brian longwe sector policy paper - big picture

8/2/2019 Brian Longwe Sector Policy Paper - Big Picture

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ICT INKENYA#140Friday

Sector Policy Paper

ICT INDUSTRY DEVELOPMENT & GOVERNMENT

INCLUSION

Nairobi 3rd April 2012


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ICT INKENYA

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ICT INKENYACONTEXTCREATING A SUSTAINABLE ICT INDUSTRY WITHIN KENYA

COMPLICATION

The scattered ICT landscape lacks sufficient structure and organization to attend the market

Kenyan ICT education lacks focus to attend to specific needs for all types of industry players

ICT development lacks vision and support to attract investors

International players see ample opportunity, endangering the local competitive position

SITUATION

The Kenyan ICT industry is immature and suffers from significant international competition

Vision 2030 for Kenya provides a high-level vision for economic development

The Kenyan governmental legislation lacks a clear ICT vision to support development

Planned ICT developments within the Kenyan government offers a large internal market

CHALLENGE

How do we develop a strong ICT industry in Kenya making optimal re-use of existing means?

How do we ensure sustainable development fitting within Vision 2030 for Kenya

How can we align all local/international stakeholders creating a win-win situation for all

INTENTION WE PROPOSE THE FOLLOWING PLAN FOR SYNERGY WITH GOVERNMENT

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ICT INKENYAINDUSTRY ANALYSISTHE KENYAN INDUSTRY ASSESSMENT SHOWS CLEAR AREAS FOR ATTENTION

S W

O T5

Strengths Private sector recognises need for better

engagement with Government

Large internal Kenyan market

ICT inclusion in Vision 2030

Recent technological advancement (Fiber)

Ambitious Workforce

Acknowledged innovations/technologies (MPESA)

Threats Growing Kenyan market attracts international ICT

players threatening local ICT companies

Globalization of the ICT industry simplifies

international service delivery to Kenyan

companies

African economic development creates

significant near-shore competition

Established human capital flows to MNCs

Weaknesses Sub-optimal procurement process for local players

Lack of tailored (tax) legislation

Technical education and industry needs misaligned

Limited availability of investments

Lack of governmental ICT representation

Lack of Public Private Partnerships in ICT (PPPs)

Diplomatic services lack focus on ICT opportunities

Opportunities Significant government Investment in ICT

Labor costs provides labor arbitrage potential

Growth of average size of Kenyan companies

Recognized ICT hub developments (incubators)

Intended creation of Konza as ICT ecosystem

Entry of international ICT players (Nokia, IBM)

Creation of EAC provides larger market


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ICT INKENYAINDUSTRY DEVELOPMENT NEEDSA PROVEN ICT INDUSTRY DEVELOPMENT STRUCTURE

6Source: Australian Business Foundation


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ICT INKENYAINDUSTRY COOPERATIONINDUSTRY DEVELOPMENT MUST BRING TOGETHER ALL INDUSTRY STAKEHOLDERS

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FINANCIAL

MARKETS

GOVERNMENT

PRIVATE

MARKETPLACE

ICT INDUSTRY

PLAYERS

- Projects

- Expertise- Marketplace

- Products & Services

- Skilled workforce

- Experience

- Industry standards

- Representation

- Funding

- Expertise

- Infrastructure

- Confidence

- Projects

- Legislation

- Education

- Tax regulation

Banks

VCs

Investment

funds

Unions

KICTB

Producers

Industry

representatives

Incubators

Universities

End Users Companies

Insurance

E-G-ovt


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ICT INKENYA

GOVERNMENT

ICT INDUSTRY

PLAYERS

PRIVATE

MARKETPLACE

FINANCIAL

MARKETS

RESPONSIBILITY KEY SUCCESS FACTORS

KEY SUCCESS FACTORS

ENSURING COOPERATION FROM ALL STAKEHOLDERS REQUIRES BENEFITS FOR ALL

DELIVER HIGH QUALITY

PRODUCTS AND SERVICE

CREATE A SOLID STREAM

OF ICT WORK

PROVIDE SUSTAINABLE

AND PREDICTABLE

FUNDING

Predictable quality

Solid service delivery methodology

Focused educational curriculum

Strong coach/mentor network

Strong business services support

Public Private Partnerships (PPP)

