Intermediary Cities Need Urban Economic Planning to Drive Sustainable Development
A key objective of programmes like the UK Government funded Sustainable Urban Economic Development Programme (SUED) is to diversify growth by expanding growth away from traditional centres to foster balanced development across a region or country. Supporting the sustainable growth of intermediary cities is therefore critical to an environment that can facilitate economic growth and diversity, create new jobs that will grow national output, and act as a disincentive for mass and uncontrolled migration into main urban centres.
Thus the aim of such programmes is to support market driven growth in fast growing secondary towns and cities along key economic growth corridors creating trade networks that spur economic development resilient to climate change.
This requires a ‘bottom- up’ approach in economic and investment planning where local government and stakeholders, including businesses and community, are engaged successfully to help develop a local strategy for economic growth, that is pro poor, inclusive, green, resilient and is articulated clearly, ensure ownership for implementation and defining a clear role for private and public investment.
In this thought piece, we1 discuss why and how inclusive and resilient urban economic development can be achieved. Our observations are informed by our long running involvement in the SUED programme which we hope can be useful for FCDO and like minded donor organisations to design and implement similar programmes.
We describe key “elements” which can be used to structure and deliver such a programme:
1. Urban Economic Plan (UEP) the vehicle for delivery which sets out the vision, projects, investments and practical steps for inclusive and resilient urban economic development
2. Delivering green growth why and how to embed green growth in programme design and implementation. In particular, we focus on raising the ambition toward transformational change and how to access sustainable finance, while:
a. protecting the environment & natural resources,
b. promoting social development and
c. adapting to climate change.
Urban Economic Planning – a vehicle for delivery
What is an Urban Economic Plan
An Urban Economic Plan is a holistic urban development plan identifying and prioritising projects and actions that can help promote economic development , maximise economic and social potential and support sustainable urbanisation. The Plan provides a roadmap for sustainable development setting out a clear link between inclusive economic development, its spatial implications and requirements for climate resilient infrastructure to support growth. It enables cities and towns to take informed decisions based on the socio-economic, climate and environmental impact of their potential development pathways and sets out participatory implementation requirements.
The goal is to integrate a market based approach to develop a portfolio of bankable projects that have a clear definition of why these are needed and alignment to economic growth potential, while they address current and future environmental and climate conditions. Careful project preparation of value chain and infrastructure projects can stimulate development and mobilise investment from both the public and private sectors.
Why it is important
Cities are faced with several constraints to sustainable development that limit investment in much needed urban infrastructure. These reflect a mix of market, governance, environmental or social failures experienced across the world and include:
Public finance deficits reduce the ability of government to drive / enable development. Deficits have ballooned due to rising living costs, and emergency responses to crisis such as Covid 19 pandemic.
Lack of capacity to plan and regulate in ways that are economically sustainable (linked to viable industries for job creation) and environmentally sustainable (fostering low carbon and climate resilient livelihoods), and in cases lack of appropriately evidenced spatial development framework to guide future growth. Current land use practices are not always conducive to economic development as land is not allocated and released for industry demand driven factors are not taken into consideration or spatially defined to align with sectoral potential.
Lack of understanding of demand driven development providing linkages with economic sector needs and wider regional development efforts. Climate resilience and opportunities for low carbon development are not always considered fully and efforts are focused on addressing current challenges without forward planning. Consequently, definition of infrastructure projects lacks the necessary rationale for opportunities to access climate finance or bankability to attract investors.
A critical gap of infrastructure provision that supports economic development such as transport infrastructure, conservation and management of water and waste facilities, reliable and affordable power supply and market/urban infrastructure.
Localities do not have the capacity to take advantage of specific opportunities or to mitigate or avoid climate and environmental risks. This results in issues:
• wrangles over resources between communities creating tensions;
• environmental factors and climate change including the impact from frequent flooding as well as droughts that affect production and longevity of infrastructure projects;
• risking economic diversification from climate dependent livelihoods to climate resilient livelihoods; and
• missing out on the opportunity for carbon emissions reductions and improvement of environmental performance of fast urbanised areas.
