Accra, an Inclusive City to Watch in Africa

June 9, 2014

Researching the 74 African cities in this year’s MasterCard African Cities Growth Index (ACGI) confirmed three things:

  1. Urbanization is occurring rapidly in Africa;
  2. Africa’s economic future will be determined  by its cities; and
  3. Inclusive urbanization and inclusive growth go hand-in-hand.

I’d like to talk more about the third point. The ACGI identifies the inclusive growth potential of African cities, which occurs when citizens from all levels of society have equal opportunity to participate in and benefit from expanding economies. Besides economic performance, factors such the business environment, structural transformation, economic diversification and competition determine inclusive urbanization, which in turn suggests inclusive growth.

These indicators and others, incorporating both historical and forward-looking data, were applied to the cities included in the ACGI. From this perspective, the ACGI is a lens through which the business community at large can assess the future of African cities as investment destinations, and as gateways into and across Africa.

Accra, the capital of Ghana, was ranked the African city with the highest growth potential in the ACGI. Accra is neither the most populous African city nor the richest, and it certainly does not have the best resource endowment. So how does Accra qualify to take the top spot on the Index, ahead of cities such as Casablanca in Morocco, Tunis in Tunisia and Freetown in Sierra Leone? It is even ahead of the wealthiest (Johannesburg in South Africa) and the most populous (Lagos in Nigeria).

Accra is the top-ranked city because of the progress it has made towards creating the conditions for economic inclusion in a swiftly urbanizing environment that is not dissimilar to most other large African cities. With some exceptions, Accra ranks highly across most of the assessment criteria, and is among the highest in governance rankings. At the country level, it is worth noting that Ghana has had four successful elections following a peaceful transition of power in 2000.

Accra, however, does face certain challenges. It shares Ghana’s macroeconomic difficulties of high fiscal and current account deficits, high wage bills, energy subsidization, increased interest costs, an under-recovery of revenue and a slight reduction in economic growth. Ghana’s political stability was tested during its presidential elections in 2012, and perceptions of corruption and crime do not appear to be in decline.

On balance, however, Accra is the African city with the greatest promise of inclusive growth and a better material life for its population. It has made ample progress towards conditions that are conducive to inclusive urbanization.

By considering indicators of social inclusion and human development when ranking cities, the ACGI affirms the importance of advancing and protecting individual freedoms to ensure the ongoing economic development of Africa. It’ll be interesting to see who tops the Index next year.

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