By 2030, almost 60% of the world’s population will live in urban areas. The rapid growth of cities in the developing world, coupled with increasing urban migration, has led to a boom in mega-cities (metropoles with over 10 million inhabitants). Now the question is: “How do we embrace the new opportunities of these fast-growing metropoles while ensuring a fair quality of life for the 10 million and more citizens who live there?”
Mega cities are at the center of the Sustainable Development Goals. The goal 11 Sustainables Cities & Community refers directly to the current transformation of the urban space. But cities are made up of various systems and millions of people. Therefore, a more inclusive and efficient urban environment is also strongly interconnected with goals such as No Poverty, Access to Clean Water & Sanitation, Affordable & clean energy or with the Infrastructure Investment.
Emerging markets will be the main protagonists of this transformation. Indeed, 95% of urban expansion in the next decades will take place in the developing world. Already today, 8 of the top 10 megacities are located in emerging countries. The global urban’s gravity is in emerging countries!
Yet most of those countries are not prepared for this development. There is too little housing, inefficient and insufficient infrastructure, safety issues and inadequate public services including transportation, education and health systems. The rise of mega cities goes with another sad reality, the rise of the number of people living in slums with poor living conditions. According to the United Nation World Cities Report, they were estimated to account for 840 million in 2014 and this number keeps on increasing every year.
At the same time, technology has enabled progress at unprecedented speed. So when we mention the challenges mega cities will face in the future, the usual answer that keeps echoing is to create Smart Cities. From Mexico to Singapore passing by Moscow, cities in emerging markets have also realized how IoT, connectivity and data-driven solutions can revolutionize the way they can deliver service to their citizens and create a more inclusive urban environment.
How can emerging cities embrace intelligent systems taking in consideration their weak infrastructure, the lack of technical capacities and an inefficient policy implementation process?
While two weeks ago the MIT spinoff nutonomy received the permission to test its autonomous vehicle in the city of Boston, it would be an utopia to think that emerging countries will be able to integrate autonomous transportation or to lead the big data revolution for mega cities as we are seeing it in developed markets. Actually, data scarcity is probably one of the biggest challenges that developing markets will have to overcome to catch up on developed markets.
But it would be wrong to think that developing countries are not taking part in the wave of “smartness”. In those specific markets, the lack of technical capacities, financing or policy implementation can be easily addressed if the cities adopt models appropriate to their reality.
A closer look to Mobility solutions
Zooming on the issue of mobility, in a recent study about the future of mobility, McKinsey reported that the most likely approach for cities like Delhi, Mexico or Mumbai would be a mix between shared application and clean technology:
“For cities like these, the widespread use of self-driving cars may not be an option in the short or medium term, because of poor infrastructure, interference from pedestrians, a variety of vehicles on the road, and a lack of clear adherence to traffic regulations. The approach most likely to apply is a shift to cleaner transport, in the form of EVs, while also limiting private car ownership, optimizing shared mobility, and expanding public Transit.” - McKinsey.
In line with these thoughts, different governments in emerging markets have already started initiatives to tackle the almost proverbial terrible traffic conditions.
- Quito will open a metro line in 2019 in order to better serve its two million inhabitants with a unique and inclusive mass transportation network. The final goal is to create a multi modal system through the implementation and integration of bike-sharing scheme, additional metro lines that will include lanes for wheelchairs and even two cable car lines to connect people from higher up to the mountain, a necessity for a city located in the middle of the Andes mountains.
- Moscow launched an intelligent transport system (ITS) using large amount of commuting data to reduce the congestion on roads. The ITS accounts for nearly 2,000 video surveillance cameras, 3,700 road detectors, and 6,000 traffic lights in the aim to provide real-time response to traffic situations throughout the city rather than waiting for Muscovites to call emergency responders, law enforcement, or others to resolve issues (for more info check Mckinsey article here).
- Colombia has invested more than $100 million in smart city initiatives. Medellin, for instance, is investing to improve public transport, create better public spaces, and improve road safety in the city. These efforts include the development of an efficient bus system, full bus rapid transit and metro integration, bicycle share program and pedestrian connection improvements. The city now has an IoT-based system to reduce traffic, accidents, and improve emergency response times.
Some cities in Latin America have installed a program to fight congestion and pollution by restricting the circulation of vehicle with a certain matriculation during some days or peak hours, with the prime examples being Bogota (Pico y Placa), Mexico (Hoy No Circula), São Paulo & Rio de Janeiro (Rodizio). In Asia, Thailand also enforces a similar system.
Of course, it seems impossible to reach smart mobility without the participation of the government and a good policy implementation. However, if you combine technology with the drive of hungry and ambitious talents, nothing is impossible. Today, many experts see in technology and entrepreneurship a long-term solution to improve people’s lives in urban environments, for their rapidity of development and low cost of implementation.
