Despite Kenya’s notable advancements in digitalisation, particularly in mobile money with platforms like M-Pesa, many key sectors are still underutilising digital technologies, hampering productivity and economic growth, says a local think tank.
According to the Kenya Economic Report 2024 by the Kenya Institute for Public Policy Research and Analysis (Kippra), the service sector’s digitalisation rate stands at a mere 0.56 per cent while agriculture is lagging significantly at 0.14 per cent.
Kippra reckons that this stark contrast highlights a significant gap between potential and actual digital integration, emphasizing missed opportunities for economic development.
“Key barriers to digital adoption include low digital skills among business owners, inadequate familiarity with digital tools, and high costs associated with essential technology,” the report states.
Mobile money
According to the Government think tank, while 98 per cent of Kenyans use mobile money, only 22 per cent primarily utilise basic digital services, and less than a third report increased income from these tools, a discrepancy that illustrates a critical need for enhanced digital literacy and infrastructure to fully realize the benefits of technology.
The likes of India have experienced significant technological transformation in recent years, to become a hub for software development, with many global companies outsourcing their IT services to Indian firms. It also has a thriving startup ecosystem. To address challenges facing the country, the Kenyan government has launched initiatives like Ajira and Jitume, aimed at enhancing digital skills among youth. These programmes are designed to equip young people with the necessary skills to thrive in a digital economy.
Additionally, the ambitious Digital Superhighway project seeks to expand fibre network coverage by 100,000 km, install 25,000 public Wi-Fi hotspots, and reduce internet costs. Kippra emphasises that these efforts are crucial for fostering an inclusive digital economy that can bridge regional disparities.
As Kenya continues to nurture its digital economy, projected to contribute 9.24 per cent of gross domestic product (GDP) by 2025, Kippra is vouching for the enhancement of digital literacy and infrastructure, saying by addressing these gaps, Kenya can better position itself as a leader in the global digital landscape while ensuring equitable access to its benefits for all citizens.
One area where Kenya has made significant strides is in e-commerce. The country’s e-commerce market is expected to grow by 21.5 per cent annually, reaching a value of $1.5 billion by 2025.
This growth is driven by the increasing adoption of online shopping platforms like Jumia, Kilimall, and Masoko, which offer a wide range of products and services to consumers across the country.
The success of e-commerce in Kenya can be attributed to several factors: the widespread use of mobile money, a growing middle class with disposable income, and increasing penetration of smartphones and internet access.
