Zone Profile: Konza Technopolis
An overview of the geographic, economic, and political aspects of the Konza Technopolis project as well as its proposed regional impact.
Context, Vision 2030
Konza Technopolis (Konza), previously known as the Konza Technology city, is a smart city project created by the Kenyan government to foster the creation of a tech industry hub in the country.
The project was conceived in 2008 to help the government achieve its vision 2030, a plan to create a globally competitive middle-income country with high quality of life for its citizens. Konza, popularly referred to as “Silicon Savannah”, is located 60 km south of Nairobi on a 5,000 acre land plot. [1]
The project is set to be built over 20 years with functional amenities like water, electricity, a railway line to Mombasa, a port, 35,000 housing units, and a university campus accommodating up to 1,500 students. The goal is to make Konza the African counterpart of the Silicon Valley in the United States, providing upto 20,000 jobs in its first five years and 200,000 by 2030. [2]
Land Acquisition Controversy
The 5,000 acres of land were previously zoned as ranch land. The land was bought from Malili Ranch Limited in Machakos County for 1 billion kenyan shillings ($12 million USD). However, the acquisition of the land was controversial.
The Minister of Information and Communications, Dr. Bitange Ndemo, alongside the ministry’s chief procurement officer (CPO), were accused of contravening procurement regulations. The regulations required that the land should be purchased through an open tender, but it was acquired via a direct procurement process. [3]
On April 2, 2012, the Director of Public Prosecutions sent a report to the Ethics and Anti-Corruption Commission (EACC) requesting that both Dr. Bitange and the CPO be charged for violating the procurement process laws. Subsequently, EACC began an investigation into the purchase, and the parties involved. Since this investigation started, there has been no further official communication regarding the progress or outcome of the proceedings. [3]
Feasibility Study
The Konza Technopolis Development Authority (KoTDA) was created as a special-purpose entity to foster the development of Konza. The Authority is responsible for developing and managing the Technopolis. As a part of its duties, KoTDA is responsible for establishing the zone’s value proposition, as a valuable location to investors.
In 2009, the International Finance Corporation was contracted to advise on the development and implementation of the city by the Ministry of Information, Communications and Technology. Later on, a team of consultants led by HR&A Advisors, Inc, a New York based firm, was contracted in 2012 to prepare a detailed business plan and master plan for Phase 1. [4]
The study commenced in August 2012 and ended in June 2013. The focus of the study was on Business Processing Outsourcing and Information Technology Enabled Services (BPO/ITES), and its potential contributions to local economic development. Through the study, four knowledge-focused themes were identified. They were Education, Life Sciences, BPO/ITO, and Telecom. It was advised that the first two themes should be funded by the government.[4]
This study led to the creation of the Master Delivery Partner 1 (MDP 1) Implementation Plan, Phase 1. After conducting an intensive sector strategy and outreach to over 300 businesses, the study anticipated there would be the creation of over 17,000 direct and indirect jobs. Furthermore, it was stated that on-site public investment during this phase would be between $180 - $260 million USD with expected revenues of $78 - $95 million USD. [5]
Experts had reservations about the location of the land due to its 50-kilometre distance from the main international airport – Jomo Kenyatta International Airport. The then acting-CEO of KoTDA, Dr Catherine Adeya stated that “The location of the Konza Techno City was informed by the Booz Hamilton Principal, where ICT parks tend to be located in dedicated areas outside the main city and within a short driving distance. They also tend to be located within a short driving distance from the airport as well as prominent universities. This clearly suits Konza as a choice location with its distance from Nairobi, and Jomo Kenyatta International Airport,” [6]
Master Delivery Partner 1 Plan
Phase 1 of this plan has an initial 5 year development period and overall completion in 2020. The plan outlines an environment capable of attracting 17,000 jobs through effective marketing, government incentives, friendly regulatory environment, high quality infrastructure and services, ease of transport, accessibility, and access to talent.
The proposal was to develop 410 acres out of the 5000 acres of land owned for this purpose. It would be built to have a university, residential area, parks, office space, and life science facilities. It was budgeted that the cost of infrastructure would be $1.06 billion USD for both off-site and on-site infrastructure.
