Kenyan startup city tries to tackle Africa's problem of urbanizing while poor

Turn into Tatu City on the outskirts of Kenya's capital, Nairobi, and it feels like entering a different world.

Even the country's most reckless drivers are transformed, slowing to a crawl and not tossing trash out the window — thanks to surveillance cameras and rigorously enforced penalties for speeding and littering.

For the 5,000 people who have moved into Tatu, a "startup city" that welcomed its first residents four years ago, the ruthless upholding of such rules makes the place appealing.

"Tatu has more law and order than other places," said Valerie Akoko, a digital content creator who moved in two years ago. "I've never seen Tatu City dirty."

Situated on 2,023 hectares, Tatu City aspires to be what its name suggests: a city, privately owned, that its designers hope will eventually have a population of 250,000.

It is already home to 88 businesses employing 15,000 people. They include CCI Global, which operates a 5,000-seat call center, and Zhende Medical, a Chinese medical supply manufacturer.

There are similar projects around the world. But in sub-Saharan Africa, champions of the idea hope that new-city developments can address the continent's urbanization conundrum: While the growth of cities has rolled back poverty elsewhere, the region has largely been an exception.

History suggests that as people move into cities, productivity increases, wages rise, exports grow and a country gets richer. But in Africa, urbanization has rarely unleashed such economic transformation.

In theory, Africa should be prospering. The continent's urban population is set to grow by 900 million by 2050, according to the United Nations, more than the present urban population of Europe and North America combined.

"Towns and cities in Africa today simply lack the tax base needed to invest in the urban infrastructure needed to accommodate the tsunami of people being added to their ranks in a short period of time," said Kurtis Lockhart, director of the Africa Urban Lab, a research center at the African School of Economics in Zanzibar.

Weak property rights and political tensions can make the problem worse.

Even Tatu City has battled Kenyan politicians and politically connected businessmen. In 2018, the London Court of International Arbitration ruled in favor of the development's multinational owner, Rendeavour, in a dispute with its Kenyan former partners, including a former governor of the central bank. The dispute delayed project development by several years.

Last year, Tatu City's Kenya head, Preston Mendenhall, took the unusual step of accusing the governor of the county where the development is based of extortion, saying he had demanded land worth $33 million (approx. Ksh.4.3 billion) in exchange for approving its updated master plan.

The governor denied it and is suing Tatu City and Mendenhall for defamation. No ruling has been made.

Still, the case for building new cities, complete with new infrastructure, is compelling to some. The Charter Cities Institute, a Washington-based nonprofit, argues that, done properly, such projects could drive growth, create jobs and "lift tens of millions of people out of poverty."

The institute sees Tatu City as a model. Yet building new cities is hard. Africa is littered with failed projects.

A handful have shown promise. Angola's Quilamba city, whose construction began in 2002, is arguably the most successful, with a population of more than 130,000. It was built by CITIC, a state-owned Chinese company, but is owned by the Angolan government.

Perhaps a dozen new city projects — from Zanzibar to Zambia — are underway in Africa that stand a chance of emulating Quilamba, experts reckon. Of these, Tatu is the farthest along, with 26,400 people already living, working or studying there.

Experts agree that the private sector must play a role in African urbanization, saying African states are too fiscally constrained to fill the investment gap themselves. Rendeavour, a private company with a multibillion-dollar balance sheet, has deep enough pockets to make a difference.

But leaving city-building to the private sector alone can cause problems, for instance by worsening inequality. The average price of a property at Eko Atlantic, a new-city development on the outskirts of Lagos, is $415,000 (around Ksh.53.8 million), far beyond the means of most Nigerians.

"Startup cities can serve as hubs for innovation and alleviate pressure on overcrowded urban centers," said Anacláudia Rossbach, executive director of the U.N.'s Human Settlements Program, or UN-Habitat.

"However, to be impactful, they must prioritize inclusivity, affordability and integration with existing urban areas, ensuring they serve all socioeconomic groups rather than becoming isolated enclaves for elites."

A one-bedroom apartment in Tatu City sells for $45,500 (around Ksh.5.9 million), still beyond the means of most Kenyans, but within reach of some in the emerging middle class. Kenya's per capita GDP was $1,961 (about Ksh.253,937)in 2023, according to the World Bank.

The development collaborates with Kenya's government, which has designated Tatu City a special economic zone.

That means companies setting up there are eligible for tax benefits and other incentives, making it a model of private-public partnership, experts say.

Tatu City also appeals to businesses and residents with its transparent governance structure and services that are often lacking elsewhere in Kenya, including its own water supply and energy grid.

It falls under national law but can set its own rules on matters like traffic and what kind of houses can be built, with all plans requiring approval from Tatu's management.

"If you look at the infrastructure, if you look at the utilities, if you look at the controls, if you look at the security, it is one of the best," said Sylvester Njuguna, who lives and owns a restaurant there.

Unlike many startup cities built far from urban centers, Tatu City is 19 kilometers north of Nairobi, close enough to plug into its labor markets.

According to Lockhart with the Africa Urban Lab, new city projects usually succeed if they are close enough to a major urban center and house both a high-quality anchor tenant — CCI Global in Tatu City's case — and good schools. They should operate under effective management and respond to market demand.

Tatu meets these criteria and, unlike many grandiosely conceived African city projects, it has grown organically like Rendeavour's other city projects in Ghana, Nigeria, Zambia and the Congo, according to Mendenhall.

"We are building what the market needs," he said. "We are not putting all the infrastructure on day one."