Based on the foregoing discussion, there are six key principles for achieving effi cient urbaniza- tion. First, adopt a solid analytical framework to help defi ne priorities and sequencing. In places that are mostly rural, governments should be neutral and establish the foundations for effi - cient urbanization (World Bank 2009). Good land policies and universal provision of basic services are central. Where urbanization has accelerated, the priority should be investments
140 AFRICA’S INFRASTRUCTURE: A TIME FOR TRANSFORMATION
in connectivity to ensure that the benefi ts of rising economic density are widely shared. In highly urban places, targeted interventions may be needed to deal with slums and exclusion.
Second, recognize that the political econ- omy infl uences the urban transition. African cities are not very powerful. Unlike cities in East Asia or Latin America, African cities have little autonomy and depend on the central gov- ernment for resources, infrastructure projects, and even land development. Chinese mayors are appointed by the party, but their political careers depend on how well they develop their cities. Especially if they are elected, U.S. and European mayors may see their cities as steps to higher political positions, including the presidency. Mayors in Africa have limited free- dom of action. Many of the diffi culties Afri- can cities have in collecting property taxes are related to the political infl uence of the major landowners, who oppose such taxes.
Third, be pragmatic. While the long-term goal is to have well-defi ned property rights and land titling, in the short run, cities may need to “fi nesse” land titling and use occu- pancy as a basis for land registration and taxation. Resource-constrained governments should invest in minimum packages of water- sanitation-energy in informal underserviced quarters at the citywide level and resist the idea of transforming slums into perfect neigh- borhoods. For about $1,200 per capita, many African slum dwellers can be provided with basic services, compared with $18,000 spent in more comprehensive and sophisticated proj- ects in Latin America (Farvacque-Vitkovic, Glasser, and others 2008).
Fourth, focus on cities and areas important for the economy. The priorities should be to improve the institutional framework (espe- cially on land markets), to provide techni- cal and fi nancial resources for planning and developing infrastructure and basic services, to harness agglomeration economies, and to deal with congestion.
Fifth, improve land policies so that mar- kets are more fl exible and can respond to the increase in demand. That requires compiling inventories of government land and of for- mal and informal developers, gathering prices and costs for land plots and construction, and
broadly planning for the extension of urban settlements, taking into account transporta- tion, connectivity, and environmental factors. Sixth, improve the fi scal soundness of cities: (a) improve transparency and predictability of transfers; (b) strengthen and simplify local taxation, changing the focus of property tax from ownership to occupancy; (c) take advan- tage of cost recovery from revenue-producing services, such as markets and bus stations— they can make up 70 percent of medium-size city revenues; and (d) use municipal contracts (between central and local governments) and
adressage to help local governments manage
their resources.
Notes
The authors of this chapter are Elvira Morella, Maria Emilia Freire, and Paul Dorosh, who drew on background material and contribu- tions from Alvaro Federico Barra, Catherine Farvacque-Vitkovic, Matthew Glasser, Sumila Gulyani, Darby Jack, Austin Kilroy, Barjor Mheta, Stephen Mink, Siobhan Murray, Madhu Raghunath, Uri Raich, Raj Salooja, Zmarak Shalizi, and Debabrata Talukdar.
1. Note that the early stages of this transition need not involve movements of activities or people; rural households increasingly earn incomes from rural nonagricultural activities (in agri- cultural processing, construction, commerce, and private services).
2. This correlation between agricultural produc- tion and proximity (as measured by travel time) to urban markets holds even after taking agro- ecology into account.
3. No internationally accepted standard exists for identifying urban areas, and each country tends to use its own defi nition. This situation hinders any effort to make sensible comparisons across countries. In this chapter, urban areas, from sec- ondary cities to megacities, are identifi ed using a subset of the GRUMP (Global Rural-Urban Mapping Project) urban extents layer (CIESIN 2004). The GRUMP urban extents were joined to a data set of city populations compiled by Hend- erson (2002) and of urban extents classifi ed by population size. To complete the urban-rural gradient, nonurban areas were classifi ed by dis- tance or travel time to the nearest city. The com- bination of urban extents and city populations allowed creation of a density-based typology of cities. However, given the limitations associated
Facilitating Urbanization 141
with these input data, the calculation of density is approximate at best. Even so, the density-based characterization of “urban” areas allows com- parisons across regions and refl ects the relation between density and agglomeration economies. 4. World Development Report 2009 expressed geo- graphic transformation as the development of the leading and lagging regions. Although both regions may consist of both urban and rural areas and hence agriculture and nonagriculture, in South Asia, lagging regions are predomi- nantly rural and agriculture remains the main source of livelihood.
