60 Km south of Nairobi sits a 5,000-acre piece of land that has been earmarked for a multi-billion shilling technopolis. A technopolis ‘technology city’ is an area with a collection of buildings dedicated to scientific research on a business footing. Typically businesses and organizations in the cities focus on product advancement and innovation. A ground breaking ceremony of the project is scheduled for September this year, as part of Kenya Vision 2030 flagship projects. A master plan for the phase one of the Kshs. 800 billion project has been drafted by International Design Engineers, Pell Frischmann from London, UK. This phase will include a science and technology park spearheaded by the Ministry of Science and Technology, a Business Processing and Outsourcing (BPO) park, world class hotels, a stadium and other social amenities typical of a city.
But what causes excitement about this 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. The new city will be under Konza Technology City Authority, a new parastatal to be created to ensure continuity of the project. Various firms will be competing for contracts to build Kenya’s multi-billion Shilling dream ICT park on a 5,000-acre site south of Nairobi. In the list of contenders are India’s Mahindra, Tata Infrastructure, Leasing and Financial Services, Wipro from America and global technology firm IBM. 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.
Similar cities already exist in Malaysia (PutraJaya), Panama (Pacifico), the Philippines (Subic-Clark) and China (Shenzhen). Business Process Outsourcing (BPO) ventures have recorded tremendous growth globally. For instance, India took over most of the BPO services – from search engine optimization to contact center services, an avenue that Kenya will be pursuing. India had revenues of US$10.9 billion from offshore BPO and US$30 billion from IT and total BPO (expected in FY 2008). Important centers in India are Bangalore, Hyderabad, Chennai, Kolkata, Mumbai, Pune, Patna and New Delhi.India thus has some 5-6% share of the total BPO Industry, but a commanding 63% share of the offshore component.
In the Philippines, pioneer BPO companies developed and expanded their services not only in the country’s capital but to other key cities such as Cebu in the south. Other prominent examples include the Hsinchu Science Park in Taiwan, The Research Triangle Park in North Carolina, NanKang Software Park, Cambridge Science Park and NETpark in County Durham, England, Pardis Technology Park in Iran and Daedeok Innopolis in South Korea. Security risk is the major drawback with Business Process Outsourcing. Outsourcing of an Information System, for example, can cause security risks both from a communication and from a privacy perspective.
If Kenya decides to set up a BPO park at the Konza Technolopolis, using world class infrastructure and technology, the park would to facilitate research, education and business, creating thousands of jobs for the innovate ‘techies’ with a business acumen. Besides building area, these parks offer a number of shared resources, such as uninterruptible power supply, telecommunications hubs, reception and security, management offices, restaurants, bank offices, convention center, parking, internal transportation, entertainment and sports facilities, etc. In this way, the park offers considerable advantages to hosted companies, by reducing overhead costs with these facilities.
The new city is part of a strategic plan to position Kenya as the region’s technology hub, using the development to entice venture capitalists to finance local companies and international companies to set up base in the country. Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology, IT, software, etc. The typical venture capital investment occurs after the seed funding round as growth funding round in the interest of generating a return through an eventual realization event, such as an IPO or trade sale of the company. Venture capital is a subset of private equity. Therefore all venture capital is private equity, but not all private equity is venture capital. For local talent, this is a reason why the project should be exciting!
