Category Archives: Kenya ICT

Konza and Smart Cities in Kenya

This week saw a webinar on August 3 hosted by the Konza Technopolis Development Authority on the planning and growth of smart cities.

It featured governments speakers and urban planners led by Jerome Ochieng, the PS for ICT and Innovation and Dr Chris Kiptoo PS, Ministry of Environment and Forestry, along with Eng. John Tanui, the CEO of Konza, Dr Shipra Suri of UN-Habitat, Juliet Rita of the Architectural Association of Kenya and Karen Basiye, Head of Sustainable Business at Safaricom.

Others were John Kabuye of the Kenya Green Building Society, John Mutambo of the Nairobi Metropolitan Service (NMS), Ambassador Njambi Kinyungu from the Ministry of Foreign Affairs, Demola Olajide of UNFPA and Annah Musyimi of Konza – and was moderated by Constant Cap.

Excerpts on the different themes . .

Sustainable Urban Development and Environmental Conservation:

  • Nairobi has had rapid population growth and rapid urbanization – this has led to waste from mushrooming informal settlements mushrooming being discharged into rivers, dysfunctional sewers, industrial waste flowing into rivers with no treatment, overflowing manholes etc. – PS Kiptoo
  • The ecological footprint of cities extends way beyond their administrative boundaries – taking in resources and giving back waste. This has to change and things like urban agriculture are important to foods security and bringing down heat levels – Shipra
  • As part of Safaricom’s plan to be a net-zero company, they committed to plant 5 million. They joined with KFS where in planting trees at South Marmanent where they have empowered communities to do more planting. To date, they have planted half a million and will extend to tree projects to Kieni, Busia, the Mau and Mombasa – Karen
  • Urban settlements must factor in issues of the environment – John Tanui
  • Konza has been designed using a “stitch & band approach” and its developments parallel to Mombasa road have green (forest and wildlife) corridors- Annah
  • NMS identified 153 discharge points and shut them down. Also of 110 illegal dumping areas, 87 have been cleared – John
  • We comingle waste, but when we separate it, we get value – Kabuye

Designing Infrastructure for Sustainable Outcomes:

  • Konza is being developed using smart city principles; each plot has its use (commercial, education, industrial, wildlife conversation), and it is being developed in phases so it grows as its population increases to eventually reach 200,000 people – PS Ochieng.
  • This is the best time now to talk about sustainable cities. The degradation of nature and land-use changes are increasing the risk of pandemics; we are paying the price of unsustainable consumption of natural resources – PS Kiptoo
  • At UN-Habitat we aim to learn from global principles and norms for Kenya to emulate – Njambi
  • Business and residential associations don’t have anyone who looks at sustainability. That has to change – John
  • If a city does not produce better outcomes, we can’t call it smart – Constant Cap
  • UN-Habitat believes people should be the focus of smart cities programs. The goal is not to go high-tech, but “smart” means you are responsive to people, think ahead and take everybody along – Shipra
  • Konza meets the needs of the current generation without compromising the needs of future generations – PS Ochieng
  • We need urban spaces that are responsive to achieve urban dimensions of the SDG’s – Njambi

Smart Solutions for Urban Planning:

  • On Internet of Things (IoT), Safaricom has done smart-metering of aerial water meters with SHOFCO in Kibera (residents buy water with their phones). They are working on IoT for the PSV sector and with UNEP, are monitoring air pollution levels in Nairobi – Karen
  • Konza has been running innovation challenges on COVID and has received 516 submissions from all the 47 counties – Annah
  • Plans are not implemented because many are only prepared as a legal requirement; they are not people-oriented to give solutions. They also require changes in land use and policy, but the country’s system of land ownership makes it hard to have changes – Juliet
  • In the developed world, unless children go back to school, parents can’t go back to work. But Africa has other caregivers in the home – Demola
  • During COVID, people have locked up in spaces that were supposed to be their homes, and this had resulted in social problems – Demola
  • COVID has been the biggest advertisement of the need for well-planned and well-managed urban spaces – Shipra
  • Riparian encroachment by buildings, garages, car washes and eateries come about from not planning well – PS Kiptoo

Urban Planning in Smart Cities Management:

  • Digital streaming and collecting data using IoT will enable Konza to make real-time decisions on transport management, smart environment monitoring, smart metering water & energy – PS Ochieng
  • You can’t manage what you can’t measure. The Kenya Green Building Society has come up with a tool measure performance of buildings, neighbourhoods, and cities in terms of energy, water, waste, human experience and transportation. They have also donated sensors to Mbagathi and KEMRI to measure Co2 emissions and carbon monoxide – Kabuye
  • Planning is still very relevant. We have seen what COVID has done to cities as it is an urban-centric disease – Njambi

Conclusion: The mistakes of Nairobi’s sprawl are not unique, as Sub-Saharan African cities are the fastest-growing urban areas. It is envisaged that the smart planning and design at Konza and the use of IoT to manage the community and environment will make it a sustainable place for a population of 200,000 people. It will accommodate 30,000 residents, 17,000 who are anticipated to work in the complex.

