The paper presented at Connected Kenya outlining private sectors proposals

1. ICT IN
KENYA
#140Friday
Sector
Policy
Paper
ICT
INDUSTRY
DEVELOPMENT
&
GOVERNMENT
INCLUSION
Nairobi
3rd
April
2012

2. ICT IN
KENYA
2

4. CONTEXT
ICT IN
KENYA
CREATING
A
SUSTAINABLE
ICT
INDUSTRY
WITHIN
KENYA
q The
Kenyan
ICT
industry
is
immature
and
suffers
from
significant
internaSonal
compeKKon
q Vision
2030
for
Kenya
provides
a
high-­‐level
vision
for
economic
development
SITUATION
q The
Kenyan
governmental
legislaSon
lacks
a
clear
ICT
vision
to
support
development
q Planned
ICT
developments
within
the
Kenyan
government
offers
a
large
internal
market
q The
scaDered
ICT
landscape
lacks
sufficient
structure
and
organizaKon
to
aDend
the
market
q Kenyan
ICT
educaKon
lacks
focus
to
aDend
to
specific
needs
for
all
types
of
industry
players
COMPLICATION
q ICT
development
lacks
vision
and
support
to
aDract
investors
q InternaKonal
players
see
ample
opportunity,
endangering
the
local
compeKKve
posiKon
ü How
do
we
develop
a
strong
ICT
industry
in
Kenya
making
opSmal
re-­‐use
of
exisSng
means?
CHALLENGE
ü How
do
we
ensure
sustainable
development
fiYng
within
Vision
2030
for
Kenya
ü How
can
we
align
all
local/internaSonal
stakeholders
creaSng
a
win-­‐win
situaSon
for
all
INTENTION
Ø WE
PROPOSE
THE
FOLLOWING
PLAN
FOR
SYNERGY
WITH
GOVERNMENT
4

5. INDUSTRY
ANALYSIS
ICT IN
KENYA
THE
KENYAN
INDUSTRY
ASSESSMENT
SHOWS
CLEAR
AREAS
FOR
ATTENTION
Strengths
Weaknesses
S W
§ Private
sector
recognises
need
for
beDer
§ Sub-­‐opSmal
procurement
process
for
local
players
engagement
with
Government
§ Lack
of
tailored
(tax)
legislaSon
§ Large
internal
Kenyan
market
§ Technical
educaSon
and
industry
needs
misaligned
§ ICT
inclusion
in
Vision
2030
§ Limited
availability
of
investments
§ Recent
technological
advancement
(Fiber)
§ Lack
of
governmental
ICT
representaSon
§ AmbiSous
Workforce
§ Lack
of
Public
Private
Partnerships
in
ICT
(PPP’s)
§ Acknowledged
innovaSons/technologies
(MPESA)
§ DiplomaSc
services
lack
focus
on
ICT
opportuniSes
OpportuniKes
Threats
O T
§ Significant
government
Investment
in
ICT
§ Growing
Kenyan
market
aDracts
internaSonal
ICT
§ Labor
costs
provides
labor
arbitrage
potenSal
players
threatening
local
ICT
companies
§ Growth
of
average
size
of
Kenyan
companies
§ GlobalizaSon
of
the
ICT
industry
simplifies
internaSonal
service
delivery
to
Kenyan
§ Recognized
ICT
hub
developments
(incubators)
companies
§ Intended
creaSon
of
Konza
as
ICT
ecosystem
§ African
economic
development
creates
significant
§ Entry
of
internaSonal
ICT
players
(Nokia,
IBM)
near-­‐shore
compeSSon
§ CreaSon
of
EAC
provides
larger
market
§ Established
human
capital
flows
to
MNC’s
5

6. INDUSTRY
DEVELOPMENT
NEEDS
ICT IN
A
PROVEN
ICT
INDUSTRY
DEVELOPMENT
STRUCTURE
KENYA
Source:
Australian
Business
Founda3on
6

