Op-ed

Enabling SME’s Connectivity Will Improve Kenya’s GDP

BY Soko Directory Team · October 17, 2017 10:10 am

Kenya has already established itself as a high growth market with a technology-enabled society that it can build on to create a vibrant information technology-based service industry.

With the East African market information technology related market expected to grow to a size of 128 billion USD in the next decade, Kenya is well positioned to benefit from this growth.

Without a doubt, this growth will be driven by Kenya’s Small and Medium Enterprises (SME’s) ecosystem that stands at a registered 17 million companies

Employing at least 85 percent of Kenya’s eligible human resource and contributing to more than 45 percent of Kenya’s economy, approximately half of Kenya’s Gross Domestic Product, it might all seem glorious but small businesses are not pulling their weight in the economy.

While lack of working capital, market access, red-tape are typically the reasons bandied around for limiting small business growth the remedy could as well be lying in lack of accessible and affordable ICT solutions.

There is market confirmation that digitizing business processes could bring unquantifiable benefits; reaching more potential customers, reducing the cost to serve customers, making production processes more efficient and making it quicker and easier to monitor and report business performance.

To get small and medium businesses using ICT services more extensively, there are four hurdles we have to overcome: complexity, affordability, connectivity and a compelling reason.

With a competitive connectivity landscape, it is increasingly becoming a complex task for small businesses without the foresight of an internal expert to find the right ICT applications to meet their business need.

Cost is another obvious stumbling block in the path of small businesses connectivity, while technology such as cloud computing is changing the equation; the panacea is really the operators’ investments in connectivity assets.

Telkom Kenya is among the companies that have made investment in connectivity infrastructure a key focus. Some of its investments include a 23 percent stake in 5000KMs TEAMs (through Fujairah in the UAE), a 10 percent stake in 2,700-kilometre LION2, (through Mayotte in Mauritius), an 8 percent stake in the East Africa Submarine System and management of the government’s National Optic Fibre Backbone sets offering solutions distinctive on speed, accessibility, and reliability.

Connectivity, or the lack of it, is an increasingly important factor. Without a reliable and speedy broadband connection, small businesses are constrained in capacity to use the myriad of opportunities at their disposal.

Granted, the web of complexity, cost and connectivity will be broken down by the marketplace competition increasing the use of ICT by SME’s.

But a final barrier stops many such businesses making effective use of ICT: they simply do not see a compelling reason to do so.

Key market trends are helping to overcome this barrier too. The revolution in consumer-friendly devices such as smartphones and tablets — and the fast-growing ecosystem of applications like Telkom Kenya’s E@synet Broadband for SME’s are changing things for small and medium business as much as for consumers.

Policymakers should also have access to better information on how to persuade SME’s of the benefits of being active online.

The explosion of social media is offering new opportunities for small businesses to market themselves and build richer relationships with customers. Buttressing this trend is the need and ability to connect enterprises’ business physical devices, otherwise known as “Internet of Things”.

This trend will play a dominant role in the future of Kenyan enterprises providing businesses with key analytics, data and informatics requisite for concise, thorough and more effective demand-side decision-making processes.

Indeed, there’s evidence that companies that can most effectively use analytics to inform demand-side decisions about business processes outperform those that can’t

There are many challenges for SME’s in today’s market, such as increased competition, rising customer expectations, and limited capital. However, by using the cloud to access the same tools and services once reserved for enterprises, SMEs can deliver a higher quality of service without placing additional strain on existing resources.

Finally, there lies an opportunity for government itself to act as a fulcrum for increasing uptake through its public services for SME’s across a range of departments, as has been acknowledged in the work already done by Business Environment Delivery Unit to digitize government operations to ease delivery to small businesses.

Departments of government have a key role to play in stimulating the online activities of SME’s in a positive way – whether it be statutory obligations like paying taxes through Kenya Revenue Authorities’ iTax system where small businesses can file and pay their corporate income tax, VAT and PAYE electronically or new businesses can have a name search and reservation, KRA pin number, NHIF, NSSF and single business permit registration online, the interaction goes a long way in demonstrating the value of connectivity in business processes.

The Author, Mr. Kris Senanu, is the Managing Director, Enterprise Division at Telkom

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory