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How Africa can advance inclusive growth by linking urban and industrial development

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Kigali: The deputy Executive Secretary of Economic Commission of Africa has launched in Kigali today the 2017 edition of Economic Report on Africa under the theme: “Urbanization and Industrialization for Africa’s Transformation”. The report focuses on how Africa can advance inclusive and sustainable growth by better linking urban and industrial development. Read her message below:

In the last seven years, the focus of the Economic Report on Africa has been on promoting the structural transformation of African economies through accelerated productivity growth and diversification with industrialization as the strategic vehicle for achieving this.

The 2011 report advocated for a developmental state approach for Africa to achieve inclusive growth. In 2013, the report illustrated how African countries could take advantage of their resource endowments to accelerate commodity-based industrialization for job-rich growth.

The next report in 2014 called for dynamic industrial policies and institutions to accelerate industrialization. In 2015, the report examined, in detail, the role of trade in supporting Africa’s industrialization. Subsequently, the 2016 report focused on how African countries could pursue a low-carbon trajectory for green industrialization.

Building on the insights from the previous editions, the 2017 report critically examines how African countries can take advantage of urbanization to accelerate industrialization. It does so recognizing the scale and magnitude of the Africa’s urban transition, and its profound implications for all aspects of inclusive growth. Through this report, ECA aims to support member States as they design policies and strategies to respond to the urban wave that is sweeping across the continent.

In less than 20 years, by 2035, almost half of Africa’s population will be urban. At 3.5 per cent per annum, the region’s urban growth rate is the highest globally. The number of urban residents in Africa nearly doubled between 1995 and 2015 and is projected to almost double again by 2035. This transition will undoubtedly result in considerable challenges including demands for employment, services and infrastructure. At the same time, it presents significant opportunities to enable structural transformation if well planned and managed.

African leaders have already affirmed the need to harness the potential of urbanization for structural transformation through the Common African Position on the Third United Nations Conference on Housing and Sustainable Urban Development (HABITAT-III) adopted in 2016.

The New Urban Agenda that emerged from HABITAT-III in October 2016 as the global urban development framework for the next two decades also underscores the role of cities in structural transformation. Additionally, the inclusion of a standalone Sustainable Development Goal 11 on cities and human settlements places urbanization firmly at the core of the global agenda for sustainable development.

Informed by global and regional narratives and evidence, the report also draws on country level case studies. The preparatory process therefore involved extensive visits to 11 countries to gather insights from practitioners and policy makers from each sub-region in Africa. The countries consulted in this process include Cameron, Republic of Congo, Cote d’Ivoire, Ethiopia, Madagascar, Morocco, Mozambique, Nigeria, Rwanda, South Africa and Sudan.

With some exceptions, the case study countries had high proportions of their population being urban and/or high urban growth rates and high degree of concentration in a single primary city. In terms of their economic structure, employment in industry was generally low, the value added of manufacturing sector was low and the value added of the services sector was high.

Drawing on the case studies and other evidence, the report concludes that Africa is currently urbanizing without industrializing, and policies and strategies for urban and industrial development in Africa are more often than not disconnected. Priorities for urban and industrial development are often set and implemented in silos, with limited coordination resulting in lost opportunities for both sectors.

However, the report illustrates that there remain significant possibilities to reverse this through deliberate policy interventions. And this is urgent because African cities require better performing industrialization in order to be inclusive and prosperous, while industrial firms require better functioning cities in order to be productive and competitive.

The report strongly advocates for African policy makers to view urbanization as an opportunity, and not only as a challenge especially for industrialization. For instance, we know that with urbanization the scale and type of consumption is rapidly changing in cities, which can stimulate domestic manufacturing. A fast growing middle class in Africa’s cities is consuming more goods, with changing preferences. Food, housing, infrastructure are only some of the examples.

Governments could target domestic industry and value chains in order to meet this demand.

The report further proposes for policy makers to better appreciate the fact that the way in which urbanization is planned and managed directly influences industrial outcomes and therefore structural transformation targets. It shows that well planned and managed cities, but also national urban systems are necessary for improved performance of industrial firms and ultimately increased job creation and productivity. Well-functioning cities and national urban systems, the report argues, are therefore core foundations for job-rich economic growth in Africa.

The findings from the 11 country case studies illustrate some innovations and deliberate strategies to promote cities and national urban systems better suited to enable industrialization. For instance, the role of Rwanda’s urban based business services, especially financial and ICT sectors, in creating a positive investment climate is highlighted. The business service sector in the country has been supported by investment facilitation, strong political commitment, strategy development and upgrading of the regulatory framework.

Reconnecting urban and industrial development in Africa through deliberate policies, strategies and investments is a priority for the sustainability of both cities and industries. The report emphasizes that cities require better performing industrialization and industrialization requires better functioning cities.

Although complex, it is possible to link urbanization and industrialization in Africa. Thus, the core message of the report is that deliberate efforts are needed to link urban and industrial development in the context of national development planning to effectively address poverty, unemployment and informality in Africa. The means to do so are detailed in the report.

Following several regional and national launches including in Dakar, Addis Ababa, Ouagadougou, Rabat, Lusaka, Khartoum, Yaoundé, and more planned in New York, London, Pretoria and Abuja, member States found the report to be timely, innovative and responsive to their needs. They have therefore requested ECA to undertake further policy analysis and organize high-level policy dialogues on urbanization, industrialization and structural transformation in Africa including at the sub-regional levels. I am also pleased to let you know that the report has already been transformed into a 6-week eLearning course to be rolled out this month by ECA targeting African policy makers.

I would now like to invite Mr. Khaled Hussein, Chief, Forecasting Section, in ECA’s Macroeconomic Policy Division; Mr. Andrew Mold, Acting Director, ECA in Eastern Africa  and Ms. Edlam Yemeru, Chief, Urbanization Section of ECA’s Social Development Policy Division to provide further details on the report, and an overview of economic development in East Africa. I look forward our discussions and reflections thereafter. (End)

 

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