Future Hubs of Africa and Asia

On UN projections between 2015 and 2050, the world population will grow by nearly 2.38 billion people, from 7.35 billion to 9.73 billion. Although this 32% growth is a big increase, it marks a slowdown from the 66% growth rate recorded in the preceding 35 years (1980-2015). Total Fertility Rates (TFRs) have come down all over the world and are expected to continue falling.
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About half of the 2.38 billion increase will take place in sub-Saharan Africa and nearly 40% in Asia. India is the biggest contributor with a net addition of 394 million, followed by Nigeria (216m), Pakistan (120m), DR Congo (118m) and Ethiopia (89m). By 2050, all of these countries will feature in the top 10 populations by size, a list that will include the United States (expected to rank fourth) but not one European country. Outside of Africa and Asia ex-China, regional populations will be growing slowly (the Americas), stagnating (China, Europe), or receding (Japan, Eastern Europe).

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This demographic boom could, under the right conditions, result in a regional or even a global economic boom. These conditions are first and foremost 1) an increase in literacy and 2) an improvement in governance, in the poorest countries where the population is growing rapidly. Higher literacy, in particular among young women, sets off a chain reaction that drives down infant mortality rates and total fertility rates. In time, this evolution leads to a falling dependency ratio and creates an opportunity for the economy to realize a demographic dividend. This was in large part the dynamic that created the China boom in the past three decades.

At the same time, the demographic center of gravity of the world will shift from North to South and from the richest to the poorest countries. This new center of gravity would lie in 2050 somewhere between Africa and South Asia, in theory somewhere in the Indian Ocean or in Eastern Africa or Western Asia.

Just as Singapore and Hong Kong were large beneficiaries of expanded trade between China and the rest of the world, there will likely be a number of cities that will benefit from being at the nexus of the coming population boom if it happens to also translate into an economic boom. Some will gain by dint of their large size and thanks to their expanded infrastructure in air and maritime transport. Others may gain by becoming specialized hubs for services such as finance, technology or other.

Approaching it from the perspective of air travel, we look below at a small sample of cities that are geographically well situated and that could be significant beneficiaries. Although this is not intended to be an exhaustive list, it probably does contain most of tomorrow’s winners.

Most striking at first glance is the low level of air passenger traffic throughout sub-Saharan Africa. Except for South Africa, the number of passengers at every airport in 2016 was below 10 million. These are indeed very small totals relative to the populations served by these airports. Lagos in Nigeria for example had fewer passengers than Beirut in Lebanon despite serving a local population that is at least ten times larger. The traffic at Kinshasa in DR Congo is abysmally low and roughly in line with that at Kigali in Rwanda, a much smaller country.

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We place possible winners in three categories: the Ambitious Giants, the Smaller Specialists and the Legacy Players.

THE AMBITIOUS GIANTS

The most ambitious air transportation hubs at the intersection of sub-Saharan Africa and South Asia in the next 35 years appear to be Addis Ababa, Dubai and Istanbul, the last situated not in Africa or Asia but at a valuable crossroads of Africa, Asia and Europe. All three of these cities have ambitious expansion plans for their airports (see table) and all three are home to fast-growing airlines that harbor big global ambitions, Ethiopian Airlines, Emirates and Turkish Airlines.

Addis Ababa is expanding its current Bole International Airport and has designs for a new airport (video) that could handle as many as 80 million passengers per year. The two airports together would handle over 100 million passengers annually.

Dubai already enjoys a high level of traffic at Dubai International Airport but has also been building the Al Maktoum International Airport (at Dubai World Central) that could become the busiest in the world. The combined Dubai airports could potentially handle over 200 million passengers. On current trends, Doha and Abu Dhabi airports will also be contenders, albeit on a smaller scale.

Istanbul is also expanding its existing Istanbul Ataturk Airport as well as building a new airport (video). This “new center of aviation” and “world’s largest transfer point” has designs to handle over 200 million passengers in the next decades. As with Addis Ababa and Dubai, Istanbul airport’s ambition is equal to that of its home airline.

THE SMALLER SPECIALISTS

Beirut is well situated and enjoys a common heritage with the Lebanese business diaspora in Nigeria and the rest of West Africa. Notwithstanding political uncertainties, Beirut could develop as an important Africa-Asia hub for business conferences, finance, tourism and other services.

Cyprus and Malta could also be contenders, given their EU memberships and locations.

Kigali has an enviable central location in sub-Saharan Africa and is enjoying a renaissance as the capital of Rwanda. It has the potential and ambition to become an important hub and destination for conferences and other industries and services.

Mauritius has staked a claim as a leading offshore finance center servicing Africa and the Indian Ocean. It may be able to sustain its advantage in financial services or other.

Nairobi is a leading choice for multinationals’ regional offices. Cisco Systems, Coca-Cola, General Electric, Heineken, IBM, Intel, Nestle, Pfizer, Toyota and many other companies have located regional headquarters or important operations in Nairobi. Casablanca, Johannesburg and Lagos boast similar appeal.

Tel Aviv and Haifa could also leverage their location and growing expertise in startups and in technology, software, pharmaceuticals and other services.

THE LEGACY PLAYERS

Paris and London are further afield but both benefit from a long history in Africa and Asia. Both will try to leverage their economic and financial power to be significant players. To a lesser extent, the same is true of Lisbon and other European capitals.

Asian cities too stand to be big winners if education, infrastructure and governance improve fast enough to enable a demographic dividend. Among them are Mumbai, New Delhi, Jakarta and Manila.

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