Local government and in particular metropolitan cities globally and in South Africa continue to play a critical role in the economic and social development strategies and programmes of countries. Cities face a complexity of challenges around space, habitat, infrastructure, environment, technology and financing as a result of economic pressures and precipitous urbanisation. These challenges are exacerbated in the South African context given the country’s political and socio-economic history and its declared intents of redress and equity.

The South African Cities Network in collaboration with the City of Tshwane initiated an expert panel based study to explore potential innovations and alternatives in city financing that will the address the perpetual gap and tension between fiscal space and development priorities. This draft report is therefore a consolidation of the initial work completed and is expected to inform further engagement, conversation and research towards potential policy and strategic changes around city financing.

The draft report contends that the strategic developmental agenda of cities needs a more rigorous financing model which integrates cross-cutting principles and fiscal instruments. This in turn lays the basis for a more effective and innovative configuration of fiscal options within alternative financing scenarios that will enhance the fiscal space for metropolitan cities. The process and report indicates that various alternatives are entirely possible, but the configurations of alternative financing models will have to be debated and discussed relative to the political and economic position of the country. The scenario options tabled unpack the working assumptions, the impacts on cities stakeholders and the scenario outcomes together with implications for both shock-risk impacts and normal risks effects on cities thus extrapolating some possible configurations of crosscutting principles and fiscal instruments. This establishes the basis for a more detailed analysis of financing approaches available to metropolitan cities over time.

This is the key outcome of the AMFM study at this stage. However, it is acknowledged that the process to develop innovative financing alternatives are complex, nuanced, multi-faceted and will require the engagement of a wide range of stakeholders and methodologies.