Kenya has made impressive progress in digitalisation, particularly with innovations like mobile money through platforms like M-Pesa and the use of technology in advancing livelihoods.
However, much of the service sector remains under-digitised, posing a significant barrier to productivity and economic growth. According to the Kenya Economic Report 2024 from the Kenya Institute for Public Policy Research and Analysis (KIPPRA), the digital adoption rate in the service sector stands at just 0.56 percent, far below its potential.
The think tank now advises that to drive economic growth and remain competitive, Kenya urgently needs to rev up technology integration in the service sector. Despite leading the way in mobile money adoption, Kenya’s broader digital landscape remains underutilised.
Mobile money has transformed financial inclusion, with 98 percent of Kenyans using it, but only 22 percent primarily use basic digital services. Less than a third of users report increased income from these tools, highlighting a critical gap in digital literacy and the effective use of technology. This gap must be addressed for Kenya to unlock the full economic potential of its digital economy.
One of the key barriers to technology adoption in the service sector is low digital literacy. Many business owners lack the skills necessary to integrate digital tools into their operations, limiting productivity and competitiveness. This is a missed opportunity for economic development.
Kenya’s digital superhighway initiative offers a promising path forward. By expanding the fibre network by 100,000km and installing 25,000 public Wi-Fi hotspots, the country can reduce internet costs and improve access to digital services.
Kenya should also learn from countries like India, which has become a global hub for IT services by investing in digital infrastructure and skills development. India’s thriving tech sector has attracted global firms, creating jobs and fostering innovation.
While Kenya has the potential to follow a similar path, the country must accelerate the integration of technology in its service industries. E-commerce is a prime example of where Kenya has already begun to make strides. Platforms like Jumia, Kilimall, and Masoko are driving e-commerce growth, with the sector expected to reach a value.
