Competitive African Cities for Better Living Standards
El-hadj M. Bah
African Development Bank
Rapid population growth and urbanization are putting significant pressure on the infrastructure of African cities. The population has grown at an annual rate of 2.53 percent from 1950 to 2015 and is predicted to increase from 1.18 billion in 2015 to 2.44 billion in 2050.1 At the same time, the continent is experiencing rapid urbanization, at the rate of 3.5 percent during the period 2000–15. It is estimated that by 2030 more than 50 percent of the population in Africa will be living in cities, and this percentage is expected to increase even further, to reach over 60 percent by 2050.2 The expected demographic transition, characterized by a decline in fertility and mortality rates, will translate into a large labor force living in urban centers. This demographic transition has the potential to turn into a demographic dividend that will increase economic growth and living standards, or it could become a source of social instability if appropriate policies are not implemented (see Chapter 1.1).
Two key implications of the demographic transition are sharp increases in the need for job creation and for urban infrastructure (including affordable housing). It is estimated that although about 10–12 million young people enter the labor market each year, only 3 million formal jobs are created. Thus many African cities face situations where large numbers of the population are either unemployed or underemployed, and are often engaged in informal self-employment. Moreover, African cities experience shortages of transport networks; electricity, water, and sewer systems; and affordable housing. These shortages reduce productivity by limiting the creation and growth of firms and hence lower labor demand.
For cities to play their role as poles of economic growth and providers of quality jobs, they need to become more competitive. Indeed, urbanization can contribute to structural transformation and, by extension, improved competitiveness through economic linkages and social innovation. The concentration of people in urban areas can create economies of scale and facilitate innovation through the concentration of high-skilled and talented workers. Economic development can be enhanced through extended and improved urban services; foreign direct investment (FDI) in urban corridors; and social development through the provision of cost-efficient transport systems, safer housing, social safety nets, and an enhanced businesses environment.3 Furthermore—through increased and improved connectivity, technology, and know-how transfer—urbanization can raise productivity and produce more attractive areas for investments.4
This chapter focuses on the constraints and opportunities for creating competitive African cities that will be required to reap the demographic dividend and, ultimately, improve the living standards of urban dwellers. It is noted that there is no consensus on the meaning of a competitive city. The World Bank notes that a competitive city is “a city that successfully facilitates its firms and industries to create jobs, raise productivity, and increase incomes of citizens over time,”5 while the World Economic Forum adds the dimension of sustainability.6 The Forum states that competitiveness is “the set of factors—policies, institutions, strategies and processes—that determines the level of sustainable productivity of a city.”7 Furthermore, the Asian Development Bank asserts that “cities become competitive though shared services and infrastructure.”8 This chapter defines a competitive city as an urban area that offers affordable housing and adequate infrastructure for private-sector development, decent job creation, and a better quality of life. Cities have different ways of enhancing their competitiveness through institutions, regulations, infrastructure, skills, innovation, enterprise support, and finance. However, our definition resonates with the African Development Bank (AfDB)’s High 5s, particularly the one related to improving the quality of life of the African people. It is line with Glaeser’s view that urban policies should emphasize people as the ultimate beneficiaries.9
The next section compares African cities along several dimensions of competitiveness. The subsequent section addresses constraints to competitiveness that prevent reaping the demographic dividend, including the lack of urban planning, low access to basic infrastructure, and the deficit of both adequate and affordable housing. The section that follows provides three main avenues to overcome these challenges and increase the competitiveness of African cities. It starts by highlighting how urban planning can improve city competitiveness to benefit from the demographic changes, followed by a focus on how residential housing construction can produce economic linkages and create jobs. Finally, the analysis explores how special economic zones (SEZs) can be a catalyst for competitiveness. The conclusion offers a summary of findings and policy recommendations made in the chapter as well as ways to move forward.
Overview of competitiveness in selected African cities
African cities vary widely by population size, wealth, and economic dynamism. This section uses city-level data from the Oxford Economics database to compare cities across Africa over the period 2000–16 along four dimensions that impact competitiveness: population dynamics, income and growth performance, employment, and costs of housing and utilities.10
There is a sharp reduction in the number of small cities concomitant with a strong increase in the number of large cities. Figure 1 shows that the number of small cities—those with fewer than 500,000 inhabitants—decreased from 31 in 2000 to 18 in 2016 and is expected to drop by half by 2030. To a lesser extent, the number of medium-size cities—those with between 0.5 and 1.0 million inhabitants—has also been diminishing, from 32 in 2000 to 28 in 2016, and is expected to decrease further to 23 by 2030. The decline in those two subgroups indicates that cities are becoming larger. The number of large cities, with populations between 1 and 5 million, continue to be the largest group, growing from 35 in 2000 to 48 in 2016, and is expected to increase by seven additional cities by 2030. However, the number of megacities with populations above 10 million inhabitants is still very small; it increased from one in 2000 (Cairo) to three in 2016 (Cairo, Kinshasa, and Lagos). By 2030 two other cities (Khartoum and Luanda) are expected to join this group. Analyzing cities’ population growth shows that, between 2000 and 2016, almost 30 percent of the cities in the sample increased their population by over 50 percent, while almost 17 percent doubled their population. Between 2000 and 2030, the populations of 24 out of 102 cities are expected to triple while those of an equal number of cities are expected to double. These projections suggest that most cities need to find ways to provide infrastructure and jobs for a larger number of urban dwellers.
Income and growth performance
There is a large variation of gross domestic product (GDP) per capita and household disposable income across cities.11 The top 10 richest cities in terms of GDP per capita share similar characteristics: they are located either in oil-exporting countries or in the most developed countries in the continent (see Figure 2a). The two richest cities, Malabo (US$18,400 GDP per capita) and Libreville (US$17,600), are both located in oil-exporting countries with small populations; another oil-exporting country, Algeria, has three cities in the top 10. The other five cities are from the advanced countries of Botswana, Mauritius, Namibia, and South Africa. The average GDP per capita for the top 10 is US$13,360, which is 16.7 times the average income per capita of the bottom 10 cities. Common characteristics for the bottom 10 are their location in low-income and mostly fragile countries (see Figure 2b). In most cases—including Burundi, Central African Republic, and Liberia—political instability, civil war, or dictatorship have prevented these countries from developing and increasing their wealth.
Relative to GDP per capita, diversified cities provide larger disposable incomes to their households. Although the GDP per capita of cities located in oil-rich countries is high, their households are not particularly wealthy. For example, the GDP per capita for Malabo is almost six times the average household disposable income (a ratio of 1:6); for Libreville, the ratio is 1:1.6, and for the Algerian cities it is around 1:1.3. However, for the other five cities located in non-oil-exporting countries, disposable income is often higher than GDP per capita. This shows that oil wealth does not necessarily trickle down to the household level and that citizens benefit most from diversified economies. The comparison for the bottom 10 countries shows a similar pattern, where household disposable income is higher than GDP per capita—an indication of diversified income sources for households, dominated by the informal sector (Figure 2b). On average, household disposable income is higher than GDP per capita for the whole sample: US$6,600 versus US$4,700. However, there is large gap in household income between the wealthiest and poorest cities. Disposable household income for the top 10 richest cities is 10 times that of the 10 poorest.
High growth of GDP per capita in the period 2000–16 did not translate into higher disposable income for households in a few cities. Although, on average, per capita GDP grew faster than household disposable income, there is a strong positive correlation (Figure 3). Nevertheless, a few cities experienced positive growth in per capita GDP while households’ incomes declined during the same period. For instance, Rabat experienced a 33 percent decline in household disposable income while GDP per capita increased by 24 percentage points. Similarly, Kumasi saw household disposable income decline by around 15 percent against a 40 percent increase in GDP per capita. The average and median growth rate of household disposable income for the 102 cities in the Oxford Economics database was 2 percent. However, eight countries had average growth rates higher than 5 percent. The top growth performer was Monrovia, which multiplied its household disposable income by more than five. A decade-long civil war had decimated livelihoods of Liberians and the peace dividend translated into higher household disposable incomes, albeit from a very low base. Other cities, such as Brazzaville, Huambo, and Pointe-Noire, almost doubled their incomes. In contrast, 22 cities either stagnated or had long-run declines in their per capita household disposable income. Asmara saw its income per capita decline by 66 percent between 2000 and 2016. The reasons for the declines are diverse and include conflict and economic stagnation.