Social failures and the need to ensure spatial, economic, and social inclusion for all communities supporting increase in household incomes.
Accessing finance as a key challenge to growth. Small business owners often have difficulty to obtain a loan, in particular when they have little to no collateral such as land or property deeds and a general reluctance to take up a loan, as this is viewed as risky.
UEPs can help to overcome these failures while carefully managing municipal social, economic and environmental facets.
Key Principles for Success
All too often plans are developed but not implemented due to lack of capacity and resources, and because the plans are not calibrated to local conditions. Plans must be developed in alignment with available capacity to identify projects and investment plans which are linked to public, private, or donor finance. To achieve this we need to:
Make plans adaptive and integrated to ensure sustainable urban development. Understanding dependencies and synergies across urban sectors whether it is economy related or infrastructure can support better planning for the future, while maximising co benefits for the community. It is also evident that in a well thought out integrated plan, key cross cutting aspects such as climate change risks are better addressed as clearly laid out cause and effect linkages can support the prioritisation of adaptive actions.
Promote knowledge empowerment with city officials, communities and businesses to plan effectively and proactively allow them to better respond to current and future challenges. It will also be important to make sure that communication to the communities and businesses is clear and public awareness campaign is consistently available to all in a format and language understandable to all to facilitate involvement.
Sequence projects in a logical way Identifying both short term projects as potential early wins with significant activity in place to support implementation as well as more medium to long term interventions support the ability to focus on investments which require some initial assistance to either de-risk for private sector engagement or provide necessary infrastructure/measures to ensure implementation is financially sustainable.
SUED provides a solid example of a programme set to address these challenges through a combination of technical assistance, including capacity building, investment climate and demand led seed funding based on the projects identified in the respective urban economic plans.
It provides a platform to identify and engage actors across various levels from local government cross sectoral, local residents and businesses, investors, external agencies to reflect on needs and opportunities. It also requires a multi discipline approach to develop and implement this plans including capacity building experts and investment advisors.
Common thread and guiding principles for developing the Urban Economic Plans:
• Sustainability: The UEP needs to promote climate resilient infrastructure that supports the development urban areas, while minimising the environmental impacts of increased population and economic activity in the future as well as protecting the sensitive ecosystems.
• Social Inclusion: The UEP needs to be socially inclusive building on the thorough analysis of the status of social inclusion within localities through stakeholder meetings and focus group discussions.
• Resilience: The prioritised projects will have to be resilient against shifts in the economy, both for domestic and international markets, to remain competitive. They will also need to be adaptive to the climate change impacts specific to the area such as lesser rainfalls and higher temperatures, while ensuring technological advancement through smart solutions can be introduced where possible.
• Resource Efficiency: To preserve the environmental assets of the abundant rural areas, the UEP will be directing economic growth towards resource efficiency, by integrating economic
activities to establish a circular economy promoting minimisation of waste and optimising water and energy use, whilst aiming to promote rural urban linkages.
Measures of success and impact:
Measuring success goes beyond the development of a plan and needs to focus on the outcomes of its implementation contributing towards improved effectiveness and efficiency of the limited resources available to maximise benefits for the society through development. Key metrics include: Job creation, stabilisation/increase of household incomes and revenue generation
Equitable distribution of positive development impacts, with particular focus on the inclusion of women, youth, people living with disabilities
Adoption of practices for low carbon and resilient development by municipalities as reflected by policies and investment plans
Commitment to protection of the environment
Delivering Green Growth
The Organisation for Economic Cooperation and Development (OECD) defines green growth as “fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well being relies” There is no one size fits all and achieving green growth has to
reflect the local conditions, including comparative and competitive advantages for development. However, we do need to consider development through the design of plans to enable identification of practical opportunities to deliver green growth.
How do you deliver green growth?
In order to deliver green growth through programme design and implementation:
• The methodology must require clear actions for the development of sectors in their own right, as well as promoting ecosystems of economic projects, and identifying appropriate climate resilient and inclusive infrastructure proposals to support growth across different sectors. Economic sectoral work should be designed to be developed in synergy rather than in silos, meaning that some actions are likely to be cross sectoral and also consider the challenges related to sustainability, climate resilience, inclusivity, circular economy, and conflict sensitivity.
