Akon City is a $6 billion planned construction project in Senegal, to build a futuristic green city. The proposed city will trade solely with a cryptocurrency called Akoin. The city will be built on a 2000 acres piece of land located near Senegal’s coastline, about 62 miles south of Dakar and 35 miles from Dakar's new $575 million international airport. It is being hailed as the Wakanda of Senegal in reference to the fictional futuristic city in the Black Panther movie. The city will feature luxury condos, a beachfront resort, office parks, a university and a hospital. The first phase of Akon City is expected to be completed by the end of 2023, this will include the construction of roads, a Hamptons Hospital campus, Hamptons Mall, a police station, a waste facility, a school, and a power plant. Phase 2 of Akon City will end in 2029 and will focus on integrating businesses to run on Akon’s Akoin cryptocurrency. Looking at the designs of Akon City's, one would definitely draw the conclusion that it is aesthetically pleasing to the eye.
That said, we are not here to gloss over Akon's vivid imagination, we are here to review this project from an objective and expert point of view. More importantly, we want to understand the benefits and risks associated with it and how this could impact Senegal and Africa as a whole.
It is public knowledge that the budget for this project is $6 million, but where is this money coming from? Akon is told the Washington Post that he has raised $4 billion out of the $6 billion investment required. He is also quoted say "he could not name other business partners, who signed nondisclosure agreements.".
Our research identified multiple sources, which included CNN, Reuters, Businessinsider.com and Africanintelligence.com, all confirming Kenyan Businessman Julius Mwale as the sole investor to date. Mwale's spokeman and Jon Karas, the President of Akoin Cryptocurrency both confirmed to Business Insider that Mwale was responsible for funding the bulk of the $4 million currently raised by Akon.
On the 4th of June 2020, Akon announced through a press release that KE International had been awarded the $6 Billion construction contract for Akon City. In a further twist, the same press release highlighted that KE International also helped secure the initial $4 billion investment for Akon city from "leaders in the healthcare and technology infrastructure industries," including Julius Mwale, the Kenyan technology entrepreneur behind MMTC.
So who is Julius Mwale and what do we know about the construction company KE International?
The Kenyan businessman Julius Mwale
Julius Mwale is a former Kenya Air Force soldier who fled Kenya in 2000 unclear and sought asylum in the US, according to Capital FM Kenya. In an interview with Mwale, he told Capital FM that he was forced to flee the country after a disagreement with government authorities over the technology research he worked on in the military.
Since moving to New York, Mwale founded SBA Technologies, a company that provides a secure platforms for mobile banking and commerce. He has taken up the role of lead investor in a number of projects such as the $2 billion Mwale Medical and Technology City, the $6 billion Akon City project and the Fintech startup Akoin Currency.
Should we be concerned that Julius Mwale is the lead and possibly only investor backing the Akon City project?
Absolutely yes, i wouldn't jump to such a conclusion without reason. According to public records in the New york alone, Julius was sued for an alleged fraudulent loan, for failing to pay rent and for failing to repay a loan. On two of these occasions the New York court order him to pay the plaintiffs large sums of money. In the other case he agreed to settle with interest. You can find details of these cases below:
In March 2012, a New York court ordered Mwale and SBA Technologies — alongside another defendant, Fiona Graham — to pay more than $325,000 to two women who sued Mwale and Graham for what they alleged was a fraudulent loan.
My key concern is if Mwale was innocent then why have all the court judgements and settlements listed above, gone against him? How credit worthy is this investor? Is the $4 billion his money or did he borrow it to invest in Akon City? If i was a shareholder or end user of Akon City, these are the questions i would ask.
Let assume for a moment that Mwale took a loan for invest into Akon City. If he were to default on this loan like he has done in the past, Akon City could be put into administration and its assets liquidated to pay off creditors.
In any case, no sensible creditor would loan a man who has a history of defaulting on loans and missing rent payment, $4 billion. So where did Julius Mwale get this money from to invest and what is the consequence for Akon City if he defaults on this assumed loan?
The construction company KE International
Its not like Akon put out a tender and chose KE International from a 100 other contractors. As previously stated, KE International was key to securing the $4 billion investment from Julius Mwale and Akon announced he had awarded the $6 billion project to them. There is a lack of transperency on the funding and construction agreement for the Akon City project. We can only assume and i say assume, that in return for KE International securing $4 billion from Julius Mwale, Akon agreed to award them the design and build contract.
