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Private Sector Partners Sought for Africa's Urbanisation Programme

As countries across Africa seek to reinvent their cities, driven by archaic infrastructure and the needs of their increasingly urbanised population, many governments are currently looking for overseas partners to help reinvent the continent.

Photo: Gridlocked Lagos: The poster child for Africa’s underdeveloped cities.
Gridlocked Lagos: The poster child for Africa's underdeveloped cities.
Photo: Gridlocked Lagos: The poster child for Africa’s underdeveloped cities.
Gridlocked Lagos: The poster child for Africa's underdeveloped cities.

With its population of nearly 13 million, Lagos is Africa's poster child for overcrowding, gridlocked congestion and urban sprawl. While the speed of urbanisation in Nigeria has been phenomenal, however, it is not the only African country where the phenomenon is so clearly apparent.

Overall, the rate of change across Africa is so high that the African Development Bank has forecast that, within 20 years, three more of the continent's urban conglomerations – Luanda, Dar es Salaam and Johannesburg – will be accorded mega-city status. The continent's list of such cities – those with a population of 10 million or more – already includes Cairo, Lagos and Kinshasa. If the predictions are borne out then, by 2037, more than half of all Africans will live in a city, with the urban population exceeding the rural population for the first time.

In many respects, the future of the continent will be shaped by these cities. At present, though, the most compelling question is: can urban development and the accompanying economic opportunities keep pace with the rapid urban population growth? While urbanisation is seen as a challenge for most major African cities, there is no doubt that well-planned urban densification can also result in economic opportunities, opportunities that China, in particular, has not been slow to pick up on.

Chart: Africa: Urban population (%); total population (000s)
Chart: Africa: Urban population (%); total population (000s)

China has long shown a willingness to invest in Africa, dating back to a time when many other countries showed a conspicuous lack of interest. Today, the level of China's private-sector investments in African real-estate construction shows that interest has not abated.

Are African Cities Future-ready?

The recent African Real Estate and Infrastructure Summit in Cape Town was notable for its focus on how Africa should meet the challenge of city development and the attendant problems of urbanisation. Addressing delegates, Abbas Jamie, a Director of the Our African City research organisation, said: "By 2050, the population in Africa will have reached 2.4 billion. The challenge is just how to prepare Africa's cities for this demographic transformation."

For many, though, the challenge could be better expressed as: "How can we derive maximum economic benefit from this changing urban demographic?"

At present, it tends to be the problems associated with urban sprawl, overcrowded informal settlements and infrastructure failures that attract attention across Africa. Despite this, there is a growing sense that Africa's cities have the potential to play a dynamic role as future engines of growth and social opportunity. Cities, after all, are increasingly the home of Africa's burgeoning middle class, a demographic seen as key to the continent's future economic prosperity.

It is well-established that there are clear benefits to be had from the agglomeration of cities as centres of economic activity, a development that inevitably creates clusters of opportunities and jobs, boosting both the networked and knowledge economies. The challenges involved with nurturing these cities as sustainable, resilient centres for inclusive economic growth, though, are inevitably huge. Acknowledging the paramount importance of getting this right, Guy Briggs, Head of Urban Design at DHK, a Cape Town-based architectural practice, said: "We neglect the continent's cities at our peril."

In China – and throughout other parts of Asia – rapid urbanisation came on the back of industrialisation and led to improved economic growth, as well as a better quality of life for many. If this were to be replicated in Africa – something that has not been managed to date – cities will need to be properly planned in order to accommodate and integrate the surge in urban population numbers.

A prime example of the urgent need for planning is Luanda, the capital city of Angola, where traffic moves at an average speed of 7.6 km/h and there are no major roads connecting most parts of this sprawling urban mass. Back in the 1970s, Luanda was originally conceived as a colonial town for a population of 400,000. Later, during the Angolan civil war, the city faced huge housing problems following the arrival of five million rural migrants all looking to escape the conflict. By 2030, the city's population is expected to number about 12 million.

An award-winning master plan is now in place to deal with many of the 20-year-old slums that occupy 80% of the city. Under the terms of the plan, expansion would be managed within the city's existing boundaries, while a colossal road-building programme would ease its huge traffic problems.

Outlining the scale of the project, Phil Bonds, a Partner with Broadway Malyan, the architectural practice behind the urban re-development plan for Luanda, said: "The scale of the estimated growth is equivalent to building a city the size of Paris within 15 years. The challenge is immense and it requires international partners. The Angolan government cannot do this on its own."

A similar transformation plan has also been drawn-up for Addis Ababa, Ethiopia's capital and the fastest-growing city in Africa. The new initiative, which foresees the city having a population of 12 million by 2024, forms part of a wider urban transformation agenda that has been spearheaded by Arup, the London-headquartered design and engineering conglomerate.

Explaining the principles behind the Addis Ababa proposal, Nico Venter, an Associate Director with Arup South Africa, said: "The plan focuses on the provision of an integrated transport infrastructure, facilitating mobility in line with rapid population growth, while incorporating the informal economy, equity and scalability."

