Most of the development land in cities throughout the world is controlled by the state. States often work in silos and it is often up to communities and real estate professionals to convince the regulators to release that land.
But in the world where real estate is often treated as a commodity, urban communities and the few welfare states that Africa has should get creative and convince property investors that buildings create a sense of place, not just monetary dividends.
So it’s most of the times down to solid multi-actor partnerships if smart cities were to develop across Africa. And don’t forget about the farmers as they lose agricultural land due to urban growth but may stand to earn a lot more if urbanization is done right.
Africa is the world’s second-largest and second-most populous continent with the surface of 30.2 million sq km (20.4% of the total global land area).
Sub-Saharan Africa has a slum population of 199.5 million
It is generally believed that going more vertical in densifying urban environments is closer to getting your city to become resilient and sustainable. Urban planners are aware of the fact that local communities do not react similarly to urban high-rise. In Asia high-rise is regarded as a premium category but in places like Europe it is treated as low quality housing.
Affordable housing and role of residents’ aspirations in urban design
At the same time they cite high borrowing costs for property developers as well as low levels of infrastructure development within city suburbs as challenges in rolling out more affordable housing units.
Rwanda Housing Authority supports introduction of Real Estates Investment Trusts (REITs) and urges real estate developers to raise funds on the stock market.
Kigali could face a housing deficit of 344,000 homes in 2020. 31,000 housing units need to be built annually, with only 800-1,000 hitting the market in the capital of Rwanda. But most of them are not affordable housing.
The government in Rwanda has set up a fund where mortgage rates will be lower than those of banks: 10 %. Rwandan banks charge 16-18 % interest rate, while in Kenya the interest on mortgages is about 27 %. Some houses in Rwandan cities now cost between Rwf10 million and Rwf20 million (starting at ca USD13,000). Rwandans earning Rwf100,000 or Rwf300,000 monthly can hardly afford even that.
Use this Mortgage and Housing Affordability Calculator availed in March 2016 by Centre for Affordable Housing Finance in Africa and see what it would cost to service a mortgage loan for a US$10,000 house in each African country.
When policy and regulation become counter-productive
Policy inconsistency is often a challenge on African projects. Take a case of a Saudi client that commissioned Singapore’s Surbana to plan a 640 ha site in Algeria. Though the financing and plans were in place, the project never got off the ground. The Algerian government rescinded the land titles for the site.
Surbana has created master plans for the city of Kigali, Rwanda and redevelopment master plans for three zones in the Angolan capital Luanda.
Another barrier to investment in urban housing markets is lack of access to reliable, prompt and local market information.
Content on sites like Estateintel.com in Nigeria — created by real estate professionals — is a way to bring in more transparency into the real estate and land markets in Africa.
A large percentage of land in urban environments is used for roads and utilities. As populations densify more of the utilities go underground. And more public spaces take their place above the ground.With driverless cars, parking lots and garages will not be as necessary as such vehicles will not need to be waiting for you in the CBD. As the garages underneath buildings get removed, the front entrance to the building gets rid of the elevator that was put their initially to get you to the parking garage. At this stage, the access to the front door needs to be changed since all the cars delivering the employees in the morning queue up in front of the building.
Another feature of smart cities — delivery drones — shape the conversation about the location of industrial warehouses in African cities.
However technology is often taking backstage in the discussions of land rights.
Take for example Brazil:
Following the adoption of the 1988 Constitution, which included a chapteron urban policy, a ground-breaking law called the Statute of the City was introduced in 2001 to promote equity and access to urban land. It gave municipalities various instruments to institutionalize the right to the city.
First, it sought to ensure that city management was more democratic by making land use planning mandatory throughout each city and subjecting development decisions to social control and participation (previously planning was essentially an elitist activity and only selected parts of each city were subject to investment and service delivery by the municipalities).
Second, it sought to ensure that the social function of urban land and buildings was put before their commercial value by removing part of the land from the market (previously public authorities had very little scope to intervene in the property sector through planning and urban management initiatives because of the long-held tradition of private property rights).
Across Africa, a clash between statutory and customary land laws often undermines property market development and makes getting legal title a challenge.
For urban planning to be seen as a collaborative process of shared decision-making (as opposed to a top-down, technocratic activity undertaken by government experts, private developers or commercial investors) African societies have a lot of e-governance solutions available. And ‘right to the city’ policies like the ones adopted in Brazil.
