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Can Satellite Cities Help Solve Africa’s Urbanisation Challenges?

CCI's Executive Director, Kurtis Lockhart was featured in The Economist discussing the concept of new cities as a potential solution to the urban challenges faced by Africa.

You can find the original article on The Economist’s website by clicking here.

For all but the well-off, living in an African city can be dispiriting. Home is often a cramped shack in a fetid slum. Getting to work, if there is any, means navigating rutted streets and manic traffic. Unlit alleys give cover to ne’er-do-wells, making the trudge home even more hazardous. Given all this, it would not be unreasonable to assume that few people would want to live in Africa’s cities. Yet every year millions gamble on swapping a prospect-free rural life for a potentially fortune-changing urban one, however Dickensian. If African cities are creaking, the future looks even more forbidding. Africa’s urban population has trebled since 1990. Over the next 26 years it may expand by another 900m people. By 2100, five of the world’s seven most populous cities could be African. Lagos, unnavigable at the best of times, may be home to 88m people. In theory, urbanisation should bring many benefits. A country typically gets richer as its people move into cities and get more productive jobs. But Africa has largely proved an exception. Wages may be higher, but urbanisation has done less to reduce poverty and transform Africa’s economies than it should have.

As cities burst their seams, advocates have long argued that building new “smart” ones on their peripheries would help alleviate such problems. The Charter Cities Institute, a non-profit organisation, reckons that, if done correctly, such projects could accelerate growth, encourage investment, create jobs and lift millions out of poverty. Chronic underinvestment, poor urban planning, corruption and municipal ineffectiveness have crippled existing cities. Starting afresh does, therefore, have its appeals. After all, similar initiatives, most famously in Shenzhen, helped unleash spectacular growth in China and parts of South-East Asia.

When it comes to building new cities in Africa, however, reality sometimes struggles to match the hype. hope City, a $10bn tech-city meant to house Africa’s tallest skyscraper, should have been completed on the outskirts of Accra, Ghana’s capital, by 2016. Despite earning awards for Roland Agambire, the businessman behind hope’s all-caps dream, it was never built. Akright City near Uganda’s capital, Kampala, was conceived on a similarly grandiose scale, with shopping malls, a 50,000-seat sports stadium and “a signature golf course with seeds for the greens flown in from Florida”. Plagued by debt and scandal, little of the project was ever realised. Last year the company behind it filed for bankruptcy.

Such failures are hardly the exception. Many never move beyond the design stage. Even those that do risk becoming perpetual building sites. “The most visible aspect of most smart cities is roads with nothing on either side,” notes Mira Slavova of Warwick Business School in Britain. Yet giving up on them would be premature. There is no ready manual that predicts whether or not a new city project will succeed, but if there is one country whose experience might come close, it is Kenya. One of its projects has long been viewed as a pig’s ear; the other has the makings of success. Take the pig’s ear first. Unveiled in 2008 as a $15bn smart city project, Konza Technopolis was supposed to be the heart of Kenya’s “silicon savannah” that, by 2020, would create 100,000 jobs and add 2% to GDP. Three years and many missed deadlines later, there is still far more evidence of savannah than silicon.

By contrast, Tatu City, on the northern outskirts of Kenya’s capital, Nairobi, is flourishing. Some 23,750 people already live, study or work there and 78 businesses have made it home. Moderna, an American drugmaker, is opening a $500m vaccine manufacturing facility, its first in Africa. Zhende Medical, a Chinese medical-supplies manufacturer, is also setting up shop.
Tatu and Konza were conceived at the same time. Each, at roughly 5,000 acres, is of a similar size. Both aspire to house populations of more than 200,000 people. And both have been designated Special Economic Zones (SEZs), meaning that the businesses they house are eligible for tax benefits and other incentives. Why is one more likely to succeed than other? The answer lies not in their similarities, but in their differences, and these provide lessons for other developments in Africa.

