Growth, diversification and Africa’s cities

22nd April 2016 By: Terence Creamer - Creamer Media Editor

Growth, diversification  and Africa’s cities

Two recent reports leave little room for doubt about the importance of urbanisation across Africa, as well as the urgent need to improve the way cities are being planned and managed.

The World Bank’s latest Africa’s Pulse publication notes that 472-million Africans already live in urban areas and that this number will double over the next 25 years, with the largest cities growing as fast as 4% a year. Africa’s population currently stands at around 1.1-billion and is expected to rise to 2.8-billion by 2060.

The bank argues that urbanisation and well-managed cities could provide a “springboard for [economic] diversification” – an issue that has become increasingly urgent in light of the plunge in oil and commodity prices.

However, to realise such benefits, African cities will need to become less costly for firms, more appealing to investors and kinder to their residents. In other words, places that are more liveable, more connected and more affordable.

This vision, however, contrasts strongly with the prevailing reality. Most African cities are crowded (but not economically dense), disconnected and costly for households and firms.

To remedy the situation, the bank argues that policymakers will need to direct greater attention towards the deeper structural problems that misallocate land, fragment development and limit productivity.

“Local and national governments are called to reform land markets and urban regulations and coordinate early infrastructure investments. At the heart of these efforts is a key principle: common knowledge. Only with common knowledge can all parties anticipate the results of their actions and the likely returns on their investment.”

The bank believes that successful urbanisation will also support Africa’s agriculture and rural transformation by effectively absorbing the labour being released by these sectors and providing markets for agriculture produce. “If managed well, urbanisation will not be a subplot, but rather the main policy narrative for Africa’s development.”

The second report has been compiled by a South African think- tank – the Centre for Development and Enterprise (CDE) – as part of its Growth Agenda series.

The CDE’s report on cities notes that South Africa’s eight largest cities are already home to about 37% of citizens and account for 59% of economic activity. It, therefore, argues that the country’s development policy needs to more fully recognise that its cities are a source of strength and a comparative advantage and should be at the centre of South Africa’s growth strategy.

“The dynamism of urban economies is a relatively untapped asset, which, if properly developed, could change the trajectory of the country’s growth path,” the CDE argues.