ICT Sector in Kenya

An Expert's View about Telecommunications in Kenya

Posted on: 1 Oct 2010

Kenya has a vibrant mobile telephony, ranked the most competitive among emerging markets in Africa. 85% of Kenyans are within range of a GSM signal, amongst the highest in Africa.

Sector briefing Information & Communication Technology Opportunities in Kenya Why Kenya? Kenya?s telecommunications and broadband market is undergoing a revolution following the arrival of three fibre optic international submarine cables in Kenya between 2009 and 2010 (Seacom, TEAMS and EASSy), ending its dependency on limited and expensive satellite bandwidth. Bandwidth prices had already fallen significantly following the liberalisation of international gateway and national backbone network provision in 2005, but they have now fallen by 90%, enabling cheaper tariffs for telephone calls and broadband data services. The fast growing demand for telecommunications services has led the World Bank to finance a telecommunications ?Kenya has a vibrant mobile infrastructure project in Kenya (KTCIP) to the telephony, ranked the most tune of $114.4 million. competitive among emerging markets in Africa. 85% of Find general information on the Kenyan market conditions on UKTI?s website. The Doing Kenyans are within range of Business Guide for Kenya gives an overview of a GSM signal, amongst the Kenya?s economy, business culture, potential highest in Africa.? opportunities and an introduction to other relevant issues. UK Trade & Investment Sector Briefing: ICT opportunities in Kenya ?Vision 2030? the master development plan that Opportunities promotes creation of employment and wealth. As part of this commitment, it has acquired Kenya, and by extension Eastern Africa has 5,000 acres of land in the outskirts of Nairobi linked-up to the rest of the world through to build a science and technology park. This undersea telecom cables that offer a high- Ksh76 billion park is envisaged to be an speed, vast data transmission internet. These advanced, e-business, high-technology centre linkages have started to revolutionise the that will incorporate a 5,000-seat Business region?s interaction with IT and literally opened Process Outsourcing park, a science park and up a new economic window. Eastern Africa was residential estate. previously entirely dependent on expensive and slow satellite internet connections. Growth The project will also involve the construction of in ICT is expected to accelerate further as 14 hotels around a convention centre and more services are made available to the social amenities such as schools, hospitals and population. There is bound to be a rise in universities. According to the Ministry of demand for communication and electronic Information, several foreign investors have equipment such as mobile phone handsets, already expressed interest in setting up these ADSL Modems, desktop and laptop computers facilities which would propel the country as an amongst others. ICT hub for Africa. This venture will create huge demand for quality IT equipment, ICT growth consultancy services and training. Mobile telephony accounted for 5.1% of GDP according to a 2008 Deloitte and GSMA study. Business Process Outsourcing has also grown There were more than 19.36 million in Kenya over the last 5 years. The leading subscribers at the end of December 2009 from BPO companies in Kenya handle outsourced the four licensed operators (Safaricom, Airtel, services for both the local and international Orange and Yu). Mobile phone penetration is markets and has seen increased growth, 49.7% - very close to the world average of especially in the recession period as companies 49.8% (ITU world development index 2009), strive to remain afloat by outsourcing some of leaving more room for growth as networks their business functions. improve and costs reduce as a result of enhanced competition, infrastructure The Kenya Transparency Communications improvements and tariff reductions. and Infrastructure Project (KTCIP) In 2007 the Kenyan government embarked on Market Number of users Penetration a connectivity and e-services delivery project Rate supported by the World Bank under KTCIP. The goal is to boost ICT connectivity in Kenya, Mobile 19,364,559 49.7% improve service delivery to citizens, increase Fixed 243,656 0.7% the type and quality of information and Internet 3,995,664 10.2% increase the government?s ability to ensure Source: CCK 2010 transparency and support anti-corruption efforts. Africa's second wave investment after mobile telephony kicked off with a commitment from The targeted areas are support to pension Kenya's Wananchi Group to invest over administration, drivers licence registration, US$100 million in a Hybrid Fibre-Coaxial land information and registration systems, high network in Nairobi and Mombasa to deliver a court registrar, public servant?s wealth Triple Play (Broadband, multichannel cable declaration, company registration and television and voice telephony) network. It has improvement in e-procurement. KTCIP put together a range of bouquets to provide frequently puts up tenders for provision of ICT premium TV content at low costs. products and services especially in creation of content and implementation of various ICT Park and