Disruptive Forces (Urbanization)

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Disruptive ForcesPart One: Urbanization and its DisContents

Andrew L. Owiti

oculus prime Ltd

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+1 703 981 4201

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OCULUS PRIME

OCULUS PRIMEDisruptive ForcesPart One: Urbanization and its DisContents

mailto:[email protected]

OCULUS PRIMEIntroduction

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OCULUS PRIMEKenya’s largest metropolitan area has grown at a rapid 4.4% p.a. pace since 1980

and, at 3.8 million inhabitants in 2014, was the 8th largest in Sub-Saharan Africa

Source: World Bank

Nairobi City Population, 1980 - 2014 Largest City Population by Country, 2014

Lagos 12.6

9.2

0.1

Lilongwe

Lusaka 2.1

2.5

Gaborone

Millions

Port Louis

Addis Ababa 3.2

Dakar Metro 3.4

Nairobi City 3.8

Dar es Salaam 4.8

Johannesberg Metro

0.9

Accra

0.3

1

9

14

16

10

40

45

29

8

3

6

SSA Rank

SSA Ave

0.0

2.0

4.0

2.5

0.5

3.5

1.5

3.0

4.5

1.0

1.7

+3.9%

+4.4%

3.8

20101995

Millions

1980

1.3

3.2

4.0

2.5

20052000

2.2

1990

0.9

1985

1.4

+3.9%

SSA Average

Kenya

Africa 11

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0.5

2.1

3.5

3.5

3.7

3.9

4.0

4.4

4.8

4.9

5.7

Lusaka

Dar

Lagos

CAGR 2010-2014

Lilongwe

Accra

Addis

Joburg

Nairobi

Port Louis

Gaborone

Dakar

-0.4

2.1

2.5

2.9

3.6

3.6

3.7

3.9

4.0

4.8

5.5

CAGR 2000-2014

Port Louis

Addis

Gaborone

Accra

Joburg

Lilongwe

Dakar

Nairobi

Lagos

Dar

Lusaka

-0.3

2.2

3.0

3.1

3.2

3.8

3.8

4.1

4.4

4.8

5.2

Joburg

Addis

Lilongwe

Gaborone

CAGR 1980-2014

Dakar

Lusaka

Nairobi

Lagos

Dar

Accra

Port Louis

While Nairobi’s growth has stabilized at 3.9% p.a., of her peer cities, Dar es

Salaam has grown the fastest since 1980, since 2000 as well as this decade

Population Growth, 1980 - 2014

4

8

23

25

26

37

40

9

20

11

15

SSA Rank (48)

SSA

Population Growth, 2000 - 2014 Population Growth, 2010 - 2014

3

13

8

21

18

10

32

30

35

26

40

41

25

19

8

4

22

37

41

34

28

23

SSA Rank (48)SSA Rank (48)

SSA

SSA

Source: World Bank; Oculus Prime Analysis oculus prime

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OCULUS PRIMEStill, the growth of Nairobi, nearly doubling since 2000 and projected to

triple by 2030 (from 2000), is perfectly in line with SSA trends

SSA Growth of Largest City, 2000-2030

Fastest Growing Cities

between 2000 and 2030

Source: World Bank; Oculus Prime Analysis

Projected to triple in size


Cities that doubled in size


0.0

0.5

1.0

1.5

2.0

2.5

3.0

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0

Harare

SSA Average

Lusaka

Luanda

World

OECD members

Dakar

Kigali

Lagos

Maputo

Gaborone

Bujumbura

Yaounde

Ouagadougou

Khartoum

Dar es Salaam

Juba

MogadishuJohannesburg

2015 Population/2000 Population

2030 Population/2000 Population

Accra

Abdijan

Addis Ababa

Kinsasha

Lilongwe

Nairobi

Port Louis

Bamako

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OCULUS PRIMEIf we define a “megacity” in SSA as one having more than 5 million inhabitants

then of Nairobi’s peer cities, only Lagos and Johannesburg Metro qualified in 2014

