Africa’s Cities Opening Doors to the World Overview 01 Africa’s Cities Opening Doors to the World Overview Somik Vinay Lall J. Vernon Henderson Anthony J. Venables With Juliana Aguilar, Ana Aguilera, Sarah Antos, Paolo Avner, Olivia D’Aoust, Chyi-Yun Huang, Patricia Jones, Nancy Lozano Gracia, and Shohei Nakamura. 1 Africa’s Cities | Opening Doors to the World All queries on rights and licenses should be addressed to the Publishing and Knowledge Division, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Open to the World © 2017 International Bank for Reconstruction and Development / The World Bank, 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org Crowded Some rights reserved. This work is a product of the staff of The World Bank with external contributions. Note that The World Bank does not necessarily own each component of the content included in the work. 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Overview Africa’s Cities: All queries on rights and licenses should be addressed to World Opening Doors to the World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. The low development trap — Africa’s urban economies are limited to nontradable goods and services................. 6 Design and production by Zephyr www.wearezephyr.com Crowded, disconnected, and thus costly — Africa’s cities are limited to nontradables by urban form........... 10 Closed for business, out of service: The urgency of a new urban development path for Africa....................... 20 Springing cities from the low development trap............. 22 Opening the doors............................................................... 25 Annex: African cities used in the analysis........................ 26 References............................................................................. 28 2 Overview Africa’s Cities: Opening Doors to the World The low development trap — Africa’s urban economies are limited to nontradable goods and services Crowded, disconnected, and thus costly — Africa’s cities are limited to nontradables by urban form Closed for business, out of service: The urgency of a new urban development path for Africa Springing cities from the low development trap Opening the doors 3 Africa’s Cities | Opening Doors to the World African cities are crowded, disconnected, and costly. Typical African cities share three features that constrain urban development and create daily challenges for residents: Crowded, not economically dense — investments in infrastructure, industrial and commercial structures have not kept pace with the concentration of people, nor have investments in affordable formal housing; congestion and its costs overwhelm the benefits of urban concentration. Disconnected — cities have developed as collections of small and fragmented neighborhoods, lacking reliable transportation and limiting workers’ job opportunities while preventing firms from reaping scale and agglomeration benefits. Costly for households and for firms — high nominal wages and transaction costs deter investors and trading partners, especially in regionally and internationally tradable sectors; workers’ high food, housing, and transport costs increase labor costs to firms and thus reduce expected returns on investment. 55% African households face higher costs relative to their per capita GDP than do households in other regions — much of it accounted for by housing, which costs them a full 55 percent more in this comparison 4 In eight representative African cities, roads occupy far lower shares of urban land than in other cities around the world. 20% African cities are 20 percent more fragmented than are Asian and Latin American ones. In Harare, Zimbabwe, and Maputo, Mozambique, more than 30 percent of land within 5 kilometers of the central business district remains unbuilt. 472 million Urban areas in Africa comprise 472 million people. That number will double over the next 25 years as more migrants are pushed to cities from the countryside. The largest cities grow as fast as 5 4 percent annually. Africa’s Cities | Opening Doors to the World Africa’s Cities: Opening Doors to the World Cities in Sub-Saharan Africa are experiencing rapid population growth. Yet their economic growth has not kept pace. Why? One factor might be low capital investment, due in part to Africa’s relative poverty: Other regions have reached similar stages of urbanization at higher per capita GDP. This study, however, identifies a deeper reason: African cities are closed to the world. Compared with other developing cities, cities in Africa produce few goods and services for trade on regional and international markets (figure 1). To grow economically as they are growing in size, dense — not merely crowded? How can they acquire Africa’s cities must open their doors to the world. efficient connections? And how can they draw firms They need to specialize in manufacturing, along with and skilled workers with a more affordable, livable other regionally and globally tradable goods and urban environment? services. And to attract global investment in tradables From a policy standpoint, the answer must be production, cities must develop scale economies, to address the structural problems affecting which are associated with successful urban economic African cities. Foremost among these problems development in other regions. are institutional and regulatory constraints that Such scale economies can arise in Africa, and they will misallocate land and labor, fragment physical — if city and country leaders make concerted efforts development, and limit productivity. As long as African to bring agglomeration effects to urban areas. Today, cities lack functioning land markets and regulations potential urban investors and entrepreneurs look and early, coordinated infrastructure investments, at Africa and see crowded, disconnected, and costly they will remain local cities: closed to regional and cities. Such cities inspire low expectations for the global markets, trapped into producing only locally scale of urban production and for returns on invested traded goods and services, and limited in their capital. How can these cities become economically economic growth. The low development trap — Africa’s urban economies are limited to nontradable goods and services How does the production of locally consumed, or Since the 1980s, much of the growth in developing nontradable, goods and services trap cities into low countries has depended on the expansion of exports economic growth? Put simply, producing for local through industrial production and higher technology. markets limits returns to scale. The consumer base of Unlike nontradables, tradable goods and services one city, however large, is much smaller than a regional face elastic global demand. They may also allow for or global market. Specializing in nontradables for local agglomeration economies, which increase returns to consumption leads to diminishing returns (both for employment (box 1). Rapidly growing cities require technological reasons, and because prices are set locally growth in employment — and the returns to expanding and decline as supply increases). In contrast, export employment are highest in tradable sectors. markets are key to a dynamic industrial sector. 6 Overview | The low development trap — Africa’s urban economies are limited to nontradable goods and services FIGURE 1 Share of firms in internationally traded and nontradable sectors, selected developing-country cities (latest post-2010 data) Luanda Gaborone Dar es Salaam Kampala Kigali Bamako Accra Nouakchott Africa Nairobi Dakar Addis Ababa Kinshasa Lagos Niger Mombasa Lusaka Harare Middle East North Africa Tunis Beirut and Amman Cairo La Paz Asunción Latin America Caribbean Cordoba and the Medellin Bogota Buenos Aires Lima Yangon Pacific & South Asia East Asia and the Bangkok Zhengzhou City Dhaka Shenzhen City Delhi Chittagong 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Nontradable Tradable Source: Calculation based on the World Note: The data is from the latest WBE surveys post-2010 (with more than 15,000 Bank Enterprise (WBE) surveys. firms in capital cities, or cities of at least one million inhabitants, and with at least 50 firms sampled). Only firms with five or more employees are interviewed. The sectoral specialization analyses used the UN International Standard Industrial Classification of All Economic Activities (3.1 revision). Manufacturing, wholesale and commission trade, and business services (such as travel agencies, transport, financial intermediation) are all tradable activities. By contrast, construction, local services, retail trade, health and social work, and other local activities are classified as nontradable. 