Regulations And Reforms Needed To Realize Growth In Digital Economy

We are in a dynamic world, where digital technologies and services have become the cornerstone of our day to day activities. More and more technologies will surely emerge in the future, which we will have to adapt to. Not by choice, but as a necessity. Already, technology is rapidly changing how we conduct business.

The world commemorates World Competition Day every 5th December, and this year, the theme is ‘ensuring effective competition in an increasingly online world’.

Now, for any country’s economic growth to improve, there must be healthy and effective competition in all sectors concerned with boosting the economy.

In the absence of competition, there is the risk of complacency, which in turn will result in the stagnation of growth. Take for instance the times you were still in school and a number of students would compete with each other to get better grades. That was highly encouraging, and do you remember the results?

Everyone would read hard, work smart, teachers would be asked questions, students would read ahead, the better ones in a specific subject would lead the rest in discussions, and the end result would be good grades, and a better class mean score jointly worked for.

The same thing goes for the world of economy. It is an effective competition that pushes firms to innovate and come up with better and quality goods or services.

Going by this years’ WCD’s theme on the digital economy, and seeing that as a country, Kenya is at the forefront in the growth of online skills needed for the digital economy, the digital economy is at the heart of President Uhuru’s Big Four Agenda.

Kenyans are now more inclined to online markets which are said to have expanded the country’s ICT sector by 13 percent to rise to 390.2 billion shillings in 2018 from 345.6 billion shillings in 2017.

As Kenya leans more towards the digital economy, the Competition Authority of Kenya (CAK), according to its director of planning, research, policy and quality assurance, Dr. Adano Wario, is finding itself at crossroads as to whether to regulate or not, as a way of accelerating the growth of the sector.

Earlier, a World Bank report dubbed ‘Kenya Economic Update: Accelerating Kenya’s Digital Economy’ recommended several reforms that the digital economy sector in Kenya needs to do to realize growth, one of which was to enhance regulation and policy.

According to the report, enhancing regulation and policy in line with rapid market evolution would ‘Speed up the adoption of modernized telecommunications regulations and empower an independent Communications Authority that can streamline regulatory procedures and enforcement to facilitate private sector investment, competition, and consumer protection’.

The World Bank also recommended that for Kenya to realize growth in the digital economy, the government would have to provide a suitable environment to ensure a smooth transition from startup to growth by improving access to capital for startups and reviewing taxation policies that aren’t ideal for startups.

Also, to have a workforce that is digitally savvy, which is a much-needed skill to realize growth in the sector, reviewing of the current school curriculum was proposed, so that from the very basic of classes, learners are equipped with the necessary digital skills in readiness for the real digital career environment.

The gap between rural and urban dwellers in terms of access to the internet is also one of the hindrances to growth. If it were made possible for every Kenyan, as an individual or a business to have access to affordable but high quality digital connectivity, everyone would be better served and enabled in terms of enjoying the benefits of the digital economy.

According to CAK’s Dr. Wario, the CAK would wish to commemorate this year’s World Competition Day by sensitizing stakeholders in the digital finance sector on the importance of having competition law and policy as a way to accelerate digital growth in Kenya.