Growth in employment
For the 102 African cities studied, employment grew on average by 3.4 percent per year for the period 2000–16, with large variation across countries. The top 20 cities for job creation all had yearly employment growth rates ranging from 5.03 percent in Kumasi to 10.74 percent in Lusaka (Figure 4a). This group includes cities at different levels of income and geographic location. On the other end, the rates for the bottom performers varied between –0.88 percent in Port Elizabeth to 1.65 percent in Johannesburg (Figure 4b). The bottom performers include several cities in South Africa and Nigeria. South Africa’s economy has experienced a decade of slow growth while Nigeria’s economy is highly dependent on oil price fluctuations.
The correlation between employment growth and growth of household disposable income, despite being positive, is fairly moderate (Figure 5). For example, both Lusaka and Kigali saw increases in employment of more than 10 percent on average over the 16-year period. However, while Kigali had a very strong growth in household income (6.9 percent) and per capita GDP (9.3 percent), Lusaka saw a modest growth in household income of 2.6 percent and per capital GDP of 3.8 percent. Employment grew strongly in Bamako (7.8 percent) and Yamoussoukro (6.3 percent) while household incomes declined, on average, by 2.0 percent and 0.1 percent, respectively.
For employment growth to translate into higher disposable income for households, an increase in wages must accompany the rise of employment. Another issue relevant for Africa is the dramatic increase in the total number of households. Although the average cumulative growth of employment is 79.5 percent, the number of households grew on average by 75 percent. This implies that employment growth barely stayed ahead of growth in the number of households. Other factors, such as income taxes and the high incidence of informality, may explain the low correlation between household wealth and employment. Unfortunately, the database does not contain information on these variables.
Housing and utilities costs
On average, households spend 21 percent of their disposable income on housing and utility costs, although there is a large variation across cities. The share ranges from 8 percent in Nairobi to 39 percent in Polokwane. In general, South Africans spend more than citizens of all other African nations on these items. Although this is an important indicator for city competitiveness, this comparison should nonetheless be treated with caution since data on access and quality of housing and utilities are either not available or non-contextualized. For instance, although it is estimated that inhabitants of Bangui spend only 9 percent of their disposable income on these items, more than 80 percent of urban dwellers in the Central African Republic live in slum conditions and only 15 percent have access to electricity.12 It is thus not surprising that a low share of Central African Republic households’ incomes is spent on housing and utilities.
Ranking cities in terms of households’ annual spending on rent shows a very large variation. In Bangui (Central African Republic), renting households spend just US$75 per year on housing while renters in Port-Louis (Mauritius) spend US$2,953 per year. Figure 6a shows that the top 20 most expensive rental cities in Africa are mostly located in countries with higher income per capita. The opposite is true for the bottom 20 (Figure 6b). In fact, the correlation between GDP per capita and household expenditure on rent is high, at 0.6. The average and median for the whole sample are US$937 and US$724, respectively. The caution noted above is also valid here.
After this brief overview of competitiveness in African cities, the next section analyzes key constraints of competitiveness of cities in the context of the demographic transition.
Constraints to competitiveness in African Cities
This section aims to explain the reasons behind the limited performance of African cities in terms of competitiveness. The lack of infrastructure, poor business environment, and shortage of skills (as noted in Chapter 1.1) are among the perennial problems hindering the competitiveness of African countries, thus limiting the potential to take advantage of demographic changes. The same issues constrain African cities. This chapter focuses on three main constraints specifically limiting the competitiveness of African cities and their ability to make the demographic dividend a reality, namely: a lack of urban planning, a shortage of urban infrastructure, and a shortage of adequate and affordable housing. Similar issues are emphasized by a recent report by the World Bank that argues that cities are crowded in terms of people but they have underinvested in infrastructure, affordable housing, and industrial and commercial structures.13
Lack of urban planning
Urban planning practices and strategies in many African cities rarely reflect the realities of urban Africa because they fail to take into account the social, political, economic, and environmental context of the continent’s urban development. The bulk of urban planning and building codes are a mix of often contradictory, complex, and outmoded colonial planning standards; customary practice; and unregulated regimes. Weak capacity and lack of strategic focus have resulted in cities being built from “back to front” because construction occurs prior to urban planning. Besides being disconnected from the reality of urban experiences in many African cities, inherited planning practices and zoning rules have increased pressure on urban infrastructure such as water, sanitation, and road networks as well as exacerbated urban sprawl.14 Besides, poor urban planning lowers productivity because it leads to congestion, sprawl, and poor spatial connectivity, further eroding the competitiveness of firms and leading to environmental degradation. Poor planning also poses serious challenges for sustainable urban development and contributes to the high costs of real estate, and housing in particular, on the continent, thereby hindering the quality of life of city dwellers as well as firms’ and workers’ competitiveness.15 As a result, today much of Africa’s urban expansion is occurring through an unplanned and low-density transformation of rural land into urban land.
Low access to basic infrastructure services
Africa suffers from a severe infrastructure deficit. The continent’s infrastructure deficit is a major impediment to the continent’s growth because it hinders domestic private investments, deters FDI, impedes industrialization, reduces productivity, and limits the provision of services. Consequently this deficit hinders the improvement of the quality of life of Africans. The largest infrastructure deficit of the continent is in the power sector: over 570 million people, or about 54 percent of Africans, do not have access to energy.16 Power consumption in Africa remains very low, at 570 kilowatt hours per capita (181 kilowatts in sub-Saharan Africa, excluding South Africa). This represents only a fraction of power consumption in both developed and emerging economies (see Table 1). Similar problems plague the continent’s information and communication technology (ICT) network, water and sanitation, and transport network (Box 1). All these constraints limit job creation and the economic opportunities needed to reap the demographic dividend.
Africa’s infrastructure shortfall has been widely identified as a major bottleneck for doing business across the continent. It increases indirect costs of manufacturers, making them less competitive vis-a-vis their peers from other world regions. Regular power outages remain a major infrastructure bottleneck that plagues businesses. Moreover, lack of access to a reliable electricity supply increases the use of environmentally unfriendly alternatives such as diesel-powered generators.
Box 1: Productivity killer: The increasing costs of congestion in Nairobi
Nairobi is a prime example of the difficulties of congestion facing fast-growing African cities, where traffic has become one of the biggest issues in terms of productivity. The Kenyan capital, whose economy grew with 6 percent in 2016, is one of the fastest-growing economies of the continent and has simultaneously seen rapid rates of urbanization. Although the population of Nairobi Metropolitan Area was around 6,658,000 in 2009, it is estimated that it will reach approximately 14 million by 2030.1-1 At the same time, car-based transportation more than doubled between 2012 and 2016, reaching 700,000, with estimates of up to 9 million car users by 2050.1-2 Combining this with low levels of infrastructure investments, an inherited colonial infrastructure, and a spatial-economic structure with an almost exclusive focus on the central business district have created a situation where most citizens spend at least two hours commuting each day,1-3 with a large impact on the city’s competitiveness.
The consequences have been plentiful. Nairobi’s traffic problems cause increased costs, longer travel times, lower economic productivity, and a substantial negative impact on health and the environment. It is expected that the congestion leads to an estimated US$578,000 a day of lost productivity in the city, and as many as 13,000 people killed in road accidents a year.1-4 Moreover, should the city keep adding cars at the current rate without expanding its infrastructure, the average speed of driving will be cut in half by 2030, to 20 kilometers an hour (so it will take twice as long to get anywhere).1-5 Another related problem is the deteriorating air quality in the city, where 30 percent more diesel is burned today than it was five years ago. The bad air quality also stems from the fact that few cars are new: the large majority of cars are old ones imported from Japan and Europe. Following this, respiratory diseases are one now the number one type of disease in Kenya.1-6 To curb the massive congestion, several initiatives are needed, including the construction of new ring roads, re-engineering of the public transportation system and investing in rail services, developing multiple city centers, and using smart technology to control road traffic.
