Key message 2 – Despite the lack of large industrial sectors in urban Africa, moving to cities still offers substantial gains over rural life.

Urbanisation without industrialisation could be a lost opportunity for Africa. Cities are often touted as engines of growth because they offer scale and specialisation economies, which result in more available and diverse job opportunities beyond the primary sector.

These productivity advantages may translate into higher earning possibilities for urban jobseekers (Combes & Gobillon 2015), or may themselves reflect higher productivity individuals choosing to live in cities over rural areas (Young, 2013; Hicks et al., 2017).

Although a lot of research has measured the size and sources of urban income premiums elsewhere, it is only recently that evidence has come to light on urban incomes in Africa. Estimates by Henderson and Kriticos (2018) suggest that urban incomes in Africa tend to be on average between 8–23% larger than rural. Such numbers are in line with previous estimates for the US (23–32%) and the UK (9%) (Glaeser & Mare, 2001; D’Costa & Overman, 2014).

For the largest cities, the income premium ranges from between 11–89% higher than in rural areas, similar to estimates in France and Spain, where the largest city premium over rural areas has been estimated at 55% (De la Rocha & Puga, 2017) and 60% (Combes et al. 2008), respectively.

Urban income premiums are also much larger at the household rather than individual level, likely because living in cities expands occupational choice for the entire household – an important point for structural transformation.

One question is whether these positive income differences outweigh the extra costs of living associated with high-density urban environments.

Recent research shows that for most quality of life measures – looking across health, housing quality, crime, and environmental conditions – outcomes are either better or no different as population density increases across African cities (Gollin et al., 2017).

This owes to the fact that cities are not just engines of productivity, but areas of potentially much greater liveability, since it becomes much cheaper to provide services at scale when people are clustered closely together.

These results suggest that on average cities in Africa offer higher wages and quality of life than rural areas. A very positive reflection for the continent’s development prospects. This leaves us with an important question: If Africa’s cities are net income enhancing, should we be concerned with their relative lack of manufacturing?

Although gross national incomes are still much lower than other regions at similar levels of urbanisation, it is plausible that other sectors could pave the way towards higher income growth in Africa.