Putting the Public Back in Finance: Reclaiming Urban Infrastructure for the Common Good
Africa’s cities are at a turning point. Astrid Haas cautions: betting everything on private capital risks deepening, not solving, urban inequality.
In many of today’s more equitable and well-functioning cities, governments have historically taken the lead. They built homes, ran buses and trains, and made sure everyone had clean water. These services are designed to serve the collective interest. While imperfect, this model is broadly underpinned by a social and intergenerational contract: citizens pay taxes, and in return, elected governments make public spending decisions in pursuit of shared societal well-being. This is why cities like Vienna became known for their expansive social housing, Paris has maintained publicly managed water and sewerage systems, and London has built out extensive transport networks and civic infrastructure under public leadership.
However, the idea of government leading infrastructure delivery has steadily eroded. Starting in the 1970s and 1980s, the focus shifted from being treated as a shared societal asset to becoming a platform for private profit. This transformation has been fuelled by reforms, which promoted the adoption of private-sector principles in how governments planned, financed, and managed essential infrastructures and services.
In many developing countries, this shift followed a similar trajectory, propelled by structural adjustment policies imposed by international financial institutions. A stark example is public transportation: mandated policies on the removal of state subsidies led to the collapse of many nationalised bus companies in African cities. This shift not only dismantled public transport provision, paving the way for informal paratransit systems, but also resulted in mass layoffs, the erosion of labour rights, and the decline of transport unions, pushing many workers into precarious informal employment, conditions that remain in many African cities to this day.
Today, the push for private sector involvement is fuelled by constrained public budgets and a continued belief in the private sector’s superior efficiency. Investors and development partners often reinforce this agenda by prioritising “bankability” and “return on investment” as the main criteria for decision-making. Yet this risk-return focus rarely aligns with the realities of urban inequality or the infrastructure needs of the most vulnerable. Instead, it skews investment toward high-end, profit-driven projects that systematically exclude low-income communities.
The Price of Profit-Driven Urbanism
Nowhere is the impact of financialization more evident than in the housing market. Over recent decades, global capital — banks, pension funds, and insurance companies — have tightened their grip on land and property, treating real estate less as homes for people and more as a source of financial returns. Housing has been recast as an asset class, no longer primarily a place to live, but a vehicle for profit.
This trend is particularly visible in African cities. Here, in many major cities, speculative development is booming, even as affordable housing remains severely undersupplied and largely inaccessible to the majority. Rather than regulating this imbalance, governments have often enabled it, offering land, tax incentives, and supporting infrastructure to attract investors, who consistently fail to meet the housing needs of ordinary citizens.
At the extreme end of this spectrum is the phenomenon of private city-building. Across Africa, new “charter,” “smart,” and “new” cities are being developed under the leadership of private capital. Nigeria alone has five such projects underway, covering a combined area of 25 million square metres. These developments are frequently promoted as symbols of modernity and innovation. Yet they reveal a fundamental conceptual flaw: these cities are designed around market value rather than human need.
When Cities Become Investment Products, Not Homes
Take Diamniadio in Senegal, for example, a flagship of the former president’s 2035 Vision Plan. Though pitched as a “city of knowledge,” it is already priced beyond the reach of most Senegalese, making it unlikely to serve the population it claims to benefit.
Paradoxically, although these cities cater to elite markets, they are heavily subsidised by the public purse. Diamniadio’s projected price tag exceeds US$2 billion, mostly borne by the Senegalese government. Across the African continent, an estimated US$100 billion is being poured into similar projects, often backed by loans premised on future productivity gains that may never materialise.
As more private capital flows in, cities are being transformed. Urban land is no longer a place for people to live; it’s become, as former UN Special Rapporteur on the Right to Adequate Housing, Raquel Rolnik, aptly describes as a “playground for capital.” When infrastructure is treated purely as a financial product, city life starts to revolve around the expectations of investors. This shift undermines public authority, distorts planning priorities, and systematically excludes the majority from shaping or benefiting from urban development. Moreover, this model is fragile. It relies on continued investor confidence, macroeconomic stability, and political acquiescence. Ultimately, when projects stall or fail to generate expected returns, which they often do, it is the public that ends up paying the price.
Reframing the Role of Private Capital and Reclaiming Public Finance
The allure of private capital is powerful, particularly when public funds are tight. In the right context, private capital can and should support much-needed infrastructure investments, especially where clear revenue streams exist. However, it must not blind us to its limitations. Its role needs to be clearly defined, tightly regulated, and always under public oversight.
To do this, governments must reclaim their position as strategic planners and guardians of the public interest, ensuring that investment decisions are guided by inclusive urban strategies, not just the demands of investors. This calls for more than “blended finance” or “de-risking.” It’s about shifting power back to the public. Infrastructure is not merely a technical or financial matter; it is a political choice that shapes the cities we build and the futures we imagine. The decisions we make today and how we finance them will leave a lasting footprint for generations.
What we need is a new paradigm: one that restores the legitimacy and responsibility of the public sector through a renewed social contract, uses private capital where appropriate, and remains firmly focused on building cities that serve everyone, not just those who can afford to pay.
