ICT IN KENYA
#140Friday Sector Policy Paper
ICT INDUSTRY DEVELOPMENT & GOVERNMENT INCLUSION
Nairobi 3rd April 2012
ICT IN KENYA
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ICT IN KENYA CONTEXT
CREATING A SUSTAINABLE ICT INDUSTRY WITHIN KENYA
COMPLICATION
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 q ICT development lacks vision and support to aDract investors q InternaKonal players see ample opportunity, endangering the local compeKKve posiKon
SITUATION
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 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
CHALLENGE ü How do we develop a strong ICT industry in Kenya making opSmal re-‐use of exisSng means? 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
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ICT IN KENYA INDUSTRY ANALYSIS
THE KENYAN INDUSTRY ASSESSMENT SHOWS CLEAR AREAS FOR ATTENTION
S W O T
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Strengths
§ Private sector recognises need for beDer engagement with Government
§ Large internal Kenyan market
§ ICT inclusion in Vision 2030 § Recent technological advancement (Fiber)
§ AmbiSous Workforce
§ Acknowledged innovaSons/technologies (MPESA)
Threats
§ Growing Kenyan market aDracts internaSonal ICT players threatening local ICT companies
§ GlobalizaSon of the ICT industry simplifies internaSonal service delivery to Kenyan companies
§ African economic development creates significant near-‐shore compeSSon
§ Established human capital flows to MNC’s
Weaknesses
§ Sub-‐opSmal procurement process for local players
§ Lack of tailored (tax) legislaSon § Technical educaSon and industry needs misaligned
§ Limited availability of investments
§ Lack of governmental ICT representaSon
§ Lack of Public Private Partnerships in ICT (PPP’s) § DiplomaSc services lack focus on ICT opportuniSes
OpportuniKes
§ Significant government Investment in ICT
§ Labor costs provides labor arbitrage potenSal § Growth of average size of Kenyan companies
§ Recognized ICT hub developments (incubators)
§ Intended creaSon of Konza as ICT ecosystem
§ Entry of internaSonal ICT players (Nokia, IBM)
§ CreaSon of EAC provides larger market
ICT IN KENYA
INDUSTRY DEVELOPMENT NEEDS A PROVEN ICT INDUSTRY DEVELOPMENT STRUCTURE
6 Source: Australian Business Founda3on
ICT IN KENYA INDUSTRY COOPERATION
INDUSTRY DEVELOPMENT MUST BRING TOGETHER ALL INDUSTRY STAKEHOLDERS
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FINANCIAL MARKETS
GOVERNMENT
PRIVATE MARKETPLACE
ICT INDUSTRY PLAYERS
-‐ Projects -‐ Exper?se -‐ Marketplace
-‐ Products & Services -‐ Skilled workforce -‐ Experience -‐ Industry standards -‐ Representa?on
-‐ Funding -‐ Exper?se -‐ Infrastructure -‐ Confidence
-‐ Projects -‐ Legisla?on -‐ Educa?on -‐ Tax regula?on
Banks
VC’s
Investment funds
Unions
KICTB
Producers
Industry representa3ves
Incubators
Universi3es
End Users Companies
Insurance
E-‐G-‐ovt
ICT IN KENYA
GOVERNMENT
ICT INDUSTRY PLAYERS
PRIVATE MARKETPLACE
FINANCIAL MARKETS
RESPONSIBILITY KEY SUCCESS FACTORS
KEY SUCCESS FACTORS
ENSURING COOPERATION FROM ALL STAKEHOLDERS REQUIRES BENEFITS FOR ALL
DELIVER HIGH QUALITY PRODUCTS AND SERVICE
CREATE A SOLID STREAM OF ICT WORK
PROVIDE SUSTAINABLE AND PREDICTABLE
FUNDING
ü Predictable quality ü Solid service delivery methodology ü Focused educaSonal “curriculum” ü Strong coach/mentor network ü Strong business services support
ü Public Private Partnerships (PPP) ü Governmental incenSve structure ü Stable entrepreneurial environment ü Virtual marketplace environment ü ProtecSon of IP Rights
