Overview

Cities generate over 80% of gross domestic product (GDP) in many countries of the Asia and the Pacific and are engines of economic growth that have lifted millions from poverty, but as they swell in size and number they are under increasing strain. Asia’s cities will become home to another 1.1 billion people in the next two decades as the poor continue to be drawn to better opportunities. Over 200 million now live in urban slums, a number predicted to soar to a staggering 692 million by 2015. Many cities are already struggling with environmental degradation, traffic congestion, inadequate urban infrastructure, and a lack of basic services, such as water supply, sanitation and waste management. Maintaining vital economic growth, while creating sustainable liveable cities for all is the biggest urban challenge facing Asia.

Since the 1960s, ADB has been assisting its developing member countries (DMCs) meet this challenge with about $15 billion in funding for 200 urban development projects, which have improved urban transport, waste management, and access to clean water and sanitation. Future ADB assistance aims to promote better city management and a larger private sector role in the delivery of services.

“The challenge for Asia’s cities is to transform from archetypal chaotic, polluted, inequitable and financially constrained cities to competitive, green and inclusive cities.”

– Bindu N. Lohani Vice-President (Finance and Administration) Asian Development Bank, at the Toronto Forum for Global Cities 5th Annual Meeting, Canada, 24 October 2011

To help urban managers cope with the needs of the estimated 120,000 people added to the region’s cities daily, ADB is focusing on integrated approaches that specifically target the poor, promote economic development, treat cities as living ecosystems, involve the private sector and civil society, and adopt measures to mitigate and adapt to climate change impacts of urbanization.

ADB support for sustainable urban development is guided by its long-term strategic framework, Strategy 2020. ADB’s renewed assistance to the urban sector is grounded in a comprehensive assessment of its DMCs urban issues and their fiscal and institutional structures. Assistance not only funds project development, early stage investment and sustainability needs but also makes full use of ADB’s flexibility and range of financial and technical assistance instruments to catalyze private sector and capital market finance for urban infrastructure projects.

The Urban Sector Strategy published in 1999 underpins ADB’s leadership role in urban development. Building on this, ADB’s New Urban Operational Plan covers clean water, sustainable transport, energy, solid waste management, urban planning and financing. The plan fosters Competitive, Inclusive, and Green Cities to improve the performance of cities on the Economic, Equity, and Environment (3Es) fronts.

Green cities

If urban expansion goes unchecked in the developing world the environmental impact will be catastrophic. With about 75% of greenhouse gas emissions generated by urban areas a growing number are embracing a new strategy to manage their rapid urbanization by promoting compact, energy-efficient, green, slum free, safe and livable cities, more reliant on mass transit than on cars. They are adopting an approach that involves new forms of engagement and finance and the flexibility to adapt to the circumstances of each city.

To encourage the sustainable development of cities, ADB assists national and city governments to promote local land use and transportation patterns that encourage the development of zero or low-carbon transport; energy-efficient infrastructure; and local government initiatives that encourage low-energy and zero carbon directions.

Inclusive cities

The role and shape of cities are changing as more people migrate to urban areas looking for economic opportunities and quality-of-life improvements in education, health, and housing. But urban citizens do not share equally in the benefits of economic growth and progress, and failure to prepare for and address the needs of urban poor in cities has created overcrowded inner-city tenements, slums, and informal settlements.

Like many cities and governments across Asia and the Pacific, ADB is determined to make cities livable and inclusive by addressing the problems resulting from rapid urbanization and the limited capacity of basic service delivery systems to keep pace with growth. It will support investment focusing on local infrastructure, community facilities, transport infrastructure, habitat and shelter, and support for livelihood and commerce. To help cities become inclusive, ADB funding supports the planning and provision of quality, high capacity public transport linking people to jobs and affordable, well-serviced high density, mixed-use development.

Competitive cities

Competitive cities attract investment and create jobs that reduce poverty and unemployment. They generate productivity gains by maximizing the advantages of their location and\or proximity to natural resources, efficiencies from the clustering of companies, and supporting infrastructure. As part of its City Cluster Economic Development agenda ADB plans to support inclusive economic development by targeting assistance to the development of successful industry clusters through interventions in infrastructure, skills development, research and development, specialized finance and regional cooperation. ADB’s Urban Community of Practice, established in 2007, facilitates knowledge flow on such urban issues and the sharing of expertise.

Partnerships for urban progress

The Cities Development Initiative for Asia, supported by ADB and the governments of Germany, Sweden, the People’s Republic of China, and Austria, help cities shape and prioritize their infrastructure development plans and assess priority projects at a pre-feasibility stage. To June 2011, 31 cities in 13 countries have participated in the initiative and approximately $11.3 million of core resources have generated an investment pipeline of approximately $5 billion.

ADB’s Urban Financing Partnership Facility with the Government of Sweden also supports innovative urban environmental, pro-poor projects and provides investment co-financing, technical assistance and guarantee support to urban infrastructure.

Private sector

To meet the growing demand for energy, transport, telecommunications, water and sanitation ADB’s 32 DMCs will require a staggering $747 billion annually. The importance of the private sector in helping to meet these investment needs cannot be overstated. With the private sector currently accounting for only about 20% of infrastructure spending in Asia, ADB is scaling up efforts towards private sector development and private sector operations, guided by the new Urban Operations Plan.