CityReads│Urbanization Without Industrialization in Africa

178

Urbanization Without Industrialization in Africa

Countries in Africa is not only the ‘final frontier’ of global urbanization and property development, but also important sites in which to explore the limits and relevance of urban theory.

Tom Goodfellow, 2017. Urban Fortunes and Skeleton Cityscapes: Real Estate and Late Urbanization in Kigali and Addis Ababa, International Journal of Urban & Regional Research, Vol.41 Number 5, 786-803.

Source:https://onlinelibrary.wiley.com/doi/pdf/10.1111/1468-2427.12550

From 2013 the IJURR editorial board have been awarding an annual prize for the article that makes the most original and outstanding contribution to our understanding of cities and urbanization. The prize winner of the year 2017 is awarded to Tom Goodfellow University of Sheffield for his article titled Urban Fortunes and Skeleton Cityscapes: Real Estate and Late Urbanization in Kigali and Addis Ababa. It is a pathbreaking study of property development in Africa, investigating through the perspective of capital circuit in an African context and finding the impacts and consequence of speculative investment in real estate. It also challenges the Marxist urban theories. This article can be downloaded for free for a year. Here is an excerpt of it.

Eastern Africa is the last world region to undergo the urban transition. Nowhere else is there a cluster of countries with such low urbanization levels––notably Burundi, Rwanda, Uganda, Ethiopia and South Sudan, all of which are still less than 20% urbanized. These societies are, however, currently experiencing accelerated urbanization and urban growth, accompanied by highly visible booms in property development and construction. Yet little attention has been devoted to the dynamics of investment in urban land and property that are shaping urban transitions in some of the world's poorest and latest‐urbanizing countries.

Countries in Africa comprising the ‘final frontier’ of global urbanization and property development constitute important sites in which to explore the limits and contemporary relevance of existing urban theory. Urbanization and industrialization do not correlate in the contemporary global South as they did in the period of Northern industrialization. In many developing countries urbanization is characterized by the rise of ‘consumption cities’, with different characteristics from ‘production cities’. While consumption cities are richer than production cities overall (particularly where consumption is driven by natural resource exports), they have higher slum populations and their relative wealth does not translate into improved wellbeing ‘to the same degree [as] an income boost through industrialization’. This may be partly because the service‐based economic strategies that many late‐developing countries are turning to––given that they are ‘running out of industrialization opportunities’ faster than their predecessors––do not ‘have the capacity to absorb––as manufacturing did––the type of labor that low‐ and middle‐income economies have in abundance’. Urbanization without industrialization thus raises important questions about the very nature of cities now and in the future.

Late urbanization in the poor but rapidly urbanizing parts of the world breathes new relevance into the debates between Henri Lefebvre, David Harvey and Manuel Castells. Lefebvre believed that after a certain point in history, urbanism itself ‘becomes a productive force, like science’ and that the city ‘is a place for creation and not simply a result, the simple spatial effect of a creative act that occurred elsewhere’. The central critique levelled against him by Castells and by Harvey was that the urban was just the spatial embodiment of capitalist industrial development and therefore epiphenomenal to industrialization. This line, maintained for decades by Harvey, was persuasive with respect to the developed world and some large emerging economies such as those of the BRICS countries. Yet it neglects to consider dynamics unfolding in some the latest‐developing and fastest‐urbanizing parts of the world––precisely those areas that Lefebvre's speculations in The Urban Revolution implicitly urge us to consider. Empirically, Lefebvre is being vindicated by developments in places such as Eastern and Central Africa where urbanization and urban property development have gathered pace in the virtual absence of industrial development, and are themselves shaping economies and societies.

This article explores these issues by examining two African countries becoming renowned for their ambitious developmental visions as well as their transforming urban skylines: Rwanda and Ethiopia. These countries are not yet developed enough to even be considered ‘emerging’ or ‘frontier’ market economies. They also fall within the 5% of countries globally that had an urbanization level below 20% in 2011. In both cases, however, this is changing rapidly: Rwanda had the world's fastest urbanization rate from 2010 to 2015, with Ethiopia not far behind in joint‐seventh place. There is little by way of accompanying industrialization in either, though efforts in this regard are accelerating. Instead, much of the capital flowing into these countries, often in the form of international aid and remittances (neither have major natural resources to export), is coalescing around urban land and real estate: what Lefebvre, Harvey and others have termed the ‘secondary circuit of capital’. This is reflected by the fact that, in both cases, growth in real estate and construction significantly outstrips overall economic growth. Sixty percent of all investment by diaspora Ethiopians during the period 1994–2014 was in real estate and related services (four times more than the amount they invested in manufacturing), and 91% of all diaspora Ethiopians’ investment was located in Addis Ababa. It therefore comes as little surprise that even in Ethiopia, where the government has concertedly pursued a strategy of industrialization, manufacturing still constitutes barely 5% of GDP.

