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Energy a megatrend that will affect city development in South Africa

28 August 2013 – A global research commissioned by KPMG, in cooperation with the Economist Intelligence Unit (EIU), found that 90% of respondents are of the opinion that quality and availability of infrastructure directly affects where they locate and expand their business operations.

Africa’s growing urbanisation means that cities have to continuously expand to accommodate the influx of people. With infrastructure on the top of Africa’s development agenda, city leaders and planners need to give critical consideration in their long-term urban planning to developing and maintaining sustainable infrastructure.

In its publication, Advisor to African Cities, which is part of its Cities series, KPMG has identified 10 global sustainability mega-forces that urban planners must consider for the development of cities in the next 20 years. Five of the most critical are population growth, energy, water scarcity, ecosystem decline and food security.

David O’Brien, global head of KPMG’s cities centre of excellence, says that the influx of people into the cities is good from an economic point of view as it tends to aggregate people and jobs together. “However,” he says, “massive urbanisation marginalises large segments of the population as people end up in unplanned settlements where service delivery is not always readily available.”

Ever-growing cities will mean rising energy costs. Further, water scarcity is set to become a reality as South Africa is expected to hit a 234 million m3 water deficit by 2025. Because cities already struggle to accommodate the existing population with the current infrastructure, further strain is placed on limited resources as the population grows. Energy and water provision are largely driven by infrastructure availability. Accordingly, these should be dealt with as a priority to ensure that we build cities that will be sustainable.

To provide sufficient infrastructure, cities need access to funding. To borrow funds, cities need to have good budgeting systems, clean audits, a good and stable government and the ability to pay back the interest on the debt – and this is not always in place with most municipalities.

O’Brien believes it is up to governments to devise ways to allocate proper funding to the cities to the point where they can have the resources available to provide a more efficient energy system and deal with water scarcity problems.

He adds, “This can be achieved by either changing the legislative structure to allow cities to have more access to revenue or encouraging economic development in rural areas in order to discourage urbanisation.”

The current South African census reports that 62% of the country’s population live in urban areas. It is estimated that, by 2030, this will be approximately 70%.