Urban mobility is a major challenge for growing African cities. The urban population is growing so fast that transport infrastructure is not keeping up. As a result, congestion, pollution, and limited access to basic services are becoming major challenges for many African cities. Improving urban mobility is crucial to improve quality of life and stimulate economic and social development. Efficient transportation systems reduce commute times, increase productivity and facilitate access to employment, education and health care. However, financing these infrastructures remains a major challenge. Traditional sources of finance, such as public budgets and international loans, are often insufficient to meet the growing needs and economic challenges of African countries. This is why it is imperative to explore innovative sources and financing strategies. This article aims to examine the different sources of funding available and to analyze the innovative strategies that can be adopted to improve urban mobility in Africa. We will address current challenges, traditional solutions and new approaches, highlighting successful case studies and proposing avenues for the future.
I. Challenges of financing urban mobility in Africa
Urban mobility in Africa is hampered by insufficient public funding, governance and planning issues, as well as economic and social challenges.
Lack of public funding
Urban mobility in Africa faces significant financial challenges, mainly due to insufficient public funding. This reality manifests itself through two main issues:
- Limited public spending: African governments often face tight budgetary constraints, limiting their ability to adequately invest in infrastructure and urban transport systems. Insufficient tax revenues and a volatile economy contribute to this situation, making it difficult to allocate sufficient resources to improve urban mobility.
- Competing priorities in national budgets: Additionally, policymakers must balance several competing priorities in the allocation of public funds, such as health, education, and general infrastructure. This competition often leads to difficult choices where urban mobility can be relegated to the background, despite its crucial impact on economic growth, quality of urban life, and environmental sustainability.
Governance and planning issues
In addition to insufficient public funding, urban mobility in Africa is hampered by governance and planning issues that exacerbate financial difficulties:
- Lack of coordination between different authorities. The planning and management of urban transport infrastructure often involves multiple levels of local, regional and national authorities. However, lack of coordination and collaboration between these entities can lead to delays, conflicts of interest and inefficiency in channeling financial resources to priority projects.
- Poorly designed or ineffective projects. Deficient planning sometimes leads to projects that are poorly designed or unsuitable for the real needs of urban populations. Common examples include inappropriate technology choices, insufficient assessment of user needs, or underestimation of long-term maintenance costs. These errors not only waste limited financial resources but also undermine the viability and efficiency of urban transport systems.
Economic and social challenges
Urban mobility in Africa faces major economic and social challenges, exacerbated by strong population growth. Africa is experiencing rapid population growth, with rates among the highest in the world. This rapid expansion of the urban population places considerable pressure on existing transportation systems and creates increasing demand for efficient and accessible mobility solutions. Without adequate planning, this population growth can overwhelm existing infrastructure and compromise the quality of life of city dwellers.
II. Traditional Sources of Financing
Public funding
- Local and national taxes : Local and national governments in Africa use tax revenues from income, property, sales, and specific taxes such as fuel taxes to finance urban mobility projects. These funds are often earmarked for road infrastructure, mass transit, and other urban transportation initiatives.
- Government grants: African governments provide direct grants to support urban mobility projects, often in partnership with international organizations and development agencies.
International loans and financing
- World Bank, International Monetary Fund (IMF) : These international institutions provide soft loans or grants to support investments in sustainable urban transport infrastructure in Africa.
- Regional development banks (African Development Bank) : The African Development Bank (AfDB) and other regional development banks provide specific financing for urban mobility projects, often in collaboration with African governments and other international partners.
These traditional funding sources are essential to support efforts to improve urban mobility in Africa, meeting the growing needs for efficient, sustainable and accessible transport in the continent’s cities.
III. Innovative Sources of Financing
There are several innovative and proven sources of financing, including public-private partnerships, crowdfunding and green financing.
Public-Private Partnerships (PPP)
PPPs are collaborative agreements between the public and private sector to develop, finance and manage infrastructure projects. Benefits include risk sharing, operational efficiency, and access to specialized skills.
Examples of successful projects in Africa include the Casablanca tram project in Morocco, which illustrates a successful public-private partnership (PPP). Inaugurated in 2012, this network has improved urban mobility and is expanding with lines T3 and T4, adding 39 new stations and 26 kilometers of additional tracks. Similarly, in Nairobi, Kenya, the modernization and expansion of the rail network, in partnership with private investors, has improved connectivity and met growing urban mobility needs, including the renovation of existing infrastructure and the addition of new lines.
Crowdfunding
Crowdfunding involves raising money from a large group of people through online platforms. In Africa, this model offers significant potential by mobilizing small contributions to support urban mobility projects.
Among the platforms suitable for this type of projects, we can cite M-Changa, a Kenyan mobile crowdfunding platform to raise funds for various causes, including urban mobility. Thundafund stands out by supporting community initiatives and sustainable projects. Finally, GoFundMe, used worldwide, is also effective in financing community urban mobility initiatives.
These platforms make it possible to bring together financial resources necessary to improve transport infrastructure and meet the growing needs of urban populations in Africa.
Green Bonds and green financing
Green bonds are financial instruments specially designed to finance projects with a positive environmental impact, such as sustainable mobility infrastructure.
Urban mobility projects eligible for green bond financing include several types of sustainable infrastructure. First, extensions of ecological public transport networks, such as new tram or electric bus lines. Then, public transport electrification projects, such as converting bus or train fleets to clean energy sources, are also suitable. Finally, cycling and pedestrian infrastructure, which encourages modes of transport without carbon emissions, can also benefit from this type of financing.