Improving Mobility through smartphones
Once again, smartphones have been a key instrument in shaping smart cities in emerging markets, this time by putting instant information about transit and safety alerts into hands of millions of people. Mobility-as-a-service apps are one of the hottest opportunities in developing countries.
Uber is operating in most of these markets, starting from Bolivia to Nigeria passing by Lebanon. Luckily for local players, the market is large enough to accommodate several different car-sharing providers. Cabify, the Spanish taxi app is now investing massively in Latin America. In Asia, Didi is leading the market, while also becoming a strong global player. For instance, early this year they acquired the Brazilian company 99 Taxi, making of it one of the first unicorns of the Latam region.
However, my personal favourite is the story of Nekso, a Canadian app that unlike most of the startups did not start by targeting US or European markets, but instead decided to launch it in Venezuela for the crucial need of a local taxi group. The cheap cost of development and the right environment to test and refine the app before its expansion are the other reasons that convinced the founders to undertake this endeavour. The app is now used in 9 countries in Latin America, including Mexico, and partners with more than 550 taxi companies, employing over 9,000 drivers. They are about to launch in Canada later this year.
Looking at another excellent case of when scarcity brings opportunities, the ride hailing and delivery app GoJek is one of the most important mobility app worldwide, founded in Jakarta, known for having the worst traffic in the world.
One last example would be the Israeli app Waze that works with crowdsourced data from drivers community and a GPS system, and it considerably improves traffic safety and driving efficiency in Latin America. Over a quarter of the app’s users are located in this region, making up for almost 27 million of users. In Switzerland, the majority of my friends don’t even know what Waze is.
Also, the company went one step further by creating the Connected Citizens Program that empowers public institutions and private agencies to share and read data to improve congestion and improve decision making for urban planning.
For instance, they closed a partnership with the Metropolitan Manila Development Authority (MMDA) to provide data with the aim to create better routes, provide wider reporting of incidents, and support public outreach to promote safer driving conditions for citizens in the city.
Local startups tackling local issues - Yes, they can!
Travelling around the world, we are always excited to see more and more local entrepreneurs trying to tackle the opportunities and challenges linked to rapid urbanisation.
Remember “Pico y Placa,” the Colombian program to reduce traffic congestion? The Colombian startup Notiplac, a Saas that helps connect drivers with legal and maintenance platforms, also assists their users to know when they can’t drive their car depending on “Pico y Placa” rules of the city where they currently are, thanks to their integrated GPS system.
In Peru, Isaac Malca, a 24-year-old Peruvian, co-founded TuRuta, an app that allows the inhabitants of Lima to access in real time the location of over 2,000 buses. The app counts now with over 200k downloads, despite the challenges the founders had with accessing accurate data.
“[In the United States or Switzerland,] the data is readily available and technology is widely accessible. Transportation is an already organized system. Here, we are organising the data while connecting it,” explains Isaac.
In Egypt, Raye7, a startup founded by Samira Negm is at the beginning of its journey to take over car pooling. In Cairo, 70% of private cars have vacant places and Raye7 hopes the use of their app and the generated data will help reduce the traffic congestion.
At the same time, while Smart City includes improving the mobility of people, mobility of goods should not be forgotten, and many entrepreneurs are already trying to improve the logistics industry.
Kargo in Myanmar has built a truck community platform, without them owning a single truck. It is powered by a bidding platform where drivers using the app can bid prices for their services of transporting cargo.
In Latin America, the Colombian startup liftit also built a similar tech platform and app to connect independent companies with their own fleet of trucks to businesses and individuals who would need their services. They also provide fleet management & road optimisation support. They register around 1800 deliveries per month. Tackling first the Colombian market, they just entered Mexico end of 2017 and are about to launch in other countries in the region. Stay tuned!
Urbaner is shaking the delivery and logistics industry in Lima, Peru with their platform and API that allows to deliver goods in less than a day around the capital thanks to a wide float of bicycles, motorcycles, cars and trucks. They are on average at least 3 times as fast as the traditional logistics companies thank to their on-demand platform and GPS technology. They are about to expand to Chile in the next month.
These apps create real opportunities as they are able to generate a lot of data in countries where data is still rare. Collecting and translating large amount of data into insights will help for better match of public services, urban planning and logistics with citizen and market needs, while allowing citizens to make smarter decisions.
However, to fully leverage the power of smartphones, connectivity needs to be brought to the people as today not all citizens can afford the data plans. Otherwise, the risk is to increase the level of inequality already high in developed markets.
Keep it simple - Bike is back!
Cycling is getting more and more popular in developing markets, such as China or across Latin America. Thanks to public investment to create cycling road (Sao Paulo, Bogota, Mexico, Santiago, Buenos Aires, etc.) and strong campaign to encourage the use of bicycle to go to work or to entertain the family on Sundays, the bike is back on the road. And once again, technology was an important catalyst of this change.
