EY says two-thirds of Nigerians will live in cities by 2030

A new report from Ernst & Young (EY) reveals that by 2030, half of the world’s top 50 cities will be in rapid growth markets just as the report also suggests that over two-thirds of people in Nigeria, Ghana and Indonesia will live in cities by 2030.

While the world needs to get used to a slower pace of growth across rapid-growth markets (RGMs) relative to the past decade, a gradual recovery will see growth above 4.5 percent next year. This is according to EY’s latest Rapid-Growth Markets Forecast (RGMF) released recently, a quarterly forecast for 25 markets that are becoming more important globally in terms of their overall weight in the world economy, their global influence and the business opportunities they offer to large corporations.

RGMs have recovered somewhat from the financial turmoil in the second half of 2013 and early 2014, and a fast-growing population, strong investment rates and the rapid adoption of technologies, will continue to grow rapidly over the medium term.

Henry Egbiki, regional managing partner for West Africa, EY, comments: “While near-term growth in several emerging economies hinges on the political will to implement second generation of reforms; in the medium term, fast-growing populations and increasing productivity are expected to lift growth, with cities especially in Africa and Asia, expected to be the epicenter of this growth.”

According to the report, the growing number of lower-middle income households with some disposable income is set to exceed 30 million by 2030 in Africa and South Asia – with incomes above $5,000 but below $10,000 in Africa and India. This growth will help to create markets of scale for mobile phone airtime cards and other consumer goods and services.

Egbiki says Africa is urbanising at an unprecedented rate. Data from Oxford Economics reveal that the urban population in Africa is projected to grow at least twice as fast as that of any other continent up until 2030. The rapid pace of urbanisation, combined with strong economic growth, is expected to create “consumer cities.”

By 2030, these consumer cities will be home to an additional 300 million people. This trend will play out in the larger hubs of Johannesburg, Lagos, Nairobi and Cairo. Secondary hubs such as Kinshasa (Democratic Republic of Congo), Abidjan (Côte d’Ivoire), Dar es Salaam (Tanzania) and Kampala (Uganda) will be the fastest-growing cities.

There will also be tremendous shifts within sectors in RGM cities. Manufacturing will expand in cities with more space to grow, whereas financial services will accelerate in cities such as Lagos, Beijing and Mumbai.

Varying demographic trends in cities across the RGMs bring challenges and opportunities. For countries such as Russia, Poland, South Korea and China, it is estimated that there will be fewer than five workers supporting each elderly person by 2030. In contrast, it is estimated that South Africa, India, Indonesia and Egypt will still have almost 10 workers for each elderly person.

Egbiki strongly believes that investments are crucial to sustaining the demographical and industrial trends across rapid-growth markets.

In conclusion, he says: “In our view, RGMs that demonstrate the political will to move ahead with second-generation reforms to attract investments in infrastructure, offer stability and predictability in their rules for doing business and take tough measures to achieve macro-economic balances can see a growth dividend in the future.”

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