3.

64
ECONOMIC REPORT ON AFRICA 2017

AN OVERVIEW OF URBANIZATION
AND STRUCTURAL
TRANSFORMATION IN AFRICA

U
rbanization is one of the defining forces economic development, social development and
of the planet’s 21st century development. environmental protection (UNDESA, 2014). And
In 1950 the urban share of the world’s while urbanization is not a sufficient condition to
population was 30 per cent, but by 2050 it may well generate economic growth, with the right urban
be 66 per cent. Nearly 90 per cent of the increase form—the spatial layout of cities—and patterns, it
will be in Africa and Asia, the fastest urbanizing can bring major productive advantages to industrial
global regions (UNDESA, 2014). value chains. Managing the urban transition is thus
essential for economic growth and the well-being of
Africa’s urban transition overlaps with a demographic Africa’s urban and rural populations.
transition—moving from high mortality and high
fertility to low mortality and low fertility—which is Deliberate policy responses are required to
occurring across huge swathes of the continent.1 optimize urbanization and minimize challenges.
Urban centres lead this demographic transition, They involve balancing agglomeration economies
with its associated demographic dividend a positive and diseconomies to exploit urban scale and
factor for economic development. externalities, preventing slum formation by forward
planning and investing in infrastructure and public
It is therefore indispensable to harness the forces goods and creating jobs to absorb swelling urban
of urbanization for Africa’s sustained growth and populations including for women and young people.
structural transformation,2 including the economic These interrelated challenges and opportunities
and social challenges flagged in the previous two are complex and best handled through inter-sector
chapters. Multi-dimensional urbanization shapes and multi-level governance. Policies need to be
all three pillars of sustainable development: coordinated through national development planning
frameworks to link urban space and economic
development—as well as the public and private
Urbanization is one of the
sectors—and to be supported by investment and
defining forces of the planet’s urban planning at national and local levels.
21st century development.
The three thematic chapters of the 2017 ERA
(3, 4 and 5) aim to extract lessons and policies—
Managing the urban transition
grounded in theory and practice—from the evidence is essential for economic growth
on urbanization’s role in promoting industrial and the well-being of Africa’s
development and structural transformation in urban and rural populations.
Africa. They raise, in broad terms, the policy
issues fundamental to establishing and overseeing
productive urban systems and present the trade- more detail the nexus between the two elements,
offs facing policymakers. using a conceptual framework of drivers, enablers,
barriers and policy levers. Chapter 5 highlights
This chapter presents an overview of the mega- country experiences related to the urbanization–
trends of urbanization and structural transformation industrialization nexus from case studies, showing
with their significance for Africa’s development, how urban demand, productive systems of
outlining the synergetic ties between the two cities and productive cities themselves promote
processes and then debunking some of the old industrialization. Looking to the future, all three
“myths” about urbanization. Chapter 4 examines in chapters present policy implications.

3.1 URBANIZATION IN AFRICA: TRENDS, PATTERNS

AND DRIVERS

The world is increasingly urban, and Africa, along with the 1950s (figure 3.1), hitting 40 per cent of the
parts of Asia, is now an epicentre of urbanization. continent’s total in 2014 and projected to reach 56
Africa’s urban populations have been growing since per cent by 2050 (UNDESA, 2014). Urbanization

Figure 3.1 Urban populations by African subregion, 1950–2050

1,600
Projected
1,400

Africa’s urban population is

URBAN POPULATION (MILLIONS)

1,200
likely to triple by 2050, with
1,000
Africa and Asia accounting for
nearly 90 per cent of the world’s
800 urban population growth.

600

400

200

0
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Central East North Southern West

Source: Based on UNDESA (2014).

66
Figure 3.2 Mozambique’s urbanization, 1960–2014
ECONOMIC REPORT ON AFRICA 2017

30

25
POPULATION (MILLIONS)

20

15

10

0
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Rural population Urban population

Source: World Development Indicators.

Figure 3.3 Rwanda’s urbanization, 1960–2014

14

12
POPULATION (MILLIONS)

10

0
1964

1974

1984

1994

2004

2014
1960
1962

1966
1968
1970
1972

1976
1978
1980
1982

1986
1988
1990
1992

1996
1998
2000
2002

2006
2008
2010
2012

Rural population Urban population

Source: World Development Indicators.

was rapid in the post-independence period, slowed Urbanization “occurs now often in a span of about
in the 1990s and picked up again in the 2000s 30 years, as opposed to the more leisurely pace of
(UN-Habitat, 2010a). Africa’s urban population urbanization in today’s developed countries which
is likely to triple by 2050, with Africa and Asia played out over 100–150 years. Rapid urbanization
accounting for nearly 90 per cent of the world’s is traumatic…” (Henderson, 2010, p. 16). Urbanization
urban population growth (UNDESA, 2014).
 Figure 3.4 Urban agglomerations in Africa, 1990 and 2030

Tunisia
Some of Africa’s small
Morocco and medium-sized
Algeria
Libya cities are set to register
major growth by 2030.
Egypt

Mauritania
Mali
Cabo Verde Niger Eritrea
Sudan
Senegal Chad
Gambia Burkina Faso
Guinea-Bissau Djibouti
Guinea Benin
Nigeria Somalia
Sierra Leone Ghana Togo
Côte d'Ivoire South Sudan
Liberia Central African Republic Ethiopia
Cameroon

Uganda
Equatorial Guinea Kenya
Sao Tome and Principe Gabon Congo
Democratic Republic Rwanda
of the Congo Burundi
1990 Tanzania
0 - 500,000
Seychelles
500,001 - 1,000,000
Angola Comoros
1,000,001 - 2,500,000 Zambia Malawi
Mozambique

2,500,001 - 5,000,000 Mauritius

Zimbabwe
Botswana
Madagascar
> 5,000,000 Namibia
Swaziland
2030 South Africa Lesotho
0 - 500,000

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

500,001 - 1,000,000
1,000,001 - 2,500,000 The boundaries and names shown and the designations used
on this map do not imply official endorsement or acceptance
2,500,001 - 5,000,000 by the United Nations.
Data Source: World Population Prospect-UNDESA
> 5,000,000 GiSS/ACS/ECA 2016

in Africa excluding North Africa went from Africa is the least urbanized and urbanizing fastest,
15 per cent in 1960—around the same as Europe while Southern Africa is the most urbanized and
in the 17th century—to 38 per cent today, which moving more slowly. The trends in Mozambique
is higher than South Asia. The number of urban and Rwanda, for example, reflect their economic
residents in Africa nearly doubled between 1995 dynamics, policies and conflicts (figures 3.2 and 3.3).
and 2015 and is projected to almost double again
by 2035 (Barofsky, Siba and Grabinsky, 2016). Eight countries are largely rural with less than one
quarter of their populations living in urban areas.
There has also been a shift globally in the However, the least urbanized countries are forecast
urbanization–income nexus: countries now have a to double their urbanization in 35 years (UNDESA,
higher level of urbanization than countries at the 2014). In contrast a few countries are experiencing
same income in the past. Globalization and imports slow and even negative urbanization, including
of cheap food have made urbanization possible Mauritius, Swaziland and Zimbabwe.
without a domestic agricultural surplus (Fox, 2014).
Countries differ in their spatial pattern of urban
Naturally, African subregions and countries are growth. Most have a higher share of their urban
urbanizing at different speeds (chapter 2). East
67
68
population in their largest city (“urban primacy”) Four drivers contribute to urbanization: net rural–
than other regions of the world, and a few have urban migration within a country, international
ECONOMIC REPORT ON AFRICA 2017

faster growth in their largest city than in their other migration, natural growth (reflecting mortality
urban areas, including Burkina Faso, Cameroon, and fertility rates) and reclassification of rural
Republic of Congo and South Africa. However, quite towns to urban areas. Early theories of Africa’s
a few countries see most urban growth outside the urbanization centred on the role of migration,
largest city, with decreasing primacy particularly arguing that high wage differentials between
apparent in Benin, Gambia, Liberia, Rwanda and urban and rural areas drove migration, even with
Sierra Leone.3 high urban unemployment, because the urban
wage was attractive even if the chances of getting
Just as most of the world’s fastest-growing cities are an urban formal sector job were low (Harris and
medium-sized agglomerations with populations of Todaro, 1970). However, there is now a general
less than 1 million (UNDESA, 2014), some of Africa’s consensus that the role of migration in Africa’s
small and medium-sized cities are set to register continued urbanization has diminished in favour
major growth by 2030 (figure 3.4). In Malawi the of natural demographic growth (Dyson, 2009;
capital city and 24 other urban centres are growing Fox, 2014; Jedwab, Christiaensen and Gindelsky,
faster than the national rate of population growth, 2014). Reclassification may also have a role in some
while in Mozambique 16 urban centres are growing countries (Awumbisa, 2014): Uganda, for example,
faster than the capital and some major cities (Potts, in 1986 had 33 districts but now has 111 districts,
2014). all with administrative and commercial towns.

