Set Up for Success: Charter Cities in Sub-Saharan Africa
February 19, 2021
In this edition of Talking Urban Futures in Africa, urban researcher Heba Elhanafy speaks to CSIS Africa Program director Judd Devermont about charter cities in sub-Saharan Africa. They discuss the inevitable rise in charter cities due to population increase in the region, and Heba outlines three key considerations: (1) the necessity of public-private partnerships between the national government and local developers, (2) an anchor tenant to attract initial residents and businesses, and (3) smart site selection. Heba and Judd also discuss the difference between Chinese and Western approaches to charter cities, and underline the need for U.S. policymakers and private companies to harness the momentum of charter city development in sub-Saharan Africa and across the world.
- Heba Elhanafy is an Atlas fellow and urban researcher at the Charter Cities Institute (CCI). CCI is a nonprofit that works on the ground with new city developers to establish charter cities or adopt charter city elements.
The discussion, moderated by Judd Devermont, has been edited for purposes of brevity and clarity.
JD: Heba, what are charter cities? Which charter cities is CCI working on in sub-Saharan Africa?
HE: Charter cities are new cities with new laws that are designed to attract investment and foster economic development. Cities across the world fail every day because they are following old rules and the same old thinking. With such rapid urbanization happening in Africa, new urban spaces need to be built. CCI believes that we can use the new urban spaces as a tool for policy reform, creating better laws that improve the business environment.
In sub-Saharan Africa, CCI is currently working with cities in Nigeria and Zambia, specifically: (1) Enyimba Economic City, Nigeria; (2) Talent City, Nigeria; and (3) Nkwashi, just outside of Lusaka, Zambia.
JD: I'm curious about the value proposition. Why would it be useful for a country to establish a charter city as opposed to just investing in preexisting cities and trying to address some of their deficiencies or inadequacies?
HE: It doesn't have to be either-or. If you have a huge metropolis, you don't have to start from scratch—you can work on figuring out what the weaknesses are and gradually implement policies to change the tide.
But in certain countries, especially in Africa, you have a huge population increase. This means large expansion of existing cities, including satellite cities or new cities. Those satellite cities or new cities—if they follow the same laws that govern the old, unsuccessful cities—will struggle for similar reasons. Because the satellite cities and new cities are being built in sparsely inhabited areas, it is possible to implement deeper economic reforms than at a national level. In short, charter cities are a public policy tool that take advantage of rapid urbanization to implement policies and reforms that would be difficult or impossible to do at a national level.
JD: When a government or a municipal leader considers building a charter city, what are the different factors they have to consider in terms of whether or not this is a worthwhile project? What's the cost of building these cities or the legal regulatory framework that they need to have in place?
HE: CCI believes the best model is a public-private partnership between the host country and a real estate developer. The developer is responsible for the infrastructure build-out, so the government doesn't incur costs, and the private sector tends to be more focused on ensuring financial viability.
A second key consideration is the anchor tenant: a large employer that can help attract initial residents and businesses to the city. Charter cities can start with a university or factory to create the initial set of jobs. The anchor tenant helps set the city's economic trajectory by creating a labor pool that can attract additional businesses and create a vibrant economy.
A third consideration is the site selection. Cities don't exist on their own, right? Even with regulatory autonomy, a city will still be embedded within a larger economic context. Picking a site on an expanding trade route or an economically growing area is key for success.
Lastly, the government should consider the regulatory environment and governance for the city. Specifically, the charter city should focus on an open business environment and an effective government. The charter city government should also have strong capacity and the ability to effectively provide public goods necessary for the city's development. It is crucial that these responsibilities are devolved on the city level to allow them to respond to the needs of their residents and businesses without waiting for support from the national government.
JD: If it's a public-private partnership, how does the private company recoup its investment? What is the financial pathway to building these cities, keeping them afloat, and keeping them sustainable after they've been built?
HE: The developer will recoup their investment from the increase in land value that results from city development. Charter cities should not be viewed as a model to facilitate aid, but as a comprehensive development model. Over the long run, a successful charter city will not just keep itself afloat, but likely will become a substantial contributor to the national treasury.
JD: Thinking about the best location for these cities, what's their proximity to natural populations, or pre-existing cities? And what kind of technological infrastructure do you envision in these cities?
HE: The perfect charter city—or the modern charter city—is usually at least two hours away from a major city or airport. It will still be connected to the existing metropolis, minimizing costly investment in infrastructure while retaining access to the labor market of the nearby city. Its distance will allow it to have sufficient land to scale and develop a sustainable internal economy.
The level of technological infrastructure will depend on the location and target population of the city. In sub-Saharan Africa, lowering the price point and making the city accessible will be a primary focus. As the city's economy strengthens, as it attracts more investments, then the infrastructure—we call it responsive infrastructure—will grow. And it will be custom-made, because it will be responsive to the needs of the citizens.
JD: CCI is not the only organization that is involved in building new cities. There has been a lot of controversy around Chinese-built cities in Africa, particularly Nova Cidade de Kilamba near Luanda. Are there distinctions between the way in which CCI operates compared to Chinese companies?
HE: One difference is that CCI is not building cities. Also, there are key differences in our approach to urban planning and governance.
Most Chinese companies build cities that are master-planned—or over-planned—begging the question: What's going to happen? How is this city going to look in 10 years? At CCI, we have more of an organic growth approach toward urban planning. We believe in a responsive development and government that builds responsive infrastructure. The city should grow as a response to growth demands as well as community demands.
Additionally, CCI believes that governance is a key determinant of long-term economic outcomes in charter cities. By embedding an improved business environment in the physical infrastructure of a new city, it is possible to accelerate the growth trajectory.
JD: Can you walk us through what you think are some of the most successful and unsuccessful charter cities in sub-Saharan Africa and why?
HE: We're still in the early days of the charter cities space. That being said, I'm very optimistic about Enyimba Economic City in Nigeria. They've acquired 10,000 hectares and are currently looking for development partners. Talent City and Nkwashi are also pioneering models to develop knowledge economies.
I can't think of an example of an unsuccessful charter city in sub-Saharan Africa, but I can think of one in Honduras. Honduras has a law that allows charter cities to exist, which is kind of cool. It took the better part of a decade for a charter city to launch. However, there was a lack of both community engagement and clear process from the government, which slowed the development process.
JD: Why should the U.S. government care about charter cities in sub-Saharan Africa? Does it make sense for U.S. policymakers and U.S. companies to support this concept?
HE: Many new city developments in sub-Saharan African, even in my country, Egypt, are built and developed by Chinese contractors and supported by state agreements and collaboration. Those projects are built on an unsustainable economic model that doesn't contribute to the city or the country's development. Charter cities focus on creating both a governance and planning framework that is sustainable and contributes to long-term economic development.
U.S. aid has historically achieved limited sustainable economic development; U.S. policymakers should care and invest in African charter cities as a tool for effective and sustainable development. Charter cities can help springboard reforms in the country or region, accelerating economic development.
Judd Devermont is the director of the Africa Program at the Center for Strategic and International Studies in Washington, D.C.
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