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Nairobi lands position nine in African cities growth potential list

Saturday December 5 2015

Nairobi Governor Evans Kidero. MasterCard’s African Cities Growth Index (ACGI) 2015 released last week ranks Nairobi at position nine out of the 49 large cities surveyed. FILE PHOTO |  ROBERT MBUGUA | NATION MEDIA GROUP

Nairobi Governor Evans Kidero. MasterCard’s African Cities Growth Index (ACGI) 2015 released last week ranks Nairobi at position nine out of the 49 large cities surveyed. FILE PHOTO | ROBERT MBUGUA | NATION MEDIA GROUP 

LILIAN OCHIENG'
By LILIAN OCHIENG'
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Nairobi has been ranked among top 10 African cities with the highest growth potential and is expected to grow rapidly in the next five years.

MasterCard’s African Cities Growth Index (ACGI) 2015 released last week ranks Nairobi at position nine out of the 49 large cities surveyed.

The ranking is attributed to its level of digitisation (supported by a high mobile penetration) that has connected a huge number of the population to bank accounts.

The survey also said that increased Foreign Direct Investments (FDI), better living standards in the urban areas and more businesses setting base in Nairobi, were pointers to increased growth in the near future.
“Nairobi features in the top 10 cities with high growth potential, recording a 37.2 index value increase in 2014 to 41.3 in 2015,” said the survey, “majority of larger cities have greater inclusive growth potential than they had a year earlier despite a harsh global economy.”

The city’s current ranking for instance is higher than last year’s, which rated the city as having the lowest ability to support profitable investments at position 19.

According to Prof George Angelopulo of the University of South Africa, author of the report, each of the assessed cities has a unique set of socio-economic, cultural and political factors that influences its growth trajectory.

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“A city’s response to the drivers of population growth, urbanisation and an increasing middle class ultimately determines the upward or downward direction of its inclusive growth,” said Prof Angelopulo in a statement.

The ranking comes amidst heightened debt burden caused by increased borrowing and inflation, threatening the entire country’s growth prospects.

Borrowers are also struggling with the burden of higher interest rates after banks adjusted the rates.

Save for the above mentioned hitches, the study has largely relied on the capital formation, political stability, GDP per capita, governance and household consumption of the city to make its conclusions.   
Last year, Nairobi’s spate of insecurity and political instability contributed to its low ranking.

DIGITISATION
ACGI reviews household expenditure in health and education, which are some of the major sectors government has concentrated on to improve the country’s growth.

In health, certain costly vaccines such as Rotavirus has been made free for infants.

In education, the mode of delivery is taking a more digital approach as Standard One pupils countrywide are expected to start using laptops next year. 

Nairobi’s ranking falls three steps behind Dar es Salaam, which is in position six.

Nairobi is, however, ranked way above other East African cities such as Kampala, Kigali and Bujumbura.

Nairobi has also excelled in terms of growth by the mentioned indicators, beating its other peers; Addis, Durban and Cape Town.

What makes Nairobi rank way higher than its South African counterparts is that “it has the highest percentage of the population with a financial account,” this is made easy by the mobile money transfer systems. 

Despite its top 10 position, Nairobi’s growth prospects are slightly frustrated by the fact that a huge chunk of the over five million inhabitants are confined to poverty compared to cities ranked above it.

It is estimated that approximately 2.5 million slum dwellers live in informal settlements in Nairobi representing 60 per cent of the city population and occupying just 6 per cent of the land.

Standard Investment Bank analyst Eric Musau says that inclusive urbanisation is a definite prerequisite for inclusive growth.

“The number of people living below the poverty line, earning less than $1 per day gives a wider perspective of where a country’s growth could lead to.”

INCLUSIVE GROWTH

Mr Musau insisted that there is need for inclusive growth, which is a pointer to even distribution of resources as well as effective regulatory policies.

Mombasa, which has constantly suffered insecurity, reducing its tourism revenue, is ranked 32 after scoring 39 points.

Last year it was ranked 40th among the continent’s large cities, beating only Bujumbura in East Africa.

This year, despite improving in ranking, it was the last city in terms of promising growth.

This states that despite all the resources it has, such as the Indian Ocean and its attractive tourist sites, terrorist attacks dragged it behind its perceived growth levels.

Accra, capital city of Ghana, maintained its top position as the only African city with high inclusive growth potential, three years in a row, scoring 41.7 points.

Unlike its peers, Accra with a population of about 2.3 million, has legislation, policy and resources that promote and sustain economic inclusivity among its citizens, the ACGI study states.