ü Shared financial risk profile ü Aligned exit strategies ü Strong partnerships ü Public/private investment funding ü Governmental taxaSon sSmulus
THROUGHOUT THE ENTIRE LIFE CYCLE
“SUPPORT FROM
INFANCY TO MATURITY”
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SUPPORT AND FACILITATE ü Long term sustainable vision ü Sufficient budget and focus
ICT IN KENYA
GOVERNMENT
ICT INDUSTRY PLAYERS
PRIVATE MARKETPLACE
FINANCIAL MARKETS
ENTREPRENEURS SME MNC
KENYA ICT DEVELOPMENT
FRAMEWORK TO SUPPORT THE KENYAN ICT INDUSTRY PLAYERS ACROsS THE LIFECYCLE MATURITY LIFE
CYCLE
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IncubaKon ü Support on product, skill and
business development ü Facili?es providing workplace,
internet and meeSng place ü Educa?on on business processes,
-‐methodologies and -‐behavior
Business Support ü Support on business advisory and
development ü Cer?fica?on of technical skills and
delivery maturity (Prince II) ü Educa?on on industry standards &
methodologies (Lean/SixSigma)
ConKnuous improvement ü Support by providing a (virtual)
networking environment, an ICT market place, and
ü Diploma?c support to create internaSonal demand for Kenyan ICT products, services and skills
VC A Bank B & C Bank A Gov’t
-‐ Banks -‐ Seed Capital -‐ Private Companies -‐ Government
Kenya ICT Investment Fund
-‐ Na3onal -‐ Interna3onal -‐ Private -‐ Public
Market Funding
Kenyan Marketplace Nairobi….. -‐ SME -‐ MNC -‐ Gov’t + rest of Kenya
Virtual Marketplace Africa
-‐ Kenya -‐ Rest of Africa -‐ Incidental offshore
Global Marketplace
-‐ Konza City -‐ Kenya -‐ Con3nent -‐ Global
Targeted Funding
ü Entrepreneurial funding and educaSonal support
ü Tax and procurement incenSves and legislaSon
ü IP rights and diplomaSc commercial exposure
ICT IN KENYA
FUNDING
REQUEST FOR HELP
THE KENYAN ICT REPRESENTATION ASKS ITS GOVERNMENT FOR HELP
EDUCATION
LEGISLATION
COOPERATION
SHORT-‐TERM MEDIUM-‐TERM LONG-‐TERM
ü Favorable government procurement procedures
ü Double TaxaSon TreaSes
ü SubstanSve government subsidies for HR capability building
ü Acknowledgement of incubator insStutes
ü Support in media exposure ü Alignment ICT development
with Vision 2030 ü Acknowledgement of ICT
industry representaSve body
ü ICT focused tax incenSves ü IP legislaSon development
ü Development of Kenyan ICT standards and cerSficaSon
ü Development of ICT focused educaSon at all levels
ü Joint Public/Private economic missions for ICT
ü R&D legislaSon development ü Contract legislaSon
development
ü Development of technology clusters that link Academia and Industry for R&D
ü Development of technology clusters that link Security & Industry
ü Acknowledgement of ICT industry Advisory Board
ü ICT sector representaSon in government
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ü ICT industry investment fund ü Government projects ü Public Private Partnerships ü Individual/CorporateTax
incenSves for investments
ICT IN KENYA NEXT STEPS AND TIMELINES
CONTINOUSLY MOVING FORWARD WITH PRECISION AND CARE
PROPOSED NEXT STEPS
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ACTION TIMELINES
APRIL 2012
APRIL – MAY 2012
MAY – JULY 2012
JULY – OCTOBER 2012
OCTOBER 2012 ONWARDS
Ø Validate ICT requests from government
Ø Align ICT industry ambiSon with Vision 2030 AND Kenya ICT Board
Ø Partner with stakeholders on ICT industry vision & approach
Ø Create detailed joint roadmap, acSviSes, roles & responsibiliSes
Ø Act on detailed roadmap with focus on quick wins
ICT IN KENYA
