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Creating an Enabling Environment for ICT Growth

By Matunda Nyanchama
Toronto, Ontario, Canada
May 19, 2006

Information Communication Technology (ICT) is both an enabler and an industry by itself. As an enabler, ICTs help create efficiency, speed and effectiveness to business processes. As an industry, it includes a range of both software and hardware products, and services that design, build and operate theses products. In the process, the industry employs millions of people worldwide

The worldwide ICT market is estimated to be in the range of trillions of dollars with an estimated annual growth of up to 30%. This market is dominated by North America, Western Europe and Japan with 36%, 28% and 17% market share, respectively. China and India are fast catching up as are many countries in Asia and South America. Sub-Saharan Africa, except for South Africa, hardly features in the world map of ICT markets. In fact Africa and the Middle East are estimated to hold a measly 2% of this market.

Elements of the ICT market include telecommunications, Information Technology (IT) services, hardware, software and other spending related to the use of ICTs.� Governments worldwide are among the largest ICT spenders across the world in an effort to bring efficiencies in delivery of services.

The size of the worldwide ICT market offers significant opportunity for ICT growth in African countries. Tapping into this market would be a major contributor to economic growth. It is estimated that ICTs constitute up to 10% of the GDP of some established economies.�

ICT growth in developing countries, including sub-Saharan Africa, is fuelled mainly through increased use of mobile telephones. However, advanced ICT use such as e-commerce and e-government, has yet to take root.�

E-commerce allows for online business-to-business and business-to-consumer transactions. E-government allows for efficient delivery of government services. In fact, most government services (licensing, registration, tax filing, etc.) are key candidates for online delivery.

There are positive indications of growth in the African ICT market. Telecommunications are leading the way but also there is substantial awareness and preparedness that has taken place. All African countries have developed and published national ICT policies. Others are some way into implementation of these policies.�

Kenya has recently launched a high-powered initiative for ICT implementation. The country’s ICT leadership envisions creating hundreds of thousands of ICT-related jobs. It is an ambitious plan, which specifically (though not exclusively) focuses on tapping the outsourcing market.

In order to be successful, the government and private sector must work to create a suitable environment for ICTs to flourish.�
A successful strategy must encompass the creation of a favourable business climate, a sound infrastructure, supportive regulatory regime, ease of access to capital, matching skills capacity, and a reliable work ethic. On top of these are others like security and safety. Taken together, these factors would contribute a positive branding of the country as a viable place for ICT business.

The average time required to start a business is an indicator of the national business climate. In Canada it takes an average of 3 days to set up a business. In Kenya, Uganda and Tanzania the figures are 54, 36 and 35 respectively. Clearly there is work for these governments to do here to speed up the turnaround for business registration. A good approach is to have a one-stop shop for business registration with all necessary components needed to start a business.

Various skills and skill levels are required to maintain sustainable ICT vitality. Simple use of ICTs requires ICT literacy. Design, installation and maintenance of ICT infrastructure require advanced technical skills. ICTs require infrastructure that can support the demands for the creation, transmission and storage of information. This requires skills that can design, install, maintain and revamp the infrastructure.

The Kenyan education system must develop capacity for production of ICT-literate population that can make use of ICTs. Both academic and tertiary institutions must invest heavily in advanced ICT skills development. This skilled labour would be a magnet for companies with outsourcing opportunities.

India’s success outsourcing business is not by accident; its large network of Indian Institutes of Technology (IITs) has produced some of the most skilled workforce in the world. A few years ago, every third company started in America’s Silicon Valley had behind it a graduate from one of the IITs.� �

ICTs advance are rapid, which means that technologies that are at the “bleeding edge” today would be near obsolete in the next few years. For example, the famous Moore’s law holds that computer processing power doubles every 18 months. Powerful computers allow for the creation of complex and advanced applications. To utilize and maintain such applications required constant skills upgrade. In this respect, employer supported continuing education is essential in order to cope with these rapid advances.�

The school system must go beyond imparting technical skills to incorporate entrepreneurship, which is essential for turning ideas into commercial products and services. Management skills are also critical for the successful execution of any venture.

Entrepreneurship and management are necessary, although not a sufficient conditions for commercialization of ideas and
products. Without access to capital, ideas will remain just that: ideas with potential of not ever seeing the light of day.

African countries should learn from the American technology revolution of the 1990s, which would not have happened without venture capital. This is money from individuals that saw opportunity and potential in technology products and services. They also understood the risk inherent in backing ideas that had not been tried before but they were willing to take chances.

The dotcom era created a number of millionaires but also caused substantial grief when the bubble burst. Although some
companies failed with the burst, their products and services remain and continue to be part of the ICT milieu.� �

There is more. A successful ICT strategy needs a legal and regulatory regime that allows for ICTs to flourish.

The government has powers to make the business of ICT attractive. Examples include tax incentives for companies that undertake to do business of this nature in the country for an agreed period of time. Such agreements would incorporate requirements for (technical, managerial, entrepreneurial, etc.) skills transfer to local people. Tax incentives can also facilitate access to (say) computers and infrastructure on which they run.

Legal regimes that allow for speedy dispute resolution contribute to a supportive business climate. Many African (including
Kenyan) judicial systems require substantial amount of work to enable them provide an enabling environment for business to thrive, specifically on matters of handling dispute resolution. Note that judicial systems, by the nature, are slow. Countries that have recognized this offer alternative resolution mechanisms such as mediation.�

Finally a country must market to the world its competitive advantage to win business. Kenya has been very successful in branding itself as a tourist destination. The Kenyan game parks and many cultural artefacts have etched the country’s image into many a tourists’ mind. A similar ICT branding strategy needs to take place. For example, the country has a large English-speaking, skilled labour pool available at low labour rates.� Needed aggressive marketing is necessary and would almost go counter the saying that chema chachiuza; kibaya chachitembeza.

The world-wide trend in ICT markets is not by accident. Countries that have excelled in tapping ICTs for economic growth lead.

Comments

Comment from leonard
Time: April 11, 2007, 2:20 pm

This is a good treatise. I was struck by your opening statements about tourism and remittances. A case in point about the latter is http://www.mamamikes.com I recently read a post about it at the American journal of foreign policy. There are remarkable entrepreneurs in born in Kenya!!!

Comment from ke13l6
Time: March 26, 2009, 3:33 pm

ear Kenyan,

Fiber Optic has finally arrived in Kenya.

It is certain Kenya’s next generation of millionaires will emerge from this sector.

If you would like to take a leap of faith and learn more about IT in Kenya then visit http://www.techkenya.com

Join us today and access your greatest opportunity.

Best Wishes,

TechKenya.com Admin

Comment from Emmanuel Ondoro
Time: July 8, 2009, 4:13 pm

IT Governance solution gives you the ability to . . .

* Meet expectations for IT.
* Measure IT performance.
* Manage resources.
* Mitigate risk.
* Make sure that IT understands and aligns activities with the strategic direction of the enterprise.

Comment from Dr.
Time: December 21, 2011, 8:11 pm

The wholesale importation of hardware and software packages coupled with limited infrastructure and the capacity to adapt and implement them; to suit local challenges is a growing and worrying trend especial in Sub Saharan Africa

Comment from mtu mdogo
Time: December 24, 2011, 10:07 pm

that’s so true; Dr.

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