The GSMA report, Driving Digital Transformation of the Economy in Kenya, projects that Kenya’s digital economy will contribute KES 662 billion to GDP by 2028. This growth, driven by strategic policy reforms and investments, will accelerate digitalisation in critical sectors such as agriculture, manufacturing, transport, and trade. The report also forecasts the creation of 300,000 new jobs and an increase in tax revenues by KES 150 billion.
Kenya has firmly positioned itself as a leader in mobile financial services and digital innovation. As of June 2024, the country had over 68.9 million mobile subscribers, representing a mobile penetration rate of 133.7%, and 39.8 million mobile money subscriptions with a penetration rate of 77.3%. These figures highlight the nation’s vast digital infrastructure, which continues to fuel innovation and economic growth.
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The Government of Kenya has recognised digitalisation as a cornerstone of its economic strategy. With frameworks like Kenya Vision 2030 and the Bottom-Up Economic Transformation Agenda [BETA] underscoring the integration of digital technologies into key sectors. The GSMA report outlines the economic benefits of expanding digital adoption and provides a roadmap for maximising these gains through targeted policy actions.
To sustain economic momentum, diversify the economy, and create high-quality jobs, especially for young and rural populations. Kenya is focusing on digitalisation as a driver of growth, government revenue, and socio-economic development. The Communications Authority of Kenya [CAK] has connected about 800,000 people across 24 counties to mobile network services. They did this through the Universal Service Fund [USF] and opened new opportunities in communication and entrepreneurship.
Introducing the GSMA Digital Africa Index
Alongside the report on Kenya’s digital economy. The GSMA launched the Digital Africa Index [DAI], a comprehensive tool that assesses digital adoption and usage across Africa. Kenya emerged as one of the top performers, with a score above 50. The index highlights how progressive policy and regulatory frameworks have facilitated Kenya’s leadership in mobile broadband adoption and innovation.
The DAI, along with the Digital Policy and Regulatory Index [DPRI], helps identify policy bottlenecks and offers benchmarks for countries aiming to accelerate their digital economies. Despite significant advancements, gaps in device affordability and digital skills persist. This could hinder future growth unless addressed through robust, coordinated action between public and private sectors.
Driving Economic Growth Through Digitalisation
The GSMA’s report also highlights that sectors accounting for 58% of Kenya’s GDP stand to benefit from digitalisation. Notably agriculture, manufacturing, transport, and trade. By 2028, digital adoption in these areas is expected to significantly boost GDP, create new employment, and enhance tax revenues. Already, Kenya’s mobile ecosystem contributed KSH 1.2 trillion to GDP and KSH 212 billion in government revenues in 2023.
Despite these gains, the GSMA and CAK note that bold policy initiatives are required to address gaps. These gaps are in digital infrastructure, smartphone affordability, and digital literacy. They continue to constrain the full potential of Kenya’s digital economy.
Closing the Internet Usage Gap and Expanding Inclusion
Kenya’s mobile network coverage is impressive, with 99% of the population covered by 3G and 98% by 4G. However, only 33.5% of the population currently uses mobile internet, leaving a significant usage gap. The GSMA projects that this gap could shrink from 63% to 46% by 2028. Potentially bringing 1.5 million new users online. One of the main barriers remains smartphone access, which, if addressed through measures like tax reductions and device financing, could dramatically enhance digital inclusion and the adoption of mobile money services.
Key Policy Recommendations for Kenya’s Digital Future
To unlock the full potential of digital transformation, the GSMA and the Communications Authority offer several key policy recommendations:
Reduce Sector-Specific Taxes: Lower taxes on telecom services to encourage investment and reduce costs for consumers.
Streamline Licence Renewals: Accelerate the process to provide certainty and stimulate network expansion.
Improve Device Affordability: Implement policies to make smartphones and other internet-enabled devices more affordable.
Support Digital Skills Development: Ensure that the population, especially in underserved areas, possesses the necessary digital skills to maximize the benefits of digitalisation.
The Communications Authority has been proactive in addressing these challenges. It has partnered with Safaricom and Huawei Kenya to conduct digital skilling initiatives, such as the recent programme in Marsabit County, which demonstrated strong enthusiasm for mobile network services even in underserved areas.
Kenya’s digital future looks promising. With sustained policy focus, infrastructure investments, and collaboration between the public and private sectors, the country is well-positioned to continue its leadership in mobile financial services and digital innovation, driving both economic growth and socio-economic development well into the future.