Rwanda and Ethiopia provide something of a natural experiment. This article explores how the real estate sector has been built almost ‘from scratch’ in both countries over the past two decades (given the legacy of the Rwandan genocide in 1994 and communism followed by civil war in Ethiopia pre‐1991). In both capital cities (Kigali and Addis Ababa), real estate has rapidly become a central pillar of the urban economy, albeit in rather different ways. despite the Ethiopian government's stated objections to private real estate‐led development and its commitment to manufacturing industry, informal incentives alongside obstacles to other investment render real estate equally (if not even more) magnetic than in Rwanda, where the government has encouraged it. This has important implications, suggesting a very powerful propensity under current global conditions for capital to coalesce specifically around high‐end real estate, even where this becomes divorced from the level of demand in low‐income settings that urgently require more productive forms of investment.

The contemporary development of countries like Rwanda and Ethiopia poses a paradox with respect to Marxist urban theories. For Lefebvre, the flow of capital into urban land and real estate was a symptom of advanced forms of urbanization: societies that have been through the ‘urban revolution’, where cities no longer appear as islands ‘in a rural ocean’. In such societies: ‘Real estate functions as a second sector, a circuit that runs parallel to that of industrial production … This second sector serves as a buffer. It is where capital flows in the event of a depression’. Harvey further developed these ideas, arguing that overaccumulation in the primary (industrial) sector leads to the ‘switching’ of capital to the secondary sector. The paradox is that, even though this advanced industrial urbanization has not been reached in societies such as Ethiopia and Rwanda (where most people are still rural farmers), capital is rapidly coalescing around urban land and real estate as if they were advanced urban societies.

Globalization is clearly relevant here; the flow of capital straight into the secondary circuit in the South is predicated on a history of industrial growth in the North and can be linked to what Harvey terms the ‘spatial fix’, whereby over‐accumulated capital seeks new geographical terrain. Lefebvre, meanwhile, was prescient enough to note that ‘It can even happen that real‐estate speculation becomes the principal source for the formation of capital … The second circuit supplants the first, becomes essential’. What he may not have considered is that cities which were still effectively ‘islands in a rural ocean’ might become focal points for real estate investment, as capital ‘hops’ rather than flows into strategic sites in less‐developed parts of Africa. Moreover, as global growth slows in the contemporary setting, returns on capital are likely to further increase and developing‐country cities offer interesting opportunities for those ‘who are looking to add some risk to their portfolios’, due to the potential rewards that such risky investments offer. In this context ‘geographical switching’ as well as ‘sectoral switching’ is likely to increase.

The specificity of cities experiencing major real estate development without a backdrop of industrial urbanism nevertheless poses challenges for dominant paradigms in urban studies. Much late-twentieth-century urban theory is predicated on assumptions about the shift from industrial to post-industrial cities, and how the latter have both been shaped by and destroyed the former. The spectre of an industrial past is hardwired into much urban theory.

Speculative urbanism, rather than the force of industrial development, is a major driving force late urbanization. The situation in which late‐developing countries find themselves today is one where competing in manufacturing export markets is extremely difficult. There is an intrinsic link between conditions of late development and the enhanced pull of the secondary circuit. A range of formal and informal incentives and constraints have led to high-end real estate being viewed as the ‘safest bet’ for those with resources to invest, even where demand is limited and governments are promoting other kinds of investment. While some people are reaping urban fortunes in largely untaxed rents, much of the construction is purely speculative, creating landscapes of unused and underused high-end properties in contexts where investment is desperately needed elsewhere.

Related CityReads

（Click the title or enter our WeChat menu and reply number ）

CityReads ∣Notes On Cities

"CityReads", a subscription account on WeChat, 

posts our notes on city reads weekly. 

Please follow us by searching "CityReads"  

Or long press the QR code  above