Abu Dhabi, UAEThursday 22 August 2019

Kenya's dream tech city becomes a nightmare

Dubbed the Silicon Savannah, Konza's first building has yet to be completed, three years after breaking ground

In this photo taken Wednesday, Dec. 5, 2018, a young boy who scavenges for recyclable materials for a living throws a rock in the air to pass the time as he takes a break while sitting on top of a mountain of garbage at the dump in the Dandora slum of Nairobi, Kenya. As the world meets again to tackle the growing threat of climate change, how the continent tackles the growing solid waste produced by its more than 1.2 billion residents, many of them eager consumers in growing economies, is a major question in the fight against climate change. (AP Photo/Ben Curtis)
In this photo taken Wednesday, Dec. 5, 2018, a young boy who scavenges for recyclable materials for a living throws a rock in the air to pass the time as he takes a break while sitting on top of a mountain of garbage at the dump in the Dandora slum of Nairobi, Kenya. As the world meets again to tackle the growing threat of climate change, how the continent tackles the growing solid waste produced by its more than 1.2 billion residents, many of them eager consumers in growing economies, is a major question in the fight against climate change. (AP Photo/Ben Curtis)

Labourers milled around an unfinished eight-storey building in an expansive field in Konza dotted with zebra and antelope - the only visible sign of progress in a decade-old plan to make Kenya into Africa's leading technology hub by 2030.

Grandiose plans, red tape and a lack of funding have left Konza Technopolis - the $14.5 billion new city to be built some 60km south-east of Nairobi - way behind schedule on its goal of having 20,000 people on site by 2020.

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

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 urbanisation which has plagued existing cities, Reuters said. 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.

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.

But the first building has yet to be completed on the 5,000 acre former cattle ranch, three years after breaking ground, and business has shifted its focus to other African countries, like Rwanda, with competing visions to become modern tech hubs.

"Nobody can wait that long for a city to be built. For a tech entrepreneur, they think about where their start-up will be two to three years down the line," said Mr Mugambi.

Other smart cities planned across Africa include 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.

Bringing such utopian schemes to life is no easy task for African governments that are struggling to provide adequate roads, power, water and security to their existing cities.

And Kenya has a habit of upsetting big benefactors. In November, The National reported that Kenya’s President Uhuru Kenyatta had called for a halt on imports of Chinese tilapia, which he believed were flooding the market and harming the local fishing industry. The Chinese government responded angrily, saying it would impose its own sanctions on Kenya. It also warned that it could pull phase-two funding of the Standard Gauge Railway (SGR), which will link Nairobi with Mombasa, Kenya’s main Indian Ocean port. The SGR has been financed by the People’s Republic and, at an estimated cost of $3.2 billion, is another expensive post-independence infrastructure project.

After a few days, the rhetoric cooled. The tilapia ban went ahead, but China walked back on its threat of retaliatory action, saying that its strategic partnership with Kenya would not be affected and that it would not “even associate the issue of fish import with other co-operative projects”. It also promised that it would continue to foot the bill for the SRG.

In Kenya, many see the planned new city as an unnecessary extravagance, albeit it an ill-fated one. "Upgrading infrastructure in places like Kibera [slum] in Nairobi to provide water and a better sewerage system is equally as important as building a new city such as Konza," said Abdu Muwonge, a senior urban specialist with the World Bank in Kenya.

The Nairobi skyline is seen in the background as a zebra walks through the Nairobi National Park, near Nairobi, Kenya, December 3, 2018. REUTERS/Amir Cohen TPX IMAGES OF THE DAY
The Nairobi skyline. Reuters

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."

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," said Mr Ndemo, now an associate professor of business at the University of Nairobi.

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.

_______________

Read more:

Kenya's biggest landfill poses climate change question - in pictures

Africa courts investors with reforms, but challenges remain

_______________

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

Financing has also proven a major issue.

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 (Dh2.86bn).

"When I say committed that 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 last year, said Abraham Odeng, deputy secretary at Kenya's Information Communications and Technology ministry, without giving figures.

Mr Odeng pointed to a 40bn 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 Kenya's growing reliance on loans is causing jitters, with the International Monetary Fund warning of an increased risk of default.

Mr Muwonge said 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 said.

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 Mr Tanui said.

But critics say it is not enough.

"What [investors] have allocated so far is still a drop in the ocean," said Mr Ndemo, the former government technocrat.

And international interest is shifting elsewhere.

Rwanda - widely regarded as the least corrupt country in East Africa - launched its Kigali Innovation City in 2015, designed to host 50,000 people in universities and tech companies on a 70-hectare site outside the capital.

The $2bn plan, due for completion by 2020, is seven times cheaper than Konza.

"All these other [cities] have better proximity, have better density and have better collaborative feedback loops," said financial analyst Satchu.

"We are now at a serious disadvantage vis-a-vis these other countries."

Updated: December 20, 2018 03:13 PM

SHARE

SHARE