7 Africa’s Cities | Opening Doors to the World Because of manufacturing’s importance in entering Why have African urban economies remained local? regional and global markets, one can look at the share Two reasons stand out. One, paradoxically, is natural of manufacturing in GDP to see whether an urbanizing resource development. Such development can create economy is opening its doors to the world — or a high demand for nontradable goods and services. closing them. For example, we compare the structures As growth in the natural resource sector raises factor of non-African and African economies during periods prices, this sector crowds out others — notably when the urbanized share of the population rises manufacturing (figure 2). Countries that depend to 60 percent. Based on a cross-section of African heavily on natural resource exports tend to sprout and non-African economies, the comparison urban economies dominated by nontradable services shows that Africa’s cities are indeed trapped in the (“consumption cities”). This syndrome is known as production of nontradables for local markets. As the Dutch Disease. African economies attain 60 percent urbanization, Another reason for Africa’s local urban economies their share of manufacturing in GDP stays flat (or is related to urban form: how cities are built and somewhat falling) at about 10 percent. In contrast, the spatially organized. The findings in this report draw manufacturing share of the non-African economies on spatial and economic analysis based on 64 cities rises from 10 percent to nearly 20 percent (falling back covering large, medium, and small cities across only when urbanization exceeds 60 percent). Africa and shows that cities are growing under a patchwork of constraints — inefficient land markets, BOX 1 The promise of cities: Agglomeration economies and returns to scale What is an urban agglomeration economy, and how has many benefits. Certain public goods — like does it arise from economic density? A simple case infrastructure and basic services — are cheaper to is the reduction of transport costs for goods: When provide when populations are large and densely suppliers are close to their customers, shipping costs packed together. Firms located near each other can decline. In the late nineteenth century, four fifths share suppliers, lowering input costs. Thick labor of Chicago’s jobs were compactly located within markets reduce search costs, giving firms a larger four miles of State and Madison Streets — near pool of workers to choose from. And spatial proximity residences and infrastructure (Grover and Lall 2015). makes it easier for workers to share information and And in the early 1900s, New York and London were learn from each other. International evidence shows manufacturing powerhouses because factories were that knowledge spillovers play a key role in boosting built there to access customers and transport services. the productivity of successful cities. Many agglomeration benefits increase with scale: Evidence from East Asia (China, the Republic of Each doubling of city size increases productivity by 5 Korea, Vietnam) points clearly to a close association percent, and the elasticity of income with respect to between episodes of rapid urbanization and economic city population is between 3 percent and 8 percent development. Unfortunately, these links appear (Rosenthal and Strange 2004). weak in Sub-Saharan Africa. Cities in Africa are not Productivity gains are closely linked to urbanization delivering agglomeration economies or reaping urban through their ties to structural transformation and productivity benefits; instead, they suffer from high industrialization. As countries urbanize, workers move costs for food, housing, and transport. These high from rural to urban areas in search of better paid and costs — rising from coordination failures, poorly more productive jobs. Similarly, entrepreneurs locate designed policies, weak property rights, and other their firms in cities where agglomeration economies factors that lower economic density — lock firms into will increase their productivity. Close spatial proximity producing nontradable goods and services. 8 Overview | The low development trap — Africa’s urban economies are limited to nontradable goods and services overlapping property-rights regimes, suboptimal with original research and analysis to explain how and ineffective zoning regulations — that hinder the the form of African cities is trapping them into local drive toward dense concentrations of structures. and nontradable production — and to point leaders More, the resulting scattered neighborhoods lack toward policies that can spring the trap. planned transport and infrastructure connections. To be sure, urban form is not the only constraint Without either high physical density or adequate on Africa’s international competitiveness. Other connective infrastructure, an urban area falls short of important factors include business regulation; the lack its potential: It cannot offer firms the cost efficiencies of access to finance (for residential and commercial and job matching advantages that open a city’s doors investments); the peculiarity of Africa’s demographic to regional and global trade. transition; the absence of agricultural productivity Even if the symptoms of Dutch Disease are mitigated gains; and, more generally, the macroeconomic by falling commodity prices, the typical African city context. These factors compound the risk that Africa’s will remain bound by constraints related to its form. cities will remain unwelcoming to investment — that These physical constraints deter regional and global their development will continue along paths that investment. And because they are likely to persist preclude their entry into higher-productivity tradable as the principal constraints on economic growth, goods sectors. And yet this threat of path dependency addressing them is one of Africa’s most urgent is itself closely, demonstrably related to the evolution challenges today. This report combines recent findings of cities’ physical form. FIGURE 2 In resource exporting countries, urbanization is linked only weakly to the development of manufacturing and services Nonresource exporters Resource exporters 100 Urbanization rate in 2010 (percent) Sub-Saharan Africa Other 80 60 40 20 20 40 60 80 100 20 40 60 80 100 Share of manufacturing and services in GDP in 2010 (percent) Source: Gollin, Jedwab, and Vollrath 2016. 9 Africa’s Cities | Opening Doors to the World Crowded, disconnected, and thus costly — Africa’s cities are limited to nontradables by their urban form Many Sub-Saharan African cities share three Workers should consume more diverse products and characteristics that constrain economic development services, pay less for what they consume, and enjoy and growth. Two appear directly in the cities’ physical easier commutes because of proximity to their jobs. structures and spatial form: They are crowded with Africa’s cities feel crowded precisely because they people and dwellings, and they are disconnected by are not dense with economic activity, infrastructure, a lack of transport and other infrastructure. Finally, or housing and commercial structures. Without and in Part because they are disconnected, cities are adequate formal housing in reach of jobs, and without also costly. Indeed, they are among the costliest in the transport systems to connect people living farther world, both for firms and for households — not least away, Africans forgo services and amenities to live in because of their inefficient spatial form. cramped quarters near their work. Often informal, these downtown districts are likely to lack adequate infrastructure and access to basic services. It is true that, within Africa as in other developing regions, population density is generally and strongly correlated with indicators of livability. For example, access to Crowded cities services is higher for African households in urban African cities are crowded in that they are packed with areas than in rural ones (Gollin, Kirchberger, and people who live in unplanned, informal downtown Lagakos 2016). But this relative advantage does not dwellings to be near jobs. Why? The immediate reason imply that cities are livable enough. Across Africa, 60 is that the urbanization of people is not accompanied percent of the urban population is packed into slums by an urbanization of capital (box 2). Housing, — much higher than the 34 percent seen elsewhere infrastructures, and other capital investments are (United Nations 2015a). lacking. Across the region, housing investment lags urbanization by nine years (Dasgupta, Lall, and Related to the predominance of informal housing near Lozano-Gracia 2014). African city centers is their relative lack of built-up area. For example, in both Harare, Zimbabwe and An underlying cause of this crowding is that African Maputo, Mozambique, more than 30 percent of land cities are not economically dense or efficient within five kilometers of the central business district enough to promote scale economies and attract remains unbuilt. This land near the core is not left capital investment. In principle, cities should benefit unbuilt by design in African cities, as it can be in well- businesses and people through increased economic developed downtowns such as Paris (which reserves density. Firms clustered in cities should be able to 14 percent of downtown land for green space, making access a wider market of inputs and buyers, with densely populated districts more livable). Instead, reduced production costs thanks to scale economies. outdated and poorly enforced city plans, along with dysfunctional property markets, create inefficient land use patterns that no one intended. The downtown lacks structures — despite being crowded. 