KONZA TECHNOLOGY CITY

where Africa’s silicon savannah begins...

SUMMARY DOCUMENT
April 2011

3
where Africa’s silicon savannah begins...

Prepared by:

Pell Frischmann with support from

Hamilton Harrison & Mathews, Nairobi

Summit Strategies Limited, Nairobi

CONTENTS

i INTRODUCTION 2 4 ENVIRONMENT 19
4.1 Water Sourcing
ii THE VISION 4 4.2 Waste Management
2.1 Masterplan Considerations 4.3 Impacts on Protected Migratory Species
2.2 Infrastructure 4.4 Uncontrolled Influx Magration
2.3 Transport Strategy - Summary 4.5 Social Impact
2.4 Strategic Environmental and Social
Assessment Executive Summary 5 PHASING 22

1 MASTERPLAN 6
6 ECONOMIC ASSESSMENT 24
1.1 The Site
1.2 Masterplan Concept
7 LEGAL FRAMEWORK 27
1.3 Key Features of the Plan
7.1 Institutional and Regulatory Framework

7.2 Land Acquisition and Development
2 TRAFFIC AND TRANSPORTATION 12
7.3 Project Development

7.4 Incentive Framework
3 INFRASTRUCTURE 14
7.5 Other Relevant Issues
3.1 Water
7.5.1 The East African Common Market
3.2 Wastewater
7.5.2 Data Protection
3.3 Storm Water
3.4 Telecommunications
3.5 Power
3.6 Solid Waste
3.7 Summary Analysis of Infrastructure

VIP SUMMARY CONTENTS 1

KONZA TECHNOLOGY CITY
 i
INTRODUCTION

2
Introduction
The Government of Kenya are to sponsor the
development of new-town catalysts, to launch East
Africa into Global Business Process Outsourcing.
Building on a rapidly expanding demand for providing
international top quality financial and business
process services, this undertaking will harness talent
from a strong well-educated and highly competitive
local work force.
The following synopsis provides details of the
Masterplan, Economic Assessment and Legal
framework prepared by international consultants. The
project plan explains how key service provision for
infrastructure and development design will be used
to construct a state-of-the-art 21st century exemplar
city – Konza Technology City. Driven by commercial
technology services the site will also be home to
Kenya’s Financial City initiative, provide University
and Science Parks, potentially house government
ministry relocations from nearby Nairobi and establish
a modern living community which attracts high calibre
professionals to a modern life style.
VIP SUMMARY INTRODUCTION 3
KONZA TECHNOLOGY CITY
 ii
THE VISION

4
The Vision

Kenya’s Vision 2030 aims to improve the quality of life

for the citizens of Kenya by transforming employment
markets, enhancing social infrastructure and securing
good governance. Konza Technology City embodies
this thinking. Designed to be a beacon of excellence
for not only Kenya but all of Africa, the city represents
an ambitious vision of a modern, inclusive and
sustainable Kenya. Konza Technology City is based on
successful new town projects around the world and
draws on international best practice to ensure global
competitiveness.

VIP SUMMARY THE VISION 5

KONZA TECHNOLOGY CITY
 1
MASTERPLAN

6 PREAMBLE VIP SUMMARY

KONZA TECHNOLOGY CITY
Masterplan

The 2,000 hectare city will be located on a greenfield

site 60km south of Nairobi. It is already a location with
excellent transport and communication links. The A109
Highway connecting Nairobi with Mombasa runs adjacent
to the site, the mainline Konza rail station is less than
4km away and Jomo Kenyatta airport is under 50km.