The webinar ended with a call by PS Kiptoo have Konza set the pace for all other cities in the country to “go smart” while PS Ochieng asked more Kenyans to visit Konza to see the ongoing developments and to add to the 10,000 seedlings that will be planted every year there for the Technopolis and community.

Konza, Urban Planning and Smart Cities

Nairobi is home to over 4 million people jostling to earn a living in the hub of Kenya and the Eastern Africa region. It takes many aspects to plan, manage, develop, run and conserve a city like Nairobi sustainably, but the Covid-19 Pandemic has evolved to be an urban crisis, forcing city managers and investors to reconsider their plans and roles.

Covid has also made some people reconsider what urban spaces mean to them, their families and their careers. On one webinar in May 2020, a partner at McKinsey said that Covid has brought “work from home” forward by ten years, and many residents are making decisions whether living in cities is the best use of their time and economic resources. Is it time to leave Nairobi?

The Konza Technopolis Development Authority plans a city that the traverses three counties of Machakos, Kajiado and Makueni, with a 10 kilometer buffer-zone around it that encompasses 68,000 acres.  Today’s newspaper also mentions the plan by the Nairobi Metropolitan Services to rehabilitate and run a 75-kilometre railway line between Konza and Nairobi as one of the routes in their commuter rehabilitation project that will also improve access to the Konza Technopolis.

As Kenya needs even more planned cities, join a webinar with managers and experts on the future of smart cities, and the economic use of resources. Through this webinar, Konza aims to bring together key stakeholders in the urban management, design, planning, the environment, and policy to discuss these post-Covid issues. RSVP here.  

Antler Nairobi Demo Day

VC funder and startup accelerator Antler Global held a demonstration day yesterday in Nairobi where founders of four companies got to explain their practical solutions to existing challenges in the sectors of health, fintech, advertising and e-commerce.

The Singapore-founded Antler has offices in London, New York, Amsterdam and now Nairobi, among others. Antler aims to turn exceptional individuals into great company founders through networks of advisors and by providing funding to enable the building of strong teams to launch and scale ideas. They currently have a portfolio of 120 investee companies.

The four new ones in Nairobi are among fifteen companies that have received pre-seed funding of $100,000 from the Antler East Africa Fund. They are drawn from 1,250 individuals who applied to join the Nairobi program which started in August 2019. The Demo day talks were by:

  • AIfluence: an Artificial Intelligence-based platform that connects influencers with brands and measures the impact and ROI of their campaigns. The company has lined up additional funding and advertising deals with Tik Tok.
  • Anyi Health: Enable patients to apply for credit right at hospitals.
  • ChapChapGo: Aims to fix the broken supply chain of fast-moving consumer goods, in which 70% of trades are still informal – with these purchases happening in a 19thcentury system where people queue to buy, queue to pay and arrange their own delivery. The company aims to leverage on wholesalers through an app, and by using WhatsApp for customer service and sales, to deliver goods at prices that are up to 25% cheaper for consumers.
  • Digiduka: Enables kiosks and shops receiving cash from low-income buyers to also process digital payment on. Many kiosk merchants find mobile money payments too costly and make many trips a week to purchase goods and permits in cash. The company aims to have kiosks double their income by offering digital services that will see them earn 75% of the commission, with Digiduka keeping the 25%. The founders say that pilot has been viable, with a payback period for kiosk owners of one month.

UNCTAD report shows an unequal digital global economy

The increased use of digital platforms in everyday lives across the world is leading to a divide between under-connected nations from hyper-digitalized societies

The Digital Economy Report released by the United Nations Conference on Trade and Development (UNCTAD) shows that China and the USA have done the most to harvest the digital economy and now dominate the rest of the world and leading to an unequal state of e-commerce. The two countries host seven global “super-platform” companies – Microsoft, Apple, Amazon, Google, Facebook, Tencent and Alibaba that account for two-thirds of the total market value of the seventy largest digital platforms with Naspers as the only African company in the group.

Google and Facebook collected 65% of the $135 billion spent on internet advertising in 2017, while, in Australia, Google took 95% of the “search advertising” revenue while Facebook took 46% of the “display advertising” revenue.

Europe’s share of the digital economy is only 4% while Africa and Latin America combine for 1%.  In Africa, progress has also been uneven with four countries – Egypt, Kenya, Nigeria and South Africa accounting for 60% of digital entrepreneurship activity. They are followed by a second tier of Ghana, Morocco, Senegal, Tanzania, Tunisia and Uganda (with a combined 20%)

The Report showed that the evolving digital economy has a major impact on achieving sustainable development goals (SDG’s) and calls for governments in developing nations to focus efforts on things like:

  • Skills development & re-education e.g. consider that in the Western world, you can do a whole university degree online.
  • Revising policies on data privacy & sharing e.g. have restricted local data sharing pools and have tariffs on cross-border data.
  • Revising competition regulations e.g. curb the tendency where platform companies tend to capture/acquire young promising companies in the developing world.
  • Taxation e.g. developing country governments should seek to tax digital platform companies.
  • Employment e.g. by setting minimum wages & work conditions for gig-economy workers.
  • Break down silos: no longer think of government as being separate from academia, private sector, civil society and tech communities.
  • Also, while the US and Europe have divergent views on data protection, it cites a survey which found that Kenyans had the least concerns about data privacy (at 44%).

