Transforming Sri Lanka’s cities to be more liveable and prosperous

By Ede Ijjasz-Vasquez 

and Françoise Clottes

Sri Lanka is in many ways a development success story… a success story for its people.

Growth of income per person in Sri Lanka has averaged a little more than 7% a year over the past five years, following average growth of just over 5% a year in the preceding nine years.

Amongst the six largest South Asian countries, Sri Lanka has the highest level of economic output per person. Whereas 15 years ago 80% of its output was generated by manufacturing and services, today that figure stands at more than 90%.

Human development indicators are impressive by regional standards. All the development success achieved so far in Sri Lanka has helped propel the country towards middle-income status. But service delivery systems in all areas must now adjust to facing new and changing demands, while improving further on fairness and inclusion.

With sustained high growth, Sri Lanka has in fact largely eradicated extreme poverty. Poverty has come down from 22.7 to 6.7% between 2002 and 2012/13. One quarter of Sri Lankans, however, are nearly poor, as defined by living above the official poverty line (equivalent to $1.50 a day but below $2.50 a day). Nearly poor households are highly vulnerable to falling back into poverty as soon as they face health problems, lose a job, or an income earning family member.

In this overall context, the country’s urbanisation strategy is a vital ingredient of any inclusive development strategy and has direct linkages to macro-economic development, fiscal management, rural-urban integration, poverty reduction and shared prosperity, and environmental sustainability. How successfully Sri Lanka manages its cities will determine how quickly, efficiently and fairly the country moves to higher middle-income status.

In recent years, Sri Lanka has been one of South Asia’s most dynamically urbanising countries. Night-lights and other satellite data reveal that Sri Lanka’s urban areas have been expanding rapidly since the turn of the century. This is especially so on the periphery of Colombo and along the major transport arteries radiating from the capital towards both Kandy and Galle. 

The result: Sri Lanka is now home to multi-city agglomerations – continuously lit belts of urbanisation containing two or more sizeable municipal or urban councils – that stretch from the metro Colombo region along the corridors to Kandy and Galle-Matara. Rapid urban growth is also observed on the Jaffna peninsula recently.

Expanding urbanisation provides Sri Lanka with the potential to further transform its economy. A key trait of urbanisation is that the concentration of people and enterprises in cities and towns can improve productivity, stimulate innovation and spur job creation, specifically in manufacturing and services.

Indeed, the post-1977 concentration of the garment industry in and around the metro Colombo region played a vital role in helping to drive the export-led growth that has been so important to Sri Lanka’s overall development.

Urbanisation is also important for Sri Lanka’s poverty alleviation and shared prosperity, as more than half of the people belonging to the bottom 40% are in fact already located within multi-city agglomeration areas. Regions with high poverty rates are often associated with weak links to the labour market, particularly among the youth and educated women. To them, reinforcing the economic link between urban areas and rural areas is crucial. 

To enjoy the full economic benefit of urbanisation, however, countries must successfully address the challenges it poses. Urban growth puts pressure on a city’s infrastructure, its land and housing markets, and the environment.

In many respects, Sri Lanka has done better than its South Asia counterparts in handling these congestion forces, according to a new report – Leveraging Urbanisation in South Asia: Managing Spatial Transformation for Prosperity and Liveability – by the World Bank.

Although Colombo still fares poorly in international rankings of liveability, Sri Lanka’s urbanisation has been far less “messy” – as evidenced by the relative absence of slums and extreme urban poverty – than in the rest of the region, the report found. And its cities have less air pollution than other cities in the region.

Still, Sri Lanka is facing obstacles in meeting the challenges posed by urbanisation.

The World Bank report found that the country suffers from considerable “hidden urbanisation,” where official national statistics understate the share of population living in areas with urban characteristics.

In Sri Lanka’s case, there is evidence that as much as one-third of its population may be living in these unrecognised urban areas. Acknowledging these urban populations and the true extents of urban areas would help to facilitate better planning and metropolitan management as well as the delivery of public services. This includes better systems of sanitation, public transport and safe spaces that ensure security for all, especially women and children.

Actions in several areas can help fulfil the potential of Sri Lanka’s cities and further bolster the nation’s economic momentum.

As in the rest of South Asia, improvements in the ways in which cities are governed and financed present the opportunity to improve basic service delivery and help address congestion constraints. This can be achieved through improved fiscal relations between different levels of government to empower urban local authorities, the identification of ways to increase the resources available to urban governments to allow them to perform their mandated functions, and the strengthening of mechanisms to hold local governments accountable for their actions. 

Steps to improve the ways in which the nation’s cities are connected and planned, to reform land and housing policies to address the country’s housing shortage, and to ensure that adequate flood protection measures are in place can also help ensure Sri Lanka reaps its full urban dividend.

In taking action, it is important to recognise that one size may not fit all and every country has to find its own way in managing urbanisation. Carefully targeted solutions that build on local characteristics and conditions may offer the best opportunity to achieve the desired results.

For the multi-city agglomerations of Colombo and Kandy and Galle-Matara, managing sprawl and ribbon development along the roads that connect them will be a priority, along with alleviating traffic and land congestion. Better planning and improved metropolitan management, which recognises the true extents of these agglomerations, can help achieve this.

For cities like Batticaloa, Trincomalee and Jaffna, improved connectivity with the rest of the country and planning for their future growth can help realise their potential. 

In the end, whether it’s continually re-inventing downtown areas of cities like Colombo and Kandy, better managing growth on metropolitan peripheries, or increasing the connectivity of Batticaloa and Jaffna and other urban settlements in the north and east of the country, it’s all about making cities places that people want to live and work, and where firms can be productive and innovate.

Today, Sri Lanka is ahead of most South Asian nations in this regard. Steps to further improve the management of its cities can help keep Sri Lanka on an upward economic path and join the ranks of richer nations in terms of both prosperity and liveability.

(Ede Ijjasz-Vasquez is Senior Director, Social, Urban, Rural and Resilience Global Practice, World Bank. Françoise Clottes is World Bank Country Director for Sri Lanka and the Maldives.)