Developing Africa’s rising cities

  Companies that want to expand their business presence in Africa should be focusing on cities, according to the Economist Intelligence Unit (EIU). The EIU reckons that “companies looking to expand into Africa want to concentrate their strategy where growth and demographics are most favourable – in major cities”.

For obvious reasons, companies will be interested in cities where there are good roads, transparent governance, efficient bureaucracy and adequate transportation. Where these are absent, the cost of doing business and living is high.

Abuja and Lagos are among the 25 cities that matter in Africa. They both account for 14 percent of the 82.3 million people estimated to be in the 25 cities. Alexandria and Cairo account for 18 percent, while Johannesburg, Cape Town and Durban make up 12 percent.

The two Nigerian cities are among the most expensive cities in Africa. According to the EIU index, Abuja and Lagos are, respectively, second and third most expensive African cities, after Luanda. When it comes to consumption of alcoholic beverages, tobacco, and narcotics, Abuja and Lagos are 12th and 21st, respectively.

However, Lagosians spend more on transportation than Abuja residents. In terms of transport, Lagos and Abuja emerged 15th and 22nd out of the 25 Africans cities. As a result, it is easier and cheaper to hold several meetings within a day in Abuja; commuting a similar distance in Lagos is expensive and takes time.

A city-level viewpoint of these 25 cities complements past surveys that have found that location and income tell a different story in terms of mobile phone subscribers and internet access. A 2010 survey by Gallup found that “being super-connected in sub-Saharan Africa” was a matter of income. The survey found that 36 million adults were “super-connected”.

Education also determines who is connected and who is not: Africans with over nine years of formal education were more likely to access the internet. In Nigeria and Senegal, men were more likely than women to have a mobile phone and access the internet.

Yet, mobile data usage is surging on the continent. According to Deloitte, a consultancy, “Africa’s mobile data usage amounts to 14.85 percent of the total internet traffic – second only to Asia.” Increased access to the internet via mobile phones is also highlighting differences in age, gender, education and location. Data from Internet World Statistics, for first quarter of 2012, ranked Nigeria, Egypt, Morocco, Kenya, South Africa, Sudan, Tanzania, Algeria, Uganda and Tunisia as the ten internet African countries.

These data, indexes and ranks should interest government officials. It will help discern how best to allocate capital for critical infrastructure projects to keep up with the pace of urbanisation in these cities.

According to Frost & Sullivan, a South Africa-based consulting firm, three concepts of urbanisation will emerge: megacities, mega regions and mega corridors. There is also talk of how technology can make cities smart – a situation where cities or urban regions are physically or virtually connected (i.e., high speed wireless broadband, 4G and free wi-fi in public places connect cities to civilian satellite towns and trains along transport corridors connecting two or more major cities or mega regions like Ibadan-Lagos-Accra).