Konza city holds “discussions” with Kenyan tech start ups

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For the last five years, the Kenya ICT Board has been involved in several initiatives like BPO, content and the latest is Konza City marketing initiative. You can read more about  ICT board here.

The discussion on tech start ups was led by a team from Dalberg consultants and was calculated to include the voices of Kenyan tech startups and what they would like to have at the Konza city in order to relocate to the remote location.

In my estimation, the meeting was poorly attended with less than 30 people, I guess the start up space is not that big or the event was poorly marketed. Some of the people in the room who I could recognize were; @kahenya @agostal @roomthinker @bankelele @bytebandit @kaboro @ kachwanya @njathika @themumbi

For the people involved in Konza city discussions, both offline and online, there are two levels of interests:

1. Those who genuinely want to see the tech industry grow but with forproper foundation

These are the kind of people who argue that we should solve elementary issues such as digitizing government services before investing in massive hardware, that we art out basic social amenities like power before building a high speed train, how will this help if there is no power?

These people argue that the tech start ups should be supported now, instead of waiting Ten years for the city. For instance, software start ups can not take their business plans to the bank and get loans, all these money going to international consultants should find a way back to the tech industry. Please note, I talk of affordable bank loans, not grants that are not accounted for.

Do we have to wait for a city to get a favorable banking sector services? I would love to hear Jimmy of iHub cluster explaining High Performance Computing to a bank Manager, pitching for a loan. Imagine him justifying that this is the future of kenyan tech.

This group of people isn’t exactly loved because they are not seen as pro development and are seen to philosophize things, especially when you compare Kenya t south Korea and they say the two countries invested in education and social amenities differently?

2.  Those who don’t care about tech, “this is a business opportunity, seize it”

We all like to say we are in group one but for those selling land around Konza and those working as consultants, this is a business and we concentrate on what we are making, not on existing or future problems. Make your money now, worry about viability later.

I am also looking at the inside lane in this group but no one seems interested to let me in. I can wrk as a consultant, I will google and write a report on basic stuff that others have written. I will regurgitate suff and claim to be what the community wants. I have thequalities but I have not been invited to the table, I guess we are many waiting 🙂 and we are perfecting our abilities to suck up to whoever.

Now that you know about the interests at Konza, let us go back to the discussions at iHub.

@kahenya started the question time by saying that it was a bad idea badly executed because with the struggling start ups, they will be dead before Konza can help them. He also argued that weneed to invest in social systems capable of supporting the grandiose projects.

Kahenya was shot down on the argument that the Dalberg team was only concerned with what start ups want at Konza, not any other attendant challenges. I agreed with the consultants,  if they were paid by the IFC to only talk about what start ups and what they want, it was unfair to start telling them the problems that Kenyans face and why some of the start ups are notsurviving to celebrate third birthdays.

For a moment, the debate seemed to move on, until @kaboro came in and started talking about the social investments that had been made by the countries we are trying to emulate. consommé point one of the consultants answered “I am not even Kenyan” and from this point, the debate seemed lost.

@roomthinker runs a software company that serves the banking sector; his office is within ten minutes of his major clients so he is able to give faster support, which is his competitive edge over international firms ahis the employees live within 20 minutes to the office. He sought to know why he should stomach Mombasa road traffic and move to Konza.

The consultants danced around the question and sad that companies like Accenture, HSBC etc will be setting up offices in Konza and will be providing new business. The journalist in me wanted to ask if there are any commitment letters but seeing the way the other questions were being handled, these guys could have started giving meexamples of how TSBDEC set up shop in Tunguska tech park and it is now doing well.

@agostaL this guy is the poster boy for tech start up success without a grant from the ICT board, i don’t know f the grants have had success 🙂

Liko has been concerned with finance availability and it is understandable. Many small companies are knocked out of big tenders because of unavailability of money or lines of credit to support deployments. He was told of how Equity bank will be setting up shop at Konza, but that can start now. Again, the consultant reminded participants that they were not bothered with those existing problems, only what they would like to see at Konza.

I wondered why the consultants kept on plugging in Equity bank like there was no other bank in Kenya. Later on it hit me that last year I met a lady fom Dalberg who told me that they were involved in setting up the Equity Bank foundation.

I am crowd sourcing responses from other people who were present, will update with responses.

 

 

 

20 COMMENTS

  1. Hi Becky,
    I agree this discussion was not very open. Thank you for the summary but the basic questions have still not been answered. How much support is available for startup? Who is incubbating who in preparation for konza city?
    We do have great ict enterprenuers at various hubs just giving them the boost is not a big ask. The fact that we are still have no success story from ict board e.g digital villages et al..
    Keep writing some thing will happen?

  2. If you look at vision 2030, a lot of emphasis on infrastructure is difficult to understand. However a look at recent developments will fill in a bit of the gaps. A good example is government intent to develop nuclear energy despite the huge costs it would imply. Then again there was that find of ‘potential’ rare elements in mombasa. Konza city is not meant to exist as a purely technology hub but as a science and technology centre. That means things like agroprocessing, spaceprograms, science, technology. Etc etc. And therefore the need for tightly controlled infrastructure. I cannot wait to be involved in it’s development.