Source: Authors, based on Gachanja, 2015; Honan, 2016; McGregor and Doya, 2014: Otuki, 2017; and Vidal, 2016.
Deficit of adequate and affordable housing
Africa’s rapid urbanization and population growth has led to a severe affordable housing shortage and a rise in informal settlements. Today, over 330 million Africans live in slum conditions. The housing backlog is estimated to be over 51 million affordable housing units, with 17 countries experiencing a housing backlog of over 1 million units.17 On one hand, countries such as Botswana, Mauritius, and Tunisia have no housing deficit, while Nigeria is estimated to have a housing shortage of at least 17 million units, the highest in the continent (Table 2). The socioeconomic impact of the housing shortage is clear. It causes overcrowding, increases the incidence of diseases, and hinders the provision of basic social and public services such as water, sanitation, education, and physical safety. In such a situation, high population growth and a youth bulge tend to be liabilities rather than dividends.
In addition to the shortage of adequate housing, affordability is a major issue facing households across African cities. A substantial number of households cannot afford an entry-level home supplied by the market. A recent African Development Bank (AfDB) study estimates that 81.5 million households can only afford a house that costs US$3,750 or less.18 Besides providing jobs for the continent’s unemployed youth and building a solid industrial base, closing the housing gap would significantly contribute toward Sustainable Development Goal 11 of making cities safe and sustainable.
The reasons for the shortage of affordable and adequate housing can be traced throughout the steps of the housing delivery value chains. Lack of urban planning and adequate building standards are causing a shortage of urban land, resulting in high prices and urban sprawl. Direct and indirect evidence shows that land use regulations, defined in urban plans, explain the majority of the differences in housing supply across space.19 These regulations create market failures that prevent the housing market from functioning properly as theory would suggest, especially the no-arbitrage equilibrium condition.20 An overreliance on imported building materials, and monopoly pricing in some cases, contribute to very high prices. The dominance of small- and medium-sized developers and artisanal construction methods with low capacity lengthens construction time, lowers quality, increases construction costs, and limits the supply of housing (Box 2). Lack of financing for developers and housing customers, along with high financing costs for those that qualify for loans, add to the overall housing costs. All these issues are amplified by inadequate institutional and regulatory frameworks and poor governance.21 This constitutes an environment not conducive for reaping the demographic dividend.
Box 2: The shortage of skills in the Kenya construction sector
In the construction sector, both skilled and unskilled labor together generally represent 30 percent of overall construction costs. Whereas unskilled labor is often widely available, there is a shortage of skilled workers, especially well-trained technicians such as carpenters, electricians, general construction workers, plumbers, and—in some countries—architects and engineers. These skills shortages are having a negative impact on housing costs and quality.2-1 In turn, the poor-quality supply and high cost of housing undermine countries’ productivity by reducing labor market flexibility, increasing mortgage spending, and preventing investment from being redirected toward more productive activities.
In Kenya, the Federation of Master Builders, representing 2,500 contractors, highlights the important skills gap in the adequacy, productivity, and quality of human resources. This is largely the result of high training costs that are not affordable for many young people, but the curricula of most training institutions are also out of touch with industry needs. In consequence, local artisans construct housing units without respecting building codes, increasing the cost of construction and limiting their ability to construct decent, safe dwellings. A shortage of managerial skills was also cited as a big constraint to scaling up affordable housing delivery. Habitat for Humanity in Kenya observes that the lack of training and skills locks low-income households into a cycle of poor-quality, self-built housing.2-2 They plead for policymakers to expand the technical and vocational training of youth in the skills needed by the construction and manufacturing sectors, ideally in close partnership with the private sector to ensure that needs are identified correctly and training is delivered effectively. It is of utmost importance to have the right skills mix throughout the housing supply chain because it means faster construction with less rework and hence results in lower construction costs.
Source: Faye et al. forthcoming (2017).
Increasing African city competitiveness for making the demographic dividend a reality
This section provides policy recommendations for how to leverage the competitiveness of African cities to address the challenges related to demographic changes. First, concrete and immediate policies for adequate urban planning addressing the demographic issues and economic changing landscape of African cities are discussed. Next the section focuses on the spillover effects of residential housing investment. It specifically shows that residential investment is an enabler of housing provision, job creation, and economic growth. Finally, it discusses the provision of an attractive business environment through the creation of special economic zones (SEZs), which are recognized as a way to support competitive private-sector development. This section does not specifically discuss policies dealing with the shortage of infrastructure such as power and transport systems nor the financing mechanisms to fill this gap, which have been more extensively discussed elsewhere.22
Urban planning to lay the foundations of competitive cities
The adoption of comprehensive and up-to-date urban plans that reflect recent economic and demographic developments is crucial for laying the foundations of competitive cities better equipped to benefit from urbanization. UNECA (2017) highlights that urbanization and industrialization can be closely associated in a mutually beneficial manner. However, in Africa, industrialization requires better-functioning cities. Although some cities, such as Addis Ababa and Casablanca, have updated their urban plans, a number are still using master plans from the colonial era.23 These master plans do not include increased urban population or changes in economic structures. They also lack good transport networks to connect workers and employers. New urban plans need to pay special attention to the following issues: (1) providing land for public infrastructure and green space; (2) including informal settlements as integral parts of cities; (3) increasing urban density; and (4) increasing connectivity between workers and firms. The World Bank notes that urbanization strategies should depend on each country’s share of urban population and should focus on providing good land policies at early stages of urbanization and providing connective infrastructure for areas that are urbanizing fast. These strategies should then adopt targeted interventions to deal with slums for highly urbanized areas.24
- Providing land for public infrastructure and green space: UN-Habitat notes that the share of public space and roads in urban land in Africa is 15–20 percent, which is half the global average of 30–40 percent.25 The shortage of urban land earmarked for urban infrastructure increases the costs of building roads, airports, and other public infrastructure on previously settled land, because inhabitants are compensated for the destruction of their dwellings. This ultimately leads to a lower road network density. Moreover, the shortage of public spaces where urban dwellers can meet to socialize or undertake recreational activities lowers the quality of life in cities. It is not rare to see roads in several African cities transformed into soccer fields during the weekend. Urban planning that anticipates these needs ahead of time will not only allow for lower infrastructure cost but also provides a better quality of life for future residents.
- Including informal settlements as integral parts of cities: Cities around the world have had varying responses to informal settlements, ranging from neglect to forced evictions. However, since the early 2000s, the concept of “Right to the Cities” has been adopted by different international organizations. Today, the World Charter for the Right to the City recognizes that all population subgroups, including the poor, women, youth, refugees, immigrant workers, and so on have equal rights to benefits from urbanization. This implies that, instead of forced evictions of slum dwellers, governments must improve the living conditions in slums. This change in mentality has led many African governments to adopt slum upgrading programs that consist of providing urban infrastructure and land security. With their very high share of informal settlements, urban planning in African cities must seek ways to improve urban infrastructure without necessarily moving people out of their community.
