Are international development and funding agencies taking Kenya to the ICT tipping point?

ICT has assumed an increasingly strategic role in the Kenyan economy in recent years. Between 2000 and 2012, the country’s wider transport and communications sector, of which ICT is a part, grew at a compound annual growth rate (CAGR) of 7.7%, outperforming all other sectors of the national economy.

And data from global research and consulting firm International Data Corporation (IDC) shows that ICT spending in Kenya has surged considerably over the past eight years, growing from 8.9% of GDP in 2006 to 12.1% of GDP in 2013. But what has spurred this phenomenal growth, and what does the future hold?

Telecommunications has traditionally accounted for the bulk of revenues in Kenya’s ICT sector. Prior to the liberalization of the market in 1999, there were only 15,000 mobile subscribers in the country, compared to the current figure of around 31.3 million, which clearly indicates extremely rapid growth. And IDC identifies the role of international development agencies as being critical in terms of financing the sector’s growth, with the World Bank Group taking the lead. Indeed, global assistance from the World Bank Group between 2003 and 2010 totaled well over $4.1 billion.

Kenya has certainly benefited from funding and other support activities in the telecommunications sector, both from the World Bank Group and from other international development institutions. The examples of major initiatives that have benefited from funds supplied by international development agencies are numerous and include the Eastern Africa Submarine Cable System (EASSy) project, the privatization efforts of Telkom Kenya, and the opening up of all local telecommunications market segments to competition through the structuring of support and advisory services by the International Finance Corporation (IFC).

A recent World Bank report on the Kenyan economy noted the rapid uptake and transformative impact of the surging ICT sector in the country, identifying the country as being on the verge of a sustained period of rapid growth. While Kenya has indeed made solid progress in terms of its ICT uptake levels, IDC believes much room remains for further improvement.

The focus of international development and funding agencies in Kenya over the coming years is likely to expand into areas that go beyond supporting the buildup of communications infrastructure and networks, and move into the realms of developing strategy for the ICT sector to transform service delivery and accountability.

IDC believes that the various ICT sector projects supported by international development and funding agencies in Kenya offer significant commercial opportunities to technology vendors. And as we have already seen with the country’s surging telecommunications sector, these initiatives will provide a significant boost to national ICT maturity and potentially lead Kenya to the ICT tipping point.

(The writer is the country manager for IDC East Africa)