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Medellín, Colombie © Benjamin Petit

Agence Française de Développement



The challenges of urban development

Lagos, Nigeria © Ben Black Art Photography

Urban development: facts and figures

5 million new city dwellers every month in developing cities.

According to UN-Habitat, 70 %

of the world’s population

will live in a city by 2050.

An investment requirement estimated at EUR 90 billion for African cities. Over 1 billion people now live in slums. If no action is taken, there will be 3 billion slum dwellers by 2050.


Proliferation of informal settlements;


Difficulties to access basic services;

 rban sprawl; U ■■ Inadequate land management; ■■ C  limate change; ■■ G  rowth of secondary cities; ■■ L  ack of employment and economic attractiveness; ■■ L  ack of resources to finance urban development; ■■ L  imited local governance. ■■


AFD helps cities meet these challenges. It promotes the sustainable city as a process of designing, building and of managing urban development by working with public actors, project managers, and in consultation with civil society. This includes helping local authorities to prioritize their actions in order to address the challenges of their development. Consequently, in addition to the targeted project, AFD provides assistance in identifying urban challenges in the territory, and each operation is part of a comprehensive local development strategy.


Improving access to decent housing, basic services (water, sanitation, energy, waste management) and public facilities;


 ndertaking appropriate mobility policies to ensure access U to a dense city for all, offering a social and functional diversity (in public equipment, economic activities, housing...);


Promoting economic activities and local employment;


Adopting a low-carbon development path.


The territory and local actors at the center of the sustainable city AFD supports urban territory projects led by local authorities and finances their priority investment programs. It has made the following assessment: ■■

The urban territory provides the appropriate scope for operations: it represents a living area and combines a set of urban functions (employment, mobility, housing…);


The local actor is the most competent to provide solutions tailored to people’s aspirations.

However, the urban sphere is addressed with all the local public actors who manage urban territories (local authorities, urban operators, ministries…) and also takes civil society (associations, NGOs, neighborhood committees, informal actors) into account.

4 intervention targets to support local actors’ strategies ■■

Strengthen the local authority as a key development actor;


Assist cities in performing strategic territorial planning;


Strengthen the institutional and financial framework in order to ensure the transparency and effectiveness of urban management;


Consolidate local governance and develop participatory processes.

Environmentally friendly cities with a climate commitment Cities are increasingly sensitive to the negative environmental impacts caused by rapid and uncontrolled urbanization. AFD supports the implementation of public policies that lead to more environmentally friendly urban development: efficient waste and sanitation management, fight against pollution, preservation of natural spaces. AFD is convinced of the essential medium- and long-term need to tackle the decisive factors for building low-carbon cities (dense, mixed and connected) that are also more resilient. Consequently, it pays close attention to ensuring that the effects of climate change are taken into account in urban development.

Two methods of operation: ■■

Financing for investment programs that have a significant climate impact: EUR 15 million loan to Afhco (Affordable Housing Company), the operator for the regeneration of downtown Johannesburg, to provide innovative rented housing to disadvantaged communities. The aim is to redensify the city center.


Providing upstream support to local authorities for the definition of their climate strategies: financing for a Territorial Energy Climate Plan in Turkey (Gaziantep) and in the Philippines.

Floods in Haiti © UN

Supporting risk management and climate change adaptation in cities in the Philippines Alongside its program to support decentralization, AFD is assisting in the definition of climate plans in three cities in the Philippines (Santa Rosa, Dagupan and General Santos). The aim is for local authorities to integrate this issue more effectively in their urban planning documents. In 2014, this support will continue with a new project that aims to strengthen local systems to prevent natural disasters. The city level is indeed essential in reducing communities’ vulnerability to extreme climate events such as typhoons, which are increasingly threatening the Philippine archipelago. Their frequency and intensity are also increasing as a result of climate change. Consequently, AFD’s action fits in with the significant efforts made by the Philippine Government to address these challenges.


Cohesive cities accessible to all

Productive, dynamic cities

In order to develop mixed cities that are accessible to all, AFD supports public policies that promote a balanced organization of space through an equitable distribution of basic services and infrastructure.

Economic development is one of the main concerns of local representatives.

The in situ informal settlements upgrading, which preserves their link to the city, is one of the main focus of AFD’s action. To this end, in these neighborhoods it finances access to urban services, public transport and the development of public spaces in these neighborhoods. At the same time, it is essential to diversify and improve the provision of social housing in order to anticipate urban growth.

In developing cities, the projects supported by AFD aim to achieve this by strengthening local economic dynamics and job creation: construction and upgrading of commercial equipment and small business facilities, markets, business parks, etc. It also finances projects for the safeguard and economic development of the urban and natural heritage of cities.

Medellín and urban social planning In 2004, following years of extreme violence, the Colombian municipality of Medellín launched an original urban policy, which involves targeting in priority the poorest neighborhoods. The implementation of this policy involves conducting proactive and simultaneous actions with massive investments in these neighborhoods. In order to support this model of urban social planning, which makes citizens key stakeholders in changing their city, AFD allocated a USD 250 million loan to the municipality to finance the “transport” component of the Center-East Integral Urban Project (PUI). The aim is to connect marginalized neighborhoods, home to 300,000 residents, to the rest of the city thanks to a tram system and two new urban funicular lines. In addition to improving the transport system, investments will be made to generally improve the entire neighborhood.