3 Throughout Dar es Salaam, 28 percent of residents live at least three to a room This figure rises to 50 percent in Abidjan 10 Overview | Crowded, disconnected, and thus costly — Africa’s cities are limited to nontradables by their urban form BOX 2 Low capital investment in Sub-Saharan African cities during a period of rapid urban growth Africa’s cities are crowded because they lack formal, planned housing that is connected to jobs and services. Without sufficient formal development, informal settlements that are relatively central and thus close to jobs — such as Kibera in Nairobi, and Tandale in Dar es Salaam — are constantly growing in population. In Dar es Salaam, 28 percent of residents live at Housing investment in Africa has also lagged least three to a room; in Abidjan, 50 percent (World behind that in other low income and middle Bank 2015a, World Bank 2016). And in Lagos, income economies. Between 2001 and 2011, Nigeria, two out of three people dwell in slums African low income countries invested 4.9 percent (World Bank 2015b). of GDP in housing, compared with 5.5 percent elsewhere; and African middle income countries One factor in the crowding of Africa’s cities is invested 6.5 percent of GDP in housing, compared their lack of capital investment, which for the with 9 percent elsewhere (Dasgupta, Lall, and past four decades has remained relatively low Lozano-Gracia 2014). in the region, at around 20 percent of GDP. In contrast, urbanizing countries in East Asia — These figures underline the fact that Africa is China, Japan, the Republic of Korea — stepped up urbanizing while poor — indeed, strikingly poorer capital investment during their periods of rapid than other developing regions with similar urbanization. Between 1980 and 2011, China’s urbanization levels. In 1968, when countries in capital investment (infrastructure, housing, and the Middle East and North Africa region became office buildings) rose from 35 percent of GDP to 40 percent urban, their per capita GDP was 48 percent, while the urban share of its population $1,800 (2005 constant dollars). And in 1994, rose from 18 percent to 52 percent between when countries in the East Asia and Pacific region 1978 and 2012. In East Asia as a whole, capital surpassed the same threshold, their per capita investment remained above 40 percent of GDP at GDP was $3,600. By contrast, Africa, with 40 the end of this period. percent urbanization, today has a per capita GDP of just $1,000 (box figure 2.1). BOX FIGURE 2.1 Sub-Saharan Africa is urbanizing, but at lower levels of per capita GDP than other regions $3,617 41% 41% 37% 37% GDP $1,860 $1,806 Urbanization per capita rate (2005 dollars) $1,018 (percent) Latin America Middle East East Asia Sub-Saharan and the and North and the Africa Caribbean Africa Pacific (2013) (1950) (1968) (1994) Source: Estimations using United Note: Years in parentheses are those with available data in which the region was Nations 2014 and WDI 2014 for the closer to Sub-Saharan Africa’s present urban share of about 40 percent. In 1950 share of urban population, and WDI urbanization in Latin America and the Caribbean was 41 percent; in 1968 urbanization 2014 and Maddison Project to estimate in Middle East and North Africa was 41 percent; in 1994 urbanization in East Asia and GDP per capita. the Pacific was 37 percent; in 2013 urbanization in Sub-Saharan Africa was 37 percent. 11 Africa’s Cities | Opening Doors to the World FIGURE 3 Connections among people as a function of population near the city center: Nairobi, Kenya is more fragmented and less well-connected than Pune, India Nairobi (population 4.265 million) Pune (population 5.574 million) 0 - 364 365 - 103 1,033 - 22 2,295 - 40 4,042 - 67 6,735 - 97 9,777 - 13,984 13,985 - 19,534 19,535 - 27,747 27,748 - 39,955 Source: Henderson and Nigmatulina 2016. Note: The blue bars show the highest densities in the city. While these peaks 39,956 - 53,912 are concentrated in Pune, in Nairobi they are separated by lower densities. 53,913 - 71,973 12 Overview | Crowded, disconnected, and thus costly — Africa’s cities are limited to nontradables by their urban form Our analysis of imagery from satellites and geographic The lack of connections among neighborhoods information systems (GIS) confirms that in African means that African cities, compared with developed cities, capital investment not only appears low near and developing cities elsewhere, show both lower the urban core, but rapidly declines outside it. A stark exposure and higher fragmentation in connections contrast emerges between patterns of downtown among people living near the city center. population density — in which Africa largely resembles • Low exposure means that people are disconnected other regions — and of economic density (as reflected from each other. At a given distance (usually 10 in patterns visible from above that indicate capital kilometers), they cannot interact with as many investment). Africa’s generally low levels of urban people as in a city with higher exposure. capital investment also appear in the assessed worth of building stock. For example, the total economic • High fragmentation means that within a specified value of buildings in Dar es Salaam is estimated at area, population density varies widely: Its peaks around US$12 billion (Ishizawa and Gunasekera 2016), are scattered, not clustered in a way that could or just less than three times the city’s share of GDP. promote scale economies. Fragmentation increases Even lower are the estimated values for Nairobi, Kenya infrastructure costs, while it lengthens travel times ($9 billion) and Kigali, Rwanda ($2 billion). Compared among homes, job sites, and businesses. with cities in Central America, African cities have low According to a new study of 265 cities in 70 countries replacement values for their built-up area, built-floor that controls for total population and per capita GDP, area, and population. Thus, Nairobi has the highest average exposure near the center is 37 percent lower replacement value per square kilometer among the in African cities than in Asian and Latin American cities, four African cities studied, yet it is just 60 percent of while African cities are 23 percent more fragmented the value of Tegucigalpa, which has the lowest among (Henderson and Nigmatulina 2016). The contrast six Central American cities. between Nairobi, Kenya and Pune, India illustrates Although the capital investment shortfall that makes these differences (figure 3). African cities crowded appears across all building One pattern that explains the low exposure and high types, it is most severe in housing. In Nairobi, for fragmentation of African cities is their relative lack of example, commercial and industrial structures explain new development near the center. New construction 55 percent of the total value of building stock — even is not clustered to make capital more concentrated though these structures occupy just 4 percent of the and increase economic density. Instead, it tends to city’s area. Residential development is urgently lacking. push the boundaries of the city outward. In urban development language, this kind of building-out represents either expansion or leapfrog development; opposed to both is infill, which makes cities denser. • Expansion development enlarges a city’s footprint at Disconnected cities the edge of the consolidated urban area. While the lack of capital by itself might not always pose • Leapfrog development also enlarges the footprint, an obstacle to economic growth, African cities also but does so by establishing satellite areas — parcels are disconnected in that they are spatially dispersed. of newly built land that do not border on or overlap Structures are scattered in small neighborhoods. existing development. Without adequate roads or transport systems, commuting is slow and costly, denying workers access • Infill development is construction on unbuilt parcels to jobs throughout the larger urban area. People surrounded by existing developments. and firms are separated from each other and from Among the three types of new development, infill economic opportunity. And because urban form is is the best for economic exposure, or connections determined by long-lived structures that shape the city among people: It defragments the city and connects for decades — if not centuries — cities that assume a workers, jobs, and firms. Expansion and leapfrog disconnected form can easily become locked into it. development are the opposite: They are less likely to foster economic connections. Our analysis of GIS imagery for 21 African cities over 2000–2010 shows that, during this period, between 46 and 77 percent of new development occurred as expansion. The share of infill was typically much lower. 