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Managing growth in developing world cities

Accommodating shifting – and often expanding – populations within an urban setting isn’t just about buildings By 2030, more than eight in ten of the world’s urban dwellers will be living in the developing world1. But are developing world cities prepared for the massive demographic shifts that this rapid urban growth will bring?

Sanjay Sah, KPMG in India, and Rahul Asthana, former Head of the Mumbai Metropolitan Region Development Authority (MMRDA), discuss how urban areas can cope with change and prepare for future growth.

The challenge for most developing world cities is formidable. Few have the public finance capability to undertake the scale of investment required to support a growing city; fewer still have the ability to create and execute a long-term plan for sustainable urban growth.

The challenge is also unavoidable. In 2005, more than 1.2 million people were streaming into developing world cities every week2; the pace has only increased over the past decade. Rahul Asthana, who until recently headed up the Mumbai Metropolitan Region Development Authority (MMRDA), suggests that planners first need to dispense with the idea of trying to prevent urban migration. “Urbanization will, and must, happen,” argued Mr. Asthana. “Planners need to prepare their cities to proactively capitalize on this growth rather than reacting to pain points once the population has already arrived.”

Addressing land usage and value

Mumbai is no stranger to massive urban growth and population shifts. The city’s population nearly doubled in an early growth boom between 1981 and 2001. In the next decade the population grew by another 20 percent. And while the city’s growth rate has now dropped to a somewhat more manageable rate, many of the challenges created by the earlier growth spurt continue to impact the city.

The city’s slums are a daily reminder of the legacy of unsustainable growth. Today, more than 60 percent of Mumbai’s citizens live in informal dwellings or slums. Breaking free from the slums is difficult; capital values on real estate are prohibitively high in Mumbai and there is a real lack of affordable housing.

“Cities need to be more creative about how they deal with slums and reconfigure those existing areas to provide both affordable housing options and more productive use of the land,” noted Mr. Asthana. He points to the models being utilized by Mumbai’s Slum Rehabilitation Authority (SRA) where low-income high-rises are constructed to house existing slum-dwellers, thereby freeing up significant land for redevelopment. The model is fairly self-funding; developers agree to build low-income high-rises in return for access to more productive and profitable land.

Mr. Asthana – who at one time also served as the Chairman of the Mumbai Port Trust – notes that most existing cities contain under-capitalized or disused sites that could be renewed or redeveloped to create new and more productive precincts within the city. The Port of Mumbai, he points out, contains around 750 hectares of under-utilized land in the Central Business District that – if rehabilitated – would open up the entire eastern waterfront area to development.

Improving connectivity to reduce migration

Another key challenge facing most developing world cities relates to transportation and connectivity. “Mumbai is not alone in needing more private transport infrastructure investment, both within the city and out to the hinterlands and outskirts,” added Mr. Asthana. “Unfortunately, this is something that planners have not been able to achieve to the extent that is needed.”

Mr. Asthana believes that – alongside better connectivity within the city – planners must also consider how satellite ‘megacities’ might ease inner-city congestion and pressure. While the name may be somewhat misleading (megacities in the context of India can comprise of anything over 100 acres), the designation comes with significant benefits such as different zoning laws, higher floor space indexes, tax benefits and better urban planning. In return, developers commit to building all of the amenities, roads, water supplies and other critical infrastructure that are necessary for the city to thrive. To ensure that employment opportunities exist within the megacities themselves, the government has mandated at least 15 percent of the area be reserved for commercial zones.

“These are well-planned cities in the hinterland where the right mix of conditions and facilities are brought together to ensure that people can find a place to work and live without having to come into the city center,” noted Mr. Asthana. “I’m not talking about creating a frontier mentality where we try to keep rural dwellers out in the fields – that has proven not to work – but rather an approach where we proactively create new cities and new areas of productivity that act as a magnet to rural migrants.”

Leadership and vision

Yet, as cities struggle with all of the challenges brought by rapid urban growth, likely the most important success factor rests with the ability of the city’s leadership to create, articulate and execute a sustainable long-term vision and plan for the city.

The reality is that – in most developing world cities – lines of authority for development and infrastructure are somewhat blurred. “In Mumbai, we have multiple agencies who often work at cross-purposes to each other,” admitted Mr. Asthana. “You can’t create a vision unless you have the political will, leadership and support to make the difficult and tough decisions, and that needs to come from one central authority or figure working across the various departments and agencies.”

Mr. Asthana notes that infrastructure and development issues have a tendency to become very political very quickly. In response, he points to the value and stability created by infrastructure authorities such as the MMRDA in Mumbai. The independent agency is not only fairly free of political influence but also (through ownership of large tracts of urban land) self-funding, which means that they are able to make decisions that deliver long-term benefits rather than politically-expedient wins.

Lessons from Mumbai

Based on his extensive experience, Mr. Asthana offers three points of advice for city leaders in the developing world. First, don’t try to stop the reality of urbanization. “Accept that it is going to happen and start developing areas to receive these masses of urban migrants before the pressure of rapid growth overwhelms the capacity of existing infrastructure and government services.”

Secondly, Mr. Asthana suggests that planners be proactive by looking ahead to what the city and its population will need in the long-term rather than just reacting to the pressures of the day. So, for example, instead of adding a new lane to an existing road, Mr. Asthana suggests that planners consider what the transportation environment will look like in 10, 20 or even 50 years and then start building to support that vision.

Finally, Mr. Asthana reminds city leaders that, before too long, they will need to make difficult decisions. “Creating, articulating and then executing on a vision won’t be easy and some of the decisions that must be made will run counter to political, societal or community pressures,” noted Mr. Asthana. “Without the ability and confidence to do what is right in the long-term, even the best laid plans will go nowhere.”