WORKING PAPER NO. 7 Africa’s Urbanization: Challenges and Opportunities Maria E. Freire, Somik Lall, and Danny Leipziger ȱ WORKINGȱPAPERȱNO.ȱ7 Africa’sȱUrbanization:ȱ Challengesȱandȱ Opportunitiesȱ MariaȱE.ȱFreire,ȱSomikȱLall,ȱȱ andȱDannyȱLeipzigerȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ©ȱ2014ȱTheȱGrowthȱDialogueȱ 2201ȱGȱStreetȱNWȱ Washington,ȱDCȱ20052ȱ Telephone:ȱ(202)ȱ994Ȭ8122ȱ Internet:ȱwww.growthdialogue.orgȱ EȬmail:ȱȱ[email protected]ȱ ȱ Allȱrightsȱreservedȱ ȱ 1ȱ2ȱ3ȱ4ȱ 15ȱ14ȱ13ȱ12ȱȱ ȱ TheȱGrowthȱDialogueȱisȱsponsoredȱbyȱtheȱfollowingȱorganizations:ȱȱ ȱ GovernmentȱofȱCanadaȱ UKȱDepartmentȱforȱInternationalȱDevelopmentȱ(DFID)ȱ KoreaȱDevelopmentȱInstituteȱ(KDI)ȱ GovernmentȱofȱSwedenȱ ȱ Theȱfindings,ȱinterpretations,ȱandȱconclusionsȱexpressedȱhereinȱdoȱnotȱ necessarilyȱreflectȱtheȱviewsȱofȱtheȱsponsoringȱorganizationsȱorȱtheȱ governmentsȱtheyȱrepresent.ȱ ȱ Theȱsponsoringȱorganizationsȱdoȱnotȱguaranteeȱtheȱaccuracyȱofȱtheȱdataȱ includedȱinȱthisȱwork.ȱTheȱboundaries,ȱcolors,ȱdenominations,ȱandȱotherȱ informationȱshownȱonȱanyȱmapȱinȱthisȱworkȱdoȱnotȱimplyȱanyȱjudgmentȱ onȱtheȱpartȱofȱtheȱsponsoringȱorganizationsȱconcerningȱtheȱlegalȱstatusȱofȱ anyȱterritoryȱorȱtheȱendorsementȱorȱacceptanceȱofȱsuchȱboundaries.ȱ ȱ Allȱqueriesȱonȱrightsȱandȱlicenses,ȱincludingȱsubsidiaryȱrights,ȱshouldȱbeȱ addressedȱtoȱTheȱGrowthȱDialogue, ȱ2201ȱGȱStreetȱNW,ȱWashington,ȱDCȱ 20052ȱUSA;ȱphone:ȱ(202)ȱ994Ȭ8122;ȱeȬmail:ȱ[email protected];ȱȱ fax:ȱ(202)ȱ994Ȭ8289.ȱ ȱ ȱ Coverȱdesign:ȱMichaelȱAlwanȱ Contentsȱ AboutȱtheȱAuthorsȱ.............................................................................................ȱv Abstractȱ............................................................................................................ȱvii Acknowledgmentsȱ............................................................................................ȱix TheȱMainȱIdeaȱ....................................................................................................ȱ1 Africa’sȱUrbanȱExpansionȱ.................................................................................ȱ4 AlternativeȱAnalyticalȱFrameworks:ȱIsȱUrbanizationȱDifferentȱinȱ Africa?ȱ..........................................................................................................ȱ9 DensityȱwithoutȱCongestion:ȱAreȱThereȱSolutionsȱThatȱAreȱFeasibleȱ andȱAffordable?ȱ........................................................................................