- Increasing urban density: As previously discussed, rapid urbanization and lack of planning have led to urban sprawl in many African cities. Agricultural land is being transformed into urban land at a very fast pace, while commute times and traffic jams are increasing. For instance, Bamako’s population growth between 2000 and 2013 was almost matched by the growth of its urban expansion, 5.7 percent and 5.1 percent, respectively, implying a low increase in urban density.26 The averages for sub-Saharan Africa show that urban expansion is faster than population growth, at 7.7 percent and 4.6 percent, respectively, for the period 2003–15. This lowers the density in African cities, leading to high costs of urban infrastructure and lower benefits of urbanization through limited economies of scale. Yet, in several cities, large plots of land near the urban center remain empty. For instance, Lall et al. report that more than 30 percent of land within 5 kilometers of the city centers of Harare (Zimbabwe) and Maputo (Mozambique) remains unbuilt.27 Urban planning should seek to increase urban density by reducing minimum plot sizes and infill, whereby housing developments occur in unbuilt areas in the city. However, for this to be effective, tax policies and land reforms may be necessary. For instance, governments can adopt high taxes for unbuilt land in urban centers, which can push land owners to develop their land or sell it to housing and commercial developers.
- Increasing connectivity between workers and firms: Urban sprawl and lack of mass transit systems means that workers in many cities need long commute times each day between their places of work and residence. This not only decreases productivity but also increases pollution. For instance, residents of Kilamba and Zango, near Luanda, Angola, spend up to two hours each way to commute the 25 to 40 kilometers to reach their places of work in Luanda. This type of geographic divide between work places and workforce should be avoided for cities to become competitive. New satellite towns should provide land for mixed use, residential, and commercial purposes. Industrial corridors or SEZs need to provide places for residential housing or build mass transit systems between populated areas and SEZs. Better connectivity between workers and firms, and between producers and consumers, are necessary to reap benefits from economies of scale and agglomeration.28 Urban planning is an important starting point to achieve better connectivity.
Leveraging residential housing construction
Addressing the large urban infrastructure deficit, including the housing backlog, is an opportunity for African cities to tackle wider economic development issues. However, this opportunity will lead to benefits only if cities regularly update their urban plans to take into account new realities. Updated urbans plans will lower costs of urban infrastructure and increase the supply of urban land for housing. It will also allow for the introduction of mechanisms to generate more fiscal revenues for the provision of urban infrastructure, which should precede housing construction.
In addition to providing shelter to a growing urban population, housing construction has large economic externalities. The impact of housing investment on economic development has been widely studied.29 All studies shows a correlation between housing investment and economic growth. However, disagreement exists on the direction of causality and some evidence shows that causality in both directions.30 Neoclassical growth theory suggests that housing investment is a driver of economic growth through its impact on capital formation. Arku and Harris argue that housing investment affects economic development though its effects on employment, savings, total investment, and labor productivity.31 In many countries, housing represents the main wealth of households. In the analysis below, we focus on three channels through which housing investment affect the economy: financial sector development, increased economic activity through extensive linkages with the local economy, and job creation.
- Financial sector development: A housing purchase is one of the largest investments that most households ever make during their lifetime. Such an investment is often not feasible without the participation of the financial sector, through mortgages and other housing finance instruments. Because of the long-term nature of housing finance, financial intermediaries use different channels to raise the required funding, which facilitates the development of the financial sector. Housing loans, backed by collateral, are also safer than other consumer loans and provide resilience to the financial sector. In addition, homebuyers are obliged to save for months and years to meet the required down payment of 10–20 percent of the house price. This increases savings and thus the availability of funds in the financial system. Housing purchase and housing finance is also associated with financial market innovation and the development of the secondary mortgage market. It provides additional financial securities (e.g., mortgage-backed securities) for diversifying risks to institutional investors such as pension funds and insurance companies.32 Insurance companies also benefit though increased business opportunities because mortgage customers are required to purchase homeowner’s insurance, mortgage insurance, or life insurance in several countries. Moreover, home equity serves as collateral for consumer borrowing for different purchases. This stimulates lending and financial sector development. Cerutti et al. report, for a sample of 52 emerging and advanced countries, that the median share of mortgages in household credit was 70 percent.33 However, there is a wide variation in the mortgage-to-GDP ratio, ranging from below 1 percent in Russia to above 80 percent in Switzerland. Financial sector development, measured as debt-to-GDP ratio, explains 60 percent of this variation. A number of countries have adopted policies aimed at developing housing finance markets not only to increase access to home ownership but also to develop the financial sector. For instance, in the United States, mortgage interests are deductible from tax liabilities.
- Linkages with the local economy: Housing construction has significant linkages throughout the economy. The construction sector uses inputs from mining and quarrying, manufacturing, and services. Subsectors such as building materials manufacturing (cement, steel bars, wood, etc.), furniture making, architectural services, and rental and leasing activities depend heavily on housing construction. Polenske and Sivinitades compiled estimates of direct backward linkages found in different studies where, for developed countries, the sector ranked in the top five of sectors with the highest direct backward linkages.34 For instance, in 1977, intermediate inputs represented 58 percent of US construction output, making it the third most linked sector. For Turkey, direct backward linkages are estimated at 50.6 percent.35
The high level of linkages with other sectors means that investments in housing yield high benefits throughout the economy. Table 3 shows estimates of output and employment effects of housing construction from various studies. A study by UN-Habitat and ILO finds that the output multiplier of housing construction is between two and three times the initial investments in most developing countries.36 This is confirmed by a recent study on India noting that residential construction generates an output multiplier of 3.84 when considering both indirect and induced effects.37 Numbers reported by Uy for the Philippines are an order of magnitude higher.38 In the United States and Canada, the economic impact of residential housing construction was estimated by assessing the additional income and taxes generated by the construction of a given number housing of units. The National Association of Home Builders (NAHB) in the United States estimates that the construction of 100 single-family homes in a typical local area generates US$28.7 million in local income and US$3.6 million in local taxes.39 Similarly, the estimate for Canada is CA$33 million (about US$24 million).40 Because of its large multiplier effects, residential construction is seen as leading indicator of economic activity. In the United States, housing starts (total new private housing units started) is a key economic indicator published monthly to gauge the direction of the economy.
- Job creation: A key factor behind the high-output multipliers observed across countries is the labor intensity of the construction sector as a whole and of residential housing in particular. In the Organisation of Economic Co-operation and Development (OECD) countries, the construction sector employed 36.4 million people in 2016. For the United States alone, the sector employed 10.3 million people as of December 2016.41 The sector is also a big employer in South Africa, with 1.4 million employees in 2016. The sector is one of the most labor intensive in developing countries. Housing construction creates direct, indirect, and induced employment.42 Estimates for full-time equivalent (FTE) direct jobs per housing unit constructed are 2.24 in Ethiopia and 2.34 for India.43 Considering direct and indirect jobs, the estimates are 1.90 FTE jobs for Canada and 5.62 jobs for South Africa.44 Including induced effects, the estimate for the United States is 4.91 FTE jobs per housing unit and 3 to 6 FTE jobs for the United Kingdom.45 There are also estimates of employment creation per million of local currency invested in housing. The estimates shown in Table 3 are all around 40 FTE jobs per million. It is 40 for Argentina (direct and indirect), 37 in Australia (overall effects), and 40.6 in India (overall effects).
These numbers show that investment in housing construction will be crucial for increasing job creation in African cities. Estimates by Faye et al. show that addressing the huge shortage of over 51 million housing units across the continent would add 288 million jobs over 10 years or 29 million per year, on average.46 Given the projected increase in population and labor force presented in Chapter 1.2, housing construction will be critical for Africa to benefit from the demographic dividend.
Housing construction and city competitiveness
Investment in residential housing construction will lead to job creation, financial sector development, and economic growth; in turn, these are expected to increase city competitiveness in Africa and facilitate the materialization of the demographic dividend. Moreover, the extensive linkages of the construction sector imply that productivity growth in housing construction will spill over into other sectors in manufacturing and services, thus lifting overall productivity. For example, Ethiopia’s Integrated Housing Development Program has been important for job creation, manufacturing development, and economic growth in general. The program is not seen as just a tool to address housing shortages but also as part of the broader development policy.