B9

A2
MARSABIT

Kenyan Context
A1

KENYA
Nairobi
B1

60 km Jomo Kenyatta
Airport

A3
NAKURU
50 km
B3

JOMO KENYATTA
NAIROBI AIRPORT

B7
KONZA
EMALI

Local Context
A1
09
M A10
o 9
m
ba

MOMBASA
sa
R oa
d

Konza Technology City

Planned High Speed Rail Link

to Nairobi and Airport
4km

To Mombasa

VIP SUMMARY MASTERPLAN 7

KONZA TECHNOLOGY CITY
1.1 The Site
The site is relatively flat and is crossed by two seasonal
watercourses, both of which feed into the Stony Athi.
To the east and west there are hills that are locally
distinctive landmarks. The existing use of the site is
marginal agricultural land and unused land forming part
of the Black Cotton plains.

8 MASTERPLAN VIP SUMMARY

KONZA TECHNOLOGY CITY
1.2 MasterPlan Concept
The commercial engine of the new city will be a cluster
of technology businesses, financial services firms and
other enterprises. Konza will be developed with world
class infrastructure, especially ICT infrastructure, which
will enable firms located there to compete on a global
stage.

VIP SUMMARY MASTERPLAN 9

KONZA TECHNOLOGY CITY
1.3 Key features of the Plan are:
• A radial road structure with the public transport
roads (shown in red) providing the preferred means
of access to all parts of the proposed city.
• A Central Business District (CBD) is proposed in the
heart of the city, easily accessible to all residents
and workers both by public transport, walking,
cycling and by car. A modern city centre will include
high class shopping, sport, cultural and leisure
facilities as well as amenities like a district hospital.
• The city will also include safe, well designed
neighbourhoods, providing 35,000 new homes
for people working in the city. Schooling will be
provided for all age groups from pre-school to
university.
• The BPO (Business Process Outsourcing)
Technopark is split into two zones to the north and
south of the CBD. These areas are easily accessible
to local residents expected to work there and also to
employees living outside the Technology City. The
Technopark provides an attractive setting to attract
inward investment into this sector, in accordance
with the Government’s Vision 2030.
• The Science Park is envisaged to the south of the
BPO Park.
• A central park near the CBD is proposed to be laid
out as a public park, providing a green lung for the
residents and workers.
• A site for a university campus is shown to the north
of the CBD. This will provide an area for academic
buildings, student residences and sports and
leisure facilities for students. It is accessible to the
CBD and will assist in the cross-fertilisation of ideas
between the university and businesses on site.
10 MASTERPLAN VIP SUMMARY
KONZA TECHNOLOGY CITY
• The residential community occupies much of the
remaining areas of the proposed Technology City.
This will provide accommodation for employees and
their families who will work in the BPO Technopark,
the CBD and in the various local community
facilities. The residential community will include
appropriate provision for schools, health -care
facilities, churches and mosques, play facilities and
sports facilities.
• Green corridors are proposed along the alignment
of the watercourses which are protected in the
Plan. This will help to avoid flood risk to the new
buildings and also provides additional open space.
These could also serve as ecological corridors
through the site.
• The Konza Road is proposed to be paved to provide
easy access for all vehicular traffic.
• A “Greenbelt” control zone of approximately 2
km is proposed around the site to protect the
setting of the Technology City and guard against
the development of informal settlements on
the boundary of the site; to reserve land for the
possible future expansion of the Technopolis; and
to institute rigorous control of development in
the area around the site. This area could also be
designated as a Nature Conservancy Zone which
could be managed by Kenya Wildlife Services (KWS)
to minimise the impact of the new town on local
wildlife.
Key
Site area University Campus

AD
Rivers Open spaces

RO
ZA
N
Roads Reserve site

KO
Landscaping Very High Density Residential
Water Features High Density Residential
Sewage Treatment Works Medium Density Residential
BPO Techno Park Low Density Residential
Central Business District Buildings
Science Park

