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publication October 30, 2019

Kenya Economic Update: Accelerating Kenya’s Digital Economy

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  • October 2019

Kenyan technology entrepreneurs attend a World Bank supported traction camp aimed at nurturing startups in East Africa so as to create globally competitive, growth-oriented, mobile and digital technology businesses

Photo: World Bank


  • The latest Kenya Economic Update says investments in the digital economy can further drive economic growth and help narrow the rural and urban development divide
  • Scaling digital skills at primary, secondary and tertiary education levels and wider adoption of innovative private sector led digital skills programs will enable Kenyans to reap the benefits of a digital economy
  • Recommendations from the report include increasing investments in technology infrastructure and human capital and adoption forward thinking policy and regulation to spur competition, expand digital markets and trade and narrowing the digital divide for vulnerable people

NAIROBI, October 31, 2019 – As Kenya’s digital economy propels the country’s economic growth, a new World Bank economic update says more needs to be done to prepare citizens and businesses for the economy, society and jobs of the future.

Known as the “Silicon Savannah,” Kenya has seen its Information and Communications Technology (ICT) sector grow an average of 10.8% annually since 2016, becoming a significant source of economic development and job creation with spill over effects in almost every sector of the economy.

However, the 20th edition of the Kenya Economic Update: “Securing Future Growth,” notes that for Kenya to keep pace with technology innovation and the growth of the global digital economy will require stronger digital foundations, such as new regulations and policy guidelines designed to support the digital transformation. For example, the report notes that telecommunications regulation has struggled to keep pace with the evolving market dynamics and emerging technologies, and the digital entrepreneurship space faces limited growth-oriented financing and lacks a firm pipeline of digitally-skilled talent.

The report also highlights that Kenya faces a significant digital divide, with 44% of the urban population having access to the internet compared to 17% in rural areas. In addition, widespread gaps in basic digital skills still limit wider usage and application of digital tools, and services and gaps in advanced digital skills limit business development. While 93.4% public primary schools are now covered by the Digital Learning Program, secondary schools still lag in access to connectivity and the curriculum currently fails to offer digital skills as a stand-alone compulsory course.

“Kenya is eager to position itself as a hub for information and communication technologies, ecommerce and digital services,” said Casey Torgusson, World Bank Senior Digital Specialist and author of the report’s special section on Accelerating Kenya’s Digital Economy. “Building strong digital foundations will be critical to the country’s long-term success in harnessing the potential of the digital economy as a driver of its economic growth, job creation and service delivery while ensuring that no one is left behind.”

Securing Kenya’s Digital Future

The analysis recommends several critical reforms and investments aimed at accelerating a dynamic and inclusive digital economy for Kenya including:

  • Enhance regulation and policy in line with rapid market evolution: 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.
  • Transition from startups to growth: Enhance the entrepreneurship ecosystem to capitalize on increasing technology adoption and to build the companies of the future.  Kenya’s impressive performance in churning out innovative new startup stage digital ventures needs to be matched with higher rates of success in enabling these startups to rapidly grow - creating enterprises that will have a big impact on overall economic growth and job creation. This includes improving access to capital for startups and reviewing existing taxation and procurement policies which are not tailored for the unique start up business models.
  • Invest in and develop human digital capital: Build a digitally savvy workforce for Kenya to capitalize on emerging opportunities in high growth sectors and create more jobs for the youth in both public and private sectors. Curriculum at basic and tertiary education level will need to be reviewed and reworked to ensure all students are equipped with basic digital skills to engage in the digital economy and access digital services and to encourage more students to pursue STEM related courses and advanced digital skills.  Innovative, rapid digital skills trainings programs offered by private sector should be encouraged as complements to the formal education system and to enable lifelong learning and re-skilling.
  • Close the digital divide: Every individual, business and government institution needs access to affordable, high-quality broadband connectivity to participate in the digital economy. Women, the poor, rural populations and other marginalized groups need to be better served if they are to reap the benefits of a digital economy.  This will take public investment and progressive policy measures to encourage private sector investment and services innovation to serve these hard to reach consumers. 
  • Think regional and global: Kenya’s digital firms face a challenge of small market scale relative to many competitors.  Creating a larger, more deeply integrated, ‘Single Digital Market’ across East Africa and increased integration globally would provide a larger customer base for Kenya’s digitally enabled firms and enable wider access to e-commerce and digital services for Kenyan consumers.  It would also encourage more investment in digital infrastructure and result in increased competition and falling prices for internet access.