Energising Africa’s productive transformation: how intermediary cities can be a game changer

By Bakary Traoré, Economist, OECD Development Centre, and Elisa Saint-Martin, Junior policy Analyst, OECD Development Centre 

Electricity-in-Africa-shutterstock_563620138A review of on-going industrial strategies (Africa’s Development Dynamics 2019 report) shows that most African countries have the ambition to expand processing activities in sub-sectors such as agro-industries, fertilisers, metals and construction materials. To achieve this, it is urgent to improve the quality of energy supply across the continent. Regional co-operation for energy among Africa’s cross-border intermediary cities can be a game changer.

First, let’s take a look at the main challenges

Today, industrial processing activities and transport services account for no more than 35% of total energy consumption in Africa (see Figure 1, based on the OECD/IEA 2019 database). Africa’s electrical networks are struggling to cope with current needs: on average, firms in sub-Saharan Africa face 8.5 electricity outages a month (World Bank, Enterprise surveys, 2019), and 40.5% of them consider insufficient access to energy to be a major constraint to their growth and competitiveness.
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Africa’s integration: groundbreaking but not so new

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By Sarah Lawan, Regional Co-operation Advisor, Networks, Partnerships and Gender Division, OECD Development Centre, and Rodrigo Deiana, Junior Policy Analyst, Europe, Middle East and Africa Unit, OECD Development Centre


Learn more about this timely topic at the upcoming
18th International Economic Forum on Africa


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Kwame Nkrumah speaking at the inaugural ceremony of the Organisation of African Unity Conference in Addis Ababa, Ethiopia, in 1963

As early as 1963, in the midst of independence movements, Kwame Nkrumah urged, “Africa must unite or perish!” The first president of Ghana pronounced this injunction at the founding meeting of the Organisation of African Unity (OAU) in Addis Ababa, Ethiopia.

The post-colonial thirst for “breaking with the old order and indigenising the direction of Africa’s economic development”led to the shaping of the African Economic Community (AEC), a pan-African single market. Africa reclaimed its leadership and ownership with the goal of promoting a self-sustained and self-reliant development trajectory.

2018 witnessed an acceleration of integration efforts with the landmark agreement on the African Continental Free Trade Area (AfCFTA) in Kigali on 21 March. So far, 49 African countries have signed the AfCFTA, which will be the world’s largest free trade area since the WTO’s creation. As the late Calestous Juma put it: “The continent’s regional integration is the most complex and elaborate effort of its kind ever mounted in human history.”2

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Make AfCFTA a reality

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By Abdoul Salam Bello, Advisor to the Executive Director, Group Africa II, World Bank Group; Visiting Fellow, Africa Center, Atlantic Council; and Author of “La régionalisation en Afrique: Essai sur un processus d’intégration et de développement” (L’Harmattan 2017)


Learn more about this timely topic at the upcoming
18th International Economic Forum on Africa


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The March 2018 signing of the framework agreement to form a continental free-trade zone throughout Africa is raising a lot of expectations. In fact, the African Continental Free Trade Area (AfCFTA) would be the largest free trade agreement since the founding of the World Trade Organization. It will include 1 billion people and up to USD 3 trillion of cumulative GDP.

Amongst the AfCFTA’s expectations is a significant boost in intra-trade. At just an 18% share of total trade, Africa has the lowest levels of intra-continental trade in the world. While the continent’s trading blocs have helped to improve these figures, the level of intra-trade in Africa is a far cry from the levels witnessed in Latin America (35%) and Asia (45%). Furthermore, Africa’s intra-continental trade has been substantially outpaced by trade with the rest of the world – often by as much as 90%.

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Raising capital for intermediary cities

By Jeremy Gorelick, Senior Infrastructure Finance Advisor, USAID’s* WASH-FIN (Water, Sanitation and Hygiene – Finance) Programme, and Joel Moktar, Project Leader, Open Capital Advisors


This blog is part of an ongoing series exploring the intersection between intermediary cities in developing countries and sustainable development


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Intermediary cities are the fastest growing cities in the developing world. Often referred to as secondary or second-tier cities, intermediary cities typically have a population of between 50,000 and one million people. They play a fundamental role in connecting both rural and urban areas to basic facilities and services.[1] Driven by population growth and rural-urban migration, intermediary cities worldwide are projected to grow at almost twice the rate of megacities (those with more than 10 million inhabitants) between now and 2030.[2] Of these, the fastest growing cities are in Africa and Asia.[3]

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Bridging the green investment gap in Latin America: what role for national development finance institutions?

By Maria Netto, Lead Capital Markets and Financial Institutions Specialist, Inter-American Development Bank, and Naeeda Crishna Morgado, Policy Analyst – Green Growth and Investment, OECD              

Green-investmentThe developing world urgently needs more and better infrastructure. Affordable and accessible water supply systems, electricity grids, power plants and transport networks are critical to reducing poverty and ensuring economic growth. The way new infrastructure is built over the next 10 years will determine if we meet the Sustainable Development Goal (SDGs) and the Paris Agreement objectives. Considering the long lifespan of most infrastructure projects, the decisions developing countries make about how they build infrastructure are critical: we can either lock-in carbon intensive and polluting forms of infrastructure, or ‘leap frog’ towards more sustainable pathways.

Many countries in Latin America are making this shift: thirty-two of them have committed to cut their emissions and improve the climate resilience of their economies, in infrastructure and other sectors, through Nationally Determined Contributions (NDCs). The cost is estimated at a staggering USD 80 billion per year over the next decade, roughly three times what these countries currently spend on climate-related activities. What is more, this is in addition to a wide investment gap for delivering development projects and infrastructure overall – the World Bank estimates that  countries in Latin America spend the least on infrastructure among developing regions in the world.
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Electricity for all in Africa: Possible?

