Most of the time, urbanisation and economic growth go hand in hand.
This might seem counterintuitive; when most people think of fast-growing cities across Africa and Asia, they think of the squalor and poverty of slums. So why do urbanisation and economic growth correspond?
Most people move to cities in search of economic and social opportunity. They are looking for more education and better jobs, and cities create wealth; people become more productive as they move from agriculture to industry and services. As a result, there is a close relationship between urbanisation and income.
Source: Coalitions for Urban Transition based on World Bank data.
In sub-Saharan Africa, most countries have enjoyed rapid economic growth as their towns and cities have expanded. In Ethiopia and Tanzania, for instance, the rural-urban transition has seen incomes rise as people grasped new employment opportunities in cities.
However, as the next graph shows, the relationship has broken down in too many African countries.
This graph shows the relationship between urbanisation and GDP per capita in 17 African countries. The direction of the arrows shows the direction of this relationship between 1990 and 2017.
If urbanisation and economic growth corresponded, every arrow would be pointing to the top right corner. But as you can see, the arrows point in every direction.
For Burundi, the Central African Republic (CAR), the Democratic Republic of the Congo, Liberia and Zimbabwe, all of their arrows point to the top left-hand corner. This indicates that as the country has become more urbanised, average incomes have fallen instead of risen.
In CAR in 1990, 35 per cent of the population was living in urban areas and the average person earned $490 per year. In 2017, 40 per cent of the population lived in urban areas but the GDP per capita had dropped to $418.
Why has this happened? One possible answer is that urbanisation in CAR has not happened because of “pull factors” such as better livelihoods in cities. Rather, it has happened because of “push factors”, where people have fled to cities to escape the violence in the countryside.
Equatorial Guinea tells a different story. In the graph above, the country has an almost horizontal arrow pointing to the right: this means that it has enjoyed a tremendous increase in average income without corresponding growth in the urban population.
Does this mean that rural Equatorial Guineans are now super-rich? Sadly, no. It just means that the large oil reserves discovered in the 1990s in Equatorial Guinea have led to much higher average incomes.
Most of this money has been captured by those directly involved in the industry, rather than shared within the country. Resource extraction is a capital-intensive activity that barely creates any local work. As a result, the benefits in this instance are not effectively distributed across society.
Furthermore, Equatorial Guinea does not have any significant industrialisation. There are no decent jobs drawing people to cities. As a result, urban growth has lagged far behind economic growth – and inequality has soared.
Of course, these factors are only a part of the answer. The graph presents many different countries with very different economic, social and political contexts. However, all of these examples call for ambitious policies from African national governments to ‘fix’ the relationship between growth and urbanisation and sustainably tap into the potential of cities.
By providing essential infrastructure and land tenure to urban dwellers, governments can enhance health and education and therefore economic productivity.
A new report from the Coalitions for Urban Transitions shows that National Urban Policies (NUPs) are a powerful tool at the service of African governments to drive change in cities and unlock their economic, social and environmental potential. If well designed, NUPs can ensure that urbanisation serves the national economic interest – and can ‘repair’ the broken relationship between urbanisation and growth on the African continent.
Catlyne Haddaoui is a research analyst for the Coalition for Urban Transitions.
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