URBANIZATION AND INDUSTRIALIZATION

4.1 DRIVERS: URBAN DEMAND AND SHIFTING
PATTERNS OF CONSUMPTION
Urbanization presents a major opportunity for
industrialization through rising urban demand
and shifting patterns of consumption. As Africa
urbanizes, the purchasing power of the middle class
is growing. 3 The power of Africa’s growing consumer
class can be leveraged to stimulate industrial
development to meet rising demand domestically
and regionally as a stepping stone to broader global
integration.
Urban preferences are shaping the consumer
market, given the strong correlation between
urbanization and final household consumption
expenditure (figure 4.2). While this relationship is
not independent of per capita GDP growth, some
categories of consumption are associated with
urbanization, independent of total income. For
example, urbanization is independently and strongly
associated with increased imports of beauty products
(figure 4.3), infant food and artificial sweeteners.
These categories are useful because fixed-effects
models using panel data for African countries over
1995–2014 show that urbanization (percentage of
population in urban areas) is significantly related to
imports of beauty products (p