One of my favorite apps of the moment is Mobike, a bike-sharing system founded in China. It is especially convenient as it is very user-friendly, has an easy on-boarding process and different payment options. In a few minutes, you can create your account with your smartphone, mobile number and Internet. Then you just need to pay a deposit to get some credit and start looking for a bike in the neighborhood (yes, just like PokemonGo!). This is possible as the app features an integrated app and once you localise one near you, you need to unlock it through a QR Code system. The best feature is that you can recharge your credit through different means, ranging from credit card (for the good Gringo that I am) to cash recharge at the most famous mom & pop stores in Mexico, Oxxo.
An available bike of Mobike, Mobike.com
Mobike is a great example of how to leverage technology to meet citizens needs and facilitate sustainable mobility in mega cities. According to the company’s statistics, Mobike users travelled around 2.5 bn kilometers in total in one year, saving an equivalent of 170,000 cars of annual carbon emissions.
According to a report by a Chinese think tank, the total number of car journeys in the 50 cities in which Mobike operates had fallen by 3% since the startup was launched in 2016.
In general, cycling offers many advantages: it is clean, it is affordable for all, it reduces congestion and maintains the infrastructure as far cheaper than building in public transport.
While the measure seems very successful in Asia and Latin America, we haven’t yet seen the same popularity in Middle East & Africa.
Innovation, Cooperation & Citizen engagement as the keys for success
If developing markets want to go faster and push the boundaries, they will have to work to adopt a human centric approach and foster innovative partnership models.
As Carlos Ratti, Director of the SENSEable City Laboratory at MIT mentioned in a podcast on the WEF website :
“Not only top down but also bottom up approach is needed to shape the future of cities. At this matter, initiatives like hackathons, cooperation between startups, corporations or even governments can be game changing.”
Waze CCP program is a great example of how to engage citizens, government and technology to create impact. Many others are taking the same approach, below is a list of examples that could hopefully inspire others:
- City Voices is a tool developed by McKinsey that captures and analyzes citizens’ sentiments across key aspects of city life. One of the main purposes is to help leaders understand what matters most to the population. It gathers feedback, at a very local level, across a variety of demographic groups experiencing over 30 different interactions with their cities.
- Continental, a leading German automotive manufacturing company with global presence just launched a program to foster the creation of new business models related to Mega cities, co-pace. Through co-pace, they give their employees and external entrepreneurs a chance to develop and bring to market new business concepts, assisted by Continental’s expertise, mentoring, and financial support. The first initiative is based on internal co-development of projects invented by their engineers where the best ideas are selected for a 3 months incubation program. The second initiative aims to encourage collaboration with startups with mobility related solutions all around the world, including emerging markets. Seedstars is currently partnering with the group to source, screen and accelerate the top ventures from emerging markets that could add value and/or benefits from Continental’s expertise.
- JCDecaux, the number one outdoor advertising company worldwide also started to engage on the smart city front. Last year in Panama, they launched free wifi services in 50 bus shelters of the capital, in partnership with the city’s municipality and the local hotspot network provider Wigo. For the past three years, the French company also hosts the VivaTech Festival with the aim to foster discussion and initiative around this thematic. This year, they announced their focus to foster collaboration with startups that offer urban communication solutions to help turn these innovative concepts into powerful and recognized brands.
Why does it matter?
Cities are made of different systems: education, health, public, transportation. Last century was the one of linear engineering. Now, it's time to think about how to connect and integrate the different systems to promote a better efficiency and inclusion. This challenge is even greater in emerging markets.
While big cities are often drivers of economic growth and create opportunities to reduce poverty, the rapidity at which they grow in emerging markets can lead to worse living conditions, pollution and environmental destruction.
Technology, human-centric design and innovative form of collaboration between public, private and citizens will be the driving forces to improve living condition of millions of people in developing cities and lead to a sustainable urban transformation.
Not only the bike sharing, on-demand transportation or delivery services apps mentioned in this article can have an impact, but blockchain is also expected to be soon used to foster more transparency. IoT and LED lights should allow a better energy efficiency and ensure better security thanks to connected cameras that will detect unusual activities for instance.
While the greatest global startups are shaping the future of emerging cities, local and regional fast-growing startups also have a key role to play in this transformation as they usually better adapt to local infrastructure, payment options and cultural patterns.
Besides, cities will need to compete to attract the people they need in order to thrive. The modern digital era gives citizens the power of choice about where they live. In the past, they used to follow job opportunities, nowadays, these job opportunities can come to them. It is urgent for emerging markets to invest in their cities if they want to attract or retain the talent that will allow them to grow in the future.
Finally, we all need to remember that if we want to reach SGDs objectives, mega cities need to adopt various technological solutions and serve the people that most needs it - unconnected low income communities living far from their workplaces.
It’s a journey, not a destination.