Africa In Fact (Johannesburg)

1 August 2014

Kenya: City of Dreams

analysis

Konza Techno City: bureaucracy scuppers ambitious plans for Africa's Silicon Savannah

Malili Ranch sits on 5,000 acres of land, 60km south-east of Kenya's capital Nairobi, on the highway that leads to the port city of Mombasa. The ranch looks like a postcard of a typical African bush scene. Knee-high grass sways in a dry wind. Not far from the barbed and mesh wire fence a few gazelles graze silently, their tails dancing in the air.

But behind this tranquil picture lies a story of misplaced government ambition, bureaucratic failure and local infighting. Denis Mule is one of many land speculators who came to the small town of Malili after the Kenyan government bought the ranch in 2011 from Malili Ranch Limited, a group of farmers who jointly owned the land, for $11.3m. The government had chosen this land for the construction of Konza Techno City, a $14.5 billion project it touted as one of its most ambitious since Kenya gained independence in 1963.

The idea was to build a city from scratch: "an information and communication technology [ICT] ecosystem... an African version of Silicon Valley", according to Bitange Ndemo, a lecturer at the University of Nairobi's business school. He was once the highest government official in charge of the project when he was the permanent secretary of what is now called the Ministry of Information, Communication and Technology.

This ministry came up with the plan in 2006, Mr Ndemo says. The government hoped to build the infrastructure and then lease land to interested investors, he adds. According to the Konza website, the government wanted--and still wants--to attract companies in the fields of business process outsourcing, data, disaster recovery and call centres.

A convention hall, shopping malls, hotels, schools, universities, health facilities and homes for Kenya's growing middle class would complete the "city". Government planners hoped that 50,000 people would live in Konza once completed and that the urban complex would create 200,000 jobs by 2030.

After the International Finance Corporation, a member of the World Bank group, completed a feasibility study in 2009, the government created the Konza Technopolis Development Authority (KOTDA) - and appointed government officials, architects, quantity surveyors, urban planners and information technology experts to oversee Konza's development.

Three years later KOTDA hired HR&A Advisors, a New York-based firm, to lead a team of architects, urban planners, engineers and economic advisors to create a plan to finance and build the city.

A much-publicised artist's impression of Konza, created in 2012 by UK-based Urban Graphics, painted a "smart city" of the future - a haven free from the traffic snarl-ups and crowded streets that characterise Nairobi. (Nairobi had the fourth most gruelling commute of 20 large cities in the world, according to IBM's Commuter Pain survey released in 2011.)

Kenya's former president, Mwai Kibaki, launched the project in January 2013 at an event attended by the country's business and government elite and broadcast live on national television. Mr Kibaki described Konza as "a game-changer in Kenya's socio-economic development" that would "spur massive trade and investment".

The land around Malili Ranch immediately became one of Kenya's hottest property markets and prices soared. Speculators like Mr Mule arrived hoping to connect investors to land sellers in the ranch's vicinity. Before the launch, an acre at Malili sold for 100,000 Kenyan shillings ($1,140), Mr Mule says. After the launch the same plot could fetch a million shillings ($11,402).

"There used to be a long queue of customers outside my office," he says, alluding to the Kenyans who flocked to Malili last year to buy land close to the ranch. "But not anymore," he says. He points to a row of semi-permanent structures near the gate which belonged to land brokers like him.

All are deserted. Since the launch, nothing at all has happened on the ground. HR&A delivered its cashflow and physical development plan to KOTDA in February 2013. KOTDA then contracted another US-based firm, Tetra Tech, to oversee the construction of the city's first five-year phase.

However, funding delays and disagreements over payment methods have postponed the signing of the $13.7m contract with Tetra Tech, according to Catherine Adeya, acting CEO of KOTDA.

Meanwhile, the land at Malili Ranch remains untouched. "The challenge with Konza has been that initially, there was so much advertising without real work on the ground," Ms Adeya admits. "Critical approvals had not been done by the time Mr Kibaki launched the project." She blames "officials who do not understand the kind of tech-city Konza is meant to be", a backhand swipe at the ICT ministry which must approve all KOTDA decisions.

The uncertainty that surrounded the March 2013 general election is also partly responsible, she says. In the run-up to the polls, foreign embassies advised their nationals to leave the country for fear that violence could erupt during or after the poll. "We lost a number of very interested international investors just before the elections because they were... worried about what would happen," she adds.

Mr Ndemo, who was in charge of the project until April 2013 when he was left out of the new cabinet appointments, blames "complex government procurement procedures" for "slowly killing the project". All government procurements have to be approved by the Public Procurement Oversight Authority, which can take months and even years, he says.

Mr Ndemo is also involved in a scandal connected to the government purchase of Malili Ranch. The former owners claimed last April that they had not been paid.

Upon investigation, the police asked the public prosecutor to arrest and charge three people with fraud, theft and forgery related to the $11.3m sale of the ranch: Mr Ndemo, Eric Mutua, the current chairman of the Law Society of Kenya, and Johnstone Muthama, the senator of Machakos County. The prosecutor says he is still studying the evidence and no formal charges have been brought.

Further delaying this tech city is a fight between three counties over Konza's official location. While Malili borders three counties, Makueni, Machakos and Kajiad, the KOTDA legislation states that Konza is in Makueni County. This has created a tussle between the three counties, which are eager to reap the project's potential tax revenue.

Last August, Makueni County officials accused their Machakos counterparts of colluding with land ministry authorities to alter the county boundaries and move Konza to Machakos, according to media reports. To add fuel to the fire, Charity Ngilu, the land minister, released a statement last May with a map that shows Malili is indeed in Machakos. KOTDA is distancing itself from the fray and claims the development and its economic benefits will stretch far beyond the original 5,000-acre ranch.

So is the dream of the Silicon Savannah still alive? Signs from government are not encouraging. Mr Fred Okeng'o Matiang'i, the cabinet secretary of the ICT ministry, did not mention the Konza venture when he spoke at a major east African technology summit in Nairobi on June 17th.

The project is no longer tenable, says Wilberforce Oundo, a director at Roack Consultants, a Nairobi-based real estate firm. The government has shifted its focus to "hard-core projects", especially the 320 billion shillings ($3.6 billion) railway currently under construction that will run from Mombasa to Kenya's border with Uganda at Malaba, he says.

The government underestimated the enormity of building a city from scratch, Mr Oundo says. "The new government that came into office in March 2013 found a full in-tray with other more pressing issues. Sadly, Konza was thrown onto the backburner."

Back at Malili Ranch, Mr Mule stares across the pristine savannah. A truck loaded with wooden poles is parked on the other side of the fence. "They started digging boreholes a month ago and electricity poles have been brought on site," he says. "Perhaps not all is lost."

The project's realisation seems unlikely. A toxic mixture of corruption, bureaucracy and poor planning is responsible for the government's failure to deal effectively with traffic congestion and slum sprawl in Nairobi. Unsurprisingly, these same problems are blocking the creation of a new city just a half-hour's drive away.

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