URBANIZATION AND INDUSTRIALIZATION FOR AFRICAS TRANSFORMATION ECONOMIC REPORT

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

ECA ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION Key policy messages • 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 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION UNECA. ORG

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA The imperative of Structural Transformation 3

4 ECA ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION Impressive economic growth 120 100 80 60 40 20 World Sub-Saharan Africa 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 0 2000 Cumulative Percentage Change in GDP xxxxxxxxxxxx

5 ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA However, this growth is exclusive and jobless Number of poor people 1999 -2018, Africa 490 470 450 430 410 390 370 350 1999 2001 2003 2005 2007 2009 2011 2014 2016 2018

6 ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA 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

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA Urbanization and Structural Transformation 7

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION 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 100 -150 years span experienced by developed. UNECA. ORG countries

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA Urbanization in Africa Urban and rural population growth rate, 1980 -1950 9

ECA 10 ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION 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) productivity increase Urbanization as a driver Cities offer economies of scale for productive sector expansion labour productive sector expansion An Urban Lens in National Development Planning | HLPD, Abuja 2017 UNECA. ORG

ECA ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION URBANIZATION ENHANCES INDUSTRIAL PRODUCTIVITY THROUGH AGLOMMERATION ECONOMIES Matching Learning Sharing AGGLOMERATION 11

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA HOWEVER, AFRICA IS URBANIZING WITHOUT INDUSTRIALIZING Urbanization and industrial employment in Africa, 2007 -2015 12

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA Linking Urbanization and Industrialization: A Theory of Change 13

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA THE URBAN-INDUSTRIAL NEXUS 14

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA 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) 15

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA 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 o Infrastructure deficits are widely recognized as one the greatest barriers to industrial success in Africa. • Poorly functioning land property markets • The functioning of urban land markets underlies the arrangement of urban space and is fundamental in both private finance and public revenues. 16

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA 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) 17

ECA ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION BARRIERS Undermine agglomeration economies and increase the costs of production Urban form Urban Infrastructure Low density Transport Disconnected Electricity Segregated Energy Institutions Inefficient land property markets Doing business (permits, tax payments, contract enforcement, regulations) 18

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA Urbanizing to Industrialize: Key Policy Entry Points 19

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA The Centrality of National Development Planning 20

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA • Focus on existing comparative advantages in specific areas • Prioritize labour extensive manufacturing INDUSTRIAL POLICY • Support existing sub-sectors • Target sub-sectors driven by urban demand • Integrate spatial considerations 21

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA • Support a more balanced national urban system SPATIAL TARGETING Urban system • Cater to spatial needs of targeted sub-sectors • Leverage special economic zones in a connected geographical context • Support complementarity among cities • 22

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA • Better manage emerging urban form and increase density • Improve land property markets URBAN POLICY: City level • Invest in multi-modal mobility • Ease housing bottlenecks • Prioritize strategic infrastructure investments • Prioritize industrial development in local economic development plans • 23

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA • Link national and sub-national budgeting with industrial and spatial targets IMPLEMENTATION: Policies, institutions and budgets • Cross-cutting coordination and implementation platform • Strengthen sub-national spatial economic data • Tools and guidelines on coordinated urban and industrial planning • Finding the financing 24

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA 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.

ECONOMIC REPORT ON AFRICA 2017 | URBANIZATION AND INDUSTRIALIZATION FOR AFRICA’S TRANSFORMATION ECA https: //www. uneca. org/publications/economic-report-africa-2017 https: //www. uneca. org/fr/publications/rapport-%C 3%A 9 conomique-surl%E 2%80%99 afrique-2017 26