A senior World Bank director on Monday told municipal leaders from around the world during a conference in Durban that while there were always avenues to generate income, the key was to have a solid regulatory framework and sound property rights.

Sameh Wahaba, the global director for urban, disaster risk management, resilience and land global practices at the World Bank, was part of a panel discussion at the 6th Congress of United Cities and Local Governments (UCLG) in Durban.

The session was moderated by National Treasury director Judy Nkosi under the theme "The future of local finance". The conference runs until Friday at the Inkosi Albert Luthuli International Convention Centre. 

Wahaba said that local governments “need a compendium of solutions that span across the entire range of financing instruments” to meet their commitments, including borrowing, and that “land value capture” (or value sharing) was an obvious source of income.

One form of land value capture involves governments putting in place the infrastructure and regulatory environment for land development, the private sector developing, and an assessment then being done on the value of that development, with a percentage of the value collected being in the form of property taxation.  

“The most important revenue source [for local government] is municipal own-source revenue, so boosting this becomes very critical. This includes basic instruments such as property taxation, user fees, charges, levies, they are part of the arsenal of tools that are available to municipalities, provided the regulatory environment exists.”

Wahaba said the second funding source, which was usually found in rural municipalities that had limited revenue streams, was intergovernmental fiscal transfers, which is an area where the World Bank often works.

“The third funding source for many cities that we work with, is the notion of municipal borrowing of debt. At the end of the day this requires a large range of issues, starting with asset management and debt management to put the municipality on a road to creditworthiness.”

He said the private sector could play an important role in infrastructure development.  

“Obviously, land value capture plays an increasingly important role. It’s a tool that’s out there, and we are all discussing it, but it hasn’t been accessed everywhere.”

National Treasury will be giving a session on Tuesday at the conference on how it managed to build the country's municipal bond market.

The conference sees representatives from local and regional governments worldwide working to define the global agenda of cities and regions for the coming years and to develop inputs for upcoming international processes.