Population of Largest Metropolitan Area by Country, 2014

2.5 = Millions

2.1

0.3

3.4

2.5

12.6

9.2

0.9

4.8

3.8

3.2

Nonmegacities

Lusaka

Gaborone

Kinsasha

Megacities

KhartoumDakar

Luanda

Accra

Nairobi

Dar es Salaam

Lilongwe

Johannesburg

Lagos

Addis Ababa

Millions

Luanda

Johannesburg

Kinsasha 11.1

Khartoum

Lagos 12.6

5.0

5.3

9.2

SSA Megacities, 2014

SSA Near Megacities, 2014

3.2

4.8

Addis Ababa

Nairobi

Millions

Dakar

3.8

3.4

Abidjan 4.7

Dar es Salaam


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2000 2005 2010 2015 2020 2025 2030

6

4

12

22

8

14

24

0

18

20

16

10

2

Nairobi

Port Louis

Lusaka

Dakar

SSA Average

Lilongwe

Dar es Salaam

Johannesburg

Lagos

Africa 11

4.73 Addis Ababa

15.94

Accra

Gaborone

6.92

5.72

3.913.24

23.64

2.682.21

But if Nairobi keeps growing at ~ 4% p.a., Nairobi’s population will be

close to 7 million in 2030 – almost doubling in size in just 15 years

Largest City Population by Country, 2000 - 2030

MillionsSSA Rank 2030

25

15

3

16

40

1

17

Projected estimates:

Assuming last 5 years pace continues

12

4

41

11


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OCULUS PRIMEAt these rates, by 2030 not only Nairobi, but Dar es Salaam, Accra and Dakar will join

Lagos, Johannesburg and nine others as SSA megacities; Nairobi and Dar by 2022

Population of Largest Metropolitan Area by Country, 2030

5 = Millions

4.4

0.5

6.1

5.2

23.6

16.0

1.7

11.8

6.9

4.4

Nairobi

Addis Ababa

Luanda

Khartoum

Kinsasha

Gaborone

Lusaka

Dakar

Dar es Salaam

Johannesburg

Lilongwe

Lagos

Accra

Nonmegacities

Ouagadougou

Antananarivo

Ibadan

KanoBamako

Yaoundé

AbidjanMogadishu

Megacities

Johannesburg 15.9

Kinsasha 21.9

Lagos

6.9

7.0

6.1

Khartoum

Yaoundé

Antananarivo

7.5

Nairobi

5.7

Millions

5.2Accra

5.5

Dakar

Bamako

8.3

Luanda 10.0

Mogadishu

Abidjan

8.0

Ouagadougou

7.8

Dar es Salaam 11.8

23.6

SSA Megacities, 2030

Source: World Bank;; Oculus Prime Analysis oculus prime

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OCULUS PRIMEOf course, the challenges of rapid urbanization are many, varied and have

been well documented…

Housing Shortage (Kibera, Nairobi) Hygiene & Health (Malawi) Traffic (Lagos)

Water Shortage (Harare) Crime (Lusaka) Pollution (Cairo)

Source: Press Search oculus prime

OCULUS PRIME

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OCULUS PRIME…but the higher order effects of rapid urbanization that are less well documented

can also have drastic impacts on distant but connected societies

Source: Kenya 2009 Census

Busia County’s Yawning Gender Imbalance, 2010

Female (Kenya)

Male (Kenya)

Male

Female

Age Groups, years

Busia County, along with several other Counties in Kenya, experiences significant

gender imbalances at the onset of adulthood. There are around 25% more adult

women than men in Busia. The men leave for Nairobi and they don’t come back! The

implications for family structure and cohesion, local economies etc. can be massive

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0%

0%

+28%+33%

+1%

+29%+22%

-3%

+24%+27%

+26%+28%+28%+28%

+24%

65--6940--44 60--6450--54 55--59 70--7410--14 15--19

+22%

25--2920--24

+20%

30--345--9 80+75--7945--4935--390--4

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OCULUS PRIMEGDP

Urban Population % Total Population

Still, like it or not, urbanization and economic growth have a very strong and

positive correlation both in output and in consumption

GDP Growth vs. Urbanization, Selected Countries, 1960-2014

“There are no rich countries which aren’t urbanized..., there are urban countries which are not rich… [urbanization] seems

to be a necessary [though not sufficient] step [for economic development] ." Jonathan Woetzel –McKinsey Global Institute

S. Korea

India

Brazil

China

1960 2014

Source: World Bank; oculus prime

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OCULUS PRIMEWhat does this mean for Nairobi?

