Bridging the Digital Divide: Smart City Innovation Strategies for Developing Nations

In this digital era, smart cities have become a major focus for many countries worldwide, including developing nations.

Authors: Tuhu Nugraha, Raine Renaldi, Annanias Shinta D*

In this digital era, smart cities have become a major focus for many countries worldwide, including developing nations. However, innovation in smart cities in developing countries often faces unique challenges. This article discusses these challenges and innovation strategies that can be applied to address them, targeting academics, policymakers, and industry players.

Developing countries face significant challenges in implementing smart city initiatives, primarily due to the lack of clear and measurable strategic vision. Many cities in developing countries still lack a comprehensive understanding of the smart city concept, often leading to ambiguity in strategic vision. Due to differing development priorities, this challenge is characteristic of developing countries, where basic needs such as infrastructure and public services remain the primary focus. Meanwhile, smart city initiatives are often seen as a luxury or an add-on rather than a priority.

Moreover, the limitations in human resources, organizational capacity, and rigid bureaucracy are major obstacles to adapting to the demands of digital transformation. In many developing countries, there is a shortage of skilled personnel with the necessary expertise to develop and manage smart city projects. Rigid and inflexible bureaucratic structures often limit organizational capacity, hindering fast and effective decision-making processes. Bureaucratic red tape can also slow down the implementation of new technologies, which require quick adaptation processes.

Many cities in developing countries focus too much on technology without considering how it can be effectively integrated into the local context to generate real value. This challenge often arises due to external pressure to adopt the latest technologies without a clear strategic plan on how these technologies will be used to improve residents’ quality of life. This pressure can come from global tech companies offering ready-made solutions that may not always fit local needs.

Another challenge is the lack of collaboration between government, industry, academia, and the community in creating and managing a local innovation ecosystem. In developing countries, there are often silos among various stakeholders, where each party works separately without effective coordination. This hampers the creation of the synergy needed for sustainable and effective innovation.

Fragmentation and isolation of knowledge also hinder the process of shared learning and the application of broader solutions. Innovation is often fragmented and isolated due to the lack of platforms and mechanisms for sharing knowledge and experiences between cities and regions. In developing countries, this problem is exacerbated by limited access to information resources and global networks that can support collaborative learning.

By recognizing and understanding these challenges, academics, policymakers, and industry players can work together to develop more effective and sustainable strategies in building smart cities in developing countries.

Innovation strategies to address challenges in the development of smart cities in developing countries involve several key approaches. First, developing open and neutral digital technology platforms can help create convergence and generativity, allowing various entities to develop complementary offerings and encourage co-creation involving multiple parties. Additionally, adopting distributed innovation strategies that enable cross-boundary collaboration between urban innovation ecosystems is crucial. This strategy helps overcome resource limitations by sharing knowledge and resources between cities.

Next, implementing combinatorial innovation by creating modules, services, or objects that can be easily recombined enhances data portability and technology interoperability, enabling sustainable and adaptive innovation. Developing a local innovation ecosystem that involves government, industry, academia, and the community in close collaboration is also essential. The helix model (triple, quadruple helix) can strengthen these relationships and ensure the involvement of all stakeholders. Finally, increasing citizen participation in the smart city innovation process through various techniques such as public consultation, hackathons, and online platforms ensures that developed innovations are relevant and beneficial to society. Here are some forms of implementation that can be adopted in developing countries.

Education and Training

Increasing human resource capacity through education and training in technology and smart city management is crucial as a solution in developing countries. This is because skilled and knowledgeable human resources are key to successfully implementing and managing smart city initiatives. Many developing countries face a shortage of experts with the necessary skills and knowledge to design, develop, and manage smart city projects.

For example, in Kigali, Rwanda, the government has collaborated with the private sector and universities to establish the Rwanda Coding Academy. This academy aims to train young people in programming and information technology skills. Additionally, initiatives like the Smart Kigali program have been launched to improve connectivity and digital services in the city. This program includes training for government employees and the general public on using new technologies to enhance the efficiency of public services.

