This note, while bearing in mind that decentralisation arrangements differ across countries, starts from a structuring hypothesis: a local authority that borrows to invest in the conditions of its economic attractiveness creates the conditions for a return of wealth to its own coffers, and indirectly to those of the state. This is not a speculative hypothesis. It is the logic of territorial public investment, documented in several African contexts, which deserves to be formalised and promoted as a model of local financial governance.

The causal chain is as follows: a well-targeted loan finances infrastructure and attractiveness mechanisms, which draw in businesses and stimulate the creation of local activities, which absorb available young labour, which produces taxable wealth, which feeds local and national tax revenues, which make it possible to repay the debt without additional pressure on the taxpayer. Each link in this chain deserves examination.

The first error of local governance is treating borrowing as an isolated financial operation, disconnected from a territorial development vision. A loan without a strategy is nothing more than a deferred problem. A loan anchored in a coherent territorial vision is, by contrast, an accelerator of development.

This distinction is fundamental. It implies that the decision to borrow cannot be made before providing clear answers to several questions: what are the economic potentialities of the territory: its natural resources, cultural heritage, geographical position, artisanal or agricultural value chains? Which investments, if carried out, would make these potentialities exploitable and visible? Who are the economic actors likely to be attracted to a territory thus equipped? And what fiscal return, over what timeframe, can reasonably be expected from this investment? Structuring investments whether in infrastructure, equipment or reception facilities require planning horizons compatible with territorial transformation cycles. The best-performing territories in terms of attractiveness combine an excellent understanding of present dynamics with the capacity to project themselves into desirable futures. A local authority that borrows without this prior understanding of its territory takes an uncontrolled financial risk. One that borrows on the basis of a rigorous diagnosis of its assets and gaps takes a calculated and justifiable one. Territorial economic intelligence: seeing before acting The notion of territorial economic intelligence refers to the set of mechanisms enabling a local authority to collect, analyse and mobilise relevant economic information about its territory in order to guide its investment and promotion decisions. It is not reserved for large metropolitan areas. It applies, at scales and with means adapted accordingly, to any territorial entity that intends to govern its development proactively rather than reactively. In practice, such a mechanism comprises at minimum: a systematic inventory of local resources and potentialities agricultural land, artisanal mineral resources, intangible heritage, position on regional commercial axes; monitoring of the needs of businesses and investors likely to establish themselves there; an analysis of economic flows entering and leaving the territory; and tracking of local fiscal indicators to assess in real time the impact of investment decisions on revenues. Territorial marketing cannot be dissociated from rigorous economic considerations. The optimal allocation of financial and human resources, the precise evaluation of returns on investment and the measurement of economic performance are unavoidable imperatives for any attractiveness strategy, and the professionalisation of financial management practices represents a major challenge for territorial actors. It is on the basis of this economic intelligence that the local authority can, with full knowledge of the facts, decide to borrow to finance one type of equipment rather than another, one development rather than one infrastructure, by anticipating its effect on the local economic ecosystem. Borrowing thus becomes a tool of local economic policy rather than a simple financing mechanism.

Territorial marketing: giving the local authority an identity that attracts

A local authority cannot attract businesses, investors or talent if it is not visible, legible and desirable. This is the purpose of territorial marketing not institutional advertising in the ordinary sense, but the construction of a strong, coherent economic and cultural identity projected outward.

This identity rests on several pillars. The first is the valorisation of endogenous potentialities: a local authority that possesses a distinctive agricultural value chain, a recognised artisanal know-how, a remarkable natural or cultural heritage must learn to transform these assets into economic arguments. The woven fabric of northern Togo and Benin, the livestock markets of the Sahel, the river ports of Central Africa’s forest regions are all potentialities that, well narrated and supported by appropriate investments, can form the foundation of lasting territorial attractiveness.

The second pillar is the construction of a business reception offer: developed local economic zones, single-window business registration services, access to basic utilities water, electricity, internet and documented land availability. Implementing reforms aimed at improving the local business climate strengthens territorial attractiveness for both foreign and domestic investment. At the local level, these reforms depend directly on the capacity of the local authority to finance reception infrastructure which brings us back precisely to the question of productive borrowing.

The third pillar is the coherence between the projected image and the lived reality. Territorial marketing is part of a strategic logic aimed at mobilising opinion relays to strengthen the visibility and image of the territory, but this approach must be grounded in authentic local economic, cultural and institutional characteristics in order to produce a lasting attractiveness effect. A local authority that presents itself as a pole of economic excellence without the corresponding infrastructure and services rapidly loses all credibility. Investment financed by debt must therefore precede or accompany marketing, not follow it.