13 Africa’s Cities | Opening Doors to the World FIGURE 4 Leapfrog development: Undermining scale and agglomeration economies in African cities 60 1990–2000 percentage of total new patches 50 2000–2010 New leapfrog patches a 40 30 20 10 0 k ey y Su is ta la a To o a do ar ou s no Lu bi ka ak ra t m i la M la Ba to o Ka al ot go kr oe Bu uj ub ay ak d pa ya ro ku u ga ak ou c g m sa ug Ka ch Ad Ab na Ac ap Ki La w m dh N ai ia ua D Co N N in W N O Source: Construction based on data in Baruah (2015). Note: Leapfrog patches as a share of all new development patches, by city, 1990–2000 and 2000–2010. Leapfrog patches are defined as continuous built-up area that do not border or intersect with existing development. An even greater concern than the preference for In Nairobi, the average journey-to-work time is one expansion over infill development is the increase of the longest for 15 global cities studied (IBM 2011). in leapfrog development, which is now appearing Part of the reason is that walking accounts for a large outside various cities. In Bamako and Maputo, such share of commuting — in Nairobi about 41 percent leapfrog patches account for more than 50 percent (UNEP and FIA Foundation 2013). But even if more of the change to the urban fabric over 2000–2010. In city dwellers could afford transport by car or minibus, many other cities this share approaches or exceeds 40 commutes would remain impractical for lack of roads. percent (figure 4). The patches often being small, their In eight representative African cities, roads occupy far isolation from existing development will undermine lower shares of urban land than in other cities around city governments’ efforts to provide the networked the world. services that require scale economies — and that The deficiency of urban road infrastructure is made undergird urban productivity. worse by its extreme concentration near the core The prevalence of expansion and especially leapfrog of African cities, leaving outer areas disconnected. development is just one pattern that makes urban Our GIS study shows that in well-developed cities commuting challenging in African cities; another is outside Africa, land allocated to roads declines only deficient transport infrastructure. Traffic congestion gradually as one looks out from the center toward the can hobble the economy with long commuting times. periphery: An example is Paris (figure 5). By contrast, 14 Overview | Crowded, disconnected, and thus costly — Africa’s cities are limited to nontradables by their urban form FIGURE 5 Paved roads occupy a smaller share of urban land in Africa than elsewhere — and usually drop off abruptly beyond the city center Built-up Paved roads Open space Barcelona London 100 100 Percentage of urban land Percentage of urban land 80 80 60 60 40 40 20 20 CBD CBD -25 -20 -15 -10 -5 0 5 10 15 20 25 -25 -20 -15 -10 -5 0 5 10 15 20 25 Paris Kigali 100 100 Percentage of urban land Percentage of urban land 80 80 60 60 40 40 20 20 CBD CBD -25 -20 -15 -10 -5 0 5 10 15 20 25 -25 -20 -15 -10 -5 0 5 10 15 20 25 Africa’s urban roads are disproportionately clustered density, Africa’s city centers remain dominated by a near the center. In Addis Ababa, Dar es Salaam, Kigali, retail industry that does not benefit from economies and Nairobi, paved roads drop off so abruptly outside of specialization: For example, in Kigali and Kampala the downtown area that they nearly disappear (Dakar many urban workers purvey food and beverages. being a notable exception to the African pattern). The spatial fragmentation of Africa’s cities prevents Households in African cities find it difficult to settle firms from reaping both scale and agglomeration outside central business districts, as the lack of benefits. It prevents scale economies by reducing paved roads makes commuting from the periphery workers’ access to jobs, constraining firm size: Africa’s impractical (Felkner, Lall, and Lee 2016). urban firms employ 20 percent fewer workers on average than comparable firms elsewhere (Iacovone, Considered as a whole, the average urban area Ramachandran, and Schmidt 2014). In addition, spatial in Africa is not strikingly less built-up than its fragmentation hinders agglomeration economies by counterparts in other regions (except in Asia, where preventing job market pooling and matching and the cities are more densely built; Angel and others transfer of skills and knowledge — a special concern in 2011). What is lacking is the economically dense light of African cities’ low human capital endowments. concentration of capital and infrastructure investment Urban agglomeration economies thrive on knowledge that enables households to live decently and spillovers, which presuppose a mix of specialized affordably near jobs. Because of this lack of economic 15 Africa’s Cities | Opening Doors to the World FIGURE 5 (cont.) Paved roads occupy a smaller share of urban land in Africa than elsewhere — and usually drop off abruptly beyond the city center Built-up Paved roads Open space Dar es Salaam Nairobi 100 100 Percentage of urban land Percentage of urban land 80 80 60 60 40 40 20 20 CBD CBD -25 -20 -15 -10 -5 0 5 10 15 20 25 -25 -20 -15 -10 -5 0 5 10 15 20 25 Addis Ababa Dakar 100 100 Percentage of urban land Percentage of urban land 80 80 60 60 40 40 20 20 CBD CBD -25 -20 -15 -10 -5 0 5 10 15 20 25 -4 -2 1 3 5 7 9 11 13 15 17 19 21 23 25 Source: Based on Antos, Lall, and Lozano- Note: CBD = Central Business District. Data for European cities are from the European Gracia 2016 and Felkner, Lall, and Lee 2016. Environment Agency’s Urban Atlas data layers. Data for African cities are from very high resolution (0.5 m) satellite images taken in 2013. cognitive skills in the labor market. African urban land use is fragmented. Its transport infrastructure workers are relatively poor in such skills, according is insufficient, and too much of its development to results from the first initiative to measure skills in occurs through expansion rather than infill. While the low-income and middle-income countries (the World underlying causes of these problems are regulatory Bank STEP Skills Measurement Program). If workers and institutional, the effects of spatial fragmentation are to sort by ability — as they should to generate are material: It limits urban economies. agglomeration economies — then Africa’s cities will need, among other things, to restructure their labor Costly cities market by attracting and growing more specialized talent. In sum, the ideal city can be viewed economically as an efficient labor market that matches employers and job seekers through connections (Bertaud 2014). Fragmented urban forms impose high living costs on The typical African city fails in this matchmaker role. workers and households, resulting in indirect costs A central reason for this failure — one that has not and other constraints for firms: In short, African yet been sufficiently recognized — is that the city’s cities are costly both to live in and to do business in. 16 Overview | Crowded, disconnected, and thus costly — Africa’s cities are limited to nontradables by their urban form FIGURE 6 A fragmented urban form is associated with higher urban costs 0.4 0.2 Price index 0 -0.2 -0.4 -1 -0.5 0 0.5 1 People within 10 kilometers of average worker Source: Estimations using Nakamura Note: The figure shows a residual-on-residual plot. The x-axis depicts the residuals from a et al. (2016) and Henderson regression of the Puga10 Index, log scale (based on Henderson and Nigmatulina, 2016) controlling and Nigmatulina (2016). for log GDP per capita, log population, a dummy for SSA, and percentage of urban population. The y-axis plots residuals of the adjusted price index, log scale (based on Nakamura et al., 2016), on the same controls. The lower the people within 10 km of the average worker, the higher the price index. According to the new research underlying this report, Africa’s higher urban living costs appear in rents, the higher cost of living in African cities is related to food prices, and prices for other goods and services. their lack of dense spatial form and infrastructure City dwellers pay around 35 percent more for food connections (figure 6). Higher spatial densities appear in Africa than in low-income and middle-income to reduce costs: For example, a 1 percent reduction in countries elsewhere: a premium that looms larger spatial fragmentation measured by the Puga Index is given the high share of African household incomes associated with a 12 percent reduction in urban costs, that goes to food. Even higher differentials apply controlling for income levels and city population. to urban housing (55 percent higher in urban areas of African countries, relative to their income levels) While higher living costs directly affect workers, they and transport (42 percent higher in African cities ultimately are borne by urban firms. Higher wages than cities elsewhere, including vehicle prices and mean lower returns — unless workers are more transport services). Overall, urban households pay 20 productive. And without the economic density that to 31 percent more for goods and services in African gives rise to efficiency, Africa’s cities do not seem countries than in other developing countries (figure 7). to increase worker productivity. The result is that investment expectations remain low for cities in the region. 