3.2 URBANIZATION’S LINKS TO RURAL AND

AGRICULTURAL ECONOMIES

Because a large share of Africa’s populations still live are closely tied to structural transformation: a
in rural areas, agriculture and rural development are faster process is associated with a faster rise in
important for structural transformation. A long-term agricultural productivity and a faster decline in the
development process, it is at a very early stage in share of agricultural output and labour force within
most African countries, particularly those with large the economy, leading to a more developed, higher-
rural populations. Three components are critical productivity and more urban economy (Timmer and
for Africa to achieve structural transformation: Akkus, 2008). Agricultural productivity can also
productivity gains in agriculture; expansion of contribute to the productivity and competitiveness
employment in industry and services at a rate fast of urban sectors because the price of food
enough to absorb the surplus in agricultural labour; affects the cost of labour: food in African cities is
and links between domestic agricultural production disproportionately expensive, at around 35 per cent
and urban food consumption. more than in comparator countries (Nakamura et al.,
2016), and labour in African cities is also more costly
Economic models have shown that reducing rural than expected, based on GDP (Iarossi, 2009).
poverty and increasing agricultural productivity

Agricultural productivity can also

contribute to the productivity
and competitiveness of urban
sectors because the price of
food affects the cost of labour.
3.3 ECONOMIC, SOCIAL AND ENVIRONMENTAL
IMPACTS OF CITIES’ GROWTH

THE BENEFITS OF The urbanization–income correlation (figure 3.5)

AGGLOMERATION ECONOMIES has many contributing factors with causation going
in both directions: economic opportunities arising
Agglomeration offers major economic benefits, in cities stimulate urban population growth, but the
but Africa’s urbanization is often characterized by clustering of populations and economic activities in
poverty and informality, with residential and social cities also holds economic potential. So urbanization
segregation creating poverty traps and reducing alone does not necessarily drive growth—the
economic mobility. Urban inequality and informality concentration of economic actors in space enables
are especially problematic when economic growth substantial productive advantages that can
is largely jobless, particularly for economies reliant contribute to growth, depending on the form that
on natural resources, which create “consumption urbanization takes (Henderson, 2010; Turok, 2014).
cities” (see section 3.10).

But on balance, the evidence is clear and broad- Urbanization alone does not
based for the economic benefits of urban space, necessarily drive growth—the
with a positive association between per capita GDP
and urbanization. “The simple bivariate regression
concentration of economic actors
below explains at least 55 per cent of variability in space enables substantial
across countries, suggesting that urbanization is a productive advantages that
very strong indicator of all aspects of productivity can contribute to growth,
growth over the long run, although clearly this simple
depending on the form

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

statistical relation does not establish causality”
(Annez and Buckley, 2009, p. 3). that urbanization takes.

Figure 3.5 Urbanization and GDP per capita across countries worldwide, 2014

1,000,000

100,000
LOG GDP PER CAPITA

10,000

1,000

100
0 20 40 60 80 100
Urbanization (% of population)
Uganda China The Netherlands

Source: World Development Indicators. 69

70
The economic advantages of urban clustering are final goods. Matching arises from larger pools of
rooted in economies of scale, which operate both employees, firms, buyers and suppliers, which helps
ECONOMIC REPORT ON AFRICA 2017

within firms and between them (Harvey, 2009; each firm or individual find the specific attributes
Quigley, 2008; UN-Habitat, 2013). Economies of demanded. Learning is promoted by cities as the
scale within firms arise as cities offer larger markets density of economic actors facilitates the diffusion
and firms spread fixed costs over more outputs. of knowledge and technology (Duranton, 2009).
Economies of scale between firms, also known as
agglomeration economies, arise from the proximity There are many ways to describe and categorize the
of economic agents and their interaction in the benefits arising from agglomeration economies. A
factor and product markets. 4 distinction is typically made between urbanization
economies (benefits from clustering of diverse
Agglomeration economies are often described as economic activities) and localization economies
the benefits of “sharing, matching and learning” (those from clustering of firms in the same sector).
(Harvey, 2009; AfDB, OECD and UNDP, 2016). Beyond this basic distinction, authors have classified
Sharing occurs when firms and urban inhabitants agglomeration economies in various ways (box 3.1).
share indivisible facilities and achieve joint
economies of scale in local infrastructure, services, These mechanisms of agglomeration economies
risks and the production of specialized inputs and bring about three general outcomes: they

Box 3.1 CATEGORIZING THE BENEFITS OF AGGLOMERATION ECONOMIES

From O’Sullivan (2007): From Quigley (2008): From Harvey (2009):

xx Sharing intermediate xx Specialization in the production xx Shopping, that is, shoppers
inputs, especially when of intermediate products. are attracted to places
inputs are highly specialized with many sellers.
xx Transactions costs and
or need to respond to rapidly
complementarities,  xx “Adam Smith” specialization, with
changing demand.
that is, better matches between outsourcing and increased
xx Sharing a labour pool, allowing workers and skills requirements productivity.
individual firms to expand or and between inputs and
xx “Marshall” labour pooling, that
reduce their labour force as production requirements.
is, workers with specialized
needed in the context of a
xx Education, knowledge and skills are attracted to an
large, stable labour market.
mimicking, for example the employment cluster.
xx Labour matching, that is, diffusion of ideas between
xx “Marshall-Arrow-Romer” learning
better matches between worker workers and between firms.
by doing, that is, learning from
skills and firm requirements
xx The law of large numbers, that repeated actions and knowledge
and reduced training costs.
is, more predictability and spill-over between firms.
xx Knowledge spillovers, that is, certainty arising from the
xx “Jane Jacobs” innovation, that
the conscious or unconscious statistical fact that larger groups
is, learning from observation of
transfer of ideas and techniques of economic actors will more
diverse activities in the same place.
first described by Marshall (1920). precisely adhere to averages.
xx “Adam Smith” division of
labour, with specialized
skills possible in the context
of many buyers.
“Romer” endogenous
Agglomeration economies are
xx
growth, that is, self-reinforcing
often described as the benefits of effects of clustering and
“sharing, matching and learning”. locational attractiveness.
xx Pure agglomeration, 
spreading the fixed costs of
infrastructure over more taxpayers.
generate increasing returns to scale that arise because of economies of scale. However, most
from geographical concentration and co-location— African cities still have major social inequalities:
clustering of firms and workers is central; via the poor, informal sector workers and women bear
cumulative causation, people and firms are attracted the brunt of negative externalities,6 including those
to places where there is already a concentration of related to safety, pollution and other health hazards.
activities, thus reinforcing and propelling existing As an increasing share of the population resides in
agglomerations; and path-dependency: a single firm cities, managing urban development with a pro-
or producer will not find it profitable to move from poor perspective will be critical to achieve inclusive
an existing cluster (Overman and Venables, 2005). development outcomes.

Agglomeration economies deliver a productive

advantage to firms and spur innovation. Large, Environmental risks of urban
diverse cities in particular facilitate the sharing of economic growth can be
knowledge, entrepreneurship and competition. They reduced through foresight and
play a “nursery” role and enable firms to incubate.
While some firms succeed and grow, less productive
investment, guiding cities to
firms close, allowing for capital and labour to be greener patterns of development.
reallocated. Creative destruction and the churning
process of firms and factor inputs underlie the role
of cities as engines of growth (Duranton, 2009). ENVIRONMENTAL EXTERNALITIES
AND OPPORTUNITIES FOR
Though most studies examine cities in developed GREENER GROWTH
economies, some demonstrate the economic power
of agglomerations in developing countries.5 Studies Environmentally, urbanization can offer benefits,
considering city size, industry size and employment reducing travel distances and preserving land.
density estimate elasticities of productivity However, urban agglomerations and industrial
ranging from 0.01 to 0.2, with most under 0.05 concentration in cities generate environmental costs

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

(UN-Habitat, 2013). Although findings consistently and negative externalities. Khan (2006) explores
suggest the presence of agglomeration economies, the trade-offs and choices facing cities using the
the nature and extent differ between contexts and Environmental Kuznets Curve, which depicts a
types of firms; therefore, generalized findings on bell curve relationship between environmental
agglomeration economies should not be blindly quality and per capita income. At low levels of
applied to a specific location or sector. Evidence development or per capita income, cities lack the
comparing countries suggests that low-income resources to invest in environmental amenities.
countries could benefit greatly from agglomeration Households and firms only begin demanding high
economies (Brülhart and Sbergami, 2008; Newman environmental quality when they reach a threshold
et al., 2016). of per capita income high enough to afford paying
for environmental amenities (Khan, 2006). Indeed,
fast economic growth, as seen in Chinese cities
SOCIAL IMPACTS for example, can harm the environment. Yet these
impacts can be mitigated or even prevented if
On social issues urbanization offers many urbanization is well managed and planned. Dense
benefits and is correlated with higher Human urban development preserves land, and cities with
Development Index scores in Africa (Njoh, 2003). a compact, connected urban form and good public
Access to education and to improved water and transport are positively associated with energy
sanitation is typically higher in urban than rural efficiency and low carbon emissions. So, while the
areas (UN-Habitat, 2010b; UNDP, 2015), and such urban development pressure exists and may result
services are less costly to provide in urban settings in severe negative environmental externalities,
especially in the short run, environmental risks of
urban economic growth can be reduced through
Urbanization is correlated with
foresight and investment, guiding cities to greener
higher Human Development patterns of development.
Index scores in Africa.
71
72
URBAN FORM: connected network of streets with space for non-
A CROSS-CUTTING IMPACT motorized modes of transport and for priority use
ECONOMIC REPORT ON AFRICA 2017

such as mass transit and freight. Heading off land

Cross-cutting to the economic, social and and property market constraints early, including
environmental impacts of urbanization is urban form. preventing speculation, can help forestall urban
Land use and transportation are major determinants problems and enable more compact development.
of urban economic competitiveness and the social Well-planned, serviced buildable plots can also help
and environmental impacts of urban development. to keep cities affordable.
Policies should aim to provide a well-planned,