ȱ11 ObservationsȱforȱtheȱFuture:ȱAsȱAfricaȱUrbanizesȱ......................................ȱ21 Referencesȱ.........................................................................................................ȱ27 ȱ ȱ ȱ Africa’s Urbanization: Challenges and Opportunities iii ȱ ȱ ȱ AboutȱtheȱAuthorsȱ Dr.ȱMariaȱEmiliaȱFreireȱisȱaȱSeniorȱAdvisorȱatȱtheȱGrowthȱDialogueȱandȱ formerȱSeniorȱAdvisorȱatȱtheȱWorldȱBank.ȱȱ ȱ Dr.ȱ Somikȱ Lallȱ isȱ aȱ Leadȱ Economistȱ forȱ Urbanȱ Developmentȱ inȱ theȱ WorldȱBank’sȱUrbanȱandȱDisasterȱRiskȱManagementȱDepartment.ȱȱ ȱ Dr.ȱDannyȱLeipzigerȱisȱtheȱManagingȱDirectorȱofȱtheȱGrowthȱ Dialogueȱ andȱ Professorȱ ofȱ Internationalȱ Businessȱ atȱ theȱ Georgeȱ Washingtonȱ UniversityȱSchoolȱofȱBusinessȱinȱWashington,ȱDC.ȱȱ ȱ ȱ Africa’s Urbanization: Challenges and Opportunities v ȱ ȱ ȱ ȱ ȱ Abstractȱ Africaȱisȱurbanizingȱfast.ȱItsȱrateȱofȱurbanizationȱsoaredȱfromȱ15ȱpercentȱ inȱ1960ȱtoȱ40ȱpercentȱinȱ2010,ȱandȱisȱprojectedȱtoȱreachȱ60ȱpercentȱinȱ2050ȱ (UNȱHabitatȱ2010).ȱUrbanȱpopulationsȱinȱAfricaȱareȱexpectedȱtoȱtripleȱinȱ theȱ nextȱ 50ȱ years,ȱ changingȱ theȱ profileȱ ofȱ theȱ region,ȱ andȱ challengingȱ policyȱ makersȱ toȱ harnessȱ urbanizationȱ forȱ sustainableȱ andȱ inclusiveȱ growth.ȱ Althoughȱ manyȱ haveȱ writtenȱ aboutȱ theȱ phenomena,ȱ whatȱ isȱ clearȱtoȱusȱisȱthatȱisȱimpossibleȱtoȱdealȱwithȱAfrica’sȱgrowthȱandȱpovertyȱ challengesȱ withoutȱ managingȱ urbanization.ȱ Urbanizationȱ isȱ notȱ aȱ subȬ plot,ȱbutȱratherȱtheȱmainȱpolicyȱnarrativeȱ forȱAfrica.ȱȱ ȱ ȱ ȱ ȱ ȱ ȱ Africa’s Urbanization: Challenges and Opportunities vii ȱ ȱ ȱ Acknowledgmentsȱ TheȱauthorsȱwouldȱlikeȱtoȱacknowledgeȱtheȱcommentsȱofȱDr.ȱMaryvonneȱ PlessisȬFraissardȱandȱProfessorȱDanielȱHoornwegȱonȱanȱearlierȱversionȱofȱ thisȱ paper.ȱ Researchȱ supportȱ fromȱ theȱ Instituteȱ forȱ Internationalȱ EconomicȱPolicyȱ(IIEP)ȱisȱgratefullyȱacknowledged.ȱ ȱ ȱ ȱ Africa’s Urbanization: Challenges and Opportunities ix ȱ ȱ ȱ ȱ Africa’sȱUrbanization:ȱȱ ChallengesȱandȱOpportunities1ȱ MariaȱE.ȱFreire,ȱSomikȱLall,ȱandȱDannyȱLeipzigerȱ TheȱMainȱIdeaȱ Africaȱisȱurbanizingȱfast.ȱItsȱrateȱofȱurbanizationȱsoaredȱfromȱ15ȱpercentȱ inȱ1960ȱtoȱ40ȱpercentȱinȱ2010,ȱandȱisȱprojectedȱtoȱreachȱ60ȱpercentȱinȱ2050ȱ (UNȱHabitatȱ2010).ȱUrbanȱpopulationsȱinȱAfricaȱareȱexpectedȱtoȱtripleȱinȱ theȱ nextȱ 50ȱ years,ȱ changingȱ theȱ profileȱ ofȱ theȱ region,ȱ andȱ challengingȱ policyȱ makersȱ toȱ harnessȱ urbanizationȱ forȱ sustainableȱ andȱ inclusiveȱ growth.