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Talent City: A Response to TechCrunch

Talent City is one of several exciting bright spots driving both infrastructure development and governance innovation in Africa.

TechCrunch has a new article on Talent City. The article revolves around the general ideal of charter cities, their applicability to promoting tech, and infrastructure development for tech and startups in Africa. The article asks four questions about Talent City, questions that I would like to provide my own answers to.

The first question the article asks is, “What are the odds of it working?” While the author of the article never seeks to firmly answer this question, I will. In the US, historically, 90% of startups fail, but the odds are better in Africa, with a 50% failure rate continent wide. Nigeria even improves on those odds, with a comparatively low failure rate of 33%. Not only are the general statistics in favor of this project succeeding, but the talent involved in the project is also a strong indication that there will be success. As the article itself notes, Iyinoluwa Aboyeji (“E”), has already had a very successful career as both a founder and an investor of startups. However, E is not the only experienced member of the Talent City team. The article also notes that the leadership at Talent City is also supported by Luqman Edu, who has extensive experience in real estate and proptech, and Coco Liu, who has a wealth of experience in tech (in the interest of full disclosure, CCI is working with Talent City, and I have a call with Coco Liu’s team about once a month). Furthermore, by positioning itself to develop in Rendeavour’s Alaro City, Talent City is setting itself up to benefit from experienced real estate developers and infrastructure builders. So, not only is Talent City being started in a location where chances for success are statistically higher than in the US, but both the team and their partners have relevant experience. Taking these factors into account, I think that the odds of it working are high.

TechCrunch then asks, “Do African states need charter cities for tech?” The short answer is, “No, African states do not need charter cities for tech.” However, I think it is important to consider the possibilities that charter cities offer in terms of economic growth. One of the success stories that CCI often refers to is the Chinese special economic zone Shenzhen, which for all intents and purposes was a charter city when it was established. Between 1980 and 2019 Shenzhen’s economy expanded 10,000-fold, and today is China’s tech capital. It is unreasonable to think that the world will ever see more than a handful of success stories like Shenzhen’s, and it’s possible that it never sees one of the same magnitude ever again. Yet, I don’t think that it’s unreasonable to believe that the developing world can replicate a fraction of Shenzhen’s success. Imagine if Talent City’s economy were to expand just 1,000-fold over a 30 to 40-year period? The gains would be enormous, and to think that this can happen isn’t a pipedream, it’s a very real possibility. This possibility is even more likely if African states adopt similar governance models to the one that made Shenzhen so successful. Thus, the real question to ask is not whether African states need charter cities for tech, but: “How much tech growth would be left on the table by not adopting a charter cities model?”

The third question that the article asks is, “Can Talent City be Africa’s new Silicon Valley?” Historically, America’s Silicon Valley got its start through a confluence of factors, including: nearby universities, the emergence of semiconductor manufacturers in the area, the rise of venture capital that was associated with the emergence of the semiconductor manufacturers, and US government defense funding. While the exact replication of these factors in another location will not necessarily give rise to a similar set of networks, agglomeration, and spillover effects, the story of Silicon Valley’s rise can provide many lessons for E and other Nigerian entrepreneurs who want to create a hub for innovation in Africa. E already has the advantage of Nigeria being one of Africa’s tech powerhouses, so in order to make Talent City Africa’s new Silicon Valley, he only needs to improve the network and agglomeration effects. The plan to build quality infrastructure that will enable tech startups is a good start, but it likely won’t be enough. However, between Nigeria’s status as a major tech hub on the continent and the high-quality infrastructure that Talent City will be providing, I think that it is likely that E will be able to pull in the other necessary elements of a network that would provide the agglomeration and spillover effects needed to make Talent City Africa’s Silicon Valley.

Finally, TechCrunch asks, “Is Talent City even necessary?” Like the “Do African states need charter cities for tech?” question, the short answer here is “no.” Yet, once again, the better answer is more complicated. There is an estimated US$ 100 billion gap in infrastructure financing in Africa, and in order to close this gap many different sources of financing need to be accessed, including private finance. Africa has a young and growing population and the greatest concentration of resources on the planet, yet it suffers from a chronic lack of infrastructure. It is unlikely that Africa will get the infrastructure that it needs without both public and private finance, and if there is an industry positioned to best provide returns for private finance, its tech. Objectively, Nigeria specifically, and Africa generally, could develop the infrastructure and networks needed to foster the tech industry without projects like Talent City, but that industry would be much worse off for it. Talent City is the first of E’s infrastructure and governance projects, and it is likely the first of many infrastructure and governance projects that will serve both complementary and competing roles. Asking whether Talent City is even necessary is missing the point. The aim of Talent City is not to meet necessity, but to drive innovation.

Talent City is one of several exciting bright spots driving both infrastructure development and governance innovation in Africa. I am more than willing to bet on the success of charter cities in Africa generally, and on Talent City’s success in particular.

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