Sustainable Urban Economic Development Programme
Unlocking the Transformative Potential of Kenya’s Intermediary Cities: Lessons
from Lamu Municipality
Introduction
Kenya's intermediary cities also known as Municipalities by design play a crucial role in the country's economic landscape Municipalities are responsible for development and maintenance of essential infrastructure such as roads, water supply, sanitation, waste management systems among others. Additionally, the municipalities are tasked with promoting local economic development within their jurisdiction. This is achieved by attracting investment, supporting small and medium-sized enterprises (SMEs), and creating a conducive environment for businesses to operate.
The Sustainable Urban Economic Development Programme, funded by the UK government through the Foreign, Commonwealth and Development Organisation (FCDO), is designed to address the swift urbanisation trends and the increasingly prevalent risks of climate change in regions of Kenya. With nearly half of the population expected to reside in cities by 2050 compared to the current 28%, the programme aims to build urban resilience in Kenya’s capital and intermediary cities by creating the right conditions for inclusive and sustainable growth. The programme plans to achieve this through technical assistance in urban economic planning, investment attraction and capacity strengthening. Lamu is one of the 12 municipalities in Kenya benefiting from the programme.
Lamu Municipality, situated on the picturesque Lamu Island, provides a compelling case study of how strategic urban planning and effective governance can unlock the transformative potential of these cities. This article delves into the key lessons learned from Lamu Municipality during the investment attraction process, focusing on urbanisation, sustainability, value chains, and governance as drivers of economic growth and investment attraction.
Urbanisation and the Impact of Economic Planning in Attracting Inward Investments
Urbanisation trends in Kenya have significantly impacted the quality of life in intermediary cities like Lamu Municipality. For example, urbanisation in Lamu County has been accompanied by population growth, as people migrate from rural areas to urban centers in search of better economic opportunities, services, and amenities. Despite the economic opportunities presented by urbanisation, the influx of people has put pressure on infrastructure, housing and public services in the urban areas. This has led to a plethora of challenges including but not limited to inadequate housing, congestion, waste management issues, environmental degredation, and social inequalities.
To address some of these challenges, the SUED programme was designed to support sustainable urban centers in Kenya. Through the SUED programme, Lamu Municipality developed an Urban Economic Plan prioritizing key sectors with the potential to spur economic growth and create resilient jobs. The sectors prioritised include agriculture (livestock and agro-processing), fishing and marine activities, tourism and heritage, and emerging maritime trade and transport. Key value chains and climate-resilient infrastructure projects were identified under each sector for implementation.
Through the investment attraction process, SUED assesses the viability of these prioritized projects and conducts outreach activities to identify potential operators and investors interested in Lamu Municipality. This strategic approach aims to attract investments that will enhance the municipality's economic resilience and sustainability.
The programme has already had some successes. For example, the construction of a new cashew nut processing factory has commenced in Lamu Municipality with a focus on producing raw cashew nuts and roasted/salted kernels, supported by SUED. This breakthrough is fueled by SUED's comprehensive support, offering technical expertise alongside catalytic seed funding.
Additionally, SUED is providing transaction advisory services to set up a new cotton ginning and oil extraction plant in Lamu Municipality, which is expected to catalyze cotton farming in the area and triple production. These initiatives demonstrate that through proactive and proper economic planning, municipalities can attract investments that spur economic development and job creation.
Lessons Learned:
• Integrated Approach to Sustainable Development: The urban economic plan received support from key stakeholders in the county and the communities. To achieve this the plan exemplified the integration of sustainability principles with urbanization efforts. By balancing infrastructure development with cultural and environmental preservation, Lamu ensured wide acceptability, long-term viability and resilience in its growth strategy.
• Inclusivity and Community Partnership in Economic Planning: Effective economic planning in Lamu prioritized inclusivity, guided by SUED's Gender and Social Inclusion (GeSI) study. Engaging marginalized groups such as the elderly, youth, persons with disabilities, and women ensured equitable distribution of development benefits and strengthened community support for projects.
• There is a need to consider local opportunities that speak to the existing ecosystem. The plan included tourism as a Catalyst for Sustainable Growth. Lamu leveraged its rich cultural heritage and natural beauty to drive tourism development. Economic planning focused on sustainable tourism practices, heritage preservation, and community involvement not only stimulated economic growth but also created diverse employment opportunities and enhanced local livelihoods.
• Community Engagement and Local Ownership: Engaging local communities throughout the development process was crucial for Lamu's success. By adopting inclusive decision-making and addressing community needs, Lamu built trust, promoted social cohesion, and ensured that development initiatives resonated with local priorities, thereby surpporting sustainable urban development.