ȱ Althoughȱ manyȱ haveȱ writtenȱ aboutȱ theȱ phenomena,ȱ whatȱ isȱ clearȱtoȱusȱisȱthatȱisȱimpossibleȱtoȱdealȱwithȱAfrica’sȱgrowthȱandȱpovertyȱ challengesȱ withoutȱ managingȱ urbanization.ȱ Urbanizationȱ isȱ notȱ aȱ subȬ plot,ȱbutȱratherȱtheȱmainȱpolicyȱnarrativeȱ forȱAfrica.ȱȱ Africa’sȱ urbanȱ growthȱ isȱ inȱ lineȱ withȱ theȱ trendsȱ observedȱ inȱ mostȱ emergingȱ andȱ developedȱ countries.ȱ Inȱ theȱ lastȱ 10ȱ years,ȱ theȱ region’sȱ economiesȱ grewȱ rapidly—aboveȱ 5ȱ percentȱ aȱ yearȱ (IMFȱ 2012)—andȱ theȱ outlookȱ forȱ theȱ nearȱ termȱ isȱ largelyȱ positive.ȱ Findingsȱ fromȱ economicȱ geographyȱ tellȱ usȱ thatȱ densityȱ isȱ neededȱ forȱ economicȱ prosperityȱ andȱ thatȱ urbanȱ growthȱ isȱ aȱ necessaryȱ conditionȱ forȱ acceleratedȱ growthȱ andȱ sharedȱ prosperityȱ (Worldȱ Bankȱ 2008;ȱ Hendersonȱ 2005,ȱ 2010;ȱ Venablesȱ 2010).ȱLongȬrunȱgrowthȱneedsȱanȱefficientȱsystemȱofȱurbanȱcentersȱthatȱ produceȱ industrialȱ goodsȱ andȱ highȬvalueȱ services,ȱ alongȱ withȱ transportationȱ networksȱ toȱ linkȱ nationalȱ economiesȱ withȱ regionalȱ andȱ globalȱmarketsȱ(Spenceȱetȱal.ȱ2009;ȱWorldȱBankȱ2009).ȱȱ Alongȱ theȱ broadȱ spectrumȱ ofȱ developmentȱ patterns,ȱ Africaȱ urbanizationȱpresentsȱsomeȱpeculiarities.ȱWhileȱtheȱheterogeneityȱofȱtheȱ regionȱ precludesȱ easyȱ generalizations,ȱ oneȱ canȱ takeȱ noteȱ ofȱ someȱ ȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱȱ 1ȱThisȱworkingȱpaperȱhasȱbeenȱacceptedȱforȱpublicationȱinȱJ.ȱY.ȱLinȱandȱC.ȱMonga,ȱeds,ȱTheȱ Oxfordȱ Handbookȱ ofȱ Africaȱ andȱ Economics,ȱ Volumeȱ 1:ȱ Contextȱ andȱ Concepts,ȱ Newȱ York,ȱOxfordȱUniversityȱPressȱ(forthcoming,ȱ2015).ȱAllȱfutureȱrightsȱreserved.ȱ Africa’s Urbanization: Challenges and Opportunities 1 ȱ singularȱ characteristics.ȱ Althoughȱ Africaȱ andȱ Asiaȱ haveȱ similarȱ urbanȱ ratesȱ(aroundȱ40ȱpercent),ȱperȱcapitaȱGDPȱinȱAfricaȱwasȱoneȱthirdȱthatȱofȱ Asianȱ countriesȱ inȱ 2012.ȱ Inȱ addition,ȱ Africa’sȱ literacyȱ ratesȱ andȱ institutionalȱ developmentȱ indicesȱ areȱ muchȱ lowerȱ thanȱ Asianȱ counterparts,ȱandȱAfrica’sȱinfrastructureȱlagsȱbehind.ȱȱ Recentȱpopulationȱcensusesȱareȱ providingȱmoreȱaccurateȱdataȱthanȱ hasȱbeenȱavailableȱinȱtheȱpast.ȱAmongȱotherȱissues,ȱthisȱnewȱinformationȱ willȱ shedȱ lightȱ onȱ suchȱ questionsȱ asȱ (a)ȱ theȱ sizeȱ andȱ sourceȱ ofȱ urbanȱ growthȱ acrossȱ Africanȱ countriesȱ (Pottsȱ 2012;ȱ Gollinȱ etȱ al.