3.4 INDUSTRIAL DEVELOPMENT AS A PATHWAY

TO STRUCTURAL TRANSFORMATION

Countries that have succeeded in structural This rising productivity in all sectors, including rural
transformation are urbanized and feature a ones, eventually brings rural–urban convergence in
consumption and production pattern driven by productivity and living standards (Harvey, 2009).
productive industrial and service sectors. They have
relocated resources (including labour) from low- to In the classical two-sector model of Lewis (1954),
high-productivity sectors, often involving industrial which looks at agricultural versus non-agricultural
development. activities, labour-intensive manufacturing grows on
the back of surplus labour released from agriculture.
The wage differential between the “modern” urban
sector and the “traditional” rural sector narrows and
Structural transformation could converges as the surplus population from agriculture
dramatically increase the income continues to enter the modern sector. The profit
created in industry is reinvested in the same sector,
levels of poor countries. generating a virtuous cycle of growth. Similarly,
in the Harris–Todaro Model of a dual urban–rural
economy (1970), the positive difference between
A key element of structural transformation involves the expected urban or industrial real income and
movement of labour out of rural activities and into the agricultural product per worker drives migration
urban ones (AfDB, OECD and UNDP, 2016; Rodrik, to cities and structural transformation. But many
2015). Historically, as economies develop and income who migrate to cities, attracted by the prospect
rises, the share of income that people spend on food of higher incomes, fail to secure urban formal
declines, and demand for manufactured products jobs and end up in the informal economy. In both
rises.7 At a later stage of development, a similar theories the urban income differential resulting
process of shifting demand takes place favouring from productivity advantages of manufacturing
services. Such changes in demand and trade are spur such transformation (Alvarez-Cuadrado and
accompanied by changes in economic structure, with Poschke, 2011).
the share of employment in agriculture declining
and that in industry or urban-based services rising. Structural transformation could dramatically
The process is generally accompanied by increasing increase the income levels of poor countries. In
accumulation of human and physical capital and developed economies much of the productivity
diversification (Chenery, 1982). The shift in sector increase comes from innovation and technology
employment from agriculture to industry and to upgrading in firms, but in developing countries, it
services is accompanied by productivity increases. will more likely come from relocation of resources
between sectors and between firms within the
 as workers move between firms, industries and
Taking developing countries as a cities, knowledge is diffused, benefiting more of
whole, as much as one-fifth of the the economy. Urban density and proximity are thus
productivity gap that separates important for spreading knowledge (Glaeser and
Resseger, 2010). Second, cities play a “nursery” role
them from advanced countries and enable start-up firms to explore and experiment
would be eliminated by the kind with new ideas. Finally, cities facilitate the churning
of reallocation of labour to largely of firms through market forces and competition,
allowing resources to relocate from less- to more-
urban-based economic sectors.
productive firms, enhancing the economy’s average
productivity (Duranton, 2009; Duranton, 2015).
same sector. This is because of the significant
productivity differential between sectors and Industrial development is not only the pathway but
the wide dispersion of productivity among firms also the corollary to structural transformation. Unlike
within sectors in these countries, making structural the service or agricultural sectors, manufacturing
transformation a powerful economic driver. exhibits unconditional convergence, meaning that
its productivity will catch up with that of developed
A study by McMillan and Rodrik (2011) estimates economies and is not conditional on country-
the impact of developing countries moving to the specific economic variables. Since 1960, output per
economic structure of rich countries (that is, the worker in manufacturing in developing countries
same sectoral distribution of their labour force), has increased to levels of advanced economies,
without changing their current level of average regardless of country-specific or regional factors.
productivity of their formal industrial and service This underlines African manufacturing’s potential to
sectors. The potential gains are large, particularly generate growth (Rodrik, 2013).
for some African countries: Ethiopia’s productivity
would increase six-fold, Malawi’s seven-fold and Unconditional convergence in manufacturing opens
Senegal’s 11-fold. Taking developing countries as up two channels for economy-wide growth. The

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

a whole, as much as one-fifth of the productivity first is productivity growth within manufacturing
gap that separates them from advanced countries itself, which contributes disproportionately to the
would be eliminated by the kind of reallocation of growth of the economy. The second is structural
labour to largely urban-based economic sectors. transformation driven by expanding employment
in manufacturing. Because manufacturing has the
In cities knowledge and ideas generate increasing potential to converge unconditionally to high levels
returns to scale. Firms invest in research and of productivity, a shift in labour out of agriculture
development to reap the benefits of productivity, into manufacturing can be strongly growth
increase their market share and maximize their enhancing. However, the effect depends on the size
profits. Relative geographical concentration of of the manufacturing sector, its growth rate and the
research and innovation to production in most productivity level of the economy itself. In a poor
industries and a strong association between country the differential growth of manufacturing is
diversity of employment in technologically related high, but its total effect may be limited by the small
industries point to the role of cities in effecting size of the sector and low employment growth, as
innovation (Duranton, 2015). in African countries (Newman et al., 2016; Rodrik,
2013).
But with low investment in research and
development in developing countries and narrow
scope for new products and processes, firms
and employees enhance their productivity by Knowledge is transferred and
learning by doing. Knowledge is transferred and technology diffused through
technology diffused through trade and foreign
trade and foreign direct
direct investment. Urbanization facilitates this
process through three potential channels. First, in investment. Urbanization
a dynamic framework, cities accumulate human facilitates this process.
capital through learning and agglomeration, and
73
74
3.5 LINK BETWEEN URBAN POPULATION GROWTH
ECONOMIC REPORT ON AFRICA 2017

AND INCOME IN AFRICA

The relationship between urbanization and income Since 2000, growth and income
appears generally weaker in Africa than in other parts
of the world, generating a narrative of “urbanization
have rebounded in many of the
without growth” (World Bank, 2001; Fay and Opal, same countries, reviving the link
2000). That Africa’s urban development is different between urbanization and income.
is highlighted by a comparison with Asia, which
has similar urbanization rates at higher incomes:
“Compared with other developing regions, the however, since 2000, growth and income have
continent is urbanizing while poorer” (Freire, Lall rebounded in many of the same countries, reviving
and Leipziger, 2014, p. 5). the association (figure 3.7). This is attributable
to commodity price rises, economic reforms and
In the 1980s and 1990s this phenomenon was improved governance (Rodrik, McMillan and
troubling for many African countries (figure 3.6); Verduzco-Gallo, 2014).

Figure 3.6 Urbanization and GDP per capita, 1980–1994, selected African countries

7000
GDP PER CAPITA (CONSTANT 2010 $)

6000 South Africa

5000

4000
Namibia
Angola
3000
Swaziland Republic of Congo
Tunisia
2000 Morocco
Nigeria
Cabo Verde
ZambiaCameroon
1000 Kenya Mauritania
Lesotho Senegal
Benin
Mali Sierra Leone
Mozambique
0
0 10 20 30 40 50 60 70

Urban population (%)

Source: World Development Indicators.

 Figure 3.7 Urbanization and GDP per capita, 2000–2014, selected African countries

8000
South Africa

7000
GDP PER CAPITA (CONSTANT 2010 $)

6000 Namibia

5000
Algeria

Tunisia
4000
Cabo Verde
Morocco
Republic of Congo
3000
Swaziland Nigeria

2000
Zambia
Lesotho Cameroon
Senegal Mauritania
1000 Mali
Kenya
Benin
Sierra Leone
0 Mozambique

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

20 30 40 50 60 70 80
Urban population (%)

Source: World Development Indicators.

3.6 URBAN DEVELOPMENT AND PREMATURE

DEINDUSTRIALIZATION

The experience of many African countries in has rebounded, but without strong employment
structural transformation has been unfavourable. growth in manufacturing (de Vries, Timmer and
Globally, the share of manufacturing in total de Vries, 2014). Between 2000 and 2015, most
output tends to rise with per capita income until African countries recorded a decline in their share
countries reach upper-middle-income status, and of manufacturing value added in GDP, averaging
then declines as services become more prevalent 2.3 percentage points.8
at higher incomes (Newman et al., 2016). In Africa
manufacturing and urbanization were going hand McMillan and Rodrik (2011) report that structural
in hand during the early post-colonial period of transformation contributed negatively to Africa’s
1960–1975, but manufacturing then declined, growth in the 1990s, as labour moved to less
limiting structural transformation and causing productive sectors. This was in part a result
growth to stagnate. Since the mid-1990s, growth of increased global competition that led some
75
76
and possibly even negative (Newman et al., 2016).
African countries are experiencing The continued trend of urbanization in the face of
“premature deindustrialization”.
ECONOMIC REPORT ON AFRICA 2017

deindustrialization has resulted in cities with poorer

populations and higher informality.

manufacturing firms to close and others to shed This decoupling of urbanization and industrial
labour to reduce costs. The loss of jobs in high- development is troubling, because “industrialisation
productivity sectors produced an urban labour force is the most efficient path to sustained growth and
that could only be absorbed in low-productivity economic convergence” (AfDB, OECD and UNDP,
informal activities and services (McMillan and 2016, p. 152) and “deindustrialization removes
Rodrik, 2011). the main channel through which rapid growth
has taken place in the past” (Rodrik, 2015, p. 5).
African countries are seeing their share of Service-led growth could in theory lead the shift
manufacturing peak at an earlier stage in their to higher-productivity jobs and to faster income
development than today’s advanced economies and growth, but most of the productive services that
failing to achieve the development and productivity can play this role are skill intensive, while the bulk of
benefits of a full manufacturing phase—sometimes service employment in African countries is neither
called “premature deindustrialization.” All developing technologically dynamic nor tradeable (Rodrik,
countries are challenged (especially Africa’s, but with 2015).
commensurate opportunities—box 3.2). Countries
are running out of industrialization opportunities In Africa, moves to industrialize agriculture are
sooner and at much lower levels of income than the also essential for its structural transformation.
early industrializers did. “Industrialization peaked Agriculture is the mainstay for a large share of the
in European countries like the United Kingdom, population and an important contributor to GDP
Sweden and Italy at income levels of around and yet its productivity is less than 56 per cent of
$14,000, in 1990 dollars. India and many African the global average (UNECA, 2013). Improving its
countries other than North Africa reached their productivity through industrial production methods
peak manufacturing employment shares at income and expanded value chains for agri-business and
levels of $700” (Rodrik, 2015, p. 15). Instead of agro-processing will help to provide food surplus
manufacturing, labour is shifting into services, but for cities and to supply agricultural inputs and
Africa’s service sector has been expanding faster in labour to industry. Industry can also induce the
jobs than value added, suggesting that the marginal use of technology and expansion of agricultural
productivity of new labour in this sector is low production by signalling increased demand for
food and agricultural raw materials through urban
markets and agro-industrial supply chains.
The continued trend of
urbanization in the face of
deindustrialization has resulted
in cities with poorer populations
and higher informality.

