 introduction. For the last five years, we've had a project, a research project on urbanization in Africa, the Center for Economic Performance at LSE, Joint Veloster, and the World Bank. In the first session this morning, we saw a presentation about an early report on that research project, and today I'm going to sort of update or build upon that report. So, I'm an economist, I tend to oversimplify as a contestee, and too often I ignore the human side, but I've only got 15 minutes. I'm an academic researcher, so I'm going to present way too many facts for you. But the intent is to evoke or perhaps provoke some discussion and thought. So, let me proceed. Let me try this. Okay, so I'm going to talk about building productive and livable cities. So, the first issue when this came up in the earlier presentation, what can a city do to be competitive and to thrive economically? So, you know, traditionally towns serve agriculture, and in the modern world, you have resource rich countries with low populations that sell oil, and they have vibrant cities because they've got a lot of revenue to pay for. Most countries and most cities are not in that kind of position. In order to thrive, they need to produce something that they can sell to the rest of the world. Traditionally, that's being manufacturing products. Today, some of it is certain types of services, like education and financial services. What I put up here is, well, first of all, two facts about just looking at other countries. In China, when we look at cities, about 40 to 50% of employment is in manufacturing. Historically, in the United States, say, about 40 to 50 years ago, before it morphed more into services, it was about 30% of employment in cities was in manufacturing. In these pie charts here, the two colors you want to look at, one is the blue, which is agriculture, and the other is the brown, which is manufacturing. We've got, for better, for called countries, we've got urban rural, and then separated out the primate city, which isn't that different from the general urban. So, you see several things. One is that the rural sector and agriculture is almost entirely agricultural. If you look in China, or you look at India, that is not the case. Agriculture might be 50% of employment at the moment. There's a lot of other things going on in the rural sector. The second thing is when you look at Africa, at a large proportion of people living in cities actually still report their occupation as farming. They own a farm somewhere, they do some out-muting, whatever the case may be. But only 10% of employment is in manufacturing. So, the question, and then there's services, which are the green, that's business services, financial services. What can African cities produce to export to the rest of the world to thrive in the long term? And that's a big challenge. So, how do you make cities competitive? There are many aspects to that. Some of them are going to discuss on the panel here. There is the idea that came from this morning that Africa, at say 40% of urbanization roughly as a subcontinent, has an income level that is much lower than other regions of the world when they are at that level of urbanization. That means there's very limited resources to draw upon to do the investments that are needed. So, what do you need? You need skills, you need general schooling, Africa. Blacks in that, you need technical training after schooling to try and match what employers need and the skills that they need. African economies are characterized by a high degree of informality. That means very small firm sizes, lack of exploitation of scale economies, often the lack of adoption of new technologies. So, why is it, is it access to capital markets, lack of access to banks, to venture capital, is it in some cases regulations in the formal sector that make it difficult to move from the informal to formal sector and keep firm sizes small? And then a key aspect that we'll talk about today is transportation. The rail, the roads and the highway sports. So, we have a trans-Africa highway system. It does not basically have limited access to multiple lane titles. Paved in some points, not paved in other points, things move very slowly from the interior to the coast. There is now a move, right, to do massive investment in this. The question is, where does the money come from? And one of the trade-offs that up there is how much debt do you incur, in the case of, say, Chinese investment, which is debt to the Chinese government, versus how much you sort of put into infrastructure today. So, with the debt, you're taking your future generations and imposing a burden on them to repay that debt. So, the role of economic density. I'm going to talk about that for a while. Economists, economic geographers say economic density is absolutely critical. They talk about externalities, firms being close to each other, learning from each other. A bigger market, better matching between workers and employees. A simple example, advertising in New York City. In the southern part of Manhattan, there are about 1200 advertising agencies. Studies indicate that if you're in a cluster of firms that are within a half kilometer of each other, that has enormous impact on your productivity. It's just an exchange of ideas and advice on how to respond to a request for a proposal on an advertising campaign. It's really very important. We look in Africa, and this is data-based on six countries. When you move from a household, a similar household from the rural to urban sector, you've got about a double household income. But then when you look across just cities, when you go from the least-dense to the most-dense cities, from the fifth to the 95th percentile, the increase in income is about 170%. It's a huge amount. Density is really important. There are no African cities in the top 40 most-dense cities in the world. How do you measure density is an issue, but that seems to be the case. So how do you get economic density? Well, there are various features. One is the transport system. So if you look into our salon, this is data from 2010. About 70% of households walk to work, or by bicycle, but mostly just by walking. If you're walking, you can cover a great distance. It means that workplaces are going to be dispersed so that people can get to work. And you're not going to have these enormous clusters of economic activity that we think is so important for productivity. And then we have numbers from that time period for Addison and Irowe, about 45%. So what is the impact