Youth employability: the human dividend of local investment

Africa stands at a pivotal moment: between 2025 and 2050, the continent will experience one of the fastest expansions of its working-age population in contemporary history, with a total population growing from approximately 1.4 billion today to 2.5 billion by mid-century. At the heart of this dynamic are some 830 million young people aged 15 to 35 an unprecedented concentration of potential talent. This demographic reality constitutes, for local authorities, both a challenge and a resource. Africa’s private sector has remained broadly small in scale, informal and weakly industrialised, creating only around 3 million formal jobs per year for more than 12 million young people entering the labour market annually since 2015. The gap between labour supply and demand plays out first at the local level and it is therefore at that same level that concrete responses can be built.

Smart local public investment creates employment at several levels. Directly, during the construction phase: building infrastructure, rehabilitating markets, developing activity zones. Indirectly, through the economic activities it makes possible: businesses attracted by a well-equipped territory, local value chains valorised by better market access, business services developed around new establishments.

The African Development Bank supports programmes targeting entrepreneurship and innovation in digital and creative industries to create jobs, particularly for young people, and aims to attract significant private investment to multiply the effect of these initial public financing flows. This model of public financing as a trigger for private investment and job creation is precisely what productive local debt seeks to replicate at the territorial scale. A local authority that invests in an artisanal zone, the rehabilitation of a regional market or a local digital hub is not merely financing infrastructure: it is creating the conditions for economic integration for its youth, reducing migratory pressures towards urban centres and contributing to the social stability of its territory.

Monetising potentialities: the fiscal return effect

This is where the logic of productive debt completes its loop. A territory that attracts businesses and generates economic activity produces additional tax revenues business licences, taxes on commercial activities, user fees for public facilities, property taxes on new establishments. These revenues feed local budgets and, through upward redistribution to the national level via fiscal allocation mechanisms, contribute to the public finances of the state.

A positive dynamic of local tax revenues makes it possible to build the guarantees necessary for mobilising additional funds, and local taxation exercised within a stable framework plays a corrective role in redistributing income from wealth and economic activity. This virtuous circle investment, attractiveness, activity, revenues, reinvestment is not automatic. It requires rigorous management, a coherent strategy and transparent governance. But it is achievable, and several African experiences attest to this.

The challenge is precisely to avoid what might be called the fiscal predation logic: raising existing taxes on already-present taxpayers to repay contracted loans. This logic is both economically counterproductive it discourages activity and investment and politically unsustainable. The real answer to local debt repayment is not to squeeze the existing taxpayer, but to broaden the tax base by creating the conditions for the emergence of new taxpayers businesses, formalised activities, investors who did not exist before the investment.

Attracting and creating: two sides of the same strategy

A complete territorial strategy is not limited to attracting external businesses. It combines two complementary logics: attracting existing economic actors to the territory, and creating new local businesses from within the territory itself.

Attraction requires a documented, visible and competitive reception offer. It involves actively promoting local potentialities to chambers of commerce, national and regional investment agencies, and diaspora networks capable of mobilising capital towards the territory of origin. It also requires that the local authority be capable of responding rapidly to enquiries from potential investors which points to the necessity of an operational economic intelligence mechanism.

Creating local businesses requires territorial entrepreneurship support mechanisms: access to premises, technical assistance, networking with commercial and financial partners. Local authorities that have succeeded in developing a local entrepreneurial dynamic have generally combined public investment in reception infrastructure with support mechanisms for local project holders. Approaches rooted in local realities such as the Igbo apprenticeship model in Nigeria, which allows young people to acquire practical and commercial skills from experienced entrepreneurs through a structured mentoring system show that the local economy possesses endogenous resources that public policies can valorise without replacing.

The combination of both logics attraction and creation multiplies the effects of the initial investment and accelerates the expected fiscal return.

Debt management in the service of local economic development is not a magic formula. It is a demanding bet on the capacity of the local authority to govern itself with intelligence and rigour. It requires locally elected officials who think in terms of territorial strategy rather than short-term expenditure, technicians capable of building and tracking an investment project over several years, and informed citizens who understand the logic of productive borrowing.

This bet is justified by the demographic and economic reality of sub-Saharan Africa. A continent that sees 12 million young people enter the labour market every year cannot wait for the central state to find solutions for each of them. The local authority is the first space where labour demand meets economic supply. It is therefore also the first space where public investment can produce a concrete and rapid human dividend. Borrow to equip, equip to attract, attract to create, create to employ, employ to produce, produce to tax, tax to repay and reinvest: this is the chain that productive local debt can activate. It does not fall into place spontaneously. It demands method, political courage and time. But it offers, in the end, what no other option guarantees: territorial development that finances itself through its own success, without unduly burdening those who live within it.