The Economics and Politics of Kenya’s “Smart City” Push
Photo via Bloomberg News
JIYON CHATTERJEE: Africa’s “baby boom” is fueling the world’s youngest workforce—but on a continent where various nations’ fiscal space has declined while allocation of resources has become more complicated, African governments are turning to innovative solutions to create future opportunities for their young workers. Kenya has fully embraced the idea of establishing “smart cities” as development panaceas: modernized urban centers that harness technology to foster economic efficiency, sustainability, and growth. But the push to create such urban techno-hubs in Kenya has come with its own set of political challenges.
What is the technological basis of a smart city, and what would it mean for Kenyan residents? The framework for all smart cities is the utilization of information and communication technology to create an urban center with higher living standards, better working conditions, and greater sustainability. By collecting and analyzing real-time data through a centralized information network, a smart city can make better evidence-based decisions and manage its resources more efficiently. Every element of urban life—including traffic flow, waste management, waterworks, and power supply—could function in a seamless, self-sustained manner with its data connected to the digital network. A normal day in a Kenyan smart city could involve self-driving electric cars that abide by speed limits (a rarity for drivers in Nairobi today), improved safety due to efficient crime monitoring similar to Singapore’s digital system, and even direct democracy with digital civic participation. Artificial intelligence is only making such a reality more likely.
Some may view such cities as a utopian dream. Others might see them as more reminiscent of fictional Orwellian surveillance states. But particularly in emerging African economies like Kenya, the transition to sustainable smart cities is a question of long-term survival. Over the next 26 years, Africa’s urban population could grow by 900 million people, and it is possible that by 2100, five of the seven most populous cities in the world will be in Africa. The future of Africa is urban. These cities will need to harness technology in order to be livable and sustainable for so many residents.
It is in this context that President William Ruto, elected in 2022, recently announced the selection of five Kenyan towns to be developed into zero-carbon smart cities. But he is also managing a careful balancing act. On the one hand, having served as the deputy president in Kenya’s previous government, Ruto has positioned himself as a supporter of the pro-growth program initiated by his predecessor. Having welcomed major foreign direct investment (FDI) in connective infrastructure and technology development, Kenya has seen relatively higher levels of growth than other African economies—even in the economic crunch following the COVID-19 pandemic.
However, as has been the case for several other countries in Sub-Saharan Africa, an embrace of FDI has meant a skyrocketing degree of Chinese involvement in the Kenyan economy. China is Kenya's leading trade partner and remains the nation’s biggest investor too, providing the capital for landmark projects like the Nairobi Expressway and Standard Gauge Railway. Despite this resulting in more stable growth, the perception of Chinese dominance in the country’s economic affairs has created an anti-China bloc among some Kenyan workers and traders, highlighted by an increase in local protests against Chinese projects and businesses. To draw a contrast with his more labor-friendly and left-wing rival, Raila Odinga, Ruto ran his presidential campaign on an explicitly anti-China platform, proposing mass deportations of Chinese workers whom he accused of occupying jobs for Kenyans. More substantively, he pledged to improve transparency about government contracts with the Chinese while reducing overall borrowing from Beijing.
This platform has largely been abandoned by Ruto upon assuming office. He appears to have chosen progress over populism, publicly assuring China’s special representative on African affairs: “We cherish the robust friendship that Kenya enjoys with China. We will step up and expand these relations, on infrastructure, agriculture, education, among other broad array of issues for the mutual benefit of our countries.” His change of stance is likely related to his economic agenda: two months after his public pro-China turn, Ruto announced his smart city plan. Urbanization requires infrastructure, and infrastructure requires funds; Beijing has been Kenya’s go-to source in that regard. China also has extensive experience in creating successful smart cities; the city of Shenzhen, which used to be a small town across the river from Hong Kong, is today held up as the country’s “model” satellite city and a blueprint for using technology to advance other cities around the world.
Ruto has, however, indicated a willingness to turn to more diverse sources of inspiration and capital to realize his smart city program. The stated model for the five announced cities is South Korea’s Incheon Free Economic Zone, which operates as a satellite region of Seoul. Kenya is going beyond mere inspiration: Ruto has indicated that the digital economy of the new cities will be designed by shared cutting-edge technology from South Korean firms. South Korea will thus have a major share in the digital platform of Kenya’s new urban centers.
An integrated digital network for these cities would create an attractive environment for businesses to provide jobs for their residents. Digital technology has already had a tremendous ripple effect on the Kenyan economy. In December 2023, for the first time in Kenya’s history, the country had a higher number of smartphones in use than traditional feature phones. Combined with its status as a leading internet-user nation in Africa, Kenya’s economy has seen new opportunities due to its mobile boom: mobile-based accounts have boosted access to capital for otherwise unbanked groups, communications technology has improved social trust between rural and urban populations (increasing the potential for economic exchange), and smartphones have increased information access for farmers hoping for better agricultural productivity. Mobile technology has increased connectivity in the Kenyan economy, and these benefits improve the entrepreneurship landscape—with the use of smartphones in particular increasing the accessibility and efficiency of these upsides. Connecting these smartphones—and even technology beyond phones, such as cars—to one urban network will undoubtedly raise quality of life. Providing access to this data would also open new doors for private sector involvement.
This seems to be part of Ruto’s plan: the proposed cities are envisioned to have cloud banks to store data that could help investors develop better technologies. But he must remain aware of the dangers, too. It has clearly not escaped Ruto’s notice that Kenya remains mired in a debt crisis due to high borrowing, especially from China. To mitigate this problem, it is important that Kenya incentivize a competitive bidding process for contracts to avoid overpaying (as they were widely criticized for doing in development of the Chinese-constructed Standard Gauge Railway).
Kenya should also prioritize projects that will generate returns with greater immediacy instead of vanity projects that appear glitzy in concept but fail to pay for themselves in reality. This may be especially difficult to accomplish when developing cities that are, by design, supposed to be futuristic and beneficial in the long-term. Some have argued that a potential solution to this issue is to give private developers a greater hand in the creation of smart cities: where government-driven Kenyan projects see limited funding, burdensome bureaucracy, and slow progress, projects led by the private sector are “disciplined by the market” and place a greater emphasis on seeing quicker returns.
Finally, national security concerns should be taken into account: backdoor access to the data of urban Kenyans on foreign-created digital platforms could create problems for Kenya. The neo-colonial, authoritarian instincts of China in this regard are a particular concern. Turning to Korean firms is a good first step in diversifying the source of their technological platforms, but Kenya must stay vigilant in ensuring that its new smart cities remain beneficial primarily for Kenyans—not for vulturous foreign interests.
Jiyon Chatterjee is a columnist for On the Record. He is from New York City and is a freshman studying economics in the College. He is especially interested in the intersection between policy, law and economic justice.