1. URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION
ECA
PART II: URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION
ECONOMIC REPORT ON AFRICA 2017
11 December 2017, Addis Ababa, Ethiopia
UNECA.ORG

2. Key policy messages ECA
Structural transformation, industrialization and urbanization are linked in theory and practice
Africa is undergoing a rapid urban transition offering opportunities to accelerate industrialization
In Africa, linkages between urbanization and industrialization are weak
Policy and institutional frameworks need to be adjusted, if urbanization is to be harnessed for Africa’s industrialization and structural transformation
ECONOMIC REPORT ON AFRICA | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION
UNECA.ORG

3. The imperative of Structural Transformation

4. Impressive economic growth
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5. However, this growth is exclusive and jobless

6. Africa’s growth model: Constraint to inclusive growth
Low productivity agriculture dominant
Commodity dependent economies
Low manufacturing share of GDP
60-70% of workers in informal economy
Highest average GDP share of services
Economic vulnerability to exogenous shocks

7. Urbanization and Structural Transformation

8. Urbanization in Africa
ECA
Urbanization in Africa
In 2014, Africa was 40 percent urbanized but it is projected to reach 50 percent in less than 20 years by 2035
The number of urban residents in Africa nearly doubled between 1995 and 2015 and is projected to double again by 2035 reaching 867 million
Africa, together with Asia will account for nearly 90 percent of the world’s urban population growth
Africa’s urban growth rate of 3.4% is the highest in the world (Asia- 2.10%; Latin America & the Caribbean – 1.28%)
Urbanization is taking place within 30 years in Africa unlike the years span experienced by developed countries
UNECA.ORG

9. Urbanization in Africa
Urban and rural population growth rate,

10. labour Structural transformation is necessarily tied to urbanization10
Structural transformation is necessarily tied to urbanization
Urbanization as a outcome
Rural modernization sheds labour to cities
Urban manufacturing and services absorb labour
Declining share of agriculture in GDP & employment
Demographic transition (low birth & death rates)
Urbanization as a driver
Cities offer economies of scale for productive sector expansion
This movement of labour = urbanization
productivity
increase
labour
productive
sector
expansion
An Urban Lens in National Development Planning | HLPD, Abuja 2017
UNECA.ORG

11. Sharing Matching Learning
URBANIZATION ENHANCES INDUSTRIAL PRODUCTIVITY THROUGH AGLOMMERATION ECONOMIES
AGGLOMERATION
Sharing
Matching
Learning

12. HOWEVER, AFRICA IS URBANIZING WITHOUT INDUSTRIALIZING
Urbanization and industrial employment in Africa,
urbanizing rapidly amid declining or stagnant industrial output
natural resource exports and related spending appear to be driving urban growth, generating “consumption cities leading to “premature urbanization”
jobless urbanization, has resulted in cities with poorer populations and higher informality
overlap between Africa’s demographic and urban transitions

13. Linking Urbanization and Industrialization: A Theory of Change

14. THE URBAN-INDUSTRIAL NEXUS

15. DRIVERS Urban demand could be a driver of industrial development
Middle class and urban consumption are rising with changing consumer patterns leading to increasing demand for manufactured and goods
This presents significant opportunities for industrial policies to select and support high-growth sectors such as the food, housing, automotive, infrastructure
Yet, increasingly, imports are meeting rising urban demand (e.g. processed foods)

16. ENABLERS- CITY LEVEL
Well planned and managed cities offer large productive benefits for industrialization, yet barriers persist
Disconnected and sprawling urban forms
The spatial layout of cities, on whether urban form is compact and connected, or sprawling and disconnected, is important to economic functioning.
Infrastructure deficits
Infrastructure deficits are widely recognized as one the greatest barriers to industrial success in Africa.
Poorly functioning land and property markets
The functioning of urban land markets underlies the arrangement of urban space and is fundamental in both private finance and public revenues.

17. ENABLERS- SYSTEM LEVEL
Diverse, balanced and connected national systems of cities play a vital role in enabling industrial development
African countries often have unbalanced national urban systems (large primary city and less competitive smaller cities)

18. Inefficient land and property markets
BARRIERS
Undermine agglomeration economies and increase the costs of production
Urban form
Low density
Disconnected
Segregated
Urban Infrastructure
Transport
Electricity
Energy
Institutions
Inefficient land and property markets
Doing business (permits, tax payments, contract enforcement, regulations)

19. Urbanizing to Industrialize: Key Policy Entry Points

20. The Centrality of National Development Planning

21. INDUSTRIAL POLICY
Focus on existing comparative advantages in specific areas
Prioritize labour extensive manufacturing
Support existing sub-sectors
Target sub-sectors driven by urban demand
Integrate spatial considerations

22. SPATIAL TARGETING Urban system
Support a more balanced national urban system
Cater to spatial needs of targeted sub-sectors
Leverage special economic zones in a connected geographical context
Support complementarity among cities

23. URBAN POLICY: City level
Better manage emerging urban form and increase density
Improve land and property markets
Invest in multi-modal mobility
Ease housing bottlenecks
Prioritize strategic infrastructure investments
Prioritize industrial development in local economic development plans

24. Cross-cutting coordination and implementation platform
Policies,
institutions and
budgets
Link national and sub-national budgeting with industrial and spatial targets
Cross-cutting coordination and implementation platform
Strengthen sub-national spatial economic data
Tools and guidelines on coordinated urban and industrial planning
Finding the financing

25. To strengthen and ensure coordination between urban and industrial sectors: Recommendation 1: A Policy note or “white paper” to articulate key principles of drafting urban and industrial policies; this paper could inform the National development planning vision. Paradigm change. Recommendation 2: Establish mechanisms to coordinate urban and industrial development policies with other sectors and sub sectors, respectively (energy, transport, trade, education, ICTs...),at national and local levels. Recommendation 3: Strengthen competencies and provide technical, financial and institutional support to sub-national levels of governance in the area of economic planning and industrial development. Recommendation 4: Expand cooperation between urban and industrial sectors with national statistical offices and think tanks to generate new spatial economic data, especially at sub-national and city levels.

28. More info: Yemeru@un.org
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