By 2050, more than a billion people will be living in African cities and towns. As more and more of the continent’s population – 60 percent of whom live in the countryside – move to urban areas, pressures on land can only intensify. How should we make room for this massive urban expansion? How will city structures have to change to accommodate Africa’s urban billion? And could well-directed policy help spring African cities out of the low-development trap? These questions were at the core of discussions at the World Bank’s 5th Urbanisation and Poverty Reduction research conference on September 6th 2018.
Cities now drive as much as 80% of global GDP. They also consume close to two-thirds of the world’s energy and produce over 70% of global greenhouse gas emissions. And given the sheer scale of urban growth worldwide, these numbers are only expected to increase. Not surprisingly, cities are rapidly becoming the epicenters of economic growth, spurring innovation, fortifying institutions and nurturing the social fabric of dynamic communities.
Urban population in Africa will double within the next 25 years and reach 1 billion people by 2040, but concentration of people in cities has not been accompanied by economic density.
Typical African cities share three features that constrain urban development and create daily challenges for businesses and residents: they are crowded, disconnected, and therefore costly, according to a new report titled “Africa’s Cities: Opening Doors to the World.”
Cities around the world face a serious fiscal crisis following the Great Recession of 2008. Five years later, the after-effects of this crisis continue to be felt and limit economic opportunities in cities.
Revenue of cities around the world—either generated by municipalities or derived from State transfers—have decreased sharply because of the economic slowdown, as did the fiscal value of real property. Some local governments also lost major assets that they invested in risk funds and banks that collapsed during the crisis. City expenditures—especially spending to address social needs—rose because of the slowdown in economic activity and the corresponding increases in unemployment and social welfare needs. The decline in revenue and increase in expenditure led many cities to experience the worst “fiscal crunch” in decades. Financing capacities shrank owing to the difficulty in obtaining loans and the increase in the cost of money. Banks and bond issuers—the main financiers of cities—have been heavily impacted. The credit rating of cities was heavily impacted because of declines in the tax base, expenditure pressures and increasing debt. Foreign investment to finance infrastructure has declined; operations underway have been put on hold and many projects have either been cancelled or delayed.