Skip to main content
An image of the Earth with light pollution visible

The Center for Human Progress is a think-and-do tank combining cultural evolution and economics. We work on the human side of progress that often prevents good ideas from working.

Center for Human ProgressCentre for Human Progress
Image of Zanzibar

Urban Development / Governance / Institutional Learning

Startup Cities as a New Model of Development

Zanzibar as a case in progress

0new city projects announced worldwide, 1945–2021

0million+ adults who would like to move to another country (Gallup World Poll, 2023)

Executive summary

As aid budgets shrink, some governments are trying new models of development. One such model is the startup city, our term for a new city that trains its own talent, with universities on site whose graduates can work and start businesses there. Zanzibar's government is pursuing this approach through the Fumba Free Economic Zone, which its Zanzibar Investment Promotion Authority (ZIPA) administers. In the zone, the developer CPS is building Fumba Town.

The African School of Economics (ASE) has a campus in Fumba Town and calls it "a charter city development". ASE, the Africa Urban Lab and the Charter Cities Institute (CCI) are involved in Fumba. Fumba Town is an early case, and there are no published results yet on how its rules work in practice.

Why governments are trying new models

Aid fell 23% in 2025

Official development assistance from members of the OECD's Development Assistance Committee fell 23.1% in real terms in 2025, the largest annual drop on record, according to preliminary OECD data (April 2026).

900 million+ would like to move abroad

In Gallup's 2023 World Poll, 16% of adults worldwide said they would like to move permanently to another country if they could.

Governance progress has stalled

Africa's average governance score has barely moved since 2018, and about half of Africans live in countries where governance was worse in 2023 than in 2014 (Ibrahim Index of African Governance, 2024).

Aid has saved lives and paid for basic services. Lasting growth also needs:

Aid and growth

  • Effective local institutions

  • Investment

  • Jobs

Migration

  • The Charter Cities Institute was founded in part to address migration caused by poverty, war and climate change. It proposes new cities with better governance as one response.

Startup cities and charter cities

What is a startup city?

A startup city is a new urban area planned from the start to have:

  • Clear, predictable rules

  • Secure property and investment rights

  • Institutions that can deliver public services

  • Universities and training that supply local talent

The idea builds on economist Paul Romer's 2009 proposal for charter cities, new cities where a host government allows a different set of rules. As we use the term, startup cities are meant to be:

  • Led by the host government and local partners

  • Politically legitimate where they are built

  • Planned to grow over decades

Most of Africa's urban growth will still happen in existing cities, which is why the Africa Urban Lab helps them plan their expansion (see Planning for Growing African Cities). New cities add to that work, because on a new site a government may have more room to try different rules.

Culture and rules

Formal rules work best when they match shared expectations about how others will behave. Economic historian Joel Mokyr argues that sustained growth depended on formal institutions and also on a culture that valued useful knowledge and experimentation. Mark Lutter, who founded CCI, sees charter cities as one way to create the right "cultural spark", by attracting talent and demonstrating better governance.

CHP's own research asks how rules and norms change together, and why the same rules can work well in one place and badly in another.

Clear rules

Secure property rights, simple regulation and credible enforcement are meant to make investing and building worthwhile.

Norms that fit the rules

Rules work in practice when people expect others to follow them. Startup cities try to build trust and cooperation alongside the rules.

Policy learning

Like a startup, a startup city is meant to test policies, measure the results and change what does not work, so that successful policies can spread.

Why Zanzibar?

Zanzibar on a map
A map of Zanzibar.

Zanzibar is a semi-autonomous part of Tanzania, with its own government for matters outside the Union's powers. Customs, currency and external borrowing, for example, are Union matters. Zanzibar passed its own free economic zones law in 1992 and runs its own investment agency, ZIPA.

  • Zanzibar Town has grown from about 35,000 people in 1923 to more than 600,000, according to ZIPA.
  • The Fumba Free Economic Zone, declared in 1992, covers 3,000 hectares on the Fumba peninsula, south of Zanzibar Town.

Africa is the world's fastest-urbanizing region. The UN projects that its population will reach about 3.8 billion by 2100, more than a third of the world's total.

Fumba Town

Within the zone, the developer CPS is building Fumba Town, which it plans to grow into Fumba City.

ASE's Zanzibar campus, which houses the Africa Urban Lab, is in Fumba Town, and CPS provides space there for tech firms in the government's Silicon Zanzibar program. Each partner has a separate role:

Fumba coastal town
  • Government: sets policy, and its agency ZIPA administers the zone
  • CPS: develops and builds Fumba Town
  • Charter Cities Institute: works with CPS on development and governance
  • ASE Zanzibar and the Africa Urban Lab: teach and carry out research

Universities and training

Since 2023 Zanzibar has gained campuses of IIT Madras and the African School of Economics.

IIT Madras Logo

IIT Madras Zanzibar

IIT Madras Zanzibar, inaugurated in November 2023, is the first campus of an Indian Institute of Technology outside India.

It offers degrees in data science and AI, chemical process engineering, and ocean structures.

ASE Logo

African School of Economics

Leonard Wantchekon, James Madison Professor of Political Economy at Princeton, founded ASE in Benin in 2014. Its Zanzibar campus in Fumba Town was set up in partnership with the Charter Cities Institute. Wantchekon argues that African universities should work with firms and governments on real problems, and that research-driven universities can feed innovation-driven entrepreneurship in cities.

ASE alumni include assistant professors at NYU and Dartmouth. Others have worked at UNDP, the International Growth Centre and Innovations for Poverty Action.

AUL logo

Africa Urban Lab

The first research center at ASE Zanzibar. Kurtis Lockhart founded it in 2024 as a Charter Cities Institute project, set up with ASE, and it became an independent nonprofit in 2026. It trains city officials and planners and works with cities on planning for growth (see Planning for Growing African Cities).

It began teaching its Professional Diploma in Urban Development in November 2024.

Rules for new cities

The Charter Cities Institute (CCI), founded by Mark Lutter, works on laws and governance for new cities (see Governance for Charter Cities). It publishes guidance and data, and it has an agreement with CPS on Fumba City.

  • Governance Handbook (2021)

    Guidance on 16 areas of law, including tax, dispute resolution, land, labor, education and the environment. Kurtis Lockhart, Jeffrey Mason and Carl Peterson wrote it.

  • New Cities Map

    A database of 353 new city projects announced between 1945 and 2021, each with a current or planned population of at least 100,000. CCI built it with the Adrianople Group. Detailed governance and finance data so far cover the Americas and India.

  • Fumba City agreement (2023)

    In November 2023 CCI and CPS agreed to work together on the development and governance of Fumba City, including master planning and feasibility studies.

What success would look like

Startup cities aim to show what is possible and prompt reform elsewhere. Kurtis Lockhart argues that special jurisdictions such as new cities and economic zones let governments pilot reforms locally, identify the successes, discard the failures and then scale up what works. If Zanzibar's approach works, it could:

  • Raise incomes and widen opportunity in Zanzibar

  • Offer lessons that other governments can adapt

  • Build growth that Zanzibaris lead and own

GDP is one measure of success. Another is whether ordinary Zanzibaris feel the city belongs to them and that it widens what they and their children think is possible. CHP will document what is tried in Zanzibar and the conditions behind each result, so other governments can judge what applies to them.

“First of all, originally, it was about bringing Black faces in the profession, in economics, because the numbers are super bad.”

Leonard Wantchekon avatar

Leonard Wantchekon

Founder and President, African School of Economics

Published by Center for Human Progress (US) Inc., a 501(c)(3) organization

Privacy PolicyTerms & ConditionsCookie Policy