New York issued its first general obligation municipal bond to finance infrastructural development in 1812. At this point our cities in Africa, though thriving, had not assimilated all the nuances of the modern metropolitan centres and we cannot blame them for not having parallel achievements. Since 1812, America has become a giant in infrastructural development and in 2017, the municipal market size reached $3.8 trillion. Your eyes are not fooling you, indeed America is now in the trillions. In just November and December last year, the USA issued $111 billion in bonds for infrastructure, pension obligations and other critical needs across the country. African cities, on the other hand, have struggled to finance infrastructural improvements with the municipal bond approach which is almost peerless in its effectiveness. They have managed to raise only 1% of the American total since 2004. How can a system that has worked so great in America be a failure in this continent?
Jeremy Gorelick says the fault should lie squarely on the shoulders of national governments which limit cities' autonomy and subsequently their ability to raise their own funds. He says, "This is often driven by a fear on the part of sovereign leadership to allow cities to have a hand in holding their own purse strings. This power can ultimately lead to less dependence on the national government." Basically the reason our cities have what could be embarrassing infrastructure in the 21st century is national government thirst for power and control.
In Dakar, the city leadership spent years working to improve investor perceptions of municipal creditworthiness only to be undone by the government in what was called "an arm wrestling match" by Senegalese media. It would have been a first for Dakar if the government had allowed it. It is difficult to understand why governments would be reluctant to allow much needed infrastructural development in a continent with a deficit that can only be remedied by at least $90 billion every year for the next decade. However, this is the reality we have to face: some governments are simply the enemies of progress.
Jeremy Gorelick deals in more detail with why African cities are not issuing municipal bonds on The Conversation.