Box 3.2 AFRICA’S OPPORTUNITIES FOR HIGHER LABOUR PRODUCTIVITY

Africa is the region that has the most to gain from structural transformation and growth in manufacturing. It has the
greatest differences between sectors in output per worker. The average ratio of the highest to lowest productivity
sectors in Africa is more than twice that for Latin America and Asia. Moreover, output per worker in manufacturing
in Africa is six times that of agriculture.
All these factors show enormous potential for movement of labour to urban economic sectors to boost growth of
income per person in Africa—a potential that has yet to be tapped (Newman et al., 2016).
 3.7 NATURAL RESOURCE–BASED GROWTH AND
CONSUMPTION CITIES
Failure to achieve growth-enhancing structural
transformation is particularly common among African countries with better
countries with high natural resource exports. “There economic performance at a given
is a very strong and negative association between level of urbanization tend not to
a country’s reliance on primary products and the
rate at which structural transformation contributes
have high natural resource rents.
to growth. Countries that specialize in primary
products are at a distinct disadvantage” (McMillan countries with better economic performance at a
and Rodrik, 2011, p. 25). This arises partly due to given level of urbanization tend not to have high
Dutch disease (where labour-poor exports crowd natural resource rents.
out employment in higher value added sectors)
and the difficulty in managing volatile public At city level, natural resource dependency feeds
revenue streams (Collier, 2007). This disadvantage into the disconnect between urbanization and
associated with resource endowment (Fukunishi, structural transformation—prompting the term
2004), combined with colonial histories focused “consumption cities” (Jedwab, 2013; Gollin, Jedwab
on developing natural resource sectors (AfDB, and Vollrath, 2014). Consumption cities arise from
n.d.), is seen in figure 3.8, which shows that African the pull of natural resource earnings that generate

Figure 3.8 Urbanization, GDP and natural resource rents in Africa, 2014

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

Equatorial Guinea
Seychelles
Gabon
100,000
Mauritius Botswana

Namibia South Africa

Swaziland Morocco Tunisia
Arab Rep. Egypt Cabo Verde
Nigeria Rep. Congo
LOG GDP PER CAPITA ($)

Kenya Sudan Sao Tome and Principe

Zambia
Lesotho Cote d’Ivoire Djibouti
Tanzania Ghana Mauritania
Zimbabwe Senegal
1,000 Chad Cameroon
Comoros Mali Benin
Sierra Leone
Burkino Faso
Mozambique Togo Guinea-Bissau
Ethiopia
Niger Rwanda The Gambia
Liberia
Madagascar
Burundi Malawi Guinea Dem. Rep. Congo
Central African Republic

100
0 10 20 30 40 50 60 70 80
Urbanization (%)
Bubble Size = Natural Resource Rents Per Capita ($)
Source: World Development Indicators.

77
78
income but not a broad base of formal jobs, leading countries, by importing food and tradeable goods
to “premature urbanization,” with employment and by creating consumption cities that shift
ECONOMIC REPORT ON AFRICA 2017

growth in the non-tradeable service sector, often workers from tradeable to non-tradeable sectors,
with a strong informal component (Gollin, Jedwab creating a force of productivity-reducing reverse
and Vollrath, 2014). Consumption cities also tend to structural transformation (Gollin, Jedwab and
be disproportionately expensive (Turok, 2013). Vollrath, 2014). The upshot is that the benefits
of urbanization lie in job-rich industrial sectors
The consumption cities idea underscores the and agglomeration economies that support them,
importance of structural transformation and but Africa has yet to generate decent jobs at the
specifically labour-intensive industrial development, required scale, compelling job seekers to turn to the
as growth may fail at broad-based job creation. The informal sector, especially in urban areas.
source of income and growth is very important.
Countries can urbanize, as in some resource-rich

3.8 GROWTH FOR ALL

African cities are dominated by
A key factor in translating economic growth into the informal economy. Sixty-
social and human development and for achieving
inclusive growth is the creation and expansion
one per cent of men and 74
of decent work. Africa has a large, poor and per cent of women working
increasingly urban population and is seeing growing in non-agricultural sectors
inequality, for which reasons broad-based and job- are informally employed.
rich economic growth and structural transformation
centred on industrial development are crucial.
Africa. A survey of seven Francophone African
cities revealed that the average income of workers
EMPLOYMENT AND in private formal enterprises is three times higher
POVERTY REDUCTION than those in informal enterprises, pointing to a
wide productivity differential (ILO, 2009).

The relationship between economic growth and The decent work deficit in Africa is tied to weak
employment in Africa is weak (chapter 2). Africa’s industrial development and employment (figure 3.9),
economic growth since 2000 has been positive, but particularly in manufacturing. Worldwide the share
with weak capacity to create formal jobs—even in of paid employment in the total population tends to
the fastest-growing economies the employment be positively associated with industrial employment,
intensity of growth is low—the default employment but at 10 per cent in Africa, the share of employment
option is the informal economy for many Africans. in manufacturing is extremely low. The share in
Only a quarter of African young men and 12 per cent other global regions is at least 20 per cent and
of African young women end up in wage-earning exceeds 30 per cent in East Asia (ILO, 2014). In the
jobs before turning 30 (AfDB, 2012). face of estimated annual working age population
growth of 2.8 per cent (ILO, 2012), job-rich growth
Lacking many formal sector and manufacturing and industrial expansion are key for Africa.
jobs, African cities are dominated by the informal
economy. Sixty-one per cent of men and 74 per cent Success in job creation is also connected to
of women working in non-agricultural sectors are broader social development issues such as poverty
informally employed, with a larger share (60 per cent) reduction and gender equality. Without enough
of women in own-account self-employment paid jobs in the formal economy, the fight to reduce
(Vanek et al., 2014). Globally, the share of informal the number of working poor, especially women in
employment is the highest in Africa excluding North vulnerable employment, will become harder. 9 The
International Labour Organization (ILO) estimates Job creation and investment in human capital
male and female workers in vulnerable jobs in Africa through education and training are linked to
to be 70.1 per cent and 84.3 per cent, respectively combating poverty and reducing inequality. Labour-
(ILO, 2014). intensive manufacturing and well-paying industrial

Figure 3.9 Urbanization and industrial employment, 2007–2015

0 10 20 30 40 50 60 70 80

Algeria

Tunisia

South Africa

São Tomé and Príncipe

Morocco

Gambia

Botswana

Seychelles

Ghana

Liberia

Nigeria

Egypt

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

Namibia

Senegal

Benin

Mauritius

Zambia

Guinea

Sudan

Zimbabwe

Madagascar

Tanzania

Burkina Faso

Lesotho

Rwanda

Ethiopia

Malawi

Urbanization (% of population) Employment in Industry (% of employment)

Source: World Development Indicators.

Note: Average of data per country for the period.
79
80
and service jobs are needed to absorb the semi- 7 per cent in resource-rich countries, though the
skilled urban population and educated work force latter showed 2.2 times faster economic growth.
ECONOMIC REPORT ON AFRICA 2017

leaving university. The formal/informal duality of the

labour market and the wide spread of productivity Industry’s potential role in reducing poverty in Africa
and income across African firms suggest strong has recently been demonstrated in a counterfactual
potential for relocating resources and enhancing study where the share of industry in 12 African
productivity by promoting a supportive and countries was simulated at the same levels as Asian
competitive business environment. benchmark countries when they were at a similar
level of GDP. The authors found that most African
More than a decade of strong economic growth economies would have less poverty if their structure
has reduced poverty in Africa excluding North was closer to the benchmark Asian economies, and
Africa, but not by enough and with wide variation that a 1 per cent increase in industrial employment
across countries (chapter 2).10 Most resource-poor is associated with a 0.8 per cent reduction in the
countries have done better than resource-rich poverty headcount ratio (table 3.1).
countries, though initial poverty levels tended to
be higher in the former. Between 1995–2000 and Given how entrenched and prevalent the informal
2008–2011 the poverty headcount in resource- economy is, policymakers need to redouble their
poor countries fell by 16 per cent compared with efforts to ease its binding growth constraints. As
highlighted in chapters 4 and 5, informal enterprises
Labour-intensive manufacturing contribute to manufacturing value added and, when
operating in clusters, increase their productivity.
and well-paying industrial and But making the informal economy a key player in
service jobs are needed to structural transformation requires governments to
absorb the semi-skilled urban provide it with pathways to growth and formalization
by simplifying regulations and removing barriers,
population and educated work
including those tied to access to finance, poor
force leaving university. mobility, weak infrastructure and issues of land.