  3. My problem is the government has decided that Konza is the only way to grow the ICT sector and then proceeded to force everything in that direction.

    Myopia.

    Government should Instead ask “what can we do to help small businesses grow organically wherever they are?”

    That, I feel sure, will lead to development ALL OVER Kenya TODAY and not just Konza in 10 years

  4. The development of konza beyond infrastructure will take a significant amount of time. Hopefully by then this development will be ‘fueled’ by petrodollars..
    It is unfair to judge this project on what it will do for kenya this very minute. Besides, in the long run big business helps grow small business. Take apple and their app store, itunes and accessories market for example. Closer to home, a big agroprocessing org would mean better supply routes for farm produce and better prices.
    Btw.. The GOK does intensive, extensive and comprehensive economic planning. Decisions are almost never made but arrived at.

  5. Godfrey I feel confident in asserting that
    1) at some point big businesses were once small business
    2) big business did not magically become thus. They had to grow, usually organically

    Why is this not apparent to everyone? Let us fix fundamentals first. Grow businesses first. Growth for the economy will be inevitable

  6. This discussion is a part of the bigger discussion on theories of development popularized and polarized by the world bank policies in Africa. I do not know if you are an economist M but if i were to hazard a guess i would lean towards your being an entrepreneur.
    If GOK were to focus on growing small business organically we would have to significantly close our borders to trade inorder to protect that economy from globelized products. The implications of these actions would be devastating.

  7. In my view, there are things that we can fix now before the financial muscle – from our recently found resources – kicks in so that we don’t worry about them 10 years later. I think this is what M is alluding to. This not only applies to tech but the other verticals of the economy as well.

    Organic growth takes a while (unless it’s kudzu) and it’s in all our interests to start cultivating an enabling environment now. Shoving a vision down our throats is not the way to do it.

  8. Like Vision 2030, which is a magic buzzword in Government circles & speeches, Konza is another beautiful plan (3D renderings – http://www.konzacity.co.ke/?page_id=2193) circulating within Government, whose benefits have not been broken down for citizens outside government- and having Dahlberg as the face of the project is not going to help. So far Konza has attracted the usual big project retinue of foreign consultants and land speculators .

    I’ve been fortunate to have been to Education City in Doha, which may or may not be a model for Konza – but that place i’s about talent and technology in practical research for every day solutions. These take place in small beautiful buildings, not gargantuan sky scrapers.

    Also, the Dahlberg team, Kenyan or not, must appreciate the economic and political realities of Kenya – that are within the control of the government such as infrastructure, small business licensing, incentives & support, land speculation/corruption/ and others such as devolutions, counties, lending constraints for tech companies and unemployment, among others.

    Finally I saw an article in the Star over the weekend that put the cost of the technopolis at Kshs 1.2 trillion – if true, that’s about $15 billion worth of Kenyan tax payers money – equivalent to a full year’s budget.

  9. Godfrey rest assured my grasp of economics is not pedestrian.

    I strongly challenge your assertion that growing small businesses has little or no role to play in growth of the economy.

    Please note I have not said Konza should be shut down. What i am against is the determination of Government to solely pursue Konza as a panacea and disregard quick wins and low lying fruit

  10. So much for my two cents, bankelele is here with an entire shilling!
    On a more serious note, your blog gets significant traffic from economists and technology buffs. What do they have to say about this project vis a vis swot (strengths, weakness, opportunities and threats). I think we should overlook dalberg and focus on what needs to be done.
    The entire project has a hidden card that the government is reluctant to advertise. (read origins of the internet)

  11. And why would some consultant want to focus a discussion on the vision, without caring to understand the background info ?, the business environment ? and all the existing challenges ? – These are the same challenges to be seen in a magnified manner at Konza. Konza is/was a GREAT idea, being run poorly, poor benchmarking, poor execution…..name it…and now becoming a bigger slum than those in Nairobi (first impression for any prospective investor)

  12. Lets review the timelines. Vision 2030 is released in july 2008. Konza will take 20 years to develop with tenancy (in my opinion) starting 5 years from now. Kenya has been involved in reforming the business enviroment in line with rwaza 2030 since 08. 5 years since then to now and now to 5 years from now, ten years to have business policy and especially ICT policies past their teething problems. Is that not enough time?
    Stop looking at the city as a plot of land to be developed. It is just a cog in the machinery that is the economy of kenya.
    Dahlberg was commisioned to develop the superstructure of the vision. They are no newbies at this kind of stuff

  13. My context is this article and the comments from it. I could point out specific references in this piece for each and every comment i have made.

    • Godfrey,

      Unfortunately, the people sent in by Dalberg were obviously not yet out of their diapers. They were unable to answer basic questions. I will give an example. Energy. One of the things that makes it tricky to do business in Kenya is cheap reliable energy. Generally, it’s a surprise when a day goes without power fluctuating (actually, electricity went thrice during the Dalberg presentation). Now, for this to happen, energy output has to consistently outpace demand. This is an expensive undertaking one which the government is yet to succeed in (a lot of power is produced by diesel, which weakens our economy) and capital is poured into securing stable electricity (inverters/generators etc – which are incidentally considered taxable capital expenses by the Kenya Revenue Authority – expenses which are not in the core business of anyone but Kengen). Dalberg said that this was not in their mandate. This is something *simple* that will have a greater effect on our economy (small and big businesses alike) that is a better spend of our money than Konza.