A109 MOMBASA ROAD

0 250m 500m 750m 1km

VIP SUMMARY MASTERPLAN 11

KONZA TECHNOLOGY CITY
 2
TRAFFIC AND TRANSPORTATION

12
Traffic and Transportation
The Masterplan development sets out a land use
scenario which will be supported, integrated and
realised through a high quality transport system. Konza
Technology City will contribute massively to the regional
economic development and its modern transport
system will allow the city to function efficiently.
The key aim of the Transport Strategy, which was
developed in integration with the land use patterns
proposed for the Masterplan, is to propose a transport
system which (i) meets travel demands to-from Konza
Technology City and (ii) provides for the movement
of people and goods in an efficient and sustainable
manner.
The Transport Strategy will encompass all modes
(public and private transport) and all facilities (highway
network, traffic management systems, etc.). Key features
for the achievement of a high quality transport system
are as following:
• Encourage the road widening of the A109 to be
extended from Machakos turn-off up to the site
in order to improve site accessibility by reducing
journey time and hence transport cost;
• Develop the road network on a hierarchical basis
and in integration with the Masterplan to a high
standard as there are no physical, land or property
boundary constraints;
• Develop strategic bus corridors which will inter-
connect the proposed development areas. The
strategic corridors should have as their focus the
proposed BPO and CBD areas and other facilities
proposed under the Master Plan. The corridors
should afford extensive priority to buses;
• Develop a comprehensive traffic management
programme (covering junction controls, signals,
channelisation, road marking, etc.), with particular
attention to be paid to parking policy; and
• Develop an Institutional Arrangement to set up and
operate the Transport Strategy.
VIP SUMMARY TRAFFIC AND TRANSPORTATION 13
KONZA TECHNOLOGY CITY
 3
INFRASTRUCTURE

