Why State's huge investments in ICT are yet to pay off

The ICT Authority has detailed a mismatch between government investments and their impact on the economy, indicating that businesses are not harnessing the potential of the sector in their operations.

The authority notes that a major reason for this ambiguity is the lack of digital skills necessary to cause a positive tilt in the economy.

It claims that people may be using the internet without the knowledge of how to maximise its potential economically.

This is even as the ICT Authority points to the informal economy as a priority when it comes to the government’s investment in ICT infrastructure.

The authority cites bottom-of-the-pyramid economies (BOP) as one of the national drivers of ICT in the country.

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Other drivers according to the strategic plan 2024-2027 launched last month include penetration of mobile devices, social issues such as poverty reduction and service delivery efficiency, increased expenditure on entertainment, affordability and localisation, younger population, ICT governance, research, development, and innovation, and digital skills and capabilities.

The plan says the bottom-of-the-pyramid markets provide the most reliable source of growth in the ICT sector.

“The project targets inclusion of vulnerable and low-income populations into the digital space,” the authority says.

“This involves digitisation of government services and incentivising businesses through business-to-business platforms. Companies are increasingly looking towards Kenya as a doorway to access the African market.”

The Digital Superhighway project seeks to expand Kenya’s fibre network coverage countrywide, which entails laying 100,000 kilometres of fibre optic cable, targeting 25,000 public Wi-Fi spots and digital village smart hubs in each of the country’s 1,450 wards.

The project also seeks to increase e-government services, automation of government services, and the use of a single unique identifier for access to digital services.

“This Strategic Plan (2024-2027) provides the means - resources, strategies, and actions needed to implement the priorities under the digital superhighway project,” the authority says.

While the authority admits that there are changing customer needs and demand for varied products, it notes a digital coverage gap due to limited infrastructure, unaffordable broadband, and literacy levels.

The issue of the mismatch of ICT investments and the business environment features in the analysis of the previous strategic plan that ended 2024.

The State agency states that there is no evidence to show for the heavy investments done by the government that have enhanced connectivity such as the fibre optics network. “The government has rolled out an elaborate network of fibre optics but there is no corresponding evidence of businesses and individuals converting the investment into valuable opportunities,” it says.

The agency blames counties for leaving the role of connectivity to the State.

“The county governments have not prioritised ICT investments in their development planning and have continued to rely on national government initiatives to support their connectivity,” it notes.

Market opportunities

The authority points out a huge digital divide in Kenya and the larger sub-Saharan region. “Which demonstrates that many may be using the internet without being able to fully benefit from it or avoid its dangers,” it says.

The authority says market opportunities in ICT are discernible to the individuals and businesses ready to use.

“Just as the global ICT market is segmented by technology types (IoT, Big Data, Security, Cloud Computing) and Applications (Digital Education, Data Centre Systems, Communication Services), market opportunities in ICT are discernible to those businesses and individuals ready to use, adopt or adapt to frontier technologies and applications,” the authority states.

The ICT sector, according to the Economic Survey 2024 Report by the Kenya National Bureau of Statistics (KNBS), grew by 9.3 per cent in 2023. This is compared to 9.0 per cent in 2022.

The report shows that the output in the ICT sector increased by 5.8 per cent to Sh6.04 trillion in 2023. “This growth was driven by an increase in mobile money transfers and the growing demand for data-intensive services,” noted the KNBS report.

How to optimise the impact of ICT investments to make business sense to citizens, businesses, and the government is one of the development areas of the authority’s latest strategic plan.

The State entity will also be aligning ICT investments and programming to the national planning cycle, the Bottom-up Economic Transformation Agenda (BETA), and the Kenya Digital Masterplan 2022-2032.

The State agency says the strategic plan 2024-2027 seeks to leverage lessons learnt, best practices, emerging technologies, and prior ICT investments such as the National Optic Fibre Backbone Infrastructure Programme, Digital Literacy Programme, Digitalisation of government services and Presidential Digital Talent Programme, as well as the restructuring of the authority in terms of mandates and resourcing.

The new plan seeks to reduce barriers to ICT investments which should translate to an increase in the proportion of newly registered businesses during the period.

The authority will also improve the ease of doing business with the plan targeting an increase in the percentage of new digital business from 20 per cent in the first year of implementation to 45 per cent by 2027.

ICT Authority chief executive Stanley Kamanguya says in a rapidly changing technological world, where citizens demand quality services from their governments, the authority must be at the forefront in accelerating sustainable digital transformation.

“This plan positions the authority as a catalyst institution to strategically optimise digital value-chains, and use innovation to improve human capital development through transformational digital culture,” he says.

“This will be attained through strategic digital investments as well as skilling, re-skilling, and upskilling pathways for the public, businesses, and government to ensure quality service delivery.”