Table 3.1 Structural transformation and poverty simulations

COUNTRY OBSERVED POVERTY SIMULATED POVERTY PERCENTAGE CHANGE
HEADCOUNT HEADCOUNT WITH IN HEADCOUNT
INDUSTRY SHARE OF
GDP SIMILAR TO ASIAN
COMPARATORS

Botswana 2005 34.4 30.7 -10.8%

Ethiopia 2005 41.6 39.7 -4.6%
Ghana 2005 22.6 22.9 1.3%
Malawi 2011 65.6 63.5 -3.2%
Mali 2005 47.4 47.4 0.0%
Nigeria 2010 66.8 66.6 -0.3%
Rwanda 2005 52.8 48.5 -8.1%
Senegal 2005 31.1 40.3 29.6%
South Africa 2006 15.9 11.6 -27.0%
Tanzania 2007 62.6 55.2 -11.8%
Uganda 2005 36.2 34 -6.1%
Zambia 2003 64.9 63.4 -2.3%
Source: Newman et al. (2016).
WOMEN to one-half of growth in the “Asian miracle.” The
growth effect is felt not just through an increased
Development goals cannot be reached if women rate of labour participation, but also through
are left behind, but the industrial sector in Africa development variables such as life-cycle savings,
has not always included this crucial population. investment deepening, foreign capital flows and
Although women’s representation has gone up in schooling (Williamson, 2013). Drummond, Thakoor
service employment across Africa since the early and Yu (2014) have estimated that a 1 percentage
1990s and has approached or surpassed parity in point change in the age dependency ratio could
East, Southern and West Africa, it has not reached cause up to a 1.1 percentage point increase in GDP,
parity in industry. In Southern and North Africa, but to reach this potential, major investments in
women’s employment in industry is particularly human capital and labour-intensive industry and
low relative to men’s (based on ILO data). Women services are needed.
should therefore be better targeted and trained
for industrial jobs through gender-based policies at Africa other than North Africa is still early in the
regional, national and local levels (box 3.3). demographic transition (figure 3.10) and is yet to
benefit from a demographic dividend, particularly
with youth unemployment up to three times higher
YOUTH than adult employment (AfDB, OECD, UNDP and
UNECA, 2012). And in Africa young people with
Africa’s urban transition is accompanied by a higher education are two or three times more
demographic transition, creating an opportunity to likely to be unemployed than those with primary
leverage a time-limited demographic dividend. As education, in contrast to those in high-income
mortality and fertility rates fall and the working age countries (ILO, 2015). At the same time, industrial
population grows to become larger than the non- firms struggle to find enough skilled workers.
working age population, economies benefit from Promoting well-targeted technical and vocational
a decreasing dependency ratio. In East Asia such education and training is therefore vital for African
a demographic dividend accounted for one-third economies.

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

Figure 3.10 Age dependency ratios by global region, 1967–2015

100
(% OF WORKING POPULATION)

90
AGE DEPENDENCY RATIO

80

70

60

50

40

0
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015

Middle East & North Africa East Asia & Pacific South Asia
Europe & Central Asia Latin America & Caribbean Africa (exc. North Africa)

Source: World Development Indicators. 81

82
Box 3.3 INDUSTRIALIZATION WITH OR WITHOUT WOMEN? THE CASE OF ETHIOPIA’S CITIES
ECONOMIC REPORT ON AFRICA 2017

Data on key indicators of labour markets specifically for urban areas are rare. Ethiopia is the only country in Africa
with such data based on standard labour force surveys that are publicly available through the ILO. In its urban areas,
while similar numbers of men and women work in services, men are nearly twice as likely to be employed as women
in industry (box figure 3.1).

Box Figure 3.1 Sector employment by gender, Ethiopia, urban areas, 2012
3,500
3,500
3,000
3,000
2,500
2,500
2,000
2,000
1,500
1,500
1,000
1,000
500
500
0
0
Women Men
Women Men
Services ('000) Industry ('000) Agriculture ('000)
Services ('000) Industry ('000) Agriculture ('000)
Source: ILOSTAT (ages 10 and up).

Women in urban areas are particularly underrepresented in sectors including professional employment, skilled
agricultural employment, managerial positions and, the most, among plant and machine operators (box figure 3.2).

Box Figure 3.2 Employment by gender and subsector, Ethiopia, urban areas, 2012

Clerical Support Workers

Clerical Support Workers
Service and Sales Workers
Service and Sales Workers
Elementary Occupations
Elementary Occupations
Craft and Trade Workers
Craft and Trade Workers
Technicians and Associate Professionals
Technicians and Associate Professionals
Professionals
Professionals
Skilled Agricultural, Forestry and Fishery Workers
Skilled Agricultural, Forestry and Fishery Workers
Managers
Managers
Plant and Machine Operators
Plant and Machine Operators
0 10 20 30 40 50 60 70 80 90 100 %
0 10 20 30 40 50 60 70 80 90 100 %
Women Men
Women Men
Source: ILO-KILM database (ages 10 and up).
BOX 3.3 (CONT.) INDUSTRIALIZATION WITH OR WITHOUT WOMEN? THE CASE OF ETHIOPIA’S CITIES

Consistent with sectoral and occupational segregation, women are more likely to fall into vulnerable employment—
that is, own-account workers and contributing family workers (box table 3.1).

Box Table 3.1 Employment status by sex, Ethiopia, urban areas (ages 10 and up), 2012
WAGE SELF- EMPLOYER OWN- MEMBER OF CONTRIBUTING VULNERABLE
EMPLOYMENT EMPLOYED ACCOUNT PRODUCERS’ FAMILY EMPLOYMENT
WORKER COOPERATIVES WORKER

Per cent 52.5 46.3 0.9 38.0 0.9 6.5 44.5

of male
workforce
Per cent 47.0 52.2 0.4 39.5 0.9 11.4 50.9
of female
workforce
Gap (Ratio 0.90 1.13 0.44 1.04 1.00 1.75 1.14
of male
percentage
to female)
Source: ILO (2016).

In Ethiopia and elsewhere, urban labour markets are failing women. Raising the productivity of urban workers will
require specific attention to women’s employment.

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

3.9 REASONS FOR OPTIMISM
After the turn of the century, structural industry contributed to per capita income growth in
transformation began to contribute to growth in 2000–2014 (figure 3.11).
some African countries. In an update to the original
study demonstrating negative impacts of structural Other reasons for guarded optimism about Africa’s
transformation (McMillan and Rodrik, 2011), industrial future include the prospect of some
Rodrik, McMillan and Verduzco-Gallo (2014) found Chinese industries migrating to avoid rising labour
that half of their African sample (Nigeria, Zambia, and manufacturing costs at home (Page, 2012;
Ethiopia and Malawi) recorded an expansion in Rodrik, McMillan and Verduzco-Gallo, 2014) and
manufacturing after 2000 and that other countries
such as Mauritius and Senegal saw labour move
into high-productivity service sectors, generating Africa’s industrial future includes
the type of structural transformation required for the prospect of some Chinese
development (Rodrik, McMillan and Verduzco-Gallo,
2014). Another study that used demographic and
industries migrating to avoid
health survey data for 2000–2010 also concluded rising labour and manufacturing
that structural transformation has contributed to costs at home and the growing
labour productivity growth in Africa in around half role of urban consumption in
of its sample countries (McMillan and Harttgen,
2014). A decomposition of growth rates by sector Africa as a force for attracting
shows that in most African countries with data, investment and industrial growth.
83
84
Figure 3.11 Per capita value-added growth rates by country and sector, Africa, 2000–2014
ECONOMIC REPORT ON AFRICA 2017

PER CAPITA VALUE ADDED CAGR (%)

-2. -1 0 1 2 3 4 5 6

Ethiopia
Mali
Nigeria
Mozambique
Rwanda
Sierra Leone
Zambia
Mauritius
Cabo Verde
Tanzania
Morocco
Namibia
Lesotho
Botswana
Tunisia
Sudan
Burkina Faso
Egypt
Mauritania
Seychelles
Uganda
Congo, Dem. Rep.
Algeria
Kenya
South Africa
Malawi
Senegal
Cameroon
Swaziland
Benin
Congo, Rep.
Liberia
Guinea
Togo
Guinea-Bissau
Comoros
Gabon
Burundi
Gambia
Zimbabwe
Central African Rep.

