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27 November 2014

Mobile tech boosts Kenya’s economic agility

Technology is at the forefront of economic development. Newcomen’s steam engine was synonymous with the industrial revolution, turning energy in coal into power. This is just one example of an improvement in technology that literally moved mountains, for one of the steam engine’ uses was to pump water out of mines, exposing sought-after raw materials.

Jumping ahead a few centuries and looking at a different continent altogether, Kenya has pioneered a mobile technology economy that points to future trends in the rest of the world.

Calling a taxi in Nairobi soon shatters old preconceptions about Kenya and developing economies. As the Economist notes, it is easier to pay a taxi fare by mobile phone in the city than it is in New York. Kenya is a leader in mobile payments technology with over half of the population on its M-Pesa mobile payments system, representing 17 million Kenyans. Monthly transfers and payment of goods and services amount to around a staggering £733 million. The development path of many emerging countries has been different to Europe and North America. Emerging economies, such as Kenya, typically have fewer people connected by landline and therefore find it easier and cheaper to install mobile telephone networks. As a result, consumers bypassed the need for analogue landline networks, and instead opted to use mobile digital networks. This, combined with few people having traditional bank accounts, provided the perfect setting for a thriving mobile payments-based economy.

In 2009, four government supported fibre optic cables came ashore bringing a new internet connection. Prior to this, the internet was only available via satellite and was too expensive for many users. Prices dropped and since then the number of people using the internet has tripled to just below 12 million. And with 74 mobiles to every 100 Kenyans, rather than expensive laptops it is via mobiles that Kenyans are connecting to the internet.

This improved connectivity has helped lay the foundation of Africa’s ‘Silicon Valley’ in Nairobi, dubbed ‘Silicon Savannah’, an area attracting a cluster of tech start-ups and venture capital firms at tech hubs such as iHub, 88mph and Innovation 4 Africa. And close-by in a new tower block is the IBM Innovation Centre, its first research lab in Africa. The international tech giants of Google, Intel, Nokia and Microsoft are also in the city.At Konza, 40 miles away from Nairobi, construction of a new techno-city is underway.

Kenya’s indigenous smart app industry is producing apps to solve problems that are particularly relevant to Kenya such as M-Farm an app,which provides farmers with food pricing information and is helping them to achieve fairer prices for their produce.

There has also been an explosion in Kenya’s IT and business technology sector. This has been the principle contributing factor behind the nation’s burgeoning technology services sector that has grown from £11million in 2002 to more than £300 million in 2013. Recently, the GMSA, the global telecoms trade association, which has a new office in Silicon Savanah, predicted that the country’s mobile industry could create 15 million new jobs by 2020.

This seems feasible given the amazing capabilities trailed for 5G. Expected to be rolled out in a couple of years, 5G will bring unprecedented speed to mobile on a level similar to that of current high-performance optic fibre networks. It will attain speeds of 800 Gbps or the equivalent of downloading 33 HD movies in a single second. Furthermore, its revolutionary compact antennae technology means that antennas can be mounted on almost any structure such as a house or telegraph pole, unlike the current bulky masts. This will allow everywhere to be connected, from Nairobi’s shanty towns to rural Rift Valley villages.