Leopoldo Albuquerque Has A Libertarian Vision Of Smart Cities In Latin America, With The Public & Private Sectors Collaborating Towards Common Goals
Leopoldo Albuquerque is on a mission to make the cities in Latin America smarter. Though you might think of technology first, Dr. Albuquerque is talking about smarter ways of governing and managing public and shared resources. The founder and Global President of Smart City Business America is in Colombia preparing for The Smart City Business Expo Colombia, which will take place the 17-19 of September in Bogotá.
Finance Colombia’s executive editor Loren Moss was able to catch up with Albuquerque (pictured above, left) to discuss the event, but primarily the wider goals that The Smart City Business Institute seeks to accomplish in Brazil, Colombia, and other Latin American countries.
Finance Colombia: What is Smart City Business, its origin, and what’s the reason behind it?
Leopoldo: The Smart City Business Institute is a non-profit organization. Nowadays, we’re in 9 countries of Latin America and our work focuses on changing the cities so they’re smart cities, regarding the business point of view. We’re the only organization working on this subject, business, because we believe that, to make the cities smart, there’s the need of a heavy investment in technologies, and for said transformation a type of finance is necessary that is beyond the capacity of government; We believe that this massive investment can only happen with private capital.. For this, it’s necessary to develop business models that facilitate the linkage between public and private actors, not only in Colombia or Brazil, but in the majority of the world. What happens is that there are not clear rules established for this. For instance, there are cities that have a specific configuration nowadays that privileges the cars in the streets. The streets are not made for the people.
Finance Colombia:What’s the role of the organization in changing, fixing that? It’s curious that here in Bogota, and in Medellin where I live, electric scooters are already being used everywhere.
Leopoldo: That’s everywhere. In Sao Paulo, where I live, it’s the same. There are scooters, bicycles everywhere, because there’s a new generation that’s changing its rhythm of life, they don’t want to have cars anymore, maybe the young people of today don’t have a driver’s license, don’t know how to drive, just because they’re looking for their own mobility, which is known as micro-mobility, each person has their own way of moving from one place to another, and that’s a global tendency. So, when I tell you that we need to make a big investment for change, I mean a general change, not only technologically speaking. For understanding one thing, technology nowadays is so big that it can generate an economic transformation in the cities so intense that has the power to create a need for the citizens to demand changes for the city, and that’s happening everywhere in the world, with all the people from different cities. But cities nowadays have a very old configuration, which created and generated all the problems that we’re facing nowadays, especially regarding mobility, but also regarding security, and many other things. So, it is the way in which people move from one place to another, but also where they’re going to live, the houses, the way the houses are made, all of that has to change for a new configuration, friendlier to the citizens.
All the technology that is necessary for having a smart city is already available, we just have to change some things and make the right decisions towards it; To generate proximity between the public and private parties so they start to work together, because the public party can’t have the private one only as a provider, it has to be an ally,
Finance Colombia:That’s something very interesting that you have mentioned along different topics. I remember that when I was 16 years old, my parents used to ground me by taking the car keys from me, and today my daughter is 17 years old, she lives in the US, and her mother grounds her by taking away her access to Uber. It’s fascinating how everything has changed.
Leopoldo: Yes. Now, look, had you asked me three years ago if I could live without a car, I would have said no, because I had always had a car, but it’s been two years since I don’t have one.
Finance Colombia:Same for me. In the US, I had two cars, a boat and a motorcycle, and here, this is the first period in my life during the last five years in which I don’t have a car.
Leopoldo: Because it’s not necessary, because now you can call at any hour and you’ll have a car for a good price, exclusive for you.
Finance Colombia:In Medellin we have the subway, which works very well, there are buses that go everywhere.
Leopoldo: Sao Paulo has a very efficient subway, which works, so that’s how it is, people are changing their rhythm of life, not only regarding that, but about everything. So, for changing everything that is there and make a friendlier city for the citizens, it’s necessary to reconfigure the city, and said reconfiguration costs a lot of money and it’s not possible to make it with public money, because there isn’t enough money, the governments don’t have any more.
Finance Colombia:Everybody’s complaining about high taxes, and in many countries, that’s the truth, they’re high.
Leopoldo: There’s another thing, another situation that’s going to generate even more pressure for the governments regarding this change. The technology that is in our service also has collateral effects, and one of them is the causing of unemployment. Many jobs won’t need people, because the machines and the artificial intelligence are doing everything. So, some time ago, there were thousands and thousands of people only for attending the phones in call centers, and nowadays there aren’t anymore. A computer, the artificial intelligence, can take the call, answer, talk about everything without needing a person.
