The Africa Tech Parks & Cities Arms Race- Is it worth it?
One of the most debated topics in IT innovation industrial policy is the place of tech parks and cities catalysed by African Government’s role in helping lay down important infrastructure.
Kenya’s Konza Tech city is slated to cost $7B. Tanzania’s Rhapta’s city is meant to cost maybe $1B or so. I even got wind of an Angola mega city project slated to cost $10B that includes a tech park. Rwanda and Uganda are also planning tech parks or cities of their own if they have not begun pushing so.
Each tech city or park has different ambition levels. The main objective in these projects tends to fall on the belief that foreign companies will set up their regional headquarters and create jobs as well as the idea that lots of local medium sized ICT firms and business process outsourcing centers will emerge and move in. The model is to emulate the parks that have gone up in Bangalore, India.
Tech parks and cities also can be financed and paid back from the real estate development model and often take a stake from any emerging tech companies (this happened with Plug and Play center in Silicon Valley). They are “safe investments” for the expensive grand projects they are.
What I have problem with is the belief by Government officials that these cities will create armies of entrepreneurs and innovation based on this infrastructure… Did Mark Zuckerberg or Larry Page need a gleaming tech city to create Google or Facebook? Or was it a coincidence that these founders originated from world class universities Stanford and Harvard? Similarly, what is the role of the IIT in India in their tech industry?
To be clear, Tech parks and cities do have their benefits- for one, the economic zones and incentives created should draw some companies to set up there vs the growing overcrowded and traffic jammed cities. The infrastructure itself can help isolate many problems that plague firms in normal city areas- this includes reliable internet and electrical power as well as good transportation links. Local Data center investments to enable cloud computing will clearly benefits everyone and start to take advantage of all that unused bandwidth capacity emerging in Africa.
Infrastructure is important. China’s investments here and even across Africa for instance are essential to both itself and to aid countries they are aiding for growth- not to mention these projects create jobs just to set up in the short term. It’s very similar to winning the bid for the Olympics or World Cup- when executed correctly, the expansion to the economy can be substantial and long lasting to the region.
Tech parks tend to be lead by Governments whose political objectives often trump any real sense of how to really enable innovation and entrepreneurship- which is a lot of cultural, incentives and education. They often ignore economics and the laws of supply and demand. How many regional offices can Microsoft and Google create in East Africa when each city is trying to build its own billion dollar tech park? An outsourcing center still builds a dependency on western market economies, and what happens when another region gains cost advantages just as people are now moving away from India? Or the big companies want to move these functions back onto their own shores or even just invest in their own corporate offices?
Take Dubai- they created a gleaming city from the desert with its vast oil wealth and created an internet city which did attract companies such as Microsoft, Oracle, Cisco to its city. These tech companies mainly created sales and customer services offices for the EMEA region- there was very little R&D and hence innovation. But how many entrepreneurs and ground breaking innovations resulted? How can you expect innovation from Dubai when failure and risk taking in business is treated so negatively? Meanwhile, their neighbor, Israel, even with their conflict problems is able to attract direct investment from tech companies like Intel and the country far punches above its weight in innovation in the tech sector. It is really, a Startup Nation. More Israeli tech companies are on the NASDAQ exchange than all of the companies in Europe combined, and the country has access to more Venture Capital per capita than any other nation on earth. What makes them different? The answer is simple- trained and risk taking human resources.
One saying I have heard from my colleague who has advised many Governments around the world on tech entrepreneurial policy including Brazil is “If you are planning to build world class football team- do you first build a 100,000 seat stadium or work to recruit coaches, find and nurture talent or even continue to stimulate the pride of football in the country?”
There are clearly advocates such as myself of a more bottom up grassroots approach that appeals to the entrepreneur and hacker grounds where universities ARE the infrastructure, vs the corporate mindset of “gleaming campuses” are the infrastructure. Difference is, the former is harder to achieve but has more long lasting results on creating homegrown tech firms.
Another aspect of tech parks and cities is the tendency to try “create a whole ecosystem” from scratch including world class universities and residential areas for the human resources. An all inclusive city makes a lot of sense, especially the university inclusion for reasons I just mentioned- but then the bigger the scope the more likely governments underestimate how much effort and time this really requires- not to mention execution.
Take for example of the University of Dodoma in Tanzania. Apparently on paper, it is the biggest university in East Africa and it costs billions and largely self financed via domestic cash rich pension funds. However when I visited it to try find the head of the computer science department to find out what the plans were for academic teaching I learnt that University students and staff were on strike over student loans and the professors also absent meant that the department had shut down– and there was this gleaming building standing by empty.
The same can be applied to innovation and entreprenuership- creating a fancy building or city does not foster entreprenuership- history has shown this. Assuming the parks are built (I would argue that maybe Angola could feasibly build one quickest based on their oil wealth) we may find that many become ghost towns in the short term if no talent develops to fill them.
I am not saying tech parks are useless in Africa- as I mention above, they do have a place and fill critical infrastructure needs, but to depend on them for more then they can actually deliver such as a source of innovation and entrepreneurship is deeply flawed. More of this money and effort would go further to encourage entrepreneurship, attract venture capital firms via policies and last but certainly not least, invest in an educated workforce- the dividends will pay off in time not overnight as many Asian economies have shown.
Singapore and Chile stand out in countries that seem to be making excellent strides and are thinking outside the box, they use human resource incentives over gleaming cities to lure talent which in turn helps infuse a Silicon Valley like culture.