17 Africa’s Cities | Opening Doors to the World FIGURE 7 Urban living costs in Sub-Saharan African countries in 2011 exceeded costs elsewhere, relative to Africans’ lower per capita GDP 210 190 Sub-Saharan African countries Other economies 170 Fitted values Adjusted price level index 150 Angola Gabon S. Africa 130 Namibia Central Equitorial African Congo Guinea Republic Mauritius Botswana Swaziland Congo. 110 Dem. Rep. Guinea- Chad Ghana Bissau Mozambique Sudan Malawi Lesotho Zambia Liberia Togo Senegal Nigeria Burkina Faso Benin 90 Niger Cameroon Mali Kenya Rwanda Guinea Sierra Leone Mauritania Burundi Uganda 70 Gambia Madagascar Tanzania Ethiopia 50 6 7 8 9 10 11 12 Log of GDP per capita (2011 PPP$) Source: Nakamura et al. 2016, based Note: The adjusted price level index (PLI) for household on data from the 2011 International consumption excluding housing rent is standardized Comparison Program (ICP) and WDI. so that the average PLI equals to 100. PLIs for 15 Asian countries are inflated by 10 percent. 18 Overview | Crowded, disconnected, and thus costly — Africa’s cities are limited to nontradables by their urban form Urban workers in Africa incur high commuting costs higher nominal wages than urban firms in other — or they cannot afford to commute by vehicle at all, countries at comparable development levels: unit and must walk to work. The informal, often colorful labor costs are three times higher in Djiboutiville, minibus systems that dominate collective motorized Djibouti, than in Mumbai, India and 20 percent higher transit in most African cities are far from cost-efficient: in Dar es Salaam, Tanzania than in Dhaka, Bangladesh. The buses’ low load factor (passenger capacity) Cities in Africa are costly for households, workers, and prevents them from realizing scale economies. For the businesses. Because food and building costs are high, poorest urban residents especially, the cost of vehicle families can hardly remain healthy or afford decent transport in some cities is prohibitive, as measured in housing. Because commuting by vehicle is not only a study from 2008 (figure 8). The need to walk to work slow but expensive, workers find it hard to take and limits these residents’ access to jobs. keep jobs that match their skills. And the need for The high cost of living affects not just households but higher wages to pay higher living costs makes firms also firms, which have to pay higher wages in cities less productive and competitive, keeping them out of where the cost of living is high. In addition, urban tradable sectors. As a result, African cities are avoided workers may need to be compensated for poorer by potential regional and global investors and trading living conditions in informal settlements with scarce partners. amenities. Manufacturing firms in African cities pay FIGURE 8 Share of urban household budgets spent or needed for transport in 11 Sub-Saharan African countries (analysis from 2008) 100 Percent of household budget spent on transportation Percent of household budget 80 Percent of bottom quintile household budget needed for two trips/day 60 40 20 0 s am li n la u bi a a a ar go ga as al ab ja o pa ro ak ug ou id la h Ki La Ab ai m D ns Ab Sa do D N Ka s Ki ga es di Ad ua ar O D Source: Kumar and Barrett 2008. 19 Africa’s Cities | Opening Doors to the World Closed for business, out of service: The urgency of a new urban development path for Africa African cities are crowded as well as disconnected, The reason why a firm in the nontradable sector making them costly for firms and for residents (see can afford to pay higher wages — while a firm in the figure 6). Potential investors and trading partners tradable sector cannot — is that the nontradable quickly see evidence of the physical and economic producer can raise its prices citywide. By doing so, it dysfunction that constrains public service provision, passes its own cost increases on to consumers in the inhibits labor market pooling and matching, and urban market. But such price hikes make the cost of prevents firms from reaping scale and agglomeration living in a city even higher, contributing to the workers’ benefits. So these potential partners stay away, urban costs. This sequence can become a vicious cycle fearing lack of return on their investment. that keeps African cities out of the tradable sector and limits their economic growth. The problem is not a simple one of underinvestment leading to low infrastructure, but a more complex one Often, proposed solutions to Africa’s urban challenges involving the interdependence of many investment focus simply on increased investments in structures decisions. Business investment decisions depend or on reforming urban planning. These actions are on the presence of other businesses — a firm’s necessary and urgent — but, by themselves, they customers and its suppliers — and of workplaces that are unlikely to lift cities out of the nontradables trap. can be reached from residential areas. Investment Why? because coordination failures tend to inhibit the will flow into housing if demand rises, driven by rising formation of new clusters of economic activity, which worker incomes. Infrastructure finance depends on are necessary for efficient tradables production (see, revenues from a growing city. All these investments among others, Henderson and Venables 2009). are interrelated, and in all of them expectations are Given the dynamics described above, no firm wants crucial. Investors’ low expectations become self- to be the first to enter the tradables sector. Yet many fulfilling when one investment fails to take place, would become established if they could coordinate reducing the expected return to others. The resulting their entry. To enable coordination, a city needs a vicious circle locks cities into a low development trap. credible coordination agent: either a forward-looking (The underlying analytic framework describing such group of firms that can harmonize their plans and traps is presented in Chapter 4.) make a move together, or a large-scale land developer or municipal government that can realize its vision Cities are “closed for business” through major infrastructure investment (Henderson A firm’s business decision to produce internationally and Venables 2009). Without such coordination the tradable goods and services will depend on its input move into tradables will fail, leaving the city “closed for costs. Among these input costs are urban costs: the business.” added costs that workers face when living in a city. Urban costs include rent, commuting costs, and the Cities are “out of service” high price of many goods. To attract workers, firms More than 60 percent of African’s urban population must raise wages to offset (or partially offset) these lives in areas with some combination of overcrowding, costs. Yet even as nominal wages climb to reflect high low-quality housing, and inadequate access to clean or rapidly rising urban costs, real wages remain low water and sanitation (United Nations 2015a). Why (see chapter 4 for detailed discussion). have cities in the region remained so deficient in When urban costs drive nominal wages too high, firms housing and basic services? will not be able to compete in the tradable sector A fundamental reason is that Africa’s urban and will produce only nontradables. The nontradable dysfunction is self-perpetuating: It lowers sector includes certain goods (beer and cement are expectations, and low expectations deter the examples), the construction trade, the retail trade, investments needed for improvement. Housing and many service sector activities, including informal investment decisions shape urban form. Providing sector employment. Demand for these goods and housing in the formal sector means deciding to sink services comes from income generated within the city costs in long-lived structures. And such decisions and its hinterland — but also from income transferred depend critically on expectations for a city’s future from outside, such as resource rents, tax revenues, prospects. Cities that inspire high expectations will and foreign aid. 20 Overview | Closed for business, out of service: The urgency of a new urban development path for Africa attract greater investment in