The growth of cities offers a huge opportunity for Africa’s economic development. To date, however, urbanisation has contributed much less to poverty reduction in Africa than in other developing regions historically – in part because much of the labour transitioning from agriculture over the last half century has moved into smallscale services, rather than industry.
While new service sectors are emerging that offer great promise for future growth, active public policy is required to support them, as well as the continued promotion of manufacturing industries.
- Policy must recognise high-value job creation as the essential step in the growth process, focusing on the development of sectors that share the advantages of manufacturing.
- Policymakers should focus on reforms that offer linkages across sectors within the city system, rather than just change at the individual sector level.
- Spatial policies must focus on enhancing connectivity through investments in transport and energy as well as efforts to improve urban land markets. This could help firms to access the quality infrastructure and markets that are needed to be productive.
- Regulatory changes to bring more enterprises into the formal economy could be a useful step towards structural transformation.
- Policy should look for opportunities from regional trade and trade in services and not give undue emphasis on global manufacturers at their expense.