THE AFRICAN CITY AS AN ENGINE FOR GROWTH
Discerning investors should be looking towards
Africa’s growing cities for sustained returns on
investment and positive socio-environmental
The 'Africa Rising' narrative in its current iteration, along with
its mainstream implications, is outdated for a continent that
is home to unprecedented uncertainties. Positive sentiment
regarding the outlook for the African market, which is attributed
to sustained economic growth since the 1980s and accredited
to policy reform and rising commodity prices, is wavering. Price
volatility, sluggish growth, governance and security concerns,
and humanitarian crises have all increased the perceived risk
of Africa as an investment destination.
In the wake of these trends, discerning investors should now
be looking away from financing the reckless consumption of
an imagined emerging middle class and, instead, towards
creating a competitive, productive economy that enhances
Cities are the engine room for both national and global
growth. In the 21st century, we see the diminishing importance
of national governing structures in determining urban economic
resilience, and the rise of the City. The bulk of the global
population wake up in cities, contributing about 80% of global
GDP and as much as 70% of global resource and energy
consumption (and the carbon-related emissions).
Understanding urbanisation and its implications for cities is
critical if you want to gain a complete understanding of 'Africa
Rising' and it is a fundamental requirement for savvy decisionmaking
regarding investment opportunities.
Relatively resilient economic growth trends and an expanding
urban labour force are seen as positive indicators that Africa will
soon be able to leverage its underutilised urban demographic dividend associated with the agglomeration of markets and
people. Yet, the specificities of African urbanisation remain
Prospects for positive rates of returns will be heavily influenced
by how Africa manages the effects of rapid, unprecedented
urbanisation. For now, population growth is concentrated
in both rural and urban areas. But, every year, for the next
three decades, 22 million people will shift from rural to urban
settlements, and by 2050 the urban population will have
increased threefold compared with 2010, and will amount to
1.34 billion people1 .
Compared to the West, which urbanised over a period of
about 200 years, this is a relatively short urban transition and
is occurring in the absence of adequate financing models and
governance systems to support such a rapid transition. The rate
and scale of this transformation has profoundly transformed
Africa’s urban landscape, placing significant pressure on
scarce public resources.
We simply do not yet understand how to harness the power
of the informal economy, while creating inclusive, sustainable
Growing urban populations2 exert pressure on already
overburdened, dilapidated infrastructure systems, increasing
the demand for basic and social services. The physical
manifestations are evidenced in heaving urban motorways
scattered with potholes, city-wide blackouts that bring economic
activity to a standstill, and a rising stench from uncollected
waste and non-existent sanitation systems. Infrastructure deficits
are present even in what are considered advanced, diversified
To maintain their role as the drivers of economic growth,
cities urgently require investment in infrastructure. A staggering
US$93 billion4 is needed annually for the next decade if we
are going to make a dent in resolving infrastructure backlogs
on the continent. Without the financial resources needed to
meet the finance requirements – which can be attributed to
the relationship between poverty, informality and the tax base – cities will have to look beyond their borders for financial
support. Importantly, they should not rely on national transfers5
from governments whose priorities generally exclude urban
Major international institutions have singled out infrastructure
investment as a catalyst for sustained recovery in the global
economy. Meanwhile, it has become evident that pension funds
and insurance companies, among others, have an appetite for
investing in infrastructure. Long-term liabilities and predictable
returns are not only complementary to the infrastructure lifecycle,
but these investments improve the capacity to raise capital from
other sources of finance.
Over the past decade, financial flows from the private sector
have grown continuously, yet cities still need more private
participation in urban infrastructure financing. But allocations
cannot continue to be ad hoc and uncoordinated. It is
concerning that there is no comprehensive data set that clearly
analyses how these financial flows are being allocated, nor is
there any sort of integrated planning system.
Compelling evidence demonstrates that while the needs of the
elites, multi-national companies and the upper middle class
are met by a patchwork of gated residential enclaves, modern
shopping centres and sophisticated fibre-optic networks,
elsewhere informality predominates within a splintered6 urban
Mega-projects seem to hold a significant allure for even the
most discerning investor despite the high risk of financial
overruns and failure7, not to mention the lack of social
dividends. Examples include the pipeline of mega-power
plants juxtaposed against negligible access to the grid and
exorbitant, exclusive electricity prices, and expansive dams, in
a context where improved water access is denied to over 30%
of the population8.