Some 75 % of global population live in urban settlements of fewer than 500,000 people. The figure will only get higher with time. Smaller cities, especially across Africa, are projected to double/triple in population over the next 15-25 years. Secondary cities vary considerably in size. In China, some have populations of over five million, while in Ethiopia they have fewer than 200,000.
Creating decentralized strategies to provide basic services to smaller “intermediate” cities and towns can facilitate the transition between rural and non-rural activities and take pressure off Africa’s megacities.
“Taking pressure off Africa’s megacities”
“This is where most investment and urban planning need to take place: equipping [Intermediate cities] with proper infrastructure, helping deliver basic services and enabling them for the generation of job opportunities,” argues Edgar Pieterse of the African Centre for Cities.
In West Africa, Ghana works to relieve pressure on Accra and Kumasi by building the capacity of local government, training planners and local councillors in smaller cities. On the other side of the continent, in Uganda, a partnership between Belgium-based Cities Alliance and the British Department for International Development focuses on 14 secondary cities, to boost the long-term planning capacities of local governments and assit slum dwellers.
“Rolling out broadband”
“In most African cities, planning is done short term, in five-year or maybe ten-year plans. It’s important for these cities to increase their planning horizons to 30 years,” explains Samuel Mabala of Cities Alliance.
Connect smaller cities to the world outside the national borders
If small cities in the middle of nowhere become hotbeds of company formation in the United States, can’t their African peers follow, follow fast? How significant is the number of places in Africa where people want to live for the sake of the place, not just a paycheck?
Create positive change by tapping into the land market
One thing is certain: land in Mohammedia, a port city on the west coast of Morocco between Casablanca and Rabat, can be cheaper for its population of 188,619 than in Nairobi, Kenya, home to some 3 million people. And all these African cities mentioned above have one enormous advantage over tech hubs like Silicon Valley, Austin, Boston or New York. Land is cheap.
As James Fallows, a national correspondent for The Atlantic, puts it “‘Every calculation – the cash flow you must maintain, the life balance you can work toward – is different when a nice family house costs a few hundred thousand dollars rather than a few million.” Again, in smaller African cities that family house can cost you well south of USD100,000.
“Cheaper rental prices, and a higher growth potential”
Take Koforidua, Eastern Region in south Ghana (some 130,000 people). An almost completed two-bedroom house with double garage and a large plot surrounding it trades in Koforidua for GH₵ 249,600 (Fixed USD price: $ 64,000).
By investing in smaller cities, real estate developers and industry professionals benefit from lower operating costs, greater space and scenery for construction, lower costs for resources and building materials. While bigger economic capitals have the advantage over smaller, lesser known cities — due to greater recognition around the world — cheaper rental prices, less competition, and a higher growth potential is enabling smaller emerging cities in Africa to rise to the challenge.
Coupled with reliable broadband and state-of-the-art medical services, smaller African cities — oftentimes a step away from breathtaking natural beauty — are to become your idea of a city of the 21st century.
Get smart about attracting investors
The picture is not without pitfalls of course. Laura Mann, International Development department at London School of Economics (LSE), observes that on the national level African policy-makers should think much more strategically about how African nations can capture value within their economies through the proliferation of information technologies and the deepening of the digital economy.
“National policies that fund local R&D and training programmes”
Recent reports by institutions like UNECA, UNCTAD and UNIDO suggest that African governments need to be extremely strategic in their dealings with foreign companies; to make sure those investments and activities contribute to raising the skill level in African countries, providing outsourcing and procurement opportunities for local businesses and paying taxes that can fund local R&D and training programmes.
But it is a two-way road. National government in Kenya tried to promote Business Process Outsourcing (BPO) by subsidising the cost of bandwidth to all BPO companies that wanted to try to engage in the sector. Some unskilled local companies received that support, and harmed the overall reputation of Kenyan firms in the eyes of international clients.
“Making African economies more predictable”
As more African governments shift to e-governance and more city dwellers use mobiles, internet connections and smartcards, massive amounts of transactional data is generated. This makes African economies more predictable, smaller cities in Africa more visible to foreign investors. Back to LSE wisdom on smart cities in Africa:
Behind the widely circulated images of slum dwellers using mobile technologies to improve daily lives, the dominance of large ICT companies, a splintered urban landscape, land dispossession and the securitisation of urban space reveal a more complicated potential smart urban future.