of, say, investing in public infrastructure? So we have an example historically from London. London invested heavily in the 19th century in overground rail coming into the city of London. Not all the way into the city, but to a boundary around the city of London. And then the underground system started construction in 1862 and continued on into the main part of the 20th century. With that, I mean one key little fact, people on average before the building of this rail system were walking one to two kilometers to work. After the building of this, they were commuting five to six kilometers. So they moved from a kind of a walking environment with workplaces dispersed around the population into a world in which there was a lot more clusters. So in the actual city of London itself, employing the tripled in this time period, action people left. There was a converted city of London to a dense economic activity area with many fewer residents. If we look in the modern world, in Bogota, the building of the Trans-Villennial, which is the kind of poster child for bus rapid transit for BRTs, studies indicate that it's having a similar effect. That it is leading to greater clustering of employment and longer commuting distances by people so that it's easier to get around the city. And the hope is we have Dar Islam, as you know, has opened up a BRT. I have many more lines. The second and third line I think are now financed and are starting this, and we think it will have a profound effect. On the city, the ability for firms to cluster and for people to be able to go to work. Another part of economic density, it is arguably building high. So building high requires private property rights. If you could lease out your free home, why? Well, you're going to put a lot of money into a particular spot. You don't want to have expropriation. You're going to need financing. You're going to want insurance. If there are rights of succession for the property, that comes with private property rights. So if you look at the city of Nairobi, today about 90% of the land is under private ownership. Now the path to that was really tortured and extremely proper to come back and talk about that. Dar Islam, on the other hand, at most, absolutely at most, 50% of residential plots of these CROs, which are our leasehold rights. So if you look at these cities, they're dramatically different. 85% of this is the paragraph here, are buildings in a Dar Islam or one story. In Nairobi, it's like under 40%, and then you have a distribution. The visual on that is this. So in the top corner, we have Dar Islam. This is building heights, average on a grid square. So we have some height there in the city center, but most of the cities are absolutely flat. You go to Nairobi, you have, first of all, higher density in the sense of building high in the center, three miles apart, and throughout the city. So Dar Islam is going through a process of trying to have more title and more privatization, but it's a slow process. You need a vibrant construction sector. In Nairobi, in a 12-year period, right near the city center, not in the city center, but just outside in the core, you have like 35% of buildings that are torn down. 50% increase in volume. A three-fold increase in higher buildings from those that were torn down, on average, to those that were put up. There's a key issue about this, its livability and thinking about Nairobi and Dar Islam in this context. So here, I kind of said with Dar Islam, Nairobi's built high, they've got this economic density. On the other hand, what you see across Africa is very different rates of home ownership. So in Dar Islam, 51% of people on their occupy in Nairobi, it's only 17%, 83% of people rank. And you see, then, the list of other countries, Nigeria down in Uganda, with very low rates of home occupancy, Mozambique and Faso with much higher, as well as Tanzania. So why does that matter? Well, in an urban environment, property values are rising over time. Who's going to get that benefit? Is it going to be spread throughout the population of people who are alone? Or is it going to be the elite on the building side? It's a really complicated question and then there are the issues, of course, of upkeep and investment in homes which tend to be better under owner occupancy. So the last thing I'm going to talk about since I've ruined the time is slums, what's their role? We argue in the research that we do, this is a very obviously cheap way of providing housing. It's a good, perhaps, way to do it on land that is cheap near the city edge. You see slums in Nairobi on private land near the city edge, not at the city center, near the city edge. If you look at the city center, of course, you have the core part of the city, not the city center. You do have massive slums and we think that is a market failure. So I'm going to finish with a cabaret story here. These are so-called government-owned slums. They were originally a land grant to the Newcomers in 1911 by the British for fighting the kings' rivals. At independence, their rights to the land were revoked. They retain, I guess, a moral claim on the part of cabaret that they occupy. But the rest of it, and much as cabaret is operated with slum lords, they have no legal claim for the land. It's corrupt. It's very profitable. And the majority of the units are owned by people who are politicians and bureaucrats. That makes it a very difficult political problem to say we want to take this land and redevelop it. There's a huge gap in the land values here between the formal use and this land that's in the core of the city and older slums. We sort of look at this and said, if you paid off the moral part of this here, if you paid off these illegal land boards for the value of their land and perpetual slum use, developed it into the formal sector, there would be about a 17- to 18-thousand-dollar per household gain for slum households. That's a huge amount of money on the table. They're only paying $500 to $700 a year. Now, that's a practical solution to pay off these illegal land lords who are also politicians and so on. Social justice, I would give the tenants ownership to their units and allow them to sell them off, but that's not going to happen in this world. So, let me say there were two other slides I have. I'm out of time. One is on livability. I don't have a lot to say about that, except it's really important. We're going to hear about that in a minute. And the other is on government finance. We're also going to hear a lot about that. Thank you very much.