Are smart cities the ‘new reality’?

Smart cities, which are self-sufficient, sustainable and independent of hydrocarbon usage, are now a reality. GCC nations Saudi Arabia and UAE are leading the global phenomenon and investing massively in this novel concept.

In fact, city leaders throughout the globe are making more sense of various internet applications and different data available to them and, more importantly, devising mechanisms about how to best use the data to design and deliver better services across the smart cities.

Role of big data

The World Economic Forum’s Global Future Council on Cities and Urbanization has recently published ‘Data-Driven Cities: 20 Stories of Innovation’, a collection of 20 of the most creative ways cities worldwide are drawing on big data to improve services and quality of life.

“The Forum seeks to empower cities as they prepare for the social, economic and technological transformations of the Fourth Industrial Revolution. The ability to collect data, correctly interpret it and apply the results will be key to driving these advances. We hope these stories serve to steer future conversations and catalyze innovative actions,” said Cheryl Martin, Head of Industries and Member of the Managing Board, World Economic Forum.

$1 billion program

So-called “smart cities” have less pollution, safer streets, and better quality of life for citizens. But many finance officers struggle to fund the upgrades that will make their cities smart. To help, Cisco introduced the City Infrastructure Financing Acceleration Program. It is a $1 billion program aimed to make it easier, faster, and more affordable for cities around the world to fund and adopt technologies that will transform their communities.

The funding will be provided through Cisco Capital in partnership with private equity firm Digital Alpha Advisors and pension fund investors APG Asset Management (APG) and Whitehelm Capital.

“Funding is a major stumbling block for municipalities beginning their smart city transformation,” said Anil Menon, Global President of Cisco’s Smart+Connected Communities. “With our partners, Cisco will bring the capital and expertise it takes to make smart city projects a reality. Digital Alpha, APG, and Whitehelm Capital bring a fresh perspective on investment in an area that has previously been perceived as too new and, therefore, too difficult to finance.”

Assembling right finance instruments

The program helps cities assemble the right type or suite of finance instruments to fund and deploy innovative technology with minimal initial investment.

Whether a city is looking to reduce energy usage, ease traffic and parking, or boost public transportation ridership and revenues, the program will help cities with solutions. Revenue-share financing, for instance, even allows a city to tie financing to desired outcomes and extend future operating budgets through revenue streams from the new services that a digitized infrastructure makes possible.