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Sub-National TA

Reliable and efficient infrastructure is essential for growth and poverty reduction. It lowers production and transactions costs, increases private investment, raises productivity, and removes economic bottlenecks. The demand for infrastructure and other services is huge but investments have not matched needs.

As the development paradigm evolves, urbanization and national fiscal constraints are placing new emphasis on sub-national entities to provide or finance infrastructure and other public services. Decentralization assigns new prominence to three types of sub-national entities: local governments, public utilities/SOEs, and the development finance institutions that fund them. Sub-national entities have broader mandates and responsibilities but they may not be able to fulfill them where there are weak financial and management capabilities, evolving regulatory environments, or thin local capital markets.

NEW UPDATE: KNOWLEDGE VIDEOS

Check out these three videos from Au Courant on Financing Cities, which covers both public and private financial sources.

Financing Cities: Part 1: Overview (French)

Financing Cities: Part 1: Overview (English)

Financing Cities: Part 2: Public Financing

Financing Cities: Part 3: Private Financing

 

What the Program does

The objective of the SNTA program is to help sub-national entities develop their capacity to access market-based financing without sovereign guarantees to improve infrastructure services. The program provides technical assistance activities such as capacity building designed to improve the credit worthiness of sub-national entities and their investment projects, as measured by appropriate local credit ratings and/or actual access to financing. Such capacity building is expected to produce improved financial management, strengthened governance and human resource capacity, as well as improved investment planning and project preparation.

  • Special-purpose government entities, including utilities, authorities, special districts, and state-owned enterprises that focus on utilities delivering natural monopoly infrastructure services.
  • General purpose sub-national government entities (provinces, states, municipalities) with infrastructure service delivery responsibilities. In most cases, these entities have infrastructure service delivery responsibilities commingled with service delivery and revenue sources from many other sectors which cannot easily be separated from infrastructure.
  • Development finance institutions, including development banks and funds that focus on infrastructure lending.

Sectors Supported

The SNTA Program works upon PPIAF’s eligible sectors: Energy, Transport, and Water and Sanitation supporting entities that primarily target infrastructure finance. In some cases, general obligation borrowing by a municipality might be designed to support other sectors, such as housing, health and education. This kind of financing would be eligible for support as long as infrastructure investment was the primary objective.

Countries Supported

Eligible countries include recipients of official development assistance as defined by the OECD Development Assistance Committee’s List. Requests from low-income countries will receive special consideration.

Type of Activities Supported

The SNTA program typically provides assistance to the following types of activities:

Areas of Work

Facilitating Access to Financing

The program can help sub-national entities secure capital for infrastructure development, typically from banks or bond markets. It helps with the preparation of financing plans, domestic debt market sounding exercises, policy reviews, assess legal and regulatory frameworks and support for the actual structuring and implementation of transactions to finance infrastructure projects.

Specific Performance Improvement

SNTA can assist sub-national entities to address issues that weaken their creditworthiness in the view of potential lenders. These activities  focus  on  reviewing financial management practices, helping to build financial performance improvement plans, strengthening revenue and expenditure management, establishing asset and debt management policies and procedures, and strengthen financial monitoring mechanisms. 

Credit Ratings

SNTA activities can help sub-national entities obtain a credit rating to demonstrate their creditworthiness to potential lenders and investors. Assistance can start with a “shadow” credit rating – an unpublished, unofficial rating done for diagnostic purposes; followed by technical assistance to make improvements. When a sub-national entity is ready, the SNTA program can help them obtain a formal rating that is disclosed to the public and the financial community.

Other

The SNTA program includes support to upstream legal and regulatory reforms that facilitate actual borrowings. Situations requiring substantial policy change are not permitted by the SNTA business plan.

How SNTA Works

Under its current strategy, the SNTA Program funds activities included in two of the five newly defined PPIAF Thematic Programs: the Creditworthiness Theme and the Access to Infrastructure Financing.

So far, SNTA has developed three initiatives within its portfolio of activities that reflect its programmatic approach which are featured below.

Applying for SNTA Funds

To apply for SNTA funding please follow the instructions on the Apply for Funds page and contact our SNTA team.

Sub-National Technical Assistance Initiatives