5. As mentioned, the most important hindrance to economic production is the supply of energy. In many countries, it can account for half of the value of the fi nal output.
6. These funds include annual public investments, annualized offi cial development assistance, annu- alized emerging fi nanciers that do not belong to the Organisation for Economic Co-operation and Development, and annualized private par- ticipation in infrastructure.
7. These fi gures include energy and roads; no data are available on the share of investment on ICT and water that serves industrial production. 8. Population fi gures are derived from national
censuses.
9. The price of construction is estimated at $222 per square meter, so a 75-square-meter home would cost about $17,000 (excluding land) (AGETIPE 2005). Average incomes are $850 a year, produc- ing a ratio of housing price to income of over 2,000 to 1, one of the world’s highest.
10. Efforts to develop mortgage systems for low- income households in Africa have encountered several problems: lack of credit history, lack of regular income, shallowness of the fi nancial market, lack of long-term funding, lack of land and house registries, high lending rates, and high credit risks.
11. Too often, the central government appropriates the city-generated taxes and distributes them to sectors that are not necessarily the most pro- ductive and certainly not the ones that will feed into the urban economy.
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143
Deepening Regional Integration
Chapter6
W
ith many small, isolated economies, Africa’s economic geography is particularly challenging. Regional integration is likely the only way to overcome these handicaps and participate in the global economy. Integrating physical infrastruc- ture is both a precursor to and an enabler for deeper economic integration, thereby allowing countries to gain scale economies and harness regional public goods. For successful regional integration, countries must start small; build on successes; think globally, linking Africa to more external markets; and compensate the least for- tunate, recognizing that benefi ts are not always evenly distributed.The benefi ts of regional integration are visible across all aspects of infrastructure networks. For information and communication technol- ogy (ICT) and power, regional infrastructure provides scale economies that substantially reduce the costs of production. Thus, con- tinental fi ber-optic submarine cables could reduce Internet and international call charges by one-half. Similarly, regional power pools that allow countries to share the most cost- effective energy resources can reduce electric- ity costs by $2 billion a year. For transport and water, regional collaboration allows optimal
management and development of cross-border public goods. Road and rail corridors linking landlocked countries to the sea are an example of such a regional public good, as are regional airport and seaport hubs. The same can be said of Africa’s 63 international river basins.
Reaping these benefi ts, however, poses insti- tutional challenges:
•
Building a political consensus. The politi-cal obstacles can trump the economic case. Regional infrastructure involves a high level of trust between countries, not least because of the implied dependence on neighbors for key resources such as water and energy.
•
Establishing effective regional institutions.Regional institutions have to facilitate agreements and compensation. Africa has an extensive architecture of regional politi- cal and technical bodies, but these face problems because of overlapping member- ships, limited technical capacity, and lim- ited enforcement powers.
•
Setting priorities for regional investments.Given the daunting investment agenda, better sequencing and priority setting of regional projects has been elusive. Political,
144 AFRICA’S INFRASTRUCTURE: A TIME FOR TRANSFORMATION
economic, and spatial approaches to prior- ity setting have all been widely discussed.
•
Developing regional regulatory frameworks.Physical integration of infrastructure net- works will be effective only with harmonized regulatory frameworks and administrative procedures to allow the free fl ow of services across national borders.
•
Facilitating project preparation and cross- border fi nance. The complexity of regionalinfrastructure projects makes them costly and time-consuming to prepare. This is particularly true when projects are large in relation to the size of the host economy and essentially depend on fi nancing from downstream benefi ciaries.