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Urbanisation – A Global Challenge

Today, 55 percent of all people live in cities – more than ever before. By the middle of the century, an estimated 2.2 billion new city dwellers will be added. By then, around 70 percent of the world’s population will live in urban areas. The dynamic transformation to an increasingly urbanised world varies from region to region.

There are enormous opportunities in rapid urbanisation, whether it is resource consumption, climate change, poverty reduction, participation and social cohesion, digitalisation or economic advancement – almost all of humanity’s future issues are decided in cities. Due to their spatial and social density, changes can reach many people at the same time and thus have a significant impact. How we invest in urban infrastructure today will shape cities for decades to come. Therefore, cities must act now to make urbanisation sustainable, inclusive, and socially just. 

Considering the immense dynamics of urbanisation, there is an urgent need for action. The planning, building and investment decisions of the next ten years will cement urban structures and living conditions for the next two hundred years. Thus, cities are key to achieving the global climate and overall development goals. That is why the German Federal Ministry for Economic Cooperation and Development (BMZ) has made it a priority of the German development cooperation to make cities sustainable, climate-neutral, resilient, and liveable for all. 

CityTransitions – Transforming Cities for a Liveable Future for All

Against the backdrop of urban challenges, it becomes clear that the global sustainability and climate goals can only be achieved by  including cities. Sustainable urban development is an essential topic for the German Federal Ministry for Economic Cooperation and Development (BMZ). Our goal is to create a liveable future for all through equitable urban transformation. Through policy development, technical expertise, and funding, we support national governments and stakeholders, as well as city governments and other urban actors, in shaping the sustainable cities of tomorrow. We are committed to reach our goal. BMZ defines “Sustainable Urban Development” as one of three areas of intervention in its Core Area Strategy “Responsibility for Our Planet – Climate and Energy, Just Transition” and clarifies its approaches in the recently published Position Paper on “Sustainable Urban Development”.

To achieve our vision, we  particularly commit to the necessary framework conditions for good governance, integrated planning approaches and access to financing. The sectors we focus on are housing and construction, mobility, water, and waste management (SDGs 6, 9, 11, 12). Approaches to achieve this are infrastructure and basic services, the global mobility transition, circular economy, the use of digitalisation and innovations. Furthermore, n in public spaces as a building block of integrated planning and climate adaptation, as well as energy as another core element of basic services (SDGs 1, 7 and 11) are also considered  important sectors. Gender equality (SDG 5), the reduction of inequalities (SDG 10) and the principle of “leave no one behind” are overarching  principles that are integrated as cross-cutting themes for our work.

We support cities in the just transition to climate neutrality and nature positivity (SDG 13). This can be managed in urban sectors through targeted governance, planning and financing mechanisms that align the necessary climate-related measures with the social and economic needs of society. U rban planning, zoning, infrastructure, and basic services can reduce social disparities and inequalities (SDG 10) and mitigate their impacts. New jobs and the promotion of local circular value chains can create perspectives for city dwellers in the post-fossil age (SDG 8 and SDG 12). We support cities in thinking about the social, ecological, and economic dimensions of sustainable development across sectors and in implementing the 2030 Agenda in an integrated way.

Urbanisation, poverty and inequality

In fast-growing cities, especially with an increase in unplanned informal settlements, the expansion of public services such as energy and water supply, and sewage and waste disposal cannot usually keep pace with the growing number of people who need to be served. One in seven people in the world today, more than one billion people, live in informal urban settlements with insecure tenure, leading to a growing number of unserved urban dwellers and increasing pollution around cities. This means precarious living conditions and employment (e.g., in the waste sector) and often a lack of social and economic participation that particularly affect women and girls.  

More than two billion people in cities currently live below the poverty line. In many cities around the world, inequality and economic instability fuel social conflict and crime. The Corona pandemic has further exacerbated poverty and social inequality, especially in cities.




The urbanisation process offers opportunities to make cities more socially and sustainably oriented. A “Just Transition” in the cities, thus, not only succeeds by making the decarbonisation of their economy socially acceptable, but also combines it with the reduction of inequalities. To achieve that, cities must offer secure basic services, good employment, and liveable housing, especially for the most vulnerable groups. By being close to the population, local governments and administrations can reach vulnerable groups directly through services of general interest and social programmes and shape the transformation in a locally equitable way so that no one is left behind. Sustainable construction and mobility, waste and circular economy, renewable and demand-driven energy supply, development and maintenance of nature-based solutions, green-blue and green infrastructure, and agro-ecological urban agriculture create new, secure, and sustainable employment opportunities.

Cities in times of the climate crisis

Cities contribute massively to climate change. Cities also produce 80 percent of global CO2 emissions and it is where approximately three quarters of all natural resources are consumed. In this respect, cities hold enormous climate and environmental protection potential, especially in the areas of basic supply, mobility, construction, water, and waste management. 

At the same time, 70 percent of urban areas are already affected or threatened by the impacts of climate change, such as rising sea levels, increased flooding, and heat events. Two thirds of cities are exposed to coasts or rivers and are therefore endangered with rising sea levels or increasing heavy precipitation. Global temperature rise and conventional planning and building practices are leading to urban heat islands that threaten health and well-being, especially of the vulnerable urban population. Typical urban characteristics such as high population and building density, land sealing and lack of green spaces make cities vulnerable to external shocks such as floods, landslides, and disease outbreaks. The consequences of climate change also make it more difficult to provide sufficient clean drinking water and sustainable sanitation. In this context, cities must be considered together with their catchment areas, as their resilience is also strongly dependent on the surrounding area. Residents of informal settlements and other vulnerable groups are disproportionately more affected by the impacts of climate change, as they have fewer social safety nets and reserves and live in more exposed neighbourhoods with poorer infrastructure. Increasing natural disasters worldwide therefore underline the need for resilient urban development.

Inadequate national frameworks and local capacities

Making cities sustainable, climate-neutral, resilient, inclusive, and liveable requires supportive framework conditions at all levels of government as well as local know-how. In many cities and municipalities, however, the conditions are insufficient. Missing or weak national urban development policies do not provide an adequate framework and sectoral policies alone often fall short. Frequently, decentralisation is not accompanied by the transfer of responsibility and resources to city administrations. Therefore, cities often lack adequate financial resources to fulfil their mandates, while municipalities often lack efficient financial management as well as human and organisational administrative capacities.  

The latter are growing at a much slower rate than the urban population. Municipal decision-making processes often lack transparency and sufficient participation of the population. Women, people living in poverty and other structurally disadvantaged persons and groups are significantly underrepresented in urban and transport planning. As a result, many cities grow in an uncontrolled manner and do not develop in line with the needs of their inhabitants. 

The urban financing gap

Rapid urbanisation is accompanied by enormous financing needs, with 70 percent of the world’s infrastructure investment needs being in cities. However, investments fall short of what is required by about USD 1 trillion annually. Additionally, only a fraction of the investments is used in developing countries in sub-Saharan Africa and South Asia. Thus, the regions where the greatest urban growth is taking place receive the least investment. Weak capacity and lack of resources in city administrations mean that infrastructure investments are not prepared in sufficient numbers and with the necessary quality and sustainability.  


Robust finances and access to reliable sources of funding are the foundation for sustainable urban development. Balanced financing must provide cities with the leeway to make investments that enable adequate basic services for residents, reduce inequalities and take climate and disaster risks into account. This is the only way to save costs in the long term and to adequately respond to crises and external shocks, such as the COVID 19 pandemic, and to promote just transition.