formal sector structures, Path dependence and interdependence including residential structures, which reduce urban When a city appears “closed for business” and “out costs and in turn attract more investment. In contrast, of service,” potential partners stay away, fearing low cities that seem likely to remain artisanal — based to no returns. At present this vicious cycle of low on low-value nontradables production — foster expectations appears likely to keep Africa’s urban low expectations for the growth of land rents over economies undercapitalized, making the region’s time. With little incentive for investment in formal development all the more challenging. structures, a lack of capital investment keeps cities disconnected and urban costs high, perpetuating the Compounding this problem of low urban expectations cycle. is the reality of path dependence –identified in recent work as a central concern for policymakers. Cities Alongside the general effect of low expected returns, that grow inefficiently, without any effective plans or specific features of the business and regulatory incentives to integrate their physical form, are likely environment in African cities create further barriers to be locked into the resulting disconnected forms. to capital investment. These features include property Urban structures share a “putty-clay” quality: Once law and land use regulations, along with the design built, they are difficult to modify and can stay in place and enforcement of urban plans. for more than 150 years (Hallegatte 2009). In addition, Systems of property law and land ownership in Africa infrastructure investment needs to be planned well are often the first and most cumbersome regulatory in advance; if a growing city lacks a comprehensive, burden weighing on urban development. For example, forward-thinking plan to provide basic infrastructure a majority of the land in Kampala, Uganda operates services — sewerage, drainage, electricity, clean under a complex land tenure regime that recognizes water, and connectivity — it will have to add them independent rights over land and structures — giving later. That means adding them inefficiently and at far rise to legal disputes and blocking investment (Muinde greater cost, and as afterthoughts and in response to 2013). The problem takes a different form in Nigeria, piecemeal demand from individuals (Collier 2016). where urban land transactions incur high costs, As important as path dependence is interdependence and inefficient regulations further bog down formal among urban structures, infrastructure, and services. development. In Lagos and Port Harcourt, titling Much of a structure’s value reflects complementarities expenses alone can reach 30 percent of construction with other structures in the neighborhood or city. For costs, while total transaction costs range from 12 to 36 example, this report documents the benefits of road percent of a property’s value (World Bank 2015b). As a investments for private investments in residential and result, land is developed informally: In Ibadan in 2000, commercial structures (chapter 6). All social returns researchers found that 83 percent of homes violated on public infrastructure depend on the proximity city zoning rules (Arimah and Adeagbo 2000). of housing and premises: Thus, a rapid transit Urban plans are largely ineffective in Africa. One system is more viable at higher densities. Policies reason is that they are divorced from reality: They need to leverage these complementarities, avoiding typically do not consider finances, market dynamics coordination failures and single-sector interventions and interests, social diversity, or differences among that get in the way of economic density. income groups. Another reason is that, when enacted, Cities that continue on inefficient development paths regulations lack built-in implementation mechanisms. are growing, but in a counterproductive direction. As a result, human capacity constraints and financial Their physical structures and infrastructure will resource constraints preclude effective enforcement. not keep up with their rising population. As they More generally, the intentions and outcomes of continue to amass sunk capital — while passing up urban plans are distorted by institutional failure and opportunities for complementary investments that will fragmentation (across sectors and levels); by political never come again — they will sink deeper into the low interference; and by lack of consideration of a city’s development trap. And they might not dig themselves political economy. out. They could remain “out of service” and “closed for Inappropriate or unrealistic regulations and opaque business” forever. guidelines, especially on land ownership, impede access to land and discourage the formal development of city centers. Political risk can make future rents even more unpredictable. As a result, the returns from construction in Africa’s cities are intolerably uncertain — and cities remain “out of service.” 21 Africa’s Cities | Opening Doors to the World Springing cities from the low development trap We now understand more about the low development (box 3). When these systems pose barriers to urban trap in which African cities find themselves. They are land access, they impede the consolidation of plots crowded rather than economically dense, and they are and the evolution of land use. Firms cannot readily physically disconnected; as a result, they are costly. buy downtown land to convert it from low-density High costs deter investors through low expected residential use into higher-density apartments, or returns — while the city’s unlivable appearance vividly to build clusters of new commercial structures. corroborates these low expectations. As a result, the Land transactions are long, costly, and complicated urbanization of capital in Africa is lagging far behind (World Bank 2015c). Such market constraints reduce the urbanization of people. Migrants crowd into slums, the collateral value of structures, giving developers simply to be near where the jobs are. little incentive to invest in residential height — while tempting all parties to enter informal arrangements How can Africa’s leaders and policymakers spring (Collier 2016). cities from this trap? Crucially, they must first realize that the problem does not begin with low capital Formalizing land markets is essential; so is making investment and the lack of physical structures, or them work. Constraints on formal land markets even with undersized infrastructure. To be sure, contribute to the typical African city’s spatial low investment in structures limits urban economic fragmentation and to the relatively low capital density; it exacerbates spatial fragmentation, and it investment near its core. Not only will efficient land precludes agglomeration economies. But the lack of markets notably increase economic efficiency, they investment results from low investor expectations, will also help African cities tap the potential of rising which result when cities are spatially dispersed and land values to finance infrastructure and other public disconnected. goods. (But such financing strategies bear risk; they presuppose stable property rights and predictable law When potential investors and trading partners look at enforcement.) African cities, they see spatial fragmentation and a lack of connections. They know that such fragmentation While urban land markets need to work more constrains public service provision, inhibits labor efficiently, cities also must strengthen their urban market pooling and matching, and prevents firms plans and land use regulations. African cities today from reaping scale and agglomeration benefits. use planning models and regulatory codes that So the key to freeing Africa’s cities from their low may be relics of colonial regimes, or that may be development trap is to set them on a path toward uncritically imported from developed countries physical and economic density, connecting them for (Goodfellow 2013). Urban planning documents do not higher efficiency and boosting expectations for the give credible accounts of finance, market dynamics, or future. distributional impacts. Guidelines are not sufficiently articulated, granular, or transparent to support The first priority is to reform land markets and land consistent and enforceable development planning. use planning — to promote the most efficient uses of Capacity and resource constraints undermine urban land, and to develop land at scale. implementation. City and country authorities will need to add urban planning capacity — and to make tough Formalize land markets,clarify property rights, political decisions informed by technical evidence and and institute effective urban planning assessments. Informal land markets are not good enough for African Land use regulations, such as zoning ordinances cities. Urban land is a vital economic asset, and asset and building codes, are necessary to make urban