Aly Khan Satchu: On Monday and Tuesday last week, I attended the ICT Authority’s inaugural ICT and Innovation conference at the Kenyatta International Convention Centre.
The KICC is actually an evocative and retro centre and it is good to see it once again playing its proper role. The President’s presence also bestowed the required gravitas on the occasion.
What we do know is that Kenya is an outlier in ICT in Africa. McKinsey ranks Kenya’s Internet GDP at three times the sub-Saharan Africa average and top of class in SSA with Senegal.
Kenya took a big and bold bet on the broadband economy and McKinsey’s IGDP ccore confirms that the bet was well made. The runaway success of M-Pesa — even Bill Gates is tweeting about it — and its extension and integration into a new and still fluid payments configuration is strong testament that innovation pays and creates opportunity.
Of course, innovation can be disruptive. As Joseph Schumpeter once described it: “The opening up of new markets, foreign or domestic, and the organisational development from the craft shop to such concerns as US Steel illustrate the same process of industrial mutation — if I may use that biological term — that incessantly revolutionises the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of creative destruction is the essential fact about capitalism”.
Shareholders of Nation Media, for example, who took the share price to a 24-month low on Friday, are beginning to fret that the #DigitalMigration campaign might prove a Schumpeter moment.
It is also worth remembering that this ICT revolution is a recent phenomenon. Just under 10 years ago, I remember spending $7,000 (Sh638,120 at the current exchange rate) to build a 170-foot tower in order to get a very intermittent 32 kilobytes Internet connection, for which I was paying over $500 (Sh45,580) a month for the privilege.
I was marvelling to myself last week that now I can listen to Mario Draghi’s press conference on a live stream and run another 10 programmes simultaneously on my computer. That’s a very big gap right there that has been closed.
Touching on Draghi, the euro fell like a stone on Friday and my January call for parity in the euro-dollar looks likely, and very soon.
The man from McKinsey explained that our IGDP component is predominantly private sector. If you look at the most successful ICT economies, you will note that the government also play a role as a precipitator. Think Israel, think the US.
Part of closing the gap, will require the government to take its operations into the 21st century and this will create an outsized demand-pull for the sector. ‘Think Kenya Buy Kenya’ was a call to the government to play that role of a precipitator.
There is plenty of innovation out there and the young Kenyans proved this at the KICC during the conference.
The point is, all the ingredients are here. And now we are looking for the magic recipe that will take our IGDP from above three per cent to near 10 per cent. We need the GoK to play an even bigger role. Enterprise Kenya [modelled on Enterprise Ireland] is a giant step in the right direction. The capital markets [GEMS in particular] have optimised the platform. We are at a tipping point. Let’s tip over.