Report ranks Lagos seventh city of opportunity in Africa
Hinging its position on five indicators observed by investors before investing in an economy, a recent report on ‘Africa’s cities of opportunity’ has ranked Lagos state the seventh city of opportunity in Africa, behind Accra, Ghana.
According to the report by PricewaterhouseCoopers, the indicators represent concrete and pragmatic determinants of a city’s social and economic development, Gross Domestic Product (GDP), inequality, middle-class growth, ease of doing business, and foreign direct investment.
Specifically, the indicators border on current development or future potential, location, nature of the opportunity, “must-have” or “Knock-out” factors and time scale (time for achieving return on investments).
With a score of 321, Lagos ranked 77 in infrastructure, 43 in human capital, 109 in economics and 92 in society and demographics. The report also showed that the ranking of cities in Africa benchmarked against the ranking of countries is markedly different.
Indeed, the attractiveness of cities on the continent is sometimes stronger than the country itself and the cities, which are performing well, are those that have succeeded with the challenge of diversifying their economy and creating an ecosystem conducive for the middle class to grow. The top five cities according to the ranking are Cairo, Tunis, Johannesburg, Casablanca and Algiers.
The preponderance of North African cities is explained by their longevity, which has allowed for the development of their infrastructure and human capital over time.
“The question we asked at the outset of this report was, ‘What makes a city suitable to exploit an opportunity?’ The point, in a nutshell, is that to discover different opportunities, investors often need to look through different lenses: different strategies demand different perspectives. “Africa is at an exceptional historical crossroad.
The growing middle class, strong demographic growth with improving age mix, the technological innovation, growing choice of investment partners from the global south and fast-paced urbanisation are shaping what the future of Africa could look like.
These trends twinned with the generally accepted economic data that cities are the world’s engines of growth, makes the report not only necessary but extremely timely.
“Most of our African Cities of Opportunity are on a path of real achievement, however, and can rise to the highest levels in our rankings with some effort and planning.
Many, indeed, have become regional hubs in a variety of areas: Dar es Salaam and Douala as ports (and the latter as a transshipment centre); Accra for telecommunications; Lagos in culture (music, as well as an essential venue for Nollywood); and Nairobi in financial services (along with the more obvious Johannesburg)”, the report stated.
Speaking on the report, Chief Executive Officer of PwC Nigeria, Uyi Akpata stated: “In 2030 half of the population will live in cities in Africa where economic activity and growth will be focused and which will become communication centers and hubs for social trends.
This presents a major challenge to local authorities, city governments and also for businesses.” Commenting further, Akpata noted that: “Lagos ranked 7th in the overall rankings and was identified as a regional hub for culture especially for music and also as the destination for African Cinema (Nollywood).
It was also listed as one of the top 5 cities that are conspicuous sites for investment at the moment along with Dar es Salaam, Lusaka, Nairobi, and Accra.
“Lagos equally tied with Accra in 5th place in terms of Economic index which measured such variables as GDP per capita, Rate of real GDP growth, Headquarter of top 500 companies in Africa and Ease of doing business but the infrastructure challenges which for example hinders easy movement and increases journey time in the city was identified as one of its weak points.
“Infrastructure and human capital take time to develop but are often critical to success.
Cities like Lagos, which are upcoming fast developing opportunity cities, face significant human capital and infrastructure challenges, which limit their economics.
“The role of the public sector policy makers (and related development of institutions) in guiding a city is important to the private sector.
The building blocks are infrastructure, human capital and also security. Where these are in place, culture and society starts to flourish.” The report also noted the extraordinary opportunities in the short, medium, and longer term and for virtually any kind of economic enterprise on the continent, from commodities to manufacturing to consumer goods to telecommunications and high tech.
PwC expects that the consistent growth of Africans cities as a whole over the next decade will not only alter the continent’s socioeconomic landscape but will also permanently alter the rest of the world’s perception of Africa in an historic and transformative way.