International Trade / Investment Promotions / Economic Diplomacy with Richmond Kwame FRIMPONG: Urban-industrial synergies in sub-Saharan Africa


Urban-Industrial Synergies are often partnerships between companies, local communities and governments to promote industrial development in urban areas. The goal of such a partnership is to enhance the success of a business and share the benefits with local communities. In simple terms, at the core of these synergies are companies that have the capacity to generate income and employment. Companies in these partnerships provide low-cost capital, technical know-how, capital equipment and modern manufacturing facilities to local communities. In return, they receive access to market requirements (as well as skills), access to scarce natural resources (for example water or electricity), a workforce and other benefits.

Despite the potential benefits, very few cities around Africa have concentrated on developing urban-industrial synergies as a means of amplifying their wealth creation. In sub-Saharan Africa, there is an apparent lack of synergy between companies and local communities in cities. As a result, economic growth and profitability is unevenly distributed. A solution to resolving this problem is to use urban industrial synergies within sub-Saharan African cities, by integrating industrial parks with metropolitan areas to promote industrial activities, boost the local economy, and improve quality of life.

For Urban-Industrial Synergies to happen, three key components are needed for success:

  1. Professional knowledge about synergies between companies and communities at the city level.
  2. Professional knowledge about how synergies lead to increased investments and wealth creation at the city level.
  3. Professional knowledge about how to promote synergy at the city level by connecting companies and communities with appropriate institutions and policies.

As of 2017, the sub-Saharan Africa region has been faced with several challenges to its economy; including low agricultural productivity, which has been exacerbated by climate change. With fewer people working in agriculture due to climate changes, cities are increasingly responsible for feeding their populations. Urban development in these cities is based on industrialisation. For these efforts to be effective, there must be a carefully-planned partnerships between companies and urban communities which are strategic and innovative enough to achieve maximum results in the shortest amount of time through clear objectives and goals.

This concept of ‘synergies’ is often used in the business world, but little is known about it. Synergies refer to a mutually beneficial integration between two different things to maximise efficiency and effectiveness. This concept has been applied throughout history, when companies partner with local communities by providing jobs and technologies in exchange for workers. The partnership helps both sides achieve desired goals; such as increasing profits, sharing profits and increasing employee-satisfaction.

There are many challenges facing sub-Saharan Africa citizens and the cities that they live in. The challenges stem from the uneven distribution of wealth found within these urban areas due to poor urban management, which results from the lack of synergies between local communities and companies.

Cities that lack urban-industrial synergies often have high unemployment rates and low economic growth. Residents of these cities also have a low quality of life, because they do not have access to consumer goods. The reason for these problems stems from the lack of profit-sharing between companies and local communities, as well as the uneven distribution of wealth within these cities.

Urban-industrial synergies can be used in conjunction with public services, such as public transportation, to solve some of the more critical issues facing sub-Saharan Africa’s urban population; by creating employment opportunities, increasing property values, and improving the quality of life for residents – while at the same time solving transportation issues faced by these cities.

Urban-industrial synergies are most often applied in urban areas that are trying to increase their competitiveness. A lack of integration between companies and local communities can result in inefficiency, which can hinder a city’s development. Cities that lack urban-industrial synergies have low productivity, low levels of investment by the private sector, and a big gap between the rich and poor.

Benefits of Urban-Industrial Synergies

The first way to promote urban-industrial synergies is to use the already-existing networks in sub-Saharan Africa’s urban areas. For example, local communities have their own social and economic networks which can be used to promote synergies between companies and communities. Companies also have networks that can be used to achieve the same goal. By using these pre-existing networks, urban-industrial synergies can become a reality in urban areas across sub-Saharan Africa.

Secondly, there is a need for integrated planning at the national level that would link economic policies with infrastructure development (such as roads, energy sources and water supplies) with social policy (such as schools, hospitals, etc.). A new system of taxation that guarantees a minimum basic income for all citizens – and extensive services such as healthcare, education, social protection, etc. – would help to reduce the opportunity costs of urban life.

Governments need to develop policies and laws that support urban-industrial synergies. These policies should be open to interpretation, so they are flexible enough to accommodate the needs of all parties involved. Governments should provide a legal framework for companies and local communities by protecting their rights, as well as providing them with incentives such as tax-breaks and other benefits to achieve their goal of achieving synergy within an area or city.

Thirdly, there is also a need for integration between industrial parks and regional and district governments, to work out the necessary rules and regulations needed to promote synergy in the long-term. Furthermore, there is a need to promote long-term strategic planning by various departments at the local level: to address issues such as public health care and education; urgently needed infrastructure (water supply and energy); and waste management and reuse programmes. In addition, there is a need for communication links between companies and local communities to create awareness about these issues.

Cities should be applying the PPP (public-private partnership) concept to better coordinate between local communities and companies. By encouraging different sectors of a city to work together, urban-industrial synergies can be achieved while at the same time promoting local economic development. One example of this is creating city-wide strategic plans which consider land use, zoning and transportation policies that rely on synergies with urban communities as well as businesses within sub-Saharan Africa. These plans should include clear objectives and goals for both sides, so that both are working toward a mutual goal.

Lastly, governments and private companies should promote the sharing of technological knowledge between urban communities and companies through educational institutions to achieve synergy. Public and private companies can partner with local schools to promote the sharing of technologies that are beneficial for both sides. These, in turn, will lead to the increased competitiveness and efficiency of sub-Saharan Africa’s cities, as well as provide educational opportunities for future generations.

Basically, African countries should also aim at building a ‘knowledge society’ instead of an industrial economy that is still strongly focused on commodity production. The emphasis should be on generating a critical mass of skilled people to generate a dynamic knowledge-based economy. The experience of many countries has shown that public services can be significantly improved from user fees, and can provide huge revenues for investments in urban infrastructure such as roads, schools, hospitals, etc. It should also be underlined that there is a need to fight against corruption. For example, corruption in the land sector often leads to artificial shortages of land, which drives up costs and leads to illegal trading of land.

Again, in order to increase its competitiveness, the African continent needs to develop better urban systems to provide a better quality of life for its growing population, and to ensure that it becomes a major player in the global economy. Since sub-Saharan Africa is predominantly a rural area, the development of cities will have a major impact on food security, environmental protection and poverty reduction.

Many countries are experiencing increased urbanisation because people are migrating from rural areas to urban centres due to increased economic activity or job opportunities. The majority of this migration is to pursue educational or employment opportunities. Women usually migrate for economic purposes and men usually migrate for educational purposes.

The writer is a financial advisory and international trade professional

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