Governmental incentive structure

Stable entrepreneurial environment

Virtual marketplace environment

Protection of IP Rights

Shared financial risk profile

Aligned exit strategies

Strong partnerships

Public/private investment funding

Governmental taxation stimulus

THROUGHOUT THE

ENTIRE LIFE CYCLE

SUPPORT FROM

INFANCYTO MATURITY

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SUPPORT AND FACILITATE Long term sustainable vision

Sufficient budget and focus


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ICT INKENYA

GOVERNMENT

ICT INDUSTRY

PLAYERS

PRIVATE

MARKETPLACE

FINANCIAL

MARKETS

ENTREPRENEURS SME MNC

KENYA ICT DEVELOPMENT

FRAMEWORK TO SUPPORT THE KENYAN ICT INDUSTRY PLAYERS ACROsS THE LIFECYCLE

MATURITY LIFE CYCLE

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Incubation

Supporton product, skill and

business development

Facilities providing workplace,

internet and meeting place

Education on business processes,

-methodologies and -behavior

Business Support

Supporton business advisory and

development

Certification of technical skills and

delivery maturity (Prince II)

Education on industry standards &

methodologies (Lean/SixSigma)

Continuous improvement

Supportby providing a (virtual)

networking environment, an ICT

market place, and

Diplomaticsupport to create

international demand for Kenyan

ICT products, services and skills

VC A Bank B & CBank A Govt

- Banks

- Seed Capital

- Private Companies

- Government

Kenya ICT Investment Fund

- National

- International

- Private

- Public

Market Funding

Kenyan MarketplaceNairobi..

- SME

- MNC

- Govt

+ rest of Kenya

Virtual Marketplace Africa

- Kenya

- Rest of Africa

- Incidental offshore

Global Marketplace

- Konza City

- Kenya

- Continent

- Global

Targeted Funding

Entrepreneurial funding and

educational support

Tax and procurement

incentives and legislation

IP rights and diplomatic

commercial exposure
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ICT INKENYA

FUNDING

REQUEST FOR HELP

THE KENYAN ICT REPRESENTATION ASKS ITS GOVERNMENT FOR HELP

EDUCATION

LEGISLATION

COOPERATION

SHORT-TERM MEDIUM-TERM LONG-TERM

Favorable government

procurement procedures

Double Taxation Treaties

Substantive government

subsidies for HR capability

building

Acknowledgement of

incubator institutes

Support in media exposure

Alignment ICT development

with Vision 2030

Acknowledgement of ICT

industry representative body

ICT focused tax incentives

IP legislation development

Development of Kenyan ICT

standards and certification

Development of ICT focused

education at all levels

Joint Public/Private

economic missions for ICT

R&D legislation development

Contract legislation

development

Development of technology

clusters that link Academia

and Industry for R&D

Development of technology

clusters that link Security &

Industry

Acknowledgement of ICT

industry Advisory Board

ICT sector representation in

government

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ICT industry investment fund

Government projects Public Private Partnerships

Individual/CorporateTax

incentives for investments


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ICT INKENYANEXT STEPS AND TIMELINESCONTINOUSLY MOVING FORWARD WITH PRECISION AND CARE

PROPOSED

NEXT STEPS

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ACTION TIMELINES

APRIL 2012

APRILMAY 2012

MAYJULY 2012

JULYOCTOBER 2012

OCTOBER 2012 ONWARDS

Validate ICT requests from

government

Align ICT industry ambition withVision 2030 AND Kenya ICT Board

Partner with stakeholders on ICT

industry vision & approach

Create detailed joint roadmap,

activities, roles & responsibilities

Act on detailed roadmap with

focus on quick wins


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ICT INKENYAWhich Significant Trade Bodies exist currently?

