Speeches & Transcripts

Remarks by the World Bank Chief Economist for Africa at the Third Annual Bank Conference on Africa (ABCA)

June 15, 2016

Albert Zeufack, Chief Economist for Africa Region, the World Bank Third Annual Bank Conference on Africa (ABCA, 2016) Oxford University, Oxford, United Kingdom

As Prepared for Delivery

Good evening!

I have the unenviable task of closing the third edition of the Annual Bank Conference on Africa (ABCA). Quite conscious that I'm standing between you and dinner I will try to make it enjoyable. 

So, let me start with a story: A journalist once asked a great Soviet Leader: Comarade, If you could describe in one word the state  of the soviet economy, what would it be? He said: GOOD! And In two words what would it be? He replied: NOT GOOD!

Believe me, when I am asked to sum-up this conference in two words, I will say: VERY GOOD! Indeed, it’s been a great conference, bringing together academics – wearing their ties to meet us bureaucrats – and representatives from governments and institutions – with loose collars to meet the academics. 

I will attempt to summarize what I've heard in the last couple of days and then point to a few directions for future research.

PART I: SOME CROSS-CUTTING THEMES

I see three themes emerging from these discussions starting with our opening session and flowing through our various research sessions.

First, property rights (Land Rights) are crucial to the sustainability of cities but these have to be balanced with obligations of land owners including taxes.

Second, Public Services are essential to maximizing the potential of cities but they have to be built to serve, not just to impress.

Third, A sense of Urgency: The time to act to make African Cities engines of growth is NOW! The future has to look different from the past! 

On the first point, property rights are key for investment but – as Ed pointed out – also for establishing responsibility or obligations, including taxation, to be able to finance the services that make cities run. In Vernon’s talk yesterday, we saw the potential gains from improved property rights and reallocation in Nairobi. And the details matter: Paul showed us how taxing land is much more efficient than taxing property, because taxing property introduces incentives against investment. 

Second, the quality of a city can be measured in the quality of its services. Yesterday, Adnan described forthcoming work that will give us insight into how giving people more voice in service delivery may or may not increase their tax compliance. Justice showed across many countries how power outages lead to smaller firms with lower energy intensity, failing to meet the potential of the agglomeration economy. Guy’s early work suggests that slum upgrading in urban Tanzania has enduring impacts decades later. 

Third, It's critical that we act now in Africa because African cities  and urbanization are different from those in other regions. Several of you made the point that African cities are urbanizing more rapidly at lower rates of income than other regions have done.  Vernon showed how many African cities differ from those in rich countries, with slums right up against the city center. 

But this sense of emergency is tamed by political economy considerations such as the apartheid legacy in South Africa or the role of Donors (DFIs)... Where safeguards policies can become counter-productive and the lack of prioritization in national budgets, hence the lack of institutions to finance African urbanization. Finally the need to look closer into city-level governance: the financing of cities and the link to political parties financing, especially in transport and housing projects, implement decentralization, avoid immobilism... 

Solutions: Use national strategies to elevate the debate, Use the SDGs (11.3); use research to inform WB SCDs... Uganda For example.

Part II: LOOKING FORWARD

Now, as we look forward, what are some directions for building the evidence and analytics?

First Data Needs:

We need more and better data to analyze urbanization in Africa!

We need:

  1. Surveys and census of where businesses are located and where households live within cities
  2. To collect and archive highly spatially detailed population and economic census data, 
  3. A mapping of urban infrastructure based on satellite and related data 
  4. Property and land price data and ownership patterns for cities, obtained through work in the field with local firms and agencies. 
  5. Data on sub national public investments and expenditures (ESP infrastructure ) with considerable emphasis on reconciling sector specific spending by various levels of government in a particular territory 
  6. Data on local input output tables and estimates of sub national employment multipliers

Big data. Big data isn’t the answer to all our problems, but several talks have shown that it has real untapped potential. Ed showed how Google Street views may work in some areas, but that we have to take care – the same method that works in Boston may not work in Jakarta. Vernon and others showed the potential of satellite data. Some big data come from digitizing micro data that we already have, including Sam’s work in India and Theophil’s work in Canada. 

Access to Open Data... 

