BY BEPHINE OGUTU
African cities are growing in size but experiencing stunted economic growth due to the disconnection to the world. In almost all of them, there has been a propensity towards the concentration of growing populations in moderately large cities. Within the developing world cities are the centers of growth and governance, as well as home to an increasing proportion of the national population.
Many countries in Sub-Saharan Africa have recently experienced accelerated urban expansion. According to a 2004 UN report on World Urbanization Prospects, in 1950 there were only 20 million people, or 10% to 15% of the total population, living in urban areas in Sub-Saharan Africa.
World Bank has found the number of people living in sub-Saharan African cities to be growing rapidly: An additional 187 million people are expected to live in urban areas by 2025, the equivalent of the entire population of Nigeria. Improving conditions for people and businesses in African cities by aggressively investing in infrastructure and reforming land markets is the key to accelerating economy.
“The report documents evidence about Africa’s small-scale fragmented form that is completely at odds with the broader thinking in development and experiences that is seen in other parts of the world, such as in East Asia or developed countries,” said Somik Lall, the urban economist at the World Bank and the report’s author.
“In African cities, land has developed as little clusters of fragments that are disconnected, which undermines not only the ability of cities to deliver on high-capacity transport and infrastructure, but undermines any potential agglomeration one may have,” he said.
“What Africa needs are more affordable, connected, and livable cities. Improving the economic and social dividends from urbanization will be critical as better developed cities could transform Africa’s economies” said Makhtar Diop, World Bank vice president for Africa.
African cities have been identified as some of the costliest among their peers in the world for both businesses and for households, making them unattractive for potential global investors. The latest World Bank report launched on February 9, 2017 says African cities are 29% more expensive than cities in countries at similar income levels. It said African households face higher costs relative to their per capita GDP than do households in other regions.
Although the capital investment shortfall that makes the African cities crowded appears across all building types, it is most severe in housing. In Nairobi, for instance, commercial and industrial structures explain 55% of the total value of building stock, even though these structures occupy just 4% of the city’s area. The residential development is urgently lacking.
The lack of affordable formal housing in Africa cities stems partly from the difficulty of adding new stock onto the old with the building now in use. In Nairobi, Informal building volume per unit of land is lower than formal development. As land prices decrease with distance to the center, the gains from conversion are larger closer to the central business district and usually exceed the cost of conversion. To convert Kibera slums, for example, it will take about 70% of Kenya’s GDP per capita. This is because the distance between the slums and the Nairobi’s CBD is short; therefore it will be expensive to convert.
The way African cities have been built and organized has led to people living in smaller, fragmented neighborhoods that lack good and affordable transportation to connect people to jobs, therefore limiting others to job opportunities and even prevent firms from reaping benefits. The lack of connections among neighborhoods means that African cities, compared with developed and developing cities elsewhere, show that people are disconnected with minimal interactions and within a specified area, population density varies widely. Cities in Africa are significantly more fragmented than those in Asia and Latin America, which is a major factor preventing urban areas from reaching their economic potential, the report finds.
The authors state that, “Without either high physical density or adequate connective infrastructure, an urban area falls short of its potential: it cannot offer firms the cost efficiencies and job matching advantages that open a city’s doors to regional and global trade”.
In Dar es Salaam, for example, 28% of residents live at least three to a room; in Abidjan, it is 50%. And in Lagos, Nigeria, two out of three people live in slums. Adding to this, city dwellers pay around 35% more for food in Africa than in low-income and middle-income countries elsewhere.
Overall, urban households pay 20% – 31% more for goods and services in African countries than in other developing countries at similar income levels. As the African cities attain urbanization, their share of manufacturing in GDP stays flat or is falling. The manufacturing share of the non-African economies rises; it only falls when urbanization increases and exceeds 60%.
The report says that urban workers in Africa are also forced to pay high commuting costs, or they cannot afford to commute by vehicle at all, and the informal minibus systems are far from cost efficient, leaving many to have to walk to work.
In Nairobi for instance, 41% of population walk to work. By walking one hour in the evening and an hour in the morning, people are only able to reach 11% of the jobs per knowledge and time hence the opportunity to find good and productive jobs are limited.
The need to walk to work also limits these residents’ access to jobs. In Nairobi the average journey to work time is one of the longest for 15 global cities studied (IBM 2011). Part of the reason is that walking accounts for large share of commuting. But if more city dwellers could afford transport by car or minibus, commutes would remain impractical for lack of roads. Without sufficient formal development, informal settlements that are relatively central and thus close to jobs, such as Kibera in Nairobi, and Tandale in Dar es Salaam, are constantly growing in population, the report says.
Eastern Africa has the largest share of households in overcrowded conditions, the smallest share of households with permanent floors and access to toilets, and the largest percentage of households with electricity connections.
African cities are allocating little land to roads, which has ranked it in the bottom 12 spots for road density including Kigali, Addis Ababa and Nairobi. They devote less than 16% of their land to roads; cities in developed countries usually allocate more than 20%. Kigali, Rwanda and Nairobi dedicate a large share of land in the city center to roads, but the share of built-up area falls steeply as the share of roads almost disappears. The deficiency of urban road infrastructure is made worse by its extreme concentration near the core of African cities, leaving outer areas disconnected.