The study also recommended the creation of a management board. The KoTDA Board of Directors was appointed in 2013 and it is currently overseeing the development of infrastructure for Phase 1 of Konza. [7]
Cost of Development
Konza City is expected to cost $14.5 billion USD to develop. The government is expected to contribute about 10% of the cost to build the new city. The outstanding sum for completion is expected to be sourced from private-sector investors.
The feasibility study predicts that if the phase 1 construction goes according to plan, it is expected to generate $1.3 billion USD in gross regional product. This would have accounted for a 2% addition to Kenya’s GDP by 2020. The study also anticipated that a successful phase 1 will lead to spillover effects in Konza’s neighbouring counties.[8]
City Development
According to the feasibility study, the government broke ground on Konza on 23 January 2013. While a lot of work has been done, the project is behind schedule considering the 2020 completion date slated for phase 1. There was a four year gap between 2009 - 2013 where it seemed that the project had stalled. Minister Bitange Ndemo stated that insufficient government funding has been a major factor leading to delays. [9]
Over the years, the project has not moved as fast as anticipated. Reports state this was due to a lack of funding. This was confirmed by John Tanui, managing director of Konza Technopolis. He stated that:
“The main issues we have experienced are mainly finance related. Lack of funding has really affected the project and where we would have been in terms of progress. So far the government has given Konza Ksh.4 billion ($36.3 million USD)”.
-John Tanui, Konza Technopolis CEO [10]
Despite the lack of funding, there are several companies (both local and international) interested in the project. They include Safaricom, Wananchi Online, Kemri, Kari, the University of Nairobi, Huawei Technologies, Samsung, Research In Motion (RIM), amongst others.[11]
Seeking Funding
In its 2015 Expression of Interest (EOI) memo, KoTDA stated that potential investors would need to raise between Sh250 million ($2 million USD) and Sh2.6 billion ($24 million USD) for phase 1 projects. [12]
In the EOI memo, the government also stated that it intends to spend:
- Sh 4.8 billion ($45 million USD) on road construction;
- Sh 2.7 billion ($25 million USD) on electricity infrastructure;
- Sh 980 million ($9 million USD) for the Konza pavilion;
- Sh 621 million ($1 million USD) on a data centre in phase 1.
This information comes after KoTDA presented 24 parcels of land to the private sector for construction. [12]
In 2016, the government awarded a construction contract worth $390 million to Italian Impresa Construzioni Guiseppe Maltauro (ICM). The contract regarded the Engineering, Procurement, Construction and Finance (EPCF) of the project. The design and supervision for the project was contracted to Technital from Italy. The funding for the ICM contract was provided by the Italian government. [13]
In 2017, Konza invited investors to bid for 150 parcels of land over a 400 acre area, set aside for phase 1. KoTDA said that these private investors would build schools, filling stations, business process outsourcing (BPO) campuses and technological incubation hubs in the smart city. [14]
In 2019, Huawei committed to building a data center, smart city and surveillance project at Konza worth $172.7 million which will be funded with Chinese concessional loans. Furthermore, the Chinese government committed to fund the Sh 50 billion ($500 million USD) JKIA-James Gichuru expressway, which will be built by the China Road and Bridge Corporation. [15]
Between 2019 - 2021, the project picked up steam with more concrete steps undertaken for the development of the zone. Some of the steps include;
- The Sh1.43 billion tender approval for the development of a conference facility in 2019; [16]
- The Konza Bill and Start-Up Bill 2020 which are focused on stimulating investment by lowering taxes and de-risking investment; [17]
- The completion of a 10-year Master Plan report for Science and Technology Parks (STPs);[18]
- The Sh.9.4 billion deal signed with South Korea for the development of the Kenya Advanced Institute of Science and technology (KAIST).[19]
40% of Konza’s Phase 1 has been sold to investors, and other developments are being worked on by the government. Principal Secretary ICT, Innovation & Youth Affairs, Mr. Jerome Ochieng said:
“So far, we are happy to note that the project has realised more than 40% uptake, some of the investors expected to break ground include hospitals, real estate developers and institutions of higher learning, government agencies such as National Construction Authority and KETRACO (Kenya Electricity Transmission Company) among others.” other companies taking up investment in Konza include Sosian Energy, GS1 Kenya amongst others. [20] [21]
Other Issues and Controversies
The project’s development is still slow and the 2020 deadline set for phase 1 has not been met. Asides funding issues, there have been issues concerning land leases.
