City of Gold is losing its glitter

Feb 10 2013 11:58
City Press

The City of Gold is only eighth out of 19 African cities in MasterCard’s new growth index.

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Johannesburg - Accra is the African city with the greatest potential for growth in the next five years, while Joburg is seven places behind.

The City of Gold is only eighth out of 19 African cities in MasterCard’s new growth index.

Dar es Salaam, Addis Ababa and Nairobi beat commercial giants Johannesburg, Lagos and Cape Town.

Lusaka and Luanda, which were second and third, respectively, both have moderate to strong growth potential.

Kano, Abidjan and Khartoum are the cities with the lowest growth potential.

The index is based on historical data and predictions on variables such as growth in gross domestic product (GDP) per capita, infrastructure development and how easy it is to do business in the cities.

Professor George Angelopulo of Unisa, who helped to compile the index, said the smaller cities were quietly establishing themselves as cities with great growth potential.

The larger and more established cities have the “expected” growth potential – for example, Johannesburg.

The City Press graphic below shows the top 10 cities in Africa with the greatest potential for growth.

top 10 cities in Africa

Professor Nick Binedell, founder of the Gordon Institute of Business Science, said that although Johannesburg was established, its consumer markets were relatively saturated.

The expected growth of the middle class is higher in cities like Accra and Luanda than in Johannesburg.

Angelopulo said Accra was at the top of the list because of its GDP per capita growth, growth in household consumption and population growth. It also had a good regulatory environment, and it was relatively easy to do business there.

Dr Martyn Davies, chief executive of Frontier Advisory, said African cities must become competitive. “It’s not about the size of a city, but its quality.”

According to Binedell, South Africa does not have enough competition. “Lesotho? I don’t think so,” he said. He believes if Nigeria were South Africa’s neighbour, South Africa would be doing better.

According to Angelopulo, Africa must attract investments on the basis of innovation and business friendliness.

Dr Yuwa Hedrick-Wong, economic adviser to MasterCard Worldwide, said emerging markets should try to create equality in income. “Cities must attract investment and eradicate poverty, otherwise they will collapse under the weight of their growing populations.”

He said investments in a city should be reflected in its spending, especially in areas such as job creation and skills development.

Dr Azar Jammine, chief economist at Econometrix, said Africa must improve its connectivity, infrastructure and education.

Davies said businesses would enter where the state could not provide. This was especially true for healthcare and education.

He believes governance is essential for a city like Johannesburg to achieve good growth.

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africa  |  south africa  |  economy



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