How Accelerated Urban Development Will Help Africa
HOW ACCELERATED URBAN DEVELOPMENT WILL HELP RESOLVE THE ECONOMIC AND ENVIRONMENTAL PROBLEMS OF SUB-SAHARAN AFRICA
By Elliott Morss
Donors have attempted to promote development in Sub-Saharan Africa through projects and programs with a rural focus. This focus could be entirely wrong: accelerated urban development may instead give the highest development return.
1. INTRODUCTION
Since the beginning of development assistance to Sub-Saharan Africa (SSA) in the late ‘fifties, donors have engaged in a wide variety of efforts to spur economic and social development. First it was programmatic aid planned and administered through central government ministries; in the ‘seventies, the emphasis turned to targeting aid via projects to the poorest segments of society; more recently, center stage has been given to macro policy reform, freeing up markets, and institutional development.
Despite this wide variety of initiatives, there has been a common thread running throughout: the focus has been on rural development. This article questions this focus and argues for accelerated urban development as the best way to cope with SSA’s economic and environmental problems.
2. REASONS FOR THE RURAL EMPHASIS
There are historical, intellectual and political reasons why donors focused on rural development in SSA. Consider first the historical reasons. Western development theory derives from Western experience. That experience started in agriculture; savings generated by agriculture were the source of the investments needed for the Industrial Revolution. The implications of this experience for developing countries were clear: agricultural development should precede industrial development. Consequently, when Western development assistance commenced in India in the early ‘fifties, the focus was on agriculture, just as it was a decade later when significant development assistance commenced in SSA.
Traditional economic development theory posits that the agricultural sector must be developed to provide a surplus needed for the large investments needed for industrial development (Timmer, 1989; Mellor, 1961). A growing agricultural sector is required even as industrialization proceeds to help absorb the expanding labor force typical of developing countries with high population growth rates. This theory is buttressed by empirical evidence: a World Bank study concluded:
“The continuing importance of agriculture in the economies of the developing countries is reflected in the association between the growth of agriculture and the economy as a whole….There have been exceptions, of course, but they prove the rule…. (World Bank, 1982, pp. 44-45)
The rural focus also became politically attractive to Western donors in the late ‘sixties because of a series of country studies commissioned by the International Labor Organization. The common finding of these studies was that donor assistance was widening income disparities in recipient nations. Donors responded by attempting to target their monies through projects for the rural poor (Morss and Morss, 1982). Why the urban poor were not also “targeted” for assistance is not clear. In part, it might be because then, as now, more people live in poverty in rural areas then in urban areas.
3. THE RURAL EMPHASIS OF DONORS
Some sense of the donor emphasis on rural development can be gained from World Bank data. For the 1981-88 period, an average of 25% of Bank monies went to agriculture and rural development, a percentage that is greater than for any other Bank outlay category. In contrast, the average allocation for urban development was only 4% for this period. Of course, these figures do not tell the full story because the other 71% of outlays were spent in either urban and/or rural areas. Unfortunately, data that would allow a complete urban/rural allocation of outlays is not available. In the ‘seventies and early ‘eighties, it is likely that the vast majority of other outlays were spent in rural areas; more recently, as the emphasis on rural development has lessened, the portion spent in rural areas has probably also declined.
It appears that what donors spent in urban areas was narrowly targeted, with little thought given to broader questions such as the rural-urban balance. For example, a recent Bank study characterized past urban programs in the following critical manner:
Government and donor programs tended to divide a city into projects, improving specific neighborhoods without improving the urban policy and institutional framework such as the functioning of citywide markets for land and housing. …it is apparent that neither governments nor donors have sought to understand the impacts of macro policy on urban economic activities. …those institutions and experts working within the urban sector have not appreciated the impact of their activities on macroeconomic performance (World Bank, 1991, pp. ii-iii).
4. PROBLEMS WITH “AGRICULTURE FIRST”
The “agriculture first” theory of development is based on the assumption that a country’s industrial development will be limited by the level of investment generated from agricultural savings. With the increasing mobility of capital, it is clear that a country’s industrial growth does not have to depend on its agricultural savings. Hong Kong and Singapore, without rural areas or agricultural sectors, offer the most extreme examples of countries able to develop without agricultural savings. Right now, SSA is not attractive to foreign investors. Accelerated urbanization should increase SSA’s attractiveness to foreign capital, thereby making it less dependent on savings generated in agriculture to finance development.
