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A Review of Kenya’s ICT Position in 2009.

By all measures, 2009 was a very key year for the Information and Communications Technologies (ICT) sector in Kenya. Its hard to believe so much happened in a relatively short period of time that will be massively define ICT in Kenya for the coming years.  In a nutshell, and in retrospect, below is a comprehensive review of what happened in 2009:

TEAMS and SEACOM Go Live.

After many years of waiting, Kenya finally got broadband internet connectivity through the SEACOM and TEAMS high speed undersea data cables. Both cables went live in the second half of 2009 and since then we have noted impressive improvements in internet speeds and reliability. However, the biggest caveat (still) is that Internet access remains largely expensive with pricing dropping only marginally, even as Internet Service Providers (ISPs) have much lower costs as they move from satellite-based internet access. Going forward, the main ICT sector that is expected to gain from the low-cost and high speed cables is outsourcing. Prior to the cables going live, the cost of access was as high as 10 times as much on satellite links. The savings are expected to make Kenya’s outsourcing globally more competitive and profitable.

Controversial ICT Bill Is Approved.

Earlier in 2009, the Kenya ICT (Media) Bill was passed. The ICT Bill makes provisions for e-commerce and digital signatures which are key for enabling online business in Kenya. At the same time, the ICT Bill provides for a broader range of provisions that will deal with risk areas such as online fraud and piracy of intellectual property. All things considered even as the ICT Bill has some controversial aspects especially in the Media sections, the overall benefits for ICT far outweigh the potential downsides.

Mobile Money Goes Mainstream.

2009 was the year that mobile money really took off. The shift to mobile money was largely dominated by Safaricom’s M-Pesa service which is the pioneer and market leader. Zain also launched its ZAP mobile money service in 2009 where it was significantly late to the mobile money party as M-Pesa is now the de facto mobile money service in Kenya. At the very end of 2009, YU launched its yuCash mobile money offering which is based on the global Obopay service. 2009 also saw mobile money being unanimously endorsed by the business community as they signed up for M-Pesa. Even Banks who we’re the largest opponents of M-Pesa in Kenya are integrating mobile money into their offerings. Going forward, the next big wave for mobile money in will be the adoption of Internet-based services that will could ultimately drive e-commerce in Kenya.

Mobile Internet Gains Massive Adoption.

2009 will be remembered as the year that the mobile internet went mainstream. Statistics from last year confirm that the mobile internet is growing at a torrid pace as users opt to ditch cyber cafes and fixed line internet for mobile internet access. This trend was largely driven by Safaricom’s massive campaign to market its 3G offerings throughout Kenya – largely succeeding in the process. However, at of the end of 2009, Zain, YU and Orange have also been aggressively pushing their mobile internet offerings although none of them have 3G yet and are still on the slower GPRS and EDGE services. Going forward, a major area of contention will be the expensive license fees for 3G in Kenya which currently stand at US$ 25 million. This fee needs to drop urgently if widely available and more cost-effective 3G mobile internet access is to take off.

Government’s 2009/10 Budget Gifted ICT in Kenya.

The 2009/10 Budget as announced by the Ministry of Finance in June 2009 gifted the ICT sector with lots of benefits. Firstly, tax was removed from digital and video cameras. Mobile phones we’re made exempt from value added tax (VAT). Kes. 1.3 Billion was allocated to the establishment of mobile computer labs country-wide. ISPs we’re allowed to offset taxable income against the cost of purchasing internet bandwidth. Wear and tear on telecommunications infrastructure was increased from 12.5% to 20%. Tax was also reduced on purchasing certain types on computer software. Therefore, in a nutshell, the 2009/10 budget was designed to give ICT in Kenya an edge for the coming years.

“Local Content” Became The New Buzz Phrase.

In 2009, one could not talk about ICT in Kenya without the inevitable mention of local content coming up. This is a key issue since although Kenya has over 18 million mobile users and 4 million internet users, the bulk of digital content they access is international and not local. The opportunity therefore for the development, distribution and monetization of local content is potentially huge and everyone is trying to get a piece of the action. What remains to be seen in 2010 (and the years to come) is how many will succeed and fail in the process  – I suspect we will see something that will mirror the dot-com bust and boom that happened in the US a decade ago as everyone rushes for local content gold.

Digital TV Starts Broadcasting.

One of the last major milestones for ICT in Kenya for 2009 was the launch of Digital TV (DTV). DTV will revolutionize television broadcasting as we know it in the coming years since its highly efficient and interactive. The opportunity to reach more audiences and also reduce the cost of broadcasting should appeal to many businesses operating in this space. Currently, only a few TV networks in Kenya are broadcasting using test DTV signals in Nairobi and other locations in Kenya. Full adoption of DTV will take a good number of years although Kenya is one of the first countries in Africa to adopt the standard.

Social Media Grew Up.

In 2009, social media moved from the sideline to the mainstream in Kenya. 2009 saw social media move from being a novelty that engaged the youth to a movement that saw businesses take notice. On many ranking services on both the mobile web and p.c. web, social networks have become some of the most trafficked internet destinations in Kenya. Brands are taking notice and the mean age for users is getting more and more adult every day. This trend will only increase as people blog more, use twitter, and facebook incessantly, as well as businesses start sharpening their social media “mojo”.

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4 Comments

  1. January 2, 2010 at 1:26 pm — Reply

    This is an informative year-in-review of the developments preceding the anticipated digital revolution in Kenya. It should also be worth noting that the developments seen are a culmination of the government’s efforts innitiated over two years ago. To give credit where its due,the ICT ministry is making a difference in the lives of Kenyans lately and in the long term.

    Any comments about the national terestrial fibre optic infrastructure project by government? It should have been completed and lit up in 2009. Also less spoken about is the government’s own automation innitiatives including the Integrated Financial Management System (IFMS) among ministry departments and the digitization/backfiling of public records through entreprice content managment systems (ECMs).

  2. January 3, 2010 at 5:44 pm — Reply

    We’ll really see a boom in local content when Kenyans can get paid for it. Right now, I doubt any Kenyan (outside a established media organ) is making money from content. Google and Paypal will not even deal with Kenyans, and the local market is not paying for subscription content.
    .-= Wayan´s last blog ..How Donors Can Expand National Health Information Systems =-.

  3. January 14, 2010 at 2:34 pm — Reply

    Wayan, what is happening right now is that forward-thinking “netpreneurs” are preparing themselves for the inevitable internet boom, hence the explosion of local content. Admittedly, it will be a long road to Canaan, but that will help filter out the long-term investors from the speculators.
    .-= Mr. Majani´s last blog ..In the Name of Jesus =-.

  4. Stella
    January 18, 2010 at 9:16 am — Reply

    I totally agree that DTV will revolutionize television broadcasting in the country and actually it might pick up faster than expected, forward thinking entrepreneurs have are positioning themselves for the boom.I personally acquired one from SPATIAL SYSTEMS, KIMATHI HSE 3rd floor and am enjoying crystal clear TV from 22 channels.

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