So what do we know about KE International to judge if they have the capability to build Akon City?
The short answer is alot. If you go to their website and About page, it is like a nightmare you don't want to wake up from because you have some many questions. On their About page, they boost of having an $8 billion portfolio of work. People would probably look at that figure and say, wow. The reality of it is that out of that $8 billion portfolio they brag about, they fail to mention that $6 billion comes from the Akon City project, which hasn't started construction yet. The remaining $2 billion is for completing the Mwale Medical and Technology City project.
To cut the long story short, prior to KE International being awarded the Akon City design and build project, this company has only ever completed one other construction project, which was the Mwale Medical and Technology City project.
So what in heaven's name made Akon think that awarding a ground breaking futuristic project to an inexperience company with only one delivered project under their belt was wise? I guess someone has to ask Akon for me.
The story about KE International gets more interesting when you look at the people running this company. Well we didn't have to search far or wide for this information because it is all on the About page of their website. To save me time i have added a screenshot of KE International's Management Board. I want you to focus on their job titles and qualifications stated under their photos. Special focus should be put on Director of Akon City project, Paul Martin. Now tell me what you observed before you see my response below the screenshot.
At this point it might be clear or not but i will get to it now. All six board of directors are extremely qualified with their expertise ranging from Electrical engineering, to IT, to Information systems and Business administration. These are not easy qualification to get and it is further evidence of their competence and capability. I should know as i am a Chartered Engineer with a Bachelors degree in Civil Engineering, MSc in Structural Engineering, Diploma in Business Management, numerous Project management and Asset management qualification, lastly i am about to complete my MBA. I know it seems i am bragging but i think it is key you understand my education and knowledge base for what comes next.
Akon City is a massive project that will require detailed Architectural designs, Structural designs, environmental impact assessments, electrical and mechanical designs etc. Out of the six board of directors in KE International, not a single one of them has any qualification in Civil engineering, Structural engineering or Architecture. These three fields will probably take up 70 to 80% of the Akon City project, while other fields like Mechanical, Electrical and IT engineering would take up between 15 to 20% of project work. Yet not a single board of director in a company that is supposed to deliver $6 billion project has any relevant qualification in Civil engineering, Structural engineering or Architecture. If this project was put out for tender, there is no way KE International would have won it. Three key reasons for this are:
1. They don't have the experience - There are companies out there that have completed hundreds of projects similar in cost to Akon City. These guys have only completed one project and that project cannot be measured in the same calibre as the Akon City project. Just take alook at the photos of the Mwale Medical and Technology City project below. This is the only project in their portfolio they have completed. Tell me, do these structures look futuristic to you? They look like structures which could easily be built by an SME contractor not a $6 billion contractor.
2. They don't have the qualification - This is a key part of any big tendering process, you look at the team delivering the project and see what experience and qualifications they have. We have already shown they have never delivered a project in the calibre of Akon City. Now we are saying they don't have the necessary qualifications to deliver such a project. Like most projects, you can subcontract out to another company if you lack the skills in house to deliver a project or the resource requirement. In the press release where KE Internation were awarded this project, it was also stated that Dubai based Bakri & Associates Development Consultants would lead the architectural designs under KE International guidance. So it is clear they are going to subcontract most of the work out. Our concern is do they have the competence to guide their subcontractors? Everyone in Bakri & Associates Development Consultants would be more knowledgeable than every singe board of director in KE International when it comes to Architectural design. So what guidance or supervision can they provide on a subject matter they are not experts on.
3. There is a massive conflict of interest - It is clear they KE International most likely were awarded this project because they help secure the funding in the first place. That is a conflict of interest and quite frankly very unprofessional.
So we now know that there are issues with both the lead investor for the Akon City project and construction company awarded the project. Even with these factors, that doesn't mean that if the project is delivered is won't provide benefits to Senegal and Africa as a whole. We are now going to look at the benefits of the Akon City project and conclude with the risks our readers should watch out for in regards to this projects.