Using cross-section, mid-’eighties World Bank statistics on a sample of 101 countries, one finds a significant statistical correlation between the level of economic development (gross national product per capita [GNP/P]) and the degree of urbanization (r = .68). Of course, this statistical association does not mean urbanization causes economic development to occur. It does, however, lead one to question how overwhelming the empirical evidence is in support of the “agriculture first” hypothesis.
5. THE IMPORT-REPLACING CITY AS THE ENGINE OF GROWTH
Jane Jacobs’ Cities and the Wealth of Nations was published in 1984, and the arguments made therein for cities as engines of development remain convincing today. In contrast to the “agriculture first” viewpoint, Jacobs has offered a comprehensive theory of economic development in which the “import-replacing city” is the driving force. She starts by pointing out:
In the two centuries since (Adam) Smith published, most of what he wrote has been questioned…. But the one thing not questioned has been the same idea Smith himself failed to question: the old mercantilist tautology that nations are the salient entities for understanding the structure of economic life. Ever since, that notion has been taken for granted. How strange: surely no other body of scholars or scientists in the modern world has remained as credulous as economists, for so long a time, about the merit of their subject matter’s most formative and venerable assumption (Jacobs, 1984, pp. 31-32).
She goes on to assert: “…among all the various types of economies, cities are unique in their abilities to shape and reshape the economies of other settlements….”
Charles F. Sabel, an M.I.T. social scientist studying small industrial cities between Bologna and Venice, was tremendously impressed by the vitality and energy he observed. Indeed, it “…suggests radically new ways of organizing industrial society” in line with the first signs “of an epochal redefinition of markets, technologies, and industrial hierarchies” (Jacobs, 1984, pp. 40-41). Jacobs says nonsense:
The strengths and wonders that Sabel observed in these tight-packed bunches of symbiotic enterprises that suggest to him epochal changes, have always been the strengths and wonders of creative cities, for there is nothing new in this way “of organizing industrial society.” The realities Sabel observed – the huge collections of little firms, the symbiosis, the ease of breakaways, the flexibility, the economies, efficiencies and adaptiveness-are precisely the realities that, among other things, have always made successful and significant import-replacing a process realizable only in cities and their nearby hinterlands (Jacobs, 1984, pp. 40-41).
Jacobs identifies “five great forces unleashed by import-replacing cities” (Jacobs, 1984, p. 42):
- abruptly enlarged city markets for new and different imports consisting largely of rural goods and innovations being produced in other cities;
- abruptly increased numbers and kinds of jobs in the import-replacing city;
- increased transplants of city work into non-urban locations as older enterprises are crowded out;
- new uses for technology, particularly to increase rural production and productivity;
- growth of city capital.
The following paragraphs elaborate on some of Jacobs’ arguments as they apply to the problems facing SSA.
6. ATTRACTING FOREIGN PRIVATE CAPITAL
Research on direct foreign investment indicates that the dominant reason for multinational corporations to invest in developing countries is to enter their markets without having to pay various sorts of import duties. This “tariff-hopping to gain market access” motivation for locating productive facilities within a country appears to be far more important than costs of production considerations (Nolan, 1983). This finding means the size of a country’s market will be the most important determinant of the country’s attractiveness to foreign private capital.
Of course, countries will use market access as a bargaining chip with multinational corporations: the larger the market, the stronger also will be the nation’s bargaining position; the lower the costs of selling and distributing to that market, the stronger will be the nation’s bargaining position. By the same token, multinationals have their own bargaining strengths: they generate employment where they produce; and the greater their employment generation potential, the greater will be their bargaining strength.
Countries (and trading blocs) with large markets are coming to realize how important their control over access to these markets is when bargaining with multinationals. This realization will cause them to use market access increasingly as a bargaining chip to get multinationals to locate research and production activities within their borders. This suggests that, increasingly, countries with small markets will be at a disadvantage in negotiations with multinational corporations.
