Summary of Addis Ababa, Ethiopia Urbanization Knowledge Platform

June 24th, 2011

UKP in Addis Ababa, Ethiopia, June 24, 2011 Organizers: Ethiopias Ministry of Urban Development and Construction, Ministry of Finance and Economic Development, & the World Bank

1. Introduction On June 24th 2011, a launch event was held in Addis Ababa (see agenda note attached). The event was jointly hosted by the Ethiopian Government (Ministry of Construction and Urban Development, and Ministry of Finance and Economics) and the World Bank. The launch was attended by 65 delegates represented by practitioners and policy makers from Ethiopia, Uganda, Kenya, Tanzania, North Sudan, and South Sudan. The workshop was designed to be an interactive debate on knowledge development and shared learning on three key issues facing national and city leaders in East African countries. The themes covered were: i. ii. iii. The nature of urbanisation world-wide and the specifics of urbanisation in Africa. The means to address and harness urban land markets as a key ingredient of successful urbanisation. The relationships between urban and rural spaces in the urbanisation process and the means to address both.

Two cross cutting imperatives were also addressed. Firstly, the need to recognise that many governments have to through rapid urbanisation at a time when they are resource constrained, and secondly, that active learning between government at national and local level is required to make the most of international experience, tools, and techniques with urbanisation management. Identifying what learning is most useful and how it can be expedited is a key task. The workshop addressed the three themes and two imperatives in turn with kick off presentations from relevant experts followed by contributions on the precise trends and policy/practice initiatives in each of the six countries and then open debate and discussion. In all, 46 contributions were made by the participants in a lively discussion. The workshop was hosted by HE Ato Mekuria, Minister of Urban Development and Construction, Ethiopia, and Greg Toulmin, Acting Country Director for Ethiopia, the World Bank. His Excellency welcomed all of the participants to Ethiopia and set out the parameters of urban growth and national development in Ethiopia, recording important progress that had been made and stressing the need for continued learning amongst city and national leaders and partnership with the World Bank.
For the World Bank, Austin Kilroy provided a succinct insight in the Urbanisation Knowledge Platform and invited the delegates to participate in the development and activities of the platform.

2. Urbanisation and National Development Strategy. The first presentation was delivered by Dr Chorching Goh of the World Bank. She introduced the key understanding of the urbanisation process articulated in the World Banks World Development Report of 2009 and the subsequent Urbanisation reviews.
Dr Goh emphasised the key dimensions of urbanisation, the advantages of urban development to economic development, and the critical policy responses that may be required as distinct phases of

UKP in Addis Ababa, Ethiopia, June 24, 2011 Organizers: Ethiopias Ministry of Urban Development and Construction, Ministry of Finance and Economic Development, & the World Bank

urbanisation are achieved. She emphasised tow important points that are important in considering urbanisation in Africa: African urbanisation has not been accompanied by the same level of industrialisation that has accompanied it in other continents and there is an economic development gap that needs to be addressed. Most countries experience urbanisation before they rise to being middle income countries and they must address the challenges without substantial resources. This is especially true in Africa and must be addressed by national frameworks and partnership with other organisations.

The debate reached some key conclusions informed by the experience of Ethiopia and the other countries present. Urbanisation clearly requires a national framework that addresses both cities and the rural areas and seeks to manage process of change. This needs to be medium to long term agenda that commands public support and citizen engagement and provides investment from leveraged resources. The urbanisation process has social, economic, environmental, physical, and governance dimensions which must be addressed in concert. It requires integrated responses from national governments that span across many ministries of national government. Urbanisation requires institution building at both national and local level and produces institutions that are able to deliver public services to a changing and dynamic population.

3. Urban Land Markets.

Prof Yu-Hung Hong of MIT and the Lincoln Institute of Land Policy provided a kick off presentation that emphasised the importance of developing specific tools to manage and harness urban land markets both to shape and manage urban development, and to provide financial returns which can be sued as resources to support public investment and public services. He provided a detailed case study of the lease hold system of urban land management in Hong Kong and emphasised the importance of combining a system to manage land use and provide public control of land assets and land use revenues, with high quality urban planning and infrastructure development. He also emphasised the importance of building instit6utions for urban land management which operate within the public sector, are operationally independent of government, professionally skilled and led, and are market facing and transparent.

