Urbanisation on the rise
Urbanisation in Africa is growing - the continent already has as many cities of 1-million people or more as Europe and more than India - and in 10 years' time the two largest South African cities will, along with Cairo, Lagos and Alexandria, comprise the five largest cities on the continent, a report by McKinsey Global Institute says.
The rise in urbanisation will coincide with a rise in African household spending from US$860bn to $1,4-trillion - assuming the rates of economic growth continue - the report by the research arm of consultancy McKinsey & Co says.
Africa's attraction for a global economy desperately in need of new markets is summed up in the report's prediction of growth in the continental economy from $1,6bn - equivalent to that of Brazil and Russia - in 2008 to $2,6bn by 2020.
Despite problems like bureaucratic inefficiency, poor infrastructure and corruption, industries such as agriculture and infrastructure, as well as resources face a surge in output, driving wealth of the continent's citizens in coming years.
"Africa already has more middle class households (defined as those with incomes of $20000 or above) than India. The rise of the African urban consumer is serving as a new engine of domestic growth."
Even below that level, consumption is growing. The number of households with an income of $5000 - the level above which people spend about half their income on items other than food - is rising.
In 2008, there were 85-million such households, or 43% of the total. By 2020, this will rise to 128-million, or 52% of the total, the report says.
By 2020, Istanbul will be the world's largest emerging-market city, with a consumer market worth $124bn, the report predicts.
Mumbai, with $75bn, will be second. Five of the next six cities are in Africa. Cairo comes next, with a consumer market worth $72m, followed by Johannesburg with $57m.
New Delhi comes next with a market worth $52bn, then comes Cape Town (35bn), Lagos (34bn) and Alexandria (26bn).
South African cities also rank in a second tier of middle-ranking cities with consumer markets worth less than $25bn by 2020, the report says. Casablanca (23bn) leads, followed by Khartoum, Luanda and Pretoria, all with $22bn, and Durban (20bn). Nairobi is predicted to have a consumer market worth $12bn.
Progress depends in part on good management by the continent's leaders, the report says. "Africa's labour force is expanding. By 2040, it is projected to reach 1,1-billion, overtaking China's or India's. If Africa can provide its young people with the education and skills they need, this workforce could account for a significant share of both global consumption and production."
Source: Business Day