KAM

TESPOK

KEPSA

KIF

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Industry Regulation and way forward

Way Forward

To work with KITOS or create another

body Marketing Kenya for IT privately and

through public sector

Set Standards in the sector

Document the industry


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ICT INKENYACURRENT KENYAN ICT LANDSCAPETHE KENYAN ICT INDUSTRY LARGELY DEPENDS ON ENTREPRENEURS AND FOREIGN MNCs

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5,000

30,000

30,00010,000

50,000

ConsultingTechnology Government

5.000

MNCSME

10.000

EntrepreneursTotal

Workforce

Outsourcing

10.000

REMARKSIndustry The largest ICT market is ..

Most of the foreign players are in

and they are rapidly growing

Outsourcing is a relative . Market

segment, although .

The technology industry segment is by farthe .. most revenue generating, and

the . Is relatively small

Employer

Over xx% of all ICT professionals work for

.., where as only xx% in .

With over jobs, the government

provides a solid base for the industry

Workforce/Revenue comparison

The relative large workforce of

entrepreneurs in comparison to the

annual revenue implies low salaries

The MNC revenue share is relatively high

considering its workforce and since many

of its players are foreign implies a capital

drain for the Kenya ICT industry

KENYA ICT WORKFORCE ANALYSIS * (in FTE)

Industry

Segmentation

Employer

Segmentation

50,000

40,000

35,000

40,000

120,000

Total

Revenue

Outsourcing

30.000

ConsultingTechnology

30.000

GovernmentMNCSMEEntrepreneurs

15.000

KENYA ICT REVENUE ANALYSIS (in KES mio)

Industry

Segmentation

Employer

Segmentation

* See appendix for more details

ANALYSIS


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ICT INKENYAPOTENTIAL ICT INDUSTRY IMPACTICT DEVELOPMENT IN COMPARABLE LEADERS SHOW SIGNIFICANT GROWTH POTENTIAL

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REMARKS

Assumptions

Kenyan avg. annual GDP growth 4%

ICT spend growth with 6% from 2012

ICT spend comparison (% of GDP):

- South Africa 15%

- Singapore 20%

- xxxxxxx 10% Taking the peer comparison average,

the potential Kenyan ICT industry

should be ~12% of GDP, increasing the

market with KES 700 mio annually

Impact

Disregarding efficiency and

effectiveness effects and assumingequal division of increased revenue

over national & international players

the Kenya GDP could grow with an

extra 7%

Assuming an average daily ICT income

of KES 5.000, the ICT industry can

provide for 70.000 extra jobs

KENYAN ICT POTENTIAL (in KES bln)

2010 201120092008

130

10

110

2012

0

2014 2015

120

2013

100

140

Total GDP Kenya

Current Kenyan ICT Spend

Comparable peerNational ICT spend(12% of GDP)

GDP INCREASE:

INDUSTRY POTENTIAL

JOB CREATION:

KES 700 mio 70.000 FTE


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ICT INKENYAKENYAN ICT LANDSCAPETHE KENYAN ICT LANDSCAPE ANALYSIS ON WORKFORCE AND REVENUE

CONSULTING

TECHNOLOGY

OUTSOURCING

INDUSTRY ANALYSIS DETAILS COMPANIES

Entrepren. SME MNC Total

Workforce

Revenue

Workforce in1.000 FTE) Revenue inmio KES 15

Type Examples

- Soft-/hardware producers

- System Integrators

- Service providers

- Website development

- SevenSeas

- Microsoft

- IBM

- Safaricom

- ..


Workforce

Revenue

Type Examples

- Technology consultant - Accenture

-

- ..


Workforce

Revenue

Type Examples

- Infrastructure

- Application maintenance/

development

- Business Process Outs.

- Microsoft

- IBM

- Safaricom

-

- ..


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ICT INKENYA

THANK YOU!

brian longwe sector policy paper - big picture

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