Page 66 - U4SSC Compendium of practices on innovative financing for smart sustainable cities projects

the area are expected to increase fourfold at the end of the first full year of operations of the
cross-border market.
• Use of smart technology: Facilities for mobile money transfers increased access to financial
services and reduced frequent travel to the commercial banks, which are situated more than
40 km from Muhange market/villages.

Financial information

In the first phase of the project, KDC contributed USD 26 256 of its own funds toward the project.
Muhange villages contributed land and labour, for a total value of USD 19 877. UNCDF provided
seed capital of USD 120 000 toward complementing the project equity in the first phase. The private
sector (represented by the Local Traders Association) constructed structures worth USD 367 117
through PPP (Build Operate Transfer - BOT).

No payback is required. The grant contributions from UNCDF were capitalized and constitute
the equity of the two village administrations and the women’s cooperative. Money from the KDC
and the central government will be recuperated through tax collection and not through capital
repayments. It constitutes the local council equity with which to leverage funding from the private
sector.

The revenue streams generated by the project are utilized for recapitalization to improve other
supportive infrastructure (i.e., water supplies) and investment in social amenities in the two villages
such as school facilities and health services. The revenue collection is in the form of fees and levies
to KDC and is re-invested in other needy villages and social services (i.e., road repairs, bridges).

Observations

• The PPP was enhanced to become a PPCP by virtue of the Village Land Act of 1999 and the
Local Government Act, which recognize villages as a corporate body. This allowed community
efforts and labour to be converted into equity ownership and participation in the dividends
and governance structure.

• The project used step-by-step community engagement to empower the local community to
take ownership of the market. Community participation and ownership under the PPP structure
(to be PPCP) was a huge success, even when the community/village ownership is as small as 5
per cent.

• Poor communities which own land, forestry, water sources or minerals, find it difficult to
participate in capital contribution and, therefore, equity ownership. All or a portion of the grant
money from development partners should be converted into equity for women cooperatives
and villages.

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