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Municipal finances and urban governance

In rapidly developing cities, large public investments are needed to improve the quality of life of citizens and provide the conditions for long-term economic growth.

The challenge for many cities is that municipal revenues are insufficient to meet the large and growing needs for public spending. At the same time, urban policymaking is often hampered by the lack of an authorising environment — a clear structure for decision making. Institutions often have overlapping and unclear mandates over decisions that affect the city, and in many cities existing institutional structures fail to adequately address cross-district urban issues.

Cross-country experiences and research highlights some key options for addressing these challenges. Urban land value capture, through annual taxes on land and property, for example, offers an ethical and efficient source of revenue — allowing urban land and property values to finance the public investments which make the city more productive.

Further options for financing, designing, and implementing urban policies are considered in the online policy toolkits, policy briefs, and policy papers below, while video case studies also highlight reforms implemented in Kampala to successfully transform revenue administration and governance in the city.