7. INDUSTRY
COOPERATION
ICT IN
KENYA
INDUSTRY
DEVELOPMENT
MUST
BRING
TOGETHER
ALL
INDUSTRY
STAKEHOLDERS
PRIVATE
MARKETPLACE
End
Users
Companies
-­‐ Projects
-­‐ Exper?se
Incubators
-­‐ Marketplace
Banks
Producers
Insurance
-­‐ Products
&
Services
-­‐ Skilled
workforce
-­‐ Funding
ICT
INDUSTRY
-­‐ Experience
-­‐ Exper?se
FINANCIAL
-­‐ Infrastructure
PLAYERS
-­‐ Industry
standards
-­‐ Representa?on
-­‐ Confidence
MARKETS
Investment
Industry
-­‐ Projects
funds
representa3ves
-­‐ Legisla?on
-­‐ Educa?on
VC’s
-­‐ Tax
regula?on
Universi3es
Unions
KICTB
E-­‐G-­‐ovt
GOVERNMENT
7

8. KEY
SUCCESS
FACTORS
ICT IN
KENYA
ENSURING
COOPERATION
FROM
ALL
STAKEHOLDERS
REQUIRES
BENEFITS
FOR
ALL
RESPONSIBILITY
KEY
SUCCESS
FACTORS
ü Public
Private
Partnerships
(PPP)
ü Governmental
incenSve
structure
PRIVATE
CREATE
A
SOLID
STREAM
ü Stable
entrepreneurial
environment
MARKETPLACE
OF
ICT
WORK
ü Virtual
marketplace
environment
ü ProtecSon
of
IP
Rights
ü Predictable
quality
ü Solid
service
delivery
methodology
THROUGHOUT
THE
ICT
INDUSTRY
DELIVER
HIGH
QUALITY
ü Focused
educaSonal
“curriculum”
ENTIRE
LIFE
CYCLE
PLAYERS
PRODUCTS
AND
SERVICE
ü Strong
coach/mentor
network
ü Strong
business
services
support
“SUPPORT
FROM
INFANCY
TO
MATURITY”
ü Shared
financial
risk
profile
PROVIDE
SUSTAINABLE
ü Aligned
exit
strategies
FINANCIAL
AND
PREDICTABLE
ü Strong
partnerships
MARKETS
FUNDING
ü Public/private
investment
funding
ü Governmental
taxaSon
sSmulus
ü Long
term
sustainable
vision
GOVERNMENT
SUPPORT
AND
FACILITATE
ü Sufficient
budget
and
focus
8

9. KENYA
ICT
DEVELOPMENT
ICT IN
KENYA
FRAMEWORK
TO
SUPPORT
THE
KENYAN
ICT
INDUSTRY
PLAYERS
ACROsS
THE
LIFECYCLE
MATURITY
LIFE
ENTREPRENEURS
SME
MNC
CYCLE
Kenyan
Marketplace
Virtual
Marketplace
Africa
Global
Marketplace
Nairobi…..
PRIVATE
-­‐ SME
-­‐ MNC
-­‐ Kenya
-­‐ Rest
of
Africa
-­‐
-­‐
Konza
City
Kenya
MARKETPLACE
-­‐ Gov’t
-­‐ Incidental
offshore
-­‐ Con3nent
+
rest
of
Kenya
-­‐ Global
IncubaKon
Business
Support
ConKnuous
improvement
ü Support
on
product,
skill
and
ü Support
on
business
advisory
and
ü Support
by
providing
a
(virtual)
ICT
INDUSTRY
business
development
development
networking
environment,
an
ICT
ü Facili?es
providing
workplace,
ü Cer?fica?on
of
technical
skills
and
market
place,
and
PLAYERS
internet
and
meeSng
place
delivery
maturity
(Prince
II)
ü Diploma?c
support
to
create
ü Educa?on
on
business
processes,
ü Educa?on
on
industry
standards
&
internaSonal
demand
for
Kenyan
-­‐methodologies
and
-­‐behavior
methodologies
(Lean/SixSigma)
ICT
products,
services
and
skills
-­‐ Banks
-­‐ Na3onal
FINANCIAL
-­‐
-­‐
Seed
Capital
Private
Companies
-­‐
-­‐
Interna3onal
Private
MARKETS
-­‐
Government
VC
A
Bank
A
Bank
B
&
C
Gov’t
-­‐ Public
Kenya
ICT
Investment
Fund
Targeted
Funding
Market
Funding
ü Entrepreneurial
funding
and
ü Tax
and
procurement
ü IP
rights
and
diplomaSc
GOVERNMENT
educaSonal
support
incenSves
and
legislaSon
commercial
exposure
9

