In the last few decades, countries across the African continent have been experiencing a rapid exodus of people from rural areas to urban centres. The region’s burgeoning urbanisation presents an episode of bittersweet revelation for urban planners and policymakers. Why is that so? With cities accounting for the lion’s share of the global gross domestic product (GDP), urbanisation has become vital for stimulating economic growth.
However, the migration of rural populations to urban areas in Africa is linked with a surging inequality, rising urban poverty and proliferation of slums in the region. Urban planners and policymakers are grappling with snags which are constraining progress in improving the standard of living for urban residents; with a rapidly growing population, can Africa achieve an inclusive urbanisation?
Excerpts of a joint report (2020) from the Organisation for Economic Cooperation and Development (OECD) and the Sahel and West Africa Club (SWAC) show that Africa is home to the world’s fastest-growing urban population; with the region’s current population expected to double by 2050, urban areas will account for two-thirds of this growth. In the next three decades, cities across the continent will host an additional 950 million people.
While the region’s rapidly growing urban population has the potential to spur economic growth, access to decent jobs and social services such as education, clean water, food, affordable energy, healthcare, housing and transportation is limited as a result of the large influx of people into urban areas. To provide a sustainable panacea for this condition, germane policies should be implemented to harness the potential of urbanisation in Africa. The effective implementation of evidence-based policies and strategies is paramount to addressing the challenges associated with urbanisation in the region.
However, these pertinent policies and strategies cannot be implemented in isolation from infrastructure development. The reality is that the largest proportion of the continent is lagging behind the rest of the world in bridging the infrastructure gap. Since 2000, Africa has been allocating an about-3.5% share of GDP to infrastructure investment. The hard truth is that this amount will not suffice, as the region will have to increase its infrastructure investment to 4.5% to close the current infrastructure gap. Interestingly, Africa has recorded significant progress in the last 15 years; during this period, African governments have been the major source of funding for infrastructure development. Apart from the substantial infrastructure investment from African governments, Chinese infrastructure investment in the region has been increasing steadily.
For example, from 2013 to 2017 China’s infrastructure commitment to Africa grew at an annual average of 10%. With China’s EXIM Bank financing over 90% of the US$3.6billion Mombasa-Nairobi Standard Gauge Railway that was opened in 2017, the railway has reduced travel time between the two cities in Kenya by 50%. This transportation facility and several other ambitious infrastructure projects that were supported by China are contributing significantly in promoting inclusive growth across urban centres, as they are reducing trading cost, improving access to economic activity, healthcare, education, job opportunities etc.
Similarly, China’s infrastructure investment in Africa’s energy sector is paying off. As Africa’s urban population continues to grow, the energy demand for household consumption and industrial production in urban areas is also increasing. This has prompted infrastructure investment in the energy sector to upgrade the production and distribution of energy in the region.
According to the International Energy Agency, access to electricity in Africa doubled from 9 million people a year between 2000 and 2013, to 20 million people between 2014 and 2019. With currently around 580 million people without access to electricity in Africa – a decline from 610 million people in 2013, this progress is largely attributed to contributions from only 5 countries: Ethiopia, Ghana, Kenya, Rwanda and Senegal. All these countries are benefitting from Chinese infrastructure investment in the energy sector.
Highlights of a report (2016) from the International Energy Agency show that Chinese companies which operated as the main contractor were responsible for 30% of SSA’s new energy capacity additions between 2010 and 2015. With more than 200 Greenfield power projects across countries in SSA, Chinese companies were contracted to build 17 gigawatts of generation capacity in the region between 2010 and 2020. Renewable energy sources accounted for 56% of the entire energy capacity within this period; ensuring that inclusive growth is supported by sustainable energy sources.
While China is committing colossal resources to develop infrastructure across countries on the continent, it is important to note that these investments are not limited to the energy and transport sector. China is also the foreign country with the largest infrastructure investment in Africa’s information and communication technology (ICT) sector; between 2001 and 2007, China’s infrastructure investment in the region’s ICT sector amounted to US$3billion.
By continually strengthening ICT infrastructure development in Africa for several decades, China has demonstrated a strong commitment to develop the continent’s ICT sector. It is therefore not a fluke that Africa is currently the epicentre of the world’s mobile money industry; a feat the continent could not have attained without China’s enormous investment in the region’s ICT sector.
A report (2021) from the GSM Association indicates that SSA has been the central point for the global mobile money industry for more than a decade. By the end of 2020, there were 548 million registered accounts in SSA; the region contributed 43% of the world’s total new accounts in 2020. In the same year, the share of additional registered accounts for East Asia and Pacific, South Asia, Latin America and the Caribbean, Middle East and North Africa, and Europe and Central Asia was 34%, 11%, 8%, 3% and 1%, respectively.
Considered as an essential resource in Africa, mobile money is bolstering access to financial services – which is closing the finance gender gap, mitigating inequality and alleviating poverty. Through mobile money, both men and women in Africa have equal access to financial services. Mobile money has enabled women who could not access the services of traditional banks as a result of inadequate documentation, travel distance and cost barriers to make or receive payment, save and insure against risk; mobile money services in Africa have proven to be a critical tool for promoting shared prosperity and fostering inclusive growth – particularly in SSA, where the largest proportion of the world’s extreme poor population is located.
By subscribing to mobile money service, low-income households are not easily pushed into poverty during an economic downturn or loss of a breadwinner; because they can access credit, save and insure against risk. Also, through mobile money, low-income households in the region are able to access basic utilities such as healthcare, education, clean water and energy.
Admittedly, these achievements which align with the United Nations Sustainable Development Goals could not have been attained without China’s commitment to develop infrastructure in Africa. As the saying goes “a friend in need is a friend indeed”. China exhibited a strong commitment to close Africa’s yawning infrastructure gap when there was limited support from the rest of the world. It is therefore important for African countries to cooperate with China – which has the technical expertise, in a problem-solving process to achieve sustainable and inclusive urbanisation.
About the Author
Alexander is an economic consultant, chartered economist and chartered financial analyst.