Speaking at an unveiling of the Report in Nairobi, Dr. Monica Kerretts-Makau said that the world is trending towards a captive society where you have to be on a platform to transact in an economy and that presents problems and opportunities in the African context.

The 2019 issue of the Report, that was previously focused on the “information economy”, can be downloaded here.

EDIT June 2020: The Kenya Revenue Authority announced the introduction of Value-Added Tax (VAT) on digital marketplace suppliers in the Finance Act 2019. Member of the public can send their views on the draft proposal  by June 15 to stakeholder.engagement@kra.go.ke.

Airtel Africa – London prospectus peek

By the end of the week Airtel Africa will have a dual listing at the London Stock Exchange with a secondary one in Lagos after raising $750 million, by offering new shares to investors at 80 pence per share in June 2019, and valuing the company at £3.1 billion (~$3.9 billion).

The goal of the listing was to reduce the debt of the company further after it had earlier raised $1.25 billion from six global investors including Softbank, Warburg Pincus and Temasek in October 2018.

A peek at the 380-page prospectus and other listing documents:

About Airtel Africa: As at 31 December 2018, the Group was the second largest mobile operator in Africa, by the number of active subscribers(according to Ovum); they had 99 million mobile voice customer and 30 million mobile data one and 14.2 million mobile money customers.

Performance: For the financial year 2019 they had $3.01 billion revenue with 1.1 billion from Eastern Africa, $1.1 billion from Nigeria and $900 million from the rest of Africa. Of the total revenue, $2.9 billion was from mobile services with $167m from mobile money. Eastern Africa is Kenya, Uganda, Rwanda, Tanzania, Malawi and Zambia, and the rest of Africa comprises operations in Niger, Gabon, Chad, Congo, DRC, Madagascar and Seychelles. The company had a pre-tax profit of $272 million compared to a loss before tax of $9 million in 2018.

Managers & Employees: The Company has ten non-executive directors (including the Chairman). Also, Raghunath Mandava and Jaideep Paul will serve as chief executive officer and chief financial officer of the Group from their operational head office for Africa based in Nairobi. They will be enrolled in a company long-term incentive (share option) plan along with other executives of the Group.

Shareholders: Prior to the listing, top shareholders were AAML – a subsidiary of Bharti Airtel (68.31%), Warburg Pincus (7.65%) Singapore Telecom (Singtel 5.46%), ICIL – a Bharti Mittal family group (5.46%),  Hero (owned by Sunil Kant Munjal – 4.37%) and the Qatar Investment Authority (QIA) with 4.37%.

After the listing, in which the company will have sold between 14% and 18.9%%, the top shareholders will be AAML (56.12%), Warburg Pincus (6.28%) Singtel (4.49%), ICIL (4.49%),  Hero (3.59%) and QIA with 3.59%).  Also, subject to completion of a merger deal in Kenya, Telkom Kenya may acquire up to 4.99% if they exercise a flip-up right.

Other: 

  • Results for the (London) global and Nigeria uptake were announced on 28 June, and share accounts of new investors will be credited from July 3 and listed in London that day, and in Nigeria on July 4. 
  • Like other telco’s in Africa, 96% of their customers are prepaid. ARPU was $2.72 per user in 2019, down from $3 in 2018 and $3.24 in 2017.
  • Airtel has two distinct strategies; where they are market leaders (e.g in Chad), they price closely to market rates and where they are seeking market leadership (e.g in Kenya), they prioritize affordability.
  • Other Financing: In May 2019, the Company arranged for a “New Airtel Africa Facility” bank facility with Standard Chartered.
  • Other Deals: Ongoing settlement discussions in Tanzania, one over a tax claim, will see all cases withdrawn and boost the Government’s shareholding to 49% at no cost. In Kenya, they are merging with Telkom Kenya and in Rwanda, they are acquiring Tigo.
  • Listing Fees: The company will pay the fees and expenses for the listing totalling $35 million for the UK admission – and these include FCA fees, bank’ commissions, professional fees, costs of printing and distribution of documents.  The joint global co-ordinators and joint bookrunners were  J.P. Morgan Cazenove and Citigroup, joint bookrunners were Absa, Barclays, BNP Paribas, Goldman Sachs, HSBC, Standard Bank, the Nigerian joint issuing houses were Barclays Securities Nigeria and  Quantum Zenith Capital, while the public relations advisor was Kekst CNC.

About Airtel in Kenya:

  • Airtel is the second-largest telco in Kenya with 13.1 million subscribers and market share of 28%.
  • Telkom Kenya is expected to acquire a shareholding of 32% in Airtel Kenya in an ongoing business transfer deal. 
  • The company is working with Kenya’s Central Bank to reverse a negative (Kshs -2.7 billion) capital position as a requirement to be part of the national payment system. They expected to lose another Kshs 1.2 billion this year.
  • Airtel has proposed to separate the mobile money business from the telecommunication one and fund the new one with shareholder loans. They had committed to recapitalize the company by Kshs 3.85 billion ($38 million) by August 2019.