Finance Colombia:There’s an annual competition The Loebner Prize, where the goal is that you can’t say if you’re chatting with artificial intelligence or with a real person, and they started it, and at the beginning it was super easy, but now even for the experts, the people who know what they’re doing, the professors, they’re wrong approximately the 30% of times. I mean, not even they can tell if it’s AI or not. Imagine how much we’re accelerating it, in two more years nobody will be able to tell.
Leopoldo: Nowadays, one of the good jobs for the people that don’t have another activity is driving an Uber, the applications, which won’t be there anymore in like 15 or 20 years, because AI will drive the cars by itself.
Finance Colombia:We already have tests of these cars in some places.
Leopoldo: Then, an Uber won’t have a driver, a person, but a machine will do it.
Finance Colombia:And it (hopefully) will be safer.
Leopoldo: Yes, much safer, but it generates a big problem for the population, that has to look for other alternatives to get a job.
But what happens? Going back to the previous explanation, the decrease in the activity, people have to live with less than today; many services have to be free for the people, for the families to be able to live better, with fewer worries.
Finance Colombia:And this being accessible for everyone, not only for the upper income.
Leopoldo: So, the cities have to offer for the people, for the population, certain activities that are paid nowadays. To this day, if a family has to go out, to go to a shopping mall, they have to spend money to have fun, but in a few years people will have to live with less, and they will go out and have in a public square all that they need. Shared spaces for having fun, for hanging out. For example, what can generate a business? When I say that everything has to have private participation, and the government has to create the possibilities for creating new businesses. Bogota is a city that has a great amount of parks, that’s the thing that I love the most about Bogota. Wherever you go, there’s a square, a place for hanging out. We’re here, there’s a square, there’s a park, that’s very nice for the city, and those are places for the citizens to hang out, but it has a very high maintenance price for the mayor’s office. Imagine that the mayor’s office gives concessions for private companies to explore the parks, so let’s say there are 100 parks in Bogota, let’s say they give five concessions, each company gets 20 parks for them to maintain, with the necessary definitions and guidelines to offer to the citizens, they have to have internet, security and activities for the citizens. Each one of the squares will become a new business for the companies that will employ people, but that will have coffee shops, restaurants, places for the people to sit down and have a nice time, this is public and stays public (and freely accessible), but now there’s a private exploration, new signalization and things like that. The mayor’s office no longer has to give money for maintaining these spaces, it goes to private activity, which therefore establishes a new business that will create employment for them, and the population gets the benefits of it all. This is a model that can be developed.
Finance Colombia:It’s fascinating, very innovative, and everybody can get the benefits. It’s interesting. I’m from Ohio in the USA, and there happened something, which is already very old, but it’s something interesting that happened, and it is that the energy company, Ohio Power (now AEP Ohio), had some coal mines, and after that they made a pact with the state, and they said “we’re going to leave the holes, we’re going to make some lakes, and we’re going to fill them” and the state gave them a bunch of fish from the state’s fish hatcheries, and they said “we’re going to fill them with fish, we’re going to plant trees to make it a forest again” and the state had to pass a law to say that if the energy company was going to open it for the public, for every person to enjoy, to go fishing, to go camping, the state had to sanction a law to establish that if something happened there, if someone was there playing and fell down a ravine and broke their bones, the power company would have no responsibility or liability because they wouldn’t be in there supervising.
The state said “look, if someone makes a public forest here, if something happens, if someone falls in the lake, there’s no one there to see you, but the company will leave it open for you, and maintain it as a forest, we will make sure that there are always many fish” and so it’s public for the citizens, it’s like a big natural park that everybody can enjoy, it’s totally free, and the company maintains it, it has a good relationship with the public, and the state protected them against frivolous lawsuits. Today this place is over 58,000 acres in Ohio, with something like 63 million trees and 350 lakes and ponds full of fish. It’s called “ReCreation Land” because it was formerly strip-mining grounds for coal.
Leopoldo: Perfect, but think about the urban example that I gave, that talks about the creation of a new business, where the people that are going to explore it will generate money, it’s a business. So, just like that, the can have many other actions in as many places as they want to, any idea is viable; what is necessary is that the governments have fewer things on their hands which each day that goes by. That’s the same exercise of the public squares, it can be applied to every government office, every mayor’s office, even cemeteries, because there’s privatization, there’s private exploration, and that generates an agenda for the government, taxes for the government, and the people keep paying just the same.
