Pakistan, India Among Top 5 Countries With Biggest Rise in Urban Population

Irshad Salim (BE2C2 Report) — Pakistan and India including China, Nigeria and Indonesia will become top five countries with the biggest urban population expansion, in absolute numbers, during the period 2017 through 2030.

In over a decade, rapid urbanization in these top 5 countries will boost economic development and consumer spending growth, as urban consumers will enjoy greater purchasing power and will be easier to reach than their rural counterparts, says a report by Euromonitor International using national statistics and UN data sources.

According to the report, urbanization in these countries will be accompanied by transition to smaller households and new consumption habits, which in turn will generate new business opportunities, and growth in real-estate sectors driven by swelling demand for housing.

However, the challenges that urbanization brings can be significant and include infrastructure deficit, rising pollution and worsening inequalities, all of which can impact the consumer market and business environment in urban agglomerations in these countries. Two South Asian megacities, Mumbai and Karachi, are already facing such challenges.

In 2030, the number of households in Karachi with an annual disposable income of US$15,000-US$45,000 will be 755,000, a significant rise from 224,000 in 2016 — over 26 percent growth per annum on the average for the next 13 years.

Given the existing conditions and upcoming challenges Pakistan’s financial capital and its biggest city faces, the World Bank this week announced it will give soft loans to modernize Karachi’s neighborhoods, encourage civic ownership, and help Pakistanis, specially women and the poor in its megacities with affordable finance for entrepreneurship and self-empowerment.

Read more at: World Bank approves $223m package to modernize Karachi, help Pakistanis access finance

Although Pakistan is often overshadowed by China and India, according to the report, consumer goods companies need to start paying more attention to the country, because it is home to a burgeoning urban middle class that is starting to earn more and spend more, particularly on fast-moving consumer goods. Pakistan has one of the highest youth bulge in the region — over 60 percent.

The forecast shows India will record the second biggest absolute increase in urban population globally in the 2017-2030 period. But India will remain a predominantly rural nation, with only 41.8% of the population living in cities in 2030.

The country’s per household income and expenditure levels are still below the averages for the Asia Pacific region, Euromonitor International’s Income and Expenditure: India Country Briefing highlights.

Income inequality in India is also relatively high by global standards and is set to rise in the period through to 2030. As a result, the potential of the consumer market is constrained by weak purchasing power and a predominance of lower social classes, says the report.

The urban population in Nigeria is set to expand by 61.6% (an extra 58.4 million) during 2017-2030. In percentage growth, this will be by far the fastest rate of all the top five countries, although in absolute terms the expansion will be far smaller than that of populous China and India.

“Such a rapid rate of expansion makes urbanization undeniably one of the most important trends impacting consumer-focused industries in Nigeria.”

The report also observes that China’s rapid urban growth has resulted not only in a rising number of large cities, but also megacities with populations above 10 million. Of the 31 megacities worldwide, six were in China as of 2016.

BE2C2 is a business unit of Irshad Salim Associates  which produces reports, infographics, analytics and analyses based on data and information from sources readily available on the web and in the public domain.

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