The African Development Bank (AfDB) has been issuing green bonds since 2013 to support projects with a positive environmental impact, including sustainable transport initiatives. These bonds finance various clean energy and sustainable transport projects across Africa, contributing to the bank’s overall strategic priorities of green growth and inclusive development.
IV. Innovative strategies to optimize financing
In the context of financing urban mobility in Africa, the adoption of innovative digital technologies plays a crucial role in improving the efficiency and sustainability of urban transport initiatives. Here are two key strategies:
Use of digital technologies
Technological advances have revolutionized the way urban transport systems are financed and managed, offering innovative solutions to address the specific challenges faced in Africa:
- Electronic ticketing and mobile payments:
By adopting electronic ticketing systems and mobile payment platforms, transport authorities can simplify revenue collection while improving accessibility and convenience for users. These technologies also reduce costs associated with physically handling tickets and collecting payments, while facilitating transaction traceability and reducing the risk of fraud.
- Real-time fleet management systems :
Fleet management systems based on real-time technology enable operators to effectively monitor and control vehicles and transportation infrastructure. Using sensors and geolocation devices, these systems optimize vehicle utilization, reduce waiting times for passengers, and minimize operational costs by enabling proactive maintenance and efficient route management. This helps improve the punctuality of services, reduce the carbon footprint of transport fleets, and increase user satisfaction through a smoother and more predictable travel experience.
Optimization of revenues generated by infrastructure
To optimize revenues generated by urban transportation infrastructure, here are two effective strategies to consider:
- Exploitation of advertising revenue :
Urban transportation infrastructure, such as subway stations, bus stops and the vehicles themselves, provide valuable space for advertising.By exploiting these opportunities, transport authorities can generate significant additional revenue. This includes renting advertising space on digital billboards, station walls, and even on vehicles. By using accurate demographic and traffic data, advertisers can effectively target their audiences, maximizing the impact of their advertising campaigns while providing consistent revenue for the transportation system.
- Development of economic activity zones around transport hubs:
Urban transportation hubs, such as major train stations and densely populated transit stops, represent strategic points for economic development. By developing economic activity zones around these hubs, such as shopping centers, offices, hotels or leisure facilities, local authorities can create attractive clusters that stimulate local economic activity and generate additional revenue for through property taxes, development fees, and commercial rents. This approach not only diversifies sources of income but also helps revitalize urban neighborhoods and improve connectivity between transportation infrastructure and residential and commercial areas.
Incentive for private investment
To encourage private investment in urban transport infrastructure, here are two key measures:
- Favorable tax policies :
Favorable tax policies can play a crucial role in attracting private investors. This includes incentives such as tax credits for investments in transport infrastructure, tax exemptions on income generated from these investments, and tax deductions for expenses related to the modernization and maintenance of infrastructure. Such measures reduce the tax burden on investors, increase the financial return of projects, and thus encourage increased participation of the private sector in the financing and management of urban transport infrastructure.
- Government guarantees and risk-sharing mechanisms :
Government guarantees and risk-sharing mechanisms are essential to mitigate the risks perceived by private investors. These guarantees can take the form of credit guarantees for bank loans, income guarantees to ensure a minimum income stream for investors, or risk-sharing mechanisms where potential losses are shared between the public sector and the private sector. private. By reducing financial uncertainty and securing investments, these mechanisms encourage private investors to engage in long-term urban transport infrastructure projects.
V. Call to action
For governments and decision-makers
Governments and policymakers are called upon to play a central role in transforming urban transport systems in Africa by encouraging reforms and innovations in financing. It is crucial to adopt favorable tax policies, promote clear regulations and support public-private partnerships to attract the investments necessary for the development of sustainable urban mobility infrastructure.
For investors and businesses
Investors and businesses have a unique opportunity to contribute to the development of urban mobility infrastructure in Africa by seizing opportunities to participate in urban mobility projects. By investing in innovative initiatives such as green transport infrastructure and advanced technological solutions, businesses can not only realize financial profits but also play a crucial role in the sustainable urban transformation of the continent.
Together, governments, investors and businesses can collaborate to build more connected, efficient and sustainable African cities, meeting growing mobility needs while creating significant economic opportunities for local and regional populations.
Conclusion
Diversification of financing sources and innovation play a crucial role in the sustainable development of urban transport systems in Africa. By integrating varied approaches such as green bonds, public-private partnerships and innovative financing mechanisms, it becomes possible to effectively respond to the growing challenges of urban mobility while promoting environmental and economic sustainability.
Africa has immense growth potential for its urban transport systems, supported by rapid urbanization and increasing demand for modern infrastructure. To fully exploit this potential, enhanced cooperation between the public and private sectors is essential. This collaboration can drive technological innovation, improve the operational efficiency of transport networks and ensure equitable access to mobility services for all citizens.
Investing in urban mobility in Africa is not only an economic necessity but also an imperative to promote inclusive and sustainable development across the continent. By adopting diversified financing strategies and fostering continuous innovation, African nations can create more resilient, connected and environmentally friendly cities, thus providing a better quality of life for their inhabitants and contributing to economic growth. overall of the region.
Webography/Bibliography :
- Achieving A More Sustainable Future for Africa’s Cities Through Transport. (2023, September 16). Institute for Transportation and Development Policy. Retrieved July 11, 2024
- Partenariats Public-Privé (PPP)
- Financement participatif (Crowdfunding): Crowdfunding platform M-changa, Crowdfunding platform Thundafund, GoFundMe
- Green Bonds et financements verts : Financestrategists, Nerdwallet, AFDB