14
Infrastructure
The Konza site has little existing infrastructure and
presents what is essentially a “green field” site for
development. Whilst this might be perceived as a
challenge, the lack of existing infrastructure represents
an opportunity to develop a fully integrated, modern
infrastructure, designed specifically for the intended
land use. Opportunities exist to incorporate sustainable
solutions for water recycling, energy recovery and waste
minimisation within the design, thus reducing the
dependency upon raw resources and leading to a green
eco-friendly development.
The location of the Technology City, beside the
main Nairobi-Mombasa route, provides not only
excellent road and rail transport links, but also direct
access to Kenya’s existing long-distance power and
telecommunications transmission systems.
Perhaps the biggest challenge for the development will
be the incorporation of a suitable water source. The
Konza region, in common with most of Kenya, has a
significant water deficit. Limited groundwater sources
are available close to the site. Konza will need to be
incorporated within a bulk regional water scheme
including the construction of new dams and pipelines to
supplement and reinforce supplies from existing dams
and water transfer schemes in the region.
3.1 WATER
The demand for water has been based upon the
proposed land use allocation and phasing, together
with typical water consumption data for domestic,
commercial, irrigation and other uses. Demand will
be offset by the use of treated wastewater for certain
irrigation uses. Allowances have also been made for
leakage and for daily variability in demand to give a
forecast average supply requirement of 10 mega litres
per day (Ml/d) in the 1st Phase, rising to 34 Ml/d upon
completion of all forecast development. Rainwater
recycling may offer a means to further offset the demand
for potable water. “Greywater” collected from roofs may
be stored and used for non-potable applications such
as toilet flushing and irrigation.
The proposed water infrastructure comprises a single
centralised water treatment works and an associated
network of distribution mains. The water treatment
works will be located to the north of the site to take
advantage of higher levels in this area and enable a
supply pressurised by gravity to most areas.
The scale and complexity of the water treatment
process will be dictated by the quality of available water
sources, land take has been provisionally estimated
as 10 hectares; based upon a conventional treatment
process comprising flocculators-clarifiers, sand
filtration, activated carbon and chlorination. The land
area includes treated water reservoirs to provide secure
storage of 1½ days’ supply.
The distribution mains will be divided into four supply
zones to enhance control, security and the phased
development of the site.
VIP SUMMARY INFRASTRUCTURE 15
KONZA TECHNOLOGY CITY
3.2 Wastewater
Wastewater will be collected in a network of sewers,
separate from the surface water (i.e. rainfall) drainage
system. The existing topography facilitates a gravity
driven sewerage system following ground contours
to a wastewater treatment works located at the
south-western corner of the development area. A
pumping station will lift the wastewater at the inlet
to the wastewater treatment works, allowing a gravity
flow through the treatment stages and onwards to a
discharge point into the Stony Athi river. The proposed
site is also downwind of the major development
areas for both the summer and winter prevailing wind
directions.
The wastewater treatment process proposed is waste
stabilisation ponds (WSPs), in line with current
strategies for wastewater treatment at other large
population centres in Kenya. This process utilises
long retention times and natural sunlight and oxygen to
achieve effective treatment of wastewater by removing
pollutants and killing pathogens. The treated wastewater
will be suitable for discharge to the river (subject to
the necessary consents) or for reuse for irrigation of
certain crops and landscaped areas, which will reduce
the development demand upon potable water. WSPs
are particularly well suited to the Kenya climate and
offer a much more sustainable solution than alternative
power-intensive wastewater treatment processes such
as activated sludge. They are also extremely simple
to build, operate and maintain, requiring a minimum
of equipment, and have a low risk of odour or noise
nuisance. WSPs do, however, require a large area of
land in order to provide the necessary retention times.
The land area required for the wastewater treatment
works has been estimated as 35 hectares for Phase 1,
rising to 50 hectares in future.
The sludge which accumulates in the ponds is removed
periodically, after draining. It provides a valuable source
of nutrients as an agricultural fertiliser.
Methane can be collected from the initial, anaerobic
stage of the WSP system. This gas can be used in
combined heat and power (CHP) engines to generate
electricity and provide hot water for local use.
16 INFRASTRUCTURE VIP SUMMARY
KONZA TECHNOLOGY CITY
3.3 Storm Water
The surface water collection system will be kept
separate from the wastewater sewers to prevent
contamination of the rivers or dilution of the
wastewater. The network of pipes and large diameter
drains will permit the rapid collection and discharge of
surface water into the dry rivers which pass through the
development.
Flood lagoons, placed at strategic locations on the
dry rivers, will control the rate of flow in the rivers,
improving flow efficiency and reducing the risk of
scouring in flood conditions.
3.4 Telecommunications
The Konza site is ideally placed for high speed, high
bandwidth communications, being adjacent to the
main route for long-distance fibre-optic cables between
Nairobi and Mombasa.
Within the development itself, a state-of-the-art access
network will comprise four exchanges, linked by dual-
redundant fibre-optic networks, distributing outwards
via star-configuration fibre-optic cables. This network
will offer a complete modern telecommunications
package of high-speed internet, telephony and video
services.
Kenya has a rapidly developing mobile telephone
market with healthy competition and major investment
by the major service providers. By involving the service
providers in the development process, they can expand
their coverage to suit the needs of the Technology City.
3.5 Power
The power demand for the site has been estimated
using international codes and standards and knowledge
gained from previous projects. The estimated total
demand for all development phases is 675 MVA.
It is proposed that the supply to the site will come
from the 400 kV line proposed between Mombasa and
Nairobi. A new 400/220 kV Main substation will be
constructed to connect the site to the grid. Additional
security of supply could be achieved through the
provision of site based standby generation facilities,
if required, although careful consideration of the
integration of these would be necessary in order to
make appropriate and effective utilisation of these
assets.
Appropriate distribution substations, transformers and
ring mains will be distributed across the site in order to
adequately and securely meet demand.
3.6 Solid Waste
The strategy for solid waste management is based
upon principles of sustainable development and the
protection of human health and the environment by
producing less waste and by using it as a resource
wherever possible. Sustainable waste management
aims to apply the ‘waste hierarchy’ of reduction, re-use,
recycling and composting (to use waste as a source of
energy) and only disposing as a last resort.
The first stage is to move collected waste to strategic
transfer stations and associated treatment system.
The system will incorporate a mix of technologies
complementing each other to provide a range of
recyclates and products for use locally, along with the
generation of energy and heat for local commerce and
housing. Efficient operation will ensure the quantities
of wastes generated is collected, treated, processed
and disposed of without being noticed by the general
populace. Vital to this system and underpinning it is
the provision of a secure landfill site for the disposal of
residuals, the management of fluctuations in the waste
stream and to act as a buffer for process down time.
VIP SUMMARY INFRASTRUCTURE 17
KONZA TECHNOLOGY CITY
3.7 Summary Analysis of Infrastructure
Infrastructure Existing conditions
Element
Water No existing infrastructure. Local
water resources inadequate.
Wastewater No existing infrastructure.
Storm Water No existing infrastructure. Run-
off flows to dry rivers.
Power No existing infrastructure on
the site.
Solid Waste No existing infrastructure.
Telecoms Good GSM coverage & fibre
optic cables nearby.
Proposed strategy
Offsite major supply source, incorporated within a regional supply scheme. Central
water treatment works and reservoir storage.
Maximise water re-use and rainwater harvesting to supplement.
Centralised treatment works using waste stabilisation ponds.
Effluent reuse for irrigation. Sludge disposal to agriculture for reuse as a soil
conditioner.
Comprehensive network of storm drains.
To obtain a 400kV dual supply to the site from an overhead line. This will be
transformed to 66kV and 11kV at strategic points around the site.
Identify suitable local site for landfill and collection points, develop commercial
incentives for recycling and reuse (Energy from Waste) and managed collections in
line with the integrated waste management philosophy.
New fibre optic Access network, providing high speed internet, voice and video
connectivity.

