AfDB and UN-Habitat Renew Pact to Drive Africa’s Sustainable Urban Future

In a significant step toward advancing sustainable development across Africa, the African Development Bank Group (AfDB) and the United Nations Human Settlements Programme (UN-Habitat) have signed a renewed Memorandum of Understanding (MoU) to deepen collaboration on sustainable urban transformation. The agreement was formalized on 1 July 2025 on the sidelines of the Fourth International Conference on Financing for Development (FfD4) held in Seville, Spain.

Building on a partnership originally forged in 2006, the new MoU expands the scope of cooperation beyond water and sanitation to encompass a broad set of urban development priorities—urban governance, housing, municipal finance, and infrastructure development. The shared objective is clear: empower local governments and mobilize resources to build climate-resilient, inclusive, and economically vibrant African cities.

Urbanization in Africa: A Defining Challenge and Opportunity

Africa’s cities are growing at an unprecedented rate. With the continent’s population projected to soar to 2.4 billion by 2050, more than 800 million people are expected to live in urban areas. Already, over 50% of urban residents live in informal settlements lacking access to basic services, affordable housing, and climate-resilient infrastructure.

This demographic trend presents both enormous developmental opportunities and governance challenges. If managed strategically, urbanization can fuel economic growth, innovation, and environmental sustainability. If left unchecked, it risks deepening poverty, inequality, and vulnerability to climate impacts.

UN-Habitat Executive Director Anacláudia Rossbach summed up the stakes: "Urbanization in Africa can either be a driver of prosperity or a deepening of poverty and exclusion. Through this renewed collaboration with the African Development Bank, we aim to help cities become engines of resilience, equity, and climate action, leaving no one behind."

Key Areas of Collaboration

The renewed MoU outlines a multi-pronged strategy focused on four key pillars:

1. Urban Governance

• Strengthening local institutions through policy guidance and decentralization frameworks.

• Promoting participatory planning and inclusive decision-making in city development.

2. Affordable Housing

• Supporting the development of sustainable housing solutions tailored to low-income urban populations.

• Encouraging public-private partnerships (PPPs) to scale up housing finance and construction.

3. Municipal Finance

• Enhancing the financial capacity of local governments to raise and manage revenues.

• Developing innovative financing instruments, such as municipal bonds and land value capture.

4. Urban Infrastructure

• Facilitating access to basic services: water, sanitation, transport, and energy.

• Implementing climate-resilient infrastructure solutions to safeguard cities against environmental shocks.

Capital Markets and Urban Investment: A New Approach

AfDB President Dr. Akinwumi Adesina emphasized the need for innovative financing mechanisms to fund the next generation of African cities: "I believe that there are ways that we can use the capital markets to develop cities much better. We need to mobilize a lot more private capital in the development of cities, which will require a different approach from the conventional public sector capital."

The partnership will actively seek to engage private investors and explore blended finance models to fund urban infrastructure at scale. Platforms like the Africa Investment Forum (AIF) and the World Urban Forum (WUF) will be used to showcase bankable projects and attract global capital.

Building Capacity and Creating Knowledge

A key feature of the MoU is its emphasis on capacity-building and knowledge exchange. This includes:

• Joint technical assistance to city governments.

• Training and upskilling of municipal staff and planners.

• Sharing best practices from across the continent and globally.

By facilitating peer learning and strategic guidance, the initiative will help African cities prepare for the complex demands of rapid urbanization.

Flagship Project: Eswatini EcoCity Masterplan

As a concrete example of their collaboration, AfDB and UN-Habitat recently signed a service agreement to develop the Eswatini EcoCity Masterplan. This initiative aims to:

• Deliver sustainable housing for over 100,000 people.

• Integrate urban and agricultural development.

• Promote green economic opportunities and environmental stewardship.

The project exemplifies the people-centered, climate-smart urban models that the partnership seeks to replicate across the continent.

Toward a Resilient Urban Africa

As Africa stands at a historic inflection point, the renewed collaboration between the AfDB and UN-Habitat offers a blueprint for sustainable urban growth. By harnessing the power of strategic planning, innovative finance, and inclusive governance, the partnership seeks to transform African cities into engines of economic dynamism, social inclusion, and environmental resilience.

Through this MoU, two of the continent’s most influential development actors are sending a clear message: Africa’s urban future is not just a challenge to be managed—it is an opportunity to be seized.