How the GCC's smart cities are ris­ing to the grow­ing ur­ban­i­sa­tion chal­lenge

Cities in the Gulf and wider world will need to take a new ap­proach to their smart city plans to meet the chal­lenges of ur­ban­i­sa­tion, ac­cord­ing to stake­hold­ers

Gulf Business - - FRONT PAGE - By Robert An­der­son

AS THE WORLD’S pop­u­la­tion con­tin­ues to grow, its cities are be­ing con­fronted with a unique set of chal­lenges.

Data from the World Bank, United Na­tions and other en­ti­ties shows 80 per cent of the world’s global gross do­mes­tic prod­uct is gen­er­ated in cities, which are to­day home to more than 50 per cent of the global pop­u­la­tion and con­sume 75 per cent of en­ergy pro­duced.

Ur­ban­i­sa­tion too has its own cham­pi­ons. Ed­ward Glaeser notes in his 2011 book

Tri­umph of the City how on av­er­age, as the share of a coun­try’s pop­u­la­tion that is ur­ban rises by 10 per cent, the coun­try’s per capita out­put in­creases by 30 per cent. While per capita in­come is al­most four times higher in those coun­tries where the ma­jor­ity of peo­ple live in cities than those where the ma­jor­ity is in ru­ral ar­eas.

The in­cen­tives for mov­ing to the big city are clear and peo­ple are tak­ing no­tice.

Ev­ery month the world’s ur­ban pop­u­la­tion grows by six mil­lion peo­ple and is ex­pected to grow from 54 per cent to 70 per cent of the over­all pop­u­lace within a gen­er­a­tion. But how do cities cope with this in­flux?

In many re­spects, ‘smart city’, has be­come the new buzz word in ur­ban de­vel­op­ment – rep­re­sent­ing tech­nolo­gies rang­ing from smart traf­fic lights to im­prove vehicle flow to au­to­mated trans­port, ef­fi­cient power gen­er­a­tion, digi­tised gov­ern­ment ser­vices and read­ily avail­able park­ing, weather and air pol­lu­tion in­for­ma­tion.

Au­thor­i­ties across the world are em­brac­ing the term, with in­vest­ment in smart city ini­tia­tives across the Mid­dle East and Africa alone ex­pected to reach $1.26bn this year, ac­cord­ing to IDC.

At the re­cent World Cities Sum­mit in Sin­ga­pore, which saw the par­tic­i­pa­tion of lead­ers from 128 cities, these tech­nolo­gies and more were on dis­play, with the host dis­play­ing tech­nolo­gies rang­ing from ver­ti­cal farm­ing to smart swim­ming pools with sen­sors to de­tect those in dif­fi­culty.

But de­spite these un­veil­ings and bil­lions of dol­lars in in­vest­ment, US pay­ment firm Master­card's ex­ec­u­tive vice pres­i­dent for en­ter­prise part­ners, Hany Fam, said most cities have a long way to go to tackle the chal­lenges rapid ur­ban­i­sa­tion will bring.

“There re­ally isn’t a sin­gle city in the world with a com­pre­hen­sive plan to deal with its rate of growth in a holis­tic man­ner,” he ar­gued.

“The chal­lenge we see with many cities to­day is they start to tackle a prob­lem as though it’s the first time it’s ever been thought about.”

Pub­lic pri­vate part­ner­ships

For stake­hold­ers in the pri­vate sec­tor, smart city projects rep­re­sent the op­por­tu­nity to col­lab­o­rate with the gov­ern­ment to im­prove the lives of res­i­dents and solve cur­rent and fu­ture chal­lenges.

But many sug­gest the slow turn­ing wheels of the pub­lic sec­tor in some cities are prov­ing an un­nec­es­sary hur­dle in driv­ing projects for­ward.

As David Waller­stein, chief ex­plo­ration of­fi­cer at Chi­nese tech­nol­ogy giant Ten­cent noted, the com­pany would of­ten turn down start-ups ap­proach­ing it for in­vest­ment if their projects in­volved work­ing with city au­thor­i­ties.

“We need these so­lu­tions but cities are still stuck in the old way of do­ing things,” he said, re­mark­ing how some au­thor­i­ties still take years to make a de­ci­sion.

“What I see hap­pen­ing is in­no­va­tors are dis­cour­aged.

"It is of­ten re­ally hard to find any­one to en­gage with on any [city] is­sues, know­ing what the un­met needs are.”

For city au­thor­i­ties, mean­while, a key con­cern is bud­gets. Dr Goh Eng Lim, vice pres­i­dent and SGI chief tech­nol­ogy of­fi­cer at Hewlett Packard En­ter­prise, said the firm’s con­ver­sa­tions sur­round­ing smart city tech­nol­ogy projects of­ten look into where sav­ings can be made to free up funds.

“One low hang­ing fruit is con­vert­ing street lamps to LED [ bulbs] to lower op­er­at­ing costs,” he said. “And the en­ergy sav­ings can be used for elec­tric ve­hi­cles in­stead of hav­ing to build more power plants.”