Another important link between housing construction and city competitiveness is through government revenues. Housing and land assets, being immobile, are easier to tax to generate revenues for local and national governments. The revenues can then be used to improve urban infrastructure and address social programs, such as upgrading slums. A policy of land value capture is needed to rationalize the use of land and for budgetary reasons. However, it would need a lot of upstream effort for land demarcation, registration, titling, and valuation. Improving urban infrastructure will facilitate the movement of people in cities and reduce the high productivity costs of transport gridlock. Other inputs can also be taxed for addressing challenges in the housing sector. In Morocco, a small tax on cement is used to constitute a guarantee fund for low-income housing and to support the program of slums elimination (“Villes sans bidonvilles”). This fund has been successful in increasing mortgage access for households in the informal sector and reducing the number of slums in the country.
Special economic zones for competitive African cities
Special economic zones (SEZs) are a practical way to circumvent poor business environment limiting private-sector development and competitiveness in many cities. The recommendation to improve the business environment in Africa has been made for decades, yet African businesses are still constrained with inadequate regulatory frameworks, lack of energy, poor distribution systems, and poor access to finance. The supply of adequate infrastructure and simplification of regulatory business systems in a specific urban area can enhance private-sector development and increase job creation, hence improving city competitiveness. The analysis in this chapter takes into account lessons learned from various parts of the world with the purpose of identifying factors of success and sharing lessons, focusing on city-wide SEZs. It acknowledges that SEZs need not only a coherent and flexible policy environment, but also competitive urban locations with sufficient quality infrastructure together with a capable financial system. Successful SEZs, as observed in China, support, in turn, the economic development and industrialization of the city where they operate.47 The analysis therefore explores the opportunities and challenges faced by city-wide SEZs in Africa and discusses policy recommendations to improve their implementation.
The benefits of special economic zones for city competitiveness
SEZs are perceived to be a means of enhancing the competitiveness of the local economy by reducing production costs, increasing trade and investment, and creating jobs within national economies. Through reduced regulatory burden, tax incentives, and low tariffs, SEZs provide a more favorable business environment, facilitate access to new markets, and encourage the concentration of industrial growth (see Box 3). They are eventually able to attract more FDI through favorable policies and locations, thereby triggering industrial spillover as well as promoting technology transfer and contributing to human upgrading at the local level through the development of backward and forward linkages.48 Furthermore, they create waged employment and promote exports together with enhanced foreign exchange earnings, and economic diversification.49 Currently, around 3,000 SEZs operate in more than 130 countries, mainly in the developing world. They have created 70 million jobs and raised US$500 billion annually in direct trade-related value addition.50
Box 3: Definition and main characteristics of special economic zones
Special economic zones (SEZs) are designated areas where economic regulations are different from those of the rest of the country. The term refers to free trade zones, free ports, export processing zones, free enterprises zones, industrial parks, economic cooperative zones, or specialized zones (science and technology parks, petrochemical zones, logistics zones). All SEZs share the following four characteristics: (1) construction relies on attracting and utilizing foreign capital; (2) the main forms of companies are joint ventures with foreign capital, partnerships, and wholly foreign-owned enterprises; (3) products are primarily export-oriented; and (4) government-led infrastructure development is sufficiently advanced and progress is being made toward a market-based economic system. According to the Foreign Investment Advisory Service (FIAS),3-1 SEZs are typically established with the goal of achieving one or more of the following objectives: (1) attract foreign direct investment, (2) serve as a “pressure valve” to alleviate large-scale unemployment, (3) support a wider economic reform strategy, and (4) act as an experimental laboratory for the application of new policies and approaches.
Source: Authors, based on FIAS 2008 and Woolfrey 2013.
In China, SEZs have been associated with rapid economic growth in the 1990s and 2000s, exports revenues, technological and skills spillovers, employment creation, and economic linkages at the local level (Box 4). As such, SEZs stand as a clear way to reap demographic dividends in competitive cities. This success story has set the stage for a basic SEZ policy model guiding subsequent SEZ implementation across the developing world.51
Box 4: Successful Chinese special economic zones: Favorable policies and adequate location in cities
The standard model of special economic zones (SEZs) developed in China are government-run export enclaves offering low taxation and appropriate logistical and infrastructure incentives to enterprises, most of them focusing on light manufacturing and shipping. The central government decided to establish the first four SEZs to act as experimental laboratories for reducing poverty and promoting growth. The initial success with SEZs in Shenzhen (in southeast China) was replicated in other parts of the country and has played a key role in China’s overall economic development. Chinese SEZs eventually expanded across an entire city or province. Among the key success factors of Shenzhen are its favorable public policies and the location of the city (near the sea and close to Hong Kong SAR, an international center for finance, trade, transportation, and travel), making it the most open and export-oriented city in China. Location is key, which reinforces the importance of urban planning.
In the early 1980s, China’s SEZs accounted for around 60 percent of the country’s foreign direct investment (FDI) and 5 percent of its gross domestic product (GDP). They also increased the share of the industrial sector in GDP as well as the standards of living of the Chinese population.4-1 In terms of foreign investment, SEZs improved and extended the scale, quality, and channels of attracting investments through favorable policies and locations. For example, FDI in Shenzhen increased from US$5.5 million in 1979 to US$5.3 billion in 2012,4-2 and its total exports and imports reached US$537.4 billion in 2013, an increase of 15.1 percent over the previous year.4-3 According to World Bank, the city of Shenzhen has experienced the fastest growth of all Chinese cities and attracted a large young labor force specializing in electronic goods into the city.4
Source: Authors, based on Tao et al. 2016.
African countries started implementing SEZs in the 1970s but the process accelerated in the 1990s–2000s, following the Mauritian success (see Table 4 on page 64). Many of the African SEZs focus on textile, apparel, and agro-processing industries. As of 2008, the Foreign Investment Advisory Service (FIAS) identified 114 SEZs in sub-Saharan Africa and 53 in Egypt.52 In Mauritius, SEZs’ development contributed to the country’s structural transformation, the diversification of quantity and quality of exports increased, and job creation in terms of both quantity and diversity of items exported.53 According to Baissac, the success of Mauritian SEZs is partly the result of appropriate government policymaking, the use of preferential trade agreement, specialization, and insular geography.54
A few African countries have established a city-wide SEZ model (as opposed to the Mauritius nation-wide model) and are performing particularly well. They have successfully harnessed the concentration of production in the cities where they have been operating, and are seeing subsequent economic integration resulting from growing urbanization.55 For example, targeted annual investments for SEZ developments in Ethiopia and the creation of industrial parks for textiles in that country amount to US$1 billion over next decade.56 Industrial parks are supported by a strong commitment from the Ethiopian government, which has considered SEZs to be an essential part of the industrialization process of the country since 2007 and has provided, in this context, various financial and technical partnerships.57 For instance, as of 2015, the Bole Lemi Industrial Zone in Addis-Ababa was hosting 12 international textile-related companies and has created around 3,000 jobs.58 In terms of employment creation, the Thema Export Processing Zone in Ghana and the Tangier Free Zone in Morocco are other successful examples. Thema’s SEZ, which houses over 200 companies, including Nestle and L’Oréal, had created about 30,000 jobs by the end of 2012, of which only 1,000 were held by expatriates. Nearly 522 companies were established in Tangier, representing US$830 million in investments, and more than 50,000 direct jobs by end of 2010.59
African SEZs have, nonetheless, generally underperformed their counterparts in other developing countries (Table 5). They generated lower amounts of investment, exports, and employment as well as less economic diversification, technological upgrading, and structural transformation.60 Reasons for the underperformance of African SEZs include many political factors such as poor governance, lack of adequate institutional framework and coordination, weak political commitment and implementation capacity, and policy unpredictability, as well as a lack of proper monitoring and evaluation mechanisms. The following section discusses three important factors needed to enhance the performance of African SEZs. First, it reviews the need to integrate SEZs into a broader trade and industrialization strategy. Second, it highlights the importance of establishing strong links between SEZs and the cities where they are located. This implies both developing skills and choosing a geostrategic location where infrastructure allows for trade facilitation and avoids remoteness from markets. Finally, it addresses the strong need to enhance labor productivity to make African SEZs competitive on an international market.
