Kenya’s showing the rest of Africa how ICT spending boosts GDP

Kenya’s showing the rest of Africa how ICT spending boosts GDP

Mount Kenya wikiAccording to a recent white paper from market research body International Data Corporation (IDC), last year ICT spending accounted for 12.1% of Kenyan GDP. That’s up from 8.9% in 2006, thanks in part to the huge growth in mobile phone users and thanks to investment from international development agencies like the World Bank.

Increased ICT spending boosts GDP; countless research companies have been saying so for years. But Kenya proves them right. “Between the years 2000 and 2012, the country’s wider transport and communications sector, of which ICT is a part of, grew by a Compounded Annual Growth Rate (CAGR) of 7.7%, outperforming all other sectors of the national economy,” says IDC.

So, how’s Kenya done it? For a start, it’s made sure the country’s telecommunications sector is extremely competitive, which increased consumer demand. And it met this demand by allocating $80 million to infrastructure investment projects between 2005 and 2012. In 1999 there were 15 000 mobile subscribers in Kenya, today there are over 31 million.

Government policy has also played a massive part in Kenya’s ICT success. From spectrum licensing to lowering mobile termination rates (the fees operators charge each other to carry calls from other operators on their networks), Kenya’s government has worked hard to make the country an attractive place for ICT companies to do business, while also partnering in the building of local tech hubs, start-up incubators and other initiatives that foster technological innovation.

The effort has paid off. IBM opened its East African headquarters in the capital, Nairobi, in 2009 and since then a slew of other technology companies have followed suit, including Google, Huawei, Nokia-Siemens, Samsung, Qualcomm, Microsoft and GE.

ICT has also fundamentally changed the financial services industry in Kenya. Today, Kenya has among the most successful and innovative mobile money services in the world. “As of 2013, 31% of Kenya’s GDP is now transacted through M-Pesa mobile telephone banking by an active user base comprising 74% of the country’s adult population,” according to IDC.

The Kenyan government has adopted a roadmap for the country’s economic development that “positions ICT as a key development pillar”. All of which means the country looks likely to continue to entrench its position as Africa’s information and communication technology (ICT) powerhouse, while other African countries like South Africa – which previously led the continent on the ICT front – are left playing catch up.

Pt Thomson Batian Nelion Mt Kenya“. Licensed under CC BY-SA 3.0 via Wikimedia Commons.

Craig is Stuff magazine's editor. He's provides tech analysis and commentary for TV stations like eNCA, CNBC Africa and BusinessDay TV, and radio stations like 702, CapeTalk, PowerFM, MetroFM and Classic FM. You can contact him at craig@stuff.co.za

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