A recent report by the GSMA, titled Driving Digital Transformation of the Economy in Kenya, projects a significant boost to the nation’s economy, forecasting that Kenya’s digital economy will contribute a staggering KSH662 billion to the GDP by 2028.
This growth is anticipated to be fueled by strategic policy reforms aimed at accelerating digitalisation across vital sectors, including agriculture, manufacturing, transport, and trade.
The report also predicts the creation of 300,000 new jobs and an increase in tax revenues by KSH150 billion, underscoring the profound impact of digital advancements on the country’s economic landscape.
With the Government of Kenya designating digitalisation as a cornerstone of its economic strategy, the vision is clearly articulated in frameworks such as Kenya Vision2030 and the Bottom-Up Economic Transformation Agenda (BETA).
These initiatives emphasize the integration of digital technologies across key areas as essential for driving sustainable growth. The GSMA report outlines the economic advantages associated with expanding digital adoption, alongside providing a roadmap to maximize these gains through targeted policy actions.
Digitalisation: The Key to Economic DiversificationTo maintain its economic momentum, diversify its offerings, enhance productivity, and create high-quality employment—especially for the youth and rural populations—Kenya is placing a strong emphasis on digitalisation as a primary driver of economic growth and socio-economic advancement.
Launch of the Digital Africa IndexIn conjunction with the report on Kenya’s digital economy, the GSMA has introduced the Digital Africa Index (DAI), a comprehensive tool assessing digital adoption and usage across the continent. This index aims to assist policymakers in identifying areas for improvement to speed up digital transformation.
Kenya ranks among the top performers in Africa, showcasing the impact of progressive policy and regulatory frameworks that have propelled the country’s leadership in mobile broadband adoption and innovation.
The DAI underscores the potential for growth throughout Africa, with Kenya achieving a score above50, placing it alongside several other leading nations on the continent.
Both the DAI and the accompanying Digital Policy and Regulatory Index (DPRI) help pinpoint policy bottlenecks and establish benchmarks for countries aspiring to enhance their digital economies.
The GSMA’s report highlights how digitalisation can revolutionize key sectors that together constitute 58% of Kenya’s GDP.
The widespread adoption of digital technologies in agriculture, manufacturing, transport, and trade is projected to significantly bolster GDP, create hundreds of thousands of jobs, and yield substantial tax revenues by 2028.
In2023 alone, the mobile ecosystem contributed KSH1.2 trillion to Kenya’s GDP, along with KSH212 billion in government revenues.
However, the GSMA warns that notable gaps still exist, which must be addressed through bold policy initiatives aimed at stimulating demand, decreasing supply costs, and encouraging investments in mobile money services, telecom infrastructure, and digital solutions.
Bridging the Internet Usage Gap Although Kenya has achieved remarkable success in expanding mobile network coverage—boasting 99% 3G and 98% 4G accessibility—only 33.5% of the population currently utilizes mobile internet, revealing a significant usage gap.
The GSMA anticipates that, with focused efforts, this gap could narrow from63% to46% by2028, bringing over1.5 million new users online and significantly increasing mobile money adoption.
Addressing Smartphone Accessibility In tandem with these findings, the GSMA’s supplementary report, Barriers to Smartphone Adoption: Kenya Case Study, examines how enhancing smartphone affordability and access can further promote digital inclusion.
Despite extensive mobile coverage, high costs remain a significant barrier to smartphone adoption. The report advocates for policy measures, including tax reductions and expanded device financing options, to enable millions of Kenyans to access mobile internet services by 2028.
Improving smartphone access is expected to not only close the internet usage gap but also boost active mobile money accounts, thereby enhancing financial inclusion.
Recommended Policies for a Digital Future The GSMA outlines several key policy recommendations designed to unleash the full potential of digital transformation in Kenya:
- Reducing Sector-Specific Taxes: Lowering telecom taxes to incentivize infrastructure investment and reduce costs for consumers.
- Streamlining License Renewals: Accelerating the license renewal process to provide industry certainty and stimulate network expansion.
- Improving Device Affordability: Implementing measures to make smartphones and other internet-enabled devices more affordable for economically disadvantaged households.
- Supporting Digital Skills Development: Equipping the population with the necessary digital skills to fully leverage the benefits of digitalisation.
Angela Wamola, Head of Sub-Saharan Africa at GSMA, stated that Kenya has made remarkable strides in expanding mobile coverage and services. However, substantial gaps persist.
Bold policy initiatives are necessary to boost demand, lower supply costs, and foster investment in digital infrastructure.
She adds that such measures promise broad benefits beyond mobile, catalyzing productivity across all sectors and generating myriad employment opportunities for Kenya.
As Kenya moves towards a more digital future, the insights outlined in the GSMA report provide a crucial foundation for unlocking the country’s vast economic potential.