The outcome of these initiatives in Kigali is a significant increase in local technological capacity. Government employees who have received training can now manage more complex digital systems, which in turn improves the efficiency of city administration. Furthermore, the general public who receive training gain new skills that enhance their employment opportunities in the rapidly growing technology sector. This program also fosters local innovation, with more tech startups emerging in Kigali, providing technology solutions relevant to local needs.

Increasing human resource capacity through education and training not only helps address the challenge of the expert shortage but also creates a more sustainable and adaptive innovation ecosystem. With a more skilled workforce, developing countries can more effectively leverage technology to improve their citizens’ quality of life and achieve sustainable development goals (SDGs).

Innovative Financing

Encouraging innovative financing models such as public-private partnerships (PPPs) is a crucial solution to address government budget constraints in developing smart cities in developing countries. This innovative financing involves various forms of cooperation between the public and private sectors, allowing both parties to share risks, responsibilities, and benefits.

One form of innovative financing is public-private partnerships (PPPs), where the private sector provides part or all of the funding for smart city projects, while the government provides policy and regulatory support. A successful example of this model is the development of smart transportation infrastructure projects, where private companies build and operate transportation systems in exchange for concessions or revenue from user fees. Additionally, performance-based financing schemes link funding to measurable outcomes, such as reducing carbon emissions or increasing energy efficiency. Private investors or donors fund projects with the condition that the financing will be repaid based on the achievement of specific performance targets.

Social Impact Bonds (SIBs) are another form of innovative financing, allowing investors to fund innovative social projects with a return on investment dependent on the project’s success in achieving agreed-upon outcomes. Smart cities can use these bonds for projects aimed at improving community well-being, such as health or technology-based education initiatives. Crowdfunding and community investment are other forms of financing that involve raising funds from many individuals through online platforms to finance specific projects. Community investment involves funding from residents that is reinvested in local projects, providing them with a share of the generated profits.

An example of PPP implementation can be seen in the city of Surat, India, which has successfully implemented this model in various infrastructure and public service projects. Water and waste management projects, such as wastewater treatment and clean water treatment plant construction, have been carried out through PPPs to improve access to clean water and sanitation for the community. By applying this innovative financing model, cities in developing countries can overcome budget constraints, accelerate project implementation, reduce financial risks, and encourage more effective and sustainable innovation.

Local Adaptation

Focusing on the adaptation of technology to the local context is crucial in the development of smart cities, especially in developing countries. Each city has unique characteristics influenced by its culture, economy, and the specific needs of its community. Therefore, the technology adopted must be tailored to local conditions to ensure effectiveness and acceptance by the community. Local culture plays a significant role in the acceptance of technology. The technology adopted should consider the values, traditions, and customs of the community. For example, in communities with a tradition of gathering and discussion, technology that facilitates communication and community participation, such as online consultation platforms or mobile applications for reporting environmental issues, will be more easily accepted and used.

Additionally, the local economic conditions must be considered in the adaptation of technology. In areas with limited resources, technology solutions must be cost-effective and easy to operate. Technologies requiring significant initial investment or high operational costs may not be suitable. Conversely, technologies that utilize local resources and can be implemented gradually will be more sustainable. Each community has different needs, so it is essential to conduct a comprehensive needs analysis before adopting specific technologies. For instance, if a city’s primary issue is traffic congestion, the most needed technology solution might be a smart traffic management system that can optimize vehicle flow and reduce congestion.

One example of a unique digital solution successfully adapted to the local context is M-PESA in Kenya. M-PESA is a mobile-based financial service that allows residents of Nairobi, and Kenya in general, to conduct financial transactions without needing a bank account. M-PESA enables users to save money, send and receive money, pay bills, and purchase goods digitally via their mobile phones. This service is especially helpful in areas where access to traditional banking services is very limited. M-PESA has become a revolutionary financial inclusion solution in Kenya, enabling more people to participate in the digital economy.

