Africa’s urbanisation and structural transformation

AEO 2016We don’t know the name, or the place and exact date of birth, of the baby who changed world history. My guess is that she was born somewhere in Africa in 2007. Not that she cared as she lay there all wrinkled and raging at the disagreeable turn her life had just taken, but it was thanks to her that for the first time ever, the world had more urban dwellers than country folk.

Africa itself won’t pass that landmark until sometime in the 2030s, but when you look at the numbers rather than the percentages, you can see why this year’s African Economic Outlook from the OECD Development Centre, African Development Bank, and UNDP is focusing on “Sustainable Cities and Structural Transformation”. In 1990, Africa was the world’s region with the smallest number of urban dwellers: 197 million. Now it has more than twice that at 472 million, and the urban population is expected to almost double again between 2015 and 2035. By 2020, Africa is forecast to have the second highest number of urban dwellers in the world (560 million) after Asia (2348 million).

Most of us, including many of the people who live in them, probably have a negative impression of African cities. Lagos-based Bayo Olupohunda warns that “intractable traffic gridlock, breakdown of law and order due to social exclusion, amenities crises are the signs of population apocalypse…”. Likewise, The Guardian is running a series on cities just now, and the headlines of its articles about African metropolises like Kinshasa and Nairobi talk about chaos and pollution.

It’s worth noting, though, that African urbanisation isn’t mainly due to the megacities we always hear about. In fact, between 2000 and 2010, urban agglomerations with fewer than 300,000 inhabitants accounted for 58% of Africa’s urban growth, compared with 29% for those with populations over a million. Nor is it due to rural-urban migration: migration accounts for less than a third of urban population growth in 22 African countries. It accounts for over 50% in only 7 countries (Burkina Faso, Cabo Verde, Lesotho, Namibia, Rwanda, Seychelles and South Africa, whereas it contributed to half of Asia’s urban population growth. The Outlook groups African countries into five types according to their stages in three processes: urbanisation, fertility transition, and structural transformation.

Whatever their individual characteristics, the Outlook, exposes a daunting series of problems facing Africa’s urban areas. In many African countries, a large portion of the urban labour force remains trapped in low-productivity informal services activities, and access to public goods is unequal. Moreover, despite Africa’s slow industrialisation, the costs of environmental degradation are large and increasing, adding to the economic and social challenges of urbanisation.

The speed of the economic transformation could be a problem as well. Some economists are concerned that African countries – and developing countries generally – are moving into the service sector too early in their development trajectory and that this “premature deindustrialisation” may damage future growth prospects by depriving economies of the benefits of industrialisation for sustained growth and economic convergence. For example, if people are moving out of farming into hotel and restaurant work or street trading, especially informal jobs, the sectors they move into are likely to see productivity growth slowed by this influx of cheap labour.

And yet, despite all the readily available negative evidence, the Outlook argues that urbanisation could boost structural transformation – moving economic resources from low to higher productivity activities, essentially from traditional agriculture to manufacturing or services. In part, this view is based on economic history. Cities everywhere have traditionally provided “a large and diversified pool of labour, a more dynamic local market, more cost-effective access to suppliers and specialised services, lower transaction costs, more diversified contact networks and greater knowledge-sharing opportunities, and an environment that encourages innovation”.

They are also ideal for cashing in on one of the trends defining the new economy. Often this is referred to as the “sharing economy”, but as Diane Coyle argued at an OECD seminar earlier this year, “matching” is a better term to describe what platforms like Uber or AirBnB do – they match the demand for something to those supplying it. Cities help firms match their requirements for labour, materials, and premises better than towns or rural area. Larger markets bring more choices and opportunities. Cities also afford firms access to a wider range of shared services and infrastructure because of the scale of activity. Firms gain from the superior flow of information in cities, which promotes more learning and innovation, and results in higher value-added products and processes.

Bayo Olupohunda recognises this, arguing that if well-managed, Lagos could be efficient, “enabling economies of scale and network effects. Furthermore, the proximity and diversity of people as seen in Lagos can spark innovation and create employment, as exchanging of ideas breeds new ideas”. He also recognises that these benefits don’t come automatically though, and that “the availability and quality of infrastructure are at the core of many of the challenges faced by a rapidly urbanized Lagos.”

The Outlook makes the same diagnosis for African cities in general, citing three policy-related issues: public and private actors have not sufficiently upgraded the urban infrastructure; steadily high fertility rates in urban areas have contributed to overcrowding through fast urban growth; and dysfunctional real estate markets have led to the explosion of informal housing. To tackle the problems, governments and the private sector will have to invest twice as much by 2050 as they have since the years of independence, but policies to restrain urbanisation have tended to be more popular than policies to use urbanisation to boost structural transformation.

