In this time of major global upheavals, there are two major power shifts taking place. The first is obvious; an economic, and consequent political, shift from the traditional developed powers of the “West” to the emerging economies of the “global South”. The second shift is happening with much less fanfare, but with as many global economic, political and social consequences: the shift in power from nations to cities.
In 2007, for the first time since cities first appeared some 5000 years ago, the world’s population tipped over from being predominantly rural to more than 50% urban. This urbanization has taken place very rapidly, since only 29% of the world’s population was urban in 1950. And it is expected to continue at pace, with the United Nations estimating that 7 out of 10 of us will live in cities by 2050.
It is estimated that every year there are 70 million new residents in cities, mostly in emerging markets, with 5 million people a month moving to cities in the developing world. South Africa is already largely city-based, with more than 60% of us already living in urban areas and massive urban migration still taking place. In the United States, 80% of the population lives on just 3% of the land mass.
What this urbanization is leading to is the rise of megacities that could, in their own rights, be stand-alone countries. Tokyo, the world’s most productive metropolitan area, is home to some 35 million people, more than the population of Canada. By 2025 there will be 36 such megacities, with populations of over 10 million people each.
Around the world, governments are struggling to manage service deliver to these rapidly growing urban populations. As a response, many have tried – and failed – to stop or reverse the trend of urban migration. For example, the state government of New South Wales recently started paying residents of Sydney, which is currently predicted to grow by 40% over the next 30 years, to move to rural towns.
But no matter how much national governments, our own included, may focus on rural development as a way of keeping people in the countryside, urban migration will continue. Over the past five years, according to StatsSA, around half a million people have migrated from this country’s poorest provinces and headed primarily to Gauteng and the Cape Town city region.
Despite making it difficult for municipal authorities to keep up with the growing needs of the newly arrived urban poor, urbanisation is not necessarily a bad thing. Cities are without question the greatest drivers of innovation and economic growth. Because of the concentration of people, talent is easier to find, markets are easier to access, populations become increasingly sophisticated, educational institutions are better able to connect to communities and business, and innovative companies thrive more easily. Economies of scale make the rollout of new technologies, such as high speed bandwidth, financially viable. Action by both the private sector and government leads to the rise of the “intelligent city”, in which the application of technology improves lives.
Companies such as Ford, Siemens and Phillips have recognized the potential of this phenomenon and have established business units dedicated to technologies that can help cities become more sustainable, focusing on areas as diverse as public transport, water treatment and the development of high-rise vertical farms.
Of course, cities are not always nice places to be. Slums around the world are now home to about 800 million people and are growing at an estimated 16,000 people per day. Nevertheless, people still choose to live in them because they believe that the economic opportunities presented by cities are significantly greater than in the rural areas they have left. The reality, we must remember, is that all the world’s greatest cities were once shantytowns.
With all this growth and concentration of economic output, it is anticipated that some cities, like Shanghai and Sao Paulo, could have metropolitan economies of around $500 billion by 2025; bigger than the national economies of several developed countries. This will accelerate a shift in political power to cities that is already well underway.
Urban dwellers are more discerning and politically savvy than their rural counterparts because of higher levels of economic participation, lower population growth rates, better access to education and a range of other factors.
This political shift was reflected in the recent local government elections in South Africa. According to the Institute for Security Studies, 58% of registered voters voted in May 2011; an increase of 10% over the last two local government elections, with turnout increasing across all provinces. The main opposition party has realised that if it can control the country’s major cities, it can control much of what happens in the country because cities have such broad mandates for delivering services to the population. They have thus begun contesting local elections much more actively than ever before.
In other, more urbanised, nations, this phenomenon is even more remarkable. In Australia, 60% of the country’s population lives in just five of its state capital cities (Sydney, Melbourne, Brisbane, Adelaide and Perth). Control those five cities and you effectively control the country at ground level, whether you’re in charge of national government or not.
As cities become more important, their mayors become increasingly high-profile and powerful. Mayors like Michael Bloomberg and Boris Johnson, and their predecessors, are as well known locally and internationally as their heads of state. And around the world, former urban leaders from major cities like Sao Paulo, Tehran and Paris have gone on to dominate national politics.
Trade between cities and the rest of the world can be as much or more than with the rest of their own countries. This is especially true of isolated cities like Perth or Cape Town, as well as cities a stone’s throw away from each other across a national border, like Kinshasa and Brazzaville. Relationships between cities can therefore override the relationships between countries, even despite political animosity between nations.
So it is possible that the growth of cities over the coming decades will make national governments increasingly superfluous. This wouldn’t be unheard of, since most empires throughout history have been based around great cities like Babylon, Athens, Rome, Cuzco, Angkor and Venice. The nation states we know today are relatively recent additions. Countries like Germany and Italy have only existed for less than 150 years. They were created at more or less the same time as random lines were drawn by European colonisers across the map of Africa to create the national boundaries we know (and are so attached to) today.
Our national leaders need, therefore, to be aware of what makes cities successful and support them as much as they can if they wish to continue to control the country. No matter which political party runs any given city, it is in the national government’s interest to ensure its success.
The McKinsey Global Institute considers four principles as key to effective city management. National government can support cities on all four of these principles. They are:
- Cities must be sufficiently funded to finance running costs and new infrastructure. This is particularly relevant to South Africa, where national government collects almost all taxes and distributes them to the cities.
- Cities must have modern, accountable governance. Corrupt or inept local officials are a major hindrance to the economic potential of cities. Improving the image of municipal employment and the deployment of the most skilled managers away from national government towards local government would help.
- Cities must be well-planned, with long time horizons of 30-40 years rather than just the current 5 year Integrated Development Plans that South African cities are required to produce.
- Clear and dedicated policies that enable the development of critical success factors, such as the provision of affordable housing, must be developed and vigorously implemented.
National governments should also encourage the growth and success of many cities across the country simultaneously, rather than falling for the temptation of focusing on a single economic heavyweight, like Johannesburg or Lagos or Nairobi, which over time become quite unmanageable as they grow beyond control. The domination of just one city or region has been shown elsewhere in the world to be at the expense of the country. The arteries of the economic heart become so clogged up that it stops working effectively. One only has to try to do business in Cairo or Bangkok to know what that can look like.
People tend to look at cities in a binary fashion; either as fantastical, futuristic utopias, or as horrific spectres of gridlock and decay. The reality lies somewhere in-between, but what is clear is that many of the solutions to our country’s challenges lie in its cities. If they are well managed by local authorities and well supported by national government, they will be the drivers of economic growth and development for the coming decades. They will become the destinations of choice for visitors from around the world and they will attract talent and investment, providing a sustainable, vibrant environment for their inhabitants to live, work and play.
The shift in power to cities is underway, and all of us, our leaders in particular, would do well to heed the trend and make the most of the opportunities that it represents.
Author Notes:
Guy Lundy is the CEO of Accelerate Cape Town, a business think tank and catalyst that brings together stakeholders in the Cape Town city region to develop and implement a long-term vision for sustainable, inclusive economic growth.