18 INFRASTRUCTURE VIP SUMMARY

KONZA TECHNOLOGY CITY
 4
ENVIRONMENT

19
Environment
A Strategic Environmental and Social Assessment
(SESA) has been undertaken based on the guidance
provided by the National Environment Management
Authority (NEMA) and International Finance Corporation
(IFC) to evaluate the impact of the proposed Konza
Technology City, recommend appropriate mitigation and
assess legal and institutional aspects relevant to the
impacts and risks.
The SESA is based on a master-plan for 80,000 jobs.
It is proposed that this be increased to 175,000 jobs in
which case a revised assessment will be needed.
20 ENVIRONMENT VIP SUMMARY
KONZA TECHNOLOGY CITY
However, the key generic challenges are shown below:
4.1 Water sourcing:
The development has the potential to have several
impacts on the water environment; positive impacts
include maintenance of the two existing water courses
on site, maintaining natural drainage systems. The
project will include the development of infrastructure
which will increase water resources to the area and
will include water treatment facilities which will help
maintain the area’s water quality.
A significant challenge however, is the large increase
in the demand for water resources; the area already
experiences water shortages with demand outstripping
supply. With no feasible on-site sources, water
will need to be sourced from offsite. Water supply
options will require a full EIA in order to determine the
environmental and social impacts of water extraction
-including those upstream and downstream of any
extraction location once determined.
4.2 Waste Management:
The development of the city will result in the creation
of large amounts of construction, commercial and
household waste, if this is not disposed of appropriately
then it could result in a moderate/large negative impact
on the environment in the form of air, ground and water
pollution.
The Konza Technology City should include the provision
of waste transfer, sorting and recycling centers and
measures for the promotion and education of workers
and residents in the means of reuse, reduction and
recycling of waste. Alternative means of waste disposal
other than conventional landfill should also be explored.
4.3 Impact on Protected Migratory Species:
The current proposed development covers a land area
of 2,000 hectares providing a loss of habitat and grazing
area and the displacement and disturbance of wildlife
currently located on site. Migratory herbivores such as
the wildebeest, zebra and antelope were identified on
site during a site visit in July 2010. The development will
result in the loss of usable grazing area for the migratory
mammals from the Athi Kapati migratory corridor to the
west. The initial project included a 2 km buffer zone and
a set of measures designed so that while the choice
was of development over biodiversity conservation,
the potential negative impact was minimized. Should
the revised Masterplan be taken forward a new EIA
assessing the impacts of the additional land area on
migratory species will be required.
4.4 Uncontrolled Influx Migration:
A large indirect negative impact of the city will be
the potential for informal unregulated development
attracted to the area and the rapid development of
slums. This would result in further land take, pollution,
resource consumption etc associated with urban sprawl.
This has the potential to have greater impact than the
development itself due to the unregulated nature of
growth, and lack of pollution control measures and
waste facilities. This growth is likely to take place within
the planned buffer zone, impeding the implementation of
mitigation measures and significantly altering the initial
baseline data.
4.5 Social Impact:
The project has potential significant long term positive
impacts in terms of providing direct job and training
opportunities as well as the stimulation of economic
activity in the surrounding area and the district as a
whole.
VIP SUMMARY ENVIRONMENT 21
KONZA TECHNOLOGY CITY
 5
PHASING

