Hinging its position on five indicators observed by
investors before investing in an economy, a recent
report on ‘Africa’s cities of opportunity’ has ranked
Lagos state the seventh city of opportunity in
Africa, behind Accra, Ghana.
According to the report by
PricewaterhouseCoopers, the indicators represent
concrete and pragmatic determinants of a city’s
social and economic development, Gross
Domestic Product (GDP), inequality, middle-class
growth, ease of doing business, and foreign direct
investment.
Specifically, the indicators border on current
development or future potential, location, nature
of the opportunity, “must-have” or “Knock-out”
factors and time scale (time for achieving return
on investments).
With a score of 321, Lagos ranked 77 in
infrastructure, 43 in human capital, 109 in
economics and 92 in society and demographics.
The report also showed that the ranking of cities
in Africa benchmarked against the ranking of
countries is markedly different.
Indeed, the attractiveness of cities on the
continent is sometimes stronger than the country
itself and the cities, which are performing well, are
those that have succeeded with the challenge of
diversifying their economy and creating an
ecosystem conducive for the middle class to
grow. The top five cities according to the ranking
are Cairo, Tunis, Johannesburg, Casablanca and
Algiers.
The preponderance of North African cities is
explained by their longevity, which has allowed for
the development of their infrastructure and human
capital over time.
“The question we asked at the outset of this
report was, ‘What makes a city suitable to exploit
an opportunity?’ The point, in a nutshell, is that
to discover different opportunities, investors often
need to look through different lenses: different
strategies demand different perspectives. “Africa
is at an exceptional historical crossroad.
The growing middle class, strong demographic
growth with improving age mix, the technological
innovation, growing choice of investment partners
from the global south and fast-paced
urbanisation are shaping what the future of Africa
could look like.
These trends twinned with the generally accepted
economic data that cities are the world’s engines
of growth, makes the report not only necessary
but extremely timely.
“Most of our African Cities of Opportunity are on
a path of real achievement, however, and can rise
to the highest levels in our rankings with some
effort and planning.
Many, indeed, have become regional hubs in a
variety of areas: Dar es Salaam and Douala as
ports (and the latter as a transshipment centre);
Accra for telecommunications; Lagos in culture
(music, as well as an essential venue for
Nollywood); and Nairobi in financial services
(along with the more obvious Johannesburg)”, the
report stated.
Speaking on the report, Chief Executive Officer of
PwC Nigeria, Uyi Akpata stated: “In 2030 half of
the population will live in cities in Africa where
economic activity and growth will be focused and
which will become communication centers and
hubs for social trends.
This presents a major challenge to local
authorities, city governments and also for
businesses.” Commenting further, Akpata noted
that: “Lagos ranked 7th in the overall rankings
and was identified as a regional hub for culture
especially for music and also as the destination
for African Cinema (Nollywood).
It was also listed as one of the top 5 cities that
are conspicuous sites for investment at the
moment along with Dar es Salaam, Lusaka,
Nairobi, and Accra.
“Lagos equally tied with Accra in 5th place in
terms of Economic index which measured such
variables as GDP per capita, Rate of real GDP
growth, Headquarter of top 500 companies in
Africa and Ease of doing business but the
infrastructure challenges which for example
hinders easy movement and increases journey
time in the city was identified as one of its weak
points.
“Infrastructure and human capital take time to
develop but are often critical to success.
Cities like Lagos, which are upcoming fast
developing opportunity cities, face significant
human capital and infrastructure challenges,
which limit their economics.
“The role of the public sector policy makers (and
related development of institutions) in guiding a
city is important to the private sector.
The building blocks are infrastructure, human
capital and also security. Where these are in
place, culture and society starts to flourish.” The
report also noted the extraordinary opportunities
in the short, medium, and longer term and for
virtually any kind of economic enterprise on the
continent, from commodities to manufacturing to
consumer goods to telecommunications and high
tech.
PwC expects that the consistent growth of
Africans cities as a whole over the next decade
will not only alter the continent’s socioeconomic
landscape but will also permanently alter the rest
of the world’s perception of Africa in an historic
and transformative way.