SILICON SAVANNAH AT THE CROSSROADS: THEORETICAL FOUNDATIONS, IDENTIFICATION STRATEGY, AND POLITICAL ECONOMY OF AI-LED DIGITAL AGGLOMERATION IN KENYA'S REGIONAL VALUE CHAINS
Abstract
Kenya's 'Silicon Savannah' strategy, anchored by Konza Technopolis, the M-Pesa mobile-money ecosystem, and a fast-growing developer community, is frequently cited as a template for African digital-led structural transformation. Yet the empirical literature evaluating its micro-level productivity effects, regional trade spillovers, and spatial political economy remains thin and fragmented. Existing analyses conflate general ICT diffusion with frontier AI adoption, treat digital hubs as isolated urban phenomena, and rely on descriptive rather than identified firm-level estimates. This review develops an integrated theoretical framework combining New Economic Geography, directed technical change, and structural-gravity trade theory, translated into a pre-fielding empirical design: a stratified enterprise-survey protocol with an endogenous switching-regression strategy for heterogeneous total factor productivity (TFP) effects of AI adoption, and a Poisson pseudo-maximum-likelihood (PPML) gravity specification, extendable to a spatial autoregressive framework, for how digital-payment interoperability and customs automation affect non-tariff trade costs along the Northern Corridor. The paper formalizes testable hypotheses linking infrastructure, credit, and skill thresholds to an AI adoption trap for informal micro-enterprises; specifies an identification strategy for the regional trade effects of digital public infrastructure under the African Continental Free Trade Area; and develops a political-economy account of digital-enclave risk at Konza Technopolis, situated within the literature on special economic zones and premature deindustrialization in Africa. It closes with four policy pillars, regional cloud and data sovereignty, agro-AI value-chain linkages, digital-trade regulatory harmonization, and rural TVET-based AI skilling, intended to convert Silicon Savannah from an urban technology enclave into an integrated regional digital common.