Africa’s High Growth Potential Cities

African Cities
Accra has the greatest potential for expansion

AFRICANGLOBEAccra, Lusaka and Luanda, the capitals of Ghana, Zambia and Angola respectively, are the African cities with the highest potential for growth over the next five years, according to the MasterCard African Cities Growth Index released in Johannesburg on Tuesday.

“As the entire African continent with its population of over one-billion people is going through a fundamental transformation, this new index puts a spotlight on the economic and human factors driving urban growth over the next five years,” Mastercard said in a statement.

The index, developed in the final quarter of 2012 by Professor George Angelopulo of the University of South Africa (Unisa), was launched at the second Africa Knowledge Forum in Johannesburg.

Johannesburg, Durban, Cape Town

Johannesburg was the highest ranked South African city in the index, coming in at 8th position out of the 19 cities surveyed, followed by Durban (10th) and Cape Town (11th). [Full ranking of cities below.]

“Johannesburg, although already a strong economic powerhouse city in Africa, achieved lower scores in certain categories as a result of lower growth expectations due to its relative maturity when compared to other African cities,” Mastercard said.

“For example, the expected growth of the middle class population is higher from cities such as Accra and Luanda than it is for Johannesburg, which has seen a growing middle class since the change of government in 1994.”

Factors Affecting Cities’ Growth Potential

The index rankings were developed from published historical and projected data on typical factors affecting cities’ growth, including economic data, governance levels, ease of doing business, infrastructure and human development factors, and population growth levels.

“Some of the key reasons for Accra emerging as a high growth city include its gross domestic product per capita growth over the past three years, its projected population and household consumption growth, its strong regulatory environment, and the relative ease of doing business in this city compared to other African cities,” Angelopulo said.

“While many of these larger and more established cities offer the expected potential for growth, other less prominent ones are quietly establishing themselves as those with even higher growth potential,” he added.

“This is primarily due to high scores on accelerated growth factors that include health, education, governance, infrastructure development, and the ease of doing business in those cities.”

Importance of Regulatory Environments

Harare (Zimbabwe), Kano (Nigeria), Abidjan (Côte d’Ivoire) and Khartoum (Sudan) were deemed to have the lowest growth potential of the 19 cities examined in the study.

While these cities scored well in some categories, such as health and levels of foreign direct investment, the study found that their potential for growth was affected by low scores in areas such as political and regulatory environments, historical economic growth and ease of doing business.

“One of Africa’s key economic and social challenges is how its cities attract significant inward investment by being globally competitive, serving as magnets for investment and growth, hot-spots of innovation and, most importantly, developing attractive and thriving business environments,” Angelopulo said.

A Rapidly Urbanising Continent

Michael Miebach, MasterCard president for Middle East and Africa, noted that Africa “is a region where the lines between the developed and developing worlds are dissipating owing to various economic, demographic and technological factors. Most of these factors have been associated with the increased urbanization of the continent.

“Therefore, understanding the long-term growth potential of Africa’s cities, and the resultant increase in African urban consumers, has never been as important.”

According to the United Nations Human Settlements Programme, the urban population of Africa is expected to triple from 395-million in 2009 to 1.23-billion in 2050, by which time 60% of all Africans are expected to be living in urban areas.

“This growth in urbanization, combined with the fact that the center of global economic gravity is shifting to dynamic emerging markets such as those found in Africa, means that the continent’s cities will play a much bigger role in driving the economic growth of their respective countries,” Miebach said.

The ranking

The cities and their ranking on the MasterCard African Cities Growth Index 2012-2017 is as follows:

  1. Accra, Ghana
  2. Lusaka, Zambia
  3. Luanda, Angola
  4. Dar es Salaam, Tanzania
  5. Addis Ababa, Ethiopia
  6. Nairobi, Kenya
  7. Kampala, Uganda
  8. Johannesburg, South Africa
  9. Kinshasa, Democratic Republic of Congo
  10. Durban, South Africa
  11. Cape Town, South Africa
  12. Mombasa, Kenya
  13. Lagos, Nigeria
  14. Abuja, Nigeria
  15. Dakar, Senegal
  16. Harare, Zimbabwe
  17. Kano, Nigeria
  18. Abidjan, Cote d’Ivoire
  19. Khartoum, Sudan