TradeInvest Africa (Cape Town)

8 May 2012

Kenya: Multi-Billion Tech City Project Seeks Investors

Photo: Tatu City
Tatu City is believed to make a significant contribution to Kenya's economic and social development.

Project: Konza ICT City

Location: Machakos County, Eastern Province

Description: The proposed Konza Technology City will be built on 5,000 acres and will host a business process outsourcing (BPO) park, science park, central business district, university and residential housing. Phased over 20 years, the development will have world-class infrastructure and create 200,000 jobs in BPO/ITES and related sectors.

BPO Techno Park: The commercial engine of the new city is The BPO Techno Park, a cluster of technology businesses, financial services firms and other enterprises centred on the state of the art business and science park. It is designed to attract multinationals looking for low cost and high quality outsourcing destination.

CBD: The central business district, which would be a significant draw for global firms, includes space for a landmark shopping mall with major retailers, office blocks and hotels of international standards. Additional facilities will include a small stadium, public entertainment venues, and concert halls and sports facilities.

Investment summary

Infrastructure development: US$ 2-billion

Site real estate development: US$ 5-billion

Average expected return

12 -15% per annum for lease income

20% capital gains per annum (straight line)

Proposed investment structures

  • BOT: Government tenders out for master builder to develop turnkey. Master developer gets anchor BPO tenant. After 10 years, government buys back investment
  • SPV: Government sets up joint venture as minority investor, master builder puts up entire financing
  • Bond Issue: Government raises bond for initial infrastructure build
  • Extended SPV: Break down infrastructure investments into a series of project investments with master developer
  • Master developer builds and recovers investment.

Kenya ICT Board

  • Implementation agency of the ministry of information and communications
  • Currently implementing the Kenya Transparency and Infrastructure Project worth US$116M (2007-2012)
  • Implements projects in connectivity, infrastructure applications, digital inclusion and BPO ITES marketing and development

Ministry of information and technology

  • Government ministry leading the inter-ministerial coordination on the Konza City Project

Kenya is one of the top three countries that are leading Africa with technology and innovation. The government recognises the benefits of embracing technology and innovation, and established the ICT Board to develop the sector. For detailed information on technology and innovation in Kenya, see Afrinnovator's Kenya Technology, Innovation & Startup Report 2012.

For further queries on investment opportunities at Konza Technology City, contact the Kenya Investment Authority.

Pius Rotich, Manager: Investment promotion

Email: info@investmentkenya.com, rotichp@investmentkenya.com

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InFocus

Will Kenya's Urban Development Projects Materialise?

Tatu City is believed to make a significant contribution to Kenya's  economic and social development.

While the nation hopes to be a middle-income country by 2030, the construction of Konza and Tatu Cities has been met with mixed reactions. Read more »