East Africa’s IT Allure
As governments, public sector and private businesses continue to rollout ambitious infrastructure projects in East Africa, how is the IT sector performing in that part of the continent?
The East Africa IT landscape comprising Kenya, Tanzania, Uganda, Rwanda, Burundi and Ethiopia is a pretty dynamic market, with quite a significant number of local and foreign companies (from Asia, Middle East, Europe and North America), providing either software development, integration services, technical support and maintenance of IT equipment or solutions.
While growth is expected for the foreseeable future in the East Africa IT sector, the market itself is still classified as nascent, with Kenya leading growth in both government and private sector projects.
One government project which perfectly exemplifies the region’s vision for the IT industry’s future is Kenya’s plan to catapult itself into an elite technology hub status via a $14.5bn project to build “Africa’s Silicon Savannah”. Known as the Konza Technology City, the development is scheduled for completion in 2019, and will be a hub for business process outsourcing (BPO), software development, and other high-tech businesses.
According to the Konza Technopolis Development Authority (KTDA), by 2020 the city will create 100,000 jobs and generate $1bn revenues a year.
However, despite the potential it remains a market that is still in its early stages rather than a fully evolved landscape, and for Middle East-based channel players that want to establish solid in-country presence in this geography, success continues to depend on their ability to educate customers and drive demand for new technologies that will enable businesses in this region to compete on a global scale.
The degree of IT maturity in the region is moderate, however it remains promising given the regions appetite for technology consumption. Kenya’s ICT market is relatively developed in comparison to its peers in East Africa. As a result, Kenya plays a significant role towards development of ICT in the region, with most ICT companies based in Kenya but servicing other East African countries such as Uganda, Tanzania, and Rwanda.
In spite of issues of last mile connectivity, shortage of advanced IT skills, and unreliable power supply, research firm IDC expects the sector to continue growing.
According to IDC Kenya’s IT market alone is expected to be worth Sh85bn ($830.6m) in 2016, influenced considerably by the government’s ICT masterplan which aims to eradicate traditional bottlenecks such as power infrastructure, the skills shortage and the deluge of digital content on creaking networks. Elsewhere in the region, China-headquartered IT giant Huawei is now an ICT advisor to the Tanzanian government. All of this bears testimony to the seriousness with which governments and private sector organisations are treating the IT sector.
Charles Mevaa, vice president, Sub-Saharan Africa for Government Programmes at Gemalto, said East Africa has seen an influx of IT investors and more government support has been given to tech entrepreneurs over the last three years. Mevaa added several government IT related projects are already being executed in the region, with a strong potential for migration to secure electronic documents such as eID and ePassports over the next few years.
“A lot of these projects are heavily driven by the necessity to modernise national citizen registries to address security concerns but also the need for more efficient administrations,” he said.
That said, Mevaa added that the main influences in IT adoption in East Africa are the same as anywhere else and are largely driven by the demand for increased efficiency across government institutions and private companies. “Financial and administrative factors such as effective management of payroll systems, efficient allocation of resources, and business growth plans lead the set of drivers steering IT adoption,” he said. “IT growth is also driven by the need for increased security and transparency in all economic sectors, as well as the cashless trend finding its footing worldwide.”
Mevaa pointed out that for IT resellers and distributors, it’s vital that they are ready to deploy cost effective and value-add solutions and services to address the specificities of the market, proposing differentiators and short delivery lead time.
Taj ElKhayat, regional vice president, Middle East and Africa, Riverbed Technology agreed and said: “Whilst this is positive and we should be optimistic, I do believe that East Africa is not yet where it needs to be in terms of enterprise IT and government projects. It’s still very much an emerging market but it’s one that is rife with opportunity.”
ElKhayat said if you look at trends such as software-defined everything (SDE), Internet of Things (IoT), virtualisation and consolidation, these are all technology areas that are a perfect fit for the African market, as they address the primary needs of rapidly ramping up technology to meet business requirements while offering the best ROI. “If we look at the telecom operators that are expanding their footprint on the African continent, they are using East Africa as an entry point. Kenya in particular, has created a very good foundation for organisations including US, European, and even Chinese multinationals to set up their headquarters for the rest of Africa in the country,” he said. “This foundation includes foreign investment support, infrastructure and human resources capacity.”