Finance Colombia:But much more efficient. Now, one question. There’s a thing that I’ve seen while living here in South America, and it’s that there is a phobia to the word “privatization”, or the people use this word like a perjorative. This is like, I remember, when Brookfield, a Canadian company bought ISAGEN, an energy company, and there was a lot of misinformation, many people who don’t understand, who thought that by selling it there was not going to be electricity anymore, that they were going to take the equipment and take it to Canada, and it was very curious, there were lots of people filled with anger, and when I asked them as a reporter why they were opposed to that, nobody that was opposed to it understood what was going on, maybe an union that had its own goals, but in general there was a lot of misinformation on the streets.
Leopoldo: That’s a cultural thing. For us in Latin America, our history is different than in Anglo Saxon countries. We had the idea that commerce and the economic activity developed here—We were always living under the state. “The state is almighty, the one that has to provide everything,” and we are still paying a very high toll for this vision. But that is decreasing as time passes, because the governments don’t have the means to maintain the infrastructure anymore, a heavy infrastructure.
Finance Colombia:And the countries are less competitive.
Leopoldo: Yes, totally, and there’s more corruption. Take a look at Brazil right now, with all of that. Petrobras, which is the biggest company in Brazil, is in the middle of an unprecedented case of corruption in the country, one of the biggest in the world because it’s government-funded, and it’s under the influence of the government. Many mistakes were made.
Finance Colombia:Yes, we’ve seen a lot of that.
Leopoldo: So, now the current president is talking about changing and privatizing, and in Brazil for the first time ever, there’s some flexibility, people are not that opposed to privatization, only the unions because of the relations that they had, but that’s a point, and the changes, they might not be going too fast, but it’s going to change.
But for the smart cities, the creation of a business model is different than what I’m quoting; it’s different than privatization. A privatization is a company to which you make a sale, it can be entirely governmental and goes entirely to private hands, and I completely agree with that, but in this case, this is not what we’re talking about. I talk about a concession, which is when you offer a park to a private party, you’re not selling the square, just giving the right to exploit it. The park stays owned by the state, the mayor’s office, by the people, it’s just the right of utilization, exploitation by a private party. There’s nothing better, you give the people their right to use the money, employ, pay taxes, offer a service to the population, and the mayor’s office keeps having everything, you can do whatever you want in the place, because it’s a public space.
Finance Colombia:The public-private partnerships.
Leopoldo: So, these are models that we have to develop, in function of the state of how things have always been in Latin America, there’s been the creation of rules, laws, that view the private sector like the bad guy, the bad ingredient in the recipe, and the laws protect the state and the citizens from the private parties, creating a barrier for conducting businesses between them.
Finance Colombia: It’s curious, I have this point of view as someone who has the experience of living in both places, it’s something that can also be seen in Europe, in Europe it’s like this too, but it’s curious because, while in some places there is that entrepreneur spirit, for example here in Colombia there are many people trying to adopt this attitude, that thinking that entrepreneurships are good.
Leopoldo: There are many, in Brazil too. The sentiment of entrepreneurship of the people in Brazil is very strong, but the laws in Brazil stop it from being stronger.
Finance Colombia: Now regarding Smart City Business specifically, what’s your role? What do you do to foment this process, this evolution?
Leopoldo: In Brazil we created an initiative with the goal of being able to bring it to every country. For example, in Brazil we created, with the help of a federal deputy, a parliamentary front of support for Smart Cities, that’s something like the commissions here in Colombia. It’s a commission consisting of deputies and senators from Brazil’s senate, where they have the mission to work for changing the laws that nowadays generate barriers for the creation of businesses in the smart cities.
So, the goal is to change those laws, focusing on the smart cities, and that commission in Brazil, the parliamentary front, was born from the initiative of the Smart City Business Institute. In Brazil, those laws were changed so the municipalities have to do what we call PDTCI in Brazil: Plan Director de Tecnología de Ciudades Inteligentes (Plan for Directing of Technology in Smart Cities), so the 5570 municipalities in Brazil can make their direct plans.
So, what happens is that that PDTCI became a rule in Brazil, where the biggest development bank in Brazil, which is BNDES, Banco Nacional de Desarrollo Económico y Social (National Bank of Economic and Social Development), now they only make loans for the cities regarding technology if they have a PDTCI. We created in Brazil a platform with Artificial Intelligence to make the PDTCI of the mayors’ offices for a very low price, because at the traditional cost for such platforms, the majority of the cities in Brazil wouldn’t be able to afford. Our platform with AI does that very rapidly. So, it lowers the cost significantly.