ȱ 2013);ȱ (b)ȱ theȱ roleȱ ofȱ ruralȱ migrationȱ versusȱ naturalȱ growthȱ inn ȱ urba ȱ expansionȱ (Foxȱ 2012);ȱ andȱ (c)ȱ theȱ usefulnessȱ ofȱ growthȱ modelsȱ inȱ explainingȱ theȱ longȬ termȱ patternȱ ofȱ urbanization.ȱ Theȱ typicalȱ modelsȱ ofȱ structuralȱ transformationȱexplainȱurbanȱexpansionȱthroughȱtheȱmovementȱofȱlaborȱ fromȱruralȱtoȱurbanȱareasȱthatȱfollowȱtheȱtransformationȱfromȱagricultureȱ toȱ industryȱ andȱ services.ȱ Urbanizationȱ wouldȱ beȱ aȱ resultȱ ofȱ eitherȱ aȱ “push”ȱfromȱagriculturalȱproductivityȱgrowthȱorȱaȱ“pull”ȱfromȱindustrialȱ productivityȱ growthȱ leadingȱ toȱ “productionȱ cities,”ȱ withȱ aȱ mixȱ ofȱ workersȱinȱtradableȱandȱnonȬtradableȱsectors.ȱȱ However,ȱthisȱmodelȱofȱdevelopmentȱdoesȱnotȱseemȱtoȱexplainȱtheȱ urbanizationȱ patternȱ ofȱ moreȱ thanȱ aȱ dozenȱ Africanȱ countries—thoseȱ whoseȱ economicȱ growthȱ hasȱ beenȱ associatedȱ withȱ naturalȱ resourceȱ exploitationȱ butȱ notȱ withȱ increasedȱ manufacturingȱ sharesȱ ofȱ GDPȱ (Collierȱ2009;ȱGollinȱetȱal.ȱ2013).ȱInȱtheseȱcountries,ȱurbanizationȱisȱlikelyȱ toȱ haveȱ beenȱ drivenȱ byȱ theȱ incomeȱ effectȱ ofȱ naturalȱ resourceȱ endowments.ȱ Assumingȱ thatȱ tradableȱ goodsȱ areȱ more ȱ likelyȱ associatedȱ withȱ increasesȱ inȱ productivityȱ thanȱ nonȬtradableȱ goods,ȱ theȱ lackȱ ofȱ manufacturingȱ developmentȱ couldȱ hinderȱ longȬrunȱ economicȱ potentialȱ forȱAfricanȱcities.ȱThisȱargumentȱmeritsȱfurtherȱempiricalȱresearch.ȱȱ Understandingȱ Africanȱ urbanizationȱ isȱ highlyȱ relevantȱ inȱ otherȱ domainsȱ asȱ well.ȱ Extremeȱ povertyȱ continuesȱ toȱ beȱ moreȱ prominentȱ inȱ ruralȱ thanȱ inȱ urbanȱ areasȱ (atȱ leastȱ threeȱ timesȱ higher).ȱ Therefore,ȱ urbanizationȱwouldȱseemȱtoȱbeȱaȱsuperiorȱwayȱtoȱprovideȱbetterȱservicesȱ andȱ livelihoodsȱ toȱ millions,ȱ asȱ wellȱ illustratedȱ inȱ theȱ caseȱ ofȱ Chinaȱ (Taylorȱ 2008).ȱ Oneȱ mayȱ expectȱ thatȱ overȱ time,ȱ theȱ gapȱ betweenȱ urbanȱ andȱ ruralȱ earningsȱ willȱ declineȱ andȱ eventuallyȱ disappear,ȱ asȱ surplusȱ laborȱ shrinksȱ andȱ theȱ ruralȱ sectorȱ modernizes.ȱ Butȱ itȱ beȱ quiteȱ aȱ whileȱ 2 Maria Freire, Somik Lall, and Danny Leipzigerȱ untilȱthisȱoccurs.2ȱAsȱpartȱofȱtheȱprocess,ȱoneȱmightȱstressȱtheȱimportanceȱ ofȱ governmentsȱ providingȱ basicȱ servicesȱ toȱ smallerȱ citiesȱ andȱ intermediateȱ townsȱ thatȱ canȱ facilitateȱ theȱ transitionȱ betweenȱ ruralȱ andȱ nonȬruralȱ activitiesȱ (Ferreȱ etȱ al.ȱ 2010),ȱ theȱ