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DISCUSSION PAPER Public Disclosure Authorized Report No. UDD-97 URBAN AFRICA IN MACROECONOMIC AND MICROECONOMIC PERSPECTIVE: ISSUES AND OPTIONS by Charles M. Becker Public Disclosure Authorized (consultant) Christopher N. deBodisco and Andrew R. Morrison April 1986 Public Disclosure Authorized Water Supply and Urban Development Department Operations Policy Staff The World Bank Public Disclosure Authorized The views presented herein are those of the author(s), and they should not be interDreted as reflecting those of the World Bank. ACKNOWLEDGEMENTS This research has been funded by and conducted for the Water Supply and Urban Development (WUD) Department, The World Bank. The views expressed in this paper; however, are solely those of the authors, and may not reflect official World Bank policy. We are grateful to Ms. Anne Reuland and the social science reference staff of Vanderbilt University's Heard Library for exoeptional assistance. ABSTRACT This paper provides a survey of recent research on the economic problems associated with urbanization in Africa. The paper also analyzes African nations' current policies, and the impact of their macroeconomic policies on urban problems. The introductory chapter provides an analy- sis of the basic hypotheses underlying urban policy throughout Africa and eonsiders general research needs. Chapter 2 then surveys the theo- retical and empirical work on rural-urban migration, and provides a discussion of African governments' policy responses toward urban growth. The third chapter concentrates on growth of specific African cities, and discusses city systems and the extent of' primacy. Chapter 4 then examines residential and other locational patterns of individual African cities, and surveys public housing and squatter settlement policies. Chapter 5 considers urban labor markets, and in particular concentrates on the ability of the non-formal sector to provide growing employment opportunities. Finally, Chapter 6 analyzes the interactions between urban and macroeconomic policies. CONTENTS page Summary and Conclusions v Chapter 1 Issues in African Urban Development 1 1.1 Key Issues ......................................... 1 1.2 Common Urban Policy Tenets .......................... 5 1.3 Research Needs .................................... 15 1.4 An Overview of the Study ........................... 17 References......................................... 19 Chapter 2 African Rural-Urban Migration: Causes, Consequences and Policies 21 2.1 Introduction ...................................... 21 2.2 Causes of Rural-Urban Migration .................... 27 2.3 Consequences of Rural-Urban Migration ...............39 2.4 Policy Responses ....................................49 2.5 Concluding Remarks ..................................61 References ........................................ 63 Chapter 3 African City Systems 79 3.1 Introduction ...................................... 79 3.2 Determinants of African City Location .............. 82 3.3 Factors Contributing to City Growth ................ 84 3.4 Measures of Urban Concentration .................... 95 3.5 National Urban Policies ........................... 100 3.6 Concluding Comments ............................... 107 References ........................................ 109 Chapter 4 City Structure, Spatial Allocation and Public Policy 116 4.1 Introduction ....*..o .....*......... e ........... 117 4.2 Locational Patterns ................ o............... 118 4.3 Residential Patterns: Gradient Estimates ......... 122 4.4 Residential Patters: Ethnic and Class Divisions .... 124 4.5 Housing ............................................ 130 4.6 Government Policy and Future Needs.............e... 140 References.. .......... ..... .... 151 Chapter 5 Employment Growth and the Wage Structure in Urban Africa 161 5.1 Introduction .....................................e 161 5.2 The Formal Sector ................................. 164 5.3 The Urban Informal Sector ..........................175 5.4 Government Policy and Growth ................193 References ....................... ....... e.....199 Chapter 6 Development Policies from an Urban Perspective 207 6.1 The Role of the Urban Sector in the National Economy .......................... .207 6.2 Urban-Rural Economic Links ......................... 211 6.3 The Urban Biases of Government Policy.. ..... 214 6.4 Appropr:.ate Macro Policy I: "Balanced" Rural and Urban Development ............ 219 6.5 Appropriate Macro Policy II: Urban Surplus Generation .......................... 221 6.6 Appropriate Macro Policy III: Accomodating Rapid Urbanization .... ............. 224 6.7 Urban Policy in a Period of Structural Adjustment.............................. 226 References ........................ 