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Russian Firm to Build Cities in Kenya and the Democratic Republic of Congo

September 12, 2011

Fascinating Bloomberg article via Alex Tabbarok:

Renaissance Partners, the investment unit of Moscow-based Renaissance Group, plans to build a 6,400- acre city in the Democratic Republic of Congo as it seeks to benefit from Africa’s urbanization.

The Russian firm is working on a master plan for the new urban center after securing the land outside Lubumbashi, the country’s second-largest city, Arnold Meyer, Renaissance Partners’ managing director in charge of real estate in Africa, said in an interview in London. Renaissance is considering similar projects in Ghana, Nigeria, Senegal and Rwanda, he said.

“The West has peaked in terms of economic growth and the new markets are in Africa,” Meyer, 39, said. “And the main drivers of this growth in Africa are going to be cities.”

Meyer’s theory of peak Western growth is fallacious, but he’s certainly correct about the potential for cities to lift the developing world out of poverty. An optimistic interpretation is that these efforts take the hotel-resort model and extend it on the city scale. Still, two things immediately make me apprehensive. There’s a reason the Congo and Kenya have been slow to grow into prosperous countries: bad governance. With this kind of development project, there’s a hardware and a software problem. The hardware problem is straightforward. Build beautiful structures and walkways next to lovely parks. Add a transporation hub. Sprinkle a stadium on top. The really hard problem is the software layer. How are people going to behave? What rules will they abide by? If they’re merely applying the same rules that the rest of the country currently lives by, I am less sanguine about the prospects. Lastly, I wonder what people will be doing in these cities. Why will businesses operate here?

Here’s a video offering some details on Renaissance’s $5 billion Kenyan project, Tatu. On a first pass, it looks too much like a updated version of Le Corbusier’s Radiant City, the archetype of centrally planned authoritarian high-modernism. But maybe I’m only in a foul mood this morning. You decide:

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5 Comments
  1. twistedone151 permalink
    September 13, 2011 7:46 pm

    In addition to the concerns you stated, I’d add another: the threat of nationalization. The Kenyan or Congolese government could have a plan like:
    1. Let foreigners bring in investment capital, build infrastructure, and generate a tax base,
    2. Send in the Army to take it.
    This adds another level of risk to projects like these.

    • Mike Gibson permalink*
      September 13, 2011 9:30 pm

      indeed.

  2. Zach C permalink
    September 14, 2011 1:17 am

    I read this article shortly after returning from Kenya, in which I met and interviewed many government officials. Sadly, I cannot imagine why Renaissance would want to work with the extremely corrupt and incompetent Kenyan State unless there was a serious crony arrangement around the building of the city.

  3. Stuki permalink
    September 14, 2011 11:53 pm

    For profit city building certainly has great potential in “undercitied” places like Africa. The question is, will the developers get it right?

    So much of what has passed for “urban planning” etc. in the West over in the last century, has been explicitly detrimental to human and economic development, and has been sustained only on the backs of ever increasing debt levels, and legally mandated, and/or structurally strongly suggested, wealth transfers from non city hinterlands; all in the name of democracy. As African rural populations simply don’t have much wealth ready for confiscation, that model won’t work there.

    For a city to act as a wealth generator, it needs to be organized such that it, relative to simple rural life, simultaneously amplify individuals’ gains from acting in a productive manner, and amplify losses from acting parasitically. In fairly lawless, and/or corrupt, African countries, the former can certainly be achieved by providing a geographic region where the rule of some reasonable and predictable law is enforced, allowing actors to form more complex production chains, taking on much more specialized tasks, than they would dare to “in the African wild.” While the latter should be cheaply achievable, by putting in place mechanisms for simply evicting or expelling those not pulling their share of the load. Medieval cities are a much better example of this, than anything in the contemporary West.

    Finally, the city’s design must also take into account defense from those who will inevitably come knocking once it becomes obvious that it is home to wealth vastly exceeding that of those in the enclosing political entity. Again, just like in Medieval times, the local “noblemen”/chieftains/whatever, needs to possess a sufficient military deterrent, to ensure campaigns against them directed from the King, or national army, will be obviously risky and expensive. Absent overt military means, the City’s residents must have ways of storing their wealth in locations beyond the reach of even a conquering army, limiting the gains from conquering. Otherwise, interference from the enclosing entity will form a hard limit on the city’s success.

  4. Wonks Anonymous permalink
    September 19, 2011 10:39 pm

    The poor governance there may be endogenous. Really dense jungle with lots of microparasites.

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