Agriculture Industry Services

Source: World Development Indicators.

the growing role of urban consumption in Africa investment. By 2030, urban residents in Africa’s top
as a force for attracting investment and industrial 18 cities may well have a combined spending power
growth. Cities hosting a growing middle class are of $1.3 trillion (Leke et al., 2010).
potential investment destinations due to rising
consumer spending and expected infrastructure

3.10 MYTHS TO DISPEL

Alongside a more positive view by African attempted to slow urban growth, but their policies
governments and development partners of cities’ failed (Annez and Buckley, 2009; UN-Habitat,
potential—economically and socially—are seeing 2014) and may well have caused productivity
African countries express renewed commitment losses (Harvey, 2009). Policies that attempt to deter
to resurrecting their industrial sectors in national migration (through lack of service provision) should
development frameworks and in Agenda 2063 be avoided, given their adverse economic impacts
of the African Union. It is time to lay to rest the (Turok and McGranahan, 2013).
common myths of an earlier “anti-urban” era.
Finally, rural and urban development are
complementary. Multi-faceted economic linkages
MYTH 1: AS POLICIES TO IMPROVE between urban and rural areas mean that well-
CITIES WILL STIMULATE MIGRATION functioning urban economies have benefits for
AND ONLY MAKE CITIES MORE rural areas, too. Increasingly urban migrants
OVERCROWDED, POLICYMAKERS and their families straddle the urban–rural line,
SHOULD FOCUS ON RURAL developing livelihood strategies that combine

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

incomes from both sources (Annez and Buckley,
DEVELOPMENT TO SLOW URBANIZATION 2009; Potts, 2010). Urban migrants remit money
Africa’s urbanization is driven more by natural back to rural areas, boosting spending in education
growth than migration. Africa’s rates of migration and investments with benefits for rural economic
peaked in the 1960s, declining after that. Unlike productivity (AfDB, OECD and UNDP, 2016).
the experience of the United Kingdom during Migration, particularly to small towns, is often a
the industrial revolution, where natural urban way out of poverty. Urbanization also helps rural
population growth was lower in cities due to high economic development by creating markets for
death rates, Africa’s urban population growth is agricultural products and by providing business
driven by natural population growth based on a services to agricultural enterprises.
fall in mortality rates in cities. Urbanization will
therefore continue independently of migration or
rural development (Annez and Buckley, 2009; Fox,
MYTH 2: AFRICAN CITIES ARE CHEAP
2014). African cities are very expensive, more so than cities
in countries at similar income levels by a margin of
Additionally, past policies of preventing or slowing up to 31 per cent (Nakamura et al., 2016)—sweeping
migration failed. In the 1980s many African aside any assumption that industrial development
governments, concerned by rapid urbanization, in Africa will benefit from cheap labour and land
(chapter 4). Further, the indirect costs of poor
infrastructure provision actually put African firms
Multi-faceted economic at a competitive disadvantage, with many firms in
linkages between urban and South America and East Asia paying 50 per cent and
rural areas mean that well- 70 per cent less, respectively, for inland transport of
imports and exports to and from port, and African
functioning urban economies firms losing up to 13 per cent of their working hours
have benefits for rural areas too. owing to electricity outages (Iarossi, 2009).
85
86
Poorly functioning cities are pricey, especially MYTH 3: GOOD CITIES WILL
when land and property markets are artificially SPRING UP NATURALLY UNDER
ECONOMIC REPORT ON AFRICA 2017

constrained by poorly functioning institutions FREE MARKET CONDITIONS

or lack of serviced, buildable land. Lack of access
to land in suitable locations is among the major Cities are built on the foundation of public
factors preventing small firms from growing. The infrastructure. Cities grow around a network of
inability of property markets to respond to demand public spaces, the most critical of which are streets.
means higher prices. The cost of living in New York Government is important in defining how streets
city is the highest in the United States due to the and infrastructure will shape the city and can result
city’s productive advantages—but Luanda, Angola; in well-functioning—or poorly functioning—urban
Kinshasa, Democratic Republic of Congo; and space. In some places market demand seems to be
N’Djamena, Chad all have higher costs of living at the root of new property development; however,
than New York City (see table 4.6 in chapter 4).11 there are too often hidden subsidies supporting
Expensive cities undermine their urban productive the extra infrastructure costs of low-density high-
advantage. income areas, fuelling urban sprawl with deleterious
economic consequences.

The elements of a free market for

The cost of living in New York developing property can indeed create economic
city is the highest in the United responsiveness, allowing the city to adapt to
changing economic forces and respond to demand
States due to the city’s productive for housing and non-residential space. Likewise,
advantages—but Luanda, Angola; private development that is abetted by well-
Kinshasa, Democratic Republic functioning land and property markets can release
of Congo; and N’Djamena, economic potential (box 3.4). However, the role of
institutions and public investments must not be
Chad all have higher costs of underestimated. Public investment in infrastructure,
living than New York City. in a long-term planning framework, signals
government commitment and the growth prospects
of a city, helping to crowd in private investment in
industry. Well-coordinated public and private goods
play complementary roles.

Box 3.4 GURGAON, INDIA: A PRIVATE CITY

Gurgaon is an Indian city thriving on domestic and foreign industrial and information technology (IT) firms. In
1991 it was a small village in Delhi city’s the backyard with a population of around 121,000. In 2011 it had surged
to 1.5 million inhabitants. In 2013 nearly half the Fortune 500 companies had operations in Gurgaon.
Gurgaon did not have a municipal authority until 2008—and thus was developed by the private sector—for three
reasons. First, businesses and citizens of Delhi looked to nearby Gurgaon for cheaper land and greater growth
opportunities when Delhi property markets became tight. Second, in Haryana State, where Gurgaon is situated,
the legislature passed laws to enable large-scale land acquisition for private firms to develop townships. Third,
after big companies like General Electric initiated the growth momentum by coming in, its growth encouraged
others to help make the city an IT hub with all the modern appurtenances, including 43 shopping malls, luxurious
apartment towers, skyscrapers, golf courses and five-star hotels.
The absence of an active government role in Gurgaon’s development has a downside, however: very poor
infrastructure. “Sewage is often dumped in nearby rivers or open land. … Power outages are frequent. In addition
public transport is poor to non-existent ... Security is also poor in public areas where police are undersupplied” (p.
201). This failure poses a threat to the city’s long-term economic stability and growth.

Source: Rajagopalan and Tabarrok, 2014.

 of infrastructure and the inability of firms to access
The failure of governments to wide pools of skilled labour (Farole, 2011; Altbeker,
deliver public infrastructure McKeown and Bernstein, 2012). The cost to bring
and services is at the heart of infrastructure up to standards in lagging regions, or
urban and industrial failures. to create entirely new cities from scratch, is very
high and may still fail to attract enough firms and
Economically efficient cities residents to reach the competitiveness threshold
require early, strategic (see examples in chapter 5).
investments, particularly
Industrial enterprises must balance the benefits of
in energy, transport and
urban space with urban diseconomies such as higher
other infrastructure. land prices and congestion. Some industrial sectors
tend toward smaller specialized cities or the urban
The failure of governments to deliver public periphery to maximize their locational advantages.
infrastructure and services is at the heart of urban Industry parks can balance locational trade-offs,
and industrial failures. Economically efficient cities but must be well placed and connected to cities.
require early, strategic investments, particularly in Making cities work is usually better than forgoing
energy, transport and other infrastructure. the benefits they already have.

Economically efficient cities require early, strategic

investments, particularly in energy, transport and
MYTH 5: URBAN ISSUES ARE SOCIAL
other infrastructure. Socially equitable cities also ISSUES, NOT ECONOMIC ISSUES
require government action to assist low-income Africa’s cities generate enormous wealth, are at
households to find decent housing and connect the heart of the region’s innovative potential and
to jobs. Environmentally sustainable cities require are home to the region’s top firms.12 As detailed in
policies to correct the market failures caused by this chapter, the forces of agglomeration economies
negative externalities. give cities a productive advantage, making African

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

cities crucial players in economic transformation.
Industrial activity is particularly susceptible to They are at the centre of the emergence and
the failure of governments to intervene in urban growth of industries, high productivity services
development and planning. This is for three and value-added linkages to agriculture and other
reasons: industrial firms have firm-specific location rural commodities. This economic potential of cities
requirements which may include the need to access has not been fully exploited though. Leveraging
labour, access markets or ports, access inputs, these advantages and maximizing their economic
and access knowledge and ideas; some industries contributions is a critical condition for sustaining
require oversized plots or need to be separated from the current trend of economic growth and
conflicting uses; and industrial productivity and achieving structural transformation. The economic
competitiveness are sensitive to the availability of challenges and barriers facing Africa’s cities are
infrastructure, particularly electricity and transport. critical impediments to structural transformation;
cities must be supported to achieve their economic
potential through appropriate policies and
MYTH 4: INDUSTRY WILL DO institutions.
BETTER IF SEPARATED FROM THE
URBAN DYSFUNCTION OF CITIES
“Urban” policies – whether in
Except for natural resources extraction, most of housing, sanitation or health
Africa’s industrial activities are based in urban areas. – have economic implications.
Special economic zones (SEZs) are one option to
create pockets of industrial competitiveness, but
The economic dynamism of
if separated from the city, forgo major productive cities underlie their ability to
advantages (box 4.3 in chapter 4). Studies of SEZs in achieve development goals in
Africa have found that locating SEZs in lagging areas a host of many other areas,
contributes to their failure, owing to the poor quality
including human development. 87
88
In spite of the economic significance of cities, development. Particularly in the current context of
they are too often only discussed in relation to rapid urbanization in Africa, cities’ ability to create
ECONOMIC REPORT ON AFRICA 2017

housing, sanitation or siloed elements of human productive jobs and to expand revenue base for
development, and policies on these topics are inclusive and sustained economic development is
divorced from policies on urban economic imperative. An economic perspective is therefore
development. The urban narrative often focuses on an essential element of the urban narrative.
a single sector, for example the housing shortage or Understanding the complexity and interplay of the
financial challenges constraining service delivery. different urban sectors is fundamental to achieve
The role and the fate of cities is larger than their economic and human development. Urban social
fragmented policy frameworks. “Urban” policies issues are of course important; but they must not be
– whether in housing, sanitation or health – have the only lens through which urban policy is formed.
economic implications. The economic dynamism of The economic weight of cities demands that urban
cities underlie their ability to achieve development policy have an economic lens and that cities are a
goals in a host of many other areas, including human central component of development planning.

