Africa Investment Forum 2024: Africa, the most urbanised continent by 2050, needs more investment to prevent a surge in shanty towns (experts warn)
Africa’s urban population will triple in the next 25 years, and African countries will need to invest 5.5% of their gross domestic product (GDP) in urban development if they are to avoid rapid growth in shantytowns.
This was the conclusion reached by experts at a roundtable discussion on “Financing Urban Development and Planning” held at the Africa Investment Forum in Rabat, Morocco, from 4 to 6 December.
Hastings Chikoko, senior director of cities at Big Win Philanthropy, a philanthropic foundation focused on development projects in Africa, draws attention to rapid and poorly controlled urbanization: “Unfortunately, people will continue to migrate To the city. What to do? he asked.
Eric Gumbo, deputy director at law firm G&A Advocates LLP in Kenya, said: “The problem is planning failure, which has led to a lack of housing infrastructure and the emergence of shantytowns.” “Our countries have no scope for financing and this affects our cities. The debt of African countries /GDP ratio is about 65%,” Mr Gumbo added.
Abimbola Akinajo, Managing Director of Nigeria’s Lagos Metropolitan Area Transport Authority (LAMAT), confirmed that many large African cities face the same reality, which is a severe lack of funding.
Panellists agreed that the key challenge is to increase sources of investment through greater use of the private sector, development finance institutions, investment funds and pension funds, in addition to state and municipal resources.
Investment diversification needs to go hand in hand with appropriate measures and regulations by national governments and city authorities: better urban governance, better planning, capacity building to design bankable projects, better planning of municipal investments, and tax modernization. User payments for various services (highway tolls, etc.) can help fund these regulations.
Ednick Muswell, head of water and sanitation in eThekwini, a KwaZulu city with a population of 4 million and a budget of $3.9 billion, presents eThekwini as a model for successful urban management in Africa : “We do not owe any debt to ESKOM (the public power company) and our budget discipline is the result of good management. The city has a good credit rating and investors believe in us.” Muswell It added that US pension funds and banks are ready to invest in eThekwini, and the company is also capable of raising funds in the capital markets.
However, Chikoko said other cities on the continent were victims of poor risk perception and bias among African investors, which had cost implications.
“Borrowing is expensive in Africa and unless we find a way around this problem, cities will not have the resources to grow,” he warned.
Mohan Vivekanandan, executive director of the Development Bank of Southern Africa (DBSA), a founding partner of the African Investment Forum, said cities must have a well-thought-out plan to attract investors: “Major projects must be initiated by cities and they must be designed to The private sector finds it profitable to invest in your city,” he said.
investor appetite
Abdelrahmane Diallo, managing director of the Africa Solidarity Fund, believes that the huge needs for roads, housing, water and sanitation in African cities cannot be met without strong support from financial institutions.
The capital market is also adapting to the new normal of urban development.
“We need to think ahead,” said Nezha Hayat, president of the Moroccan Capital Markets Authority. The authority, which has adopted a regulatory framework tailored to local market needs, developed a green bond (in 2016) and the municipal bond Agadi, which has been helping the city Seoul has been attracting capital market investment since 2020.
Tierno Habib-Hann, managing director of the African Shelter Development Bank (ShafDB), pointed out that Africa still needs 53 million housing units and requires US$1 trillion to build these homes. Mr. Habib-Hann, whose agency covers 44 African countries and works on the urban housing value chain, highlighted that low-cost housing (up to US$10,000) is a viable solution thanks to appropriate construction techniques. He called on investors to come to Africa, where the real estate market alone is worth $700 to $800 billion.
Solomon Quaynor, African Development Bank Group Vice-President for Private Sector, Infrastructure and Industrialization, concluded the meeting by reminding the forum that the African Development Bank is working to connect urban entities with competitive financing prices and Support cities in developing public-private partnerships. He noted that at the African Investment Forum’s board meeting, six projects with a total value of more than $4 billion attracted investor interest.
Distributed by APO Group on behalf of the African Development Bank Group (AfDB).
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About the African Development Bank Group:
The African Development Bank Group (AfDB) is Africa’s premier development finance institution. It consists of three different entities: the African Development Bank (AfDB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF). The African Development Bank operates in 34 African countries and has an external office in Japan, contributing to the economic development and social progress of its 54 regional member countries. For more information: African Development Bank website