This may be changing. The Draft Africa Common Position on Habitat III, the Third UN Conference on Housing and Sustainable Urban Development taking place in October, states that Sustainable Development Goal 11 to make cities and human settlements inclusive, safe, resilient and sustainable, “needs to be considered together with goals 8, 9 and 10 on matters relating to promoting economic growth as well as full and productive employment; building infrastructure, industrialization and innovation, as well as reducing inequality within and between countries”.

Useful links

A 21st Century Vision for Urbanisation Dr Joan Clos, Executive Director, UN-Habitat on OECD Development Matters blog

OECD Development Centre work on Africa and the Middle East

Bringing Stability to Southern Sudan

Rachel Flynn is a PhD student inLSE’s Department of International Development. Her thesis is Southern Sudan’s periphery: state-building in fragile border regions. The world is currently focussed on the unrest at Southern Sudan’s border with its northern cousin, but Flynn argues that it is just one of several border issues the new state will have to tackle.

The killing of nine Kenyans by a group of Southern Sudanese in a remote region of the Southern Sudan-Kenya border on 15 June serves as a potent reminder of the extremely volatile and potentially explosive nature of the nascent country’s international borders.

Given the history of Southern Sudan and the often nomadic nature of many of the groups living on its periphery, its international borders have tended to be weakly defined. It is this lack of clear demarcation, coupled with the neglect regularly experienced by border-dwellers, that has the potential to destabilise Southern Sudan.

The conflict that resulted in the recent deaths of nine Kenyans has been playing out over a long period of time between the Toposa of Southern Sudan and the Turkana of Kenya.

The crux of the issue is that because nomadic pastoralism is their main livelihood and they live in regions increasingly prone to drought, these groups need to share dry season pasture and water points.

Historically, conflict over this resource-sharing was managed and resolved locally, but state intervention has led to an escalation of the conflict, creating a ‘damned if you do, damned if you don’t’ scenario for the Government of Southern Sudan (GoSS).

This is not the only border region that is proving recalcitrant. Recently in Nimule, a vibrant town bordering northern Uganda, the government’s attempts to stop locals using Ugandan Shillings instead of Sudanese Pounds led to such ferocious opposition, including the complete closure of the town’s market for a fortnight, that ultimately the government had to acquiesce.

The use of Ugandan Shillings is only one symptom of this peripheral region being more integrated into the Ugandan economic society than the Southern Sudanese one.

This failure of GoSS to exert control over its currency is symptomatic of the state’s weak presence and authority at its international borders.

There are countless other examples of state weakness – the continued presence of the Ugandan militia group, the Lord’s Resistance Army, on the Central African Republic border; ongoing child abductions in Jonglei State bordering Ethiopia; and increasingly violent and fatal cross-border cattle-raiding on the Kenyan and Ugandan borders, to name just a few.

At the moment, all eyes are on the north/south border as tensions mount ahead of Southern Sudanese independence on the 9 July. However, it is not the only border that poses major challenges to the Government of Southern Sudan as the country embarks on its nation-building project. Furthermore, it is not the only border region that deserves attention, a point that GoSS, the international community and the aid industry would do well to remember.

Useful links:

OECD Development Centre work on Africa

Africa at LSE

Africa on the move: the Bamboo Bike Project

 

Bamboo has higher tensile strength than steel. Click on the logo for the project prospectus.

Africa imports an estimated 30 million bikes per year, yet there are no bike manufacturers on the continent. In today’s post, John Mutter of Columbia University describes a project to build bikes locally, using bamboo for the frames.

People in wealthy countries full of young, genuinely well motivated and committed people with honest and very good intentions can always do something to help those in poorer countries – something small, that is.  These small things no doubt can be very good things. You can build a sanitary facility in a village and the health of the villagers will improve. You can introduce better farming practices and yields will improve on the few hectares of a poor farmer’s field.

It is also not very difficult to establish a small business in Africa. There must be millions of roadside vendors selling everything from food to furniture to appliances. In many cases the goods are produced right there on the side of the road. They operate out of stalls as small as the average toilet stall in the US. These businesses support the income needs of perhaps one or two people at a very modest level.

When we first started the Bamboo Bike Project many people suggested that we should emulate that model. We should create new village-level or roadside businesses because “that’s what works in Africa”. People who encouraged that approach said that if we just got a few started then things would “go viral” and next thing you know they would be everywhere, like Starbucks maybe.