3.11 POLICY IMPLICATIONS AND LOOKING AHEAD

Urban development and its links to Africa’s
development is receiving new policy focus at If urban and industrial challenges
national, regional and international levels. Goal 11
of the Sustainable Development Goals, the New
are addressed jointly by urban
Urban Agenda and Agenda 2063 demonstrate some and industrial stakeholders,
recent thrusts. Based on the topics covered in this policies can be better
chapter, it is possible to derive a set of overarching coordinated and aligned for
policy considerations with more detailed policy
implications in later chapters: achieving common purposes.
ҋҋ Policymakers should recognize the
economic potential of cities for their key
role in structural transformation, especially Policies to connect urbanization and industrialization
in the face of rapid urbanization. are important for three reasons:
ҋҋ Policies should not seek to deter rural-urban
migration because it is not the driving force
behind urban population growth and is CITIES REQUIRE BETTER
needed for structural transformation. PERFORMING INDUSTRIALIZATION
ҋҋ The importance of the quality and form of
urban development must be addressed early
to avoid severe economic, environmental The failure of African industry to create broad-based
and social problems in the long term. jobs, develop functional value chains and support
ҋҋ Policies should make cities more efficient urban–rural linkages manifests in cities dominated by
for the sake of industrial firms’ cost base poverty, informality and inequality. Improvements
and their global competitiveness. to the industrialization process have a critical role to
play in tapping into the productive power of cities.
ҋҋ Good cities require well-planned public
Job-rich youth-employing sectors must grow if
investments and long-term public policy.
Africa is to take advantage of the opportunities for
ҋҋ Industrialization should be central to a demographic dividend. Manufacturing and labour-
development policy, primarily the absorption
absorptive industries with high productivity growth
of labour into job-rich industrial sectors
potential are part of the pathway to a prosperous
(but which natural resource–reliant
countries will find a particular challenge). urban future.
ҋҋ Cities need to serve the needs of women,
youth and informal sector workers.
 Table 3.2 Common urban and industrial issues
URBAN INDUSTRIAL

Urban infrastructure: electricity, transport, water and Infrastructure for industry: electricity, transport,
sanitation, and so on logistics, and so on
Employment clusters and urban jobs Clustering of competitive sectors
Cities in a nursery role, firm churning Industrial innovation
Urban-based R&D, IT and training institutions; Industrial upgrading
education and human capital
Consumption cities Resource-rich disadvantages, including currency
overvaluation
Duality of labour market in cities, constraints to labour Flexible labour markets, labour pooling, labour
mobility matching
Port cities, trade logistics Export competitiveness
Clustering; proximity; co-location of industries; urban Agglomeration economies
efficiency
Urban systems and SEZs Industrial location matching
Urban land market functionality Access to land

INDUSTRIALIZATION REQUIRES The resolve by African leaders to make the continent

MORE FUNCTIONAL CITIES prosperous, inclusive and sustainable puts structural
transformation at the centre of the region’s long-term
Cities are the hotbed of innovation and the dynamic vision and agenda (AU, 2015). As Africa continues

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

churning process of capital and labour that can to pursue structural transformation, harnessing
enable developmental leaps forward. Cities provide the opportunities generated by urbanization is
firms with access to consumer markets, the pooling critical. Despite the evidence that urbanization and
of labour and matching of specialized skill sets, industrialization are closely interlinked, this has not
opportunities for specialization, access to a better been the case in Africa, losing opportunities for
selection of inputs, and the sharing of knowledge growth and improved well-being. Opportunities
and ideas. Urban economies of scale also operate in and strategies for reconnecting urbanization and
the provision of public infrastructure and services, structural transformation are described in greater
lowering the cost for users. Overcoming the barriers detail in the following chapters.
to urban productivity, including poor urban form,
segregation and the urban infrastructure gap, holds
enormous benefits for industry.

URBANIZATION AND As Africa continues to pursue

INDUSTRIALIZATION HAVE structural transformation,
COMMON PROBLEMS harnessing the opportunities
generated by urbanization is
The development of cities and industries share critical. Despite the evidence that
challenges (table 3.2) including infrastructure urbanization and industrialization
deficits, labour markets with high informality are closely interlinked, this has
and constraints on the mobility of people and
goods. If addressed jointly by urban and industrial
not been the case in Africa,
stakeholders, policies can be better coordinated losing opportunities for growth
and aligned for achieving common purposes. and improved well-being.
89
90
REFERENCES
ECONOMIC REPORT ON AFRICA 2017

AfDB (African Development Bank). 2012. African de Vries, G., M. Timmer and K. de Vries. 2014. Structural
Economic Outlook 2012: Promoting Youth Transformation in Africa: Static Gains, Dynamic Losses. Paper
Employment. Abidjan, Côte d’Ivoire. prepared for the International Association for Research in
Income and Wealth 33rd General Conference, Rotterdam,
———. n.d. The Bank Group’s Urban Development Strategy:
the Netherlands, August 24–30, 2014. Available at:
Transforming Africa’s Cities and Towns into Engines of
http://www.iariw.org/papers/2014/deVriesPaper.pdf.
Economic Growth and Social Development. Abidjan:
Côte d’Ivoire. Available at: http://www.afdb.org/file- Dorosh, P., and J. Thurlow. 2014. “Can Cities or Towns
admin/uploads/afdb/Documents/Policy-Documents/ Drive African Development? Economywide Analysis for
Urban-Development%20Strategy-Rev%201.pdf. Ethiopia and Uganda.” World Development 63: 113–123.
AfDB, OECD (Organisation for Economic Co-operation Drummond, P., V. Thakoor and S. Yu. 2014.
and Development) and UNDP (United Nations African Department Africa Rising: Harnessing
Development Programme). 2016. African Economic the Demographic Dividend. Working Paper
Outlook 2016: Sustainable Cities and Structural WP14/143. Washington, DC: IMF.
Transformation. Paris: OECD Publishing. Available
Duranton, G. 2009. “Cities: Engines of Growth and
at: http://www.africaneconomicoutlook.org/.
Prosperity for Developing Countries?” Working Paper
AfDB, OECD, UNDP and UNECA (United Nations 12. Washington, DC: Center for Global Development.
Economic Commission for Africa). 2012. African
———. 2015. “Growing through Cities in Developing
Economic Outlook 2012: Promoting Youth
Countries.” The World Bank Research Observer 30 (1).
Employment. Accessed Novemeber 09, 2016.
Dyson, T. 2009. “The Role of the Demographic Transition
AU (African Union). 2015. Agenda 2063 The Africa
in the Process of Urbanization.” Paper prepared for the
We Want. Addis Ababa. Available at: http://www.
International Workshop on the Long Term Implications of
un.org/en/africa/osaa/pdf/au/agenda2063.pdf.
the Demographic Transition, Madrid, September 24–26,
Altbeker, A., K. McKeown and A. Bernstein. 2012. 2009. Available at: http://sgfm.elcorteingles.es/SGFM/
“Special Economic Zones: Lessons for South Africa FRA/recursos/doc/Actos/2009/Ponencias_ingles/Long_
from International Evidence and Local Experience.” term_Implications/405329082_2192009135719.pdf.
Executive Summary 19. CDE Round Table. Johannesburg:
Euromonitor International. 2016. Doing Business
Centre for Development and Enterprise.
beyond South Africa: Growth and Opportunity
Alvarez-Cuadrado, F., and M. Poschke. 2011. “Structural in Sub-Saharan Cities. London.
Change Out of Agriculture: Labor Push versus Labor Pull.”
Farole, T. 2011. Special Economic Zones in Africa:
American Economic Journal: Macroeconomics 3: 127–158.
Comparing Performance and Learning from Global
Annez, P., and R. Buckley. 2009. “Urbanization and Growth: Experience. Washington, DC: World Bank.
Setting the Context.” In M. Spence, P. Annez and R.
Fay, M., and C. Opal. 2000. Urbanization without Growth,
Buckley (eds.), Urbanization and Growth. Washington,
A Not-So-Uncommon Phenomenon. Policy Research
DC: Commission on Growth and Development.
Working Paper 2412. Washington, DC: World Bank.
Awumbisa, M. 2014. Linkages between Urbanization,
Fox, S. 2014. “Urbanization as a Global Historical Process:
Rural–Urban Migration and Poverty Outcomes in Africa.
Theory and Evidence from Sub-Saharan Africa.”
Geneva: International Organization for Migration.
Population and Development Review 38 (2): 285–310.
Barofsky, J., E. Siba and J. Grabinsky. 2016. Can Rapid
Freire, M., S. Lall and D. Leipziger. 2014. “Africa’s
Urbanization in Africa Reduce Poverty? Causes,
Urbanization: Challenges and Oportunities.”
Opportunities, and Policy Recommendations. Washington,
Working Paper 7. Washington, DC: The Growth
DC: Brookings Institution. Available at: https://www.
Dialogue. Available at: http://www.danny-
brookings.edu/blog/africa-in-focus/2016/09/07/
leipziger.com/documents/GD_WP7.pdf.
can-rapid-urbanization-in-africa-reduce-poverty-caus-
es-opportunities-and-policy-recommendations/. Fukunishi, T. 2004. International Competitiveness of
Manufacturing Firms in Sub-Saharan Africa. Chiba: JETRO.
Brülhart, M., and F. Sbergami. 2008. “Agglomeration
and Growth: Cross-country Evidence.” Journal Glaeser, E., and M. Resseger. 2010. “The
of Urban Economics 65 (2009): 48–63. Complementarity Between Cities and Skills.”
Journal of Regional Science 50 (1): 221–244.
Chenery, H. 1982. “Industrialization and Growth: The
Experience of Large Countries.” Staff Working Gollin, D., R. Jedwab and D. Vollrath. 2014.
Paper 539. Washington, DC: World Bank. “Urbanization with and without Industrialization.”
Journal of Economic Growth 21 (1): 35–70.
Collier, P. 2007. The Bottom Billion: Why the Poorest
Countries are Failing and What Can Be Done About
It. New York: Oxford University Press.
Harris, J., and M. Todaro. 1970. “Migration, Unemployment Nakamura, S., R. Harati, S. Lall, Y. Dikhanov, N. Hamadeh, W.
and Development: A Two-sector Analysis.” Oliver, M. Rissanin and M. Yamanaka. 2016. Is Living in
American Economic Review 60 (1): 126–142. African Cities Expensive? Washington, DC: World Bank.
Harvey, D. 2009. “Reshaping Economic Geography: Newman, C., J. Page, J. Rand, A. Shimeles, M. Söderbom
The World Development Report 2009.” and F. Tarp. 2016. Made in Africa: Learning to Compete
Development and Change 40: 1269–1277. in Industry. Washington, DC: Brookings Institution.
Henderson, J. 2010. “Cities and Development.” Njoh, A. 2003. “Urbanization and Development in
Journal of Regional Science 50 (1): 515–540. Sub-Saharan Africa.” Cities 20 (3): 167–174.
Iarossi, G. 2009. Benchmarking Africa’s Costs and O’Sullivan, A. 2007. Urban Economics.
Competitiveness. Washington, DC: World Bank. Singapore: McGraw-Hill.
ILO (International Labour Organization). 2009. The Overman, H., and A. Venables. 2005. Cities in the Developing
Informal Economy in Africa: Promoting Transition to World. London: Centre for Economic Performance.
Formality: Challenges and Strategies. Geneva.
Page, J. 2012. “Can Africa Industrialise?” Journal of
———. 2012. Global Employment Trends 2012. African Economics 21 (suppl 2): ii86–ii124.
Geneva. Accessed December 23, 2016.
Potts, D. 2010. Circular Migration in Zimbabwe and
———. 2014. Global Employment Trends 2014. Contemporary Sub-Saharan Africa. Woodbridge and
Geneva. Accessed Dcember 23, 2016. Rochester, NY: James Currey and Boydell and Brewer.
———. 2015. Global Employment Trends for Youth ———. 2014. Whatever Happened to Africa’s Rapid
2015. Geneva. Accessed December 23, 2016. Urbanization? London: Africa Research Institute.
ILOSTAT. 2016. ILOSTAT database. Available Quigley, J.. 2008. “Urbanization, Agglomeration and
at: http://www.ilo.org/ilostat Economic Development.” Working Paper 19. Washington,
DC: Commission on Growth and Development.
Jedwab, R. 2013. Urbanization without Structural
Transformation: Evidence from Consumption Cities in Africa. Rajagopalan, S., and A. Tabarrok. 2014. Lessons
Washington, DC: George Washington University. from Gurgaon, India’s Private City in Cities and
Private Planning. Available at: http://mason.gmu.
Jedwab, R., L. Christiaensen and M. Gindelsky. 2014.
edu/~atabarro/Lessons%20from%20Gurgaon.pdf.
Rural Push, Urban Pull and... Urban Push? New
Historical Evidence from Developing Countries. Rodrik, D. 2013. “Unconditional Convergence

