Here’s a little-known fact worth considering: the just over 530 Public Development Banks (PDBs) operating globally make up only about 5% of the financial sector, yet between them, they manage around US$23 trillion in assets. To put that in perspective, Africa’s largest multilateral bank—the African Development Bank—holds assets worth US$50 billion, while the largest national bank, South Africa’s Industrial Development Corporation, controls US$9 billion. State-owned financial institutions like Nigeria’s Bank of Industry, Côte d’Ivoire’s Banque Nationale d’Investissement, and South Africa’s Development Bank of Southern Africa all carry public mandates to facilitate long-term economic development goals within their borders or across regions.
Their work is fundamental, and they’re major players in a global financial system desperately in need of reform. As calls grow louder for improving the structure, regulation, and operation of the international financial system to support all countries equally, it’s becoming clear that Public Development Banks will be crucial stakeholders. Their success will play an outsized role in determining the future of infrastructure and key social investments in cities across the continent.
Over the last decade, calls for global financial reform have grown impossible to ignore. The demands are clear enough. Reformers want significant changes in how international institutions like the IMF and World Bank operate, giving developing nations—which make up a large part of these banks’ client base—a greater voice in decision-making and governance. They’re also pushing to improve global financial stability by strengthening regulations for banks and non-bank financial institutions worldwide, enhance debt sustainability by addressing the debt burden of developing nations, increase climate finance flows to developing countries, boost infrastructure investment and connectivity to facilitate trade and economic growth, and tackle growing global inequality.
Progress has been sluggish, hindered by multiple issues. There’s little consensus on implementation, largely due to differing national priorities. Geopolitical fragmentation and political or economic barriers further contribute to the slow pace of these critical changes.
Make no mistake: African countries, like many across the global South, desperately need these reforms. Handled well, they could support key continental economic drivers— increased domestic investment, youthful and growing urban populations, and the expansion of the African Continental Free Trade Area (AfCTA), founded in 2018 with the aim of building a single market for goods and services, free from tariffs, to boost intra-African trade.
The continent’s cities stand to be key beneficiaries, and here’s why.
African cities are growing faster than anywhere else in the world. This trend will continue for the foreseeable future, with the continent expected to be 60% urbanised by 2050. This is happening while access to long-term, concessional development financing to complement often limited domestic resources remains difficult. Reform would level the playing field, addressing the financing constraints that hinder African cities’ ability to provide basic services, build infrastructure, and respond to climate and economic shocks.
But better access to finance under current conditions won’t be enough.
African cities need genuinely affordable financing. Reducing borrowing costs by ensuring more accurate risk assessment matrices are used for Africa’s cities seeking resources for infrastructure and other essential investments would be game-changing. This could take many forms: debt-relief initiatives, fairer lending terms, increased access to concessional financing, and breaking unsustainable debt cycles by improving how debt is assessed and managed. Transparent and predictable mechanisms for debt restructuring would also help tackle a global financial system premised on the views of risk-averse credit rating agencies, lending practices that mirror often volatile economic cycles, and capital markets skewed against African borrowers. This situation has adversely affected the development of many cities across the continent. Developing a more inclusive financial system with wider access to affordable public and private funding will be critical for their uninhibited success.
A reformed system would make climate finance and investments in renewable energy projects available to cities across the continent, boosting sustainable growth by enabling African cities to adapt to climate change impacts and transition to low-carbon economies. Here, development banks can play the important role of ensuring seamless processes that enable funds to flow between international and national spaces. Well-run and fully functional country platforms led by public development banks at both multilateral and country levels will be fundamental.
African countries aren’t monoliths—they’re connected not only geographically, but through history, culture, movement, and trade. Facilitating intra-African trade and investment by supporting the development of an integrated financial system within the continent could be another important outcome of global finance reform. Improved access to affordable, long-term financing for infrastructure that connects countries and cities—roads, railways, ports, and digital networks—is critical for implementing the AfCTA, a programme at the centrepiece of Africa’s future. Aligning global finance with Africa’s integration goals can help unlock the continent’s vast internal market potential and drive shared growth.
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African cities need genuinely affordable financing. Reducing borrowing costs by ensuring more accurate risk assessment matrices are used for Africa’s cities seeking resources for infrastructure and other essential investments would be game-changing.
In cities, PDBs have a direct role to play as financiers, implementers, facilitators, and integrators of investments in infrastructure-based services, business-led urban development, social inclusion, and learning and development projects. In 2020, the Development Bank of Southern Africa launched Development Laboratories (DLabs), a programme of spaces created in collaboration with local government, private sector, and community partners to provide social, economic, health, and sports facilities in low-income areas across South Africa. Currently operational in nine locations, the model provides technology that helps communities access services and other opportunities. This collaborative model could serve as a blueprint for how cities across the continent can use technology to improve not only their effectiveness, but also the lives of their residents. The DLabs programme also illustrates how PDBs are more than just conduits for finance—they’re catalysts for reform at both global and hyperlocal scales. They can partner with stakeholders at the city level to seed new innovation that directly improves the quality of everyday people’s lives in cities built on access to basic services, technology, social engagement, and business development.
The continent’s PDBs are an important piece of the puzzle in the development of Africa’s cities. The global financial reforms being called for can only make them an even more effective player in determining how the continent’s urbanisation unfolds, and increase their prospects for success.