Output

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OCULUS PRIMEGreater Nairobi’s GDP stood at $13.6 Billion in 2014 and at current growth rates (almost

entirely driven by population growth) GDP will nearly double by 2030. If we assume national

productivity gains, Nairobi’s GDP could be as high as $31.2 Billion in 2030

Greater Nairobi GDP, 2000- 2030

24

8

26

0

22

20

4

14

18

12

2

16

10

6

Billions, USD

2010 2030

25.9

+4.1%

2020

13.6

20052000 2015

7.6

2025

Kiambu County

Nairobi County

Greater Nairobi GDP, 2000- 2030

5.4

1.5

3.9

GDP

Growth

Productivity

Growth

Population

Growth

4.2

0.33.9

Population

Growth

GDP

Growth

Productivity

Growth

Nairobi GDP Growth Breakdown, 2000-2015

Nairobi Productivity Gains

2000-2015

National Productivity Gains

2000-2015


30

4

28

26

24

18

10

22

16

14

32

0

12

2

6

8

20

31.2

14.2

2010 202520152000

+5.4%

Billions, USD

2020 20302005

7.6

Nairobi County

Kiambu County

2015-2030 projections using

National Productivity Gains

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OCULUS PRIMEIn context, in 2014 Nairobi’s GDP was larger than Namibia’s, almost as large as

Zimbabwe’s, and in 15 short years Nairobi’s economy could be larger than the

current size of ¾ of SSA countries. That’s the disruptive power of urbanization!

Source: World Bank

SSA GDP by Country (selected countries), 2014 SSA GDP by Country (selected countries), 2014

Kenya

Cameroon

Cote d’Ivoire

Greater Nairobi 2030

Angola

34.3

Namibia

32.1

Mozambique

60.9

31.2

Billions, current USD

138.4

Zimbabwe

Senegal

27.1

15.9

13.0

15.7

Uganda

14.2

27.0

Zambia

3

11

14

16

13

20

24

18

12

5

9

SSA Rank

SSA Ave

2.6

13.0

10.6

Zimbabwe

4.3

32.1


Namibia

Madagascar

13.6

Kenya

Angola

Malawi

14.2

60.9

Cote d’Ivoire

Cameroon

7.9Rwanda

138.4

34.3

Billions, current USD

Eritrea

SSA Ave

3

5

9

11

19

24

40

38

31

28

22

SSA Rank

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OCULUS PRIME34.3

27.031.213.613.0

14.2

Cote D’Ivoire


Zimbabwe

Namibia

Greater Nairobi 2030 Uganda

Who are the people in charge of managing the challenges and opportunities of such

disruption in Greater Nairobi and in economies comparable in size to Greater Nairobi’s

economy in 2014 and in 2030? Patrick Chinamasa,

Minister of Finance

Adama Kone,

Minister of Economy & Finance

Calle Schlettwein,

Minister of Finance

Matia Kasaiija,

Minister of Finance, Planning &

Economic DevelopmentGregory Mwakanongo Mary Ndunge Nugli

Ministers of Finance & Economic Planning,

Kiambu County & Nairobi County

Source: World Bank; Oculus Prime research oculus prime

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OCULUS PRIMEWhat does this mean for Nairobi?

Consumption

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OCULUS PRIME10.6

4.9

Greater Nairobi 2010 Greater Nairobi 2030

At current growth rates, Greater Nairobi will have a population of 10.6 million by

2030, ~57% of whom will be between the earning and consuming ages of 20 and 64

Greater Nairobi Population Growth, 2010-2030

Source: Kenya Census 2009; Kiambu County Government; Oculus Prime Analysis

1

0

9

8

7

6

5

10

3

2

4

11

Millions

+3.9%

10.6

2030

4.9

20252020

7.3

20152010

Greater Nairobi (Nairobi County + Kiambu County)

2001000 300 400

454035

1510

2530

20

05

80

55

9590

100

75

50

6570

85

60

300 200 100400 0

Population, Thousands

800600 1.0004002000

5

1520

50

85

70

80

65

75

55

95

60

0

100

10

40

25

45

3530

90

600800 200 0400

Population, Thousands

Greater Nairobi Population Pyramid, 2010 Greater Nairobi Population Pyramid, 2030