Improving the performance of African SEZs
To increase the positive spillover effects of SEZs on the economic development, industrialization, and competitiveness of the local economy, policymakers need to carefully consider the following issues:
- Establish a consistent strategic planning based on national comparative advantage: African governments have been unable to continuously reform and upgrade their administrative capacities and to create a competitive business environment for SEZs. According to two studies,61 poor legal, regulatory, and institutional framework and the lack of strategic planning are significant obstacles to SEZ development in Africa. African governments have not proved successful in focusing on economic sectors where the country has a comparative advantage.62 Furthermore, SEZs often rely on a single export market. Policymakers need to be more coherent and integrate SEZs into national economic and urbanization plans. High-level political commitment and effective inter-ministerial collaboration are crucial to support industries that have a comparative advantage through SEZ development.63
- Link SEZs to local economies and cities: Maximizing the spillover effects of African SEZs on cities should not merely be based on tax reduction and the promotion of technology and know-how transfer at the SEZ level. Policymakers should provide incentives for the creation of joint ventures between foreign SEZ companies and local companies as well as establish low minimum investment thresholds for local companies.64 In order for SEZs to rely on a productive local labor and capital, African cities would need to provide necessary skills and basic and efficient infrastructure (see Box 5). Skills, for instance, are key to a competitive business environment and to attract FDI into SEZs. In turn, FDI and concentration of an industry in one location would attract good management, technology, and talent, thereby triggering know-how transfer, skills development, and competitiveness. The literature has, indeed, pointed out that the mitigated results of SEZs were due to their inappropriate location and a lack of consideration of specific technical factors of the hosting region or country.65 Aggarwal demonstrates that the limited catalytic effects of SEZs on domestic economies pertained to insufficient linkage development, technology transfer, and human capital upgrading.66 Indeed, developing linkages with the local economy would benefit and enhance the competitiveness of both cities and SEZs. Farole argues that the overall poor performance in African SEZs is partly the result of the poor business environment within the zone, including lack of infrastructure, such as downtime due to power shortages, poor trade facilitation, and land tenure and registration.67 Environmental standards should be in line with the United Nations Industrial Development Organization’s Guidelines for Green Industry Parks.68
- Focus on labor productivity: Currently, African SEZs face a big competitiveness challenge that, in addition to limiting their own development, prevents them from contributing significantly to the urban areas where they are operating and, more globally, to national economies. Most African SEZs focus on traditional labor-intensive manufacturing sectors such as garments, electronics, textiles, agro-processing, and metal and wood working. However, the wages that they offer to the local labor force tend to be high compared with wages offered in Asian SEZs, while productivity is lagging (see Table 6).69 This lack of labor productivity and high wages partly explains why SEZs on the continent do not perform well. According to the World Bank, SEZs are more productive if they exploit advantages both in natural and economic geographies.70 The latter includes infrastructure; physical endowments; human capital accumulation; and the agglomeration of workers, entrepreneurs, and markets accessibility.
It is, however, noted that a shortage of skills is an important constraint in many cities. This can be addressed through the design and implementation of effective technical and vocational education and training programs (see Box 5).
Box 5: Increasing the availability of skills through technical vocational education and training (TVET) programs
Although technological change is creating some uncertainty about the future of jobs and the relevant skills needed by the next generation of workers,5-1 certainly technical professions will remain in high demand in Africa. According to a 2015 survey conducted by South Africa’s Department of Higher Education and Training, the most in-demand occupations include engineers, physical technicians, and electricians as well as project or finance managers.5-2 At the same time, as shown by World Economic Forum’s Executive Opinion Survey, the availability of scientists and engineers declined in many African countries between 2008 and 2016. Expanding and improving technical vocational education and training (TVET) programs may play an important role in filling this specific type of skill gap.
Well-designed TVET programs can in fact trigger productive employment by increasing the pool of technical skills available in a country and creating better links with formal employment. Recognizing the importance of improving the supply of technical skills, many developing countries have taken a stronger stance on expanding TVETs and improving partnerships with the private sector. The African Union’s Plan of Action for the Second Decade of Education (2006–2015) encouraged TVET as a policy tool to reduce youth unemployment.5-3 Although a few African countries have heeded this call, TVET programs are still underused in Africa. With the exception of lower-secondary vocational programs, TVET enrollment rates declined from 2000 to 2014 (Table A). They are below the world average and far below the figures for Middle East and North Africa, East Asia and Pacific, and the European Union.
To change this situation, African governments need to deal with key factors hindering the sector. First, a cultural attitude shift is needed to emphasize the importance of TVET relative to university education. Indeed, TVET is seen as offering lower prestige and social status than other higher education options, despite the overwhelming evidence that it should be treated as a priority.5-4 Second, TVET programs are underfunded by governments and not affordable to students. On average, only 5 percent of public education expenditure goes to TVET.5-5 There is scope to increase private financing and participation in TVET in Africa, a strategy that some governments are already pursuing.5-6 Apprenticeship or dual training may ultimately be less expensive and more efficient than center-based training.5-7 Most importantly, the quality of TVET programs and the delivery mechanism need to improve. Better quality with better aligned with skills demand and assistance job placement upon graduation will be the best mechanism to increase the status of TVET programs and lower youth unemployment. Better monitoring systems will be important in this process.5-8
Table A: Students enrolled in vocational programs by level of education (percent of total per level)
Source: UNESCO Institute for Statistics, UIS.Stat database, http://data.uis.unesco.org/.
Conclusions and recommendations
The response of African cities to the increased demand of jobs, housing, and other urban infrastructure caused by the continent’s demographic transition will be crucial for Africa to achieve a successful demographic dividend. Competitive cities require carefully designed strategies and their effective implementation. However, there is no single strategy that cities can follow to achieve competitiveness. Each city’s strategy will be based on its own constraints and comparative advantages.
Data analysis of African cities’ competitiveness for the period 2000–16 reveals that the performance of cities across the continent varied widely. Cities in economies dominated by natural resources had a very fast growth in per capita GDP, yet they were less successful in improving households’ disposable incomes. The opposite occurred in more diversified economies, a finding that emphasizes the need for African cities to diversify their economies to achieve inclusive growth. However, there is a strong correlation between economic growth and disposable household income in the sample of 102 African cities considered in this chapter. Another interesting finding is that high employment growth has not always been accompanied by household disposable income growth, an indication of slow growth in wages and/or a fast increase in the number of households.
The analysis of the constraints to city competitiveness has highlighted the negative consequences of the lack of urban planning and the deficit of urban infrastructure, including affordable housing. Poor urban infrastructure, such as lack of electricity access or inadequate transportation, reduces business formation and productivity. Combined with poor urban planning and rapid urban population growth, a number of cities have witnessed an explosion of slums and large housing backlogs. This housing shortage not only lowers household welfare but also increases matching costs between employers and employees and hinders labor productivity. Another factor contributing to the lack of competitiveness is the poor business environment that is a result of heavy regulation, widespread corruption, and low access to finance. Moreover, the issue of youth unemployment is becoming acute in a number of cities. Included in these constraints, among the perennial major factors contributing to the lack of competitiveness of African economies are insufficient infrastructure development, insufficient human capital, and weak governance. Addressing these obstacles will certainly improve the competitiveness of countries in general and of cities in particular. In addition, African cities must create jobs and provide decent affordable housing for their growing urban population in order to achieve a demographic dividend.
Up-to-date and adequate urban planning is necessary not only to address the large shortage of affordable housing in cities but also to increase the density of transport networks at lower costs, thereby increasing the connectivity between workers and firms, and between producers and consumers. This will ultimately help firms benefit from economies of scale and agglomeration. The analysis also indicates that residential housing investment is important for city competitiveness: it not only provides shelter for the growing urban population but also creates a large number of jobs. It is a very labor intensive sector with extensive backward linkages, including linkages with the financial sector.
