The ICT industry has been characterized by revolutionary growth over the last twenty years and it is projected that the USA will over the next twenty years begin to experience substantial short fall of labour in the ICT sector. Already, India and China have led in the take over of jobs from Europe and America, and Africa is rapidly catching on.
In Kenya, it is estimated that by the year 2017 the country’s ICT industry will be contributing up to 25% of GDP at USD 2 billion, and have created over 500 new tier-1 ICT companies, employing over 50,000.
According to the Communications Commission of Kenya, as December 2011, there were a total of 17.4 million Internet users in the country, within 44.1% of the country that has access to the internet.
Notwithstanding considerable increase in internet access, low population density in vast areas of the continent, low incomes and large rural populations have tugged back the development of internet infrastructure, in Africa with urban cities having up to 72% of local users, that translate to less than 28% of the continent’s population.
In addition, the cost of accessing the internet is also still relatively high. In Kenya, for example, internet capacity, for example, is projected to reach 15 terabytes per second, 15TBps over the next two years, but despite this huge capacity, high prices charged by inland cable providers, high infrastructural investment costs, as well as the fact that internet usage has not reached a level that would drive prices down, among other reasons are likely to mitigate the likelihood of internet costs coming down.
Kenya’s is currently served by four undersea fiber-optic cables: The East Africa Marine Systems (TEAMS), a joint venture of the Kenyan government, Emirates Telecommunication Technology (Etisalat) and a consortium of local investors; the Eastern Africa Submarine Cable System, (EASSy), running from Mtunzini in South Africa to Port Sudan in Sudan, with landing points in nine countries; SEACOM; a privately funded venture which sells wholesale
International capacity to global networks via India and Europe, and the first to provide broadband to countries in East Africa, and the Lower Indian Ocean Network (LION).
This provides the country massive capacity, which local usage has not fully exploited. Kenya’s 18 million internet users, representing a penetration rate of 53%, are only using 6.5% of the country’s bandwidth capacity. Increased use of the internet particularly through government, commercial and education applications harbours enormous potential for the country’s socio-economic development. The Government of Kenya’s ICT development master plan currently aims at getting every home in Kenya connected to high-speed and affordable internet over the next five years.
The mobile telecommunication sector has grown by over 40% each year over the last four years, and currently, there are over 30 million registered mobile subscriptions in Kenya, representing 72% mobile penetration. In Kenya, there are four mobile operators, all of who have recorded declining voice revenues compared to steeply rising data revenues.
Increased use of tablets and mobile handsets to access the internet, short messaging services (SMS), and the use of money transfer services are set to shift the mobile paradigm for business.
Commercial use of the internet and mobile applications will need to take into consideration that users are increasingly accessing the internet “on the go”, day and night, and with ever increasing integration of services that are available online.
In twelve-month period ending December 2012, Ksh. 1.56 trillion (USD 18.4B) was moved in mobile transfer transactions, which should give indication of what level of business in now being conducted on bobile phones and related technology.
Investments in ICT depreciate 20 to 25% annually, while the cost of technology declines 25 to 30% each subsequent year. This puts businesses under immense pressure to obtain reasonable return on investments in ICT, and to be able to renew their technology in order to match rapid technological changes.
Businesses have addressed themselves to this situation in various ways including change of business model, amalgamation and disintegration of business operations, outsourcing, leasing and sharing of infrastructure among others. Still, obtaining optimum return on investment in ICT arguably remains the biggest challenge that businesses face, with some choosing to maintain technology for utility rather than explore ways of creating strategic advantage around it.
Increased use of ICT in business, has in addition to creating overwhelming consumer awareness, driven down the cost of setting up businesses – including internet-based business, made it easier to directly access potential markets, and global suppliers, and coupled with speedy transfer of funds lowered entry barriers and created a market–driven free price system. This situation is ideal for businesses with a strong strategic orientation, but a nightmare for the average business down the road.
E-waste refers to various forms of electrical and electronic equipment that is old or has ceased to be of any value to its owners. It includes end-of-life electronic appliances, as well as electronic equipment that is destined for reuse, resale, salvage, recycling, or disposal.