Smaller African cities will have to be smart about opening markets and opportunities, a policy that should primarily contribute to development of their own communities — rather than large corporations or the local elites.
Beyond the narrative that tends to put smart city Africa into the realm of technology, smaller African cities should guard against becoming exclusive enclaves or archipelagos of high technology. Smart African communities should prioritize people and avoid withdrawing from the wider city.
“Getting beyong exclusive enclaves and archipelagos of high technology”
Function and role – as opposed to population size – are now defining an intermediary city’s status within the global network of cities. In this context, talent attraction and retention become factors that differentiate Gondar, a secondary city of 358,257 in the north of Ethiopia from Kikwit (home to some 400,000 people) in the southwestern part of the Democratic Republic of Congo.
Smart specialization strategies promoted by the European Union are designed to encourage each region to identify transformation priorities that reflect and amplify existing local structures and competencies, and thus produce original and unique competitive advantages.
As Chris Weafer, a senior partner at Moscow-based research consultancy Macro-Advisory, suggests in a 2013 end-of-year post on FT’s beyondbricks:
For the next two months one policy priority will eclipse all others [in Russia]; delivering a controversy-free and efficiently-managed Winter Olympics.
President Putin wants budget spending to focus more on measures to encourage entrepreneurs and boost infrastructure spending.
Strategy options? Some amendments to the Russian federal law “On Railway Transport” reported in September 2013 provide an opportunity to private investors to own railways of general use, however ban their sale to third parties. As noted by journalist Eugene Gerden, traffic density of the country’s steel trunks is by 10 times higher than in the developed Europe.
Russian Railways (RZD) have long complained about the lack of funds for modernization and expansion of its infrastructure. The investment program of the state-owned monopoly, designed until 2020 involves investment of about USD200 billion in the development of the Russian railways infrastructure, however the company does not have sufficient financial resources.
Regardless of this, as much of last year has been spent preparing for the 2014 Sochi Olympics, Russia Today estimates that the Eastern European country spent USD50 billion on the Winter Olympics, the most expensive in Games history. Out of which, Russian Railways spent $8.7 billion on a railway and road link to the coastal and mountain Olympic villages.
In such climate, any fundraising strategy is tried. RZD hopes to raise 2 million ruble (USD60,854) by suing California-headquartered ideators of iPhone. RZD told the Moscow Commercial Court that Apple Inc. violated the Russian Railways’ copyright, by adding the company’s logo to App Store.
The president of the National Association of Transport of Russia Georgy Davydov:
Russia needs to build at least 1,500 km of new rail tracks each year in order to reduce the current load on the already existing railways.
With the Sochi Olympics looming over Russian planners and doers, there is another frontier to aspire to: soccer World Cup in 2018.
As reported in August 2013, building of Moscow – Kazan – Yekaterinburg high-speed rail line, the second largest project in the field of high-speed rail lines in Russia, is expected to be completed by 2020, according to the President of RZD Vladimir Yakunin. According to Yakunin, currently RZD is trying to do its best to complete the construction of bullet rail line from Moscow to world championship venue of Kazan (one of 11 host cities), which should be completed prior to 2018. Bloomberg said in a December 2013 report that Russian Railways was seeking bank funding for USD33 billion to make the Kazan speedy train link a reality.
Back in the Soviet days, two experimental high-speed trainsets were built in 1974 designed for 200 km/h (120 mph) operation: the locomotive-hauled RT-200 (“Russkaya Troika”) and the Latvia-manufactured ER-200 EMU. Nowadays Russia’s highest speed railway link — with a top speed of 250 km/h (155 mph) — The Sapsan, operates German Siemens Velaro trainsets.
Preparation of more local production is underway.
According to online publication Railway Bulletin, Russian leading rolling stock producer Kirov plant and Ukraine’s Kryukov car building plant agreed to start jointly producing locomotive-hauled passenger cars, high-speed inter-regional and suburban and diesel trains in the first quarter of this year. The production will be located at the capacities of the Kirov plant in Gorelovo, St. Petersburg, as well as the city of St. Petersburg.