AN OVERVIEW OF URBANIZATION AND STRUCTURAL TRANSFORMATION IN AFRICA

Washington, DC: George Washington University. in Manufacturing.” Quarterly Journal of
Economics 128 (1): 165–204.
Kessides, C. 2006. The Urban Transition in Sub-Saharan
Africa: Implications for Economic Growth and Poverty ———. 2015. Premature Deindustrialization. Princeton, NJ:
Reduction. Washington, DC: World Bank. Insitute for Advanced Study, School of Social Science.
Khan, M. 2006. Green Cities: Urban Growth and the Rodrik, D., G. McMillan and Í. Verduzco-Gallo.
Environment. Washington, DC: Brookings Institution. 2014. “Globalization, Structural Change, and
Productivity Growth, with an Update on
Leke, A., S. Lund, C. Roxburgh and A. van Wamelen.
Africa.” World Development 63: 11–32.
2010. What’s Driving Africa’s Growth. June. McKinsey
Global Institute. Available at: http://www.mck- Rosenthal, S., and W. Strange. 2004. “Evidence on the
insey.com/global-themes/middle-east-and-africa/ nature and sources of agglomeration economies.”
whats-driving-africas-growth. In V. Henderson and J.F. Thisse (eds.), Handbook
of Regional and Urban Economics 4: Cities and
Lewis, W. A. 1954. “Economic Development
Geography: 2119–2171. Amsterdam: Elsevier.
with Unlimited Supplies of Labour.” The
Manchester School 22 (2): 139–191. Storeygard, A. 2013. Farther on Down the Road:
Transport Costs, Trade and Urban Growth in Sub-
Marshall, A. 1920. Principles of Economics. London: Macmillan.
Saharan Africa. Washington, DC: World Bank.
McMillan, M., and K. Harttgen. 2014. What is Driving
Timmer, C., and S. Akkus. 2008. “The Structural
the ‘African Growth Miracle’? Abidjan, Côte d’Ivoire:
Transformation as a Pathway out of Poverty:
African Development Bank. Available at: http://
Analytics, Empirics and Politics.” Working Paper 150.
www.afdb.org/fileadmin/uploads/afdb/Documents/
Washington, DC: Center for Global Development.
Publications/Working_Paper_-_209_-_What_is_
driving_the_African_Growth_Miracle.pdf. Turok, I. 2013. “Securing the Resurgence of African
Cities.” Local Economy 28 (2): 142–157.
McMillan, M., and D. Rodrik. 2011. “Globalization, Structural
Change and Productivity Growth.” In M. Bacchetta and ———. 2014. “Urbanization and Development in the BRICS.”
M. Jansen (eds.), Making Globalization Socially Sustainable: In Handbook on Cities in the Global South, edited by
49–84. Geneva: International Labour Organization. S. Oldfield and S. Parnell. London: Routledge.

91
92 Turok, I., and G. McGranahan. 2013. “Urbanization and
Economic Growth: The Arguments and Evidence for Asia ENDNOTES
and Africa.” Environment and Urbanization 25 (2): 465–482.
ECONOMIC REPORT ON AFRICA 2017

UNDESA (United Nations Department of Economic

and Social Affairs). 2014. World Urbanization 1 See chapter 2.
Prospects: 2014 Revision. New York: United Nations 2 Four characteristics of development define structural
Department of Social and Economic Affairs. transformation: a declining share of agriculture in GDP
UNDP (United Nations Development Programme). and employment, a rise in industrial and service sectors,
2015. Human Development Report 2015: Work demographic transition from high rate of births and
for Human Development. New York: United deaths to low rates of births and deaths and a rapid
Nations Development Programme. process of urbanization (Timmer and Akkus, 2008).

UNECA (United Nations Economic Commission 3 Based on calculations using the World
for Africa). 2013. Economic Transformation Development Indicators.
for Africa’s Development. Addis Ababa. 4 Thorough reviews of the empirical literature
UN-Habitat. 2010a. State of African Cities. Nairobi. on agglomeration economies include Rosenthal
and Strange (2004), Duanton and Puga (2004)
———. 2010b. State of the World Cities 2010/2011 - Cities and Overman and Venables (2005).
for all: Bridging the Urban Divide. Nairobi: UN-Habitat.
5 Thorough reviews of the empirical literature include
———. 2013. Unleashing the Economic Potential of Rosenthal and Strange (2004), Duanton and Puga
Agglomeration in African Cities. Nairobi: UN-Habitat. (2004) and Overman and Venables (2005).
———. 2014. State of African Cities 2014: Reinventing 6 That is, where the economic costs of actions
the Urban Transition. Nairobi: UN-Habitat. are not borne by the instigator.
Vanek, J., M. Chen, F. Carré, J. Heintz and R. Hussmanns. 7 Under Engel’s law, elasticity of demand of agri-
2014. “Statistics on the Informal Economy: cultural products is lower than that of manufac-
Definitions, Regional Estimates and Challenges.” turing products. Thus a productivity increase in
WIEGO Working Paper 2. Cambridge, MA: Women in agriculture results in release of labour to sec-
Informal Employment Globalizing and Organizing. ondary and tertiary sectors of the economy.
Williamson, J. 2013. “Demographic Dividends 8 Based on World Development Indicators
Revisited.” Asian Development Review 30 (2). for 40 countries with data.
World Bank. 2001. World Development Report 9 In 2011 Africa’s share of working poor was esti-
2000/2001: Attacking Poverty. Washington, DC. mated at 82 per cent, more than double the global
World Development Indicators. WDI data- average of 39 per cent (Newman et al., 2016).
base. Available at: http://data.worldbank.org/ 10 Between 1996 and 2010, the share of people living on
data-catalog/world-development-indicators. less than $1.25 a day in Africa excluding North Africa
declined from an estimated 58 per cent to 48.5 per cent.
11 According to city cost of living rankings by Mercer, 2016.
These include rental rates. Cost of living is from an expa-
triate perspective but is useful for city cross-comparisons.
12 Cities in Africa generate a share of GDP and manufac-
turing value added disproportionate to their population
size (Dorosh and Thurlow, 2014; Kessides, 2006;
Storeygard, 2013), host a higher share of leading compa-
nies (UN-Habitat, 2010b) and have higher productivity
than other areas (Euromonitor International, 2016).