Second Phase of CFO Capacity-Building Program: A milestone achievement in fostering economic growth and accessing capital markets for African cities

United Cities and Local Governments of Africa (UCLG Africa) and the African Development Bank (AfDB), with the support of the Development Bank of Southern Africa (DBSA), the C40 Cities,  the National Treasury of South-Africa, and the European Investment Bank (EIB), concluded their second phase of the capacity-building program for Chief Financial Officers (CFOs) of African cities and subnational governments in Johannesburg from May 29th to June 2nd, 2023. This collaborative effort marked a significant milestone in fostering economic and financial development in African cities.

The opening ceremony brought together key stakeholders who shared their insights on the importance of accessing capital markets and the transformative power of financial initiatives. Distinguished speakers included Honorable Peter Anyang Nyong’o, Governor of Kisumu County, Kenya; Mrs. Alice Nabalamba, Urban Division, Africa Development Bank; Mrs. Mojabeng Manthata, Development Bank of Southern Africa; Mr. Hastings Chikkoko, Regional Director for Africa, 40 Cities; and Mr. Jean Pierre Elong Mbassi, Secretary General of UCLG Africa.

During the first day, a round table and several sessions addressed crucial topics related to municipal finance and bond issuance.

The round Table focused on the Africa Territorial Trade and Investment Agency (ATIA) and its role in creating a conducive government policy and regulatory environment for bond issuance. Participants emphasized the need for transparent and sound regulatory frameworks to enhance investor confidence. Governor Anyang Nyong’o highlighted the challenges of raising resources for county investments in Kenya and expressed interest in utilizing ATIA as an intermediary. Mr. Eduardo Nguenha, Deputy Mayor and Councillor in Charge of Finance in Maputo, Mozambique, discussed the connection between capital market access and decentralization in Mozambique, while Mr. Kolisan Molukoalne highlighted the importance of creditworthiness and risk assessment in South Africa’s borrowing framework. Mrs. Valérie White, Former Managing Director at Standard & Poor’s Global Ratings (S&P) in New York, shared insights into the municipal bond market in the United States, emphasizing the role of rating agencies and the potential applicability of tax incentives in Africa.

The first session featured experts from the European Investment Bank (EIB) and the African Centre for Cities (ACC) who shared valuable insights on municipal creditworthiness, financing strategy, institutional strengthening, and the Africa Sustainable City Initiative. Mr. André Kruger and Mr. Ioannis Filopoulos from the EIB emphasized the importance of credit ratings and records of accomplishment to attract investors, while Mrs. Liza Cirolia from the ACC highlighted the need for sensible regulations and capacity assessment of subnational governments before accessing the capital market. The discussion also underscored the differentiation between social and income generation borrowing and emphasized the significance of fiscal rules, budgeting, revenue management, and expenditure management for African cities and subnational governments.

The second session focused on the legislative and regulatory framework for South African municipalities’ access to capital markets. Mrs. Sandra Sekgetle from the National Treasury provided expertise on the policies, acts, and regulations governing borrowing and investment in the country at the municipal level. Representatives from the Development Bank of Southern Africa (DBSA), Mrs. Mojabeng Manthata, discussed municipal financing opportunities and the DBSA’s role in infrastructure development. The discussion also touched on other funding sources and the potential for consultancy services.

Participants raised important questions and comments concerning the judiciary’s role, the influence of Development Finance Institutions (DFIs) on national governments, the significance of credit rating agencies, and the necessity for contextualized ratings in Africa. The South African legislative and regulatory framework governing capital market access, including borrowing and investment, was highlighted and discussed. The first day’s discussions also emphasized the importance of UCLG Africa facilitating dialogue and knowledge-sharing on financing local governments, as well as the potential value of CEE Rating in providing insights.

During the second and third day, participants learned from practical case studies conducted in South African cities such as Johannesburg, eThekwini, and Tshwane. These case studies showcased the successful implementation of municipal bond issuance as a means for municipalities to finance infrastructure projects and other development initiatives. Participants explored topics such as rating and listing municipal bonds, as well as the crucial role played by Development Finance Institutions (DFIs) in supporting municipal finance. The program provided valuable insights into the practical aspects and challenges involved in accessing capital markets for municipal financing.

The second and third day of the program proved highly informative and beneficial for participants, as they gained practical knowledge and insights into municipal financing strategies. The case studies, discussions on municipal bonds, and the role of DFIs provided participants with a solid foundation for exploring and implementing effective financial mechanisms to support infrastructure development and drive sustainable growth in their respective cities and regions.

The program for day 4 included a session and a roundtable addressing key topics related to municipal finance and bond issuance. The first session focus on the rating and listing of municipal bonds in the US, featuring Mrs. Valérie White, the former Managing Director at Standard & Poor’s Global Ratings (S&P) in New York.

The roundtable centered on the role of Development Finance Institutions (DFIs). It included esteemed panelists such as Mrs. Harriet Kiwanuka, Senior Investment Officer at the Department of Financial Development, African Development Bank; Mr. Mohan Vivekanandan from the Development Bank of Southern Africa; and Mr. André Kruger from the European Investment Bank.

On the last day of the program, there were one session and one roundtable. The first one focused on the importance of new green and climate funding opportunities. Mr. Anton Cartwright from the African Center of Cities (ACC) led the discussion, providing valuable insights into the potential of such funding opportunities to support sustainable and climate-resilient projects.

The roundtable centered around establishing the Africa Municipal Bond (AMB) Market Community and the Centre of AMB Market Practice. Dr. Zienzi Dillion, Former Head: Public Sector: Corporate and Investment Bank: Barclays Africa ex SA and CEO of Carmel Global Market, played a crucial role in facilitating this discussion, which aimed to create a platform for collaboration and knowledge-sharing among stakeholders interested in municipal bond markets in Africa.

In addition, the FiNet Network meeting provided an opportunity to discuss activities and publications related to municipal finance. The participants engaged in networking activities, fostering connections and collaborations that would further advance economic and financial development in African cities.

The closing ceremony of the capacity-building program for CFOs of African cities and subnational governments marked a significant milestone in empowering African cities to access capital markets and drive economic development. Representatives from key organizations reiterated their commitment to supporting African cities and subnational governments in their financial endeavors. The ceremony provided an opportunity to reflect on program achievements, outline future steps, and foster networking and collaboration among participants, further advancing economic and financial development in African cities.

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Wafae Boumaaz;; +212660128943