ADDIS ABABA – February 13, 2015 – Ethiopia can harness urbanization to secure high and sustainable economic growth and to achieve middle-income country status by 2025, says a major new study by the Global Commission on the Economy and Climate, the Ethiopian Development Research Institute and the Global Green Growth Institute.

The government aims to double the country’s Gross Domestic Product (GDP) per capita and radically reduce poverty in ten years’ time through an ambitious industrial policy and sustained economic growth, which currently stands at around 10% a year.

The report Unlocking the Power of Ethiopia’s Cities highlights the importance of building compact, more efficient cities. It proposes creating a sustainable national urban system across the country and makes recommendations to support the government’s five-year Growth and Transformation Plan.

Ato Newai Gebre-Ab, Executive Director of the Ethiopian Development Research Institute, said: “Ethiopia has a unique window of opportunity to grow a network of compact cities with world class public transport since we are at an early stage of urbanization – only one in five people living in cities.”

“Creating well-planned urban networks will drive sustainable economic growth and save money, improving the quality of life of all Ethiopians. But the time to take action is now as the country faces an urban population explosion. We cannot allow this opportunity to slip away.”

Ethiopia’s urban population is expected to grow by more than 20 million people from 88 million in the next ten years. Meanwhile the urbanization rate is projected to increase from the current 19% to 25% by 2025. The number of people living in cities could reach 150 million by 2040.

In the face of an increasing urban population, Ethiopia can learn from the experience of other developing countries. In some developing countries too much growth was concentrated in rapidly expanding capital cities. This meant that they were later unable to keep up with their growth, having to tackle health-related problems caused by pollution and divert scarce resources to provide services such as basic housing and sanitation to a sprawling urban population.

To support the growth of Addis, the report recommends expanding a network of regional cities that evolve along strategic economic corridors, in-line with the government’s emerging urban development strategy. This would diversify economic activity and distribute wealth across the country, strengthening links with regional and international trading partners and accelerating development. By contrast, failing to set up this network would be a missed economic opportunity.

The report calls on government to set up clusters of cities in planned development areas and corridors – eight in total – spread across the country. This would allow each cluster, or even a city within each cluster, to specialise in specific commercial, service or industrial activities, complementing each other.

For example, the North West Development Area might develop a more advanced tourism cluster around Lake Tana together with sesame processing facilities. Additionally, an economic cluster in the east would meet the country’s demand for a dry port facility and economic hub in the area, linking Addis Ababa and Dire-Dawa with key international markets.

Nick Godfrey, Head of Policy and Urban Development at the Global Commission on the Economy and Climate, said: “Given the long-lived nature of urban infrastructure and rapid population growth, a small number of key decisions over the next five years will shape Ethiopia’s cities for many decades to come. To ensure future growth, our report suggests that there are compelling reasons to invest in a network of cities distributed across regions.”

“Good investments will generate huge savings and help turn Ethiopian planners’ development vision for 2025 into a reality. The government and development partners need to act together now to take advantage of this golden opportunity.”

The report supports the government’s emerging view on the priorities for national urban growth. However, the study concludes that this will not happen on its own – Ethiopia needs sustained policy action to direct the pathway of urbanization and unlock the power of cities to support growth and transformation. It identifies a number of areas which require enhanced attention by government and sets out a simple 5-step urban development framework to help achieve better urban growth.

Read the report here.

About the Global Commission on the Economy and Climate

The Global Commission on the Economy and Climate was established by seven countries, Ethiopia, Colombia, Indonesia, Norway, South Korea, Sweden and the United Kingdom, as an independent initiative to examine how countries can achieve economic growth while dealing with the risks posed by climate change.

Chaired by former Mexican President Felipe Calderón, and co-chaired by renowned economist Lord Nicholas Stern, the Commission comprises 24 leaders from 19 countries, including former heads of government and finance ministers, leading business people, investors, city mayors and economists. It has been advised by a panel of world-leading economists chaired by Lord Nicholas Stern that includes two Nobel Laureates.

Research for the Commission has been carried out by a partnership of leading global economic and policy institutes, including the Ethiopian Development Research Institute, the World Resources Institute (Managing Partner), the Climate Policy Initiative, Global Green Growth Institute, Indian Council for Research on International Economic Relations, LSE Cities at the London School of Economics and Political Science, the Stockholm Environment Institute and Tsinghua University.