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Economy

Legal vacuum delays work on Kenya’s technology city

An impression of the Konza Tochnopolis Park. FILE
An impression of the Konza Tochnopolis Park. FILE  

Kenya’s dream of building Africa’s first technopolis is falling behind schedule shackled by delay in passing the law it needs to enter into contractual obligations with financiers.

Work on the project was to begin this month but has now been moved to next year pending Parliament’s passing of the law.

“We cannot start the project, including full-scale external fund-raising for Phase One before the law is passed,” said John Ngumi, who chairs the Konza Technopolis Development Authority (KOTDA) board.

The draft KOTDA Bill is currently with the Attorney-General and is expected to go to the Cabinet for approval early next year before it is tabled for debate in the National Assembly.

The legislation is expected to institutionalise the authority as a legal entity with the power to enter into contractual obligations, including fundraising for the initial phase of the project.

The government has so far allocated Sh1.3 billion for Phase One of the project, which Mr Ngumi says requires $750 million (Sh63.8 billion). 

Failure to pass the relevant law now means initial work on the technopolis that was to begin this year, ending 2017, will not start on time.

Mr Ngumi, however, said that preparatory works such as zoning of the land, digging of the boreholes, and construction of power sub-stations will continue as planned with the support of budget funds.

Mr Ngumi said he expects the legislative process to be concluded in the first quarter of next year, paving the way for the authority to mobilise funds from external financiers.

“We estimate that the first phase will cost $750 million and we intend to borrow that from external sources,” said Mr Ngumi, adding that the plan is to repay the loans through taxes on leases and from the expected growth in tax revenues arising from the establishment of new businesses in the technopolis and newly created jobs.

Delay in passing the legislation has also stalled the work of the US consultancy firm Tetra Tech Inc. that was tapped in June to oversee work on the first phase of the multi-billion-shilling project.

The US firm’s contract includes negotiation of land leases with potential investors, marketing the project as well as overseeing the firms that will build primary infrastructure such as roads, water and sewerage systems.

The US firm is also charged with conducting due diligence on potential investors for the award of leases.

Konza technopolis is one of the flagship projects of Vision 2030 development blueprint meant to position Kenya as East Africa’s ICT hub.

The Konza development plan puts third parties at the centre of its execution, with the government offering land, legal backing and approving architectural plans.

Primary infrastructure

The government is also expected to build primary infrastructure within and leading to the technopolis. It has already dug 10 of out of 28 planned boreholes on location and built a police post. Construction of a power sub-station and the Thwake water dam is expected to begin early next year.

Upon completion, Konza is expected to create 16,200 jobs. Some 400 acres have been earmarked for Phase One of the project that is located off the Nairobi-Mombasa highway.

The technopolis is expected to host various amenities, including ICT research centres, a university complex, offices, residential houses and parks.

Last year, the Kibaki government announced that it had struck a deal for concessional loans with Brazil, Russia, India and China to finance roads, railway, telecommunication, water and sewerage networks within the 5,000-acre technology park.

Konza is also expected to host foreign and local business process outsourcing (BPO) companies, a science park, a convention centre, shopping malls, hotels, international schools and health facilities.

The government is offering investors a 99-year lease, with a 25-year payment plan. The arrangement is to be reviewed after a decade with the Treasury as the custodian of the land.

That window is, however, restricted to investors who are able to quantify and prove the significance of their business to the Kenyan economy.

The Konza master plan indicates that investors in transport and other public facilities will get 130 acres – the biggest share of the 400 acres set aside for phase-1 of the project.

Mixed-use developments will be allocated 89 acres, parks (79), universities (39), life science (26), residential (26) while offices, retails and cultural facilities will have 11, 8 and 1 acre respectively.

Stringent conditions have been set for investors to ensure order within the metropolis.

KOTDA also plans to take full charge of the affairs of the technopolis through an amendment to the law on urban settlements.

The list of Kenyan firms that have committed to setting up shop in Konza include Safaricom, Wananchi Online, Craft Silicon, Kemri, Kari, the University of Nairobi, the Jomo Kenyatta University of Agriculture and Technology and the Nairobi Hospital.

Huawei Technologies of China, Korean electronics giant Samsung, Telemac of the US, Canada’s Research In Motion (RIM) — the makers of the Black Berry phone — make the list of interested foreign investors.

Others are Google, Telemax Technology Corporation of Taiwan and Shapoorji Pallonji Group from India.

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