To illustrate differences in market size and the costs associated with selling to markets among nations, consider two extremes: the United States and Nepal. The United States has a population of nearly 250 million and a per capita income of about $17,500 with excellent communication (advertising) and distribution facilities. In contrast, Nepal has a population of only 17 million and per capita income of $150 with rudimentary communication facilities and very high distribution costs. It is clear that from a marketing standpoint the United States is in a stronger position to bargain with multinationals than is Nepal.
Following on the above discussion, consider that, while SSA has a population of 424 million, it is spread over 20.9 million square kilometers, an area more than twice as large as the United States. And it has 44 nations with each nation having its own trade, investment, and currency regulations. Its average per capita income is only $370, and it has only 28 cities with populations greater than 500,000 (nine of which are in Nigeria). In addition, its communication and distribution infra-structures are marginal.
In contrast, consider India. It has a population of 781 million residing on only 3.2 million square kilometers. While its average per capita income is only $290, it has 36 cities with more than 500,000 persons. In short, from a marketing standpoint, India is far more attractive proposition than SSA would be, even if it were a single nation. In such circumstances, it is clear that SSA will have to do something to increase the appeal of its markets if it wants to attract significant amounts of foreign investment.
With a population growth rate in excess of 3%, one could argue SSA is doing all it should to increase overall market size. However, this is a crude way to increase market attractiveness and it has serious negative consequences. Instead, the focus should be on increasing population concentrations. These concentrations will mean that the marketing and distribution costs of potential foreign investors will be reduced. In contrast, low overall population densities coupled with few concentrations, means high communication and distribution costs, making SSA unattractive from an investment standpoint to multinationals.
It follows that donors should consider policies and programs to increase population concentrations to make SSA more attractive to foreign private investors. Donors could also make SSA more attractive to private foreign capital through urban infra-structure investments intended to reduce information and transportation costs associated with marketing and distributing their goods and services.
7. REDUCING FERTILITY RATES
One can only predict economic and environmental disaster for SSA unless population growth can be reduced. There are various ways in which urbanization may directly and/or indirectly lead to a reduction in fertility rates. It is generally accepted that a reduction in child mortality rates will ultimately lead to a reduction in fertility rates (World Bank, 1984, pp. 71-73). Perhaps a more powerful causal linkage applies in rural than urban areas because of the small farmer’s need for children to use as labor on the farm. Nevertheless, it is also true that children may also be engaged in income-earning activities in urban areas on behalf of the family. Hence, once urban parents believe their offspring have a better chance to live, some will choose to have fewer offspring. Mortality rates are lowered through the delivery of various social services and supplies to target populations. In this regard, urban areas have an advantage over rural areas in that it is cheaper to deliver needed services and supplies to a population concentrated in cities than to populations spread over rural areas.
There is a strong negative correlation between education levels and fertility rates. Education levels tend to be higher in urban areas, in part because the per-student cost of delivering education to urban concentrations is lower than provision of similar services in rural areas.
In urban areas, various costs associated with children are higher than in rural areas. An obvious example of this are costs related to space: in cities, space is expensive, and this tends to discourage having large families.
How the factors described above in urban areas work together to cause a decline in the fertility rates can be described statistically. The following regression equation draws on a sample of 101 countries. It demonstrates that urbanization (U) and per capita income (GNP/P) are separately statistically significant in explaining variations in fertility rates (F) (t-ratios are in parentheses).
F = 6.624 – 0.0399U – 0.0001GNP/P
(-5.307) (-2.465) R2 = .498
A similar equation using SSA countries only as the sample yields the following results:
F = 7.419 – 0.0266U – 0.0007GNP/P
(-2.118) (-2.251) R2 = .296
It should be noted that for both samples, the degree of urbanization has a significant negative association with fertility rates. That is, the greater a countries degree of urbanization, the lower will the country’s fertility rate be.
In sum, it is probably not an exaggeration to say the combination of effects that work through urbanization make its acceleration the greatest possible deterrent to population that can be brought to bear in SSA. Donors appear to give little or no attention to this point. Instead, all their efforts to reduce population growth are funnelled through family planning programs. These programs have stirred controversy and often are not popular in developing countries. The above paragraphs suggest donors should start thinks of using accelerated urbanization as a means to curb population growth.
