Africa cities

Improving conditions for people and businesses in African cities is the key to growth

WASHINGTON, February 9, 2017“The population of African cities is growing – adding the size of another Nigeria to cities by 2025 – and therefore have a critical role to play in the economic growth of their countries, according to a new World Bank report released today” hui. Improving conditions for people and businesses in African cities by aggressively investing in infrastructure and reforming land markets is key to accelerating economic growth, creating jobs and improving the competitiveness of cities.

The report, African cities: opening up to the world, notes that in order to grow economically as they grow, African cities must open their doors and connect to the world. As cities grow, an additional 187 million people will be added to urban areas by 2025. In fact, Africa’s urban population will double over the next 25 years, reaching 1 billion people by 2040. .

“What Africa needs are more affordable, connected and livable cities”, noted Makhtar Diop, World Bank Vice President for Africa. “Improving the economic and social dividends of urbanization will be essential, as better developed cities could transform African economies. “

The report notes that Africa is urbanizing at lower incomes than other developing regions with similar levels of urbanization. In 1968, when the countries of the Middle East and North Africa region became 40 percent urban, their GDP per capita was $ 1,800 (constant 2005 dollars). And in 1994, when the countries of the East Asia and Pacific region crossed the same threshold, their GDP per capita was $ 3,600. In contrast, Africa, with 40% urbanization, today has a per capita GDP of barely $ 1,000. This means that every dollar of public investment in cities must be made as efficiently as possible and make the most of other sources of funding – from the private sector, international partners and citizens.

Rapid low-income urbanization means that capital investment in African cities has remained relatively low in the region over the past four decades – at around 20% of GDP. In contrast, the urbanizing countries of East Asia – China, Japan and the Republic of Korea – have intensified their capital investments during their periods of rapid urbanization.

In the absence of capital investment, the report stresses that investments in infrastructure, industrial and commercial structures in African cities have not kept pace with population concentration, nor have they invested in formal affordable housing. The potential for coordinated investments in infrastructure, residential and commercial structures is great, which will improve agglomeration economies and connect people to jobs.

The report explains that due to this lack of connection, , leaving cities “out of service and closed for business”. African cities are 29% more expensive than cities in countries with similar income levels. African households face higher costs relative to their GDP per capita than households in other regions – largely due to housing, which costs them 55% more than in other regions. In Dar es Salaam, for example, 28 percent of residents live at least three to a room; in Abidjan, 50 percent. And in Lagos, Nigeria, two in three people live in slums.

In addition, city dwellers pay about 35 percent more for food in Africa than in other low- and middle-income countries. Overall, urban households pay 20 to 31 percent more for goods and services in African countries than in other developing countries at similar income levels.

In addition, urban workers in Africa are also forced to pay high travel costs, or they cannot afford to travel by vehicle at all, and informal minibus systems are far from cost effective, forcing many to walk to work. The need to walk to work limits these residents’ access to employment. Without sufficient formal development, informal settlements that are relatively central and therefore close to jobs – such as Kibera in Nairobi and Tandale in Dar es Salaam – continue to grow in population.

The need for higher wages to pay for higher living costs makes companies less productive and less competitive, keeping them out of commercial sectors. As a result, African cities are shunned by potential regional and global investors and trading partners.

Given these costly conditions, the opportunities for considerable efficiency and productivity gains can lead African cities to become a powerful catalyst for economic development.

According to the report, the key to freeing African cities from their low development trap is to put them on the path to physical and economic density, connecting them for greater efficiency and boosting expectations for the future:

  • The first priority is to formalize land markets, clarify property rights and institute effective urban planning which allows the land to be grouped together.
  • The second priority is to make early and coordinated infrastructure investments that allow interconnections between housing, infrastructure, commercial and industrial development.

“What cities do now will determine their form and effectiveness not only for years to come, but for decades, if not centuries.” stress Ede Ijjasz-Vasquez, Senior Director of Global Social, Urban, Rural and Resilience Practice at the World Bank. “From a political point of view, the answer is to tackle the structural problems that affect African cities. Africa needs to strengthen the institutions that govern land markets and coordinate urban and infrastructure planning. Fragmented physical development – cities in Africa are 20% more fragmented than those in Asia and Latin America – limits productivity and livability.

Somik Lall, Chief Urban Economist at the World Bank and author of the report, added that, “From an investment perspective, African leaders and policymakers need to focus on early and coordinated infrastructure investments. Without it, they will remain local cities, closed to regional and global markets, trapped in the production of goods and services only marketed locally, and limited in their economic expansion. African cities must create an internationally competitive business sector in order to remain open for business. For this to happen, city leaders urgently need a strong new urban development pathway for Africa. “

the African cities report and its underlying research was supported by the UK Department for International Development (DFID).