Job creation requires policies that address both the supply and demand sides of labor markets, and must include special emphasis on the housing sector and the development of city-wide SEZs. Policies should increase the supply of a skilled workforce and reduce the skills mismatch. On the demand side, policies favoring the development of the private sector are required. This chapter focuses on policies to circumvent the constraints of the poor business environment and places special emphasis on labor-intensive sectors, particularly housing. Another recommendation would be to improve the business environment and build better infrastructure in specific urban areas to create successful SEZs as a catalyst for competitive private-sector development. The chapter has provided a thorough analysis of the reasons for the success and failure of SEZs around the world and in Africa in particular, with a spotlight on city-wide SEZs. It has shown that the success of the SEZs and their positive spillover effects on the local economy depends on careful planning and understanding of comparative advantage as well as linkages between the particular SEZ and the rest of economy. In other words, policymakers should avoid geographic and economic isolation and should pay special attention to labor markets, including skills and capital costs in urban areas where SEZs are located.
ABS (Australian Bureau of Statistics). 2007. “The Construction Industry’s Linkages with the Economy.” Belconnen, Australian Capital Territory. Available at http://www.abs.gov.au/Ausstats/[email protected]/94713ad445ff1425ca25682000192af2/
AfDB (African Development Bank). 2016. “The New Deal on Energy in Africa: A transformative partnership to light up and power Africa by 2025.” Abidjan, Côte d’Ivoire: AfDB. Available at https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/Brochure_New_Deal_2_red.pdf.
AfDB, OECD, UNDP, and UNECA (African Development Bank, Organisation for Economic Co-operation and Development, United Nations Development Programme, and United Nations Economic Commission for Africa). 2008. African Economic Outlook: Developing Technical and Vocational Skills in Africa. Paris: OECD Publishing.
———. 2016. African Economic Outlook: Sustainable Cities and Structural Transformation. Paris: OECD Publishing.
AFD and ADEA (Agence Française de Développement and Association for the Development of Education in Africa). 2014. The Financing of Vocational Training in Africa: Roles and Specificities of Vocational Training Funds.
African Union. 2006. Second Decade of Education for Africa (2006–2015): Draft Plan of Action. Addis Ababa: African Union. Available at http://www.adea-comed.org/IMG/pdf/SECOND_DECADE_OF_EDUCATION_FOR.pdf.
Aggarwal, A. 2004. “Export Processing Zones in India: Analysis of the Export Performance.” Indian Council for Research on International Economic Relations (ICRIER) Working Paper No. 148. New Delhi: ICRIER.
Arku, G. and R. Harris. 2005. “Housing as a Tool of Economic Development since 1929.” International Journal of Urban and Regional Research 29 (4): 895–915.
Altus Group Economic Consulting. 2009. “Economic Impacts of Residential Construction.” Report for the Canada Mortgage and Housing Corporation, Ottawa. Available at http://www2.hamilton.ca/NR/rdonlyres/1F84E3C3-009A-46AF-B95E-7F6D3F05D697/0/Jun17Item88iieconomicimpact.pdf.
Atlas of Urban Expansion. Available at http://www.atlasofurbanexpansion.org/.
Auty, R. 2011. “Early Reform Zones: Catalysts for Dynamic Market Economies in Africa.” In Special Economic Zones: Progress, Emerging Challenges, and Future Directions, T. Farole, and G. Akinci, eds. Washington, DC: World Bank. 207–24.
Baissac, C. 2011. “Brief History of SEZs and Overview of Policy Debates.” In Special Economic Zones in Africa: Comparing Performance and Learning from Global Experience, T. Farole, ed. Washington, DC: World Bank. 23–57.
Brautigam, D. and T. Xiaoyang. 2011. “African Shenzhen: China’s Special Economic Zones in Africa.” Modern African Studies 49 (1): 27–54.
Burns, L. S. and L. Grebler. 1977. The Housing of Nations. London: Palgrave Macmillan.
Cerutti E., J. Dagher, and G. Dell’Ariccia. 2015. “Housing Finance and Real-Estate Booms: A Cross-Country Perspective.” IMF Staff Discussion Note 15/12. Washington, DC: International Monetary Fund. Available at https://www.imf.org/external/pubs/ft/sdn/2015/sdn1512.pdf.
Cheesman, A. 2012. Special Economic Zones & Development: Geography and Linkages in the Indian EOU Scheme. Development Planning Unit, The Bartlett, University College London, Working Paper No. 145, July.
Chen, J. and A. Zhu. 2008. “The Relationship Between Housing Investment and Economic Growth in China: A Panel Analysis Using Quarterly Provincial Data.” Uppsala University Working Paper, Sweden. Available at http://www.diva-portal.org/smash/get/diva2:128349/FULLTEXT01.pdf.
China Statistics Press. 2013. Shenzhen Statistical Yearbook 2013. Shenzhen: Chinese Statistics Press.
Choe, K. A. and B. H. Roberts. 2011. Competitive Cities in the 21st Century: Cluster-Based Local Economic Development. Manila: Asian Development Bank.
Çoban, O., E. Üstündaĝ, and A. Çoban. 2015. “The Structural Analysis of Construction Sector of Turkey and Its Effects on the Selected Macroeconomic Indicators.” Copernican Journal of Finance and Accounting 4 (1): 27–44.
Collier, P. 2016. “African Urbanisation: An Analytical Policy Guide”. Policy paper, International Growth Centre, London.
Davidson, W. 2015. “Ethiopia Plans Export Hubs with $10 Billion Factory Parks.” Bloomberg, May 18, Update May 19. Available at https://www.bloomberg.com/news/articles/2015-05-18/ethiopia-plans-manufacturing-hub-with-10-billion-factory-parks.
Dubel, H. 2007. “Does Housing Finance Promote Economic and Social Development in Emerging Markets?” Study commissioned by the International Finance Corporation, Washington, DC. Available at http://www.hofinet.org/documents/doc.aspx?id=260.
Farole, T. 2011. Special Economic Zones in Africa: Comparing Performance and Learning from Global Experiences. Washington, DC: World Bank.
Faye, I., E. Bah, and Z. Geh. Forthcoming (2017). Housing Market Dynamics in Africa. Basingstoke: Palgrave Macmillan.
FIAS (Foreign Investment Advisory Service). 2008. Special Economic Zones: Performance, Lessons Learned and Implication for Zone Development. Washington, DC: The World Bank. Available at http://documents.worldbank.org/curated/en/343901468330977533/pdf/
Freire, M., M. Gautier, and O. Hassler. 2006. “Review of Argentina’s Housing Sector: Options for Affordable Housing Policy.” World Bank Working Paper. Washington, DC: World Bank.
Gachanja, J. 2015. “Mitigating Road Traffic Congestion in the Nairobi Metropolitan Region.” The Kenya Institute for Public Policy Research and Analysis (KIPPRA) Policy Brief No. 2/2015, Kenya. Available at http://kippra.or.ke/downloads/Mitigating%20transport%20congestion%20in%20Nairobi.pdf.
Glaeser, E. L. 2007. “The Economic Approach to Cities.” NBER Working Paper No. 13696. National Bureau of Economic Research.
Glaeser, E. L. and B. Ward. 2006 “The Causes and Consequences of Land Use Regulation: Evidence from Greater Boston.” NBER Working Paper No. 12601. National Bureau of Economic Research.
Gupta, S., A. C. Gupta, and R. Goyal. 2010. “SEZs in India: Export Performance and Future Prospects.” In Special Economic Zones in India: (China’s Way of Development), P. Arunachalam, ed. New Delhi: Serials Publications.
Habitat for Humanity in Kenya. 2014. http://www.habitat.org/where-we-build/kenya.
Home Builders Federation and Nathaniel Litchfield & Partners. 2015. “The Economic Footprint of UK House Building.” London: Home Builders Federation and Nathaniel Litchfield & Partners. Available at http://www.hbf.co.uk/?eID=dam_frontend_push&docID=24568&filename=Economic_Fotprint_BPF_Report_March_2015_WEB_01.pdf.
