According to the Organisation for Economic Cooperation and Development’s (OECD) estimates, 80% of the continent’s growth will be driven by urban areas. While only 60 cities currently have populations of over one million, that number is expected to jump to 159 by 2050.
Rapid urbanisation is a major problem the developing world is contending with. Cities are becoming more densely populated faster than their infrastructure can keep up. Africa is no exception. By 2050, Africa is projected to comprise 25% of the global population, with 2.5 billion people, and this figure is forecast to reach 40% by the end of the century.
According to the Organisation for Economic Cooperation and Development’s (OECD) estimates, 80% of the continent’s growth will be driven by urban areas. While only 60 cities currently have populations of over one million, that number is expected to jump to 159 by 2050. Cities are already congested, and policy researchers are calling for more decentralisation and for a shift of focus and resources to smaller cities and towns.
Water scarcity is one of the main hurdles to urbanisation in Africa. The continent is prepared to handle such rapid urbanisation in a sustained manner; therefore, most African leaders are first calling for better water infrastructure in these cities. In a shocking revelation, South Africa’s President Cyril Ramaphosa confirmed that Africa, a resource-rich continent, was facing a $30 billion water infrastructure investment gap.
Megacities and emerging urban spaces are already tackling intense rainfall and flooding, or drought and acute water shortages. While the socio-economic problems, such as high levels of unemployment, political unrest and poor public services, are major concerns, when weighed against the climate risks Africa is facing, there arises an alarming need for a better urbanisation model.
Along with water shortages, African nations are also plagued by gaps in sewage and housing infrastructure. As cities are soon reaching their optimal capacity, Africa’s best hope of tackling unchecked urban expansion is to gradually develop rural or semi-rural areas while ensuring that development is more horizontally than vertically oriented. If not, these countries will have more cities with growing populations and face the same problems cities face today.
However, it is important to note that the problem of rapid urbanisation is the challenge it poses to sustainability, and the concept of expanding cities itself. Cities are the bedrock of Africa’s economic development, driving 80% of the GDP. Economists are only warning that, should this growth momentum continue, a more sustainable model is of utmost importance.
While the urban population statistics are swelling, in 2025, it was reported that nearly 240 million people were living in informal settlements and constitute almost half of Africa’s urban population. Uncheck urban expansion adversely affects the local biodiversity, and also strains the municipal fiscal revenues, where the informal sector dominates the economic model; over 75% of municipal revenues are derived from the informal sector.
Economists are urging governments to invest heavily in public services such as education, healthcare and transportation in secondary cities and surrounding areas, as they can help in considerably decongesting these megacities. Introduction of zoning regulations or offering tax breaks or subsidies to businesses based in underdeveloped areas will not only reduce the population stress in urban areas but also help generate employment in smaller towns and cities, reducing the need to migrate.
The expansion of the continent’s urban spaces has opened up wide opportunities for real estate development across Africa. Urbanisation has increased the demand for residential and commercial spaces. This is also linked to the increasing middle-class demographic that possesses a disposable income and drives the demand for such real estate opportunities.
FDIs have also been identified as a catalyst driving expansion in the real estate sector. In 2022, the Biden administration had promised $55 billion in investment over three years following the US-Africa Leaders’ Summit. With such inflows, funding projects to meet the rising infrastructural demand is made easier, and in 2024, it was reported that Africa’s real estate market was valued at $223.43 billion in 2024 and is expected to reach $332.32 billion by 2033.
Closely linked to real estate is the logistics market, which is also on an uptrend. In 2025, modern warehouses across Africa had an 85% occupancy rate, a 10% increase from the previous year. The growth of the industrial and logistics market, along with the rise of e-commerce and agro-based industries, has resulted in this record-breaking figure.
This is also proof that as cities grow, such opportunities rise. In Nigeria alone, the e-commerce sector is estimated to be $8.5 billion, and could grow up to 11.8% by 2033, and in South Africa, where the sector was $35 billion in 2024, e-commerce is expected to double by 2033.
E-commerce is a booming sector, to be sure. However, it is still part of the informal economic ecosystem. Workers and entrepreneurs in the informal sector are often migrants who are flocking to expanding cities in search of better employment opportunities, but have to bear the brunt of the lack of public services and necessary infrastructure, despite being important drivers of the countries’ economies.
Governments which are still using colonial-era laws for land use and town planning are only just perking up to the fact that the informal economy is an unmissable part of these megacities. Research has shown that home is a workspace for many households, particularly for the low-income group. Poorer households are using their own home to make and sell products, and without proper regulation, there is a risk of such activities being banned or the economic costs and inefficiencies rising for such home-based workers.
The answer to all these problems lies only in strengthened infrastructure. Regular electrical and water supply, sewage and drainage facilities and other civic amenities are sure to stimulate the unorganised sector’s contribution to the region’s economy.
While these facilities are more accessible in urban areas, they are not uninterrupted or free of challenges like floods, unrest and instability. However, the demand-supply vacuum is also being widened because of the rising population in urban areas. Should smaller cities with lesser population density be given these amenities, the economic outputs will soon be visible and significant.
Population is a strength and a weakness at the same time. The tactic of harnessing the potential of a dense population is necessary to extract the maximum economic benefits to develop any region’s economy, and Africa must work towards the same, rather than viewing it as a disadvantage.