Ouagadougou market, Burkina Faso © Paul Kabré

Boosting local economic dynamism in Ouagadougou In Ouagadougou, the economic hub of Burkina Faso, the municipality has made the quality of its commercial facilities a priority. Thanks to the projects financed by AFD since 1997, RAGEM, the market’s management authority, has enhanced its programming and management capacities. The authority manages Ouagadougou’s central market and six secondary markets for which AFD financed the refurbishment between 2007 and 2010. 13,500 traders benefit from the refurbished facilities. AFD has also provided EUR 6 million of financing for the transport sector, which is experiencing strong growth. Four bus stations managed by RAGEM will be refurbished between 2013 and 2016. One of the objectives of this support is to strengthen the (often informal) activity of the many small carriers who use these stations. The refurbishment and reorganization of these spaces will allow them to offer a more reliable, safer and more punctual service to the 13,000 daily passengers in Ouagadougou.

Medellín Metrocable, Colombia © Diego Zamuner


Diversified financing tailored to territorial conditions The amounts committed by AFD to support urban development in the French overseas territories and in foreign countries have been constantly increasing since 2000. AFD’s support to local authorities systematically combines project financing with capacity building for cities. AFD is able to offer various forms of funding, thanks to its wide range of financing tailored to specific local characteristics and needs and the level of decentralization of each country:

Sovereign loan


Finances a capital investment programme or reallocates the financing to

Direct loan with or without State guarantee

Loan or grant

In addition to its financing activity, AFD develops strategic analysis tools: decentralization matrix, financial analysis framework, urban analysis matrix and local PEFA (Public Expenditure and Financial Accountability) assessment. These tools make it possible to methodically identify the priority areas that capacity building must target and to feed into the policy dialogues with partners. Capacity building may take different forms: exchange of experiences, expertise, training for officials from territorial public administration, etc.

Promoting French models and expertise

Specialized financial institution or local development fund

Local authority or Urban operator

Direct loan

“Mail de l’Océan”: An environmental approach to urban planning The project to develop the “Mail de l’Océan” business park in the City of Le Port, Réunion, is a showcase project for AFD. It combines opening up the city to the sea, revitalizing and densifying the city center, and developing a new mixed housing provision. It is the first operation based on an “environmental approach to urban planning” (bioclimatic design of buildings, energy and resource management, etc.) supported by AFD. The municipality, the social housing and development operator SIDR (Réunion Social Housing Company) and private investors worked together, with support from ADEME (French Environment and Energy Management Agency), on the city’s integrated sustainable development strategy (transport, public spaces, services, facilities). AFD supported the project by providing EUR 10m of financing to both the city and the social housing company (in particular by financing additional environmental costs).

In response to requests from its partners, AFD actively participates in the debate on public policies that aims to promote sustainable urban development. To this end, it mobilizes innovative French expertise in “enhancing quality of life for city dwellers”, promotes exchanges between local authorities (decentralized cooperation programs), and organizes or participates in exchanges of ideas during local or international events: World Urban Forum, Ecocity, Africities, United Nations Climate Change Conferences, etc. City of Le Port, Réunion © SIDR


Agence Française de Développement (AFD) is a public development finance institution that has been working to fight poverty and foster economic growth in developing countries and the French Overseas Provinces for seventy years. It executes the policy defined by the French Government. AFD is present on four continents where it has an international network of seventy agencies and representation offices, including nine in the French Overseas Provinces and one in Brussels. It finances and supports projects that improve people’s living conditions, promote economic growth and protect Earth, such as schooling for children, maternal health, support for farmers and small businesses, water supply, tropical forest preservation, and the fight against climate change. In 2012, AFD approved EUR 7 billion to finance activities in developing countries and the French Overseas Provinces. Main outcomes of AFD’s funding are monitored every year. For instance, money delivered will help get 10 million children into primary school and 3 million into secondary school; they will also improve drinking water supply for 1.79 million people. Energy efficiency projects financed by AFD in 2012 will save nearly 3.6 million tons of carbon dioxide emissions annually.

Children in the Ouagadougou bus station, Burkina Faso © Paul Kabré

This publication was printed in an environmentally responsible manner using vegetable-based ink and PEFC™ paper, chain of custody n° 10-31-1482 (sustainable forest management).


PROPARCO, AFD’s subsidiary dedicated to private investment, promotes private investment in emerging and developing countries in order to boost growth, promote sustainable development and reach the Millennium Development Goals. Its financing is tailored to the specific needs of investors in the productive sector, financial systems, infrastructure and private equity investment.

FFEM is a bilateral public facility set up by the French Government in 1994 following the Rio Summit. It aims at promoting global environmental protection via sustainable development projects in developing or transition countries. The French Global Environment Facility supports physical projects in recipient countries. Its operations are learning-based and support experimental, innovative or exemplary approaches.

AGENCE FRANÇAISE DE DÉVELOPPEMENT 5 rue Roland Barthes 75598 Paris Cedex 12 – France Tél. +33 1 53 44 31 31 Fax +33 1 44 87 99 39


Creation: Planet 7 – March 2014


Sustainable Cities and Territories  

AFD supports urban territory projects led by local authorities and finances their priority investment programs.