The World Bank’s latest cities report should warn Kenyan policy makers after it valued Dar-es-Salaam’s real estate at Sh273 billion more than Nairobi’s. The report estimates the value of Dar-es-Salaam’s real estate at Sh1.2 trillion while Nairobi’s at Sh927 billion. Addis Ababa was third at Sh618 billion. It also cited low economic replacement values in Nairobi, Dar es Salaam and Addis Ababa as the reason the cities were ranked lower than cities with similar income levels. The report instructively says that small land portions and inadequate land reserve for future expansion has lowered the value of our cities.
It notes that the low economic value comes from the way land is organized in small fragments, which makes it very difficult for future infrastructure development. The planners do not definitely have future plans on mind. For cities to act as integrated labour markets and match, jobs seekers and employers need to make employment accessible. Nairobi is a city built for car owners, who can reach about 90% of jobs within an hour, but car use accounts for only 13% of trips for all purposes, 28 trips are made with matatus and 41% are made on foot. A central resident can access only 20% of all jobs within an hour using the matatu network. Heavy congestion, high rates of walking, informal collective transportation, and the spatial distribution of jobs and residents lead to low employment accessibility in Nairobi and the misallocation of labor.
Just look at the congestion that is prevalent in Nairobi and its outskirts, and now that some of the roads are under construction, it becomes worse during the peak hours. What is lacking is the economically dense concentration of capital and infrastructure investment that enables households to live decently and affordably near jobs. Given the expenditure pattern of urban households in Africa, higher prices of food deepen livability challenges for households and impose a severe constraint on the choices they have on where to live or work.
The report also observes that the need for higher wages for higher living costs makes businesses less productive and competitive, keeping them out of tradable sectors and as a result, African cities are avoided by potential regional and global investors and trading partners. Given these costly conditions, the opportunities for tremendous gains in efficiency and productivity can lead to African cities becoming a strong catalyser of economic development, the report further says.
It recommends that to free Africa’s cities from their low-development trap, Africa needs to be set on a path toward physical and economic density, connecting them for higher efficiency and boosting expectations for the future. “What cities do now will determine their shape and efficiency not just for years to come, but for decades or even centuries,” said Ede Ijjasz-Vasquez, senior director, World Bank’s Social, Urban, Rural and Resilience Global Practice.
Data from World Bank Enterprise Surveys indicates that urban wages in manufacturing are higher in African cities than in other cities at comparable levels of economic development. The average firms in Africa today hires about 20% fewer employees than equivalent firms elsewhere. When a city’s urban wage is higher than the international wage, (for tradables), it makes it harder for the city to break into global markets.
It further proposes that since Africa’s cities will experience population growth of an additional 170 people million in 2025, the continent has a critical role to play in countries’ economic growth and improving conditions for people and businesses in African cities by aggressively investing in infrastructure and reforming land markets.
The report, themed “Improving Conditions for People and Businesses in Africa’s Cities is Key to Growth” points out that Africa’s urban population will double over the next 25 years, reaching one billion people by 2040.
To create an international competitive tradable sector, African cities must cease to be crowded, disconnected, and costly, and instead become livable, connected and productive through formalizing land markets, clarification of property rights, and institution of effective urban planning. When the land markets and land use planning have been reformed, it will promote the most efficient uses of urban land, and to develop land at scale. Urban land is a vital economic asset, and asset transactions are viable only where purchasers can rely on enduring extra legal documentation of ownership. Efficient land markets will also increase economic efficiency and this will help tap the potential of rising land values to finance infrastructure and other public goods.
Cities must also strengthen their urban plans and land use regulations. This will support the effective management of urban development through foresighted planning, realistic regulation and predictable enforcement. Guidelines should be transparent to support consistent and enforceable development planning so that the city and country authorities can add urban planning capacity and make political decisions informed by technical evidence and assessments. African countries depend heavily on natural resource exports therefore tend to sprout urban economies dominated by non-tradable services. As growth in the natural resource sector raises factors prices, this sector crowds out others, notably manufacturing.
Based on a cross section of African and non-African economies, the comparison shows that Africa’s cities are indeed trapped in the production of non-tradables for local markets.
Making Africa’s cities well connected and economically dense will entail huge infrastructure investment. Such large investments, especially at scale, will require financing through new systems of revenue. Future investments should leverage the value of city assets, mainly land, to finance infrastructure and provide public goods and services. Land based infrastructure financing will bring the biggest payoff where cities are growing rapidly. Both efforts should aim at structural improvements in the allocation of city’s land, capital and structures. Their aim should be to achieve urban development at scale and for scale, while fostering economic specialization.
To grow economically as they are growing in size, Africa’s cities must open doors to the world. They need to specialize in manufacturing, along with other regionally and globally tradable goods and services. And to attract global investment in tradable production, cities must develop scale economies, which are associated with successful urban economic development in other regions. As long as African cities lack functioning land markets and regulations and early coordinated infrastructure investments, they will remain local cities, closed to regional and global markets, trapped into producing only locally traded goods and services, and limited in their economic growth.
