is temporarily growing faster than the population dependent on it) of Africa’s youth bulge is significant. The labour force is projected to reach 1.1 billion by 20404 by which time the continent is predicted to be more than 50 per cent urbanized.5 This youth bulge may work either for or against Africa’s urban societies. Although the potential to harness youths within formal economies exists, the possibility of them becoming impoverished forces of radicalization and conflict is also high. These youth bulges, as can be expected, are particularly numerous in Africa’s more populous countries. Prudent economic, industrialization, labour and social policies will be decisive in determining whether the demographic dividend will become a cornerstone of Africa’s development or a major socio-political risk.
The Economic Transition
THE STATE OF AFRICAN CITIES 2014
In recent years, Africa’s economic growth has seen real gross domestic product (GDP) increasing at a rate twice that of the 1980s and 1990s.6 The spread of growth over economic sectors has been relatively uniform.7 By 2020, 128 million African households are projected to have transited to “middle class” (see also Box 1.1), boosting consumption and spending potentials;8 and by 2030 Africa’s highest-performing 18 cities might reach a combined purchasing power of USD 1.3 trillion.9 Projections over the longer term include growth of the middle class from 355 million people in 2010 (34 per cent of the total population) to 1.1 billion (42 per cent) in 2060,10 exceeding that of China today. However, these projections may be premature because, despite ten years of high economic growth continent-wide, around 50 per cent of Africans today remain at incomes below USD 1.25 per day, while only four per cent receive more than USD 10 per day.15 Using the range of USD 10 to USD 100 per day, Africa constitutes a mere two per cent of the global middle class and has only one per cent of its purchasing power.16 Clearly, far greater effort will be required to provide more and higher income opportunities for households in the lower-income strata, in addition to creating more livelihood options away from the largest cities. This is particularly the case for Africa’s present and emerging “rentier states” whose economic performance hinges on extraction of one or more finite natural resources. In such states, the cities (and the capital in particular) already tend to be mere gatekeepers of financial flows and power. But, given increasing globalization, cities of rentier nations may in future be bypassed as the custodians of financial and decision-making powers. Furthermore, whereas until recently broad consensus existed about the relationship between industrialization, economic growth and urbanization, a far deeper understanding is needed of what exactly drives aggregate urbanization trends in developing and emerging economies. A question being raised is: in such economies, does urbanization cause growth or is it the other way round? Recent research at the Asian Development Bank17, which analyzed the correlations between urbanization and GDP-growth, provides new evidence on the impacts of economic growth, education and industrialization on the
urbanization rates of developing and emerging economies. The study indicates that, although growth and urbanization feed upon each other, the strongest direction of causality is probably from industrialization to urbanization, rather than the reverse.18 This finding could have major implications for African urban and industrialization policy debates. A sustained African economic transition will hinge on achieving three important features. Firstly, given continuing global economic uncertainties, African economic development must become more self-driven by further exploration of existing and new technologies for raising domestic productivity and income generation. Africa must rapidly improve its social services, especially in its mushrooming cities, to create better working and living conditions as well as new economic opportunities for its young people who will have to carry forward the current economic momentum. This includes encouraging the return of Africa’s diaspora brain drain which, in turn, implies the provision of more attractive urban living and working conditions. Secondly, trade and investment flows within Africa, as well as between Africa and the world, will need to be further expanded. These strategic relationships must rise above mere international assistance and natural resource extraction. In the words of African Union Commission Chairperson Nkosazana Dlamini-Zuma: “No country can have donor aid as the mainstay of its development. We cannot wait for the first dollar to come from outside.”19 Investments in road, rail and energy networks will be crucial to boosting Africa’s urban economies; unlocking sparsely-populated areas for settlement and investments in agro-industrial and manufacturing enterprises; facilitating flows of people, commodities and services; connecting its many landlocked nations to the world; and assuring food, water and energy security for development. Thirdly, more robust and sustained African economic development will require further nation- and institutionbuilding; overcoming generally weak institutions and governance modalities; as well as promoting more effective democratic institutions for greater openness, less corruption in the management of public finances and other public interests, particularly in the extractive sector. Africa’s thrust towards industrialization must, however, take into account the roles that the inevitable urban transition will play in structural transformations. With a large, emerging, urban consumer class Africa should actively explore and embrace more diverse growth opportunities, especially where these can be decoupled from resource exploitation and ecological degradation.20 This might include growing services sectors, for example, to establish value chains that cut across city and national economies at all levels. Growth trajectories should not blindly replicate the unsustainable development paths of many advanced countries. The future is characterized by global resource constraints and inevitable higher costs of energy, water and raw materials, as well as variability and uncertainties introduced by environmental and climate change. It would be wise for
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