To be launched in 2016-17, at Phase 1 the joint venture is to annually produce between 1,500 and 2000 mostly gondola freight cars. Ukrainian Techvagonmash, based in Kremenchuk, Poltava participates in the project.
There is a reported growing interest from African markets for “made in Africa” rail cars, made by Africans with steel made of African iron ore.
– we avoid in the future maybe maritime transport of 100,000 wagons, to be transported from the Far East to Africa
– the energy for the plant will come from Angolan hydro-power-plants, CO² emission free
-Once the railway line is the Congolese Province of Katanga is repaired, it will be easy to transport wagons to countries in South and East Africa. With the presence of the port of Lobito, new wagons can be shipped by sea to new markets in West and North Africa.
Earlier Eugene Gerden reported that total volume of investments in the expansion of Transsib and BAM, Russia’s longest rail lines, by 2018 will amount to USD18,7 billion. Payback period of both projects is 50 years. Let’s wait and see, then.
During a visit to Warsaw in April last year, Chinese Premier Wen Jiabao announced a plan to launch a $10 billion fund to finance joint projects in infrastructure, high-tech and green energy in Emerging Europe.
As reported by the Railway Bulletin, a cargo train from Zhengzhou in central China to Hamburg in northern Germany was launched recently to boost trade.
The container train [will] pass through Kazakhstan, Russia, Belarus and Poland before reaching Germany. The train will travel 10,214 km for 16 to 18 days… The trade volume is worth $1.52 million, according to customs authorities in Zhengzhou. In 2014, the number of cargo trains from Zhengzhou to Hamburg will rise to 50, generating a trade volume worth $1 billion.
The modern Silk Road is likely to carry computers and other electronics, moved by rail along an often-desolate 11,000km+ route. In approximately three weeks, a freight train carrying thousands of Hewlett-Packard notebooks and displays makes its way from Chongqing in China’s South-west, that produces 20 million laptops and 15 million printers a year, to distributors and customers in Duisburg, Germany.
China Railway Corporation 中国铁路总公司, founded in March 2013, as part of the now defunct Ministry of Railways used to have its own police force and court system, which is unique among the world’s railways. As of 2008, approximately 2 million people worked in the China Railways. The United Nations has 32,417 members of staff.
For a year, HP navigated government and rail import/export requirements in the six countries through which the train travels: China, Kazakhstan, Russia, Belarus, Poland and Germany. Pilot trains began test routes in March 2011, and in March 2012, HP launched the rail route being used today… The voyage between Dalian and Rotterdam along this southerly route takes 48 days. By sailing the Northeast Passage, the Yong Sheng is expected to reach its destination on September 11 – a transit time of only 35 days.
But this doesn’t mean that the idea of sea freight was left entirely behind by the global trade players. As reported by the FT, the Yong Sheng, a vessel operated by Chinese state-owned Cosco Group, set sail on August 8 from Dalian, a port in northeastern China, bound for Rotterdam. The 5,400km journey via the Bering Strait (known as the Northern Sea Route) could shave as much as 15 days off the traditional route through the Suez Canal and Mediterranean Sea.
if ever you had an irrational desire to charter one, now would be the time. This time last year, an Aframax tanker capable of carrying 80,000 tons of cargo would cost £31,000 a day ($50,000). Now it is about £3,400 ($5,500).
The cost of sending a 40ft steel container of merchandise from China to the UK has fallen from £850 plus fuel charges last year to £180 this year. The cost of chartering an entire bulk freighter suitable for carrying raw materials has plunged even further, from close to £185,000 ($300,000) last summer to an incredible £6,100 ($10,000) earlier this year.
There is a three-year lag between the placing of an order and the delivery of a ship.
In the same account by Parry he cited a major UK broker estimating that it cost £7,000 a day to put a container ship to sea.
Russian authorities have granted 372 permits this year to ships intent on sailing all or some of the passage.
But analysts caution that it will be years before the route, which is only passable for a few months, is commercially viable let alone a rival to the Suez Canal, which handled more than 17,000 ships in 2012. In the Suez Canal where in 2011 almost 18,000 vessels transported 929m tonnes of cargo.
There are more than 100,000 ships at sea carrying all the solids, liquids, and gases that we need to live. Only 6,000 of them are container vessels.