• The outputs must encompass high value capital investment projects (e.g. transport infrastructure) alongside soft interventions such as education and training, changes to systems such as skills development, technology availability, and smaller infrastructure recommendations at local or household level.
• The evaluation framework needs to be grounded on robust economic sectoral analysis to guide the identification of specific activities as part of an entire sectoral supply chain identifying key bottlenecks at various stages. In other words it requires consideration of requirements beyond a specific facility or activity and how to efficiently bring in materials as well as how to link with markets.
Specific examples to consider in the development of urban economic plans include:
Promoting value addition and job creation through circular economy Plans need to identify and define any opportunities that:
focus on creating value addition through processing and collection of previously overlooked waste and by products. Examples from SUED include banana fibres and coconut which can be used to produce a range of products, including absorbent pads, rope, cardboard, tea bags, textiles, and matting or agri processing waste for feedstock commercialise process of waste such as sewage sludge to form charcoal briquettes or through processing with black soldier fly larva (BSFL) to produce protein and compost or carbonising and pressing into charcoal briquettes as well as biogas production
The benefits of such an approach are not constrained to job creation and revenue generation but also address key environmental and infrastructure challenges such as minimising waste which can negatively impact the health of residents and provision of affordable energy
Providing an enabling infrastructure framework
Plans need to set out infrastructure and economic projects with implementation in mind and focus on how these can be delivered not just what can be delivered. In doing so it is important to acknowledge and accommodate both design and their implementation/financing requirements depending on delivery i.e., under the authorities’ responsibility to deliver, those that can attract donor funding and also those projects that would leverage private sector investment including climate finance This is particularly important considering public finance deficits and availability of private finance.
Infrastructure Projects with Private Sector Investment Potential Delivery Mechanism Type of Infrastructure
Public sectorMunicipality using county/government funds
Transport networks (roads, NMT), drainage/flood mitigation, water resource management
Potential to attract private investment
and additional grant support from donors
In coordination with County Government and the Municipality
Public sector facilitating private sector investment or PPP
Potential for land value uplift
Solid Waste, Energy, Sanitation, transport systems (logistics hubs, bus network)
Place based projects such as Industrial zones and town centre redevelopment (e.g., public realm, Transport oriented development)
Prioritisation and phasing of development
Possible in areas where private sector can bring added value or new technology e.g., renewables/ waste to energy
Possible depending on size/scale of opportunity e.g., public land put forward for industrial development with private developer.
Prioritised infrastructure projects are directly linked to key economic activities within the municipalities with the aim of supporting economic growth. Naturally there is a concentration of certain economic activities within specific locations, such as central business districts and town centres for trade and commerce and industrial areas for agri processing/manufacturing, hence a development framework and associated infrastructure projects within each UEP would best deliver having a locational focus. Similarly, there are certain key activities that go beyond the urban boundaries such as part of a supply chain for key economic activities thus identified infrastructure projects can be municipality/city wide. The aims and purposes of the infrastructure don’t differ significantly across the towns. Broadly speaking the motivation and need for the infrastructure is driven by the following:
▪ The first purpose for infrastructure is to safeguard the livelihoods of the locality’s residents and workers (e.g., all weather road access).
The second purpose is to unlock new opportunities and attract private investment through their revenue generating potential (e.g., municipal solid waste, biogas, transport orientated development).
Appropriate phasing of the infrastructure projects is a critical element and needs to be considered carefully. While there are some commonalities in terms of urgency and timing of certain projects such as ensuring infrastructure is in place, phasing for each UEP has to be developed specifically to reflect current provision and future needs:
• Take into consideration urban growth plans and significant spatial constraints of the planning area
• Sequence projects based on optimising their individual and collective impact on urban and economic development whilst minimising costs
• Consider capacity and availability of funding for delivery
Protecting the Environment and Natural Resources
Regardless of location, climate zone, physical geography, and population and economic size, cities and towns rely on inputs from natural and social support systems within their wider urban catchment areas. Water, food, and biodiverse natural habitats are all critical resources, and risks to any of these, especially when they touch upon clean energy, water and/or food supply systems within wider urban catchments, can endanger the ability to deliver basic services and affordable food to urban populations. We have set out below key targets that protect the environment & natural resources in tandem with economic development:
Promote Green Cities:
Improving the environmental performance of cities through low carbon and environmentally sensitive actions not only helps adapt to climate change risks but has clear health benefits for society. Redefining green spaces and the way city centres are designed for business as well as traffic management can be a critical short term solution that has valuable long term planning benefits. Multi functional river parks sponge
cities which also act as flood storage, while sustainable urban drainage and natural flood management features can be incorporated in the revitalisation plans for towns and cities.