Which Significant Trade Bodies exist currently? KAM TESPOK KEPSA KIF
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Industry RegulaSon and way forward
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
ICT IN KENYA CURRENT KENYAN ICT LANDSCAPE
THE KENYAN ICT INDUSTRY LARGELY DEPENDS ON ENTREPRENEURS AND FOREIGN MNC’s
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!"###$#"###
$#"###%#"###
!"#"""
ConsulSng Technology Government
5.000
MNC SME
10.000
Entrepreneurs Total Workforce
Outsourcing
10.000 REMARKS Industry
• The largest ICT market is ………….. • Most of the foreign players are in ……… and they are rapidly growing • Outsourcing is a relaSve …………. Market segment, although ……………. • The technology industry segment is by far the ……….. most revenue generaSng, and the ………………. Is relaSvely small
Employer • Over xx% of all ICT professionals work for …………….., where as only xx% in …………. • With over ………… jobs, the government provides a solid base for the industry
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 considering its workforce and since many of its players are foreign implies a capital drain for the Kenya ICT industry
KENYA ICT WORKFORCE ANALYSIS * (in FTE) Industry Segmenta?on
Employer Segmenta?on
!"#"""
$"#"""
%!#"""
$"#"""
!"#$###
Total Revenue
Outsourcing
30.000
ConsulSng Technology
30.000
Government MNC SME Entrepreneurs
15.000
KENYA ICT REVENUE ANALYSIS (in KES mio) Industry Segmenta?on
Employer Segmenta?on
* See appendix for more details
ANALYSIS
FICTIVE DATA
ADD INDUSTR
Y DATA – MIKE/MBUGUA
–
ADD INDUSTR
Y ANALYSIS –
TEJ/NGIGI –
ICT IN KENYA POTENTIAL ICT INDUSTRY IMPACT
ICT DEVELOPMENT IN COMPARABLE LEADERS SHOW SIGNIFICANT GROWTH POTENTIAL
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REMARKS AssumpKons • Kenyan avg. annual GDP growth 4% • ICT spend growth with 6% from 2012 • ICT spend comparison (% of GDP): -‐ South Africa 15% -‐ Singapore 20% -‐ xxxxxxx 10% • Taking the peer comparison average, the potenSal Kenyan ICT industry should be ~12% of GDP, increasing the market with KES 700 mio annually
Impact • Disregarding efficiency and effecSveness effects and assuming equal division of increased revenue over naSonal & internaSonal players the Kenya GDP could grow with an extra 7% • Assuming an average daily ICT income of KES 5.000, the ICT industry can provide for 70.000 extra jobs
KENYAN ICT POTENTIAL (in KES bln)
2010 2011 2009 2008
130
10
110
2012 0
2014 2015
120
2013
100
140
Total GDP Kenya
Current Kenyan ICT Spend
Comparable peer Na?onal ICT spend (12% of GDP)
GDP INCREASE:
INDUSTRY POTENTIAL
JOB CREATION:
KES 700 mio 70.000 FTE
FICTIVE DATA
ADD ECONOM
IC DATA – LILL
IAN/PAUL –
ADD POTENTIA
L ANALYSIS –
WAIBOCHI/MARY –
ICT IN KENYA KENYAN ICT LANDSCAPE
THE KENYAN ICT LANDSCAPE ANALYSIS ON WORKFORCE AND REVENUE
CONSULTING
TECHNOLOGY
OUTSOURCING
INDUSTRY ANALYSIS DETAILS COMPANIES
Entrepren. SME MNC Total
Workforce
Revenue
Workforce in 1.000 FTE) Revenue in mio KES 15
Type Examples
-‐ Sos-‐/hardware producers -‐ System Integrators -‐ Service providers -‐ Website development
-‐ SevenSeas -‐ Microsos -‐ IBM -‐ Safaricom -‐ ……..
Entrepren. SME MNC Total
Workforce
Revenue
Type Examples
-‐ Technology consultant -‐ Accenture -‐ …… -‐ ……..
Entrepren. SME MNC Total
Workforce
Revenue
Type Examples
-‐ Infrastructure -‐ ApplicaSon maintenance/ development
-‐ Business Process Outs.
-‐ Microsos -‐ IBM -‐ Safaricom -‐ …… -‐ ……..
ADD INDUSTR
Y DATA – STEPH
EN/DAVIS –
ICT IN KENYA
THANK YOU!
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