South Africa: The Role Of Cities In Africa’s Rise

Last Updated: 20 June 2013
Article by De Buys Scott and Kobus Fourie

With a population of one billion and an economy likely to double in size from US$2 trillion to US$4 trillion before 2025, Africa has quickly emerged as the next economic driver for the global economy.

While the success of Africa's rise is well-founded, a far more granular approach to grasping the nuances and realising the opportunities is essential. This goes beyond country-by-country assessments. A deeper assessment of this economic energy and growth reveals that it will be largely driven by Africa's emerging cities. The nature of the business environment in Africa will increasingly demand a far more city-oriented investment approach.

De Buys Scott, KPMG Head of Global Infrastructure and Projects Group in Africa, notes that we cannot afford to ignore cities. "Close to three quarters of African people will be living in African cities by 2050. African cities and megacities already have a larger population than all of Europe".

While boosting strategic infrastructure is more than just the role of cities, the KPMG report 'The Role of Cities in Africa's Rise', makes clear the importance of the rise of the urban economy in Africa.

"There's greater growth of urbanisation in Africa than anywhere else in the world. Over 50 percent of the African population is already urbanised, and expected to grow to approximately 70 percent in the foreseeable future.

Historically, city infrastructure has been viewed in silos – with cities looking at projects on a one to one basis where they would just build a hospital or a school or a road or power station. With so much pressure on the cities, as a result of this massive urbanisation, it is critical to assess their infrastructure needs from a much broader perspective. Cities have to consolidate all the infrastructure needs and must develop the measurement tools to assist them in prioritising their capital allocation that will lead to long-term sustainable cities," adds Scott.

"Cities play a very significant role in attracting investment". It is though, not just about the investment, it is about the capacity of cities to manage this investment. Sound financial and urban planning expertise is critical to appeasing the financial community that their investments are being well managed. Cities are quickly becoming the economic engines of entire national economies and they need the tools to deliver a product that can withstand the test of time.

While cities bring with them great economic growth prospects and coordinated development, they are not void of challenges. The role of urbanisation as the most significant driver of the economies of our countries cannot be denied, but it can also play one of the most divisive roles in our society.

David O'Brien, Global Lead of KPMG's Cities Centre of Excellence warns that "there is a tenuous balance between opportunity and despair when it comes to the implications of massive urbanisation."

"We have to be very careful to balance the needs of all of the residents of our megacities. We must not marginalise whole segments of our society for the sake of economic gain. If we do, we run the real risk that the cost of dealing with our marginalised population will, in the end, consume all of the benefits of urbanisation. Cities should never be about size – they should be about quality of life," says O'Brien.

The report notes that only three African cities – Lagos, Cairo and Kinshasa – fall within the true definition of 'megacities', a category of cities with populations of 10 million or more. But this is likely to change in the near future, with at least six other cities expected to join the megacity class in the next 20-30 years. O'Brien believes that it is important "to step back now and assess how we want these cities to develop in order to use their potential to drive the economic and social expectations of Africa". He also believes that, in this process, the role of the medium-sized city versus the megacity should be properly unpacked and understood.

Kobus Fourie, Head of the South African Cities Centre of Excellence, concludes: "One should take into account the diversity and maturity of the different African cities. Some of them are emerging/new cities, some of them are existing fast-growing cities and, very importantly, some of them are becoming mature cities – all with related but different urbanisation pressures. There is no one easy solution for all cities."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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