Ensure integrated nature-based approaches. Future growth is highly dependent on a region’s water and natural resources, which can be under significant stress. Pressures come from rapid and uncontrolled urbanisation, poor economic practices, pollution, and degradation of resources, as well as climate change.
A nature based approach can be introduced to facilitate the sustainability of agri processing activities by focusing on the protection of water and natural resources and enhanced environmental resilience. This, in turn, will soon improve the health and wellbeing of all citizens and foster a growing community.
Provision of potential soft and hard solutions should aim to manage a set of interlinked challenges, which could be achieved by adopting a Green Blue Development (GBD) approach.
Similarly, a blue economy approach can be adopted for areas rich in marine and coastal resources with the potential for utilization that can support economic growth, jobs, livelihoods, food, and energy security. These areas besides their importance for biodiversity,
provide climate protection through carbon sequestration from the atmosphere (also called ‘blue carbon’ when taken and stored in marine environments), and support nature based tourism andFigure 1Using a nature based approach to support CBD regeneration in Eldoret Figure 2: Example of interactions between marine/coastal capital and the tourism sector in Lamu
coastal protection. This carbon sequestration and storage potential can also be used to attract private investment to fund mangrove or seagrass conservation initiatives through voluntary carbon markets where businesses fund the conservation projects that lead to carbon sequestration and in that way offset their own emissions.
Promote sustainable industrial activity decoupling the prosperity generated from industrial activities from excessive natural resource use and negative environmental impacts. Processing and industrial activities often require substantial volumes of water to operate. In order for the industrial sites to be sustainable and not exacerbate current pressures on water supplies they often need dedicated water infrastructure. The majority of locations can supplement the existing water supply with smaller scale infrastructure such as:
• A designated water supply to the industrial park using infiltration galleries
• Water supply to site through construction of new boreholes, pump, and chlorination system
• Supplementing existing water supply (e.g., with a borehole)
• Wastewater treatment works and plant to manage and recycle grey water which can be reused by the processing facilities or for irrigation.
Introduce New technologies, such as solar hot water systems, energy management systems (smart meters) and home insulation can facilitate efficient use of resources. Innovations such as off grid small scale distributed renewable energy systems that can integrate power for homes are likely to transform current models for energy production and distribution, moving away from reliance on state provided energy. Distributed, networked systems for energy generation and storage could improve the resilience of power systems and critical energy infrastructure systems to natural disasters. Promoting sustainable industrial activity will also assist in improving air quality within cities, decoupling the prosperity generated from industrial activities from excessive natural resource use and negative environmental impacts
Promoting Social Development
We cannot talk about green growth and sustainable development without thinking about its social dimension. Social development is both an outcome and a process to ensure the well being of all people regardless of their socio economic background, ethnicity or race, religion, gender and sexual orientation, disability, age, and so on. Among its objectives, social development aims at reducing inequalities, eradicating poverty, and promoting communities’ socio territorial integration.
Social development is important since local economic development does not always (or directly) translate into pro poor, inclusive growth. Moreover, ensuring that all communities are able to access the benefits from urban economic development is not only the right thing to do, but it is too costly to ignore. Inclusive urban economic development contributes to enhance local economies’ productivity and the diversification of talent, reduces social services’ costs, and improves the quality of life of future generations.
How do you work towards social development?
