Kenya is considered the leading technological and innovation hub of East Africa and stands at the forefront of mobile broadband connectivity, mobile financial services, and a robust ICT infrastructure. According to the Business Monitor International (BMI), the country’s ICT sector grew by an average of 10.8% annually in the last decade, with the digital economy expected to contribute up to 9.24% of the country’s GDP by 2025. The Kenyan government’s positioning of the country as a regional hub for international technology vendors attracted significant data center investment and could see the country develop as a regional center and testbed for emerging technologies, cloud, and AI applications. Big-tech companies such as Amazon Web Services (AWS) recently chose the country for their regional development and Edge data centers.
Kenya has made great strides in providing access to digital infrastructure. The government recently launched its Digital Superhighway Project, which seeks to strengthen the country’s information communication technology backbone. The Digital Superhighway will prioritize the expansion of Kenya’s fiber network coverage countrywide with plans of laying of 100,000 kilometers (62,000 miles) of fiber optic cable. This expanded infrastructure is expected to create 25,000 public Wi-Fi hotspots as well as Digital Village Smart Hubs in each of Kenya’s 1,450 wards (the country’s lowest administrative units). These centers will play a multifaceted role, engaging in research and development, innovations, digital device refurbishment, cyber security training, repair and maintenance, recycling, e-waste management, practical training, and the provision of various ICT services.
The country’s digital masterplan aligns with global technological advancements and supports the rapid rise of Kenya’s digital economy and growing startup ecosystem. The government sees ICT as a critical enabler for other sectors. For example, in Healthcare, Health IT continues to gain momentum as the government implements its eHealth strategy. The Ministry of Health’s (MoH) eHealth strategy identifies five main areas of focus and implementation. These are: Telemedicine; Health Information Systems; Information for Citizens; mHealth; and eLearning. Projects such as the District Health Information Software 2 (DHIS2) utilize digital solutions to improve healthcare delivery and disease tracking, leading to more effective resource allocation and improved public health outcomes.
The government is committed to ensuring students have access to the requisite IT skills to meet global market demand for skilled IT labor. The Digital Literacy Program (DLP), commonly referred to as Digi-School, is a program borne out of GoK’s vision to make sure every pupil is prepared for today’s digital world. The program introduces primary school children to the use of digital technology and communications in their learning. DLP is targeted at learners in all public primary schools in Kenya and will cover over 24,000 primary schools. The Education Broadband Connectivity project is another holistic, multi-faceted and national approach to provide internet connectivity for the nation’s secondary schools and tertiary institutions.
The Kenya Digital Economy Acceleration Project (KDEAP), a$390 million World Bank funded project, supports the governments’ digital agenda as it seeks to expand already in process efforts to expand access to high-speed internet, improve digitization of government services, and develop skills for the digital economy. An estimated $100 million in Private capital will also be mobilized to accelerate broadband infrastructure development.
On the policy front, the Kenyan government imposed a digital services tax (DST) on income from services provided through a digital marketplace in Kenya at the rate of 1.5% on the gross transactional value. Kenya engaged in discussions with the Organization for Economic Cooperation and Development (OECD) and other partners on the OECD/G20 Inclusive Framework, but that process is ongoing, and Kenya continues to apply its unilateral DST.
The Office of the Data Protection Commissioner (ODPC) was established under the Kenya Data Privacy Act (2019). The ODPC’s role is to oversee the implementation of and enforcement of the Act. The Data Privacy law further provides guidance on data processors, storage, localization criteria and provides guidance to data processors on punishable offences and dispute mechanisms. Issues such as cross-border data flows and localization remain a priority for U.S. industry with clear guidelines yet to be set.
In August 2023, the Ministry of ICT repealed a policy requiring foreign technology companies to have 30% local shareholding. This policy had been a major setback for long-term foreign investments into the ICT sector. For more information on these policies please visit the resources outlined at the bottom of this section.
Opportunities
Digital Infrastructure:
As highlighted above, the GoK, through the ICT Authority (ICTA) offers tenders opportunities related to the government’s Digital Superhighway Project. In addition to KDEAP procurements, opportunities include last-mile and public Wi-Fi connectivity and eight lots of backbone and metro connectivity contracts. Further information can be found on the Ministry’s website.
Data Centers:
Cloud computing services are arguably the fastest-growing segment in Kenya’s IT services sector based on the number of investments attracted in recent months. This is mostly driven by affordable sources of renewable energy to power data centers, better broadband connectivity, and strong value propositions for cloud-based services in the country. The government plans to establish green energy plants for sustainable electricity supply to ICT systems to ensure reliable and accessible services as well as service continuity. Investment in hyperscale data centers by leading tech firms continues to drive growth in the cloud services market.
Computer Hardware and Software:
Computer hardware accounts for nearly 70% of the IT market in Kenya. Total computer hardware and software sales reached approximately $549 million at the end of 2022. Trends in remote working/studying is expected to drive growth in demand for hardware and software. Demand for software, computer hardware, and computer systems for various industry verticals is expected to grow. The government announced plans to set up a local software industry in support of investments made by various U.S. companies such as Microsoft, Cisco, among others who, established software engineering training hubs in Kenya.
Consumer Electronics:
U.S. mobile devices are available and competing for the middle-to-upper income brackets, with U.S. brands like Apple now being used widely in the market. However, the lower-to-middle end of the market is price sensitive, resulting in wide use of cheap and often counterfeit mobile devices that are easily available and often sold as original devices to unsuspecting customers.
Cybersecurity:
Online crime in Kenya increased significantly in the last few years due to the rapid digitization of the financial sector and increased online payment transactions. In 2023, cyber criminals using the name ‘Anonymous Sudan’ launched a D-DOS attack on Kenya’s public and private sector digital infrastructure with significant downtime affecting services that included eCitizen, and mobile money apps amongst others. Kenya also suffered other D-DOS attacks during the year. Cybersecurity solutions will be required to secure data and online applications for both the government and its citizens.
Resources
- Ministry of Information and Communications (MoICT)
- Communications Authority of Kenya (CAK)
- Information Communication Technology Authority (ICTA)
- National Communications Secretariat (NCS)
- Konza Technopolis Development Authority (KoTDA)
- Office of the Data Protection Commissioner (ODPC)
- World Bank
- Technology Service Providers of Kenya (TESPOK)
Major Trade Shows
Connected Kenya Summit 2024
Africa Com 2024
Africa Tech Summit
For more information, the U.S. Commercial Service in Nairobi, Kenya, can be contacted via e-mail at:
Janet Mwangi, Senior Commercial Specialist
U.S. Commercial Service, U.S. Embassy Nairobi
U.S. Department of Commerce | International Trade Administration
Tel: +254 20 363 6724 Janet.Mwangi@trade.gov