The Akoin Cryptocurrency
I am not going to dwell on this area of Akon City because i am not blockchain or cryptocurrency expert. I do however understand the concept of creating value or adding value to a product, service or commodity. Cryptocurrency is the future of digital currency. Since the launch of Bitcoin in 2009, cryptocurrency has sowed as a secured form of payment and value exchange. The cryptocurrency market was hit by one of the biggest scams in history when Ruja Ignatova, the CEO of Onecoin and self appointed Cryptoqueen defrauded the world of $4 billion. She told people she had invented a cryptocurrency to rival Bitcoin, and persuaded them to invest billions as shown in the BBC chart below.
This was a warning shot to the enthusiasts of cryptocurrency, that while blockchain technology makes it one of the most secured payment forms in the world, there are still people like Ruja Ignatova who will try and defraud investors. The success of Akoin cryptocurrency would be great for Africa and young African entrepreneurs. Our concern is with Akon's business motive behind this cryptocurrency and how it impacts Akon City. Its clear that the value of Akoin cryptocurrency is tied to the Akon City project and Mwale Medical and Technology City project. Both of which are coincidentally being built by KE international and both of which have been invested in by Julius Mwale.
Without the publicity and promise of Akon City, Akoin cryptocurrency won't have much value and would be like any other cryptocurrency. All we are saying is that investors should be cautious and do their homework. We don't need another OneCoin incident.
The benefits and risks associated with the Akon City project
To understand the benefits and risks associated with the Akon City project, one has to understand Senegal's economic state. We have put together the infographics below to summarise this.
Benefits of Akon City project to Senegal and Africa in a whole
1. Boost to Senegal's and Africa's tourism sector
If AKON City is successfully built, it will bring an influx of revenue into senegal's tourism sector. Tourism accounted for 10% of Senegal's GDP in 2019 and accounted for 7.1% of Africa's overall GDP to a tone of $168 billion as shown in the screenshot below.
2. Creation of employment in Senegal
Another benefit would be the creation of jobs in Senegal. Unemployment is currently 6.6% of Senegal's 18.84 million population. When compared to Nigeria's unemployment rate of 27.1% (of 200 million people), UK's unemployment rate of 4.8% (of 66.65 million people) and US unemployment rate of 6.7% (of 328 million people), one would be inclined to say that Senegal doesn't have an unemployment problem. This stats show otherwise, unemployment has been on an upward trend in Senegal since 2018 as shown in Statista's graph below.
Risks associated with Akon City project
1. Under utilisation of Senegal's natural resources
Although Senegal's economy is driven by mining, construction, tourism, fishing and agriculture, Senegal is also rich in natural resources such as iron, zircon, gas, gold, phosphates, and recently discovered oil deposits. Senegal is currently under utilising their natural resources and most of their revenue is still generated from agriculture and tourism. Currently Senegal spends more money importing goods and services than they export. In 2019, Senegal spent $8.892 billion on importation of goods and services but made only $5.374 billion from export. This left them with a negative current account that further devalued their currency in relation to dollars. In order for Senegal to generate more revenue from export than expenditure from import, they have to diversify their economy beyond tourism and agriculture. Taking into account the negative impact of COVID 19 on Senegal's tourism sector and the forecasted impact this pandemic will have on tourism worldwide, is it still wise for Akon to invest $6 billion on Akon City?
The Organisation for Economic Co-operation and Development (OECD) forecast that international tourism will fall by around 80% in 2020 worldwide. Furthermore, the UN World Tourism Organization (UNWTO) now foresees a decline in international arrivals close to 70%, with recovery to pre-crisis levels not expected before 2023.
The question remains, with the uncertainty surrounding the tourism sector, would it be wise for anyone to invest $6 billion into a futuristic city? If i was to do an investment appraisal right now, the answer would be no. That said, where is the investment appraisal for Akon City and why isn't there transperency from Akon on this. Is there really a business case for this investment or is it just a plot to drive the value of Akon's cryptocurrency startup.
2. Lack of transparency poses a risk to investor and future end users
This it is the most publicised project that lacks any form of transparency. Like we have pointed out, Julius Mwale has a history of defaulting on loans and has been taken to court on three different occassions in New York. In all of these cases he was made to pay back money, if he was an innocent man the court wouldn't have order him to payback these loans. He is the lead investor on this project and no one knows where or how he raised $4 billion to invest in Akon City or where he raised $2 billion to build Mwale Medical and Technology City. Is this his personal capital or is it a loan? If it is a loan, what happens to Akon City if he defaults on it and why should any potential investor trust him?