10. REQUEST
FOR
HELP
ICT IN
KENYA
THE
KENYAN
ICT
REPRESENTATION
ASKS
ITS
GOVERNMENT
FOR
HELP
SHORT-­‐TERM
MEDIUM-­‐TERM
LONG-­‐TERM
ü Favorable
government
ü R&D
legislaSon
development
ü ICT
focused
tax
incenSves
LEGISLATION
procurement
procedures
ü IP
legislaSon
development
ü Contract
legislaSon
ü Double
TaxaSon
TreaSes
development
ü Development
of
technology
ü SubstanSve
government
ü Development
of
Kenyan
ICT
clusters
that
link
Academia
subsidies
for
HR
capability
standards
and
cerSficaSon
and
Industry
for
R&D
EDUCATION
building
ü Development
of
ICT
focused
ü Development
of
technology
ü Acknowledgement
of
educaSon
at
all
levels
clusters
that
link
Security
&
incubator
insStutes
Industry
ü Support
in
media
exposure
ü Acknowledgement
of
ICT
ü Alignment
ICT
development
ü Joint
Public/Private
industry
Advisory
Board
COOPERATION
with
Vision
2030
economic
missions
for
ICT
ü ICT
sector
representaSon
in
ü Acknowledgement
of
ICT
government
industry
representaSve
body
ü ICT
industry
investment
fund
ü Individual/CorporateTax
FUNDING
ü Government
projects
ü Public
Private
Partnerships
incenSves
for
investments
10

11. NEXT
STEPS
AND
TIMELINES
ICT IN
KENYA
CONTINOUSLY
MOVING
FORWARD
WITH
PRECISION
AND
CARE
ACTION
TIMELINES
Ø Validate
ICT
requests
from
APRIL
2012
government
Ø Align
ICT
industry
ambiSon
with
APRIL
–
MAY
2012
Vision
2030
AND
Kenya
ICT
Board
PROPOSED
Ø Partner
with
stakeholders
on
ICT
MAY
–
JULY
2012
NEXT
STEPS
industry
vision
&
approach
Ø Create
detailed
joint
roadmap,
JULY
–
OCTOBER
2012
acSviSes,
roles
&
responsibiliSes
Ø Act
on
detailed
roadmap
with
OCTOBER
2012
ONWARDS
focus
on
quick
wins
11

12. ICT IN
Industry
RegulaSon
and
way
forward
KENYA
Which
Significant
Trade
Bodies
exist
currently?
KAM
TESPOK
KEPSA
KIF
Way
Forward
• To
work
with
KITOS
or
create
another
body
• MarkeSng
Kenya
for
IT
privately
and
through
public
sector
• Set
Standards
in
the
sector
• Document
the
industry
12

13. CURRENT
KENYAN
ICT
LANDSCAPE
ICT IN
KENYA
THE
KENYAN
ICT
INDUSTRY
LARGELY
DEPENDS
ON
ENTREPRENEURS
AND
FOREIGN
MNC’s
KENYA
ICT
WORKFORCE
ANALYSIS
*
(in
FTE)
ANALYSIS
Industry
!"#""" Employer
Segmenta?on
Segmenta?on
Industry
REMARKS
10.000
• The
largest
ICT
market
is
…………..
%#"### $#"### • Most
of
the
foreign
players
are
in
………
and
they
are
rapidly
growing
• Outsourcing
is
a
relaSve
………….
Market
segment,
although
…………….
ATA
$#"### 10.000
!"### • The
technology
industry
segment
is
by
far
D
TIVESME
MMNC
E/ 5.000
UA
UG
–
the
………..
most
revenue
generaSng,
and
FIC
–
I
K MB
Government
–
the
……………….
Is
relaSvely
small
DATA
Technology
ConsulSng
Outsourcing
Total
Entrepreneurs
IG I
TRY –
T
Workforce
EJ/NG Employer
IN DUSKES
mio)
NALYSIS
ADD
• Over
xx%
of
all
ICT
professionals
work
for
KENYA
ICT
REVENUE
ANALYSIS
(in
Y
A
!"#$### D
IN USTR ……………..,
where
as
only
xx%
in
………….
ADD
• With
over
…………
jobs,
the
government
Industry
Employer
provides
a
solid
base
for
the
industry
Segmenta?on
Segmenta?on
30.000
%!#"""
15.000
Workforce/Revenue
comparison
$"#"""
• The
relaSve
large
workforce
of
$"#""" entrepreneurs
in
comparison
to
the
annual
revenue
implies
low
salaries
!"#"""
• The
MNC
revenue
share
is
relaSvely
high
30.000
considering
its
workforce
and
since
many
of
its
players
are
foreign
implies
a
capital
Technology
ConsulSng
Outsourcing
Total
Entrepreneurs
SME
MNC
Government
drain
for
the
Kenya
ICT
industry
Revenue
*
See
appendix
for
more
details
13

