Kenya's Silicon Savannah courts Asian investments

Photo credit: The Kenyan Wall Street

Kenya has extended tax incentives and other benefits to Asian investors in a bid to attract them to its flagship smart city project Konza Technopolis. The project, which has faced criticism for slow progress has begun to attract attention. As of January 2023, 25 investors in the project's first phase have registered leases and 10 investor designs have received approval.

Nicknamed 'Silicon Savannah', the ambitious Konza development is located on a 2,000ha former cattle ranch, 70km south of Nairobi, and aspires to become a hub for business process outsourcing, software development, data centres, and light manufacturing. It also intends to offer residential, educational, and healthcare facilities. Although introduced in 2008, the ambitious project confronted legal and logistical challenges that delayed the first round of government funding until 2013. Critics have raised doubts on the viability of the say Konza project, given its distance from Nairobi. Failure to meet a 2020 target to house 20,000 people on-site had earlier been cited as a red flag.

Despite initial setbacks, the project has gained some traction in recent years. Huawei completed the first phase of a data centre in 2020, and there have been advancements in essential infrastructure, including road construction, street lighting, and the installation of water, sanitation, and underground internet cables. The China Aerospace Construction Group is building a 400-kV power substation at Konza, projected to start supplying power by March of next year. Funded by the Export-Import Bank of China, this sub-station and the accompanying 40-km Isinya-Konza transmission line are set to harness geothermal, hydro, and wind power from western Kenya.

On a visit to Seoul in late 2022, Kenyan President William Ruto announced a funding contribution from South Korea for Konza's progression. The Korea-backed Kenya Advanced Institute of Science and Technology (KAIST) is currently under construction in Konza, with the inaugural cohort of students expected to be admitted by year's end. The institution is geared to offer masters and doctorate-level programmes in mechanical, electrical, and ICT engineering.

In March, the Kenyan and Korean governments launched four projects to accelerate the development of Konza. These initiatives – integrating an intelligent transport system and a central control centre, fostering a vibrant startup ecosystem, creating smart logistics, and developing a Konza-Nairobi transport network – build upon the strides made in 2022. The previous year saw the crafting of a smart city blueprint, a feasibility study on security operations, and the creation of a transport network and smart mobility plans that underpin the city's urban functions.

Konza offers a range of benefits to investors including a low corporate tax rate of 10% for the first 10 years, exemptions on certain licences, and waivers of some local government fees and charges.

 

References

‘Kenya's tech entrepreneurs shun Konza silicon savannah’, The Guardian, 05 January 2015

‘Kenya struggles to give life to futuristic Silicon Savannah city’, Reuters, 11 December 2018

‘Phase 1 of Konza Technopolis data center complete’, The Kenyan Wall Street, 23 July 2020

'The failed promise of Kenya's smart city', Rest of World, 5 August 2021

‘Seize investment opportunities at Konza techno city’, Business Daily, 18 March 2022

'Ruto secures Korea funding for Kenya’s delayed Konza tech city', The East African, 17 January 2023

‘ICT CS Owalo assures Konza Technopolis investors of government support’, Konza Technopolis Development Authority, 30 January 2023

‘Kenya, Korea governments launch four EIPP projects to accelerate development at Konza Technopolis’, Konza Technopolis Development Authority, 14 March 2023

'Konza smart university allocated Sh5.7 billion', Business Daily, 14 March 2023

‘Kenya set to become Africa's high-tech hub’, China Daily, 25 May 2023

‘Konza Technopolis special economic zone benefits as provided for by SEZA’, Konza Technopolis Development Authority, Accessed 28 May 2023