Sustained, equitable growth will be possible if there’s a surge
in infrastructure investment that facilitates the development
across sectors and infrastructure categories, i.e. economic
and urban infrastructure. But Africa’s urbanisation specificities
and infrastructure requirements also need to be interpreted
in the context of global environmental change, diminishing
finite natural resources, and accelerated climate change. The
convergence of these trends is becoming increasingly visible,
manifesting as environmental crises, while the associated risks
of inaction significantly outweigh the cost of adaptation9.
Valuable insights from academic research show us that the
specific configuration of networked urban infrastructure ensures
and determines urban economic reproduction10. Here is an
opportunity for investors to contribute to an 'Africa Rising 2.0'
As Africa’s urban landscapes are yet to be configured, there
is a unique opportunity to leapfrog obsolete and unsustainable
conventional technology of the 20th century and become
world leaders in creating low-carbon, resource-efficient,
productive urban spaces. Herein lies an attainable competitive
advantage for the continent.
Infrastructure, as the nexus between the impacts of
urbanisation, economic productivity and the resolution of
global environmental change, is a key intervention point. Much
needed are investments into renewable energy, reliable public
transport systems, efficient water and sanitation systems and,
importantly, a sustainably built environment. The imperatives of
meeting basic needs, while lifting economic productivity and
growth, can simultaneously be materialised by targeted and
coordinated infrastructure investments that take advantage of
the opportunity offered by Africa’s urbanisation.
1 Cartwright, A. 2015. Better Growth, Better Cities: Rethinking and Redirecting Urbanisation in Africa. NCE Cities, Paper 03. Online: http://2015
2 OECD/AfDB/UNDP (forthcoming): African Economic Outlook 2016: Sustainable Cities and Structural Transformation. Paris: OECD Publishing
3 OECD/AfDB/UNDP (forthcoming): African Economic Outlook 2016: Sustainable Cities and Structural Transformation. Paris: OECD Publishing
4 Foster, V. and C. Briceño-Garmendia (2010). Africa’s Infrastructure: A Time for Transformation. Africa Infrastructure Country Diagnostic. Washington
DC: Agence Française de Développement and World Bank.
5 Pieterse, E. 2014. Filling the Void: an agenda for tackling African Urbanisation. In: Africa’s Urban Revolution. Parnell, S. and Pieterse, E. (eds).
London: Zed Books.
6 Graham, S. and Marvin, S. 2001. Splintering urbanism: networked infrastructures, technological mobilities and the urban condition.
7 Flyvbjerg, B. 2014. What you should know about megaprojects and why: an overview. Project Management Journal, 45(2): 6-19.
Castellano, A., Kendall, A., Nikomarov, M. & Swemmer, T. 2015. Brighter Africa: The growth potential of the sub-Saharan electricity sector.
Electric Power and National Gas Working Group, McKinsey & Company.
8 Cartwright, A. 2015. Better Growth, Better Cities: Rethinking and Redirecting Urbanisation in Africa. NCE Cities, Paper 03. Online:
Parnell, S. and Pieterse, E. (eds.) 2014. Africa’s Urban Revolution. London: Zed Books.
Watson, V. 2014. African urban fantasies: dreams or nightmares? Environment and Urbanization, 26(1): 215-31.
9 Stern, N. 2007. The economics of climate change: the Stern review. Cambridge University Press.
10 APP (African Progress Panel). 2015. Power People Planet: Seizing Africa’s energy and climate opportunities.
Africa progress report 2015. Geneva: APP.
Hodson, M. and Marvin, S. 2009. Urban ecological security: a new urban paradigm? International Journal of Urban and Regional Research,
Hodson, M., Marvin, S., Robinson, B. and Swilling, M. 2012. Reshaping urban infrastructure. Journal of Industrial Ecology, 16(6): 789-800.
Intergovernmental Panel on Climate Change (IPCC). 2014. Chapter 12: Human Settlements, Infrastructure and Spatial Planning. Mitigation of
Climate Change. Working Group III- contribution to the IPCC 5th Assessment Report. Available: http://www.ipcc.ch/report/ar5/wg3/.
Kennedy, C., Cuddihy, J. & Engel-Yan, J. 2007. The Changing Metabolism of Cities. Journal of Industrial Ecology. 11(2): 43-59.