transactions are viable only where purchasers can rely plans into realities. Although planners may promote on enduring extra-legal documentation of ownership. spatial density as a public good, the cost of investing A formal market both offers purchasers the protection in housing and commercial structures is borne by of the state and — because transactions are readily households and firms. (The benefits of economic observable and recorded — generates the public good density and exposure are an externality.) Because of accurate valuation. private actors on their own will not prevent market Clear rights to urban land are a precondition for failures in the allocation and use of land, urban land formal land markets. African cities struggle with use regulations must be clear and their enforcement overlapping and sometimes contradictory property- predictable. rights systems — formal, customary, and informal 22 Overview | Springing cities from the low development trap BOX 3 Urban land and property rights: A need for clarification Unclear land rights are severely constraining urban fiscal obligations, so lenders cannot always use land land redevelopment throughout Africa, imposing high as collateral. In Sub-Saharan Africa, only 10 percent costs. Under the customary rules for land tenure that of total land is registered (Byamugisha 2013). In control much urban and peri-urban land, property West Africa, only 2–3 percent of land is held with a rights depend on the consent of local chiefs or family government-registered title (Toulmin 2005). elders. One example is Durban, South Africa. Other The good news is that African countries are taking examples are in Ghana, Lesotho, Mozambique, and steps to clarify land rights. Botswana took the Zambia. Such cities often struggle with overlapping bold step of regularizing customary lands in 2008, and conflicting tenure systems — formal, customary partly because the Land Boards faced challenges to and informal. administering tribal land (Malope and Phirinyane Even where formal titles or clear land rights exist, 2016). Zambia passed a new planning bill in 2015, basic mapping, geographic or ownership information extending planning controls across state and is often inaccurate or land records maintained poorly, customary land and designating all local authorities causing disputes. Applying for formal recognition as planning authorities (Wesseling 2016). Namibia can also be tedious and costly (Toulmin 2005). In recognizes traditional leaders as part of the formal Mozambique one can apply for concession to a land system; they are designated by the president land plot from the relevant municipal directorate or and their details published in the government gazette municipal cadaster services. But the application can (United Nations 2015b). involve as many as 103 administrative steps over Some countries and cities are developing hybrid several years (UN-Habitat 2008). The lack of a proper regimes to make formal and customary administration registration system prevents urban land markets from more compatible. For example, in Nigerian states with functioning well, and it creates obstacles to the raising largely Muslim populations, the emir’s representatives of capital for development and investment — and to subdivide and allocate land with the help of volunteer the raising of revenue by the local authority. professionals from government: An example is the Across Africa, opaque and inadequate land databases city of Rigasa, in the extreme west of Kaduna (Igabi, and information systems distort land prices and Local Government Area, Nigeria). Future Urban availability. Finally, land administration systems (such redevelopers in Africa may learn from the past as registries and cadaster records) are incomplete and successes of two approaches — land sharing and land underused for enforcing legal claims and landholders’ readjustment — in several Asian cities. The market pricing of land depends partly on other infrastructure projects carry high sunk costs: Like policies besides land use regulations. Taxes, charges, any large structures, they depreciate very slowly and subsidies can be used to complement regulations, over decades or even centuries (Philibert 2007). And creating financial incentives and disincentives. the costs of developing housing, infrastructure, and Revenues — land taxes, for example — can also be industrial premises depend on sequencing. Consider used to finance administration and infrastructure. the relation of new transport systems and industrial And implementation tools such as capital investment, zones. If not coordinated with one another, and with budget, and phasing plans can assist upstream land markets and land use regulations, these projects planning. can put cities on a counterproductive development path. Make early and coordinated infrastructure Such large investments, especially at scale, will require investments — allowing for interdependence financing through new systems of revenue. Public among sites, structures, and basic services infrastructure projects incur costs far in advance of their benefits to productivity and livability, and the Research conducted for this study supports the value large capital outlays required can appear daunting. of early investments in neighborhood infrastructure The central government transfers on which African and services (chapter 6). But coordination among cities often rely will not suffice. City leaders, country these investments is equally crucial, given that cities authorities, and the international aid community are both path-dependent and interdependent. Large 23 Africa’s Cities | Opening Doors to the World BOX 4 Leveraging land values to finance Africa’s urban infrastructure Making Africa’s cities well connected and economically on the economic activity of the owner — so, unlike in dense will entail huge infrastructure investments. production, no owner behavior exists to be distorted.) Urban public finance in the region has traditionally Higher revenues from land and real estate can come relied on revenues from intergovernmental transfers. through: Future investments should leverage the value of city assets — mainly land — to finance infrastructure and • Improved valuation of land and properties closer to provide public goods and services. their market value, deepening the tax base. Land-based infrastructure financing will bring the • Improved enforcement of land and property taxes biggest payoff where cities are growing rapidly. on a larger number of owners, broadening the tax Rapid growth drives swift increases in land prices base. and creates large revenue opportunities. Yet it also • Monetization of underused public land. magnifies infrastructure investment needs, requiring major sources of development finance. Land-based Devising systems of land and real estate taxation financing has funded large leaps in the scale of urban that promote economic density is not easy. Strong investment in France, Japan, and the United States. institutions are needed to clearly define property rights; to ensure standardized and objective methods Taxes on land can fund investments while also of land valuation; and to support and oversee land promoting more efficient land use — giving management, land sales, and tax collection. For pure landowners an incentive to develop the land to its real estate taxes, policymakers should realize that most profitable use given the market value of their property values generally respond more slowly than property. Valuable downtown land will become other taxable wealth to annual changes in economic more densely developed, attracting investment in activity — while “property areas” respond still more residential and commercial structures. And land taxes slowly. are nondistortionary. (Appreciated land values are economic rents for a scarce resource, not a return should therefore study various financing options. One strong signal to other potential investors. It has been is to leverage land values (box 4) — although many argued that “investments sunk historically, even small cities in Sub-Saharan Africa are not currently allowed ones that have now depreciated completely, might to raise revenues from land (World Bank 2015c), and serve as a mechanism to coordinate contemporary their weak fiscal cadaster records and capacities pose investment” (Bleakley 2012). a further challenge. Decisions about a city’s growth pattern, based on Unregulated markets are unlikely to solve the underlying transport investment choices, will strongly problems of coordination, path dependence, and influence future greenhouse gas emissions and interdependence. Public policy and planning are environmental sustainability. Scholars have proven needed to get urban structures “right.” This imperative the impact of urban form on driving behaviors, modal is especially challenging in Africa, where fragmented choices, transport-related energy consumption, and urban development may already be locking cities into