22
Phasing

Konza Technology City is designed to allow phased

development which will permit rapid growth while
ensuring that the civic amenities and infrastructure
grow with the population’s needs.

Phase 1 Phase 3

Phase 2 Phase 4

VIP SUMMARY PHASING 23

KONZA TECHNOLOGY CITY
 6
ECONOMIC ASSESSMENT

24
Economic Assessment
Market Demand

BPO ITO KPO CSO

Horizontals Most developed with local Emerging with software Activity in this space not Emerging with few
captive markets dominating development as key area significant if any and companies starting
– services include contact of focus targeting local and provide opportunity animation
centres and digitisation foreign investors
Verticals Banking Financial Service & Insurance
Telecommunications
Government developing a shared service platform, digitisation

Konza Technology City presents a promising opportunity
for Kenya to develop an alternative and complimentary
path for economic development in line with Vision 2030
by exploiting ITES and IT Products in the ICT Park1. Konza
also provides an opportunity as noted in the comparator
countries to transform the country into a knowledge
economy. Thus, this is a policy driven initiative as
a tool for job creation, national transformation to
launch the country to new frontiers. Government will
aim to structure the project so as to recoup as much
as possible of this initial investment funding in later
phases.
The key focus areas of opportunity within the ITES
are BPO, ITO, KPO and CSO as illustrated below.
A key strategy to realise this goal include;
• To sell demand and only then sell talent and other
infrastructure advantages. Availability of talent
and infrastructure provides a foundation but is
not sufficient to excite investors. There exists
unexploited local demand, which will provide
comfort to international actors.
• To sell Konza ICT Park as a product of the Eastern
African region for the world. This takes advantage
of the expanded East African Community market to
provide language variety e.g. French from Rwanda
and Burundi and the larger market access.
• ITES industry is people based and thus will drive
uptake at Konza by shifting people – Centre of
Excellence (COE) for Africa at Konza, affordable
housing in the Technology City for up to 20% of ICT
Park staff, mass transport system to Nairobi, low
cost of space, among others.

1
Note that the ICT Park is within the Konza Technology City. The ICT Park is
expected to be the focus of the first phase of development of the wider Konza
Technology City project together with some city amenities and residential
development that will support the ICT Park staff working during the day and
house a significant part of the ICT Park staff and their families over time that will
reside in the Technology City. Additional development of the city is expected to
take place as the ICT Park becomes established over time but such demand for
the wider city was not part of the ICT Park demand study.

