Kenyan digital economy: What is it and how will it transform lives?

By Victor MUJIDU

The digital economy is the worldwide network of economic activities, commercial transactions, and professional interactions that are enabled by information and communications technologies (ICT).

Digital Economy has gained substantial importance within the global economy as a driver of innovation and competitiveness.

As part of the global village, this new ecosystem presents a unique opportunity for economic growth and it takes the Government, businesses, and individuals’ effort to adapt to the reality.

Digital Economy policies and the underlying frameworks have become commonplace within the Nation States that seek to transform their overall economic outlook. Their main focus then becomes the identification of digital ecosystem enablers that are necessary to transform a country.

Kenya, for instance, is dabbed as “silicon Savanna” for being the regional ICT hub of East Africa, with an ICT sector that accounts for up to seven per cent of the country’s GDP through IT-enabled services and has become a significant source of economic development and job creation with impacts felt across almost every of the economy.

The adoption of such innovations is facilitating transactions and spurring trade for corporations, small and medium enterprises (SMEs), and individuals. This in turn translates to improved and efficient business environments, increased accessibility, connectedness, and better standards of living.

To achieve 100 per cent digital transformation in the country, the Government in conjunction with private investors is at the forefront of facilitating investments and innovations in core digital infrastructure and also facilitating a thriving technology startup ecosystem.

In a past event, President William Ruto said is keen on making Kenya an ICT innovation hub to unlock the digital economy potential as well as “creating robust measures to ensure successful implementation of the digital economy.”

The major sectors driving the continued growth of the digital economy in Kenya include the E-commerce industry where firms such as Jumia are thriving besides the growth of the Fintech services such as M-pesa that received acceptance across the rural and urban areas in Kenya.

The role of the Government shall not be underestimated since it has continued to invest heavily in technology while also promoting decisive policies and frameworks for enabling resources and investment.

Investing in the Inclusive digital economy

Kenya has some of the best digital and legal frameworks on the continent like its ICT masterplan digital economy Blueprint, little wonder that its economy is growing at a fast pace.

As Kenya’s digital economy propels the country’s economic growth, a new World Bank economic update says investments in the digital economy can further drive economic growth and help narrow the rural and urban development divide.

The growth in Kenya’s digital economy is supported by the number of people who have access to smartphones and internet services.

Data has it that about 98 per cent of Kenyans have sim cards while more than half of that number use a smartphone and about 65 per cent have access to the internet, a situation that encourages financial inclusion and digital-know how.

The framework has made a turnaround and led to a spur in the country’s economic growth such that the digital economy is expected to contribute to 9.24 percent of the country’s GDP by 2025, according to Africa’s GDP Forecast, Accenture.

Implementation of Konza Technopolis as a stimulus for Kenya’s digital economy

The Kenyan Government suggests to place a foot at the forefront hence its budgetary allocation takes into consideration funding for technological initiatives.

For instance, the 2021/2022 budget made a provision of $210 million for fast-tracking various initiatives such as the development of Kenya’s first smart city Konza Technopolis as well as the maintenance and rehabilitation of the National Optic Fibre Backbone phase II Expansion cable.

The Government set aside $132 million in the FY 2022/2023 for ICT initiatives which included the continuous development of the Konza Technopolis/ Smart City, the installation and commissioning of the Eldoret-Nadapal fibre optic cable and the digital literacy program, and ICT integration in public institutions.

On top of that, the Government launched a ten-year digital Masterplan 2022-2032 to align the global technological advancement which would enhance the growth of the digital city.

The technological investments have however enticed many investors from various entities who want to digitize Kenya and help it to leapfrog to more lucrative opportunities globally.

Benefits of the digital economy

With the fast growth of the digital economy in Kenya, there is a likelihood that it can create a gap in the job market as the country might still be behind in providing the human sources needed to meet up with growing digitalization.

Therefore, to fully tap the digital opportunities, the gap must be bridged through enhancing investments, aimed at developing and building human capital.

Beyond economics, the digital aspect of ICT has totally transformed the way people live, interact, communicate, work, learn, solve problems, and do business. It has been aptly dubbed the fourth industrial revolution.

Currently, the Government under the digital infrastructure pillar, proposed to lay 100,000km of fiber optic cable countrywide estimated to reach out to 8.5 million homes and businesses.

By creating a universal technological atmosphere, the Government will be expected to connect 1,450 wards, 400 police stations, 13,000 health facilities, 40,000 public schools, markets, and other public institutions.

The digital masterplan envisions a twin-pronged investment in digital skills, intending to empower citizens with digital skills to adopt, use, and monetize digital technologies.