Other ex­am­ples in­clude route op­ti­mi­sa­tion for mail de­liv­ery, waste man­age­ment and park­ing ef­fi­ciency.

“The chal­lenge we s e e with many c i t i e s to­day when they s t a r t to tackle a prob­lem is it starts from ground zero. They s t a r t to tackle a prob­lem as though it’s t h e f i r s t t i m e i t ’ s ever been thought about.”

“All these sav­ings can then be redi­rected to start pub­lic ser­vice things a smart city can en­able,” Lim added.

Mean­while, for pub­lic sec­tor de­part­ments of­ten con­tend­ing with tight purse strings the is­sue can then be­come bud­get cuts as sav­ings mean less money to spend the next year.

“It’s much eas­ier to build shiny new ob­jects than to im­prove the ef­fi­ciency of things that al­ready ex­ist,” said Master­card’s Fam. How­ever, this is not al­ways the case ar­gued Nasima Razm­yar, deputy mayor of Fin­land’s cap­i­tal Helsinki.

The city, which was ranked fifth glob­ally for smart city gov­er­nance in a July study of 50 ur­ban cen­tres by Sin­ga­pore con­sul­tancy Eden Strat­egy In­sti­tute, puts part of its suc­cess down to set­ting up an open data plat­form sim­i­lar to that planned in Dubai.

City au­thor­i­ties say the plat­form has re­sulted in bud­get sav­ings of 1 to 2 per cent “with in­creased trans­parency and ac­count­abil­ity push­ing civil ser­vants to be stricter in pub­lic pro­cure­ment,” ac­cord­ing to Eden. Deputy mayor Razm­yar said the avail­abil­ity of pub­lic data has al­lowed the pri­vate sec­tor to step in by cre­at­ing apps for pub­lic ser­vices like bike stops, thus al­low­ing the pub­lic sec­tor to fo­cus on the big­ger pic­ture like a wider pro­ject in the Kalasa­tama neigh­bour­hood to save res­i­dents an hour a day through ef­fi­ciency of ser­vices.

Au­thor­i­ties also host work­shops with dif­fer­ent groups of com­pa­nies and res­i­dents to find out their needs and ben­e­fit from their ideas to im­prove the run­ning of the city.

“It’s also about mind-set and sav­ing money and how we cre­ate and make al­ready ex­ist­ing in­fra­struc­ture bet­ter,” she said, cit­ing ex­am­ples of smart locks that pro­vide bet­ter ac­cess to pub­lic spa­ces.

Tourism chal­lenges

Be­yond spe­cific chal­lenges re­lat­ing to ser­vices for res­i­dents of cities, another area that is of­ten over­looked is tourism.

For cities that at­tract mil­lions of tourists each year like Dubai, which wel­comed 15.8 mil­lion in 2017 and is aiming for 20 mil­lion by 2020, it is of in­creas­ing im­por­tance to con­sider the ex­pe­ri­ence of vis­i­tors as well as res­i­dents.

Ac­cord­ing to Poh Chi Chuan, direc­tor of dig­i­tal trans­for­ma­tion at Sin­ga­pore Tourism Board, projects that im­prove the lives of tourists and res­i­dents are not mu­tu­ally ex­clu­sive, while the use of tech­nol­ogy could help avoid some of the frus­tra­tion ex­pressed by res­i­dents of tourist cities seen over the last year.

“Re­cently we have seen, at least in Barcelona, where the res­i­dents are push­ing back and there is a sce­nario that you hope you don’t have to face,” he said.

“Ear­lier Venice was also go­ing through such a chal­lenge where tourism has ba­si­cally taken over the city. So I think one of the im­por­tant things we are try­ing to in­tro­duce back in our mar­ket here is about au­then­tic tourism.”

He sug­gested that if cities are not care­ful with their plans to at­tract tourists then it can com­pro­mise the very prod­uct they are try­ing to sell to vis­i­tors. “We have

no choice but to be selec­tive and I think data al­lows us to do that.”

The Sin­ga­pore Tourism An­a­lyt­ics Net­work (STAN) is de­signed to de­liver a seam­less tourism ex­pe­ri­ence by en­abling au­thor­i­ties to an­tic­i­pate dips and surges in de­mand.

Data on the plat­form, which keeps track of vis­i­tor ar­rivals, the modes of travel they take, the at­trac­tions they visit and how they spend their money, will even­tu­ally be avail­able to third par­ties.

“We hope that it will help us sharpen our de­liv­ery and our ex­pe­ri­ences and in­sight and go and do our mar­ket­ing and hope­fully that will help our in­dus­try,” said Chuan.

“We are try­ing to take the guess work out of busi­ness. There is no need to guess, the de­tail it gives you, the in­sights of what the con­sumer wants.”

Us­ing the sys­tem, Sin­ga­pore – ranked sec­ond be­hind Lon­don in the Eden Strat­egy In­sti­tute study – hopes to ex­per­i­ment with dif­fer­ent tourism and mar­ket­ing prod­ucts, scal­ing up those that prove suc­cess­ful.