In 2011, the 360 commercial ports of the United States took in international goods worth $1.73 trillion, or 80 times the value of all U.S. trade in 1960.
Only 12% of ship crews have freely available Internet access at sea. Two thirds have no access at all.
2,000 seafarers die at sea every year. More than two ships are lost every week.
Filipinos make up more than a third of all crews worldwide. 250,000 of them are at sea.
Shipping is so cheap that it makes more financial sense for Scottish cod to be sent ten thousand miles to China to be filleted then sent back to Scottish shops and restaurants than to pay Scottish filleters.
Lawyers who fight for seafarers’ rights describe their clients as moving targets who work in no- man’s-lands. They describe an industry that is global but also uniquely mobile, and diffi cult to govern, police, or rule.
Buy your fair- trade coffee beans by all means, but don’t assume fair- trade principles govern the conditions of the men who fetch it to you.
As suggested by the Ukrainian financial daily Kapital, $US300 (2.5K hryvnia) is an ideal price of an one-week tour to Egypt per person. Data as of early December 2013.
Amid the ruins of Mogadishu, the UN had constructed a giant fortress for its expatriate personnel, complete with a shopping mall, street lights, satellite communications systems, a modern sewerage network, flower beds and other comforts. Costing $160 million, it had all come from the Somali aid budget. As the UN withdrew, looters swarmed over the area. …Just as a far greater catastrophe than Somalia [Rwanda genocide of 1994] was about to erupt, the US and the UN had been reduced to the role of bystanders.
According to Chi-Chi Okonjo and Uzodinma Iweala of Ventures Africa, there are more than 10,000 Africans with investable assets greater than $50m.
According to a 2011 United Nations Federal Credit Union report (cited here from the UNDP Watch website), from the United Nations Development Progamme 637 individual accounts are at $1 million+. Other 1,041 UNDP staffers have enough salary (income) to justify million dollar homes in New York (or tri-state area NY/NJ/CT).
According to a Forbes Ukraine account by Tatiana Revutskaya, an international logisitics business owner from Ukraine, — who cites research by Marketing & PR Studio FreshLook — every day there are around 150 strikes and demonstrations taking place worldwide. Too little to be true, probably. But the idea itself is thought-provoking.
The $5.7 billion United Nations Development Program bills itself as the U.N.’s flagship antipoverty agency, but [argues IO Watch] when it comes to helping the world’s 1.3 billion poor people, that description appears to be more of a facade, according to a report commissioned by UNDP itself. … According to the document, UNDP’s efforts often have ‘only remote connections with poverty’” Its anti-poverty programs are ‘disconnected,’ and are frequently ‘seriously compromised’ by a lack of follow-up to help poor countries learn ‘what works and why.’
[After] spending more than $8.5 billion on anti-poverty activities between 2004 and 2011—and just how much more is something of a mystery– UNDP has only ‘limited ability…to demonstrate whether its poverty reduction activities have contributed to any significant change in the lives of the people it is trying to help.’
Moreover, it lays … [much] of the blame] on the way that UNDP has spread itself across a growing range of activities in the name of promoting ‘development’ –from environmental projects to trade promotion and border management—that ‘dilute’ its anti-poverty effort.
“NGO executives berated for their ‘fat cat’ salaries have bills to pay too – and work for much less than the market rate,” argues Oxfam GB’s Duncan Green in a recent piece for The Guardian. He further claims that, “For an organisation such as Oxfam, the challenge is to find the right balance between duty (keeping salaries relatively low in the context) and effectiveness (understanding that the external market has an effect on the likely talent you are having to attract/retain from within and, more importantly, from outside the sector).”
32.4 million people were forced to flee their homes in 2012 by disasters such as floods, storms and earthquakes. While Asia and west and central Africa bore the brunt, 1.3 million were displaced in rich countries, with the USA particularly affected.
A 2010 study argues that millionaires (those in the top 1% of earners) pay approximately 40% of all taxes in the United States.
According to Wikipedia, socialites of New York spend between $98,000 and $455,000 per year (young and old, respectively) to be and maintain their role as a successful socialite
Around 80% of millionaires are college graduates. Only 18% of millionaires have Master’s degrees. 8% have law degrees, 6% have medical degrees, and 6% have PhDs. Around 80% still go to work.
