22 February 2011

Kenya’s technopolis dream gets a boost from European, Asian firms

At least six firms have expressed interest in competing for contracts to build Kenya’s multi-billion Shilling dream ICT park on a 5,000-acre site south of Nairobi.
Winners of the contracts will become master builders of the $10 billion (Sh800 billion) project, whose construction begins next month at a ground-breaking ceremony to be presided over by President Kibaki.
In the list of contenders are India’s Mahindra, Tata Infrastructure, Leasing and Financial Services, Wipro from America and global technology firm IBM.
Swedish, South Korean and American firms — whose names could not be immediately verified — are also eyeing infrastructure projects at the park.
Construction of the technopolis is hinged on a model that puts third parties at the centre of its execution with the owners — the government — offering the land, legal backing and architectural plans.
Winners of the master builder tender are expected to develop property on location and upon conclusion lease it out (for 99 years) or sell it to interested buyers, the master plan crafted by the Ministry of Information says.
A separate group of bidders will build the city’s infrastructure and levy service charges under the build, operate and transfer (BoT) model.
Lease periods will be hinged on the length of time it takes them to recoup costs without imposing a heavy cost burden on users.
People familiar with the bidders’ plans said a Swedish company is gunning for the tender to construct and manage the technopolis’ sewerage system while the Korean firm wants to build the Business Process Outsourcing (BPO) park.
Infrastructure development at the park situated 41 kilometres South of Nairobi begins next month paving the way for invitation of the initial tenders worth $3.8 billion (Sh304 billion).
“The official launch should make it possible for the government to actively market the project to potential investors throughout the world,” said Dr Bitange Ndemo, the Information permanent secretary.
Prime minister Raila Odinga is expected to lead a team of top government and private sector personalities who will leave the country in April for a road show in New York.
Service providers, including a leading hospital, an international school and an investment group have expressed interest in putting up units at the park, Mr Ndemo said.
Next month’s launch of infrastructure development projects will also see the grounds zoned for planned activities such as IT, hospitality, education, health and finance.
The ICT park is expected to create 80,000 new jobs in the first four years as part of the government’s Vision 2030 development blueprint.
Last Friday, the parliamentary accounts committee team led by Gichugu MP Martha Karua, Nairobi Metropolitan and Ministry of Information officials toured the site to ascertain whether the public had got value for the Sh1 billion that has so far been pumped into the project.
Kenya intends to use the facility to promote conference tourism and is preparing a bid for the 2018 GSMA World Congress.
The annual meeting brings together 800 of the world’s mobile operators, more than 200 technology companies and about 50,000 IT executives.
Successful execution will make Konza technology city Eastern Africa’s first and only technopolis – a city built specifically for technology firms.
It will host Business Process Outsourcing (BPO) ventures, a science park, a convention centre, shopping malls, hotels, international schools and health facilities.
Similar cities already exist in Malaysia (PutraJaya), Panama (Pacifico), the Philippines (Subic-Clark) and China (Shenzhen).
Mr Mugo Kibati, the director general of Vision 2030 said execution of the plan is hinged on the allocation of money in the next budget to kick-start the initial phase.
“We are now packaging the project ready for show casing to potential investors,” he said.
The technopolis has faced numerous hurdles, including encroachment on its land by private developers, since its inception in 2008.
There is also fear that implementation of the project may be mired in politics as the Kenya moves into the next general election.
“This is the worst time to implement a project of this magnitude as politicians can go promising investors anything to get campaign money in exchange,” Dr Ndemo said.
The ICT park was initially embroiled in a fierce disagreement between shareholders of Malili Ranch, its directors and area politicians.
Shareholders of the ranch accused brokers of cheating them out of their land and threatened to block the project unless they were paid more.
The Ministry of Information, entered into an agreement with the directors of Malili Ranch on June 17 last year to purchase 5,000 acres of land at a price of Sh200,000 per acre and made a down-payment of Sh400 million.
The Sh600 million balance was paid in January paving the way for work to begin.
Malili Ranch belonged to 606 farmers who owned 7.8 acres each and were paid Sh1.56 million each for their shares.
Mr Mugo advised land owners in the area to stop subdividing it because they could end up getting more value for consolidated units in mega projects around the technopolis.
By Okuttah Mark, Business Daily

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