Honan, E. 2016. “Nairobi Looks to Africa’s First Bike-Share Scheme to Tackle Congestion.” Financial Times, August 5. Available at https://www.ft.com/content/6133a0f0-5a5b-11e6-8d05-4eaa66292c32.
IEA (International Energy Agency). 2013. World Energy Outlook 2013. Paris: OECD/IEA.
Katz, L. and K. T. Rosen. 1987. “The Interjurisdictional Effects of Growth Controls on Housing Prices.” Journal of Law and Economics 30 (1): 149–60.
Kleinman, M. 2014. “Measuring Jobs from the Housing Programme.” Appendix 3 of Progress Report. London City Government. Available at https://www.london.gov.uk/moderngov/documents/s38594/Measuring%20Jobs_Appendix%203.pdf.
Lall, S. V., J. V. Henderson, and A. J. Venables. 2016. Africa’s Cities: Opening Doors to the World. Washington, DC: World Bank.
Leung, C. 2004. “Macroeconomics and Housing: A Review of the Literature.” Journal of Housing Economics 13: 249–67.
Lopes, J., L. Ruddock, and F. L. Ribeiro. 2002. “Investment in Construction and Economic Growth in Developing Countries.” Building Research and Information 3: 152–9.
McGregor, S. and D. M. Doya. 2014. “Traffic Costs Nairobi $570,000 a Day as No.2 Africa Hub Clogs.” Bloomberg, April 12. Available at https://www.bloomberg.com/news/articles/2014-03-25/nairobi-traffic-loses-570-000-a-day-as-no-2-africa-hub.
NAHB (National Association of Home Builders). 2015. “The Economic Impact of Home Building in a Typical State: Income, Jobs, and Taxes Generated.” Washington, DC: NAHB. Available at https://www.nahb.org/~/media/Sites/NAHB/Economic%20studies/1-REPORT_local_20150318115955.ashx?la=en.
NCAER (National Council of Applied Economic Research). 2014. “Impact of Investments in the Housing Sector on GDP and Employment in the Indian Economy.” New Delhi, India: NCAER. Available at http://mhupa.gov.in/writereaddata/UploadFile/Impact_of_Housing_on_GDP_Employment_FULL_REPORT.pdf.
O’Flaherty, D. D. 2008. “Understanding Dynamic Linkages and Technology Spillover from Korea’s Masan Free Export Zone.” Master’s Thesis, Department of Globalization and International Development, University of Ottawa.
Otuki, N. 2017. “German Firm Wins SH1.4bn Deal for Nairobi Traffic Lights.” Business Daily, January 15. Available at http://www.businessdailyafrica.com/Corporate-News/German-firm-wins-Sh1-4bn-deal-for-Nairobi-traffic-lights/539550-3518356-item-0-871dviz/index.html.
Oxford Economics. African and Middle Eastern Cities Forecasts. Available at http://www.oxfordeconomics.com/forecasts-and-models/cities/middle-east-and-african-cities-and-regions/overview.
Polenske, K. R. and P. Sivitanides. 1990. “Linkages in the Construction Sector.” The Annals of Regional Science 24 (2): 147–61.
Republic of South Africa, Department of Higher Education. 2016. “List of Occupations in High Demand: 2015.” Department of Higher Education and Training.” Government Notices, Government Gazette, January 19. Available at http://www.gpwonline.co.za/Pages/default.aspx.
Sawkut, R., S. Vinesh, and F. Sooraj. 2009. “The Net Contribution of the Mauritian Export Processing Zone Using Cost-Benefit Analysis.” Journal of Development Economics 21 (3): 379–92.
Tao, Y., Y. Yuan, and M. Li. 2016. “Chinese Special Economic Zones: Lessons for Africa.” Africa Economic Brief 7 (6). Côte d’Ivoire: AfDB.
Terzi, F. and F. Bolen. 2007. “The Impacts of Housing on Economic Development.” Paper presented at the 14th Annual European Real Estate Society Conference, London, June 27–30.
Turin, D A. 1973. The Construction Industry: Its Economic Significance and its Role in Development. London: UCERG.
UNDP and IPRCC (United Nations Development Programme and International Poverty Reduction Center in China). 2015. If Africa Builds Nests, Will the Birds Come? Comparative Study on Special Economic Zones in Africa and China. Working Paper Series No. 06.2015. Beijing: IPRCC and UNDP China. Available at http://www.cn.undp.org/content/china/en/home/library/south-south-cooperation/if-africa-builds-nests–will-the-birds-come-.html/
UNECA (United Nations Economic Commission for Africa). 2017. Economic Report on Africa 2017: Urbanization and Industrialization for Africa’s Transformation. Addis Ababa: UNECA.
UNESCO Institute for Statistics. UIS.Stat database. Available at http://data.uis.unesco.org/.
UN-Habitat. 2013. Streets as Public Spaces and Drivers of Urban Prosperity. Nairobi: UN-Habitat.
UN-Habitat and ILO (International Labor Organization). 1995. Shelter Provision and Employment Generation. Nairobi and Geneva: United Nations Human Settlements Programme and International Labor Organization.
UN-Habitat and UNECA (United Nations Economic Commission for Africa). 2015. Towards an African Urban Agenda. Nairobi: UN-Habitat.
UN Population Division, World Population Prospects, 2015 revision. Available at http://www.un.org/en/development/desa/publications/world-population-prospects-2015-revision.html.
Uy, W. J. 2006. “Medium-Rise Housing: The Philippines Experience.” Paper presented at the 5th Asian Forum, January 18–20, 2006, Tokyo, Japan.
Vidal, J. 2016. ‘There’s No Escape’: Nairobi’s Air Pollution Sparks Africa Health Warning.” The Guardian, July 10. Available at https://www.theguardian.com/cities/2016/jul/10/no-escape-nairobi-air-pollution-sparks-africa-health-warning.
Viruly, F. 2014. “What Are the Derived Social Benefits of Occupying Affordable Housing in South Africa? A Social Audit Conducted on Residential Units Built by International Housing Solutions.” Study commissioned by International Housing Solutions, Gauteng, South Africa. Available at http://www.ihsinvestments.co.za/wp-content/uploads/2015/07/2012_IHS-Final-Report-1.pdf.
Walther, R. 2012. “The Financing and Costs of Technical and Vocational Skills Development (TVSD): The Case of Africa.” Presentation at the Third International Congress on TVET, Shanghai, May 13–16, 2012. Available at http://www.unesco.org/education/TVET2012/parallel-sessions-day1/3/R-Walther.pdf.
Wells, J. 1985. “The Role of Construction in Economic Growth and Development.” Habitat International 9 (1): 55–70.
Woolfrey, S. 2013. “Special Economic Zones and Regional Integration in Africa.” tralac Working Paper No. S13WP10/2013. Stellenbosch: tralac.
World Bank. World Development Indicators (online). Washington, DC: World Bank.
———. 2009. World Development Report 2009: Reshaping Economic Geography. Washington, DC: World Bank.
———. 2015. Competitive Cities for Jobs and Growth: What, Who, and How. Washington, DC: World Bank.
World Economic Forum. 2014. “The Competitiveness of Cities.” Report of the Global Agenda Council on Competitiveness. Cologny/Geneva: World Economic Forum.
———. 2016. The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution. Geneva: World Economic Forum.
Zeng, D. Z. 2012. “SEZs in Africa: Putting the Cart in Front of the Horse?” Let’s Talk Development, Blog. Washington DC: World Bank.
———. 2015. Global Experiences with Special Economic Zones – With a Focus on China and Africa. Trace and Competitiveness Global Practice, Washington, DC: World Bank.
Appendix: Selected African Cities (alphabetical order)
Source: Oxford Economics, African and Middle Eastern Cities Forecasts. Available at http://www.oxfordeconomics.com/forecasts-and-models/cities/