The debate between the delegates raised important points for learning and development of urban land market management techniques in African cities and nations. Rapid urbanisation in Africa creates both an opportunity and the challenge to proactively manage land assets and use in order to generate good spatial form and to raise much needed resources for investment. African countries have limited experience of these approaches but many have established new land use policies and land management institutions to take this forwards. Widespread interest exists in how to develop such approaches over a whole investment cycle.

UKP in Addis Ababa, Ethiopia, June 24, 2011 Organizers: Ethiopias Ministry of Urban Development and Construction, Ministry of Finance and Economic Development, & the World Bank

Land use planning policies and practices need to be strengthened and improved if these asset management techniques are to be fully used and there is a need for institution building around both planning and land management. Infrastructure investment needs to be placed on a longer footing if the benefits of netter land management are to be leveraged through financial instruments such as bond issues or value capture financing techniques.

4. Urban Rural Linkages.

Dr Uwe Deichmann of the World Bank provided a kick off presentation that emphasised the key challenge to recognise urban-rural linkages in the way that national policies are developed and to address some the broader insights and challenges that are revealed by urban research.

The debate amongst the delegates covered key specific issues: National development policies should address comprehensive territorial development and provide support and interventions is both urban and rural areas, in those that are growing as well as those that losing population. Policies should also recognise the many linkages between the cities and rural areas in terms of resources, labour markets, trade, food, ancestral and family allegiance, and population mobility patterns between both. A critical issue is the provision of good public services to all populations in all locations and this requires both adequate resource generation and capable institutions. Due to the dynamics of growth flexible governance arrangements are required to address both changing boundaries and functional spaces, and the relationships between different places. Economic development promotion is required in rural areas as well as urban areas in order to encourage people to see opportunities of rural living as well as the need to address to address the jobs deficit in cities. Land use planning will be critical to managing areas of growth and those in decline, and strengthening the planning systems remains a key priority.

5. Overall. The delegates acknowledged that the WDR 2009 provide an important insights with its focus on Institution building in areas of incipient urbanisation, infrastructure provision in areas of intermediate urbanisation, and effective interventions in areas with advanced urbanisation. The debate amongst the delegates also revealed that within several countries features of different speeds of urbanisation exist and it is frequently essential to combine all three modes of response within a single national approach.

UKP in Addis Ababa, Ethiopia, June 24, 2011 Organizers: Ethiopias Ministry of Urban Development and Construction, Ministry of Finance and Economic Development, & the World Bank

Motivation The structural and spatial transformations of an economy are intimately related. Successful industrialization goes hand-in-hand with a successful urbanization process. This was the case for today's developed countries to which industrialization came early and it has also been the case for more recent successful developers, such as South Korea. It is no coincidence that China has been rapidly urbanizing at the same time as it has been rapidly industrializing. It is also no coincidence that, as industrialization continues to elude much of the African continent, urban shares remain low in sub-Saharan Africa. An understanding of the urbanization process is therefore crucial to an understanding of how countries develop and transform economically. Unfortunately, for the countries which matter most, such an understanding is incomplete. Although theoretical and empirical advances over the last two decades have led to a renaissance of the field of urban economics, the resultant knowledge which has been accumulated relates almost exclusively to developed countries. Whilst empirical work on some, but by no means all, of the most important urban issues has taken place for the largest developing countries (namely, Brazil, China and India), hardly any rigorous work has been published on these issues for the rest of the developing world. Especially for subSaharan Africa, serious empirical and theoretical work in the arena of urban economics is noticeably absent. Yet, in the decades to come, it is in the African continent where urban shares are lowest, that urbanization can be expected to be most rapid and the challenges most difficult. Contents As a consequence of the knowledge gap which exists on urban issues, developing country policymakers lack adequate answers to the many questions and challenges surrounding the urbanization process which confront them. These questions and challenges include: are the agglomeration economies which are necessary for a beneficial urbanization process present? Or are they swamped by the diseconomies of concentration viz. crime, grime and congestion? What can be done in the way of, for example, urban infrastructure investment to tackle such diseconomies? 1. Why do cities grow? How do processes of agglomeration in developing countries the main drivers of the rural-urban transformation differ from those that have been historically experienced in industrialized countries? What are the dominant constraints (infrastructure? red-tape?) on urban agglomeration in Africa? 2. How do cities grow? What are the specific dynamics of urban land markets in African countries, and in the peri-urban areas as land is converted from rural to urban uses? What are the market failures associated with the functioning of land markets in African cities? 3. How do urban areas interact with rural ones? What do we know about general migration processes in Africa? Are such processes limited by regulations in land, labor and credit markets? A cross-cutting question for all of the research themes is: How does public policy support or hinder spatial and structural transformations? What are the implications of policies which relate to the above three questions for the dynamics of urbanization? And how do urban development policies affect (either positively or negatively) the structural transformations experienced by national economies? This Forum intends to open up a conversation surrounding these issues.