VIP SUMMARY ECONOMIC ASSESSMENT 25

KONZA TECHNOLOGY CITY
With the strong government commitment as
demonstrated in the purchase of the 5,000-acre land for
the City, the project could help generate 15,000 ITES/
electronic manufacturing direct jobs (and 45,000 indirect
jobs) nationally in phase 1 by 2015. Konza itself would
host approximately 8,000 direct jobs by 2015. Revenue
generated arising from Konza ICT activities would be
US$ 244 million annually. In phase 2, the jobs created
nationally would rise to 39,000 direct jobs with half of
the direct jobs in Konza ICT Park. Konza ICT Park jobs
are expected to generate US$ 607 million annually. By
2032 the national market would generate 349,000 jobs
(approximately 1million indirect jobs). Konza ICT Park is
expected to host the bulk of the direct jobs while the
rest are in other private sector driven initiatives. Total
revenue generated at Konza ICT Park is projected at US$
5.4 billion by 2032. This market will initially be driven by
regional demand and therefore Kenya can exploit the
first mover advantage by positioning Konza ICT Park as
regional product for the world.
26 ECONOMIC ASSESSMENT VIP SUMMARY
KONZA TECHNOLOGY CITY
These figures are conservative compared with
comparator countries and sites of Cyberjaya (Malaysia),
Cyber City (Mauritius), Smart Village (Egypt) among
others and the projections are inspired by early trends
of mature markets of India and Philippines. Recurring
success factors in these comparator countries that
inspire the design of Konza Technology City are;
• A very focused and visionary government
commitment over the long term to give the private
sector comfort through a proof of concept in the
first phase of the project
• Progressive inclusion of private sector to increasing
take over some of risks
• Parks are increasingly generic in design and
implementation, thus the differentiator is the value
addition demonstrated through commitment and
a superior operating environment, strategic access
to other markets in the neighbourhood of eastern
African region, market insights, access to talent,
geopolitical stability macroeconomic stability
• A self-sustaining ecosystem within the City and
its neighbourhood comprising of Incubation,
Science Park, Research and Development, Centre
of Excellence and Universities
This is a long-term project and will be developed
through a sequenced approach with clear milestones
driven by a high-level champion to handhold and
transition the project into the future.
The government identified the need to establish Special
Economic Zones (SEZs) to cater for industrial activities
and requirements for agro-industrial, manufacturing,
Information and Communications Technology and Small
and Medium Enterprise (SME). The SEZ framework
will address key factors that enhance Kenya’s
competitiveness as an investment destination through
infrastructure provision, simplification of business
regulations, value chain integration and clustering,
expanded market access for SEZ goods and services,
and reduced taxation. SEZ will be a vehicle that may be
applied to enhance investment attractiveness at Konza
Technology City.
 7
LEGAL FRAMEWORK

27
Legal Framework
Hamilton Harrison & Mathews (HH&M), as the legal
transaction advisors to the project, carried out a legal
and regulatory framework review in order to identify the
legal implications of all legislation and other pertinent
laws on the project. The following were the key issues
identified by HH&M:
Institutional and Regulatoryc
7.1
Framework
The Government intends to set up the project under
a Special Economic Zones (SEZ) program, currently
being formulated by an inter-ministerial team. HH&M
reviewed the draft SEZ bill dated August 2009 and
identified various deficiencies. We understand that
these deficiencies are currently being addressed by
the inter-ministerial team but ultimately, the SEZ law
should provide an enabling institutional and regulatory
framework under which SEZs can operate. Key areas that
need to be adequately addressed include:
i. the establishment of an autonomous regulatory
authority with adequate powers and statutory
functions necessary to implement the objectives
of the SEZ law;
ii. a clear framework for the designation of SEZ land
and development of SEZs which allows for private
sector participation;
iii. a transparent licensing regime that not only
encompasses a “one-stop shop” but also provides
tools to ensure harmony between the SEZ authority
and other regulators (such as CCK and KRA); and
iv. a suitable incentive framework that is not only
attractive to investors but also ensures that the
objectives of the SEZ program are achieved.
7.2 Land Acquisition and Development
Pursuant to the provisions of the new Constitution, all
existing land laws will be revised, consolidated and
rationalized and this will significantly affect the manner
in which land in Kenya may be acquired, utilised and
disposed. For instance, under the new Constitution,
all public land (including land owned by the state or
state agencies) will be vested in the National Land
Commission. The Constitution further provides that
public land may only be used or disposed in terms of
an Act of Parliament specifying the nature and terms of
that disposal or use. It is therefore necessary that the
SEZ law grant express powers to the SEZ authority to
dispose land acquired by it for SEZ purposes in such
manner as it may deem necessary in order to achieve
the objectives of the SEZ law.
With regard to development of SEZ land, it will be
necessary to harmonize the physical planning laws and
the SEZ law to ensure that the objectives of the SEZ
policy are taken into account in developing regional and
local development plans and in granting development
approvals. It will also be important to harmonize the
roles of the different regulators involved in this process
(such as the local authorities, the physical planning
department and the Commissioner of Lands).

