Nigeria Urbanization Review
Analytically, there is a strong causal connection between urbanization and economic development. ‘No country has grown to middle income without urbanizing. None has grown to high income without vibrant cities.’ (WDR2009). Urban areas (and urbanized regions) facilitate agglomeration economies, which are a vital part of firms becoming internationally competitive, with costs reduced through the learning, matching, and sharing (of knowledge, labour, infrastructure) that happens between firms. Urbanization has also been linked to poverty reduction. Almost universally, access to basic urban services such as health, education, water, sanitation and electricity are higher in urban areas than in rural areas and are higher in larger urban areas than in smaller urban areas. On the other hand, large urban areas often suffer from issues of congestion that can undermine the benefits of urbanization. However, there exists only limited rigorous analysis of whether and how agglomeration economies are taking place in sub-Saharan Africa, including Nigeria. The challenge is: how can policymakers overcome the barriers to positive change, facilitate urban agglomeration economies, benefits to firms and positive impacts on urban employment and ensure improved living conditions for households? To help answer these questions, the World Bank has developed an analytical framework known as the Urbanization Review. Several initial reviews have been conducted in such countries as Colombia, India, Indonesia, Turkey and Vietnam. They have been widely successful in opening and furthering the policy dialogue on urbanization in these countries. The government of Nigeria has requested Bank support for an urbanization review with a focus on understanding how the country can better leverage the benefits of urbanization and agglomeration economies for economic growth and job creation. This will be one of several urbanization reviews that are expected to be prepared in Africa, with other first set of priority countries being Ghana, Ethiopia, Tanzania, and DRC. Support from DFID is anticipated for each of these.
The objective of the works is to understand Nigeria’s urbanization process through an economic lens, and to investigate how Nigeria’s cities can leverage the urbanization process to achieve sustainable economic development, employment growth and poverty reduction.
1. A Visualization of the Urban Transformation: This summary document will summarize, using a spatial visualization approach, the urban transformation that is on-going in Nigeria and will benchmark the transformation against peer countries in the Africa Region, globally and between cities/economic regions in Nigeria. 2. Practical strategies for harnessing the benefits of the urban transformation: Based on the findings of detailed analytical work, short 2-3 page policy oriented briefing notes will be developed that will serve to orient states, cities and national government policy makers on priority investments and policies that best serve to foster economic development and employment growth in urban areas and ensure a smooth urban transition that allows Nigeria’s cities to develop as engines of economic growth and poverty reduction. 3. Strategies for Successful Industrial Policy: Through a spatial lens, strategies based on international best practices can be developed for Nigeria considering the unique characteristics and development trajectories of the primary urban economic regions/cities. 4. Public Private Forums: Just-in-time policy notes as requested by policy makers or key private sector industry groups can be generated based on public-private forum that would be established around each of the key policy/investment priority recommendations.
Expected Impacts and Results
The work would be led by the World Bank, jointly by the Finance and Private Sector Development and the Urban Development and Services Units. Key partners and funders of this include DFID and the Cities Alliance. During a mission to Nigeria in November 2012, meetings were held with key stakeholders, including Ministry of Finance, Ministry of Lands, Housing and Urban Development, DFID, the Nigeria Infrastructure Finance Facility and other key stakeholders. The principal counterpart for this work will be the Ministry of Finance and selected key states. The general structure of the work was agreed and is outlined below. Structure of Engagement 1. Overview of the Urbanization Process in Nigeria across five dimensions: The first part of the work will review and assess shifts across five different dimensions: economic changes, welfare changes, demographic changes, physical changes and administrative changes. This overview will provide an overall picture of how Nigeria is urbanizing across these dimensions and will allow for policy makers to understand how Nigeria compares in this urbanization process to several of its peers globally. 2. Urban Economic Development: This aspect of the work will assess which enterprises, markets and industries are generating jobs and economic growth in urbanized areas. It will scan emergent value chains, including in informal settlements, to establish an urban growth narrative across the portfolio of cities/urban regions in Nigeria charting out some possible growth and employment trajectories based on market demand and supply-side transitions. 3. Prioritizing urban policies and investments: This section will compare the performance of Nigerian cities to their competitors, both within country and key comparator countries. This will drill down into areas of land and housing markets, infrastructure and connectivity and basic services and how this impacts firm and household locational opportunities and costs. In addition, this section would aim to identify fiscal and governance implications of these policies and investment priorities looking into the fiscal sustainability and political economy of these priorities. These conclusions will be built from a number of quantitative diagnostic tools as used in the World Bank’s Urbanization Reviews (so far conducted in Vietnam, Colombia, Turkey, India, and elsewhere), plus a perceptions survey of firms in specific value chains about city-level constraints on growth, and a number of focus group discussions.