Globalization and urbanisation have transformed economies and social systems in countries around the world in the past decades. The information in this document was compiled as background reading material for the 48th Brussels Development Briefing on Strengthening rural livelihoods in the face of rapid urbanisation in Africa co-organised by CTA, BMZ/GIZ, ACP Secretariat, European Commission (DG DEVCO) and Concord.
Whereas Africa continues to experience urban growth, this development and the wealth generated by most African countries has not been led by industrialisation and an industry-led agricultural transformation as has been the case in other regions such as Asia. The result is that most African economies have not been able to absorb labour moving from the rural to the urban and modern sectors of the economy and from low to high-productivity employment.
The process of the structural economic transformation being pursued by governments and regional bodies (including the African Union and the African Development Bank), will have to be complemented by a very profound push in building employability and entrepreneurial skills for African youth who exit farming. This entails targeted improvement of key technological skills, vocational training for jobs in the commercial sector and basic “life skills” for success in working environments. (IFAD, 2016).
Managing a successful economic transformation poses two key challenges: (i) to raise labour productivity sustainably in the agricultural sector and the rural economy, while (ii) diversifying into higher valued goods outside agriculture in emerging higher productivity, urban-based manufacturing and service sectors. The factors determining the success or failure of countries to transform successfully are linked to the adequacy of human and physical assets, institutional and technological resources, as well as policy and coordination capacities.
Increasing linkages between rural areas and urban markets cannot happen without adequate access to finance and financial services, particularly if these linkages are to generate jobs for youth and capture a better skilled and entrepreneurial workforce. As information and communications technologies have been growing rapidly in Africa, especially among youth, their availability and accessibility to other information-based resources must continue, with the aim of deepening access to credit and financial services.
Improving physical infrastructure should remain a priority as most rural occupations are informal. If the rural informal economy is to be supported, improved connectivity to access markets reliably and at lower costs depends on better quality and connected roads.
The private sector is a critical player to enable stronger rural urban linkages, through increased investment into agriculture and the rural non-farm economy. However, to make this option an attractive one for investors, whether institutional or as is increasingly the case, SMEs, there need to be urgent reforms to eliminate regulations that limit private entry and investment in value chains that serve smallholders.