Speeches & Transcripts

Speech: Leveraging Urbanization in South Asia

September 24, 2015

Sri Mulyani Indrawati, Managing Director and Chief Operating Officer of the World Bank Report Launch New Delhi, India

As Prepared for Delivery

Ladies and Gentleman,

It is a pleasure to be with you today to release a new World Bank report on urbanization – a topic that is of vital importance to India, South Asia and the world at large.

Today, more than half of the world’s population lives in urban areas.

By 2030, the urban population in South Asia will grow by another 250 million from where it is today.

Globally, more than 80 percent of GDP is generated in cities and – if managed well – urbanization can lead to sustainable growth by increasing productivity, allowing innovation and new ideas to emerge.

Indeed, urbanization presents the countries of South Asia with an opportunity to transform their economies and join the ranks of richer nations in both prosperity and livability.

But to reap the benefits of urbanization, countries must successfully address the challenges posed by urbanization. Growing urban populations put pressure on a city’s infrastructure; they increase the demand for basic services, land and housing, and they add stress to the environment.

URBANIZATION IN SOUTH ASIA

So how is South Asia doing?

There has been progress. Average GDP per capita in the region grew by almost 56 percent from 2000 to 2012. And, at the same time, absolute poverty came down.

But, speaking frankly, South Asia is not fully realizing the potential of its cities. Much work remains to be done to enjoy the full benefits of urbanization in a region where a majority of the cities remain characterized by high levels of poverty, bad housing conditions and generally poor livability.

The report the World Bank is releasing today finds that the region’s urbanization has been messy and hidden.

The messiness is reflected in the widespread existence of slums and sprawl.

Sprawl helps give rise to hidden urbanization, which is not captured by official statistics.

Messy and hidden urbanization is a result of cities struggling to meet the challenges posed by growing urban populations. And those struggles have consequences.

South Asia’s share of the global economy remains strikingly low relative to its share of the world’s urban population, unlike East Asia.  India, for example, should have a higher level of national GDP based on its level of urbanization.

The region’s largest cities fare poorly in international rankings for livability.

For the very poorest in Bangladesh, India, Nepal and Pakistan, under-5 mortality is higher in urban settings than rural ones.

And, South Asia’s cities are notable for their polluted air.

RECOMMENDATIONS

That’s a lot of bad news.

The good news is that the conversation about urbanization has started to change in South Asia. The reservations of the region’s politicians and policymakers about the benefits of urbanization have been replaced by talk of how to use urbanization to improve economic growth.

The report you have before you identifies three deficits in urban governance that need to be addressed for South Asia’s urban dwellers to fully enjoy the benefits of urbanization. The deficits are in empowerment, resources and, most importantly in my view, in accountability.

Addressing these deficits means improving fiscal relations between different levels of government to empower urban local governments.

It means identifying practical ways to increase the resources available to urban local governments to allow them to perform their mandated functions.

And, finally, it means strengthening the mechanisms to hold local governments accountable for their actions to citizens and to central authorities. In practice, the effectiveness of accountability mechanisms in place today varies markedly across the region. Part of making them better is more – and more effective – citizen involvement.

Making improvements in all three deficit areas is necessary for meaningful progress – but it will not be enough.

To tackle messy and hidden urbanization, and to bring about lasting improvements in the prosperity and livability of South Asia’s cities, requires more.

It requires policies that improve the ways in which cities are connected and planned. It calls for reforming land and housing policies to ensure that the 203 million additional housing units required in South Asia by 2050 are built, and built properly. And it demands improvements in the resilience of the region’s cities to natural disasters and the effects of climate change.

URBANIZATION IN INDIA

With more than 380 million people living in cities, India has a big task ahead of it. But we are encouraged by the work that is being done in India to make its cities better. The Smart Cities, AMRUT, Clean India and Housing for All missions are important steps forward, and we recognize the efforts being made to ensure the convergence of all these programs.

CONCLUSION

We also recognize that whether it is India or the other countries in South Asia, policymakers face a choice. They can continue down the same path, and see the same troubling results. Or they can make changes as is being done here and enact reforms to tap into the potential of the region’s cities.

Change will not be easy. And it will not happen overnight.

But it is essential to bring a brighter future to South Asia, one that achieves our shared vision of ending extreme poverty and promoting shared prosperity.

This report aims to provide a pathway to that brighter future.

Thank you.


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