UKP in Addis Ababa, Ethiopia, June 24, 2011 Organizers: Ethiopias Ministry of Urban Development and Construction, Ministry of Finance and Economic Development, & the World Bank

Time 8:00am-8:45am 8:45am-9:20am

Program Breakfast & Registration Welcome and Opening Remarks Ato Mekuria, Minister of Urban Development and Construction, Ethiopia Greg Toulmin, Acting Country Director for Ethiopia, the World Bank

9:20am-9:30am

Introduction to the objectives of the Urbanization Knowledge Platform and Communities of Practice Austin Kilroy, Urbanization Knowledge Platform focal point Introduction of the Delegation of 66++ attendees Greg Clark, Moderator Format for each Session: A 20-minute kickoff presentation of key issues Reflection by the Panel & Open Floor Discussions moderated by Greg Clark Participants of each Panel comprise experts and East African policymakers

9:30am-9:40am

9:40am-noon 9:40am10am

Session 1: Policies for Inclusive Urbanization A kickoff Presentation: Inclusive Urbanization: Examples from Asia Chorching Goh, Lead Economist, the World Bank Coffee break Reflections from the Panel and Open Floor Discussions: The structural and spatial transformations of an economy are intimately related. Successful industrialization goes hand-in-hand with a successful urbanization process. Urbanization is fastest at low income levels. In the decades to come, it is in the African continent, where urban shares are lowest, that urbanization can be expected to be most rapid. How do governments with limited capacity and resources at that level of development lay the necessary foundation for an inclusive urbanization? Well- functioning land market institutions are the bedrock for efficient urbanization. What challenges do governments face to ensure land market works well? How will rural-urban transformations influence growth, welfare levels, and poverty outcomes across metropolis, cities, towns, and rural areas? Are the speed and nature of the transformations limited by regulations in land, labor and credit markets? Lunch

10:00am-10:30am 10:30am -12 noon

Noon - 1:30pm

1:30pm-3:00pm

Session 2: Land Market Institutions

UKP in Addis Ababa, Ethiopia, June 24, 2011 Organizers: Ethiopias Ministry of Urban Development and Construction, Ministry of Finance and Economic Development, & the World Bank

1:30pm 1:50pm

A kickoff Presentation: Building institutions and facilitating market mechanisms in land use transactions for urbanization and development Yu-Hung Hong, Visiting Professor, MIT, and Senior Fellow, the Lincoln Institute of Land Policy Reflections from the Panel and Open Floor Discussions: How do cities grow? What are the specific dynamics of urban land markets in African countries, and specifically in the peri-urban areas as land is converted from rural to urban uses? What are the market failures associated with the functioning of land markets in African cities? What drives informality in housing markets, an all too frequent and visual companion of urbanization? And how best to deal with the division within cities that is the result of such informality? Do the poor benefit or are they harmed by residential informality? How do land market policies and regulations support or hinder supplies of land? How is land valued by governments, and how can appropriate land valuation help raise revenue to finance infrastructure needs? What are key factors (viz property rights, regulatory framework.) for a well-functioning land market? How do infrastructure planning and land use planning influence each other in core and peri urban areas? How to integrate transport and land use planning