By Bakary Traoré, Economist, Sébastien Markley, Statistician, and Ines Zebdi, Research Assistant, OECD Development Centre 1 


Explore the 2017 African Economic Outlook: Entrepreneurship and Industrialisation in Africa for more on this subject


Electricity-in-Africa-shutterstock_563620138For decades, access to electricity has been a serious challenge in Africa. It still is. 600 million Africans are not connected to an electrical network. African businesses cite electricity amongst the two most severe constraints on their operations (Enterprise Surveys, 2016). Twenty-five of the 54 countries in Africa, including Nigeria, South Africa, Ghana and Senegal, deal with frequent power crises characterised by outages, irregular supply and surging electricity costs. These are symptoms of insufficient generation capacity and a lack of infrastructure.

Despite these sobering facts, a number of recent initiatives signal that major improvements may be underway. The impetus to act is driven by the benefits Africa can reap by investing in electrification. Such benefits go far beyond direct job creation in energy infrastructure, as important as that is. Several pieces of evidence (Jimenez [2017], Torero [2014], van de Walle et al. [2013]) suggest that household electrification also increases job opportunities by carving out more time for work and enabling rural micro-entrepreneurship. We see three reasons for hope that Africa is on the path to greater electrification – provided certain conditions are met.

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Infrastructure, jobs, good governance: Bringing Africans’ priorities to the G20 table

By Michael Bratton, University Distinguished Professor of Political Science and African Studies at Michigan State University and senior adviser to Afrobarometer, and E. Gyimah-Boadi, Executive Director of Afrobarometer and the Ghana Center for Democratic Development

 

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Beyond the limelight and the headlines, the recent Group of 20 (G20) summit accomplished an important piece of business by launching the Compact with Africa. The next step is crucial: negotiating the priorities that the compact will address.

One key concept is that the compact is with – rather than for – Africa, implying that it will rely on true partnerships to pursue mutually agreed-upon goals.

With its contribution to a “20 Solutions” document presented to the G20 by a consortium of think tanks, the pan-African research network Afrobarometer is working to ensure that the compact will take into account what ordinary Africans say they want and need.

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Broadening financing options for infrastructure in Emerging Asia

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By Kensuke Tanaka, Head of Asia Desk, and Prasiwi Ibrahim, Economist at Asia Desk, OECD Development Centre 


Learn more about this timely topic at the upcoming
1st International Economic Forum on Asia
Register today to attend on 14 April 2017!


Kensuke-Prasiwi-AsiaForumAgreeing on the need for new infrastructure is one thing; finding a sustainable way to finance it is another. According to the ADB, an estimated USD 26 trillion (or USD 1.7 trillion per year) will need to be invested in infrastructure in its developing member countries1  between 2016 and 2030 if these economies are to maintain their growth momentum, eradicate poverty and respond to climate change2  .Given the scale of investment needed, countries in the region will not have sufficient funds to meet demand. Indeed, financing infrastructure investment has been a considerable challenge for the region. Political factors can further complicate financing when they lead to the inefficient allocation of public funds. How best to finance infrastructure is, therefore, a key concern for policy makers in the region.
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The value of sharing experiences in urban redevelopment

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By Dr. Koki Hirota, Chief Economist, Japan International Cooperation Agency (JICA)


Learn more about this timely topic at the upcoming
1st International Economic Forum on Asia
Register today to attend on 14 April 2017!


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A future image of the Cebu metropolitan area

Catastrophic floods and earthquakes have hit Asian cities such as Manila, Bangkok or Kathmandu in recent years more than ever before. Air pollution in Delhi, Dhaka or Beijing has turned more and more dangerous, threatening the lives of residents. All this as the international community agreed on Sustainable Development Goal (SDG) 11 to “make cities and human settlements inclusive, safe, resilient and sustainable.” Responding to this call, the Japan International Cooperation Agency (JICA) decided to allocate 35% of its financial co-operation programme last year to urban development.

Why? Urbanisation in developing countries is happening fast. Ten mega cities of over 10 million people existed in 1990; that number increased to 28 in 2014 and is projected to reach 41 in 2025 (UN [2014]). Urban areas in Shanghai expanded by 8.1% annually between 2000 and 2010 and by 4.0% in Jakarta. Tokyo, in comparison, expanded by 0.2% (World Bank [2015]). Dhaka became a mega city in just 40 years from a population of 1 million. Many other Asian mega cities took only 50 to 70 years to reach that level, which is a much shorter time than what advanced economies experienced.

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The SDGs, Domestic Resource Mobilisation and the Poor

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By Nora Lustig, Samuel Z. Stone Professor of Latin American Economics, Director of the Commitment to Equity Institute at Tulane University, nonresident senior fellow of the Center for Global Development and the Inter-American Dialogue, and non-resident senior research fellow at UNU-WIDER 1


Learn more about this timely topic at the upcoming
Global Forum on Development on 5 April 2017.
Register today to attend!


E_SDG goals_icons-individual-rgb-01Countries around the world committed to the Sustainable Development Goals (SDGs).  However, achieving some of the SDGs could happen at the expense of the overarching goal of reducing poverty, at least in the short-run.2  One key factor to achieving the SDGs will be the availability of fiscal resources to deliver the floors in social protection, social services and infrastructure embedded in the SDGs. A significant portion of these resources is expected to come from taxes in developing countries themselves, complemented by transfers from the countries that are better off.3 In developing countries, however, raising additional taxes domestically for infrastructure, protecting the environment and social services may leave a significant portion of the poor with less cash to buy food and other essential goods.  Continue reading