Many major cities in developing countries, especially in Africa, are failing to reap the economic benefits of urbanization. These cities are not able to drive structural transformation, boost growth, create jobs in tradeable industries, and contribute to national economic growth compared with cities in other countries, such as those in China or most developed countries..
As policymakers, urban planners, and development practitioners try to tackle the issues of rapid urbanization, they face numerous roadblocks and constraints.
With Africa’s urban population expected to nearly triple by 2050—adding 800 million people—the urgency of addressing these challenges is paramount. Recent African urbanization analyses have confirmed the problems of limited job creation, inadequate structural transformation, and poor livability seen in many sub-Saharan African cities today.
At an urbanization level of around 40 percent, African cities are relatively poorer than other developing regions when they were at similar levels of urbanization. Because per capita GDP is low, public and private investments in housing, infrastructure, and other capital are lacking. Issues of limited land management and lack of infrastructure contribute to African cities being fragmented, with low levels of accessibility to jobs and social services. These and other factors contribute to high costs in African cities. For example, urban residents pay 55 percent more for housing and 42 percent more for transport in Africa than in other regions.
A range of national macroeconomic, social, and political challenges—such as poor monetary policy, trade, and fragility—affect all cities in a country, but there are also a number of challenges particular to specific cities.
Measures of accessibility—both within and between cities—describe how well a city connects workers to firms and firms to markets. For example, intracity access to jobs, measured by number of jobs available within a set commute from different neighbourhoods, can be seen as a land management issue (in terms of housing and employment locations) or as a transport infrastructure service issue.
The business environment is an important determinant of firms’ costs, which affect firms’ abilities to compete in international markets. In our framework, we focus on issues that may arise at the city level rather than broader national issues that may affect cities such as macroeconomic stability, trade, or fragility. Given this consideration, labour and human capital, the regulatory environment, and services and infrastructure are important components of the local business environment.
Public sector governance is a second-order constraint that describes the ability of institutions at either the national or subnational level to address accessibility and business environment constraints. Specifically, the distribution of fiscal and functional responsibilities between different levels of government, as well as the functional and fiscal capability/capacity of government agencies are imperative. Important questions to ponder include: if there are clear land rights, how transparently are they applied? If there are land use regulations and zoning laws, are these contributing to misaligned land uses or directed at protecting public interests? Are rules for appropriating private property for investments, such as road rights-of-way, fair and transparent? (