8. DISTORTIONS IN URBAN AND RURAL IMAGES
City happenings are covered by various media throughout the world. Whenever there is an urban disaster, we hear about it. But less is heard about continuing disasters occurring in rural areas. More people starve to death in rural areas of developing countries than in cities; World Bank data indicates there are far more people living in poverty in rural areas than in cities. There seems to be a sense in the West that people in developing countries will be better off if they stay in rural areas than if they migrate to cities. In fact, cities in developing countries have done quite well by migrants. As a recent World Bank report stated:
The hopes of migrants have largely been met in urban areas. Higher wages and incomes reflect the greater productivity of labor supported by economies of scale and agglomeration. The city has become the locus of economic and social innovation, culture, and political power in most countries (World Bank, 1991, pp. 4-5).
9. ENVIRONMENTAL CONCERNS
For many years, environmentalists have opposed the growth of cities on grounds that they overwhelmed nature’s regenerative capacities. Today, it is accepted that modern technologies must be used to manage cities, technologies that will take pressure off the natural environment. Putting it somewhat differently, large cities must create artificial environments to preserve their natural environments. The real question is whether benefits of cities outweigh costs when the costs of these technologies are included.
Benefit/cost analyses of accelerated urbanization should allow for the fact that more rapid urban growth will reduce the pressure on rural environments. This should be beneficial if it leads to reductions in rural populations, rural unemployment, and pressures on the land, such as the excessive cutting of wood and the overgrazing of livestock.
10. THE COSTS OF PROVIDING CITY SERVICES
Earlier studies of city costs suggests a U-shape: that is, costs first fall with an increase in city size as various economies are realized; ultimately, however, costs were thought to increase with city size. More recent studies indicate city costs are not likely to increase until cities become extremely large, e.g., Mexico City. Nobody is suggesting that SSA would benefit from creating cities the size of Mexico City. What needs to be considered seriously are policies to promote urban growth that will take advantage of the economies to be realized from somewhat larger cities.
In the case of SSA, there are important and obvious economies of scale to be realized from accelerated urbanization. For example, there is a clear need to increase the quality and level of education, health, and institutional services in SSA. These services are more cheaply provided when populations are concentrated than when they are spread throughout rural areas. Further, SAA professionals in these services have demonstrated a preference to live and work in cities rather than in rural areas.
11. THE NEED TO INCREASE URBAN PRODUCTIVITY
In the past, donors have been reluctant to accept the obvious fact that SSA cities would continue to grow rapidly and would require major infrastructure investments if they were to function efficiently. Again, from the World Bank:
…one of the most glaring deficiencies of previous efforts has been the insufficient attention given to the issue of productivity within the urban economy (World Bank, 1991, p. iii).
The Bank argues that cities should be viewed as producers, with some operating at higher levels of productivity than others. Right now many SSA cities are highly congested with poor communications, i.e., they are inefficient producers. To increase their productivity, major investments in transportation, communications, sanitation, pollution control, and housing are needed.
12. THE FAILED RURAL FOCUS
By whatever measure one chooses to use, the rural development focus has failed in SSA. If one excludes petroleum-rich Nigeria, overall per capita income fell by .7% annually in the 1973-80 period and by 1.2% from 1980 to 1987. In agriculture, performance has been even worse. Between 1973 and 1980, per capita agricultural production fell annually by 1.4%; between 1980 and 1987, it fell by 1.7% annually. Food production has not kept pace with population growth; indeed, in a large number of countries, the absolute level of food production is less than it was a decade ago. As a consequence, food imports have increased: for example, from 1974 to 1986, cereal imports have almost doubled while food aid imports have trebled (World Bank, 1989).
Further, donor spending in rural areas apparently did little to retard the rate of urban migration. From a recent World Bank report: “…in no country have efforts to restrain migration or urban growth been successful” (World Bank, 1989, p. ii). Table 1 indicates that the annual average growth rate for urban areas increased from 4.87% for the 1950-75 period to 5.39% for the 1975-85 period. If urban fertility and death rates in urban areas were the same as the national average and migrations to and from SSA were insignificant, the migration rates to cities would have fallen from 2.36% for the 1950-75 period to 2.34% for the 1975-85 period. If, as is likely, urban fertility and death rates are less than country averages and the two maintained the same proportion over the two periods, it is probable that the urban migration rate for SSA actually increased in 1975-85 over what it was during the 1950-75 period.
