What is urban governance and why does it matter? This topic guide introduces the literature on urban governance and its relationship to growth and poverty reduction. It considers the key debates and issues, and sets out some implications for practice on specific urban governance challenges.

The 21st century has been referred to as the first urban century. More than 50% of the world’s population live in urban areas.  Rapid urbanisation has been identified as both an opportunity and a global challenge. Urban centres drive economic growth and offer economies of scale in productivity and public investment; they are social melting pots, centres of innovation and drivers of social change. However, cities can also be marked by inequality, poverty, conflict, violence and environmental degradation.

Urban governance is the process by which governments (local, regional and national) and stakeholders collectively decide how to plan, finance and manage urban areas. It influences whether the poor benefit from economic growth, and determines how they bring their influence to bear and whether political and institutional systems, processes and mechanisms facilitate inclusive and pro-poor decisions and outcomes. It involves a continuous process of negotiation and contestation over the allocation of social and material resources and political power. It is not just about the formal structures of city government but encompasses a host of economic and social forces, institutions and relationships, formal and informal. Elements that contribute to effective governance include:

  • The city-national interface: Effective urban governance depends not only on local institutions and actors, but also on the framework set by national governments that links the city and broader regional and national development. However, in many contexts inadequate institutional frameworks have impeded urban governance.
  • Municipal capacity: Expanding capacity to plan, manage and finance urban growth is a fundamental component of effective urban governance. Each tier of government needs sufficient capacity to ensure that physical and socio-economic planning processes are well-coordinated, legally enforced, inclusive and cross-sectoral. However, many municipalities lack the skills, capacity and resources to meet obligations.
  • The role of the private sector: The private sector is a key stakeholder in urban and economic development. In addition to creating and providing employment, it can also be engaged in the design, construction and maintenance of infrastructure and provision of services. However, where the private sector has contributed to improvements, it has often been at the expense of universal coverage, with low-income areas excluded.
  • Political systems and institutions: Urban governance is political, influenced by the creation and operation of political institutions, government capacity to make and implement decisions and the extent to which these recognise and respond to the needs of the poor. The most vulnerable are often excluded from, or ignored in, decision-making processes. There are gaps between poor and better-off residents’ access to social, economic and political opportunities and in their ability to participate in and leverage benefits associated with urban living.

Developing solutions to urban challenges involves a number of interacting factors and actors, making desirable outcomes hard to achieve and predict. Maximising the potential of urban areas requires institutionalising mechanisms of coordination, planning and accountability among diverse stakeholders in a way that recognises the complexity of urban challenges. Key messages include the following:

  • Urban governance is often neither inclusive nor participatory. Governance frameworks need to encourage policy coordination at local and regional levels and include the voices and participation of the poor. Co-production of public goods has some potential for facilitating more participatory and inclusive urban governance. City-level political processes also provide a means for social groups to negotiate, debate and form coalitions of interest that, if supported, can promote developmental activities in the city.
  • Urbanisation in developing countries has involved the growth of informal settlements and informal economies. The importance of the informal sector to urban economies and the livelihoods of the poor is often poorly understood, and limited attention is given to working with the informal sector. Policies to address ‘informality’ need to involve partnerships among tiers of government, urban actors and the private sector to expand rather than undermine opportunities and livelihoods.
  • Urban authorities often fail to provide access to services for the poor. There is scope for improvement by facilitating collective action, creating incentives to boost resources for service provision and applying appropriate pricing and revenue models. Decentralised, community based and participatory approaches and processes for the design and implementation of urban programmes may also increase the potential for democracy, accountability and transparency and promote local involvement.
  • Urban conflict and violence are significant global phenomena, affecting national and metropolitan level economic development, and the livelihoods and well-being of the poor. Whilst cities are inherently sites of conflict, this is generally managed through a range of social, cultural and political mechanisms. When these break down, violence can ensue. Conflict can be resolved and violence mitigated when urban governance arrangements leverage community and city-level political processes to encourage groups to negotiate, debate and form coalitions of interest. Supporting these coalitions can help manage urban conflict, prevent its descent into violence whilst simultaneously promoting developmental activities.
  • Urban migration is a defining trend of the 21st century, though migrants are often overlooked in discourses on urbanisation and governance. Migration is seen as contributing to shortages of housing, infrastructure and services as well as causing tensions with host communities. Migration policies can be improved by paying attention to the nature of migration and the vulnerability of migrants and by facilitating their participation in civic and political life.
  • Urban areas are major contributors to and central in addressing climate change. Opportunities for addressing climate change are greatest in the rapidly urbanising areas of the global south where urban form and infrastructure are not locked-in. Policymakers need to better integrate international and national climate strategies with regional and local urban policy frameworks.

Whilst the above policy challenges present a unique set of issues, a number of cross-cutting themes emerge that need to underpin approaches to urban governance. Practitioners need to recognise the importance of local context (economic, political and social) including an understanding of formal and informal processes and structures. Central to developing solutions to complex challenges is sound political economy analysis that identifies impediments to action. Strategies are considered to work best, and do least harm, when the people designing them are thinking and working politically (TWP). TWP encourages partnerships between organisations that are capable of acting innovatively and flexibly to solve development problems. Prescriptive, one-size fits all strategies are likely to fail as they lack relevance to local contexts. Rather, policies that adopt an iterative and adaptive approach can respond proactively to changing local dynamics. Finally, listening to the voices of the poor and adopting innovative means of creating space for their participation is pivotal to ensuring that those who are disenfranchised and discriminated against are not further left behind. This can be challenging given limited resources and expertise amongst urban governments and the poor. Policies need to embed inclusion and participation in urban programming.