Africa has the world’s fastest urban growth rates; by 2050, its cities will be home to an additional 950 million people, according to the Organisation for Economic Co-operation and Development (OECD).
More than 40,000 people in Africa are expected to move into its cities every day for the next 20 years.
Unfortunately, however, African megacities such as Kinshasa, Cairo and Lagos are well known for poor planning and functioning, and are already unable to accommodate their existing citizens in an orderly fashion, creating the urgent need for new cities to see the light.
“Two-thirds of Africa’s cities are yet to be built,” according to the London-based think tank International Growth Centre (IGC). The need for modern, as well as extensive urban infrastructure in a continent known for depleted government budgets and little access to international funding naturally creates a void that several private and land developers are already filling.
“Africa has a fast-growing middle class and many dynamic people would prefer to live in a well-planned and well-organised city,” says Yomi Ademola, Nigeria country head for private land and property developer Rendeavour.
An estimated $100bn of public and private investments are planned in new city projects across the continent, according to IGC figures. Nigeria is leading the way, with five new city projects covering 25 million sq m.
Nigeria’s biggest initiatives include Eko Atlantic in Lagos (with a planned investment of up to $60bn), and Centenary City ($18.7bn) and Asokoro Island ($900m) in the capital, Abuja, according to the research company Estate Intel.
“Most African cities have not built infrastructure as quickly as their populations have grown. Our model is to decongest these crowded cities by situating our projects 20km to 30km away from city centres and building infrastructure that matches the needs of the people within and around the cities,” Mr Ademola says. “We put a great deal of emphasis on efficiency.”
Rendeavour — whose biggest investors include Stephen Jennings, the founder of Renaissance Capital, and Frank Mosier, the founder of Kazimir Partners, an emerging markets investment firm — is developing seven new cities across the continent: two in Nigeria (Alaro City and Jigna), another two in Ghana (Appolonia City and King City), and individual cities in the Democratic Republic of the Congo, Zambia and Kenya. Overall, they cover 120 million sq m in total.
“The new cities are often in high economic growth areas, close to new airports, new seaways and new highways, or located in special economic zones,” Mr Ademola says.
New cities are developed as private plots of land offering residential, industrial and commercial infrastructure, and often regulated by special rules introducing incentives to investment, like in the case of Rendeavour’s Alaro City, which has been developed within the Lekki Free Trade Zone in Nigeria’s biggest city Lagos.
As the developer of the masterplan, Rendeavour is responsible for providing a city’s vital infrastructure so that individuals can build their homes and companies can construct and run their businesses. It also provides the infrastructure to specialist developers of schools and hospitals, and of residential, commercial, retail and industrial properties. It can also offer ‘build-to-suit’ lease agreements.
“Our utilities are regulated. We have public roads that cross through our land. So, our relationship with policy-makers is focused on creating policies that attract and enhance investment, whether this be through a special economic zone or working with governments to upgrade existing infrastructure,” Mr Ademola says.
“We do not believe completely private cities could or should emerge, because it is impractical to be an ‘island’ separate from the surrounding environment. New cities need to be integrated with their surroundings.”
Eko Atlantic is one of the continent’s most ambitious privately developed projects, covering an area of 10 million sq m — roughly the size of Manhattan’s skyscraper district — including 5.6 million sq m of reclaimed land off Victoria Island, the leading financial district of Lagos. The total envisaged built-up area could add up to 26 million sq m, involving a total investment of up to $60bn. However, the average price of an apartment to purchase in pre-sale is $415,000, according to the portal Nigeria Property Centre — significantly outside of the budget of the average Nigerian, who earns $2200 a year.
By 2040, Eko Atlantic's developer South Energyx, a subsidiary of the Nigeria-based Chagoury Group, expects 300,000 people to be living in the city and a further 250,000 people commuting to and from it.
The project’s original concession agreement dates back to 2006 and land started to be reclaimed in 2008. It is privately funded by South Energyx.
“Our vision has evolved from a new financial centre for Lagos to a new business centre for the city,” says Ronald Chagoury, vice-chairman of South Energyx Nigeria. “Not only do we now expect many financial institutions to locate in the city, but also multi-national and Nigerian companies seeking to set up a new head office.”
However, some experts believe that new cities for the continent’s rising middle and upper classes could be a distraction for national governments, as they could channel scarce economic resources to Africa’s elites.
“Building new smart cities in the hope people will follow may be a high-risk gamble that most African governments cannot afford,” says Astrid Haas, policy director of the IGC. “A surer bet is to study where people are already moving, which means where future urbanisation is likely to happen. Laying the foundations for this urbanisation to happen in an orderly and well-managed fashion, such as delineating basic road systems and investing in basic infrastructure before settlement takes place, will go a long way to harness the potential of Africa’s urbanisation.”
Mr Chagoury, however, believes the benefits of projects like Eko Atlantic can spread across the board.
“It is true that some of the independent property developers in Eko Atlantic have decided to construct luxury apartments, but we do not regard our city as ‘elitist’,” he says.
“Over a 25-year period, we envisage up to 2 million people living and working in the city. Other property developers plan to construct smaller apartments at a lower entry price that can be financed by low-cost mortgages. We believe Eko Atlantic has immense potential as it caters for the Nigerian market, which has the continent’s biggest economy.
“Multinationals that want to penetrate the Nigerian market must have a local head office and our city offers a good location for them.”
With thousands of people across the continent moving to urban areas daily, the need for functioning urban infrastructure has never been greater. New cities and their private developers will help meet some of that demand, provided their projects do not become wishful thinking for a limited elite.
This article first appeared in the December/January print edition of fDi Intelligence. View a digital edition of the magazine here.