Business Process systems. These tenders can be viewed at Outsourcing http://www.ict.go.ke/index.php/joomla- The Kenyan government intends to put up home facilities to support Business Process Outsourcing (BPO) ventures and a science and technology park that are key to achieving the UK Trade & Investment Sector Briefing: ICT opportunities in Kenya Telecoms Management and Investment One of the undersea cables mentioned earlier Advisory is The East African Marine Systems (TEAMS). Telecoms consulting is a growth business in This is 85% owned by a joint venture between Africa, according to the International the Kenyan government and private sector Telecommunications Union (ITU) because the players (Safaricom, Telkom Kenya, Essar continent is where operators invest in Telecom, Kenya Data Networks, Wananchi secondary network services like mobile Group, Jamii Telecom, Access Kenya, commerce and money transfer solutions Flashcom, Inland and Fibrenet). Etisalat (A UAE alongside mainstream communication services. telecommunications operator) owns the The pioneering Safaricom M-PESA service (a remaining 15%. This $130 million fibre optic money transfer service using the mobile cable connects the coastal port of Mombasa to phone) was the first of its kind anywhere in the Fujairah in the United Arab Emirates. world and has proved successful in Kenya especially with providing finance to the un- The Eastern Africa Submarine Cable System banked population. The M-PESA service (ESSAY) is made up of a submarine segment currently boasts 10 million subscribers. Other that wraps around Africa with connections to mobile phone service providers in Kenya have Europe, Brazil, India and Middle East. It was set up similar competing services within their developed with the support from the networks. Customers are now able to pay International Finance Corporation (IFC) and utility bills via their mobile phones. Several other development partners. In Kenya, the sole other solutions and opportunities are being shareholder is Telkom Kenya (which is also explored to improve service provision and the partly government-owned). Other major mobile phone service providers are consistently African telecoms operators as well as a handful looking to new areas of opportunity. A recently of international companies such as British introduced application enables clients to access Telecom, Bharti Airtel and Telkom South Africa and transact directly with their bank accounts are also shareholders in the project. using a mobile phone application. This has provided a better avenue for banking especially SEACOM is a privately funded initiative that for clients unable to access data services for has landing points in Kenya and Tanzania and internet banking. connects to France (Marseilles) and India (Mumbai) respectively. The capacity on this Transition to Digital TV Broadcasting cable will be sold at wholesale prices. The transition from analogue to digital TV is expected to increase efficiency in the use of The activation of these cables between 2009 the radio spectrum and improve the quality of and 2010 has enabled data businesses to offer content. The migration to digital television more and improved services to clients and broadcasting is scheduled to take place in three widened their product range. Home internet phases. The first phase is the digital switch-on. connectivity is still very low but has been The digital signal will initially be transmitted in growing steadily since the activation of the Nairobi and its environs including Kajiado, fibre optic networks. These undersea cables Machakos, Naivasha and Murang?a. The other have also faced vandalism in-land and repair two phases will involve distributing the signal challenges at sea, which has created another to other parts of the country during the dual- area of opportunity for ICT infrastructure illumination period before the eventual switch- security and monitoring. off of the analogue signal in June 2012. Kenya Power & Lighting Company (KPLC) Broadband Connectivity Commissioned Fibre Optic Cable About 4 million Kenyans currently have access KPLC commissioned its 450 km Nairobi- to internet services out of a population of Mombasa fibre optic line implemented under a about 40 million. This low access was linked to US$32 million System Control and Data inadequate infrastructure and the high cost of Acquisition and Energy Management System accessing the services. However, infrastructure (SCADA/EMS) project financed by the upgrades (including the laying of fibre optic European Investment Bank (EIB). This cables) has pushed access costs down and connection will improve power consumption improved speeds over the last year. The 100+ efficiency through a dedicated system, as well Internet Service Providers (ISP) are now as improving high-speed internet capacity and linking their customers to fibre cables and enable data companies to link their services to extending this to home connectivity. UK Trade & Investment Sector Briefing: ICT opportunities in Kenya remote areas of Kenya which are without a ? The waiving of the 16% VAT on all telecommunication infrastructure. telephones for cellular networks or other wireless networks. There are 24 pairs of optic fibres in KPLC?s If you have any