Money Markets

Konza city launch opens new frontier for investors

A model of Tatu City. File
A model of Tatu City. File 

The Konza ICT City, one of the theme projects expected to make Kenya a newly industrialised economy in 17 years, breaks ground Wednesday with the promoters reporting that they have already attracted investors from around the world.

The Director-General of Vision 2030 Delivery Secretariat, Mugo Kibati, said investors had responded positively to Konza which many attribute to the buzz created by innovation like Safaricom’s M-Pesa money transfer system on the global stage.

“Very many investors are interested but the ground breaking ceremony and the launching of the master plan will help a lot. We have investors from Asia, Europe and America expressing interest,” said Mr Kibati.

Asian investors, especially from China, were mainly interested in construction while their European and American counterparts were more interested in the data processing business.

Konza Technopolis Development Authority chairman John Ngumi said the ground breaking by President Mwai Kibaki would open the door for the recruitment of an executive team and engagement with presidential candidates who are key to the project’s continuity after the transition.

“We want to invite all the presidential aspirants so that they can see for themselves what we want to achieve in the coming years,” said John Ngumi, a veteran investment banker now with Johannesburg-based Standard Bank Africa, who was tapped to mid-wife the project.

Kenya is gearing for a transition which will see the exit of President Kibaki and probably some of the bureaucrats including Information permanent secretary Bitange Ndemo and Investment secretary Esther Koimett who have been critical in its initialisation.

Mr Kibaki will launch the physical development phase that had been scheduled to have started late last year.

Besides politicians and other stakeholders, the board is expecting senior executives from the US, Europe and the rest of world at the ceremony.

The phase will be implemented side by side with infrastructure development that is estimated to cost Sh26 billion ($300 million) and which is ongoing at the 5,000-acre land in Konza, 60 kilometres from Nairobi.

It includes setting up of a hospital, a science park and a technology university among other amenities.

Information and Communications minister Samuel Poghisio recently appointed the authority’s board which includes Harold Nyakundi, Rosemary Maundu, Emma Miloyo and Reuben Mutiso, a team which Mr Ngumi said intends to break from a development approach adopted by existing regional bodies.

“The authority must be a lean operation playing the role of a landlord and planner but must develop with the tenants,” said Mr Ngumi. “This is a fundamental shift where the authority is a means to the end of development by users for the users.”

Mr Ngumi said he draws inspiration from the phenomenal development of the Kenya telecoms sector in which he has been a major backroom player for over a decade.

One of the initial Communications Commission of Kenya directors, he resigned in early 2000 to avoid conflict of interest by his new employer, Citi, a large player in the then fledgling sector.

In his new role, he went on to craft major financing deals for Safaricom, Airtel, Telkom and Essar’s yu.

Mr Ngumi, the bank’s director for investment banking coverage, East Africa, believes Kenya can take a shortcut in the development process through the service and technology industries.

Questions have previously been raised about the size and viability of such a project in Africa more so in light of the fact that only places like Dubai and Singapore have successfully implemented the same.

Kenya is banking on International Finance Corporation (IFC), which has seen the project move from the controversial buying of the land to host the ICT park to Wednesday’s launch.

Dr Ndemo said a feasibility study conducted with the advice of the IFC indicated the project would contribute immensely to economic development in Kenya and eastern Africa.

Mr Kibati says while Angola has tried the concept and currently has 20 per cent occupancy, Kenya has a distinct advantage of having a strong domestic demand component.

“The Angolan economy is skewed while ours is dynamic. Locals want to be involved in both the supply and demand sides,” he said citing the huge interest by investors around the Konza City which compelled the Ministry of Local Government to carve out a buffer of 10 kilometres for zonal planned purposes.

The feel good factor has seen prices of land around the buffer zone rise to Sh3 million per acre from Sh100,000 three years ago.

Mr Kibati added that locals were showing strong interest in the integrated city particularly in the financial, hospitals and education centres.

Besides infrastructure and the science park, phase one will feature bits of the CBD and the financial hub which would be implemented fully in phase two. The first phase targeting early adopters would be implemented within five years and the second including light industries would take a decade.

Mr Ngumi believes Konza will form another leg for the Kenya economy.

In the coming few weeks the board, which met for the very first time on Monday, will be seeking to recruit a technical person to oversee the project.

Mr Ngumi said the kind of management required at the Hong Kong Science & Technology Parks was a good guide to the calibre of the right candidate. The Hong Kong parks host 400 companies employing 9,000 people and industrial estates with 160 factories employing 26,000 people.

In the Kenyan case, the CEO would be expected to take over from the government particularly the Ministry of Information and create demand from prospective investors.

Mr Ngumi said the technopolis should steer other sectors of the economy including agriculture, health and manufacturing as the main driver of innovation and disseminator of information technology.

He said 3D manufacturing, where items are designed on computer and manufactured, would help Kenya jump ahead of countries China which have established industries.