The Economist has an interesting article discussing two charter cities in Kenya:
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 first difference they identify is ownership:
Konza’s proprietor is the state. Tatu City’s is Rendeavour, a big private urban land developer.
As a result, these two cities have followed very divergent paths:
Tatu City’s land ownership is transparent. Konza’s, until recently, was not. . . . 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.
People often assume that “privatized’ means the same thing as “unregulated free for all”. Actually, privately developed cities have an incentive to set rules that create a pleasant environment:
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.
It is increasingly clear that large governments are not good at urban planning. In many countries, including the US, local governments have counterproductive zoning rules, provide poor transportation infrastructure, and are ineffective at law enforcement. I expect to see many more experiments along the lines of Tatu City.
