Standard Bank analyst Simon Freemantle recently produced a series of five research papers on the trends powering Africa’s economic growth. During the course of the week, How we made it in Africa will examine each of these five trends in more detail. In our second article, we look at how urbanisation is transforming the continent.
“Enticed by the promise of economic prosperity, millions of Africans are converging on the continent’s ballooning urban nodes.”
So says Standard Bank analyst Simon Freemantle in a recent research report on urbanisation in the continent.
It is estimated that around 40% of Africans currently live in urban areas, making Africa more urbanised than India, and slightly less urbanised than China.
Freemantle says that “2030 will be the tipping point whereby more Africans will reside in urban than rural areas for the first time in the continent’s history”. By 2050 it is expected that more than 60% of Africans will be urbanised.
It is, however, important to note that a large percentage of urban population growth is through a natural increase of people already living in cities, rather than rural-urban migration. Freemantle says that “in the initial phase of particularly accelerated urban growth that the continent is currently undergoing, rural-urban migration is likely to account for a larger share of the growth of the continent’s cities than natural increase”.
“The scale of expansion in certain more populous nations is leading to the growth, or emergence, of so-called African ‘mega-cities’, large urban commercial centres such as Lagos, Cairo and Kinshasa, each with populations of over 10 million, and growing rapidly,” notes Freemantle.
It is expected that Kinshasa will be Africa’s fastest growing city in the next decade, adding a further 4 million inhabitants, amounting to a 50% increase from its current estimated population of almost 9 million. Other rapidly growing urban centres are Lagos and Luanda.
According to the report, Dar es Salaam, Cairo, Ouagadougou, Nairobi, Abidjan, Addis Ababa and Kano will all see their populations swell by more than 1 million people within the next decade.
Although Africa’s mega-cities are growing, the greatest increase in urbanisation is taking place in the continent’s smaller cities and towns. Freemantle says that between 1990 and 2006, Nakuru in Kenya and Dire Dawa in Ethiopia grew at average annual rates of 16.6% and 7.8% respectively. In Nigeria, for example, 34% of urban residents live in the country’s 11 large cities, meaning that over 50 million people live in smaller and secondary urban areas.
Why urbanisation is important for the economy
According to Freemantle, there is a mutually enforcing relationship between economic growth and urbanisation. “While, for the most, urbanisation supports socio-economic development, it is also true that economic growth inspires more rapid rural-urban migration.”
Coupled with economic growth, urbanisation is able to have the following economic benefits:
Productivity: Urban-based businesses are generally more productive than their rural equivalents. “Elevated accessibility to large and relatively diversified pools of labour . . . positively influences productivity. Meanwhile, a broader local market enables easier access to the benefits of scale in production, facilitates enhanced access to suppliers and specialised services, and reduces transaction costs. Urban employees also tend to earn significantly higher wages than rural workers, enabling a greater swelling of the consumer base,” says the report.
Infrastructure: “Given the immense challenges posed by inadequate infrastructure in Africa, urban conglomerations allow for greater and more immediate benefit for public spending on key infrastructure projects supporting economic growth. As a result, urban inhabitants have greater access to basic infrastructure services, providing profound support to relevant commercial aspirations,” explains Freemantle. “Moreover, with high user volumes, infrastructure projects in large cities become more economically viable, and are thus more likely to be able to attract private funding.”
Link between urban and rural prosperity: Urban areas are often the largest markets for agricultural produce, generating income that flows back to the rural areas. Many city dwellers also continue to financially support their rural families.
Civil society: Freemantle notes that a concentration of people in urban areas supports the development of viable civil societies, often allowing for necessary political and social change. “Recent protests in Cairo and Tunis, for instance, were more pointed, attracted more attention, and ultimately exerted greater influence than more dispersed rural dissension.”
Although urbanisation holds clear economic advantages, the current pace of change on the continent is putting significant pressure on existing infrastructure. Africa’s mushrooming cities are pushing more people into informal settlements, where the living conditions are often much worse than in rural areas. Freemantle says that governments need to address these challenges in order to experience the full benefits of urbanisation.