Funding hitch delays business park plan in Kenya

Business Process Outsourcing firms will not be housed at Sameer Business Park in Nairobi soon because the government did not allocate money for it, it has emerged.

Information permanent secretary Bitange Ndemo said the funds delay would hurt the IT sector’s long-term strategy anchored on the ability of BPOs to create jobs.

“We did not get any allocations for this project, though we are still talking to the relevant authority,” Dr Ndemo told the firms which have been looking forward to reducing their overheads such as rent.

The Information ministry has been negotiating with the Treasury to allocate it Sh1 billion, part of which was to be used to lease land at Sameer Park to house old and incoming BPOs in preparation for the expansive Malili Technology Park that is further out of the city.

Sameer was expected to bring the operators under one roof and enable them to handle big contracts that require large capacity which they cannot currently attract or handle in their small operations.

Kenya has around 50 registered members but 90 per cent of these have capacity of between 15 to 20 seats, which experts say cannot attract big contacts or make the businesses break even.

To attract big business, a BPO or call centre needs between 250 and 300 capacity that can employ 900 workers.

This also means that the government may not be able to create the 15,000 jobs it had promised by 2012 through BPOs.

The sector has also been facing other problems such marketing themselves globally, failure by financial institutions to offer them start- up loans and high cost of internet connectivity.

Despite the country being connected to two undersea fibre cables— Seacom and Teams— and being connected to the third cable Eassy, today, the costs of internet is yet to come down at rates that can make Kenya BPOs as competitive as those in India or Philippine which they intend to compete with.

As the providers still have to pay for satellite connection for redundancy purposes.

The cost of one megabyte on undersea cables in Kenya is $400 while in India it goes for $200.

“This will affect our long term strategy as the park was to act as a cluster while we work on the bigger project at Malili which will house more players,” said Dr Ndemo.

He said most of the big outsourcing companies had expressed interest in the technology park, provided the government availed free office space, training and marketing funds .

Raychelle Injente, the chairperson of the Kenya BPO and contact centre society says some operators had already factored the government project into their plans and will be affected by the move which may also hit the marketing of their operations outside the country.

Source: www.businessdailyafrica.com