Nairobi Male

Kiambu Male Nairobi Female

Kiambu Female Nairobi Male

Kiambu Male

Kiambu Female

Nairobi Female

1.45 M 1.34 M 3.13 M 2.91 M

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OCULUS PRIMEIn 2015, Kenya’s aggregate gross wealth was $48.5 billion, $32.6 billion of which was “easily

consumable” (financial & debt); assuming growth rates continue apace, in 2030 Kenya’s

aggregate gross wealth will be $144.5 billion of which $97.3 billion will be “easily consumable”

Kenya’s Aggregate Gross Wealth, 2015

Debt

3.90

FinancialNon-Financial Gross Wealth

48.47

15.83

28.74

10

50

70

150

90

100

130

80

120

60

40

110

30

140

20

0

+7.6%

+7.6%

Billions, USD

2000 2020 20302025

48.5

20152010

144.5

2005

16.3

Financial Debt

11.62

47.20

Non-Financial Gross Wealth

85.69

144.52

Kenya’s Aggregate Gross Wealth, 2030Aggregate Gross Wealth Growth, 2000-2030

Billions, USD Billions, USD

$32.6 Bln $97.3 Bln

Kenya

Source: Credit Suisse; Oculus Prime Analysis oculus prime

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Narok

33.9%

Kisumu

Uasin Gishu

Mombasa

Nakuru

Nyeri

Other Counties

Machakos

Kajiado

Nairobi

Kiambu

6.2%

If aggregate wealth at the sub-national level breaks down as it does for sub-national

revenues, then in 2015 Greater Nairobi’s aggregate wealth (~40% of Kenya) was

around $19.5 billion and could be as high as $58 billion in 2030

Source: Government of Kenya Office of the Controller of the Budget; Credit Suisse; Oculus Prime Analysis

County Revenues % Total, 2014/2015

60

55

40

45

50

15

10

20

0

25

5

30

35

2030

14.8

2005

58.0

2000

+7.6%

Millions

9.0

2025

3.0

+7.6%

49.0

6.5

19.5

2010 2015 2020

16.4

Kiambu County

Nairobi County

Greater Nairobi Aggregate Wealth, 20000-2030

oculus prime

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OCULUS PRIMEUtilities

Transport

Consumable Wealth

27.7%Rent

55.5%

4.2%

12.6%

Which implies $13.1 billion was available to Greater Nairobians in financial and debt form,

of which $7.3 billion was available for consumption of “non-fixed” goods and services

Source: Credit Suisse;Numbeo; Oculus Prime Analysis

Greater Nairobi Aggregate Wealth Breakdown, 2015 Greater Nairobi Average Expenses, 2015

11.5

1.6

FinancialDebt Non-FinancialTotal

19.5

6.4

$13.1 Bln

7.3

2015

Consumable Wealth, 2015


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Wealth available for food,

clothing, entertainment,

electronics, vacations etc.

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OCULUS PRIME12.6%

Consumable Wealth55.5%

4.2%

27.7%Rent

Utilities

Transport

In 2030, the wealth available for consumption of goods and services could be as

high as $21.7 billion, tripling the size of Greater Nairobi as a market in just 15 years.

That too is the disruptive power of urbanization!

Greater Nairobi Aggregate Wealth Breakdown, 2030 Greater Nairobi Average Expenses, 2030

58.0

34.4

4.7

Non-Financial

19.0

Debt FinancialTotal

$39.1 Bln

2030

21.7

Consumable Wealth, 2030


Source: Credit Suisse; Numbeo; Oculus Prime Analysis oculus prime

Wealth available for food,

clothing, entertainment,

electronics, vacations etc.

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Conclusion

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Urbanization is a very powerful disruptive force that can bestow upon megacities the

economic heft of entire nations and can conjure up massive new markets before our

very eyes… And it is happening right now in Kenya and all over Sub-Saharan Africa!

GDP Greater Nairobi vs. Selected Countries, 2000-2014

2006

20

2009

8

28

26

6

18

14

4

2011

2

16

12

0

2013 2014201220102008

10

24

2007

22

200520042003200220012000

27.0

Zimbabwe

Mozambique

Rwanda

Namibia

Greater Nairobi

7.9

13.6

Mauritius

Senegal

Uganda

Greater Nairobi GDP & Market Size, 2015-2030


x3

2.2

Source: World Bank; Credit Suisse; Numbeo; Oculus Prime Analysis oculus prime

31.2

Market Size 2015

21.7

Market Size 2030

7.3

GDP 2030

GDP 2015

Greater Nairobi

14.2

Disruptive Forces (Urbanization)

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