Urbanisation and the Infrastructure Challenge
Over one third of Africa’s population lives in an urban settlement. In 2010, Cairo was Africa’s largest urban conurbation with a population of 11 million, with Lagos being the second largest city with a population of 10.5 million. By 2050, Cairo will be dwarfed by both Lagos (15.8 million) and Kinshasa (15 million). The Cities Alliance has projected that the urban population across Africa will grow by a further 300 million by 2030, with the majority of the urban growth occurring outside of the ‘mega cities’ in secondary and tertiary conurbations. The UN estimates that 60% of the urban area projected for 2030 has not yet been built.
Flagship projects such as Konza City and Tatu City in Kenya, Appolonia City in Ghana, La Cite Du Fleuve in the Democratic Republic of Congo, and Eko Atlantic and Centenary City in Nigeria are at the forefront of this urbanisation movement. They offer an exciting vision of the future and will make an important contribution to the prosperity of the region. However, for the majority of existing settlements, urban expansion is unplanned or inadequately managed, leading to urban sprawl, pollution, and environmental degradation.
For African cities to become truly sustainable, urban growth must be planned and managed. Urban governments need to provide the critical infrastructure necessary to support developing populations, including airports, ports, road and rail infrastructure, drainage, power plants, water works, and communications networks.
The Global Risk and the Opportunity Landscape
This exponential growth in urban areas and the associated growth of the urban middle class presents major opportunities in the infrastructure sector for investors, developers, and contractors. It also comes with significant societal, technological, political, and security hazards and threats. The impact of natural hazards, particularly from extreme weather events such as river flooding, cyclones, and drought, will be magnified significantly in large urban areas. One such example is the perennial flooding of the lowlands of the coastal city of Lagos, Nigeria: roads are frequently inundated and destroyed, and houses and commercial properties are flooded, bringing the city to a standstill as traffic gridlocks. The global projected annual losses from manmade and natural disasters is now estimated in billions of dollars. This figure is only likely to rise as ever more areas are affected by poorly conceived development.
Urbanisation and infrastructure projects are also be characterised by complex stakeholder networks comprising of governments, investors, developers, contractors, and inhabitants. Development lifecycles are long and investment requirements are forecast at US$90 trillion up to 2030. Managing risks is, therefore, central to the success of infrastructure projects.
Managing the Risk and the Resilience Agenda
Looking at future trends in the sector, this complex risk and opportunity landscape has led to increasing interest in the subject of urban resilience, with major programmes underway under the auspices of the UN, the World Bank, and OECD to name but a few.
While there are differing interpretations of what resilience might mean, Control Risks defines it as the ability of an entity to adapt and evolve to changing environments whilst minimising the probability and impact of all hazards or risk events. This concept has clear relevance in the planning, design, implementation, and operation of new urban centres.
It is clear, however, that questions of risk, resilience, and disaster risk reduction for new urban centres in Africa are not particularly well understood. Some urbanisation projects, particularly in the developing markets, commence with little or no consideration of risk. Risk is rarely approached from an all-hazard or whole-life perspective and this will have, as a consequence, significant negative impacts through the project lifecycle. The UN observes in the 2015 GAR Report that “there is little evidence that the risk information produced is really informing development or disaster risk reduction. The production of risk information generally continues to be supply-driven and is rarely translated into risk knowledge for potential end –users”.
More worryingly for long-term investors and asset owners is the UN assertion that “investment decisions rarely take into account the level of hazard in these locations, or they discount the risk excessively due to short-term profits to be made. As a consequence, large volumes of capital continue to flow into hazard prone areas, leading to significant increases in the value of exposed economic assets”. This illustrates the importance of a comprehensive and effective risk assessment covering all hazards. This will create a baseline of actionable information as a start point for establishing resilience.
There is also a tendency to focus on post-event remediation and crisis management in place of fully-integrated resilience strategies that form part of initial feasibility studies and master plans, and which permeate all aspects of a development. This is founded on an over-reliance and overly-optimistic view of the ability of civil defence and emergency services to develop and implement contingency plans to manage incidents and thus reduce risk exposure.
While the opportunities for urban development clear, so are the risks. These can, however, be managed.
Planning for and managing potential political and regulatory risks to infrastructure projects, regardless of their location, should fit into a wider risk management framework that is integral to the project cycle. Barriers to this include:
- Complex regulatory and political environments
- Local business practices which may expose organisations to Foreign Corrupt Practices Act or Bribery and Corruption Act liabilities
- Poorly-prepared projects
- Limited public resources
- Onerous insurance requirements – where insurers require projects to be insured for full reinstatement value without taking into account local context and risks.
If risks can be managed and barriers overcome, developments will experience real, tangible benefits that protect the interests of all stakeholders, from investors through to inhabitants, and will contribute to the overall success and prosperity of the world’s future cities.
Written by Mark Whyte – Senior Managing Director, Control Risks
-  The Urban Transition in Sub-Saharan Africa (The Cities Alliance, 2004).Online. Available at: http://goo.gl/UtDyBh