carbon dioxide emissions (Newman and Kenworthy high-cost paths. And since the low expectations that 1989). African cities now enjoy a unique opportunity come with high costs are self-fulfilling — expectations to avoid carbon-intensive urban transportation affect investments, which in turn affect expectations trajectories. Getting these choices right the first — cities that lack durable capital today may have an time — while urbanization is still in its early stages even harder time financing its acquisition tomorrow. — is critical. Given the path dependence of urban settlements, polluting now and cleaning up later is not Even if developers expect an African city to grow, they an option. might not know where growth is likely to occur — a type of coordination failure. One mechanism for In coordinating land use policies with infrastructure overcoming such failures is a sunk investment made plans, it is finally important to consider risk from by the government or a group of investors. Sunk natural hazards. While 70 percent of high-income investments can have long-run effects, sending a countries integrate land use with the management of 24 Overview | Opening the doors natural-hazard risk, only about 15 percent of low- and water supply, is essential (World Bank 2012b). income countries do so (World Bank 2012a). Yet cities Swakopmund, Namibia, a city of 42,000 surrounded by in these low-income countries are more vulnerable environmentally sensitive areas, limits development to natural hazards, including the floods that are to zoned “townlands” and has protected watersheds now so destructive in many parts of the world. with integrated environmental, sector, and land use Coordinating land use planning with the management planning. of natural resources, including water resources Opening the doors That African cities are crowded is apparent from the housing, commercial structures, or connective ground — both in the growth of informal settlements, infrastructure. Such cities are not just difficult and and in the traffic that snarls urban roads. That the costly to live in, but costly to do business in — they same cities are disconnected can be seen from scatter firms, prevent labor market pooling, and limit satellite images showing land use. And that these specialization across settlements. The urban economy cities are costly appears in price and wage data, as is restricted to nontradable, as opposed to tradable, interpreted by economic analysis. activity. This report explains the high costs of living and So long as Africa’s cities are in evident disarray, with doing business in African cities as consequences fragmented forms and dysfunctional markets, they will of their inefficient urban form. Distortions in factor continue to signal low expectations and stay in this low and product markets leave cities without adequate development trap. At best, they will proceed farther BOX 5 Building dense, connected, and efficient cities: Two models of success One model of successful urbanization is the high-speed rail — the bullet trains that have shrunk Republic of Korea, where urban planning and Korea into a half-day travel zone. land management institutions evolved to meet A different sort of success story is that of Bangkok, challenges at each stage of urbanization. Land where less restricted land markets were able to adapt development programs were established first, to growing demographic and economic pressures and followed by a land use regulation system. Then came climbing costs. Over 1974-88, when growth was rapid comprehensive urban planning, with guidelines for and land and housing construction prices on the rise, mandatory 20-year visions, zoning decisions, and developers responded by increasing the density of planning facilities. Downtown development projects their housing projects. Average units per hectare rose systematically adhered to phased scenarios under the from 35 to 56. Multifamily housing increased from comprehensive plans. Later, in the 1990s and 2000s, less than 2 percent of new construction in 1986 to 43 Korea integrated separate laws regulating urban and percent in 1990. With these shifts, developers were nonurban areas, and in 2000 it instituted metropolitan able to profit through the construction of affordable city-regional planning (between the city and the housing (Dowall 1992). Over 1986-90, almost half the county or province). Meanwhile, the government growth in Bangkok housing stock was from private initiated large-scale apartment construction projects development, while informally produced housing that solved Korea’s most serious urban housing composed a mere 3 percent of the total. In other problems. Multiple transport modes were developed. cities with highly constrained land markets, informally Road projects over time have included urban produced housing composed 20-80 percent of the highways and pavement projects as well as a network total (Dowall 1998). of expressways. And the nation’s rail network includes urban subway lines alongside traditional railroads and 25 Africa’s Cities | Opening Doors to the World along the inefficient path of slow and inadequate land Annex: development and infrastructure investment. Fortunately, the need for more efficient cities is easy Coverage of African to see and impossible to ignore. Africa’s urban areas cities used in the are quickly gaining in population: Home to 472 million people now, they will be twice as large in 25 years. The analysis most populous cities are growing as fast as 4 percent annually. Productive jobs, affordable housing, and effective infrastructure will be urgently needed for residents and newcomers alike. In urgency lies opportunity. Leaders can still set their cities onto more efficient development paths if they Cities used in the analysis act swiftly — and if they can resist flashy projects, steadfastly pursuing two main goals in order of Small cities priority: (<800,000) • First, formalize land markets, clarify property rights, Country City and institute effective urban planning. Benin Abomey-Calavi Burundi Bujumbura • Second, make early and coordinated infrastructure CAR Bangui investments that allow for interdependence among Côte d’Ivoire Bouake sites, structures, and basic services. Namibia Windhoek Nigeria Maiduguri A third goal is to improve urban transport and Nigeria Nnewi additional services. But this must not come ahead of Somalia Hargeysa the two goals listed above — nor can it be achieved South Africa Soshanguve unless those are met first. Sudan Nyala Zimbabwe Bulawayo Models of success from other regions may offer illuminating analogies and contrasts with African cities, while exemplifying what leaders can achieve through Intermediate cities coordinated and sustained action (box 5). Of course, (800,000-2 million) political economy must be considered in designing Angola Huambo and implementing policies. Leaders need to foresee Congo Pointe-Noire policy impacts (opportunities, winners, and losers) and DRC Bukavu anticipate challenges to enforcement. DRC Kananga DRC Kisangani City growth will be central to development in Africa, Eritrea Asmara as it has been elsewhere. By starting with reforms to Guinea Conakry land markets and regulations, then making early and Kenya Mombasa coordinated infrastructure investments, governments Liberia Monrovia can take control of urbanization and build more Malawi Blantyre-Limbe connected and productive African cities: cities that Malawi Lilongwe Mauritania Nouakchott open their doors to the world. Mozambique Maputo Niger Niamey Nigeria Benin City Nigeria Ilorin Nigeria Jos Nigeria Kaduna Nigeria Uyo Rwanda Kigali Sierra Leone Freetown Tanzania Mwanza Togo Lomé Uganda Kampala Zimbabwe Harare 26 Overview | Opening the doors Spain Turkey Tunisia Morocco Syria Iraq Algeria Libya Egypt Saudi Arabia Western Sahara Cabo Mauritania Mali Niger Chad Sudan Verde Eritrea Yemen Senegal The Gambia Burkina Guinea- Faso Djibouti Bissau Guinea Benin Somalia Sierra Leone Côte Togo Nigeria D’Ivoire Ghana Central African South Sudan Ethiopia Liberia Republic Cameroon Equatorial Guinea Uganda Large cities Sao Tome and Principe Kenya Gabon Democratic (>2 million) Republic of Rwanda Angola Luanda Congo Congo Burundi Burkina Faso Ouagadougou Seychelles Cameroon Douala Cameroon Yaoundé Tanzania Côte d’Ivoire Abidjan DRC Lubumbashi DRC Mbuji-Mayi Ethiopia Addis Ababa Angola Comoros Gambia Sukuta Malawi Ghana Accra Ghana Kumasi Zambia Madagascar Kenya Nairobi Madagascar Antananarivo Mali Bamako Nigeria Abuja Zimbabwe Mauritius Nigeria Ibadan Namibia Mozambique Nigeria Kano Nigeria Lagos Botswana Nigeria Port Harcourt Senegal Dakar Senegal Touba Swaziland Somalia Muqdisho (Mogadishu) South Africa Cape Town Lesotho South Africa Durban South Africa Johannesburg South Africa South Africa Pretoria Tanzania Dar es Salaam Zambia Lusaka 27 Africa’s Cities | Opening Doors to the World References Angel, Shlomo, Jason Parent, Daniel L. 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