TRENDING in Kenya last week was a new four-part documentary by Nairobi-based investigative journalism house Africa Uncensored titled Kanjo Kingdom, that reveals the harassment, extortion, corruption and outright thuggery that Nairobi city authorities wield over market vendors and petty traders every day.
About three-quarters of the city’s labour force makes a living in the informal economy; the Africa Uncensored investigation reveals that city inspectorate officers exert unofficial – but compulsory – bribes on tens of thousands of market traders.
Cumulatively the bribes add up to $960,000 every month, or close to $11.5 million every year. Most of these traders make less than $100 a month, and a street trader can be forced to hand over as much as 50% of gross turnover to the thuggish inspectorate officers, colloquially referred to as kanjo (from council, i.e. Nairobi City Council).
But the troubles of Nairobi’s street vendors are part of a bigger story, which begins with the question why African urban centres have market traders and street vendors – or more broadly, local retail – as their primary economic activity. Why are there hawkers to harass in the first place?
Africa is urbanising rapidly, and in the next 35 years, Africa will need to accommodate almost 900 million new urban dwellers, which is equivalent to what Europe, USA and Japan combined have managed over the last 265 years, data from the Mo Ibrahim Foundation shows.
Push and pull
In most continents, city growth is a by-product of two factors, usually happening side-by-side: a “push” from an increase in agricultural productivity growth, which means fewer workers are needed on farms; and a “pull” from urban industries, whereby factories requires an increasing amount of labour in cities.
Urban growth in Asia has largely unfolded along this trend – the “Asian Tigers” typically went through both green and industrial revolutions; cities grew as economies shifted away from agriculture and towards export-driven industry.
But Africa’s case has been rather different, with only a weak correlation between urbanisation and this kind of structural transformation, lacking both a “push” from agriculture or a “pull” from industry.
A new report from the World Bank outlines three reasons why Africa’s urban growth has only given modest returns in GDP growth, and explains why most of the jobs that African cities create are those in the informal economy, vulnerable to extortionists like those revealed in Kanjo Kingdom.
The report, Africa’s Pulse (pdf), reveals that African cities suffer from three fatal flaws; the first is that cities are crowded, but not necessarily economically dense. In other words, they are undergoing an urbanisation of people, not of capital, which means that they lack formal, affordable housing; residents are forced to live in unplanned downtown settlements.
Across sub-Saharan Africa, housing investment lags urbanisation by at least nine years; in Nairobi, commercial and industrial structures account for 55% of the total value of building stock, although these structures occupy just 4% of the city’s land area, the World Bank data shows.
The second flaw is that cities are developing as a collection of small, fragmented and disconnected neighborhoods, even as land near the city centre ironically remains undeveloped. For example, in Harare, Zimbabwe, and Maputo, Mozambique, more than 30% of land within five kilometres of the central business district remains unbuilt.
The land near the core in African cities is not left unbuilt by design, to reserve green space to make densely populated districts more pleasant. Instead, outdated, poorly enforced city plans and dysfunctional property markets create inefficient land use patterns that no one intended: the downtown lacks formal structures, yet it is crowded.
The third flaw is that the crowding, yet disconnection, means that living costs, especially transport, is very high in urban Africa. Because of the fragmentation of neighbourhoods and nightmare traffic jams, a resident of Nairobi, on average, can reach no more than 8% of all jobs available in the city within 45 minutes. By contrast, in greater London in 2013, this figure was 21.6%.
The research shows that firms in cities in Tanzania and Uganda, for example, pay their workers 30-50% higher wages than in the rural areas. But when adjusted for living costs, the urban wage premium fades into statistical insignificance in the Tanzanian and Ugandan cities studied.
In other words, higher wages in urban Africa are driven by higher costs, not higher productivity. Urban workers in these countries gain no purchasing power, on average, from living in a city.
Fragmented development and unfeasible commutes imply that the most accessible urban jobs are those pursued at home—and by oneself. For example, in Kigali, Rwanda, the home is the usual headquarters for the 72% of firms that are run by a single individual.
“An urban area that looks unlivable and unkind, without decent housing and amenities for its residents, might as well post a sign stating: ‘out of service’,” the report states.
“And one that is difficult for commuters and firms because of a fragmented plan, lack of affordable transport, and unexpectedly high labor costs could set up another sign: ‘closed for business’.”
A city that is ‘out of service’ and ‘closed for business’ ends up plunging into low productivity spiral, where the only jobs being created are informal, vulnerable ones in street hawking and market trading – the kind of jobs that Nairobi’s city inspectorate can ruthlessly raid for bribes.
Potential investors – both local and international – quickly see the signs of the physical and economic dysfunction that constrains public service provision, inhibits labour market pooling and matching, and prevents firms from reaping the benefits of scale.
So these potential partners stay away, fearing low to no returns on their investment – and with no investment, the dysfunction continues.
It’s the reason why Africa’s large city centres are dominated by a local retail industry, of goods and services being traded within the city, but only modest production in things that can be scaled up or traded internationally.
In Kigali and Kampala, for example, many urban workers sell food and beverages on the street – which puts money in their pocket, but keeps them in a low productivity trap.
It’s rare to find a vendor who has gone from hawking a “Rolex” (a popular street snack in Kampala, made from the fried flat bread chapatti and an omelette) to opening a chain of street food outlets in several towns.
To shift urban centres in Africa from being crowded, disconnected, and costly, and instead become livable, connected, and productive will require some tough measures, the report states, including:
- Simplifying and clarifying transfers of property rights among land market participants, freeing these procedures from today’s unclear, overlapping property rights regimes
- Supporting the effective management of urban development through foresighted planning, realistic regulation, and predictable enforcement
- Making infrastructure investments early, and coordinating them to take full advantage of scale economies in housing, transport, and services, to avoid inefficient and fragmented investments that scatter market demand
“Given the high sunk costs and enduring nature of infrastructure, any approach to urban development that lacks early planning and coordination will only require future generations to clean up the mess: a terribly inefficient strategy,” the World Bank warns.
To make African cities work, cities in Africa need better institutions; institutional structures must lead, not lag, urban infrastructure. The goal must be not only to raise productivity and structural transformation, “but also [be] kinder to their working inhabitants, whose increasing skills will be critical to economic growth and development,” say the authors.