      Another example – the trend is to move Government not business. Washington DC, Yamoussoukro, Pretoria, Dodoma, Abuja, Brasilia etc. The Government will do more by moving out of the City Center (KRA, Ministry of Lands, Ministry of Health, Ministry of Finance, CBK etc). It will be cheaper. Easier. Less disruptive. Let us have outposts. Possibly Isiolo would be a good place to have this – will free up a lot of real estate making it cheaper for enterprises to get good office space in Nairobi.

      It’s rather unfortunate that you take a condescending tone towards entrepreneurs who are the engine of any economy. Simple question, in the 1900’s, there were few multinationals, entrepreneurs changed the face of the USA. We can name them. GE (Thomas Edison), Ford (Henry Ford), Standard Oil (John. D Rockefeller), Bank of America (started by Amadeo Giannini), IBM, RJR tobacco, Intel, Microsoft, Apple etc. The powerhouses of the American economy are not British firms invited by the American government to invest in ‘SEZ’s’, but American firms started by hard working American entrepreneurs. Same applies in Britain. Leyland, Rover, Jaguar etc. You have to produce something as a nation to generate wealth. Think of China, Huawei (who have their investments underwritten by the Chinese Government), ZTE, Foxconn, Petrochina. I can go on. These companies *produce*, hence, they generate *wealth*.

      Assuming that entrepreneurs are being petty is firstly a bad case of economic myopia – nay, economic blindness as you are totally unable to see the effects of the actions.

      This government has failed in its duty to provide necessary public goods (which they are duty bound to provide after taxing us). That’s the real problem. Given your deep understanding of economics, this should come as no surprise to you. I’m surprised you failed to mention this in your well-thought-out comments above.

      Read up on what South Africa did around making a good investment environment and China as well (by the way, China will not make the leap to a high income economy until it starts enforcing property rights). There are basics that are required for an economy to grow. You don’t need to build a Special Economic Zone. Put the basics in place, if that does not work then and only then do you consider putting an SEZ to act as a catalyst. China had good reason to do this, they came from a Communist background (under Chairman Mao) and it was one of the things that the new reformist leader Deng Xiaoping had to do. There was no foreign investment at all in China. We have more FDI than we need in Kenya currently, the red tape that afflicts Nairobi, afflicts the entire nation. Reforming this once and for all will lead to lasting change and not the cosmetic-lipstick-on-a-swine change that you seem to be advocating.

      • This is brilliant!! And then again, why would I need to move from Mombasa to Konza? Who said everything has to be one-sided? Mombasa is where 60/70% , or even more, of Kenya’s revenue is collected. But ooooh no, incubation hubs, ICT centers etc all have to be in Nairobi. Am in the process of setting up one in coast but getting backing is like trying to push a camel through a needle’e eye.
        We have brilliant ideas out here as well, but how safe are we to share them? The recent innovation awards will eat up the innovators (like Mpesa which is now Vodafone owned). The Govt should have a revolving fund for ICT incubation hubs. The v2030 document, ICT 2017 masterplan are good reads but without support, small fish will never become sharks.
        Why can’t the Govt think of setting up another ICT hub at the Dongo Kundu Freezone? If we look at Dubai – case in example Jebel Ali freezone, Dubai Internet/Media cities are just about 10 minutes drive from the freezone.
        Why should Dongo Kundu freezone rely on Konza, which is a flight away?

  14. Dear Becky,
    I read with interest your blog on Konza City. It provides good insight and will probably impact the direction that the development takes. I must admit that the project is very important to our company. Chomoka Studios currently has eleven full time employees and has been operating for over two years without any external support from government or otherwise- essentially on a shoestring budget. We do animations for advertising agencies, virtual sets for TV stations and gaming assets. For us, our clients are very few- and don’t need to visit us. We mainly need space, a lot of space (affordable) – and good internet to allow us to expand. The reason i expect Konza to work for us is that it will allow the team to work and stay from around the city with little traffic and at a lower cost. We won’t have to each spend more than 1.5 hours a day in traffic for example. Housing and food are the other big costs that we need minimize. The other day, the estate committee was concerned at the number of young boys getting into the house- but at the moment, we can’t afford a location in town or other suburbs with an independent compound! So we minimise our movement untill we get Konza, which we hope will have technology firms like ours – where young boys are seen for the value they can create rather than a security risk. I would rather invest in Konza rather than Nairobi where I hope the developments costs will be lower, and deliver us the space/customizations we need to grow. As our company is employee driven, cutting our costs is the key driver to make us competitive. That is what I hope Konza City will help us do. I wasnt at the Dalberg meeting that you mention but i attended the Konza city conference and i liked what i heard is being done. My only hope is that companies such as ours can be accompodated rather than just having multinationals.

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