The first is ownership. Konza’s proprietor is the state. Tatu City’s is Rendeavour, a big private urban land developer. During Konza’s troubled existence promised government funding has failed to materialise while politically connected bigwigs have been accused of cashing in on the project, spooking potential clients. Initiatives led by the private sector, however, are disciplined by the market, says Kurtis Lockhart, the executive director of the Charter Cities Institute: “If they don’t make it work, they go out of business.”

Second, location matters. Shenzhen succeeded in part because it was an outpost of Hong Kong. Likewise, Tatu, some 20km north of central Nairobi, is better plugged into the capital and its labour market. CCI Global, a big African outsourcing firm, is building a 5,000-seat call centre in Tatu, partly because the development is close to Nairobi’s densely populated northern suburbs and two nearby universities, says its Kenya director, Rishi Jatania. Konza, by contrast, sits in splendid isolation about 80km south-east of Nairobi on the Athi Plains, where you are more likely to see a giraffe than a human being.

Infrastructure matters too, in a country where such things are often unreliable, Tatu City boasts its own water supply, energy grid and internet network. Konza’s management seem much more airy-fairy when asked about such matters, grumble potential tenants touring the site. Tatu’s planners eschew grandiose visions, preferring to grow organically and in response to demand. “You have to incubate a city,” says Dean Landy, Rendeavour’s head of urban planning and design. “A lot of megacities try to build everything at once.”Finally, the rule of law must prevail inside new ecosystems. Tatu City’s land ownership is transparent. Konza’s, until recently, was not. Many residents welcome Tatu City’s regulated environment. Lawrence Njagi, a publisher, moved to Tatu after houses near his old home were turned into bars. Strict building rules in Tatu make a repeat unlikely. “Living here gives me peace of mind and predictability about what my neighbour will do,” he says. Mr Njagi puts his finger on what many believe is the key factor that determines success. Tatu works because it has the freedom to set its own rules. It is more than just an SEZ, a concept that has mostly underwhelmed in Africa. Experts categorise it instead as a “charter city”, a loosely defined term that in essence describes an urban development with enough freedom to bypass weak state institutions and shape its own governance.
In a state like Kenya, where property rights are flimsy and bureaucracy arbitrary, Tatu City offers comforting predictability. It is a sort of haven in the jungle. Nairobi is notorious for its crime, but Tatu, for the moment, is safe. The barred windows ubiquitous on houses elsewhere in Nairobi are not yet in evidence here.

Freewheeling Nairobi types who venture into the development can initially be aghast to see speed limits strictly enforced. Rule-breakers even have their wheels clamped. A strict no-littering policy means Tatu’s streets, compared with the rest of the metropolis, are eerily clean. “We are like Singapore,” jokes Stephen Jennings, Rendeavour’s CEO. No new city will directly answer the needs of Africa’s urban poor. Some do not even pretend to. Since the average price of a property at Eko Atlantic, a swish new city development being built on the outskirts of Lagos, is $415,000, it “caters only to the upper echelon of the upper echelon”, notes Mr. Lockhart of the Charter Cities Institute. Tatu City aims to be more inclusive. One-bedroom flats in its cheaper districts sell for $34,000. Such a price will still be unaffordable for most Kenyans. Yet the point of charter cities is not to help the poorest directly, but indirectly. Strong governance, coupled with fiscal incentives, are intended to attract investment, the benefits of which will ripple through the economy.

Kenya has done much that is worth emulating. Its courts have proved independent enough to see off politically connected bigwigs wanting a share of the Tatu pie. Above all, it has legislation robust and forward-thinking enough to give Tatu the space it needs to be a genuine charter city.

In much of Africa laws passed in the 1990s with export-processing zones in mind are becoming outdated. Today’s cities have far greater potential than the narrow industrial sites once envisaged. Updating those laws requires much greater co-ordination between government agencies, meaning there is “potential surface area” for corruption to occur, notes Preston Martin, the president of the Adrianople Group, an advisory firm. Getting those laws right, however, could make a world of difference. If African governments want new cities to work, they need to give the developers more of a free hand.

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