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Kigali's $2 Billion Innovation City Construction Scheduled to Begin in September 2024

The $300 million construction of Kigali Innovation City (KIC) will start in September, following agreements signed between the Government of Rwanda and investors at the African Development Bank Group Meetings in Nairobi. Africa50, granted exclusive rights, will co-sponsor the project, investing $400 million, focusing on real estate. KIC, costing $2 billion in total, will span 61 hectares in Kigali's Special Economic Zone, featuring universities, incubators, housing, and retail spaces. Expected impacts include creating 50,000 jobs, $150 million in annual ICT exports, and attracting $300 million in foreign direct investment. Key partners include BADEA, Norrsken East Africa, and Rwanda Innovation Fund.



The $300 million Kigali Innovation City's ("KIC") construction works are expected to commence in September following the signing of implementation agreements between the government of Rwanda and investors on Friday. The agreements were signed on the sidelines of the African Development Bank Group Meetings this week in Nairobi between the Rwanda Developer Board and Africa50, a pan-African investment platform focused on infrastructure development. Exclusive rights were given to Africa50 to develop, operate and commercialize the mega-development.


The total project is anticipated to cost approximately $2 billion.



Kigali Innovation City Project


Kigali Innovation City is an ambitious project to create a new tech-focused city on a 61-hectare (i.e., 150,734 acres) plot owned by the government of Rwanda located within Kigali's Special Economic Zone. By being in the Economic Zone the city gains access to already in place high-quality infrastructure and various tax incentives such as reduced corporate taxation and exemption from import duties.


The master plan includes the construction of various types of buildings including several Universities, including branches of Carnegie Mellon University, African Institute for Mathematical Sciences, and African Leadership University. Incubators are envisaged to be included as well as apartments and student housing, supportive retail, business hotels, and green spaces.



The KIC project is expected to have a significant socio-economic impact, including the creation of over 50,000 jobs, generating $150 million in ICT exports annually, and attracting over $300 million in foreign direct investment.


 

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Investors and Partners


Government of Rwanda


The development project has attracted a number of financing partners, not the least of which is the Rwandan government which provided the underlying land and funding of essential infrastructure such as roads, electricity, water systems, and drainage infrastructure. The infrastructure works commenced in 2022.


Africa50


Africa50 is co-sponsoring, on a 50/50 basis, the Kigali Innovation City (KIC) project with the Government of Rwanda. It will invest $400 million, focusing primarily on the real estate segment of the project. This includes the construction of retail and commercial complexes, which are estimated to cost $315 million.


Africa50 was established in 2015 by the African Development Bank and 20 other African countries, with an initial capital subscription of $700 million. The investment platform's mandate is to bridge the infrastructure financing gap in Africa. In December 2023, Africa50 achieved the first close of its Infrastructure Acceleration Fund ("IAF"), securing $222.5 million in commitments from 16 African institutional investors, including sovereign wealth funds, pension funds, social security funds, insurance companies, banks, and development finance institutions ("DFI"s).

Arab Bank for Economic Development in Africa ("BADEA")


On December 24, 2021, BADEA signed a financing agreement worth $20 million with Rwanda to support the development of basic infrastructure at KIC.


Other Funders and Partners


Norrsken East Africa, part of the Norrsken Foundation, has been instrumental in raising venture capital for startups within KIC. Additionally, the Rwanda Innovation Fund, a $100 million venture capital fund managed by Angaza Capital, will support startups in the KIC.


The usual mix of DFIs will participate in one way or the other including institutions such as the International Finance Corporation ("IFC") and the African Development Bank ("AfDB") which are involved in providing financial and strategic support for KIC. These institutions help attract further private sector investment.


Various private sector entities, including sovereign wealth funds and pension funds, are being courted to provide additional capital. Rwanda’s sovereign wealth fund, the Agaciro Development Fund, which accumulated $200 million by the end of 2018, is a key potential source of funding.

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