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Cities hold key to African growth, survey finds

Business News of Thursday, 31 January 2013

Source: Ejura Audu

ACCRA, Ghana’s booming capital, was identified as having the highest growth potential of any city on the continent, according to the MasterCard African cities growth index, launched in Johannesburg on Tuesday.

Cities in Africa showed signs their populations would continue to grow, and the continent was expected to have the largest workforce in the world by 2035, the index suggests.

The continent also enjoys improved perceptions of governance.

Prof George Angelopulo of the University of South Africa and Prof George Roger of the University of Cape Town produced the index on behalf of MasterCard.

The index was launched at the second Africa Knowledge Forum, hosted by MasterCard in Johannesburg. The forum draws together thought leaders from academia‚ business and government.

Accra, Lusaka and Luanda, the capital cities of Ghana, Zambia and Angola respectively, have been identified as the cities with the highest potential for growth over the next five years, according to the index.

While South Africa and Nigeria are the only countries with three cities in the index, none feature in the top five.

While more established cities offer the expected potential for growth, other less prominent ones are quietly establishing themselves as those with even higher growth potential. Accelerated growth factors included health, education, governance, infrastructure development, and the ease of doing business.

Harare (Zimbabwe), Kano (Nigeria), Abidjan (Côte d’Ivoire), and Khartoum (Sudan) were deemed to have the lowest growth potential of the 19 cities examined in the study.

Johannesburg, although an economic powerhouse city, achieved lower scores in certain categories because of lower growth expectations owing to its relative maturity compared with other African cities. Johannesburg appears eighth, while Durban and Cape Town appear 10th and 11th, respectively.

Prof George said it was up to leadership to ensure they capitalised on the growth. “Johannesburg will not disappear over night. It is a well-established city and by far the powerhouse of its region. A balanced portfolio is also needed for a city to grow further,” he said.

The forum is examining how cities across Africa are playing an increasingly important role in driving national and regional growth, how they need to compete on the global stage in order to attract investment, and how these cities urgently need to manage their natural and human resources more effectively as they grow.

The index used data compiled between 2009 and 2011 to arrive at its findings. Factors taken into consideration included gross domestic product, growth per capita, household consumption expenditure growth, governance factors and ease of doing business.

Dr Azar Jammine of Econometrix said the rapidly expanding population of Johannesburg was an advantage in making it one of the fastest growing cities in the continent.

“Fiscal balances have improved enormously. In 2000 African countries were where the US is today. Africa is also getting its governance gradually right,” Dr Jammine said.

MasterCard noted that according to the United Nations Human Settlements Programme, the urban population of Africa was expected to triple by 2050 to 1.23-billion (from 395-million in 2009), by which time 60% of all Africans would be living in cities or urban areas.

Economic adviser to MasterCard Dr Yuwa Hedrick-Wong said growth in populations in these cities could drive inclusive growth for the continent with the fastest growing population.

Net capital inflows to sub-Saharan Africa are projected to nearly double from $43.4bn in 2008 to $86.1bn in 2015, the World Bank said this month.

Fiscal balances have improved enormously. In 2000 African countries were where the US is today. Africa is also getting its governance gradually right.

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