With two-thirds of Africans expected to live in cities by 2050, how Africa urbanises will be critical to the continent’s future growth and development.

This is according to the new African Economic Outlook 2016 released by the African Development Bank.

Africa’s economic performance held firm in 2015 amid global headwinds and regional shocks. The continent remained the second fastest growing economic region after East Asia. According to the report’s prudent forecast, the continent’s average growth is expected at 3.7% in 2016 and pick up to 4.5% in 2017, provided the world economy strengthens and commodity prices gradually recover.

In 2015, net financial flows to Africa were estimated at USD 208 billion, 1.8% lower than in 2014 due to a contraction in investment. At USD 56 billion in 2015, however, official development assistance increased by 4%; and remittances remain the most stable and important single source of external finance at USD 64 billion in 2015.

 

Rapid urbanisation

The continent is urbanising at a historically rapid pace coupled with an unprecedented demographic boom: the population living in cities has doubled 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, says the report’s special thematic chapter.

According to the authors, 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 – a rise of 92%- at an average annual growth rate of 7.2%. Consequently, the ratio of population to total built up area decreased from 132 inhabitants/ha to 90 inhabitants/ha at an average annual rate of 4.6%, much higher than the global average of 2.1% during the same period.

Urbanisation is a megatrend transforming African societies profoundly. Two-thirds of the investments in urban infrastructure until 2050 have yet to be made. The scope is large for new, wide-ranging urban policies to turn African cities and towns into engines of growth and sustainable development for the continent as a whole.

If harnessed by adequate policies, urbanisation can help advance economic development through higher agricultural productivity, industrialisation, services stimulated by the growth of the middle class, and foreign direct investment in urban corridors. It also can promote social development through safer and inclusive urban housing and robust social safety nets.

Finally, it can further sound environmental management by addressing the effects of climate change as well as the scarcity of water and other natural resources, controlling air pollution, developing clean cost-efficient public transportation systems, improving waste collection, and increasing access to energy.

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.

 

Bold reforms needed

According to the Outlook, seizing this urbanisation dividend requires bold policy reforms and planning efforts. For example, tailoring national urban strategies to specific contexts and diverse urban realities and patterns is essential. And harnessing innovative financing instruments is paramount.

Ongoing endeavours to promote efficient multi-level governance systems, including decentralisation, capacity building and increased transparency, at all government levels, should be strengthened.

“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 molding ambitious urbanisation policies into concrete strategies for Africa’s structural transformation,” said Abdoulaye Mar Dieye, the Director of the Regional Bureau for Africa at the United Nations Development Programme.

“We need to invest in building economic opportunities, especially those of women of which 92% 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.”