Finance Colombia: This initiative has its origin in Brazil, but now you’re also in Colombia and in other countries, and here in Colombia, what is specifically the goal?
Leopoldo: Same as in Brazil, all of that applies here. There are other things that we’re doing, but we start here with our congress, which has the goal of creating conscience in the mayors, and the first message of it is that the mayors don’t have to do everything anymore, they have to understand that they don’t have the power and the necessary money to buy everything, to define everything anymore, that they need to have private parties by their side, helping in the investments.
To define for people what a smart city is, because there’s a wrong perception about it being just an overly technological city, the city of the Jetsons, the vision of a children’s cartoon, but to understand that it is not that, that all the technology that is necessary for having a smart city is already available, we just have to change some things and make the right decisions towards it; To generate proximity between the public and private parties so they start to work together, because the public party can’t have the private one only as a provider, it has to be an ally, it has to have another mission. Also, to make the population understand that they can have a smart city, and for that they’re very necessary and a central character of it, and that they can demand from their governments the necessary changes.
Finance Colombia:You’re already talking with the mayors and the congressmen. What role do private companies have? For instance, in this case our readers are the multinational executives, and they’re the ones who are investing in Colombia, who already have capital in Colombia, and if they say “I’m an executive from a company, it sounds good, I think it’s a good idea.” But how do they participate participate in supporting this initiative of yours?
Leopoldo: We have great participation from the CEOs of big companies in Colombia. For example sister companies of our event attend and we have a strategic meeting during the event to discuss themes that are important for the city, to understand the local reality, because despite being a general thing, there are peculiarities in each country, city, and so on. We bring the companies, we host forums with the companies where we discuss themes. For example, in Brazil we created a forum about interoperability, for the companies to start creating interoperability between their platforms, just so they can come already integrated to the cities, so they don’t have to buy something that won’t work later.
There’s heavy participation of private parties in our activities, because we believe that they’re the ones who can break through the barriers to do business with the public parties, they help us so much more in that aspect than the public parties, because the latter are bureaucrats and don’t know exactly where the problem is.
Finance Colombia: Many times there are obstacles. That’s something that always worries me when I hear someone say that their congressman is so good because he or she made a lot of laws. Sometimes we need fewer laws, or sometimes the laws have secondary and tertiary effects that lawmakers have not sufficiently taken into account.
Leopoldo: And there’s that thing about the governments, they create laws to control everything.
Finance Colombia:I think that, not only in Colombia but in many developing countries that I know, the informal economy is very big, but that’s in large part because it is very difficult and very expensive if you want to respect the law and do everything “by the book.” It is very hard and expensive for the small businessperson. Here in Colombia, for example, if I have an employee, for each 100 pesos that I pay, I pay more than 50 pesos in mandatory benefits and labor taxes. The labor laws basically eliminate part-time employment, such as for students.
Leopoldo: Here the people don’t understand why the 50% of young people today are unemployed, they don’t understand why.
Finance Colombia:When they make the laws, they think they’re helping, like, that’s for the benefit of the workers, but then we have 50% employment in the untaxed, informal economy.
Leopoldo: In Brazil it’s the same. The last reform they did was for domestic workers to have the same benefits as company workers, so they created and passed the law, and the next day 30% of the employees lost their jobs. So, where’s the benefit? Were those domestic workers who lost their job helped?
Finance Colombia:Now, my question, you have an event, a congress coming up, can you tell me about it?
Leopoldo: Yes. One month ago, in Brazil we had the Smart City Business Brazil congress. Now, between the 17th and 19th of September, here in Bogota, the Smart City Business Colombia Congress, we are going to talk about everything we’ve mentioned here during two and a half days, about different outcomes, security, education, many things, all of that has to change in a smart city.
Finance Colombia:And it is addressed to whom?
Leopoldo: Our public is influencers from the companies and the governments, from mayors, legislators to agency directors, to cabinet secretaries, and more. From private parties, we also have company managers, we talk about business, we talk about the relations between the companies and the governments. This is an event for people who are in the market and who want to contribute in any way.
Finance Colombia:And for the businesspeople, the managers which are interested in getting more information, do you have a website where they can read about it?
Leopoldo: Yes, www.scbamerica.com. That’s our website, and there you can check the events that we do and more. We are in Brazil, Colombia, Chile, Argentina, Panama, Ecuador, Mexico, Bolivia and Peru.
Finance Colombia:Excellent. Thank you very much and congratulations on your success and on your initiative.
Photo credit: Mauricio Ferro