1:50pm-3:00pm

3:00pm-3:30pm

Coffee break

3:30 pm-5:30pm 3:30pm-3:50pm

Session 3: Rural Urban Transformation A kickoff Presentation: How do urban-rural interactions facilitate growth and structural transformation? Uwe Deichmann, Senior Environmental Specialist, Europe and Central Asia, and Coordinator of Urban Research Work, the World Bank Reflections from the Panel and Open Floor Discussions: Urban shares remain low in Africa. An understanding of the rural-urban transformation process is therefore crucial to an understanding of how countries develop and shift their economic structure. Are the agglomeration economies which are necessary for a beneficial urbanization process present? Or are they swamped by the diseconomies of agglomeration crime, grime and congestion? What can be done in the way of, for example, urban infrastructure investment to tackle such diseconomies? How can such infrastructure be financed? And should infrastructure in larger cities be prioritized over infrastructure in smaller towns? Does urban growth reduce rural poverty? And, if so, what does this imply for national poverty reduction strategies? Whats the role of the rural non-farm sector in towns and small cities? What influences rural-urban migration decisions? Whats the degree and nature of specialization in towns, secondary cities,

3:50pm-5:30pm

UKP in Addis Ababa, Ethiopia, June 24, 2011 Organizers: Ethiopias Ministry of Urban Development and Construction, Ministry of Finance and Economic Development, & the World Bank

5:30pm 6:00pm

capital cities at different stages of development? Unemployment (particularly youth unemployment) is a serious problem in most urban centers of the developing world, what should be the role of the Government in addressing the issue of urban unemployment? Summary of the Forums discussions Greg Clark, moderator Dinner

Short Bios of Presenters:

Chorching Goh, a Malaysian national, graduated from Yale University, summa cum laude, with simultaneous BA and MA degrees, and from Harvard University, a PhD in Economics. She joined the World Bank in 1999 as a Young Professional working on health, nutrition, and education. During 2001-06, she worked on poverty, inequality, trade and labor market issues in East Asia. Prior to joining Africa, she worked on territorial development and urbanization issues in Russia, the former Soviet Republics and Poland. She is a co-author of the World Development Report 2009 Reshaping Economic Geography.

Yu-Hung Hong, a senior fellow at the Lincoln Institute of Land Policy and a visiting faculty in the Department of Urban Studies and Planning at MIT, earned his Ph.D. in Urban Development and Masters in City Planning from the Massachusetts Institute of Technology. His research focuses on property rights and obligations, land management tools, and local public finance. He has been teaching urban public finance since 1996. He was an assistant professor at the University of Akron in Ohio (19992003) and Hong Kong University of Science and Technology in China (19961998). Selected publications: Leasing Public Land: Policy Debates and International Experiences (2003; translated into Chinese in 2007); Analyzing Land Readjustment: Economics, Law, and Collective Action (2007); Land Policies and Their Outcomes (2007); Fiscal Decentralization and Land Policies (2008); Property Rights and Land Policies (2009); Smart Growth Policies: An Evaluation of Programs and Outcomes (2009); Local Revenues and Land Policies (2010); Chinas Local Public Finance in Transition (2010); and Climate change and Land Policies (2011).

Uwe Deichmann, a Senior Environmental Specialist Development Research Group and coordinator of its Spatial Analysis Team, holds a Ph.D. in Geography from the University of California at Santa Barbara. His research interests are in the geographic aspects of development. His recent work has included issues of housing and urban development, the role of infrastructure in promoting regional growth, and the impacts of natural hazards and global change on economic development. Prior to joining the World Bank he worked for the UN Environment Program and the UN Statistics Division. He is is a co-author of the World Development Report 2009 Reshaping Economic Geography.