Page 6 - U4SSC Compendium of practices on innovative financing for smart sustainable cities projects

Executive summary

The objective of the Compendium of Practices on Innovative Financing is to provide a practical
insight on the types of projects that can improve sustainability and smartness of a city, combined with
ideas on how they can be financed. Given the focus on financing projects which support achieving
the 2030 Agenda for Sustainable Development, innovative financing of urban development projects
is critical to achieving the Sustainable Development Goals (SDGs) globally.

This Compendium builds on the “U4SSC Guidelines on tools and mechanisms to finance sustainable
smart cities projects”, which were also developed within the United for Smart Sustainable Cities
Initiative (U4SSC) and published in 2021.

While the Guidelines provide recommendations for city governments on how to develop investment-
grade projects in support of sustainable smart urban development, the Compendium, through its
case studies from different geographical regions, demonstrates the use of different instruments
to finance sustainable smart cities projects.

The presented case studies include examples of smart sustainable cities projects at different
project stages - from planning and preparation to project implementation and evaluation; and
from different sectors: education, energy, housing, transport, communication technology, urban
development, water and waste management.

The case studies demonstrate the use of different financial mechanisms. For instance, the examples
of the Ogal Shiwa Public Real Estate Programme in Japan and Parque das Nações in Portugal show
the use of the public-private partnerships. The case of Elaziğ Fethi Sekin City Hospital is an example
of a project financed using green and social bonds.

Other projects presented in the Compendium highlight the important role of international
development institutions. For instance, the Cabeólica wind farm built across four islands of the
Cape Verde archipelago, demonstrate the use of the funds from the European Investment Bank
(EIB). Support from these and other multilateral organizations proved to be important not only in
providing funds but also in promoting transparency in public procurement.

One more approach is involved in-kind grants and technical support by the private sector, which
is followed by the transfer of the operation to a cooperative of beneficiaries. The case of First Solar
Energy Cooperative in informal settlement in Rio de Janeiro, Brazil demonstrates the use of grants
from the Open Society Foundation and the International Cooperatives Alliance.

This Compendium also highlights that enabling environments, including suitable laws and
regulations and the improved capacity of local communities to absorb projects, and governments
to implement them, are necessary for their successful deliveries. While the private sector took the
necessary financial risk, it was also the commitment of the government to ensure that investments

iv Compendium of practices on innovative financing for SSC projects | January 2023