questions on the opportunities cable, out of which the company will use 6 above, contact pairs for its operations while the rest will be leased to telecommunications companies. Six Dennis Keya, Trade Development Manager companies have already leased optic fibres British High Commission, Nairobi along this route. Another 800 km KPLC fibre Tel: (+254 20) 2844 289 optic line installation on the western route Email: dennis.keya@fco.gov.uk. between Nairobi and Tororo in Uganda has been completed and undergone commissioning Business opportunities aimed specifically at UK tests. This network has opened up various companies are added daily to UKTI?s website. additional opportunities such as providing These leads are sourced by our staff overseas broadcasting services to a wider range of in British Embassies, High Commissions and people while creating a bigger market for Consulates, across all sectors and in over 100 equipment and services to serve clients. markets. Converged Licensing You can be alerted to business opportunities on A simplified and converged licensing regime a regular basis by registering on the UKTI introduced in 2008 has lowered the barriers to market ent website. Find out more on UKTI?s business ry and increased competition by opportunities service on the UKTI website allowing operators to offer any kind of service in a technology and service-neutral regulatory framework. Companies that started out as ISPs such as Access Kenya, Kenya Data Networks (KDN) and Wananchi have transformed themselves into second-tier telecom companies by rolling out national and metropolitan fibre backbones and wireless-broadband access networks, offering converged voice, data and video/entertainment services. Several fibre infrastructure sharing agreements have been forged. At least six major deployments of WiMAX technology are underway and 3G mobile broadband services with up to 7.2Mb/s have been launched. Advanced services such as IPTV/triple-play, e-commerce, e-learning and e-government are now rapidly evolving and are areas of opportunities that can be explored by new entrants. Promoting ICT in Kenya In its 2009/10 budget the Kenyan government announced: ? Internet service providers will be allowed to offset the cost incurred in acquiring the right to use the fibre optic cable over a period of 20 years against their taxable income. ? In order to boost infrastructure investment, wear and tear increased from 12.5% to 20% on cost of telecommunication equipment including the fibre optic cable. ? a 5% tax reduction on the purchase of computer software UK Trade & Investment Sector Briefing: ICT opportunities in Kenya Major events and activities UKTI contact East Africa ? West Midlands Business Dennis Keya Opportunities Conference & Workshop Trade Development Manager Contact: Jonathan Webber British High Commission, Nairobi Email: Tel: (+254 20) 2844 289 J.Webber@birminghamchamber.org.uk Email: dennis.keya@fco.gov.uk th Date: 4 November 2010 www.ukti.gov.uk Venue: Birmingham, West Midlands Technology World in Partnership with UK NanoForum Contact: Dennis Keya Email: Dennis.Keya@fco.gov.uk th th Date: 7 ? 8 December 2010 Venue: Excel Centre, London UK Aid Funded Business Service Mission to Kenya Contact: Claire Gamage Email: C.Gamage@afbs.org.uk Date: January 2011 Venue: Nairobi, Kenya London Chamber of Commerce & Industry Trade Mission to East Africa Contact: Ruma Deb Email: rdeb@londonchamber.co.uk st th Date: 21 ? 30 March 2011 Venue: Kenya, Uganda & Ethiopia Birmingham Chamber of Commerce & Industry Trade Mission to East Africa Contact: Misbah Mughal Email: Misbah.Mughal@fco.gov.uk Date: June 2011 Venue: Kenya, Uganda, Tanzania & Ethiopia Find full details of all events in this country and sector on the UKTI website. New export events are added daily to the site and you can register to be alerted to them on a daily, weekly or monthly basis UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events UK Trade & Investment Sector Briefing: ICT opportunities in Kenya Next steps - How UKTI can help ? Arranging appointments British companies wishing to develop their ? Organise seminars or other events for business in the Kenyan market are advised to you to meet contacts and promote your undertake as much market research and company in the Kenyan market planning as possible in the UK. UKTI?s team in Kenya, with its wide local knowledge and This work is available via our Overseas Market experience, can provide a range of services to Introduction Service (OMIS) a chargeable British-based companies wishing to grow their service which assists British-based companies business in global markets. wishing to enter or expand their business in overseas markets. This can include: ? Provision of market information To find out more about commissioning this ? Validated lists of agents/distributors work, or accessing other UKTI services and ? Key market players or potential specialist advice, please visit the UKTI website customers in the Kenyan market to find contact details for your local UKTI ? Establishment of interest of such office. contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2010 by UK Trade & Investment Crown Copyright © UK Trade & Investment Sector Briefing: ICT opportunities in Kenya
Posted: 01 October 2010