By Alex Mabunda, Group CEO of Ntiyiso Consulting Group
Africa stands at the most consequential crossroads of its modern development. Our continent is urbanising at a breathtaking pace, a transformation that holds the promise of unprecedented economic growth, innovation and improved living standards. Yet, this promise is being stifled by a critical structural flaw: our cities, the very engines of this growth, are financially hamstrung.
The diagnosis, as confirmed by extensive research from institutions such as the African Centre for Cities and the University of Pretoria, is clear and alarming. African cities are economically powerful, often contributing more than half of their countries’ national GDP, but administratively impoverished. They have the Herculean task of providing housing, transportation, water, sanitation and resilience against climate change for the world's fastest-growing population: urban dwellers. However, they are forced to do so with one hand tied behind their back, reliant on insufficient and unpredictable transfers from national treasuries that are too slow and inflexible to meet local needs.
This model of fiscal dependency is a recipe for perpetual crisis management. It is the root cause of the infrastructure deficits we see every day: the paralysing congestion, the under-served settlements and the struggling public services. For businesses, this translates into higher operational costs, logistical nightmares and a constrained consumer base. For citizens, it means a daily struggle against a system that cannot keep up with their needs.
This is not a failure of our city leaders’ ambition; it is a failure of the system in which they are forced to operate.
The solution is not more centralised control, but intelligent empowerment. It is time to champion a new compact for African urbanisation, built on the cornerstone of fiscal autonomy. This is not a radical idea; it is a pragmatic and necessary evolution. It means equipping our cities with the financial tools and responsibilities that match their economic importance.
This empowerment rests on three fundamental pillars, each underscored by robust research:
1. Diversifying the revenue toolkit: A city’s financial base cannot rest on property rates and central transfers alone. As explored in depth by the African Cities Research Consortium, cities must be granted the legal authority to leverage innovative, location-based financing mechanisms. Value-capture financing is a prime example. When public investments like a new transit line or a reclaimed public space dramatically increase surrounding land and property values, the city should be able to recapture a portion of that uplift to fund the infrastructure that created it. This creates a virtuous cycle, aligning public investment with private gain and generating revenue for further development.
2. Accessing capital markets for strategic investment: No business would finance a long-term asset from its annual operating budget. Prudent borrowing is essential for large-scale infrastructure. As noted by experts at the University of Pretoria, creditworthy cities must be empowered to access capital markets, for instance through municipal bonds, to fund major projects. This spreads the cost over the lifetime of the asset and its beneficiaries. Crucially, it also instils a new discipline: to borrow affordably, a city must demonstrate transparent governance and sound financial management, thereby creating a powerful incentive for accountability and professionalism.
3. Building unbreakable links between autonomy and expertise: This is the most critical pillar. Fiscal tools are useless without the skilled hands to wield them. As argued compellingly in Africa Sustainability Matters, “fiscal autonomy and financial expertise must go hand-in-hand”. Granting new powers without a concurrent investment in capacity is a pathway to risk. This requires a dedicated effort to professionalise municipal finance and cultivate a cadre of urban financiers, project managers and economists within city administrations. This is not a short-term training exercise but a long-term commitment to embedding sophisticated skills in revenue management, public-private partnerships and long-term financial planning. The private sector, including firms that specialise in this domain, has a role to play as partners in this capacity-building mission, helping to insource these critical competencies for the long term.
Skeptics will rightly point to concerns about governance and corruption. These concerns are valid, but they are an argument for robust, transparent systems and oversight, not for maintaining the status quo of disempowerment. The answer to mismanagement is not less responsibility; it is more accountability, enabled by digital systems, independent audits and strong civic oversight. The current system has not eliminated these risks; it has often merely obscured them within complex intergovernmental frameworks.
The benefits of this shift are profound. Fiscally empowered cities can plan for the long term, attract private investment with credibility and respond with agility to local priorities. They can finally begin to translate their immense economic potential into tangible, life-improving services for their residents.
The call for fiscal freedom is more than an economic argument; it is a call to unleash the latent potential of Africa’s urban future. It is about trusting the ingenuity and commitment of our local leaders with the tools they need to succeed. Our national governments have a key role to play as enablers, creating the legislative and policy environment for this empowerment to flourish.
The future of our continent is being shaped in our cities. By unshackling them from financial dependency, we are not just building better cities, we are building a more prosperous, resilient and equitable Africa for all. The time for this decisive shift is now.