By 2050, Africa is expected to become the most urbanized continent in the world, with its urban population tripling in just 25 years. However, behind this staggering demographic growth lies a major threat.
The proliferation of slums, fueled by uncontrolled urbanization and a critical lack of infrastructure, continues to exacerbate the continent's challenges. This warning, issued by experts during a roundtable discussion at the 2024 Africa Investment Forum, dominated debates held from December 4 to 6 in Rabat.
During the session titled “Mobilizing Financing for Urban Development and Planning,” speakers painted an unequivocal picture: without massive investments amounting to 5.5% of African countries’ GDP, the continent’s major cities will continue to suffer from structural deficits. According to Abimbola Akinajo, Managing Director of Lamata in Nigeria, “Large African cities share a common reality: the lack of funding.”
Eric Gumbo, Associate Director of G&A Advocates LLP in Kenya, emphasized the urgent need for better planning. “The absence of coherent strategies leads to uncontrolled slum development and inadequate infrastructure,” he noted. Moreover, with debt-to-GDP ratios nearing 65% in many countries, governments face borrowing constraints, further hindering cities’ ability to respond to demographic pressures.
In response to these challenges, panelists explored various avenues to mobilize the necessary funding. Hastings Chikoko, Senior Director for Cities at Big Win Philanthropy, advocated for diversifying investment sources, including greater involvement from the private sector, international financial institutions, and pension funds, alongside public resources.
Examples of Effective Urban Management
Ednick Muswell, Head of Water and Sanitation at eThekwini, South Africa, shared a concrete example of effective management. Through strict budget discipline and a favorable credit rating, the city attracts investors and raises funds on international markets. However, Muswell also cautioned against the often-skewed perception of risks associated with African investments, which drives up borrowing costs.
The Role of Strategic Planning
Mohan Vivekanandan, Executive Director of the Development Bank of Southern Africa (DBSA), stressed the importance of rigorous planning. “Urban projects must be structured to demonstrate profitability in order to attract private sector investment,” he stated. This approach is supported by institutions such as the African Development Bank (AfDB), which actively works to provide African municipalities with access to competitive financing through public-private partnerships.
Nezha Hayat, President of the Moroccan Capital Market Authority, highlighted Morocco’s initiatives, including municipal and green bond issuances. These financial tools, adopted as early as 2016, have enabled cities like Agadir to mobilize capital for major projects.
The needs of African cities are colossal: roads, housing, water, and sanitation. According to Abdouraman Diallo, Director General of the African Solidarity Fund, these needs represent a market worth several hundred billion dollars. Thierno Habib-Hann, CEO of ShafDB, emphasized the use of innovative technologies to build affordable housing at $10,000 while attracting investors to a housing sector valued at $700-800 billion.
A Promising Future with Concrete Projects
Closing the session, Solomon Quaynor, Vice President of the AfDB, announced that six major projects, representing over $4 billion, have already garnered investor interest during the Africa Investment Forum’s Boardrooms. This success highlights Africa’s potential to structure projects that appeal to financial markets, provided exemplary regulatory frameworks and governance are adopted.
The urban future of Africa depends on a combination of concerted actions among states, municipalities, and financial partners. The stakes are clear: transforming the challenges of urbanization into sustainable development opportunities for a rapidly evolving continent.
