Firms eye big business in new year through Kenya’s technology plans

Saturday January 05 2013

An artist’s depiction of Konza City, a technology hub to be built in Kenya. Photo/FILE

Kenya’s information and communications technology industry is warming up to the year ahead with multimillion shilling projects that could push up stakeholders’ profitability, and deliver more affordable and faster services to consumers.

The ground-breaking ceremony of the country’s first technology city is scheduled for this month, setting the stage for the construction of the Ksh850 billion ($10 billion) project.

The Ministry of Information and Communications said last month that President Mwai Kibaki is expected to officially launch the project on January 23.

The project — expected to transform Kenya into a “Silicon Savannah,” the local of equivalent Silicon Valley in the US — has attracted only a few foreign investors, with some describing it as a real estate project.

In August, New York-based HR & A Advisors won a hotly contested contract to manage and develop Konza City at a cost of Ksh168 million ($1.9 million).

Last week, the Information Ministry posted an advertisement on its website inviting experts to support the government and the Konza Technology Development Authority in developing the plans for the first phase of the city.


Financed through a partnership between the government and the private sector, Konza city is expected to position Kenya as a leading ICT hub in Africa by expanding the country’s technology focused industries.

The emerging opportunities in the ICT sector are expected to rally global firms, especially those from India and China.

Some commercial banks, parastatals and industry regulators are turning to India for IT solutions.

For example, RMSI, an Indian firm specialising in integrated geographic information systems (GIS) and software solutions for risk analysis and management, is seeking a contract to digitise Kenya’s land records.

Investment in counties

The rollout of the devolved system of government after the March 4 General Election is expected to provide a lucrative stream for firms.

“The industry is likely to be very vibrant this year as the government devolves its operations to the county level. This will open up huge investment opportunities for the players in the communication sector as the county governments establish communication systems with the central government,” said Francis Wangusi, the director general of the Communications Commission of Kenya (CCK), the industry regulator.

Internet speeds are also expected to improve this year as a fifth undersea fibre optic cable lands in Kenya nearly doubling the country’s internet speed capacity.

Information Permanent Secretary Bitange Ndemo said a Middle East company is contracting suppliers to lay the undersea cable that will increase Kenya’s bandwidth capacity to more than 15 terabytes per second, up from the current 8.56 terabytes per second.

The additional fibre optic cable is also expected to drive down wholesale prices of data. Since the landing of Kenya’s undersea cable in 2009, data prices have fallen by more than 80 per cent.

“The uptake of ICT is likely to increase significantly in the devolved system, especially if the government keeps its promise to make most of its services available online,” said Riyaz Bachani, the chief technical officer at digital media firm Wananchi Group.

“Governments at the county level will need to liaise with one another and the central government so they will need superior data services. It will be much better if the government takes on solving citizens’ issues online,” Mr Bachani said.

Digital migration

This year, Kenya will migrate from analogue to digital television transmission. After failing to beat its self-set deadline to switch by the end of 2012, the government hopes to migrate by the end of this year.

“We have engaged in fresh stakeholder talks to see how best we can effect the migration. We hope to settle the court cases fast so that we begin the phased migration with Nairobi, as soon as possible,” Mr Wangusi said.

The migration is expected to create a boom in business for set-top box vendors, and create more opportunities in the broadcasting sector as more television channels come up.

Mobile operators are set to battle for the fast-growing mobile money and data markets.

READ: Kenya telecoms battle for data market on smartphones

Last year, Safaricom’s M-Pesa service yielded huge profits. Competing mobile phone operators have called for the opening up of agency services to allow a single agent to transact for all the networks.

Towards the close of 2012, Airtel Kenya, yuMobile and Telkom Orange had launched discussions on opening up their agency services in a combined effort to penetrate the mobile money market.

yuMobile said it will apply to Vodafone to be allowed to offer money transfer services to its customers, saying Safaricom’s dominance has locked the market in its favour.

The battle for the mobile money market has stretched into the courts with ownership disputes over Safaricom’s newest product M-Shwari. Faulu Bank has accused Safaricom of copying its product — Kopa Chapaa — which runs on the Airtel Money platform.

Local mobile operators have lined up huge investments for the data segment of their businesses to turn the service into a profitable revenue stream after voice.

According to a survey by industry body GSMA, Africa has become the fastest growing market for smartphones in the world as more subscribers access the Internet from their phones than the traditional PC.

A study by technology firm Cisco showed that smartphones have surpassed desktops and laptops as the preferred devices for completing work.

The report shows that 90 per cent of global youth check their mobile phones before eating, dressing or brushing their teeth in the morning.

The country also expects to introduce the 4G Long Term Evolution that could heighten competition in the mobile data services.

“We must roll out the 4G network before the end of this year. The private-public-partnership model of financing is good and the fact that operators will share both the active and passive components in the network is meant to enhance a level ground for fair competition,” said Dr Ndemo.