WEF: Private sector ‘extremely interested in the New Urban Agenda — but have some concerns’

"If you look at the business community, in many instances they’re actually dealing with city leaders. If they’re offering a service, delivering infrastructure or selling a product, then they’re working with cities rather than prime ministers or presidents," says the World Economic Forum's Alice Charles. (Drop of Light/Shutterstock)

GENEVA — Every year in the Swiss ski resort town of Davos, world leaders and titans of industry gather under the auspices of the World Economic Forum. From monetary policy to geopolitics, cybersecurity to virtual reality, the January confab is a marquee meeting for the future of the world economy. Since 2009, a small group of business executives have met in the rarified Alpine air to ponder how urbanization fits into a vision for global prosperity.

Nearly a decade later, much of the World Economic Forum’s policy research on the urban question is thanks to Alice Charles, the WEF’s urban point person at the Shaping the Future of Urban Development and Services Initiative. Officially, she’s the forum’s Community Lead of Infrastructure and Urban Development Industry.

Internally, she manages attention-grabbing reports on topics such as the latest urban innovations and how the private sector can deliver on the New Urban Agenda, as well as country-specific recommendations for India and city-specific recommendations for China. Externally, she coordinates an advisory board of 25 private sector movers and shakers with a stake in cities, including the likes of Arup, Danfoss, PricewaterhouseCoopers, IBM, Cisco, GlaxoSmithKline, Novo Nordisk, Hindustan Construction, Biaban Group and the Rockefeller Foundation.

[See: Public sector can’t deliver New Urban Agenda alone, World Economic Forum warns]

Most recently, Charles spearheaded the forum’s latest attempt to look into the crystal ball, the Global Future Council on Cities and Urbanization. With leading luminaries such as Quito Mayor Mauricio Rodas, UN-Habitat Executive Director Joan Clos and World Bank Senior Adviser Abha Joshi-Ghani, this new roundtable will seek to solve urban ills by harnessing the so-called Fourth Industrial Revolution — now the forum’s latest focus, with a recently opened center in San Francisco.

This week in Buenos Aires, the WEF is hosting its annual meeting on Latin America. In March, Citiscope’s Gregory Scruggs sat down with Charles near the World Economic Forum’s global headquarters, to learn more about the forum’s global view on urbanization. This interview has been edited for length and clarity.


Gregory Scruggs: Why is the World Economic Forum interested in urbanization?

Alice Charles: The forum is the international organization for public-private cooperation, so the demand for a line of work comes from that community. With the level of urbanization that’s happening — 66 percent of our population is going to live in cities by 2050 — if you’re going to improve the state of the world, you’ve got to deliver in cities.

The World Economic Forum’s Alice Charles.

If you look at the business community, in many instances they’re actually dealing with city leaders. If they’re offering a service, delivering infrastructure or selling a product, then they’re working with cities rather than prime ministers or presidents.

[See: How investable is your city? This index promises an answer]

And of course, city leaders have an interest in working with us. From a city leader’s point of view, generally what they would say is: One, they’re interested in looking at the best primary examples we can share, but the second thing is working with this wider community of business and civil society that can help them to deliver some solutions on the ground in their cities.

Q: If there is so much opportunity for the private sector in urban development, why do you think that the business community was so absent at Habitat III?

A: The private sector wasn’t engaged from the outset. There was an absolute willingness of the private sector to be involved. At the 2016 Davos meeting, the 25 business leaders on the steering committee of our Future of Urban Development and Services initiative said that in order to get the best agreement at Habitat III, they wanted to be part of the process.

[See: Private-sector role is discussed at Habitat III but few businesses show up]

Mayors were well represented in Quito [at Habitat III], but the need for the private sector to be part of the process was recognized too late in the day for the private sector to physically be there. That’s definitely a major learning in terms of any future global framework on urbanization: You need to make sure all of the stakeholders have a seat at the table from day one.

Q: Since the adoption of the New Urban Agenda, have you seen a renewed interest from the private sector?

A: The private sector is extremely interested in the New Urban Agenda, but they have some concerns. They believe that a number of things need to happen now.

“Mayors were well represented in Quito, but the need for the private sector to be part of the process was recognized too late in the day for the private sector to physically be there.”

One is they would really encourage member states to take a leading role for the development of enabling legislation and policy for the New Urban Agenda. They are very interested in how can you get national parliamentarians, mayors, the business community and civil society to sit down and start talking about how you legislate for this agreement. And their concern is, of course, they are aware that national governments didn’t turn out in Quito. They are aware that mayors came before national governments in terms of their engagement in Quito, so their concern would be that nothing will happen.

[See: Business can be a powerful broker in shaping urbanization solutions]

There’s great momentum around the [Sustainable Development Goals], but there isn’t that same momentum around the New Urban Agenda. The business community feels that the discussion really needs to be taken up with national governments to make it happen.

Q: Your office has prepared city strategy reports for a number of Chinese municipalities, like Tianjin and Dalian. What are the trends that you are observing in China as far as how local governments are delivering on urban development priorities?

A: The big trend here is the vast level of rural-to-urban migration. Of course, the Chinese government has had policies to drive that trend and will drive that over the next decade, as well. The level of movement of population is absolutely huge, and the level of development is unbelievable. Where rapid development takes place, generally adequate facilities are not necessarily provided in tandem with development.

The big challenges China faces are largely environmental as a result of huge mobility problems. Beijing was a city that once had a huge amount of cyclists. But the reality is that the infrastructure that’s been delivered in the last number of years is promoting the car. Trying to even cross a highway can be difficult in China. That creates pollution, congestion and health problems.

[See: Between Habitat II and III, China changed everything]

“There’s great momentum around the SDGs, but there isn’t that same momentum around the New Urban Agenda. The business community feels that the discussion really needs to be taken up with national governments to make it happen.”

