Abidjan in Côte d’Ivoire and Nairobi in Kenya will surpass the 10 million threshold by 2040. And by 2050 Ouagadougou in Burkina Faso, Addis Ababa in Ethiopia, Bamako in Mali, Dakar in Senegal and Ibadan and Kano in Nigeria will join the ranks - bringing the total number of megacities in Africa to 14 in about 30 years. The number of people living in urban areas in Africa will double to more than 1 billion by 2042, according to the World Bank.
The University of Toronto’s Global Cities Institute, which monitors cities’ population growth and socioeconomic development worldwide, forecasts that Lagos will be the largest city in the world by 2100, housing an astonishing 88 million people, up from 21 million currently.
In a 2016 paper titled African Urban Futures, published by the Institute for Security Studies, an African independent research organization that aims to enhance human security on the continent, researchers Julia Bello-Schünemann and Ciara Aucoin wrote: “The current speed of Africa’s urbanisation is unprecedented in history. For some it is the ‘single most important transformation’ that is happening on the continent.” They add that African “cities and towns will increasingly shape the lives of people living on the continent.
Africa’s demographic transition, caused by the “youth bulge,” an increase in the population of people between 15 and 29 years
of age, will continue to fuel a move to the big cities because “young people are generally more prone to migrate to urban areas” than older people, according to Bello-Schünemann and Aucoin. While millions of rural Africans move to cities in search of high-paying jobs and a better quality of life, these burgeoning metropolises also offer strong incentives to investors foreign and domestic.
Power of population
Lagos is a prime example of the economic power in Africa’s megacities. From its technology hub ecosystem - Africa’s largest -to its successful banking sector and prosperous film industry, venture capitalists see many investment opportunities in Nigeria’s commercial capital. According to a report by the telecom trade body GSM Association, there are 31 tech hubs in Lagos, 29 in Cape Town and 25
in Nairobi. The value of innovative tech spaces to African economies is massive, as investors pump capital into start-ups and hence contribute to countries’ GDPs.
In 2017 outgoing Lagos State Governor Akinwunmi Ambode announced that the state’s GDP had reached $136 billion, about a third of Nigeria’s GDP ($376 billion) and more than the combined GDPs of Ghana ($47 billion) and Tanzania ($52 billion).
Steve Cashin, founder and CEO of the private equity firm Pan African Capital Group, believes that investors are focusing on
Africa’s megacities because of market size. “My firm does a lot of business in Liberia, and one of the main constraints to growing businesses and attracting investment there is the population size and density. When the entire country’s population is just about 4 million, and you’re likely only to reach a small fraction of that, it is harder to make a compelling business case,” says Cashin.
A single Lagos district can be a market size of an entire country such as Botswana. Because people in Lagos are concentrated, companies can benefit from lower fixed costs and easier distribution. “The economics are just more attractive,” he adds.