Wired has a new article by Laurie Clarke and Nelson C.J. on Itana (formerly Talent City), a new tech hub being developed near Lagos. Itana, led by Nigerian tech entrepreneur Iyinolwua Aboyeji, is one of CCI’s key partner projects in sub-Saharan Africa. We’re glad to see charter cities projects across the continent generate such interest and excitement about their potential to boost innovation and create economic opportunity in Africa. However, the piece includes certain claims which are either inaccurate, misleading, or in need of additional context, which this blog will provide.
At multiple points, the article presents a confused, and in some cases inaccurate, understanding of both the Lekki Free Zone and special economic zones(SEZs) more generally. The Lekki Free Zone is a 150 sq km SEZ located along the coast adjacent to Lagos. Itana is located within the Lekki Free Zone, as a constituent piece of Alaro City, a new city development within the free zone. In the second paragraph of the article, the zone is described as being “outside the Nigerian state” by anthropologist Omolade Adunbi. This is simply not the case.
The Lekki Free Zone is one of 19 active SEZs designated by the Nigerian Export Processing Zones Authority (NEPZA), established as a joint public-private venture between a consortium of Chinese firms and the Lagos State Government. Public-private partnership projects like the Lekki Free Zone are very much a part of their respective state, responsive to the laws and regulations governing SEZs and the zone authority. What the zone itself, and companies operating within the zone, can and cannot do is bound by Nigerian law and by NEPZA.The Lekki Free Zone’s existence is itself an act of industrial policy on the part of the Nigerian federal and Lagos State governments to promote investment and facilitate regional economic development–not create a stateless vacuum. This is common practice in hundreds of countries, with support from institutions focused on building state capacity and facilitating local economic development, not undermining territorial sovereignty, such as the United Nations Industrial Development Organization.
Adunbi later goes on to say that SEZs are “antithetical to the progress of Africa.” History tells otherwise. While many SEZs in Africa have not been particularly successful for a wide variety of reasons (bad management, locations, infrastructure support, policies, etc), they have been successful for some countries. Prior to the recent civil war, Ethiopia’s industrialization was being driven in-part by a well-managed, reasonably successful industrial park system which allowed the country to compete with Bangladesh, Vietnam, and other investment destinations which typically win out over African countries. The Tema Free Zone in Ghana was transformed from major failure in 2005 to beacon of economic development by the 2010s. Famously, Mauritius was an early African adopter of the SEZ model in the 1970s, successfully diversifying its economy and attracting higher value-added activities like textile manufacturing. If SEZs can successfully drive economic transformation throughout Asia, the Middle East, Latin America, and elsewhere, it can and has been done in Africa.
There are also some claims about what it is that CCI advocates for which warrant clarification. CCI is described as being part of a movement to build “privately-owned city-states,” which is not reflective of how CCI envisions charter cities. We see charter cities as public-private partnerships, in which there is a role for both parties. While it is true that some participants in the broader new cities/competitive governance ecosystem want to see the state replaced entirely with private actors, this is not what CCI advocates for. Charter cities are a co-development strategy, not a form of political exit.
The article also claims that CCI advocates for “quasi-independent, pro-business zones.” CCI does not advocate for any infringement of the sovereignty of the state hosting the charter city. A charter city is a constituent piece of its country, just like any other local government. This is not incompatible with a jurisdiction authorized by the state to operate under a unique set of rules, or to have a significant degree of autonomy in making policy. And while CCI generally favors business-friendly policies–it should be easy to start a business, comply with regulation, pay taxes, and so on–our animating purpose is to create the conditions for human flourishing, not just flourishing for a foreign investor. We are building cities, not industrial parks. The charter cities which can have the greatest impact are those widely accessible to the local population, provide quality public services and infrastructure, create jobs and foster entrepreneurship, and generate agglomeration economies–the benefits which accrue from the concentration of more people, ideas, and resources in an area. As stated above, it’s important to recognize that CCI does not advocate for the vision of charter cities originally elaborated by Paul Romer, in which a high-income “guarantor” country would oversee a special jurisdiction in a low-income country.
Regarding Honduras, where several charter city projects have been developed under the country’s now-repealed Zones for Employment and Economic Development (ZEDE) Law, it’s worth noting that while the ZEDEs are privately operated, the Technical Secretary overseeing the zone must be approved by a government committee, as must several other ZEDE functions. The two most well-known ZEDEs, Prospera and Ciudad Morazan, also have democratic governance mechanisms baked into their charters to allow for resident selection of the Technical Secretary, local council representation, public veto powers, and other considerations. And Ciudad Morazan in particular is targeting low-income Hondurans, renting townhouses and apartments at rates local Hondurans can actually afford, in a safer environment with better public services than those offered in the rest of Honduras.