The other key demographic factor defining Africa's cities is the fact that they are home to a disproportionately young population. By 2050, Africa's median age will be 25, compared to the global median of 36. Young people form the bulk of its labour force, while young urban consumers are seen as primarily driving wealth creation in many African cities. This future economic dividend, however, can only be realised if employment opportunities remain in step with the growth of this youthful population.

Photo: Nairobi: Informal settlements targetted for clearance under ambitious development plans.
Nairobi: Informal settlements targetted for clearance under ambitious development plans.
Photo: Nairobi: Informal settlements targetted for clearance under ambitious development plans.
Nairobi: Informal settlements targetted for clearance under ambitious development plans.

Potentially, urbanisation can also deliver impressive returns for the private sector. The development approach outlined in Africa's urban development and regeneration plans is based on multiple funding mechanisms, allowing room for both public and private developers.

The African real-estate sector – regarded by many as the final frontier in this market – is attracting substantial private investment, something that is desperately needed by many of the continent's cash-strapped governments. The World Bank has estimated that about US$60 billion a year is needed for African infrastructure development, at least half of which needs to come from the private sector.

China is clearly already aware of this requirement. In the past 20 years or so, there has been a substantial inflow of Chinese investment into African real estate and infrastructure programmes. Highlighting this, Peter Welborn, Chairman of Knight Frank real estate consultancy, said: "The Chinese have been pre-emptive when it comes to believing in Africa. That's why they have been so successful in the real-estate sector."

World-class Cities Versus Inclusive Developments

Overall, there is widespread belief that the way Africa's cities should be redeveloped requires solutions that are inclusive of all their residents. More specifically, the hope is that they don't just become places for "big capital".

Professor Vanessa Watson, of the School of Architecture, Planning and Geomatics at the University of Cape Town, has been critical of the planning in certain African cities, seeing it as an unrealistic attempt to follow the templates set by other major "world-class" cities. Expanding on her views, she said: "Much of the urban planning in African cities seems to be intended to transform them into replicas of Dubai, Shanghai or Singapore. These plans are having a highly negative impact."

According to Watson, a very different approach is required. She sees a need to move to a model of real-estate development that provides inclusive affordable housing for the majority of urban dwellers, many of whom face being marginalised at present. In support of her case, she cites the fact that 43% of the urban population in Africa lives below the poverty line, while 62% live in slum conditions in informal settlements. This has resulted in UN Habitat – the United Nations human settlement programme – calling on local governments throughout Africa to plan cities that are inclusive, safe, resilient and sustainable.

Watson's solution is to ensure the provision of low-cost shelter for all, but she believes that such a solution should not necessarily deter investors, saying: "Finding housing models for lower-income households is absolutely possible and offers considerable opportunities."

Overall, the real-estate industry in Africa has tended to overlook the affordable-housing market, viewing it as a risk rather than a potential reward. Many, though, see low-cost housing as a missed economic opportunity, especially for those investors willing to take a longer-term view. In fact, some believe real-estate companies may well be missing a trick here as this is a market that is competitive, scalable and replicable.

The implementation of such a policy, though, calls not only for attentive city planning, but also for private-sector partnerships. In line with this, during the summit, officials from several of the continent's fastest-growing cities outlined a number of commercial opportunities for real-estate investors, detailing just which professional services would be required.

Uganda's capital Kampala is expected to grow from three million residents to 10 million over a generation, while there is already an estimated deficit of 800,000 housing units. Outlining the proposals currently in place, Ivan Katongole, Physical Planning Supervisor for Kampala Capital City Authority, said: "The city has identified two satellite towns as suitable for development in order to reduce the housing pressure on the overcrowded city centre. At present, a number of Chinese companies have expressed their willingness to invest in several of our low-cost housing projects."

Turning to Rwanda, the country has in recent years become one of Africa's shining stars in terms of sound governance, robust economic growth and its business-friendly environment. Kilgali, its fast-growing capital, is hoping to attract real-estate developers to invest in a number of prime commercial and residential projects, as well as to finance developments and form partnerships with Rwandan developers.

Outlining a major new mixed-use development in Kigali, DHK's Briggs, said: "We have shunned the generic solution of building standard housing blocks on the periphery in favour of a more inclusive approach, something intended to foster greater social equality and integration."

Zambia, too, has been keen to invite tenders for real-estate projects, with the government willing to provide guarantees to the private sector. As the country has not invested in social housing since the 1980s, there is a huge deficit in terms of the number of units that need to be built. Among the other challenges that need to be addressed are transport development, water supplies and sanitation infrastructure.

Keen to outline the opportunities on offer, Alex Mwansa, Lusaka City Council's Town Clerk, said: "We are currently inviting investors to tender for several urban renewal and infrastructure programmes, including industrial parks and a central business district development. There are also opportunities in Lusaka for the development of retail complexes, as well as roads linking the unplanned settlements with the city centre."

Photo: Affordable housing in South Africa: An overlooked investment opportunity.
Affordable housing in South Africa: An overlooked investment opportunity.
Photo: Affordable housing in South Africa: An overlooked investment opportunity.
Affordable housing in South Africa: An overlooked investment opportunity.

The African Real Estate and Infrastructure Summit 2016 was held at the Cape Town International Convention Centre from 2-3 November 2016.

Mark Ronan, Special Correspondent, Cape Town

Content provided by Picture: HKTDC Research
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