African Economic Outlook 2016 Wants More People in African Cities
Paul Conton

The foreword of this 400-page report, subtitled Sustainable Cities and Structural Transformation, proudly tells us, "A team of over 100 researchers, economists, statisticians and other experts from Africa and other regions of the world collaborate on the AEO". And indeed a few pages later a veritable galaxy of scholars and eminent persons are listed as contributors. Despite this, the report's sponsors, the ADB, OECD and UNDP, still find it necessary to add a disclaimer on page 1, "The opinions expressed and arguments employed in this publication are the sole responsibility of the authors and do not necessarily reflect those of the African Development Bank, its Boards of Directors or the countries they represent; the OECD, its Development Centre or their member countries; or the United Nations Development Programme." This is nothing short of administrative cowardice. Do you accept the main thrust of the report, for which you have engaged so many professionals and spent so much time and money, or don't you? If you do believe in your report, why compromise it at the outset? If you don't believe in it, then don't bother to publish it, plain and simple, or if you think it has at least some value, publish it as an alternative professional opinion and register your disagreement clearly. If you don't know whether or not you accept the report, if you are unable to come to a conclusion about it, then you are failing in your mission. Don't publish it until you are able to come to a conclusion one way or another, hopefully in the not too distant future.

Having said that, the group may have fair reason not to believe in the report. For decades, professional economists have argued over the conundrum of Africa's underdevelopment. The first six chapters of AEO 2016 lay out the problems of Africa in great detail: widespread poverty, low rural and urban productivity, lack of industrialisation, even deindustrialization, urban slums and congestion, extensive rural-urban migration, poor infrastructure, low education and skills base, widespread inequality; these and more are discussed in the report's first six chapters. Chapter 7 brings forth AEO's big solution, reflected in the report's subtitle: focus attention on the cities as engines of structural transformation in order to build a bright new Africa. Redress what the report claims has been a bias towards rural areas by devising new attitudes, policies and (inevitably) investments for the cities and the urban newcomers.

The authors are well aware that many economists have argued that Africa needs rural investment more than it does urban, but they claim that the weight of professional and political opinion has shifted or is shifting towards the cities. Early on in the report they cite a seminal 1969 paper outlining what is known as the Todaro Paradox: under certain conditions creating jobs in the cities causes urban unemployment to increase, not decrease, as the presence of jobs in the cities attracts more and more rural migrants. The report details clearly the plight of rural migrants in the cities, without relevant skills or education, eking out a living on the streets with no prospect of career advancement, often living in precarious slum housing. In the end this and much other evidence showing the damage to African economies of overflowing cities is dismissed or ignored as the authors promote policies that favor rapid urbanization. Even as Chapter 7 lays out the new agenda, however, the authors are less than emphatic in their advice (all emphasis mine):

"Urbanisation can contribute to economic development and structural transformation..."

"Africa’s urbanisation could increase agricultural productivity and rural development by..."

"Urbanisation can transform the rural non-farm economy..."

"Cities can provide enabling conditions for Africa’s industrialisation..."

"African cities can drive service-led growth..."

"Africa's urbanisation can contribute to environmental development..."

The African experience over the last fifty years has been the reverse of many of these hypotheses. It's hard to argue that the rapid African urbanisation thus far has contributed to economic development or structural transformation or increases in agricultural productivity in Africa. Indeed much data shows increasing urbanisation is directly correlated with increasing staple food imports. Far from Africa's cities promoting Africa's industrialisation, they have become huge consumers of foreign imports, promoting industrialisation in China and elsewhere. And given the growth of African urban slums, it's laughable to argue that Africa's urbanisation has contributed to environmental development.

Evidence that Africa's urban dwellers have higher incomes than their rural counterparts has often been used to justify the argument for greater urbanisation. Many of the new arrivals end up selling  imported trifles on the streets. Yes, they can eke out a living by applying a small mark-up to whatever sellables they can lay their hands on and pressing them on passers-by, and in short-term daily cash terms they may end up better off than their rural counterparts, but in terms of real value added to the economy there is no comparison with the rural agricultural producer (much value is added to foreign economies by these sales!). The real challenge of course is not to abandon rural areas to urbanisation but to reorganize and capitalize rural economies such as to make these expanding, dynamic places that attract local enterprise and energy rather than repel it.

No one claims this will be easy, but without this the future looks bleak. Demographic data presented in AEO 2016 indicates that even though African urbanisation (defined as the percentage of the population living in urban areas) is increasing, because of high African birth rates, in absolute terms the African rural population is increasing not decreasing, and will continue to do so for many years. The result of the much vaunted urbanisation then is increasing numbers of poor city dwellers selling all manner of imported trinkets on the streets and increasing numbers of impoverished rural dwellers waiting to flee to the cities.