229 Annex I: UN Estimates of African Cities' Population Over Time........................... ... 231 v SUMMARY AND CONCLUSIONS This monograph surveys and assesses recent research on the economic problems associated with urbaniza-tion in sub-Saharan Africa. It also analyzes African nations' current urban policies and the' impact of their macroeconomic policies on urban problems. While the paper concen- trates on presenting a critical survey of the literature, several evalua- tions of public policy are included as well. Finally, attention is given to high priority research areas. Chapter 1. Issues in African Urban Development This chapter focuses on the key urban problems facing African policymakers. Of paramount importance are the stunning growth rates of Africa's cities, particularly its largest ones. This rapid growth contrasts with poor employment growth performance in the urban formal sector. As a result, understanding the role and potential of the infor- mal sector assumes increasing importance. In view of many African nations' poor macroeconomic performances, designing urban sectoral policies that further economic growth also has become a critical issue. Finally, programs aimed at curtailing high urban infiastructural costs designing appropriate urban land use policies have been neglected. The chapter also identifies and discusses the appeal of four strong- ly held urban policy tenets. The first of these is that the rate of urban population is excessive. The unfortunate consequence of this belief is that many governments (not just in Africa) have not viewed urban growth as the endogenous reaction to economic conditions and public policies; instead, they have viewed urban growth as a disease itself, rather than as a symptom of imbalances elsewhere in the economy, and in some cases have attempted to control urbanization directly. Unfortunately, many of these controls may have resulted in direct welfare losses, as well as indirectly hampering GNP growth. A second, related belief is that city size distributions are too primate: that is, too large a proportion of the urban population lives in the largest cities. Again, we stress that size distributions are the endogenous outcome to a set of economic forces, and that efforts to control large cities are at most "second best" solutions to the underlying problems. A third common goal has been the desire to maintain standards of social service provision to the urban population. Unfortunately, this goal is both infeasible and inegalitarian. It also is likely to increase the rate of urbanization and, by lowering the rate of productive capital formation, reduce GNP growth rates. Finally, many African governments are indifferent toward their informal sectors, comprised of small-scale manufacturing and service activities. But, given the importance of this sector for employment growth, as well as its limited dependence on capital and imports, it undoubtedly deserves more formal incorporation into national plans and development strategies. vi The chapter concludes with a br;tef overview of major research needs. These needs are considerable, and include both formal modeling efforts of different typ-^: of African cities, and descriptive studies of existing patterns. Despite the research efforts surveyed in this monograph, many questions regarding basic economic characteristics of African cities remain. Finally, macro level analysis of the impact of government policy on urbanization also deserves attention, as do studies of appropriate infrastructural design. Chapter 2. African Rural-Urban Migration This chapter examines rural-urban m:1,ration, a phenomenon which accounts for over half of urban growth in some African countries. We argue that the migration level may not be socially efficient, as artificially maintained urban wages fail to reflect productivity differ- entials, because of the educational selectivity of the migration process, and as the result of externalities that accompany the migration process. The causes of rural-urban migration are examined in detail. Sociological explanations such as desire for freedom from the older generation, the weak social position of childless women in traditional cultures, and the prestige of living in a big city are presented, but the main thrust of the chapter is an examination of the economic causes of migra- tion. Both Lipton's urban bias thesis and Harris-Todaro's fixed urban wage model are scrutinized for their applicability to the African mi- lieu. Extensions to Harris-Todaro incorporating non-continuous job turnover (Blomqvist), heterogeneous migrants (Collier), and migration to obtain informal sector employment (Cole-Sanders) are detailed. We present Sabot's queueing. model to explain why the unskilled comprise may a smaller percentage