Thursday, 23 May 2013

‘Middle Cities’ – Are we forgetting to nurture the engines of our future growth?

By Jaideep Gupte
With the world now mostly urban, nearly 60% of our global GDP is generated in only 600 urban centres. Moreover, large urban centres are quite simply the places where growth has been occurring – this is a function of concentrated economic activity. But this story is really about what is yet to come. For the first time, a country like India, with only a third of its population currently urbanised, which is far less than Brazil (86%) or China (47%), is reporting higher population growth in urbanised areas than across its vast rural landscape. In sub-Saharan Africa, the urban population is projected to double by 2030. This growth can be categorised into two significant trends: just under 30% is projected to occur due to what is classically understood as rural-urban migration. Significantly, the rest will occur due to natural increases in urban population, that is, cities and towns generating their own population growth. National planning bodies also have a say in this when they classify peri-urban or peripheral areas as under municipal administration.

This ‘urban-shift’ is going to require resources at a monumental scale – China for example, predicts it will need $8.1 trillion in new investment by 2020 to accommodate its new urban dwellers. Current rates of investments into infrastructure are falling far behind these levels. And not just in terms of scale, but importantly, also in terms of location: focussing on new or projected population growth, the mega-cities of the developing world are quickly being overtaken by a vast number of small and medium sized urban areas, each numbering approximately 100,000 in population.

These ‘middle’ cities and towns across sub-Saharan Africa and Asia are going to be the main hosts of urban growth. Understandably, these town and cities are also the weakest in terms of human capacity, infrastructure or service provision, and have a very thin local tax-base to use for future investment. Local revenue of most of these municipalities is often less than 1% of their country’s GDP. This has created a critical mismatch across a range of sectors, from basic service provision, law and order, to disaster preparedness, which directly impacts our progress on poverty eradication.

This is the theme of this year’s Global Monitoring Report - Rural Urban Dynamics and the MDGs, which provides an in-depth analysis on urbanisation as a force for poverty reduction and progress towards the Millennium Development Goals. I speak with Jos Verbeek, Lead Economist at the World Bank and Manager of the Global Monitoring Report, on what impact urban development has on rural poverty, what roles and responsibilities the private sector has in fostering equitable urban growth, and how ‘middle’ cities can be supported in becoming engines of our future growth.