Second What are Research Issues that emerge from this discussion? We still have more questions than answers in this research field. Let me list a number of these:

  1. The Interplay between urbanization, demographic transition, Trade and Structural Transformation. MD made an important point that rapid urban growth in Africa has not been accompanied by decline in fertility as seen in many parts of LAC, EAP, etc. What are the key reasons for which time allocation decisions and fertility decisions within households has not changed? Is it because Africa’s urbanization has not been driven by “urban pull” as traditional models suggest, rather it has been driven by rural push? And does the small scale and informal nature on urban employment create stymie the process of capital labor substitution? Research on the patterns, drivers, and welfare consequences of the “incomplete” demographic transition would be most useful.
  2. Capabilities, capacity and urban investment choices: In his opening talk, Ed Glaeser made a compelling case for research at the intersection of judicial and executive capabilities and the choices made in terms of adopting new urban “solutions”, including rapid transit systems. We just don’t know much about this critical issues – as policy makers grapple with the choices of investing in new technological solutions vs. upgrading existing solutions. Bringing in a flavor of behavior economics, research on governance capabilities and urban solutions can be rather useful.
  3. Urban connectivity:  An important point Paul Collier made yesterday was on urban connectivity and its implications for labor market and agglomeration economies. Paul made the point that efficient density and connectivity requires that people and goods are able to move through the city to large employment clusters. Large African cities typically lack this: economic activity tends to be more dispersed, making some cities almost collections of villages, with less economic interconnectedness than in other comparable parts of the world. It would be very useful to have more analytics on the sorts of transport initiatives that would offer marked improved on the current state of affairs. 
  4. Urban Housing: Much of the research over the past two days touched on housing markets, slums informal settlements and their broader implications. A critical need is to achieve a much better understanding of various options to expand mass urban housing in Africa. The prevailing wisdom is ‘incrementalism’, or slum upgrading. However, in many places older slums are on prime land near the centre for which the best use could be commercial. Redevelopment could be considered, as suggested by Vernon yesterday, but this is a very delicate subject. How have other countries handled this? Any lessons from Latin America? What is our  Or large scale government planned initiatives can be planned to redevelop an entire city. Much more research is needed to inform core housing choices.
  5. Secondary Cities: we’ve seen a lot of research on capitals, from Kampala to Yaounde. But we’ve seen much less on secondary cities. Patricia showed us that the real wage premium for the self-employed is highest in Tanzania’s capital, relative to other urban areas. We need to understand the shape of these wage gradients and the potential of these secondary cities. Also, this morning Andreas looked at the border cities in their capacities to serve the regional EAC market better. But there is still work to do to really inform policy. Failure to do so could lead to disastrous policy mistakes.
  6. Clusters, zones and other place based policies: Growth poles have become a fad, yet it is not clear if these translate into growth centers or the sorts of market and coordination failures they solve. As urbanization and clustering of activity go hand in hand, it would be important to refine methodologies and develop the data foundations to identify and assess spatial and sectoral linkages among sectors of an urban/ regional economy alongside identifying employment multipliers across sectors and regions.
  7. We need to deepen our knowledge of how to get urban labor markets to work better.  heard from Carolina about queuing for public sector work in Ethiopia and from Stefano and Simon about the importance of lowering search costs in Addis. 
  8. We’ve talked about the importance of improving the quality of taxation and of services in cities. But we haven’t talked about how to get there. We need new research on the political economy of property rights reform in cities. 
  9. One last point: Urbanization is highly path dependent. As Ed Glaeser told us yesterday, introducing tolls and fees in urban areas is much more difficult once people are used to enjoying those services for free. The same principle applies broadly. Given the low current levels of African urbanization and the high rate of change, now is the time to get it right. 
  10. Before I let you go, a few thank you’s are very much in order. This conference required effort from a wide range of people across several institutions. But let’s start with the most important. Many thanks to Ken Omondi and Sally-Ann Lyon, for handling the massive task of organizing logistics, helping many of you to get here and to get back home again. Moussa Blimpo, Markus Goldstein, Dave Evans and the entire Africa Chief Economist's Team for tirelessly working to make this event possible!

Also, on behalf of Makhtar Diop, Vice-President of the Africa Region of the World Bank, let me thank our keynote speaker, Ed Glaeser, and our invited guest speakers, Paul Collier, Vernon Henderson, Tony Venables, Jennifer Musisi, Crispian Olver, and Mthuli Ncube. We are grateful to our partners at the Centre for the Study of African Economies, the International Growth Centre, the Department of Economics at LSE and Oxford University, and to the Blavatnik School of Government for hosting the event in this splendid facility. Finally, thank you to all of you who have presented over the last few days. 

Because of constraints listed above, the field of research on urbanization in Africa is still young. We need to all work together to advance high quality research in this area. The World Bank's Africa Region has just completed a study on Urbanization in Africa titled: "Opening Doors"? The study will be launched in the coming couple of months. Stay tuned! 

Finally, Our next edition of ABCA will focus on African Agriculture, and will be held in June of next year. We'll be advertising a call for proposal soon. We hope that some of you will join us there and that you’ll spread the word to your colleagues working on this crucial area.

Again, thanks to all of you for coming and have a safe trip back home!

Albert Zeufack, Chief Economist for Africa Region, the World Bank


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