From smart cities to open cities: Why smart cities need open contracting

From association with Bletchley Park in the 1930s to today’s high-tech urban visions, smart cities have inspired policymakers and innovators for decades. Today, smart cities are being explored in countries around the world. For UNDP, they are about leveraging technology and innovation to improve lives and livelihoods – and we need to create opportunities for smart cities to happen.

Globally, the smart cities market will grow from its current $600 billion to $3.5 trillion by 2026, driven primarily by governments’ investing in technology, energy, and infrastructure. Growth is also likely across Sub-Saharan Africa and the ASEAN region, where urbanization is happening quickly. The ASEAN Smart Cities Network and networks across the African continent are seeing considerable developments. 

We think that open contracting can play a crucial role in creating, enabling, and catalyzing smart cities worldwide. It can drive improved governance by increasing transparency and accountability, enhance the delivery and effectiveness of digital and other infrastructure, and ensure that we can apply the best solutions to improve urban economies and societies.

Technology and innovation have catalyzed new markets and opportunities in emerging economies and lower entry barriers for startups and micro-enterprises. From ag-tech to wearables, and from Addis Ababa to Zanzibar City, startups deliver new products and services – driving economic development and improving lives and livelihoods.

However, the startup ecosystem focusing on smart cities is less developed in many emerging economies. Whereas ag-tech, ed-tech, and fintech have gained traction, startups with a specific focus on improving the urban environment – and the lives of its citizens – have a smaller profile. Here, open contracting can play a crucial role in increasing the opportunities available for startups to tackle city challenges by bringing transparency, collaboration, and openness to the public sector. 

Governments around the world spend $13 trillion with companies every year. Public contracting is the world’s largest marketplace, and it needs to work well. This includes ensuring that collaborations with the private sector deliver the solutions needed by governments and their citizens.   

As we work on building smart city initiatives across Sub-Saharan Africa – and the Asia-Pacific region – we’re learning that:

• Transparency is crucial for driving innovation. Startups and other companies struggle to engage with local (and national) governments that are opaque and unpredictable. This is further complicated when public sector churn is high, and relationships between the public and private sectors are not institutionalized. Without these foundations, few companies – large or small – will explore partnerships. Open contracting can play an essential role in providing accountability and certainty.

• Public officials have a key role to play. We need to increase the ability to define problems better so that projects and associated contracts are scoped adequately. Complexity complicates contracting and discourages smaller enterprises from working with local and national governments. We also need to focus on outcomes. We can broaden how we engage with the private sector beyond the usual vendors – and partner with startups and other enterprises through both of these.

• A longer-term perspective is required. Improving how the public and private sectors work together can take time. It’s why an agile approach is so important – including identifying key government partners to build an open contracting ethos and refining this in partnership with large and small players in the private sector. Open contracting can also catalyze the private sector, providing opportunities to grow and develop the startup and innovation ecosystem in countries. 

• Open contracting is not negotiable. It delivers the best outcomes for local and national governments, the private sector, and – crucially – provides citizens’ best results. The best solutions can only be implemented if they and the companies behind them – many of which are startups – can share them with governments. 

The COVID-19 crisis, which has significantly affected dense and highly populated urban environments, reaffirms the importance of open contracting. Unforeseen challenges demand the best solutions, and these will only be identified and implemented in a context of openness and transparency. Similarly, smart cities need to be adaptable to withstand, respond to, and shift following challenges and crises. But they cannot do this alone. 

Meaningful collaboration with the private sector is crucial. We cannot rely on the same vendors providing the same solutions. We need new and innovative approaches and engage with startups focusing on urban issues. By 2030, the world population will increase by a tenth, and the number of urbanites will increase by a third. We need solutions that make cities more livable. We need the best ideas, and open contracting is crucial in identifying, implementing, and scaling them.