Okey Umeano is chief economist at Nigeria’s Securities and Exchange Commission

Africa has a rapid rate of urbanisation. As of 2021, 43% of the continent’s population live in cities, compared with 14% in 1950, and the figure is projected to hit 60% by 2050. As more people seek work opportunities, better infrastructure and higher standards of living – rarely obtainable in rural areas – they move to urban areas to find them.

Urbanisation in Africa differs from the European and North American experience in not being accompanied by industrialisation. Africans moving to the cities are not going there to take up jobs created by the development and expansion of the economy, but to enjoy whatever infrastructure is available. Moreover, their influx aggravates unemployment, inadequate housing and congestion, threatening ultimately to overwhelm the infrastructure that draws them in the first place.

New space age

Some experts believe that the charter city concept may provide a solution to these challenges. First introduced by economist Paul Romer in a 2009 Ted Talk, as the name implies, charter cities are governed by charters that allow them to be administered under separate laws from those in the rest of the country. Many are constructed from scratch with the goal of getting the infrastructure, economic and social life of the city right from the outset.

A charter city is administered under separate laws from those in the rest of the country

A charter city’s ability to impose good governance, often with lower taxes and less regulation, is conducive to sustainable economic development. According to the non-profit Charter Cities Institute (CCI), the model allows for policy experimentation and the implementation of administrative and regulatory best practice, so attracting investment, creating jobs and improving productivity. Charter cities are often focused around a theme, such as manufacturing and industrialisation, technology, health, education, etc.

You may ask, isn’t this what special economic zones (SEZs) are? But charter cities are larger and more ambitious than SEZs, have greater governance authority and a more varied industry base, and may operate under a legal system that is different from the rest of the country.

Mark Lutter, founder and executive director of CCI, said in a September 2020 podcast that given the option, people would prefer to live in a charter city because they allow for easier registration of businesses, often have lower taxes, better environmental and education laws, as well as a host of other factors that people don’t really think about that often until they have to interact with government.

Success stories

Obtaining the required investment is a challenge. One option is for a charter city to be sponsored by an economically strong and developed foreign government, which may also provide anchor companies and industries. Hong Kong was built and administered by the British in this way, with separate laws and systems from the mainland.

Learning from the Hong Kong experience, China has gone on to establish other such cities, under their own administration. Shenzhen is a shining example. Once a small cluster of villages with about 100,000 inhabitants, it is now a city of 20 million people with impressive infrastructure and capabilities. Singapore and Dubai are other examples.

A charter city allows for easier registration of businesses and lower taxes

Variations on the charter city model are emerging in Africa. In Nigeria, Enyimba Economic City is a public-private sector partnership project (the preferred model for today’s charter cities) backed by the African Development Bank, with the International Finance Corporation providing advisory services. This city targets manufacturing and industrial development, and promises more than 600,000 jobs. Although construction has not yet begun, the city has strong support from state and federal government and draft regulations have been published in the government gazette.

Also proposed in Nigeria is Talent City, which takes Silicon Valley as its model. Led by entrepreneur Iyinoluwa Aboyeji, it is focused on creating a new tech hub, with a regulatory framework designed to attract companies and entrepreneurs not just from Lagos but from all over Africa.

Meanwhile, in Zambia, 36 miles east of the capital Lusaka, the new city of Nkwashi is taking shape. With its own business district and a university district built around science, technology, engineering and mathematics education, Nkwashi will ultimately accommodate 100,000 residents. More such cities are on the drawing board, although problems in progressing, financing and constructing them go with the territory.

While the economic strength a developed country sponsor could bring to a charter city is desirable, Africa’s colonial experience may prevent that model taking root on the continent. Another potential impediment is opposition to the idea of allowing cities to carve out different legal spaces for themselves from the rest of the country.

Perfect fit

Africa is home to some of the most congested cities on the globe, with the poorest levels of infrastructure and services. CCI studies show that charter cities are best suited to low/middle-income countries experiencing rapid urbanisation, capable of maintaining a baseline level of stability and with a minimum level of political openness. This seems to describe the majority of countries across the continent.

It’s an opportunity that is hard to ignore. As Lutter says: ‘Charter cities can be this value proposition… this model for economic development that is liberal, that is tolerant, that is cosmopolitan, that does allow you to see strong economic growth and poverty alleviation that can hopefully make the world a better place.’