There is then the issue of KE International who where awarded the contract to build Akon City. They lack the experience or qualifications to undertake a project of this calibre. Just because they built Mwale Medical and Technology City for $2 billion doesn't automatically mean they have the capability to build a Wakanda like futuristic city. That begs the question, are the concept designs on Akoncity.com buildable or will the architectural designs be more conservative like Mwale Medical and Technology City ,which is anything but a futuristic city.
The last problem is the promise that Akon City will trade only in a cryptocurrency called Akoin which is by the way owned by AKON. Hypothetically speaking, what's to stop anyone from saying that Akon City is just a ploy to boost the value of Akoin cryptocurrency, because that is what it looks like without relevant information to dispute this hypothesis.
3. Lack of funds to complete project
We already mentioned the risk of the lead investor Julius Mwale defaulting on the $4 billion loan invested in Akon City, assuming it is a loan and not his personal cash. Now we are drawing on a more obvious risk to the completion of this project and that is lack of funds. Can $6 billion build a futuristic city of the size proposed by Akon? I severely doubt that, not unless KE International builds a substandard version of Akon City that will be nothing like the concept designs. No need for assumptions, check out the top ten most expensive structures in the world below.
These are not cities, they are buildings and two of them are worth more than 4 times of Akon City. That's without even taking into consideration what these buildings are worth now as $1 now will not have the same value as $1 ten years ago or $1 in two years time. The value of money goes up and down, so has Akon taken this into consideration? Again i ask, where is the investment appriasal for this project and why isn't it made public if Akon has nothing to hide? If he is really looking for investors, the investment appraisal should be made public for potential investor to review. They would want to know what the net present value of the project is and how much value their investment would get them.
The benefits of Akon City being built are clear, it will boost the tourism sector in Senegal, it will create jobs and provide a much needed boost to the country's revenue. While it is easy to gloss over the great things Akon City will bring to Africa, our research identified too many issues which also need to be taken into consideration. Below are three issues concern parties need to consider about this project:
The company appointed by Akon to design and build Akon City lacks the experience and qualifications to deliver a project of this calibre. KE International is a relatively new company and would never have won a tender competition with the big players in the construction industry like VINCI, Actividades de Construcción y Servicios, Bechtel and my favorite China Communications Construction Company who have delivered numerous projects in Africa. KE International has only delivered one project since its inception and that was Mwale Medical and Technology City. We know that KE International helped secure the $4 billion investment from Julius Mwale, which is why they were most likely awarded the design and build contract. As pointed out earlier, none of the six board of directors in KE International possess a single qualification in Civil Engineering, Structural Engineering or Architecture. Even if they were to subcontract this project to another company, how can they provide guidance on a subject they are not experts in.
In the current climate marred by a pandemic, tourism is not the best sector to invest in and the UN World Tourism Organization (UNWTO) has already forecasted a 70% decline in international arrivals with recovery to pre-crisis levels not expected before 2023. So we would recommend that Akon re-evaluates his proposal to build the $6 billion Akon City and release an updated investment proposal to promote transparency with stakeholders.
The risk of funds being depleted before Akon City is built is quite high. This can happen two ways:
Firstly, the lead investor Julius Mwale could default on the $4 billion loan he invested into Akon City. He already has a history of defaulting on loans and on all three occasions he was taken to court he was order to pay his creditors twice and on the third he settled. If this investor was innocent why would a judge rule against him on three occasions. If he doesn't default on the loan for Akon City, it is most like that Akon City will be liquidated to pay of his creditors
Secondly as shown earlier the scale of the Akon City project would most likely cost more than $6 billon. The Shard cost $3.3 billion and was built in 2009, The emirate palace cost $3.6 billion and was built in 2001, Marine Bay Sand was built in 2010 and cost $5 billion. These are not futuristic cities, they are large buildings that cost billions of dollars. Akon City on the other hand has alot of high rise buildings with futuristic designs and yet Akon claims $6 billion is enough to build this cities.
We hope our readers find this article informative. While we believe it to be objective we would like to remind our readers that these are our views of the Akon City project. They should not be used for any malicious purposes and we do not take liability for how you interpreted them. Thank you