Towards Smart Economic Development in Nairobi: Evaluating Smart City Economy Impacts and Opportunities and Challenges for Smart Growth

Abstract

Kenya intends to transition into a middle-income economy by 2030. According to the 2008 Kenya Vision 2030 strategy, this goal would be achieved by growing the country’s gross domestic product (GDP) at an average rate of 10 % per annum between 2012 and 2030. Eight years after enactment of the vision 2030 strategy as the country’s long-term growth blueprint, the country’s economy is still dragging behind, with an average GDP growth rate that is about half the target rate. Recent reviews by the World Bank indicate that for Kenya to achieve middle-income country status by the end of the planning period, her gross national income per capita needs to triple from the $1290 recorded in 2014 to $4125 by 2030, and her GDP needs to grow at a rate of about 7 % until 2030. In a country where the productive sectors of the economy (manufacturing) are overshadowed by both agriculture and low-technology small-scale enterprises and informal activities, this goal seems far-fetched. Recent investments in infrastructure development, and particularly on information communication technologies (ICTs), have, however, opened a new growth trend, which when properly explored could trigger rapid economic growth and help the country achieve the 2030 goal. Rapid adoption of ICTs in various economic sectors, particularly the growth of e-commerce, e-finance and e-governance, coupled with friendly policies and a rapidly emerging middle class are already causing an economic revolution, particularly in Nairobi—the country’s capital city and commercial hub. This chapter explores Nairobi’s economic growth trajectory within the framework of Kenya’s long- and short-term economic goals. It identifies that an ICT-driven smart economic growth revolution has started in the city, in both the formal and informal sectors, and establishes that there are massive opportunities for sustained growth. These opportunities, which emanate from increasing investment in ICT infrastructure development, ICT education, an innovative population and suitable government policies, will greatly help shape the country’s economic growth in the next decade. The chapter also identifies that challenges such as cyber security, a thin manufacturing sector, slow adoption of e-commerce, a hugely informal economy and little research on innovative technologies and their adoption are limiting the city’s smart transition.