From Oil to Cities: Nigeria's Next Transformation
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DIRECTIONS IN DEVELOPMENT Countries and Regions From Oil to Cities Nigeria’s Next Transformation From Oil to Cities DIRECTIONS IN DEVELOPMENT Countries and Regions From Oil to Cities Nigeria’s Next Transformation © 2016 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 19 18 17 16 This work is a product of the staff of The World Bank with external contributions. The findings, interpreta- tions, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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From Oil to Cities • http://dx.doi.org/10.1596/978-1-4648-0792-3 Contents Preface xi Acknowledgments xiii Abbreviations xv Overview Transitioning to a New Urban-Based Model of Economic Growth 1 Limited Employment Creation and Poverty Reduction Characterize Nigeria’s Urbanization 5 Diagnosing Nigeria’s Urban Challenges: Institutions, Infrastructure, and Interventions 31 The Way Forward: Start with Institutions 49 Annex: Matrix of Stakeholders and Recommendations 51 Notes 53 References 54 Chapter 1 Urbanization in Nigeria 59 Introduction 59 Rapid Urbanization on a Massive Scale 59 The Nigerian Urban System 64 Physical Development and Spatial Expansion 67 Urban Poverty and Living Conditions 71 Notes 82 References 83 Chapter 2 Nigeria’s Spatial Economy 87 Introduction 87 Growth and Employment in the National Economy 87 Growth and Employment in Regional and Urban Economies 97 The Urban Informal Economy 100 The Urban Business Environment 106 Trade, Connectivity, and Regional Development 109 Notes 120 References 121 From Oil to Cities • http://dx.doi.org/10.1596/978-1-4648-0792-3 v vi Contents Chapter 3 Land, Urban Planning, and Housing 125 Land Ownership and Land Values 125 The Challenges of Land Tenure 128 Land Use and Urban Planning 134 Improving Urban Land Management—Recognizing the Value of Formal and Informal Systems 136 Helping to Establish an Urban Planning System that Works 138 Housing and Affordability 139 Notes 152 References 154 Chapter 4 Financing Nigeria’s Cities 157 Introduction 157 State and Local Government in Nigeria 158 Financing Nigeria’s Urban Development 161 Expenditure 166 Subnational Revenues 178 Policy Actions and Institutional Strengthening 195 Notes 204 References 206 Boxes O.1 Kano: Northern Commercial Capital 23 1.1 A Brief History of Urbanization in Nigeria 60 1.2 Key Terms 62 1.3 The Impact of Conflict on Urbanization 63 1.4 The Relationship between Income and Land Consumption per Capita 69 2.1 Youth Unemployment in Nigeria 92 2.2 Key Findings of the Kaduna Freight Survey 113 2.3 The Decline of Kano—The Industrial Capital of Northern Nigeria 118 3.1 Intermediaries and the Cost of Low Information on Land Prices in Ota 132 3.2 The New Urban Development Policy 136 3.3 Informality and Incremental Construction: The Case of Kaduna 145 4.1 Urban Transport and Water Supply: Investment Needs and Costs 162 4.2 Investing in the Urban Water Supply Sector: Institutional Reforms and Capacity Development Needs 163 4.3 Subnational Road Maintenance in Nigeria 164 4.4 The Allocation of Functional Responsibilities in the Roads Sector 171 From Oil to Cities • http://dx.doi.org/10.1596/978-1-4648-0792-3 Contents vii 4.5 Functional and Expenditure Assignments in the Health Sector 171 4.6 Federal, State, and Local Government Assignments in Kaduna’s Education System 172 4.7 State Power and Local “Conquest” in Nigeria since 1999 173 4.8 Subnational Intergovernmental Relations 174 4.9 Solid Waste Management in Nigerian Cities 175 4.10 Health Sector Spending at State and Local Government Levels 176 4.11 The Quality of State Government Public Expenditure Management 177 4.12 Edo State: Where There’s a Will, There’s a Way 190 4.13 The Politics of Metropolitan Governance 196 4.14 Lagos Metropolitan Area Transport Authority 198 4.15 Enugu Capital Territory Development Authority 199 4.16 Subnational Public Financial, Expenditure, and Investment Management: Selected Quotes from Recent World Bank Public Expenditure Management and Financial Management Reviews in 12 States 202 4.17 Nigeria Infrastructure Advisory Facility 203 Figures O.1 Nigeria’s Stunted Manufacturing Development Compared to Countries with Similar Urbanization 2 O.2 Urbanization Has Not Led to Structural Transformation and Poverty Reduction in Nigeria 4 O.3 Urbanization Rate versus GDP per Capita, Global Benchmarks 6 O.4 Income at Which a Country Became 46 Percent Urban 6 O.5 Changes in Unemployment versus Economic Growth 9 O.6 Nigeria’s Most Pressing Problems 10 O.7 Real GDP by Sector, 1990–2010 11 O.8 Nigerian Job Concentration in Agriculture, Despite Urbanization 12 O.9 Wages Vary by Sector, Median Wage per Month, US$, 2013 13 O.10 Share of Informal Workers by Category 14 O.11 Share of Firms Identifying an Issue as a “Major” or “Severe” Obstacle 16 O.12 Annual Cost of Congestion as a Share of Regional GDP 17 O.13 Roughly 50 Percent of Firms Identify Local Markets (Locality, Town, or State) as the Main Sales Channel 20 O.14 Number of Roadblocks per 100 Kilometers (2011) 22 BO.1.1 Factors Affecting Business in Kano 24 O.15 Share of Nigeria’s Nonvulnerable and Middle-Class Populations 26 O.16 Household Public Transport Expenditure by Household Income, Three Nigerian Agglomerations 29 From Oil to Cities • http://dx.doi.org/10.1596/978-1-4648-0792-3 viii Contents O.17 Average Trip Length for Passengers on Public Transport, Selected Cities across the World (Kilometers) 30 O.18 Density of Nigerian Cities Relative to Other African and World Averages 35 O.19 Infrastructure-to-Population Ratio, by City Size and Income Group 35 O.20 Tax Collection as a Share of GDP 40 1.1 Urban Population as a Share of the Nigerian Total 61 1.2 Nigeria’s Urban Size Distribution Conforms to International Standards 66 1.3 Nigerian City Density Relative to Other African Cities and to World Averages 68 B1.4.1 Density Change as a Function of Initial Density and Income Change in a Subsample of 20 Cities, 1990–2000 69 1.4 Distance from Poverty Line 75 1.5 Access to Improved Water Source across Geopolitical Zones in Nigeria 78 1.6 Household Public Transport Expenditure by Household Income, Three Nigerian Agglomerations 80 1.7 Average Trip Length for Passengers on Public Transport, Selected Cities across the World 80 1.8 Car Ownership as a Function of Gross National Income 81 2.1 Urbanization, Structural Transformation, and Poverty Reduction 88 2.2 Real GDP by Sector, 1990–2010 88 2.3 Sectoral