Type	Voluntary commitment by other stakeholders
Organisation	FMDV – Global Fund for Cities Development
Scope	Regional
Location(s)	Colombia, India, Mexico, South Sudan, Turkey
Themes	Cross-cutting areas; Domestic public resources; Environment; Infrastructure; International public finance; Social sectors

Description

Recognising the potential of Subnational Pooled Financing Mechanisms (SPFMs) to :
– Sustainably finance the investments of local governments;
– Enhance their solvency and credibility in the eyes of investors,
– Play the role of “market makers” creating a new asset class for investors;
– Positively influence, on a national level, the state of local finances,
the FMDV – Global Fund for Cities Development launched in Addis-Ababa the Subnational Pooled Financing Mechanisms International Platform.
The platform aims, through analysis of existing uses of SPFMs, to provide actionable recommendations and ways forward for replication and implementation in emerging and developing contexts, by targeting five pilot countries: Colombia, India, Turkey, Mexico and South Africa.
This Platform will contribute to implement the Addis-Ababa Agreement, contributing to the New Financial Architecture for Localizing FfD and enhacing the Local FInancing Framework.
This platform, which gathers together all the stakeholders working across the creation and running of these mechanisms (central and local governments, technical and financial partners, private banks, rating agencies), will aim to:
➢ Disseminate information about SPFMs and produce an informed and updated diagnostic assessment of the performance and diversity of all previous examples of SPFMs.
➢ Evaluate the opportunities, issues and conditions for the creation and development of SPFMs in the context of developing countries.
➢ Support the development of the national conditions governing the establishment of this scheme within each country through organizing a grouping of committed stakeholders.
➢ Develop operational advocacy (recommendations) within the context of international agendas, allowing local authorities and their networks to propose their own innovative, concrete, credible and varied options for financial engineering methods for development.
➢ Define a detailed plan of action which is in line with the common interests of the stakeholders so as to ensure the possibility of a follow-up to this first exploratory phase.

Partners

Launching organization : FMDV – Global Fund for Cities Development
First supporting partners :
UNCDF – United Nations Capital Development Fund
AFD – French Development Agency

Targets

– Central states and their existing financing instruments – to evaluate the opportunities to help local governments in developing SPFMs and identify the necessary conditions for their practicability: the legal reforms, modifications in decentralization.

Indicators

Number of development finance institutions and other financial partners involved in the SPFMs Platform
Country-studies available on implementation requirements and plan of action for SPFMs
Number of extensive stakeholder consultation, detailed technical assessments, training, project preparation, the structuring of creditworthy financial entities managed by experienced competent professionals, and “roadshows” building local investor demand.
Number of first pilot financial transactions in the 5 countries targeted
Adoption of regulatory reforms to allow SPFMs implementation
Number of local representatives involved in Study-Tours for training, knowledge sharing and understanding

Resources

Up to 600k euros to 1m euros will be committed in the first exploratory phase by FMDV, its members and partners.
These amounts will be achieved by monetary inputs, and valorization of expertise and logistics support (such as :
– Political leadership at local and regional level
– Technical expertise and logistic assistance for organizing Workshops for mobilization ans sensitization of stakeholders
– Production of training courses, toolkits and study tours
– Communication tools)

Timeframe

July 2015-october 2016 for first actions and assessment, then 2016-2020 for first transactions and SPFMs implementation