Energy also comes up as a major challenge. There’s a heavy reliance on coal, which of course creates further problems in terms of air pollution. And these huge challenges are then coupled with water quality and land-degradation issues. The environmental changes they have to face as a result of rapid development are huge, and that’s where a big focus will have to be placed.

China needs to get back to the livability piece, providing much more livable cities.

Q: The other major urban player is India. We are now three years into Prime Minister Narendra Modi’s 100 Smart Cities effort, which your office provided a series of recommendations for. Where does that initiative stand, and what’s your assessment of its progress?

A: The task in India is landmass. It’s going to be the most populous country in the world in the not-too-distant future. The level of rural-to-urban shift that it’s going to experience in the next couple of years — and is already experiencing — is again huge. What the government of India has done in the last couple of years has to be welcomed, recognizing that they need to place an emphasis back on the cities and trying to develop the cities. Schemes like the 100 Smart Cities initiative and the AMRUT cities initiative have to be really welcomed.

In terms of implementation, there’s a lot of fixes needed from a governance point of view. If you look at the way cities are led, you have the federal government, which develops the overall national urban strategy, but then you move on to the state level. There, a chief minister largely controls the entire state — rural and urban — and if you look at somewhere like Maharashtra, that’s 100 million people, much bigger than the average country.

As a result, you don’t have the dedicated leadership at a city level. India needs to create a mechanism that empowers city leadership so that the right decisions are being made at the right level to enable proper city development.

[See: In India, training the next generation of urbanists]

India also needs to encourage investment to come from outside the country. There has been a huge issue with financial constraints on the urban development and infrastructure sector. In terms of borrowing to invest in infrastructure, firms generally can only borrow for very short periods of time —  two to five years at very high interest rates. Thus, the domestic sector is quite heavily indebted, and mechanisms need to be put in place to get them out of that situation.

Both domestic and international investors also must face the time it takes to actually get paid for completed work. A firm will enter into contracts with a state or a city and state, and it will take a very long time to get paid — up to seven years in many instances. Thus, the dispute resolution system really needs to be focus on ensuring that it’s easier to do business in India.

In the last couple of years, the government has done a huge amount to address that problem. Our competitiveness rankings show that they’ve really improved. But more must be done, like creating the right sort of transparency. The task is still enormous.

Q: What are India’s biggest infrastructure problems?

A: Water and transportation. Over 50 percent of the municipal water supply leaks into the ground. They need to immediately try and fix that. They need to look at, should people be paying for water? And the reality is they probably should be.

“We plan to speak with city leaders to understand how migration has impacted their cities in terms of the delivery of infrastructure and urban services, both positive and where it’s posed a challenge. We then hope to find solutions to those kinds of issues.”

Also there are public health concerns in terms of sewage. A lot of people, even in an urban context, still have their own personal treatment system. Where you have that along with wells where people are pulling up their own water and piping out of their own domestic sewage system, of course there can be contamination. So I think they need to try and create a system to bring those individual sewage-treatment plants into an overall network and focus on trying to improve the quality of water.

[See: How Mysuru became India’s ‘cleanest city’]

India also needs to find a way of getting people from A to B in a rapid way. I was recently in India, and our driver was telling me about spending two-and-a-half hours that morning getting to work, and then he worked a 12-hour shift. Plus he needs to be there 30 minutes before work and, say, 30 minutes after. Before long, that’s 24 hours.

The only way to get him from A to B easily is to have rapid public transit. There is a lot of talk about self-driving vehicles, but in places where you have that level of development happening, you need rapid and reliable public transit. That’s the reality.

Q: What are the next major issues in urbanization that the World Economic Forum plans to tackle?

A: Migration and the sharing economy. On migration, we’re very interested in looking at this from a city preparedness point of view. Where is the migration happening from and to, especially in terms of internal rural-to-urban migration, which is a bigger issue than inter-country migration caused by climate change or conflict. What are the current trends? Where are the cities that are going to be most affected?

We plan to speak with city leaders to understand how migration has impacted their cities in terms of the delivery of infrastructure and urban services, both positive and where it’s posed a challenge. We then hope to find solutions to those kinds of issues. For example, if city leaders have a real need to deliver short-term and long-term housing, we could look at various innovative solutions.

Finally, we will ask how could cities be better prepared to address this trend that’s going to continue over the next 30 years until urbanization levels off.

[See: Initiative aims to make more green infrastructure projects ‘bankable’]

As for the sharing economy, the Airbnbs and Ubers get a lot of attention, but there are so many other entities popping up. For example, New York-based WeWork, the coworking company, has branched into WeLive, a cohousing concept.

WeWork is great if you’re somebody who’s seeking to start a business and you don’t want to enter into a contract. For an office, you can literally just rent your desk by the day or the week. WeLive is the same premise — how you can live in a more communal type of environment.

We’re looking at the opportunity and challenge these companies present to cities. How do you create policy, regulation and platforms to implement them in cities? I recently met with a city leader who said, “I would love to have ride-sharing in my city from a competition point of view. But when I think about a public safety point of view, I’m concerned.”

Recently, his police force had stopped drivers, and they didn’t have insurance or driver’s licenses. If an accident happens and a citizen is injured, he wanted to know who is liable, his city or the platform. If the platform, how does the city legally pursue action if the platform’s headquarters are in the United States?

[See: Cities hopeful and cautious on ‘sharing economy’]

We’d like to figure out how you can create the right policy. Dubai is smart — they’re creating the platform rather than the policy and the regulation. You can create the platform that allows the proper open market to exist, rather than necessarily the legislation and policy.

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Gregory Scruggs is a senior correspondent for Citiscope. Full bio

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