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.