UK aid helping cities grow sustainably but more support needed to tackle climate change threats 

23 Jul 2024

• UK aid for sustainable cities supports urban development around the world, ICAI review finds. 
• But watchdog calls for more focus on helping countries adapt to climate risks and protect nature. 
• Lack of coordination across Whitehall departments hinders the portfolio’s effectiveness.  

UK aid is helping developing countries to build sustainability into their city planning but more focus on adapting to climate change is needed, the aid watchdog reports today (Tuesday 23 July).  

The Independent Commission for Aid Impact (ICAI) found the UK is not doing enough to meet its international climate finance (ICF) ambition to help cities strengthen how they adjust to climate change threats, such as extreme weather, focusing more on the commitment to support emissions reduction.  

Nature-based solutions – working with nature to address environmental challenges – are considered key investments in helping developing countries adapt to climate change. However, the ICAI review of UK aid for sustainable cities found only isolated examples of UK urban development programmes using nature-based solutions.   

The watchdog noted that UK aid for sustainable cities gives insufficient attention to reducing poverty, and that nature-based solutions would often help the poor.   

ICAI also found that aid budget reductions, which began in 2020, contributed to thinly spread sustainable cities programming, while the merger between the Department for International Development (DFID) and Foreign, Commonwealth Office (FCO) led to fragmentation in the delivery of UK aid for sustainable cities. With multiple government departments coordinating separate parts of the portfolio, effectiveness has been hampered.  

In addition, the review raised questions about the need for the UK’s technical assistance grants, some of which support cities in middle-income countries, which may be able to finance the assistance themselves.   

The review also found that the UK is committed to incorporating citizen voices into its planning and engagement with local officials, noting that South African stakeholders consistently highlighted the positive and constructive engagement of the British High Commission in Pretoria. To ensure UK aid addresses the changing needs of the urban poor, UK officials must continue to engage with citizens and work with local and national leaders.  

In addition, ICAI noted that UK aid for sustainable cities is broadly aligned with the UN Sustainable Development Goal to make cities liveable, safe and sustainable.   

Sir Hugh Bayley, former ICAI Commissioner who led the review, said:   

“UK aid for sustainable cities is good at incorporating citizen voices into planning and using quality data to inform choices on infrastructural development.   

“But our report found that UK aid for urban development isn’t doing enough to help citizens to adjust to pressing climate threats in urban areas. This is a missed opportunity which would help UK aid to focus especially on the needs of the urban poor.”  

 The UK’s commitment to sustainable cities featured in the 2023 International Development White Paper and is a key pillar of the 2023 UK International Climate Finance Strategy. However, ICAI found that these commitments have been poorly communicated and lacked both clarity of purpose and appreciation of the UK’s potential strengths, such as mobilising private finance for city infrastructure investments.   

 Although ICAI found that UK sustainable cities programming has generally been relevant and effective, finding consistent evidence of impact was difficult, according to the report. Monitoring, evaluation, learning and data collection were inconsistent, and there were no performance indicators to evaluate progress of the portfolio, making it impossible to ensure value for money.   

 ICAI found some examples of the Foreign, Commonwealth and Development Office (FCDO) developing innovative ways of securing finance for environmental initiatives, which could be used more. In Kenya, FCDO played a key role in developing the country’s first green bond – a form of debt issued by private and public institutions to fund climate and environmental-related projects – which has supported the country’s access to finance for projects related to climate change.   

 The report also noted that most of the UK’s work on sustainable cities has made efforts to build gender, disability and social inclusion – key priorities in the 2023 White paper on international development – into its design at an early stage, with notable examples of FCDO’s urban planning in Indonesia. In Jakarta, a strong FCDO disability focus facilitated access to transport for people with disabilities and in Semarang, earthquake disaster preparation measures now include accessible escape routes from facilities for blind people.  

ICAI makes the following recommendations to improve UK aid to sustainable cities:  

Recommendation 1: The UK needs to conduct a portfolio-wide evaluation of its interventions to support sustainable cities to better understand what has been effective, both in central and country-based programming, and to assure value for money.   

Recommendation 2: Following the portfolio evaluation, FCDO should convene UK departments and external partners in a collective strategic planning process for sustainable cities work.    

Recommendation 3: British International Investment (BII) and the Private Infrastructure Development Group (PIDG) should develop a credible model for supporting affordable housing for people in the bottom 40% income category in any country, drawing on learning from other development finance institutions and the development capital portfolio.    

Recommendation 4: The UK should better align its technical assistance in urban settings with securing private and public finance.    

Recommendation 5: The UK should rebalance its investments in climate action in urban settings towards climate adaptation (relative to mitigation).     

Recommendation 6: The UK should support development and investment in urban nature-based solutions (NBS) as a key solution for climate adaptation and resilience in developing countries.    

Recommendation 7: The UK should develop mechanisms for seeking reimbursement, or co-finance in cash or kind, from the partner country for its technical advisory services for sustainable cities in upper- and lower-middle-income countries.