Mainstreaming gender and inclusion from the outset
Social development cannot be achieved if we see local communities as mere beneficiaries of development projects; we need to acknowledge their voices, needs and agency. Mainstreaming gender and inclusion means embedding these considerations throughout the project cycle and in each of its activities. Doing this requires:
As a first step, training team members and experts to become more aware about the intersections between gender and inclusion and their own disciplines.
- Deploying different methodologies to understand from the beginning who is being excluded and why, and design inclusion strategies in a multidisciplinary and participatory manner. This may require iteratively zooming in and out the different proposed interventions to ensure they are inclusive and accessible to all.
Not only consulting, involving, and collaborating with beneficiaries, but empowering them to become advocates of more inclusive societies themselves. The aim of these projects is to
develop sustainable solutions that can be scaled up, such as identifying local business role models or developing skills that can be later transferred.
Working with all beneficiaries not separately with marginalized groups. While inclusive consultation often requires targeted efforts, the design and implementation of inclusion strategies should be a collective endeavor, developed carefully and in a culturally appropriate way to avoid retaliation or unintended negative consequences.
Deploying a multidimensional approach to inclusion
Our projects incorporated a multidimensional approach to inclusion, based on the World Bank’s framework for inclusive cities, to tackle exclusion in a holistic way. This approach considers three dimensions:
Spatial inclusion: understanding that infrastructure is not intrinsically accessible to all nor gender neutral and designing infrastructure and urban interventions that contribute to facilitate communities’ social, economic, and cultural development. This means assessing all interventions in terms of their accessibility and safety, as well on strengthening links to social infrastructure whenever possible. This assessment should be based on a thorough understanding of the local context, social norms, and existing barriers to inclusion.
Economic inclusion: creating job and skill development opportunities that are available and accessible to marginalized, low income groups so they can enjoy the benefits from urban growth. Doing this also requires understanding the vibrant role of the informal economy and focus on integrating these stakeholders in the planning and design of urban economic development and emerging markets.
Social inclusion: ensuring that local communities and marginalized groups’ voices are heard in the entire project cycle. This is done by ensuring their active participation through different stakeholder and consultation processes, as well as the recommendations above.
Addressing the intersections with major challenges such as conflict or climate change
The dynamics that generate exclusion in a certain community might be sometimes evident, but often not. Conflict is, perhaps, one of the most evident barriers to social development. Yet, its causes and potential solutions are not always straightforward. In conflict settings, interventions should aim at ‘doing no harm’. As a minimum, this means considering the mutual influence that exists between the conflict affected environment and a project’s actions. This should be done by:
Understanding the context and drivers for conflict and insecurity, the interactions between the project and this context, understand who is being directly and indirectly impacted by this context, and design solutions aiming at avoiding any negative impacts, and, whenever possible, to strengthen positive, de escalating and peace promoting impacts.
Box 1. Applying the principle of ‘Do No Harm’ in Mandera
In Mandera, conflict was mainly generated from different clans competing over scarce natural resources (being water access and availability a major challenge). This situation was undoubtedly going to be aggravated in the near future by the impacts of climate change and environmental degradation. Project benefits and interventions, if not adequately planned and implemented, could intensify conflict even more. With a ‘Do No Harm’ approach, the conflict analysis was linked to the UEP by integrating conflict sensitivity throughout the: Sector action plans, Value Chain opportunities, Infrastructure Proposals, and throughout the development framework
Similarly, we identified less evident challenges to social development such as the climate change poverty nexus. Climate change poses a serious challenge to poverty reduction efforts since its impacts disproportionately affect vulnerable populations such as low income or remote communities, women, the elderly, persons with disabilities, or persons with chronic illnesses. Understanding this link allowed to plan and design inclusive climate resilient solutions. These interventions aimed at ensuring that
adaptation strategies do not act to reinforce or deepen existing inequalities, and that are accessible to groups that are already marginalized within their communities. Plans need to:
Design climate resilient technologies and interventions that are affordable, culturally appropriate, and accessible to all, as well as accompanied by capacity building and targeted technical support.
