Continental Issue

BOLSTERED! From Microsoft, lifeline for Kenyan Telecoms

Grandiose plans, red tape and a consistent lack of funding have left Konza Technopolis — the $14.5 billion Silicon Valley in the Savannah city to be built some 60 km southeast of Nairobi — way behind schedule on its goal of having 20,000 people on site by 2020.
By Collins Hinamundi

Dubbed the Silicon Savannah, Konza aims to become a smart city — using tech to manage water and electricity efficiently and reduce commuting time — and a solution to the rapid, unplanned urbanization which has plagued existing cities.

Konza’s dream is to become a top business process outsourcing hub by 2030, with on-site universities
training locals to feed into a 200,000-strong tech-savvy workforce providing IT support and call centre services remotely.

About 40 per cent of Africa’s 1 billion people live in towns and cities and the World Bank predicts the urban population will double over the next 25 years, adding pressure to already stretched infrastructure,
and Konza hopes its model will be a benchmark. It is being built on a 5000-acre Cattle ranch that is home to antelope and deer because of the delays.

Even the 8-floor building whose construction has been ongoing looks lost on this huge expanse of land.
The almost 13-year-old project was launched by then Kenyan President Mwai Kibaki, and at the launch, Kibaki, promised that the project already had enough interest to grow its own legs and start the marathon to the top. He also said the project has already captured the interest of many local and
international investors who will begin work on the ground soon after ground-breaking.

“We are excited to finally launch this development, though it has come later than we initially expected. This will remove doubts among sceptics who thought Konza was a white elephant. Watch this space in the next five years,” he said.

Almost 6 years later, the project has faced numerous delays and amid declining interest from the tech giants had initially planned to move in. Critics have already started questioning the viability of the project 6 years after its launch.

“It has taken too long and I think people have moved on,” Josiah Mugambi, a tech entrepreneur and founder of Alba.one, a Nairobi-based software company, who was initially excited by the government’s
ambitious project says.

“Nobody can wait that long for a city to be built. For a tech entrepreneur, they think about where their startup will be two to three years down the line,” said Mugambi. Some critics say Konza was ill-conceived from the start.

“The vision is wrong; the vision is too big,” said Aly-Khan Satchu, a Nairobi-based independent financial analyst. “This is miles from anywhere. There are not leveraging the existing infrastructure … It is assuming that you can bring in academia, you can bring in venture capital, you can bring in corporates.”
He adds.
The Presidency of Kibaki was characterised by huge and futuristic projects in Kenya, and Konza was just one of those many projects, his successor Uhuru Kenyatta has not picked on it, preferring to focus on Anti-corruption and a Standard Gauge Railway, leading to accusations that the government is also
frustrating the project.

According to the Voice of America, the first serious hurdle arose in 2012 when the National Land Commission (NLC), which manages public land, introduced a cumbersome land acquisition procedure, said Bitange Ndemo, who led a team that conceived Konza Technopolis in 2008.

“The NLC was saying we should follow the processes of acquiring public land, which would take years to
complete,” Ndemo, now an associate professor of business at the University of Nairobi, told the Thomson Reuters Foundation.

The delays caused at least one deal with a German university to fall through, he said, as the process was
much slower than the old one where investors signed deals directly with government ministries which took care of land leases.

To resolve this, the government transferred ownership of the site to the Konza Technopolis Development
Authority (KoTDA), set up in 2012 to coordinate the development of the new city, which now allocates land to investors on 50-year renewable leases.

In its strategic plan, the government promised to fund 10 per cent of Konza, laying the infrastructure, while the private sector would come in with the rest of the money to build universities, offices, housing and hotels.

But the government was slow to contribute its share and has yet to pass a law to create KoTDA as a legal entity which would make it easier to sign contracts with external lenders, said Lawrence Esho, one of Konza’s project planners until 2013.

“They are way behind schedule partly because the government took time to give Konza money,” he said, adding that no money came in until 2013. “This stopped any work from starting at the site and investors may have developed cold feet as they waited.”

KoTDA’s chief executive, John Tanui, said the government has committed to invest more than 80 billion shillings ($780 million).

“When I say committed does not mean we have absorbed. Our absorption is less than 10 per cent of that figure,” he said, without elaborating. The government has stepped up funding since 2017, says Abraham
Odeng, deputy secretary at Kenya’s Information Communications and Technology ministry, without giving figures.

Odeng pointed to a 40 billion shilling contract signed in 2017 with an Italian firm to build roads, water and sewerage infrastructure by 2021, funded by the Italian government.

“That is a concessional loan, which is a long-term loan that the Kenyan government will pay,” he said.
But the loans may also become a halt as Kenya’s debt to GDP ratio is now beyond 60 per cent. The IMF has warned Kenya to go slow on the loans, and within the country, loans are becoming political taboo, with activists calling for the Finance Secretary Henry Rotich to be fired. Abdu Muwonge a senior economist at the World Bank, says the issue is eliminating challenges for the private sector to do business.

“Getting Konza city off the ground will require that we pull in private capital with concessions for them to deliver certain kinds of infrastructure for which the government may not have resources,” he says.

THIS MAY ALREADY BE HAPPENING.
Five local investors, including Nairobi- based software developer Craft Silicon and the state-run Kenya Electricity Transmission Company, are expected to build offices, residential buildings and hotels by 2020, KoTDA head Tanui said.

On Tuesday last week, Technology Giant Microsoft unveiled a 100 million dollar research and development centre in Nairobi tasked with producing innovative solutions.

The facility, dubbed Africa Development Centre (ADC), will help the multinational grow its market share
across the continent in the wake of increased technology uptake in various economic sectors.

The centre will hire local engineers who will be tasked with working on cutting-edge technology tailored for the local and global markets. It is the seventh globally, with plans underway to open another one in Lagos,

Nigeria, later in the year. This investment will likely renew Tech firms’ interest in Kenya, and will
create opportunities for Konza City even as it competes for attention with Nigeria’s Eko Atlantic City near Lagos that will house 250,000 people on land reclaimed from the sea, Ghana’s Hope City and an Ethiopian city styled as the real Wakanda after the film “Black Panther.” “Beyond that, it is an opportunity to engage more with local partners, academia, governments and developers — driving impact and innovation in sectors important to Africa.”

Phil Spencer and executive sponsor of the ADC at Microsoft said in a statement. But critics say this will not be enough. “What (investors) have allocated so far is still a drop in the ocean,” says Ndemo, the former government technocrat.

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