The major issue was that investors could not easily access the land, nor register their interest in the land with the government. To resolve this, the Kenyan government transferred ownership of the site to the Konza Technopolis Development Authority (KoTDA). KoTDA now allocates land to investors on 50-year renewable leases. This has not restored investor confidence, but KoTDA maintains that the project remains on course to be completed. [22]
The main issue regarding land permits is that they were being granted to developers outside the zone. To stop this, the government stopped issuing new development permits in the area falling within the ten-kilometre radius around the Konza. This was so that the government could provide guidelines and standards for regulation of land use practices and general development within the zone - thus maintaining the value of the zone. [22]
In addition, there are energy and power supply issues. The inability of the government to provide reliable and uninterrupted power and water supply has affected the smooth running of the project. [23]
Furthermore, human rights allegations, sexual harassment, and Kenyans being denied work has been levied against the Italian engineering firm ICM. Regarding sexual harassment, there are allegations that women working on the site are being harrased by the Italian contractors. Also, it was alleged that workers are being mistreated by the contractors.
It was claimed that derogatory comments, unhealthy living conditions, long work hours, amongst others are being practised by these employers. This has led to unrest at the zone, thereby slowing down the development. [23]
Project Summary and Timeline
2008: The Government of Kenya approved the creation of Konza Technology City as a flagship Kenya Vision 2030 project.
2009: The Government hired the International Finance Corporation, to advise on the development and implementation of the project.
In the same year, a 5,000 acre parcel of land at Malili Ranch, 60km south east of Nairobi along Mombasa-Nairobi A109 road was purchased to serve as the project site.
2012: The Ministry of Information, Communications and Technology retained a team of consultants led by New York City based HR&A Advisors, Inc. to prepare a detailed business plan and master plan for Phase 1. The first phase of Konza City was estimated to create over 20,000 direct and indirect jobs.
2013: President Mwai Kibaki broke ground for the project marking the start of the development of Konza Technopolis. The Board of the Konza Technopolis Development Authority (KoTDA) was appointed as a special purpose entity to facilitate the development of Konza Technopolis.
2014: Infrastructure and parcel development guidelines begin.
2015: Access and arterial road construction and preliminary earthwork begin.
2016: KETRACO substation & ICTA fiber line completed.
2017: Commitment for Konza Data Center with China Exim bank was signed. Implementation of Phase 1A and Technology/ University development began.
2018: Major Phase 1 infrastructure construction begins. Parcel Leasing also begins.
2019: First Konza Technopolis building ‘Konza Complex’ is complete.
2020: Phase 1 of the Data Centre was completed and the government commenced plans to roll out services of the National Data Centre.
The Centre would support the Government’s short term requirements and business needs while providing an environment for implementing and piloting initial smart city services for the zone.
2021: In July, the Konza Technopolis Development Authority (KoTDA) announced it has discounted part of its land fees in bid to invite investors to the project.
“Our commitment, as a government, is reinforced by our actions and in the recent budget allocation for the year 2021/2022, we as the parent ministry have set aside over 70% of the budget for the development of this project,” said ICT Principal Secretary, Jerome Ochieng.
Investors who have made payments for their parcels of land have been given access to spaces include the Kenya Electricity Transmission Company Limited (KETRACO), the National Construction Authority (NCA), Sosian Energy, Bigen Global and Vinjay Sandhu. Others are Geonet Technologies, GSI Kenya, Makueni Housing Cooperative and the Parklands Baptist Church. [24]
Conclusion
With the creation of Konza, the Kenyan government hopes to empower its citizens with infrastructure and skills development with the goal of alleviating poverty. Vision 2030 created by the Kenyan government hopes to move as many citizens as possible into the middle class, with Konza being its flagship project for the vision.
This goal is pertinent because of the mounting government debt in Kenya. According to Statista, Kenya’s cumulative external debt stands at $35.6 billion USD as of January 2021. Therefore, Kenya needs to generate more output to reduce its debt and strengthen its economy. [25]
It is clear that the project was not completed in 2020 as anticipated. Deliberate steps need to be taken to ensure that the completion of Phase 2 does not take another 10 years as many in Kenya are closely observing the project.
See Konza Technopolis on our Open Zone Map here.