The average millionaire goes bankrupt at least 3.5 times. Those with Russian ancestry have the highest concentration of millionaire households in America (ca $1.1 trillion, or nearly 5% of all the personal wealth in America). The Scottish rank second and Hungarians rank third. Most modern American millionaires today (about 80%) are first-generation millionaires. Usually the fortune they build will dissipate by the second or third generation.
In the year 1900, there were only 5,000 millionaires in the United States. In 2000, there were more than 5 million. In 2008, there were 10 million people around the world who were classified as millionaires in U.S. dollars.
The world’s 1,226 billionaires have more combined wealth than 3,5 billion people (half of the current population of the planet). This piece of data has no confirmed source. Please suggest one if you are aware of it.
Less than 100,000 people worldwide own about $9.8 trillion of the wealth held offshore. According to a BBC report, a global super-rich elite had at least $21 trillion hidden in tax havens by the end of 2010 [10% of all the privately held wealth?], the equivalent of the size of the US and Japanese economies combined.
Since the 1970s, the richest citizens of 139 developing countries had amassed $7.3 trillion to $9.3 trillion of “unrecorded offshore wealth” by 2010.
From The State of Africa:
A report prepared for the African Union in 2002 estimated that corruption cost Africa $148 billion annually — more than a quarter of the continent’s entire GDP.
Carlo Slim Helu, a Mexican billionaire worth $69 billion, is considered to be the first “world’s richest man from a developing nation.” He has lived in the same modest home for the past 30 years. His wealth is equal to 5% of Mexico’s economic output. He earns almost $30 million a day.
One in five people in Singapore is a millionaire, making it the city/state with the most millionaires per capita. It has 188,000 millionaires.
According to the Ukrainian financial daily Kapital that cites the Ministry of Revenue and Duties, there are 3,200 hryvnia millionaires in Ukraine. The daily aslo provides stats from the 2012-13 World Ultra Wealth Report by Wealth-X saying that currently 480 ultra-millionaires live in Ukraine (net worth USD30 million+). These people own a third of the Eastern European country’s GDP that equals USD55 billion.
If we talk about ultramillionaires worldwide, there over 187,000 of them. 65,000+ in North America, over 53,000 in Europe with only 2,535 reported to call Africa their home (USD325 billion total net worth).
In the July 2013 supplement on private banking, Kapital also cites Maintaining Momentum in a Complex World: Global Wealth 2013, a report by Boston Consulting Group (BCG). According to this report that came out in May 2013, USD135.5 trillion worth of wealth was privately held, as of end 2012. Out of this sum, USD39.1 trillion was owned by people in the emerging economies.
Today every fourth person out of the world’s 13.8 million millionaires come from an emerging economy. Just in 2012, the emerging economies graduated 469,000 new millionaires, including 415 people whose net worth is USD100 million each.
According to BCG, only 6.3% of the privately-held wealth in the world (USD8.5 trillion is stored outside the jurisdictions inhabited by its owners). Switzerland is the offshore champ of the world (26% of world’s offshore welath). Out of USD3.5 trillion that is managed here, USD2.2 trillion trickled in from abroad.
The Global Assessment Report on Disaster Risk Reduction 2013, prepared by the UN Office for Disaster Risk Reduction (UNISDR), says disasters have cost$2.5 trillion since 2000. A new risk model developed by UNISDR estimates that annual losses just from earthquakes and cyclonic winds will be in the range of $180 billion annually this century.
According to an account published by Huffington Post:
750 million plus people are illiterate. An estimated 200 million primary school children struggle to read even basic words. UNESCO estimates are that the world needs almost 7 million new trained teachers by 2015 just to address primary education.
250 million children cannot read, write or count well. According to Arne Duncan, U.S. Secretary of Education, “Today, around the globe, an estimated 61 million primary-aged children are out of school, almost half of them in conflict-affected poor countries. And in Africa’s poorest states, UNESCO projects that the lives of 1.8 million children could have been saved if their mothers had at least a secondary education.
In 1900 only 12 cities had more than 1 million people. Today, this number of people moves to a city every month, with 7 billion people (current population of the Earth) expected to live in urban centers by 2050.
Deadline reports that “PricewaterhouseCoopers’ soothsayers see the annual growth in filmed entertainment spending accelerating over the five-year period through 2017; it will average +3.4% a year to $36.4 billion.”