Africa’s population is expected to reach 1.5 billion people by 2050. With the majority of this population projected to live in urban areas, there is a need to invest and develop African urban areas in order to accommodate the rising population.
According to From Millions to Billions: Financing the Development of African Cities report by the African Development Bank (AfDB), it is estimated that African countries will need to invest about 5.5% of their annual GDP in their cities, approximately Sh21.23 trillion ($140 billion) per year.
During a forum, held during the Africa Investment Forum 2023 Market Days in Marrakech, Morocco, titled Leveraging Cities and Municipalities for National Development, Akinwumi Adesina, President of the African Development Bank highlighted the need for greater commitment towards the development of cities while also stressing the need for increased investment and autonomy for municipalities, the continent’s engine for economic growth.
“This forum launches what we hope is the beginning of new collaboration between financial institutions, cities, states and municipalities, to accelerate the growth and development of Africa. It also shows the priority that the partners and investors in the Africa Investment Forum will place on improving investments in sub-national level projects,” he said.
Investing in urban areas should necessarily include services, green spaces, highly diversified markets and decent, well-paying jobs. According to Jean Pierre Elong Mbassi, the Secretary General of United Cities and Local Governments of Africa (UCLG Africa), the future of the continent is directly linked to how policy makers make cities more attractive and welcoming for populations and young people.
“Bankers need a change of perspective when dealing with local governments. Thanks to this event for trying to push for this as well as focusing on research and innovation,” Mbasse said.
Accordance to Dr Astrid Haas, economist and co-author of the report, urbanization is the megatrend that is reshaping the African continent and no country has ever developed without an urban plan. The report underlines several key strategies for cities, including creating enabling environments, increasing revenue flows to cities, vision, improving fiscal autonomy and credit worthiness.
“The time to think big is now; African cities hold the power. Let’s act boldly to ‘transform Africa’s future for generations to come,” Haas said.
The African Development Bank has pledged to support by investing more in the development of urban areas. The group already has an Urban and Municipal Development Fund (UMDF), which supports 15 cities, with technical assistance, capacity building for integrated urban planning, governance, project preparation, and broader urban management, including municipal fiscal management.
The bank has outlined four ways in which it could support urban areas; by providing greater autonomy and fiscal responsibility to cities and towns, using debt securities which could deliver greater financing, developing better mortgage financing to make cities more liveable with access to affordable housing, and by providing additional regulatory space to raise financing on local capital markets by posting municipal and green bonds to boost their own financing.