Economic development in Africa centres around urbanization – UN-backed report

24 May 2016

With two-thirds of Africans expected to live in cities by 2050, how Africa urbanizes will be critical to the continent’s future growth and development, a new report presented by the United Nations Development Programme (UNDP) has found.

According to the African Economic Outlook 2016, released yesterday at the African Development Bank Group’s annual meetings, Africa remained the second-fastest growing economic region in 2015, after East Asia. The continent’s average growth is expected to be 3.7 per cent in 2016 and 4.5 per cent in 2017, provided the world economy strengthens and commodity prices gradually recover.

“In 2016, the emerging common African position on urban development and the international

New Urban Agenda to be discussed in Quito in October provide the opportunity to begin moulding ambitious urbanization policies into concrete strategies for Africa’s structural transformation,” said Abdoulaye Mar Dieye, Director of the Regional Bureau for Africa at UNDP.

“We need to invest in building economic opportunities, especially those of women, of which 92 per cent work in the informal sector. Cities and towns have a key role to play in that process, but only if Governments take bold policy action,” he added.

The report – whose theme this year is Sustainable Cities and Structural Transformation – is produced annually by UNDP, the African Development Bank, and the Organisation for Economic Co-operation and Development (OECD) Development Centre.

In 2015, net financial flows to Africa were estimated at $208 billion, 1.8 per cent lower than in 2014 due to a contraction in investment. At $56 billion in 2015, however, official development assistance (ODA) increased by four per cent, and remittances remain the most stable and important single source of external finance, at $64 billion in 2015, the report found.

“African countries, which include top worldwide growth champions, have shown remarkable resilience in the face of global economic adversity. Turning Africa’s steady resilience into better lives for Africans requires strong policy action to promote faster and more inclusive growth,” said Abebe Shimeles, Acting Director, Development Research Department, at the African Development Bank.

The continent is urbanizing at a historically rapid pace, coupled with an unprecedented demographic boom, with the population living in cities doubling from 1995 to 472 million in 2015. This phenomenon is unlike what other regions, such as Asia, experienced, and is currently accompanied by slow structural transformation, according to the report’s special thematic chapter.

The authors of the report concluded that lack of urban planning leads to costly urban sprawl. In Accra, Ghana, for example, the population nearly doubled between 1991 and 2000, increasing from 1.3 million to 2.5 million inhabitants at an average annual growth rate of 7.2 per cent. During the same period, the built-up area of Accra tripled, increasing from 10,000 hectares to 32,000 hectares by an average annual rate of 12.8 per cent.

“Africa’s ongoing, multi-faceted urban transition and the densification it produces offer new opportunities for improving economic and social development while protecting the environment in a holistic manner. These openings can be better harnessed to achieve the Sustainable Development Goals – especially SDG 11 on sustainable cities and communities – and the objectives of the African Union’s Agenda 2063,” said Mario Pezzini, Director of the OECD Development Centre and Acting Director of the OECD Development Co-operation Directorate.

“The benefits could accrue for both urban and rural dwellers, provided governments adopt an integrated approach,” he added.

This approach includes stepping up investment in urban infrastructure, improving connectivity with rural areas, better matching formal real estate markets with the housing demand by clarifying land rights, managing the growth of intermediary cities, and improving the provision of infrastructure and services within and between cities. Such investments need to be accompanied by productive formal employment – especially for the youth – and sufficient public goods, according to the report.

In 2015, approximately 879 million Africans lived in countries with low human development, while 295 million lived in medium and high human development countries. Africa’s youth are particularly at risk from slow human progress. In sub-Saharan Africa, nine out of ten working youth are poor or near poor, the report found.

According to the report, seizing this urbanization dividend requires bold policy reforms and planning efforts. Ongoing endeavours to promote efficient multi-level governance systems, including decentralization, capacity building and increased transparency, at all government levels, should also be strengthened, the report said.


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