Pop­u­la­tion growth hin­der­ing link­ages -WB

East African Business Week - - NEWS - BY DAMAS MAKANGALE

DAR ES SALAAM, TAN­ZA­NIA - Africa’s cities in­clud­ing Dar es Salaam are grow­ing in pop­u­la­tions which add the size of link­ing one an­other dif­fi­cult yet they have a crit­i­cal role to play in their coun­tries’ eco­nomic growth, says a new World Bank re­port re­leased last week. World Bank Vice Pres­i­dent for Africa, Makhtar Diop told re­porters in a video con­fer­ence that African cities in­clud­ing those in the East African states are open­ing up doors to the world but re­main dis­con­nected, crowded and costly. “What Africa needs are more af­ford­able, con­nected and liv­able cities,” said Diop, World Bank Vice Pres­i­dent for Africa. Adding that im­prov­ing the eco­nomic and so­cial div­i­dends from ur­ban­iza­tion will be crit­i­cal as bet­ter de­vel­oped cities could trans­form Africa’s economies. The re­port adds that im­prov­ing con­di­tions for peo­ple and busi­nesses in African cities by ag­gres­sively in­vest­ing in in­fra­struc­ture and re­form­ing land mar­kets is the key to ac­cel­er­at­ing eco­nomic growth, adding jobs, and im­prov­ing city com­pet­i­tive­ness. The re­port, Africa’s Cities: Open- ing Doors to the World notes that to grow eco­nom­i­cally as they are grow­ing in size, Africa’s cities must open their doors and con­nect to the world. Africa’s ur­ban pop­u­la­tion stands at 472 mil­lion peo­ple to­day. As cities grow in size, an­other 187 mil­lion peo­ple will be added to ur­ban ar­eas by 2025. In fact, Africa’s ur­ban pop­u­la­tion will dou­ble over the next 25 years, reach­ing 1 bil­lion peo­ple by 2040. The re­port in­di­cates that Africa is ur­ban­iz­ing at lower in­comes than other de­vel­op­ing re­gions with sim­i­lar ur­ban­iza­tion lev­els. In 1968, when coun­tries in the Mid­dle East and North Africa re­gion be­came 40% ur­ban, their per capita GDP was $1,800 (2005 con­stant dol­lars). And in 1994, when coun­tries in the East Asia and Pa­cific re­gion sur­passed the same thresh­old, their per capita GDP was $3,600. By con­trast, Africa, with 40% ur­ban­iza­tion, to­day has a per capita GDP of just $1,000. This means that ev­ery dol­lar of pub­lic in­vest­ment in cities needs to be done as ef­fi­ciently as pos­si­ble, and lever­ag­ing as much as pos­si­ble other sources of fi­nance from pri­vate sec­tor, in­ter­na­tional part­ners, and cit­i­zens. Rapid ur­ban­iza­tion at lower in­comes has meant that cap­i­tal in­vest­ment in African cities has re­mained rel­a­tively low in the re­gion for the past four decades – at around 20 % of GDP. In con­trast, ur­ban­iz­ing coun­tries in East Asia – China, Ja­pan, and the Re­pub­lic of Korea – stepped up cap­i­tal in­vest­ment dur­ing their pe­ri­ods of rapid ur­ban­iza­tion. Lack­ing cap­i­tal in­vest­ment, the re­port em­pha­sizes that in­vest­ments in African cities’ in­fra­struc­ture, in­dus­trial, and com­mer­cial struc­tures have not kept pace with con­cen­tra­tion of peo­ple, nor have in­vest­ments in af­ford­able for­mal hous­ing. The po­ten­tial for co­or­di­nated in­vest­ments in in­fra­struc­ture, res­i­den­tial, and com­mer­cial struc­tures is great, which will en­hance ag­glom­er­a­tion economies and con­nect peo­ple with jobs. The re­port ex­plains that be­cause of lack of con­nec­tion, African cities are among the costli­est in the world both for busi­nesses and for house­holds, leav­ing cities “out of ser­vice and closed for busi­ness”. African cities are 29 % more ex­pen­sive than cities in coun­tries at sim­i­lar in­come lev­els. African house­holds face higher costs rel­a­tive to their per capita GDP than do house­holds in other re­gions much of it ac­counted for by hous­ing, which costs them a full 55% more than in other re­gions. In Dar es Salaam, for ex­am­ple, 28% of res­i­dents live at least three to a room; in Abid­jan, 50%. And in La­gos, Nige­ria, two out of three peo­ple live in slums. Adding to this, city dwellers pay around 35% more for food in Africa than in low-in­come and mid­dle-in­come coun­tries else­where. Over­all, ur­ban house­holds pay 20 – 31% more for goods and ser­vices in African coun­tries than in other de­vel­op­ing coun­tries at sim­i­lar in­come lev­els. In ad­di­tion, ur­ban work­ers in Africa are also forced to pay high com­mut­ing costs, or they can­not af­ford to com­mute by ve­hi­cle at all, and the in­for­mal minibus sys­tems are far from cost ef­fi­cient, leav­ing many to have to walk to work. The need to walk to work lim­its these res­i­dents’ ac­cess to jobs. With­out suf­fi­cient for­mal de­vel­op­ment, in­for­mal set­tle­ments that are rel­a­tively cen­tral and thus close to jobs – such as Kib­era in Nairobi, and Tan­dale in Dar es Salaam – are con­stantly grow­ing in pop­u­la­tion. The need for higher wages to pay higher liv­ing costs makes busi­nesses less pro­duc­tive and com­pet­i­tive, keep­ing them out of trad­able sec­tors. As a re­sult, African cities are avoided by po­ten­tial re­gional and global in­vestors and trad­ing part­ners.

World Bank Vice Pres­i­dent for Africa, Makhtar Diop told re­porters in a video con­fer­ence that African cities in­clud­ing those in the East African states are open­ing up doors to the world but re­main dis­con­nected, crowded and costly.

Makhtar Diop, World Bank Vice Pres­i­dent for Africa

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