NAIROBI, Kenya- Konza Technopolis, Kenya’s pioneering smart city, is facing a significant funding shortfall and is now turning to creative financial solutions to keep its ambitious projects on track.
With a budget deficit of Sh140 billion, the technopolis is exploring a mix of green bonds, partnerships, and loans to bridge the gap left by insufficient national government funding.
As the government tightens its purse strings with recent austerity measures, Konza Technopolis is being forced to think outside the box.
John Okwiri, CEO of the Konza Technopolis Development Authority, revealed that the smart city is considering raising funds through the issuance of green bonds.
These bonds, which are specifically earmarked for projects with environmental benefits, could provide a sustainable solution to the funding crisis.
“We have a shortfall of Sh140 billion in terms of the resources needed for the projects we intend to undertake. Green bonds are one of the options we’re considering to raise these resources,” Okwiri said.
He also mentioned that they are open to exploring other avenues such as Public-Private Partnerships (PPPs) and concession loans to ensure that the development goals are met.
Initially, the National Treasury had planned to allocate about Sh5.2 billion to Konza for the current financial year—an increase that would have been a significant boost from the Sh170 million received last year.
However, the unexpected withdrawal of the Finance Bill 2024 led to a drastic revision in these plans, forcing Konza to seek alternative funding sources.
The budget cuts have also had a ripple effect on other projects within the technopolis. For instance, the Open University of Kenya, which was unveiled last year with much fanfare as the country’s first virtual public learning institution, had its development budget of Sh200 million completely scrapped.
This setback has raised concerns about the future of the university and its potential to revolutionize higher education in Kenya.
Despite the financial challenges, Konza Technopolis has made significant strides, especially in its first phase, which focuses on horizontal infrastructure.
The 170-hectare phase one of the project, funded through a $391 million (Sh50.4 billion) financing agreement with Italy’s UniCredit SpA, is now complete.
This phase includes the development of essential infrastructure such as the National Data Centre and smart city facilities, funded by a Sh17 billion loan from China’s Exim Bank.
Plans are also in place for further development, including the much-anticipated Digital Media City, which has attracted considerable interest from investors.
However, some projects, such as a proposed hotel within the Konza Complex, are currently on hold pending additional financing.
As Konza Technopolis continues to evolve, the pressure is on to secure the necessary funds to keep the dream of Kenya’s first smart city alive.
