African Urbanization May Point to Economic Opportunities

In 2014, for the first time in recorded history, more humans lived in cities than anywhere else – around 54% of the global population to be exact.

Most economists agree that cities are the engines of economic growth. And, mass urbanization may prove to be one of the most important changes of the early 21st century according to Jamal Saghir, director of sustainable development at the World Bank. If models hold true, predictions show that by mid-century, fully 2/3 of the world’s population will dwell in cities.

In 2014, for the first time in recorded history, more humans lived in cities than anywhere else – around 54% of the global population to be exact.

Most economists agree that cities are the engines of economic growth. And, mass urbanization may prove to be one of the most important changes of the early 21st century according to Jamal Saghir, director of sustainable development at the World Bank. If models hold true, predictions show that by mid-century, fully 2/3 of the world’s population will dwell in cities.

This is big news for the developing world, which accounted for the largest portion of this population shift. Africa, in particular, appears to be benefiting from urbanization, with rapidly improving education systems and young work forces. These traits, along with adaptability, enterprise, and diversity, are attracting investors in unprecedented numbers.

Thanks to this heightened interest in Africa, once referred to as the “dark continent,” global auditing firm PwC has created a report entitled “Cities of Opportunity” which ranks Africa’s growing urban centers. The report only ranks one city per country, but attempts to quantify characteristics such as infrastructure, social influences, demographics, human capital, economics, etc.

Perhaps not surprisingly, the more developed north took the top five spots on the list. Cairo was number one, followed by Tunis, Johannesburg, Casablanca, and Algiers. These cities had the strongest infrastructure (largely thanks to their age), and best environments for citizens to truly grow and add to the local economy. Building takes time, so it may be a few years before nations further south are able to top these statistics, but they are catching up quickly. In addition, sub-Saharan Africa has many other useful qualities to offer. This region offers the most diversity and population growth. These are both important traits to analysts and investors.

A second analysis contained in PwC’s report ranked the cities based on trajectories for economic growth. Based on this analysis, the rankings flipped, with only one North African city (Cairo, Egypt) breaking the top 10. Dar es Salaam, Lusaka, Nairobi, Lagos and Accra took up the top five spots, showing that sub-Saharan Africa is the hotspot for growing economic opportunities of the future.

Of course, these results are based on existing data, and cannot accurately take into account unknown variables like terrorism, war, and other destabilizing factors. Moreover, one city’s growth could easily outstrip another’s, leading to some jockeying in position in years to come. Still, the analysis was an interesting reminder of the possibilities awaiting investors in the developing world in the age of mass-urbanization.