Kenya gets Ksh.31B loan from Korea to finance Konza City project

Kenya has inked two financing agreements totaling Ksh.31.1 billion ($238 million) with the Korea Eximbank to fund the Konza Technopolis project in Malili, Machakos County.

The Korea Eximbank, formally called the Export-Import Bank of Korea, is the official export credit agency of South Korea.

Kenya’s Foreign Affairs Principal Secretary Korir Sing’oei on Tuesday morning announced the lending signed on the sidelines of the 2024 Korea-Africa summit, which President William Ruto is attending in Seoul.

PS Sing’oei represented Kenya while the Korea Eximbank was represented by its Executive Director, Hwang Kiyeon, during the signing on Monday.

The Presidency and the Foreign Ministry had at press time yet provided further details about the backing and its disbursement.

‘SILICON SAVANNAH’

Touted as Africa’s Silicon Savannah ahead of its launch in January 2013, Konza City was set to be complete by 2019. It was projected to inject $1.3 billion into Kenya's gross domestic product (GDP) by 2020.

Kenya under then-president Mwai Kibaki, who launched at the end of his tenure, wanted to replicate Silicon Valley in the United States, offering both tax exemptions and holidays to investors in a bid to make the country one of the few global ICT zones in Africa.

The government planned to build the city through four five-year phases and it pledged to lay out infrastructure as interested private partners build their facilities.

That has however not materialised.

The new funding is part of a deal Kenya inked with the South Korean government in March 2022, after President Ruto took over power, to fast-track the actualization of the Konza Technopolis dream.

Dubbed the Economic Innovation Partnership Program (EIPP), the three-year partnership was signed in March 2022 to provide a framework for the completion of three pivotal projects in Konza Technopolis. 

Last September, the two governments announced the conclusion of EIPP’s second phase.

This comprised formulation of the city master plan, a feasibility study focused on the integrated control centre with an emphasis on security operations, the establishment of an intelligent transport system, and consultations for the creation of a vibrant start-up ecosystem within the technology city.

And as time has gone by, so have its costs gone up. Initially set to cost an estimated $7 million (Ksh.588 billion at the time), the project is now estimated to be around worth over Ksh.1.4 trillion.

Konza City’s management has pinned the delays on finance, even as the brains behind the project maintain that the challenge is in handling the project.

BIG BUDGET

In the 2023/2024 budget, a large chunk of the ICT Ministry’s Ksh.15.1 billion allocation was poured into the Konza Technopolis project.

Ksh.4.8 billion went into the city’s Horizontal Infrastructure Phase I, Ksh.1.2 billion to its data centre and smart city facilities, Ksh.5.7 billion was set aside for the construction of Kenya Advanced Institute of Science and Technology at the city, while Ksh.1.3 billion went into the maintenance and rehabilitation of the National Optic Fibre Backbone Phase II Expansion Cable.

At the same time, President Ruto’s government set aside Ksh.475 million for the construction of Konza Complex Phase 1B, and Ksh.583 million for Last Mile County Connectivity Network.

Among the initial global firms that showed interest in Konza include American tech giant Google, and Chinese network and handset maker Huawei.

However, Google and other tech giants such as Microsoft and Visa have since set up multi-billion-shilling hubs in the country, but opting instead for the capital Nairobi.