• Government support. The ease and cost of doing business is enhanced when the government supports private sector and is willing and ready to partner with them to accelerate investments. Lamu County Government has been at the forefront in supporting private players to establish their industries in the County. This has been demonstrated by providing land long-term lease to private players, supporting farmers to ensure quality yields, facilitated the acquisition of requisite licences among others.
Sustainability Beyond Technical Assistance and Initial Seed Funding:
Sustainability lies at the heart of long-term economic development in intermediary cities. While technical assistance and seed funding from the SUED Programme are essential for kickstarting initiatives in Lamu Municipality, sustainability of the initiatives to create a long-lasting impact requires investment by the county government.
Lessons Learned
• Need for Capacity Building and Training: From the onset, SUED planned to incorporate capacity building and training in the programme implementation. Investing in training and skill development programs for county/municipal government officials, community leaders, and residents is crucial. These programs enhance their ability to effectively manage and sustain programme activities. Training can cover various aspects such as project management, sustainable practices, financial management, and community engagement techniques. Building local capacity of municipalities ensures that initiatives are implemented efficiently and maintained over the long term.
• Stakeholder Partnerships and Resource Leveraging: Building partnerships with local businesses, NGOs, academic institutions, and other stakeholders is crucial to ensure sustainability of the activities. These partnerships bring additional resources, expertise, and networks to support ongoing initiatives. For example, businesses can provide funding or in-kind support, NGOs can offer technical expertise, and academic institutions can conduct research or provide training. Leveraging these diverse resources not only strengthens the implementation of projects but also broadens their impact and sustainability.
• Community Engagement and Ownership is critical: Encouraging community involvement in decisionmaking processes and building project ownership is vital. Through SUED implementation, it was noted that when residents are engaged from the planning stages, their needs and priorities are better understood and incorporated into project designs. This involvement promotes local entrepreneurship as community members may initiate or participate in project activities, enhancing economic opportunities and social cohesion. Projects aligned with community interests are more likely to be supported, ensuring their long-term success and sustainability.
• Diversified Funding Strategies: While SUED includes a grant component, its implementation targeted supplementing this with operator funds and alternative funding sources such as grants, private sector investments, and revenue-generating activities reduces dependence on external funding. Grants from governmental or non-governmental organizations can provide initial support, while private sector investments offer sustainable financing options. Revenue-generating activities, such as fees for services or products provided by projects, create ongoing income streams. Diversifying funding sources enhances financial stability and ensures projects can continue operating independently over time.
• Monitoring and Evaluation for Impact Assessment: Establishing robust monitoring and evaluation mechanisms is essential for assessing progress, measuring impact, and identifying areas for improvement.
Monitoring tracks project implementation against set goals and timelines, while evaluation assesses the broaderimpacts on the community and environment. Data collected through these processes informs decisionmaking, allowing adjustments to be made to enhance effectiveness and efficiency. Regular evaluations also provide accountability to stakeholders and ensure that resources are used effectively.
• Integration into Local Policies and Plans: Advocating for the integration of successful programme outcomes and best practices into local urban development policies and plans is critical. Incorporating proven strategies and lessons learned from initiatives ensures their continuity beyond the initial funding period. This integration aligns municipal development goals with sustainable practices, guiding future projects and initiatives. Local policies that reflect these practices support ongoing urban development efforts and facilitate long-term planning for sustainable growth.
• Knowledge Sharing and Collaboration: Promoting knowledge sharing and collaboration with other municipalities, both nationally and internationally, will help enrich experiences and enhance collective learning. Sharing successes, challenges, and innovative solutions fosters mutual learning and supports continuous improvement in urban development practices. Collaborative efforts can lead to the adoption of new ideas, technologies, and approaches that improve sustainability and resilience across cities. Networking with other municipalities also strengthens advocacy efforts and promote shared goals for sustainable urban development on a broader scale.
Governance and Creation of an Enabling Business Environment for Investors:
Effective governance is a cornerstone of success for intermediary cities seeking to attract investment and foster economic growth. In Lamu Municipality, transparent and accountable governance practices have been instrumental in creating an enabling business environment for investors. Streamlining administrative processes, improving infrastructure, and enhancing regulatory frameworks, the county and municipality have instilled confidence among stakeholders and facilitated sustainable development.
Lessons Learned
• Good governance is essential for building trust, reducing risks, and unlocking the full potential of intermediary cities as engines of economic progress.
• Simplifying and streamlining bureaucratic procedures, permits, and licensing requirements can reduce barriers to entry for businesses and attract investment.