The making of Kenya’s Silicon Valley

By Carole Kimutai, Nairobi, Kenya

In Kenya’s Vision 2030 economic blueprint, the country has spelt out its ambition to become a middle income country by the year 2030. Kenya has pegged this success to one of the drivers – Information and Communication Technology (ICT). The country has already positioned itself as a hub of ICT creativity and innovation. With the penetration of three under sea internet cables, Kenya is well on its way to becoming the ICT hub of Africa.

One of Vision 2030’s flagship projects is Konza City – a multi-billion dollar ICT city that will be located 60km outside Kenya’s capital city, Nairobi. The USD 7 billion project will host Business Process Outsourcing (BPO) ventures, a science park, a convention centre, shopping malls, hotels, international schools, and health facilities. According to an Information and Interest notice for the services of a Master Developer for Konza Technology City issued by the Ministry of Information and Communication in May 2001, the development will be over a 20 year phased plan.

The Notice was published in the international media (Economist magazine) and a local newspaper (Daily Nation).  Kenya’s bigger picture is to leverage and expand its nascent Information Technology Enables Services (ITES) sector using the Private Public Partnership (PPP) model with a master developer and or operator/investor.

Kenya’s ICT sector has already attracted several corporate and individual foreign investors including the Indian telcos Bharti Airtel who entered the African market – with Kenya as its base – in 2010. The operator tagged along global strategic partners like IBM, Erickson, Nokia, and Huawei. Other multi nationals with a base in Kenya include: Microsoft and Google. One of the areas Bharti is eyeing is the BPO sector and the mobile money service, the later that has succeeded and put Kenya on the global map courtesy of Safaricom’s MPESA. 

According to the Ministry of Information and Communication plan, phase one of the project will see the construction of a science and technology park that will be spearheaded by the Ministry of Science and Technology, a BPO park, hotels, a stadium and other social amenities. All these are areas of opportunity for investors as the government expects the project to be heavily driven by the private sector. Towards this end, the government of Kenya intends to create a Special Economic Zone to encompass Konza City.

As part of encouraging investment in Kenya, the government has various incentives that include: an Export Processing Zones program which offers attractive incentives to export -oriented investors, a Tax Remission for Export Office - a program for intermittent imports for export production, double taxation, bilateral investment trade agreements, a liberalization policy allowing for sector participation in the ICT sector, reduced taxes on computer hardware software, and has removed licensing requirements on information and broadcasting services.

Earlier this year, the Konza project seemed to have hit a bump after two high ranking government officials gave conflicting remarks on how land will be allocated to investors. Prof. Githu Muigai, Kenya’s Attorney General said land will be sold through competitive tendering while Dr. Bitange Ndemo, Kenya’s Permanent Secretary in the Ministry of Information and Communication said land would be sold directly to interested investors.

When contacted for comment by this writer, Prof. Ndemo said tendering would open up the land to speculators who would buy with the intention of reselling the land and not investing in a project. The ICT park will be built on 5,000 acres of land.

However, there are conflicting opinions about the strategy to sell directly to investors. A local ICT investor who did not want to be named said: “The Konza project is a public project and all investors must be given an equal platform regardless of their intentions. “I will give you an example of the fibre optic project that used the same model. We were told that after the fibre, the cost of interest in Kenya would go down to almost becoming free but we are still paying high prices! We need to know who all these investors are and if they are here for the long term. The government should not just cherry pick – what will be the agenda?” he poses.

The Information PS is keen on the global practice for governments to enter into private partnership for infrastructure with selected investors.

For more information about Kenya’s ICT sector, see:

http://www.ict.go.ke

http://www.information.go.ke/index.php?option=com_content&task=blogcategory&id=167&Itemid=537

Twitter: @CaroleKimutai

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