply. A number of cities do not have efficient systems of solid waste collection. Majority of the cities in developing countries do not have sewerage system connections, and sanitary landfill facilities.

Environmental degradation. With an increasing population density, especially in slums areas, environmental and health problems are rising. In addition to mitigating air and noise pollution and controlling wastes, managing the consumption of non-renewable resources have become more serious concerns.

Key challenges

Sustaining urban areas as engines of growth. Cities are focal points for economic activities, and engines of economic growth. They are centers of excellence for education, health care, culture, technological innovation, entrepreneurship, social services, government administration, and communications with the world. They create opportunities for jobs, employment and livelihood. They are as well focal points for rural hinterlands to alleviate rural poverty.

Managing urban growth. The rapid rate of urbanization needs to be effectively managed to ensure that the potential economic and social development arising from urbanization are optimized to reduce poverty, improve the quality of life and protect the environment.

Bridging supply and demand gap on infrastructure services. There exists an enormous gap between demand for infrastructure services and capacity to finance urban development. In 2004, conservative estimates suggested about $250 million per year in infrastructure investments would be needed to support urban growth over the next 25 years.

Strengthening urban management capacity. Capacity of cities to manage urban growth and development, including preparedness to respond to disasters, needs to be strengthened. Project-based approaches with short time horizon adopted in some cities are unsustainable and did not effectively address long-term goals.

Decentralizing urban administration. Many governments have decentralized responsibilities to local governments. This gives local governments more strategic role in planning and decision-making in urban development. However, funding may not have always matched with devolved functions. Decentralization also requires collaboration between the central and local governments.

Responding to globalization. Globalization has thrust cities into new frontiers making it more imperative for cities to be globally competitive.

Key approaches in addressing urban issues and challenges

Stakeholder partnerships. Cities partner with private sector, other cities, and organizations to exchange information, build capacities, expand resources and enhance revenues, and implement improvements in urban management.

Formulation of city development strategies. Several cities across the region have formulated development strategies based on long-term visions and an analysis of their strengths, weaknesses, opportunities and threats. Cities recognized the essential link and complementarity between national development policies and city development strategies.

Inter-local cooperation. There is a growing appreciation for the linkages between rural and urban areas, particularly in terms of inter-local cooperation in the face of the emergence of city-regions or multi-modal metropolitan areas. City-regions are becoming the foci for integrated urban development, which is blurring the traditional distinction between "rural" and "urban".

Cities as ecosystems. With the increasing interest in sustainable urban development, cities are now being viewed as living ecosystems wherein a balance is sought among social, economic and environmental concerns. Related to these specific approaches to energy efficiency, disaster mitigation, as well as resource and cultural heritage conservation, are being developed.

City leaders as economic managers. City leaders have shifted from a purely political orientation to an entrepreneurial and economic management approach. Some cities have initiated successful experiments in innovative techniques adapted from the private business sector, such as asset management.

ADB's involvement in urban development work

ADB's approach to urban development is guided by the following key documents:

Long Term Strategic Framework, Strategy 2020 indicates ADB's focus on urban infrastructure, such as water supply, sanitation, waste management, and urban transport, with operational emphasis on private sector participation and sound environmental management promoting livable cities.

Enhanced Poverty Reduction Strategy (2004) says "ADB is committed to poverty reduction and will lend its weight and influence to achieve it".

Urban Sector Strategy (1999) results from the need to strengthen ADB's leadership role in urban development in the region by expanding the level and impact of development assistance provided to DMCs to improve the plight of urban areas. In 2005, ADB reviewed the strategy to determine how appropriate and effective it is in guiding the urban development agenda.

ADB's stated commitments in assisting developing member countries achieve the Millennium Development Goals, e.g., Goal 1 on eradicating extreme poverty, and Goal 7 on ensuring environmental sustainability.

ADB's support to member countries

Since late 1960s, about 200 urban projects were funded (approximately in the amount of $15 billion) and implemented by ADB throughout the region. Of the total lending, around 11% was for urban projects. Much of ADB's lending and TAs during the period focused in urban water supply, sanitation, and wastewater management.