Community Engagement

Strengthening community involvement in every stage of smart city initiatives is crucial to ensure that the developed solutions are genuinely relevant and beneficial to them. In developing countries, there are several relevant and effective forms of community engagement. First, public consultation is an essential method through which city governments can gather input from residents regarding their needs and priorities. This can be done through community forums, online surveys, or face-to-face workshops. Second, using digital platforms like mobile applications or websites to report urban issues and provide real-time feedback can enhance active citizen participation. An example is the JAKI app in Jakarta, which allows residents to report various urban issues directly to the government.

Additionally, hackathons and innovation competitions are effective ways to involve the community, especially the youth and tech communities, in seeking creative solutions to city challenges. Through hackathons, participants can collaborate in teams to develop technology prototypes that can address specific city problems. Third, forming citizen advisory councils consisting of representatives from various communities can also provide diverse perspectives in the decision-making process. These councils can serve as a bridge between the government and citizens, ensuring that the community’s voice is heard and considered.

Lastly, education and awareness-raising through information campaigns about smart city initiatives are also important. This helps the community understand the benefits of new technologies and how they can participate in these efforts. By implementing these forms of engagement, cities in developing countries can create solutions that are more inclusive, sustainable, and aligned with the community’s needs. This not only increases the effectiveness of smart city projects but also builds trust and support from citizens.

Collaboration and Networking

Developing collaborative networks with other cities, both nationally and internationally, is a crucial step to sharing experiences and successful solutions in smart city development. Concrete forms of this collaboration can be realized through various initiatives and platforms. One concrete form is participation in global smart city networks such as the Smart Cities Council, which provides a forum for cities worldwide to share best practices, technologies, and innovative strategies. This network also offers resources, training, and technical support to help member cities overcome specific challenges they face.

Additionally, cities can participate in programs organized by international organizations such as the United Nations’ Smart Cities Programme or the World Bank’s Smart Cities Initiative. These programs often provide funding, technical support, and opportunities to share knowledge with other cities facing similar challenges and goals. For example, these programs might involve joint workshops, conferences, and pilot projects that allow cities to learn from each other and implement proven solutions in other locations.

At the national level, governments can facilitate collaboration between cities by forming smart city associations or consortia. These associations can serve as a platform for cities to exchange information, develop joint projects, and advocate for policies that support smart city development. An example of this is the Association of Indonesian Municipalities (APEKSI), which can play a crucial role in coordinating the efforts of cities in Indonesia to adopt smart technologies.

Collaboration can also be encouraged through bilateral initiatives between cities. For example, City A and City B can sign cooperation agreements to share data and technology, conduct staff exchange programs, or develop joint smart city projects. This form of collaboration allows cities to leverage each other’s strengths and expertise, overcome weaknesses, and create more effective and efficient solutions.

By developing strong collaborative networks, cities in developing countries can accelerate the learning process, reduce technology development costs, and enhance the effectiveness of their smart city initiatives. This collaboration not only helps in the dissemination of innovation but also builds solidarity and partnerships that can provide long-term benefits for all parties involved.


The transformation of smart cities in developing countries faces various complex challenges. However, by adopting the right innovation strategies, these cities can harness the full potential of digital innovation to achieve faster and more sustainable transformation. Collaboration between governments, academics, and industry players is crucial to creating an inclusive and highly competitive innovation ecosystem.

Academics, policymakers, and industry players are invited to collaborate in creating solutions that can bring real benefits to communities in developing countries, ensuring that every smart city initiative truly reflects local needs and aspirations.

*Raine Renaldi, President ID-Opentech Group, Chairman Indonesia Smart City Provider Alliance. Annanias Shinta D, Passionate professional with a strong background in research, communication, and business management. Experienced in collaborating with public and private companies, as well as NGOs, to drive positive change and create a better future.

Tuhu Nugraha
Tuhu Nugraha
Digital Business & Metaverse Expert Principal of Indonesia Applied Economy & Regulatory Network (IADERN)