The problem is that just about nothing goes viral in Africa except biological viruses like HIV. The singular exception is cell phones. It’s hard to think of anything else that just took off. The roadside vendor selling fruit isn’t on the first step of a path that will lead to opening a Shop Rite supermarket, there isn’t a Pret a Manger chain in the future for the woman cooking food over a wood-fueled fire, the guy walking around with a display of 50 cheap sunglasses isn’t about to challenge Sunglass Hut any time soon.

For us the issue is that we want to make a serious difference to transportation needs and those needs are vast. Our guess is that there is something between 5 and 50 million bikes in sub-Saharan Africa (it is impossible to get a good number), almost every one made in China and every one of inappropriate design and very poor quality. A bike is something that is assumed to break and need constant repair. We want to make good quality bikes designed for the needs of the rural poor and don’t need repair as often.

Most important is that we want to make them at a scale comparable to the needs – millions. That can’t be done on the side of the road or in village settings. Bike building won’t go viral. It needs a factory and now there is one in Kumasi, Ghana.

The whole story is too long to tell here, but thanks to a partnership between the Millennium Cities Initiative at Columbia University, The Bamboo Bike Studio in Brooklyn, New York and a Ghanaian investor, a factory is taking shape that has the potential to produce perhaps 10,000 bikes a year all made locally. That’s not millions but it is a lot closer than what can be done on the side of a road and it has a chance of meeting some significant part of the transportation needs in West Africa.  

We haven’t found the Rosetta stone for scale-up. You can’t scale-up latrines this way. But we have kept a clear focus on the size of the problem from the very start and not been tempted into the much easier path of making a few bikes in a few places, taking pictures of ourselves in Africa, and achieving little more than making ourselves feel virtuous.

Useful links

African Economic Outlook

China in Africa: Debunking myths and debating truths

Linda Richter of South Africa’s Human Sciences Research Council and the Global Fund to Fight AIDS, Tuberculosis and Malaria speaks out against AIDS orphan tourism in this post

Learning and Leadership: Two Main Ingredients for Africa’s Development

Click to go to conference website

Government, civil society and international organisations met in Tunis this month to discuss the priorities for aid and development effectiveness ahead of the High Level Forum on Aid Effectiveness in Busan, Korea in November 2011. Misaki Kruger of the OECD Development Co-operation Directorate reports.

What Africa needs is not only cash, but practical and innovative ideas to “put Africa to work”. Kenyan Minister of State for Public Service, Dalmas Anyango Otieno, set the tone of the meeting – looking for ways to build capable and effective states that can maximise all resources and knowledge.

So what are the main ingredients needed to make this happen?

Aid, currently at $120 billion per year globally will continue to be an important source of finance for African countries. However, as African Development Bank  (ADB) President Kaberuka says, “aid is only part of the solution for Africa’s problem”.

The priority ahead of Busan coming out of this meeting is to see how aid can be leveraged to build good financial governance, credible public services and generate internal resources through tax and investments. It is about using aid as a catalyst to build capable states and reduce aid dependency.

This also applies to the increasing engagement of the so-called BRICS countries. With China in mind, Aloysium Ordu from ADB argued that the so-called “Beijing Consensus” is an opportunity for Africa and also complementary to traditional donors, both in terms of increased resources as well as lessons, for example on speed of delivery and flexibility.

One might question the developmental relevance of building “friendship stadiums” or the often cited “no-strings-attached” approach. But participants agreed that the responsibility to manage Africa’s development lies squarely with Africans themselves.  (more…)

Investing in Africa

It’s often overlooked, but the past decade saw a very substantial increase in the amount of money foreign companies invested in Africa – what’s known as foreign direct investment (FDI). In 2000, FDI was worth about $9 billion; by 2008 it had risen almost tenfold to $88 billion. To put that in perspective, that was double the $44 billion provided for African countries in official development assistance (ODA) in 2008.

(more…)

Is Africa catching up?

The 2000s were for much of the developing world a first decade of strong growth since the 1970s. They were marked by a global shift in wealth and the emergence of a new geography of the world economy. But the shift is not just about major emerging markets such as China, but shows up in African growth figures as well. This should not be surprising: a 2008 article in the OECD Observer reported that Africa had survived the early crisis quite well, and since 2000 the magazine has been highlighting the growing interest in Africa among private investors, not to mention its brighter image as a place for young people from OECD countries to go and find work. (more…)