Sources
- Konza Technology City; International New Towns Institute (INTI) http://www.newtowninstitute.org/newtowndata/newtown.php?newtownId=1816#:~:text=source%3A-,source%3A,flagship%20Kenya%20Vision%202030%20project
- Kenya’s Konza tech city marred by procurement scandal; ITWeb https://itweb.africa/content/8OKdWqDEORDvbznQ
- Konza Techno City: A smart investment; Endeavor Magazines https://www.littlegatepublishing.com/2018/02/konza-techno-city/
- KONZA Technology City Kenya – Phase 1 Implementation Plan; Institute of Economic Affairs https://www.ieakenya.or.ke/downloads.php?page=Konza---MDP1-Implementation-Plan-by-Dr.-Bitange-Ndemo.pdf
- Vision and Mission; Konza Technopolis https://konza.go.ke/vision-mission/
- Building Africa’s Sillicon Savannah; Ventures Africa https://venturesafrica.com/konza-techno-city-africas-silicon-savannah/
- Vision and Mission; Konza Technopolis https://konza.go.ke/vision-mission/
- KONZA Technology City Kenya – Phase 1 Implementation Plan; Institute of Economic Affairs https://www.ieakenya.or.ke/downloads.php?page=Konza---MDP1-Implementation-Plan-by-Dr.-Bitange-Ndemo.pdf
- Kenya begins construction of 'silicon' city Konza; BBC News https://www.bbc.com/news/world-africa-21158928
- Scam in the making??! Future of Konza City; Daily Active https://dailyactive.info/2019/02/20/scam-in-the-making-future-of-konza-city/
- Top companies line up for piece of Konza; The East African https://www.theeastafrican.co.ke/tea/news/east-africa/top-companies-line-up-for-piece-of-konza-1314464
- Agency sets Sh250m minimum capital for Konza city investors; Business Daily Africa https://www.businessdailyafrica.com/bd/corporate/companies/agency-sets-sh250m-minimum-capital-for-konza-city-investors--2101292
- Italy’s ICM wins US$390mn Konza smart city contract; African Review https://www.africanreview.com/construction-a-mining/buildings/italy-s-icm-wins-us-390mn-konza-smart-city-contract
- Italy’s ICM wins US$390mn Konza smart city contract; African Review https://www.africanreview.com/construction-a-mining/buildings/italy-s-icm-wins-us-390mn-konza-smart-city-contract
- Huawei to build Konza data center and smart city in Kenya, with Chinese concessional loan; Data Center Dynamics https://www.datacenterdynamics.com/en/news/huawei-build-konza-data-center-and-smart-city-kenya-chinese-concessional-loan/
- Tender for Konza meeting centre now approved; The Kenyan Herald https://kenyan-herald.com/3339-2/
- Two Bills in the Pipeline to Stimulate Investment in Kenya; Konza Technopolis https://konza.go.ke/2020/09/28/two-bills-in-the-pipeline-to-stimulate-investment-in-kenya/
- Kenya's 10-year master plan for Science, Technology Parks complete - PS; The Star https://www.the-star.co.ke/news/2021-03-22-kenyas-10-year-master-plan-for-science-technology-parks-complete-ps/
- Kenya, South Korea Sign Sh.9.4 Billion Konza University Deal; All Africa https://allafrica.com/stories/202104280216.html
- Smart City: Development at Konza takes shape as 40% sold off; The Star https://www.the-star.co.ke/news/big-read/2021-02-02-smart-city-development-at-konza-takes-shape-as-40-sold-off/
- Konza Technopolis Woo Investors, Outlines Project Progress; Africa Tech https://africabusinesscommunities.com/tech/tech-news/kenya-konza-technopolis-woo-investors,-outlines-project-progress/
- Government stops issuance of development permits in Konza City; Tech-ish Kenya https://tech-ish.com/2021/04/13/government-development-permits-konza-city/
- Anonymous Complaint Decries Colonisation By Italians At Konza City; Cyprian Nyakundi https://www.cnyakundi.com/anonymous-complaint-decries-colonisation-by-italians-at-konza-city/
- Konza Technopolis project timeline and all you need to know; Construction Review Online https://constructionreviewonline.com/biggest-projects/konza-technopolis-project-timeline-and-all-you-need-to-know/
- Cumulative external debt of Kenya 2019-2021; Statista https://www.statista.com/statistics/1223191/cumulative-external-debt-of-kenya/
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