Table 1. – Actual and Projected Population Growth Rates for Sub-Saharan Africa (average annual percent change)
| 1950-75 | 1975-85 | 1985-2000 | ||||
| Region | Total | Urban | Total | Urban | Total | Urban |
| Eastern Africa | 2.7 | 6.7 | 3.3 | 7.2 | 3.4 | 6.6 |
| Middle Africa | 2.1 | 5.1 | 2.6 | 5.5 | 3.0 | 5.0 |
| Southern Africa | 2.2 | 3.2 | 2.5 | 3.9 | 2.6 | 3.8 |
| Western Africa | 2.6 | 5.9 | 3.2 | 5.8 | 3.4 | 5.7 |
| Total | 2.5 | 4.9 | 3.1 | 5.4 | 3.2 | 5.0 |
Source: United Nations Fund for Population Activities, Population Images, United Nations:
New York, 1987, 2nd Edition.
Of course, the fact that past donor initiatives have failed does not necessarily mean they should be abandoned. Presumably, something has been learned over the last two decades on how donors can help promote sustainable rural development in SSA’s rural areas. Rural efforts must be continued, particularly when it is realized there are more people living in poverty in rural areas than in cities.
However, the positive arguments made above in support of accelerated urban development should also be given careful consideration. The policy implications of these arguments will be discussed below.
12. POLICY IMPLICATIONS
In considering policy implications, it is important to distinguish between donors and the governments of SSA nations. Most SAA governments have for some time had policies that favor urban areas:
- to hold down food prices in cities, they have controlled prices received by farmers;
- they have overvalued their currencies which favors those able to obtain import
licenses (primarily city dwellers);
- they allow a much larger portion of government workers to live in cities than is
justified by the distribution of citizens to be served;
- they have regularly asked donors to increase the share of assistance going to urban
areas (Bates, 1981).
SSA governments, therefore, should not be pressured to take further steps to accelerate urbanization.
Donors should re-examine the “agriculture first” model of development for its appropriateness in today’s world. Conceptual work is needed to articulate the linkages between urban, rural, and overall national development. Models should be developed that would allow Jacobs’ view of the city as the engine of growth to be tested empirically.
If accelerated urbanization appears promising for SSA, further important questions will have to be examined. Perhaps the most important question involves whether a few large or a number of smaller cities should be promoted. Foreign firms would prefer a few large cities, but this would be extremely difficult to promote politically among the 44 SSA nations. Smaller cities will not require as much in the way of corrective environmental investments, but there is a question as to how small cities can be before they lose the networking and synergy needed to accelerate growth.
But even before this research is carried out, donors should consider giving a greater share of its assistance to cities. For, as a recent World Bank report noted migrations to urban areas will continue and “…urban poverty will become the most significant and politically explosive problem in the next century” (World Bank, 1991, p. ii).
REFERENCES
Bates, Robert H., Markets and States in Tropical Africa: The Political Basis of Agricultural Policies, Berkeley: University of California Press, 1981
Jacobs, Jane, Cities and the Wealth of Nations, New York: Random House, 1984.
Mellor, John W., “The Role of Agriculture in Economic Development”, American Economic Review, vol. LI, (Sept. 1961), pp. 566-93.
Morss, Elliott R., and Victoria A. Morss, U.S. Foreign Aid: An Assessment of New and Traditional Development Strategies, Boulder: Westview Press, 1982.
Nolan, Sean, “Transnational Enterprises and Manufactured Exports from Industrializing Countries: Theoretical and Empirical Significance,” New Haven: Yale University Department of Economics Report, 1983.
Timmer, C. Peter, “The Agricultural Transformation” appearing in The Handbook of Development Economics, vol. 1, Ch. 8, pp. 275-331, Amsterdam: North Holland Press, 1989.
World Bank, Sub-Saharan Africa: From Crisis to Sustainable Growth, Washington, DC 1989.
World Bank, World Development Report, New York: Oxford University Press, 1982.
World Bank, World Development Report, New York: Oxford University Press, 1984.
World Bank, “Urban Policy and Economic Development: An Agenda for the 1990s”, a report prepared by the Urban Development Division of the Infrastructure and Urban Development Department, Washington, DC, February 19, 1991.
