Home to the wildly popular M-pesa mobile-phone payments service used by millions, Kenya has rapidly scaled its Internet infrastructure to drive economic growth. Now the World Bank says it’s time to take this digital commerce phenomenon on the road, to build a globally competitive East African market.
The potential? As many as 4.5 million new jobs across Kenya, Tanzania, Uganda, Rwanda, South Sudan and Burundi. Together these countries would form the ninth-largest digital market on the planet, with 200 million people. Adding Ethiopia’s 100 million-plus population through investment and technology connections with Kenya, which seems to be on the way, would pump up the payoff.
“A more deeply integrated and competitive regional market would provide a ‘friendly’ space for Kenya’s digital firms to scale and mature before launching into the continental and global markets,” the World Bank’s researchers argue. “It would attract significant new investment in digital infrastructure, expand domestic and cross-border digitally enabled services and goods trade, stimulate development of locally relevant digital content, and inject greater competition across the region.”
From meal deliveries to online shopping to the sharing economy (think Airbnb, Uber and their global imitators), it’s all about the platforms.
“Digitally enabled companies and innovators need large, seamless markets to rapidly scale,” the World Bank study explains. “Digital platforms become exponentially more valuable the more users and data they generate, often locking in a first-mover advantage.”
There are tantalizing signs of major potential, such as in agriculture. “While digital agricultural technologies have demonstrated early signs of creating an impact, adoption still lags, with the reach of the leading platforms and technologies ranging from 1,000 farmers to over 600,000, suggesting a reasonable uptake but also significant scope to expand.”
More advice to Kenya from the World Bank:
- “The impressive performance in churning out innovative new startup stage digital ventures needs to be matched with a higher success rate of graduation to growth stage – generating the enterprises that will have a big impact on overall economic growth and job creation.”
- Equipping Kenya’s workforce with digital skills will create jobs in the emerging services and gig economy, where Kenya has catching up to do to compete at global scale. Just 7,000 Kenyans work in business outsourcing like customer call centers; in the Philippines that industry employs more than 1 million.
- Out in rural areas among Kenya’s poorest citizens, the digital economy is feeble, especially for women. “Three quarters of the population live in rural areas, but broadband access is limited outside of urban centers, which affects both access and use of digital services,” according to the study.
To read the full assessment of Kenya’s digital economy, see the October 2019 Kenya Economic Update: Securing Future Economic Growth – Policies to Support Kenya’s Digital Transformation, report 143163 at: documents.worldbank.org