28 LEGAL FRAMEWORK VIP SUMMARY

KONZA TECHNOLOGY CITY
7.3 Project Development
The Government intends to develop the project under
the PPP Framework. The existing PPP framework sets
out an elaborate procedure for the approval of PPP
arrangements (including approval by cabinet) and these
have significant time and cost implications which will
need to be taken into account in planning the project
schedule. In addition, the relevant decision makers will
need to be satisfied that the project meets the overall
objectives of the PPP framework before approving the
proposed PPP arrangements.
Regarding ownership of the project, it is possible for the
Government to transfer the land and the development of
the project to a separate entity e.g. a state corporation
incorporated under the State Corporations Act and the
Companies Act or a development authority incorporated
by statute. This entity can then, as a separate legal
entity, perform the role of developer or appoint a master
developer, and in the future, be able to act as the
‘landlord’ to charge levies and maintain standards of
construction and maintenance of the developments.
The advantages of this are that a State Corporation can
be set up fairly quickly; the project can be run by an
autonomous body (although this will still be subject to
PPP law, procurement law etc.); the autonomous body
can have private participation in the future (by way
of shareholders, independent directors etc); and this
body can be financially independent from Government
(save for the shareholding or ownership of the body
by Government). Further consultations and advice
needs to be taken if this option is to be considered by
Government
7.4 Incentive Framework
The SEZ bill proposes various procedural and fiscal
incentives. Some of these, particularly the fiscal
incentives will need to be incorporated into the existing
tax legislation in order to bring them into effect.
More importantly, it is important to bear in mind the
provisions of the multilateral treaties that Kenya has
ratified, as these cannot be easily amended.
The other issue to bear in mind is that under the
new Constitution, county governments may be able
to impose additional taxation over and above that
imposed by the national government. In this regard,
the national government will need to educate county
governments on the general objectives of SEZ program
in order to ensure that the taxation policies established
at county level do not defeat the objectives of the SEZ
program. That said, it could be argued that the SEZ
program is a matter of national importance and to
that extent any laws passed at county level that are
inconsistent with the SEZ law will be superseded by the
SEZ law.
7.5 Other Relevant Issues
7.5.1 The East African Common Market
The East African Common Market Protocol, which came
into force on 1st July 2010, provides for free movement
of people, goods, services and labour within the East
African Community (“EAC”). It is not clear how SEZs will
be treated once the Common Market Protocol comes
into force. There will be need for amendments to the
Customs Union Protocol to make suitable provisions
relating to SEZs including import duties and market
access conditions and perhaps this is something that
the Government should begin engaging other EAC
member states in.
7.5.2 Data Protection
Kenya has no specific data protection legislation. The
absence of data protection legislation is something that
may discourage investment in the project and we would
recommend that suitable data protection legislation be
enacted in order to give investors confidence that the
privacy of their communications and transactions will be
adequately safeguarded.
VIP SUMMARY LEGAL FRAMEWORK 29
KONZA TECHNOLOGY CITY
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