14. POTENTIAL
ICT
INDUSTRY
IMPACT
ICT IN
KENYA
ICT
DEVELOPMENT
IN
COMPARABLE
LEADERS
SHOW
SIGNIFICANT
GROWTH
POTENTIAL
KENYAN
ICT
POTENTIAL
(in
KES
bln)
REMARKS
140
AssumpKons
130
• Kenyan
avg.
annual
GDP
growth
4%
• ICT
spend
growth
with
6%
from
2012
120
• ICT
spend
comparison
(%
of
GDP):
110
-­‐
South
Africa
15%
Total
GDP
Kenya
-­‐
Singapore
20%
ATA
Comparable
peer
–
• Taking
the
peer
comparison
average,
100
-­‐
xxxxxxx
10%
F ICT IVE
D
LILNa?onal
PCT
UL
the
potenSal
Kenyan
ICT
industry
A
LIAN/ I spend
Y
–
A
– (12%
of
GDP)
AR
T
IC
DA
10
I/M should
be
~12%
of
GDP,
increasing
the
M
Current
Kenyan
ICT
Spend
IBOCH
CONO 2013
A2014
SIS
2015
–
WA
0
market
with
KES
700
mio
annually
2011
E 2012
ADD
LY
2008
2009
2010
IAL
AN
PO TENT Impact
ADD
• Disregarding
efficiency
and
effecSveness
effects
and
assuming
INDUSTRY
POTENTIAL
equal
division
of
increased
revenue
over
naSonal
&
internaSonal
players
GDP
INCREASE:
JOB
CREATION:
the
Kenya
GDP
could
grow
with
an
extra
7%
• Assuming
an
average
daily
ICT
income
KES
700
mio
70.000
FTE
of
KES
5.000,
the
ICT
industry
can
provide
for
70.000
extra
jobs
14

15. KENYAN
ICT
LANDSCAPE
ICT IN
KENYA
THE
KENYAN
ICT
LANDSCAPE
ANALYSIS
ON
WORKFORCE
AND
REVENUE
INDUSTRY
ANALYSIS
DETAILS
COMPANIES
Entrepren.
SME
MNC
Total
Type
Examples
-­‐ Sos-­‐/hardware
producers
-­‐ SevenSeas
Workforce
-­‐ System
Integrators
-­‐ Microsos
TECHNOLOGY
-­‐ Service
providers
-­‐ IBM
-­‐ Website
development
-­‐ Safaricom
Revenue
-­‐ ……..
S
–
Entrepren.
SME
N/ D
AVI
MNC
EPHETotal
Type
Examples
A
–
ST
Y
DAT
-­‐ Technology
consultant
-­‐ Accenture
Workforce
TR
NDUS
-­‐ ……
CONSULTING
I
AD D
-­‐ ……..
Revenue
Entrepren.
SME
MNC
Total
Type
Examples
-­‐ Infrastructure
-­‐ Microsos
Workforce
-­‐ ApplicaSon
maintenance/
-­‐ IBM
OUTSOURCING
development
-­‐ Safaricom
-­‐ Business
Process
Outs.
-­‐ ……
Revenue
-­‐ ……..
Workforce
in
1.000
FTE)
Revenue
in
mio
KES
15

16. ICT IN
KENYA
THANK
YOU!