“We hope now our busi­ness is sharper,” Chuan ex­plained.

Is cash­less the an­swer?

As the pop­u­la­tion of cities across the world con­tin­ues to grow, some stake­hold­ers sug­gest the elim­i­na­tion of cash will be the only vi­able means to carry out trans­ac­tions.

Sarah Quin­lan, SVP of mar­ket in­sights at Master­card, says the re­liance on phys­i­cal notes and coins costs coun­tries about 1.5 per cent of gross do­mes­tic prod­uct over time by slow­ing down the “ve­loc­ity” of money.

She be­lieves no city can truly be con­sid­ered smart un­til res­i­dents and vis­i­tors are able to make key trans­ac­tions via cards and other elec­tronic means.

“I don't know if you have to be com­pletely cash­less [to be a smart city] but let's just say you have to be 70 per cent or more,” Quin­lan ar­gued. "You have to have the ba­sics of ev­ery­day life for me to con­sider [ you] a smart city.”

One of the key ar­eas Master­card has been fo­cussing on in its dis­cus­sions with more than 100 city au­thor­i­ties around the world has been the use of contactless credit cards for tick­et­ing on pub­lic trans­port sys­tems to in­crease us­age.

This in­cludes en­abling contactless cards on cur­rent sys­tems pre­vi­ously reliant on cash like New York and en­cour­ag­ing cities with closed trans­port card sys­tems, like Dubai, Hong Kong and Sin­ga­pore, to en­able tick­et­ing with any contactless credit card.

Fam says Master­card's work with Trans­port for Lon­don to en­able contactless pay­ments on the Lon­don Un­der­ground from Septem­ber 2014 had im­me­di­ate con­se­quences for the city, which pre­vi­ously in­tro­duced the Oys­ter Card pay­ment sys­tem in 2003.

In par­tic­u­lar it has helped fa­cil­i­tate less fre­quent trav­ellers like the 19 mil­lion tourists Lon­don re­ceives each year and is pro­jected to cut the cost of col­lect­ing fares from 14 per cent of rev­enue pre2010 to 6 per cent, ac­cord­ing to a Master­card case study. Fam added that the tech­nol­ogy, which is now be­ing tri­alled in Sin­ga­pore, can also help ad­dress one of the key chal­lenges fac­ing cities – air pol­lu­tion. World Health Or­gan­i­sa­tion fig­ures in­di­cate road trans­port ac­counts for 30 per cent of par­tic­u­late emis­sions in Euro­pean cities – a per­cent­age that is likely higher in other re­gions.

But de­spite the ben­e­fits of cash­less tech­nol­ogy, in­clud­ing ef­fi­ciency and se­cu­rity ad­van­tages, there has been push back in some of the mar­kets where it has been most heav­ily adopted due to con­cerns some mem­bers of the pop­u­la­tion are be­ing left be­hind.

In Swe­den, where cen­tral bank data in­di­cates around 25 per cent of peo­ple use cash at least once a week and notes are coins are used for just 15 per cent of re­tail trans­ac­tions, the Na­tional Pen­sion­ers' Or­gan­i­sa­tion is lob­by­ing the gov­ern­ment to make sure cash­less trans­ac­tions are not the only op­tion. "As long as there is the right to use cash in Swe­den, we think peo­ple should have the op­tion to use it and be able to put money in the bank," or­gan­i­sa­tion spokesper­son Ola Nils­son told the BBC for an April re­port. "We're not against the cash­less so­ci­ety, we just want to stop it from go­ing too fast."

Quin­lan says the shift to cash­less in the Nordic coun­try was “a bit too abrupt” for older peo­ple” es­pe­cially those over 70, who have lived a life­time us­ing cash.

“There should have been the abil­ity for a bit more [of a] tran­si­tion rather than im­me­di­ately 'it's cash­less or else',” she said. “The gov­ern­ment in part­ner­ship with us and the mer­chants and banks could have done a bet­ter job of phys­i­cally go­ing and tak­ing some­one through a cash­less trans­ac­tion and show­ing them all the way.”

These lessons will be of par­tic­u­lar rel­e­vance to Dubai and other Gulf cities as they un­der­take smart city ini­tia­tives and open new trans­port net­works to meet the chal­lenges of ur­ban­i­sa­tion.

But one thing is clear, it will take col­lab­o­ra­tion be­tween gov­ern­ments, the pri­vate sec­tor and res­i­dents to meet the chal­lenges ur­ban­i­sa­tion will bring.

“City of­fi­cials of­ten say they don't have enough money, but the pri­vate sec­tor says [the is­sue is] pol­icy,” said Dr Frank Ri­js­ber­man, direc­tor gen­eral of the Global Green Growth In­sti­tute.

“Some cities are still think­ing they have to do every­thing, I think get­ting out of the way and be­ing more of a plat­form is the right an­swer.”

A Master­card panel at the re­cent World Cities Sum­mit in Sin­ga­pore

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