Smart cities and their influence on income growth: The case of Africa

Source abstract

Despite rapid urbanization and the adoption of smart city (SC) initiatives, the economic benefits for the population have been limited in Africa. This study aims to examine the effect of “core” elements of Smart Cities, such as Information and Communication Technologies (ICT), in the growth of GDP per capita in a set of 78 cities in Africa. The methodology employs a Probit model with instrumental variables (IV-Probit) to correct for endogeneity problems, using population density and the proportion of the population in slums as instruments. Labor, fiscal, demographic, and institutional controls are considered. The results show that a 1% increase in the ICT index increases the probability of GDP per capita growth by approximately 1%, a positive effect, but of small magnitude. This suggests that ICT are necessary, but insufficient, to drive inclusive growth without complementary measures that address structural problems. Prioritizing basic digital infrastructure, inclusive governance, and contextual adaptation of SC models is recommended. The paper provides critical and contextualized empirical evidence. Limitations include a lack of data and the use of proxy ICT indicators that do not capture their actual use.