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.