The increasing use of technology is generating huge amounts of e-waste, much of which unfortunately is finding its way into less developed economies where, given the levels of poverty, it still obtains residual value.
According to a 2010 UNEP press release, it is estimated, for example, that Kenya annually receives as imported e-waste:
Apart from the inability of many less developed economies to effectively recycle or otherwise destroy the non-biodegradable e-waste – leading to e-dumping, much of e-waste is itself toxic and carcinogenic; it poses considerable threat to health and environment in the long term, as will ultimately cost government huge amounts of money in environment remediation measures.
Increase in e-waste nonetheless presents investment opportunities in Africa especially, where even without the importation of e-waste, the growing use of technology will continue to generate huge amounts of e-waste.
In an effort to harness opportunities presented by technological advancements in ICT, and to address the regulatory challenges associated with convergence, the Government of Kenya introduced the Unified Licensing Framework (ULF), which aims to promote investment in ICT and is based on the principle of technology neutrality.
Under the uniﬁed licensing and regulatory model, operators and service providers are licensed under three broad market segments: Network Facilities Provider (NFP), to provide infrastructure system for long distance transmission and for local access; Applications Service Provider (ASP), to provide all forms of services to end-users using the network services of a facilities provider; and Contents Services Provider (CSP), to provide content services such as broadcast TV and radio material, data processing and other information services.
This has allowed any form of communications infrastructure to be used to provide any type of communications service that an operator or service provider is capable of providing. Previously, ISPs (Internet Service Providers), for instance, were required to obtain a separate license to oﬀer VoIP (Voice over Internet Protocol). The unified license has made mobile operators the biggest providers of internet services as well as given other service providers, such as local loop operators and internet service providers, a new lease of life in previously shrinking businesses.
Through the opportunities presented by the ULF, penetration has significantly increased, and investment in ICT infrastructure increased. The flip side of this for business is that competition within the ICT sector has correspondingly heightened.
The entry of mobile operators into financial services through money transfer services remains a key area in which the existing legal and regulatory framework is need of review, and which review will introduce major changes in the conduct of business.
The creative and unbounded nature of the ICT industry, coupled with its attraction of youthful trends, and the vast opportunities it provides are creating a new challenge for business.
Most businesses will acknowledge the enormous impact that ICT has had, and is going to continue to have on them. It will also be acknowledged that some of best personnel in ICT do not necessarily have first class degrees, nor do they work for the biggest firms, nor do they conform to the “corporate” way of life, or even work regular hours. Many are self-employed. ICT contractors are much the same. They themselves faced with the same situation, it is no longer the case that a big brand necessarily assures you quality that you will not be able to get elsewhere.
This situation is presenting managers and business leaders in corporate environments with new challenges relating to how they will work with these emerging, and unavoidable partners in business: what level of engagement they should enter with them, how they should manage them, how much they should pay them, and what they should expect from them.
This shift in the character of labour supply is leading to big changes in business process design, which strategically oriented and positioned companies are quickly taking advantage of.
The quality and level of reliability that the emerging relationships can obtain nonetheless remain a major challenge for business.
We have developed various solutions through which we work with clients within the ICT industry to respond to the various situations the industry has to deal with on a day-to-day basis:
Save for data carriers, ISPs, fixed line and mobile telecommunications companies, which must of necessity be larger operations and whose advisory requirements are therefore better addressed within our structured Corporate Advisory solutions, Most ICT firms will find our SMS solution perfectly meeting their business strategy, growth and development requirements.
Our work in Financial Advisory provides practical solutions for business, on the back of which ICT firms can pursue their corporate finance, business planning and project financing objectives.
Much of ICT services are themselves outsourced. This makes it necessary for ICT service providers to be as lean a possible, in order that they may remain competitive. Notwithstanding, ICT service providers must themselves be sustainable and their sustainability depends, in part, on how efficiently they can handle their non-core operations. This is the situation that renders our Outsourcing service especially relevant in the ICT sector.