Speeches & Transcripts

Remarks by World Bank Group Senior Vice President Mahmoud Mohieldin: “The importance of well-managed urban development for combating poverty and increasing job creation”

May 8, 2017

World Bank Group Senior Vice President Mahmoud Mohieldin UN Habitat 26th Governing Council Nairobi, Kenya

As Prepared for Delivery

I am delighted to join you to this high level session as the issues of poverty reduction and promoting peace and stability are closely related to job creation. The issue of job creation is inherently related to how cities are built and managed – both creating opportunities – and connecting people with these opportunities.

In fact, over 80% of global economic activity is concentrated in cities. And there is no country that has ever reached middle-income status without urbanizing, and none has reached high-income status without vibrant cities. Cities are essential for lifting millions of people out of poverty. Through their density, they make it easier and cheaper to deliver basic public services – it costs 70 to 80 US cents per cubic meter to provide piped water in urban areas, versus $2 in sparsely populated areas.

Here in Africa, the decline in oil and commodity prices have hit resource-rich countries hard, and there is an urgent need for economic diversification. To help create this diversification, investments in cities need to be at the forefront of our efforts. If global experience is a barometer, cities in Africa will have a critical role to play in their countries’ economic growth.

How and why do these investments need to happen? First, well-functioning cities boost incentives for investment in infrastructure, residential, and commercial structures, connecting people with jobs. Second, by making cities livable for poor and middle-class residents, through access to services, amenities, and housing, cities can keep a rein on living costs for workers. Through both channels, a successfully developed city offers businesses the incentives of agglomeration and high returns on investment.

In fact, it is no surprise that city growth has accompanied economic growth in many parts of the world. This is particularly evident in the development experience of China, Vietnam, and the Republic of Korea. However, in contrast to these known features of well-developed cities, Africa’s cities today are on a different development trajectory – one that poses prohibitively excessive costs to their residents and businesses, and weakening links with economic progress.

I want to emphasize that we need urgent action because the infrastructure and policy choices that are made today will lock cities into urban development patterns for decades – if not centuries to come. It is up to us to ensure that urbanization spurs growth which inclusive and that all city-residents can have a decent life – by improving access to affordable and reliable basic services, education, housing, transport, healthcare and jobs.

Key constraints that cities in Africa are facing

Recent World Bank research, published in the Africa’s Cities: Opening Doors to the World report, shows that cities in Africa today, instead of being economically dense, connected, and livable, are, instead, crowded, disconnected, and costly for households and businesses. Investments in infrastructure, industrial, and commercial structures have not kept pace with the concentration of people, nor have investments in affordable formal housing.  Congestion and its costs overwhelm the benefits of urban concentration.

African cities have also developed as collections of disconnected, small and fragmented neighborhoods, lacking reliable transportation and limiting workers’ job opportunities, while preventing businesses from reaping scale and agglomeration benefits. Crowding and limited connectivity adds to costs for businesses deterring investors and trading partners, especially in regionally and internationally tradable sectors.  Adding to this, workers’ high food, housing, and transport costs increase labor costs, thus reducing expected returns on investment.

What actions should policymakers consider prioritizing?

We find that the underlying challenge facing Africa’s cities is in the functioning of key markets. In particular, city leaders in Africa – both and the national and local levels – need to strengthen institutions governing the transfer, valuation, and use of land.

Further, Africa’s cities need the tools for policy coordination so that infrastructure investments are coordinated with efforts for land development. Such coordination is all the more urgently needed since capital investments have lagged behind the pace of urban growth, as Africa urbanizes at lower incomes than those of other developing economies.  We need to ensure that every dollar invested has the most impact.

And here -- let me tell you that Africa’s city leaders have much to learn and adopt from their own neighborhood.  Since 2005, Rwanda has implemented comprehensive land tenure reform that has shown early success. Between 2005 and 2012, it pursued its nationwide program to issue land titles based on photomapping technology, at a cost of less than $10 per parcel.  Madagascar, Namibia, and Tanzania have undertaken similar efforts. Ethiopia issued certificates for 20 million parcels of land at less than $1 per parcel and mapped them onto a cadastral index map at less than $5 per parcel in 2003–05.  And in 2011, Senegal passed a new Land Tenure Act, under which people with temporary occupancy permits in urban areas can convert the permits into permanent title deeds at no cost. Improved tenure security further helps increase housing investment and improvement, access to housing finance, and the activity of the formal land market.

As Africa’s cities clarify land rights and strengthen land use planning, they will encourage economic growth. They will also lay the foundations to expand domestic revenue mobilization, as revenues from appreciation in land values can help finance much-needed urban infrastructure.

Ongoing collaboration between the World Bank and UN-Habitat in Kenya provides strong examples of how African cities can strengthen land use planning to encourage economic growth:

Under Kenya Municipal Program (KMP, US$100 million), UN-Habitat worked with the counties and the Urban Development Department to provide technical assistance that improved the quality of the integrated strategic urban plans (financed under KMP). UN-Habitat also used the KMP planning sites as the basis of a student design competition for Kenya’s towns which, among other objectives, aimed to advance students’ applied planning skills.  The link to the design competition report is: https://unhabitat.org/books/un-habitat-support-to-sustainable-urban-development-in-kenya-volume-3/.

Under the proposed Kenya Urban Support Program (KUSP, US$300 million), considered a follow-on project from KMP, the collaboration between World Bank and the UN-Habitat will continue as KUSP work closely with the national government and county governments on enhancing urban management, urban infrastructure and service delivery.

Under the Nairobi Metropolitan Services Improvement Project (NAMSIP, US$300 million), UN-Habitat is playing a key role in providing technical assistance on the principles of transit oriented development (TOD) in land use planning. NAMSIP is financing three large land use planning consultancies to improve urban mobility in the Nairobi Metro area and the TA from UN-Habitat contributes to refining the quality of the outputs and to guiding the actions of the key government agency (the Kenya Railway Corporation) who will be responsible for implementing the plans.