Make the roles and actions of disadvantaged groups in climate change mitigation and adaptation more visible, while better integrating them in value chains development, as the example below shows:
Box 2. Women and mangrove conservation: integrating women in value chains as key agents of climate action in Lamu
Lamu County hosts the most extensive and species-rich area of mangroves in Kenya. Mangroves are key to ensure biodiversity, but also climate protection through carbon sequestration from the atmosphere. They are also key to ensure the well functioning and sustainability of fisheries’ value chains for their ecosystem services they provide (habitat functions, regulation of floods, water purification, etc.). However, mangroves are significantly declining in Lamu mainly due to increased deforestation and pollution emerging from urbanization. Awareness is then key to ensure their conservation.
In the UEP, we identified groups that are already active in this task, such as the Mtangawanda Mangrove Restoration Women’s Group. Through this initiative, women receive small loans to start businesses within their community and, in return, they must undergo training on mangrove restoration and conservation. This not only acts a women’s economic empowerment strategy but strengthens women’s roles as agents in climate action and in decision making processes. This initiative has visibly contributed to the recovery of marine breeding grounds and the return of fish. Controlled harvesting of mangroves also provides other economic opportunities such as construction materials which can be later sold. Our urban economic development plan aimed at making these efforts more visible, support them and scale them up.
Adapting to Climate Change and Finance Opportunities
Urban development will not be sustainable unless it is also resilient to climate risks, both those faced at present, and emerging risks driven by climate change. We also need to recognise that the impacts of climate change are not felt evenly, and that existing vulnerable and marginalised groups will be disproportionately affected. Integrating climate resilience into urban economic plans provides an opportunity to reduce the impacts of existing hazards like flooding and heatwaves, while preparing for future changes. Importantly, it also provides an opportunity to attract investment, drawing on the increasing number of sources of sustainable and climate finance.
First, climate resilience integrated throughout the development process, and used to guide the selection and development of economic activities and infrastructure projects, so that as a minimum requirement, the proposals contained in the plans take into account the relevant climate risks. For example, urban regeneration proposals included sustainable drainage features, and additional shade and cooling in order to increase their resilience, while for value chain proposals assessments were carried out to ensure that the supply of raw materials could be maintained despite climate change, and that the proposed sites included suitable flood risk assessments, and year round access.
Second, for towns with greater stakeholder interest in climate change as a topic, specific interventions should be proposed to build resilience of the municipalities more generally. This includes assessing with stakeholder where opportunities exist for investments that could strengthen the enabling environment for climate resilience.
In Wote, for example, building on the awareness created by the County Climate Change Fund, a climate smart agricultural hub was proposed, comprising targeted extension services, tailored climate information, and facilitating access to financial products such as crop insurance that can be used to support a more resilient agricultural system.
Third, the potential for accessing a number of different sources of climate finance, and the process of screening infrastructure investments designed in such a way as to meet some of the initial requirements around risk assessment. Linkages between project development, and potential sources of sustainable finance should be strengthened, with a focus on delivering bankable investments that would meet sustainable finance criteria. Bringing potential financiers into the process of project development could both enhance stakeholder engagement in the process and increase the likelihood of successful implementation of projects.
In practice we need to always ask ourselves how our proposed measures and interventions address the following criteria:
Criteria related to UEP principles Climate resilience Does the project address the risk of vulnerable groups exposed to climate change?
Climate resilience Will the project be resilient to climate change?
Sustainable/green Will the project contribute to reduction of emission e.g., green/low carbon development?
Sustainable/green Will the project increase air pollution and environmental degradation?
Will the project improve access for youth, women and disabled through increase accessibility, mobility, security as well as increased employment opportunities
Will the project increase socio economic polarisation e.g., benefit only part of the community or increase tensions?
Does the project support urban rural systems e.g., consideration of natural resources outside the town boundary supporting the urban population?
Resource efficiency Does the project support minimisation of waste and efficient use of resources including land and water?
Other criteria Revenue generation Does the project have the potential to increase revenues to the Municipality/council?Figure 3: Innovation for Climate Smart Agriculture in Wote
Source: Atkins, 2019
Does the project have the potential to increase additional investment?
Does the project support key economic sectors and create sustainable employment?
Will the project address key urbanisation challenges within the town?
Can the project introduce latest technology and best practice?