Digitisation to unlock Sh7.4 trillion

Kenya’s quest to go paperless and cashless in dispensation of public and private services come January, could unlock an additional Sh7.4 trillion into the economy in 10 years.

A newly released report by strategy consulting firm AlphaBeta, which mostly concentrates on macroeconomic analysis and commissioned by IT firm Google found that sanctioning a trusted digital identity platform for all Kenyans will quadruple online commercial activities riding on a faceless and contactless platform.

The financial sector will be the biggest beneficiary at Sh2.1 trillion, agriculture (Sh1.7 trillion), infrastructure (Sh1.5 trillion), resources (Sh400 billion) while other sectors will witness a Sh900 billion rise.

Government’s Sh800 billion revenue could largely be drawn from digital service tax as private sector players trading their goods and services online deduct a 1.5 percent tax form onward remission to the government.

“Given the need to rebuild economies following the impact of Covid-19, the importance of capturing this potential digital dividend becomes ever more crucial. Kenya must expand use of the internet to do traditional business on a digital platform,” it says.

Dgital identity system

The study says a government-backed digital identity system would also open never before seen business opportunities where companies could advertise and lease idle fixed assets from manufacturing lines, warehouses, vehicles and even personnel.

The sharing economy has largely thrived on the services sector where rental and leasing businesses grow among them the controversial theatre and laboratory equipment leasing by public hospitals.

Private entities have also been leasing out retail shelves, computers as well as vehicles thereby enabling businesses to concentrate on their core business while hiring only on-demand equipment or services.

The study says Kenya could ignite a regional revolution by deepening use of digital platforms in service deliveries across all government offices thereby ending perennial delays largely blamed on missing files, tiresome manual and paper-based processes blamed for runaway corruption.

ICT secretary Joe Mucheru and his Interior counterpart Fred Matiang’i last Tuesday ushered rollout of the eight million Huduma cards that contain verified personal information of 38 million Kenyans as well as a computer chip-embedded payment portal.

Procurement opportunities

Google’s study says government involvement could open up procurement opportunities to more Kenyan ‘tenderpreneurs’ ending cartels that have turned public jobs into exclusive zones.

“While leading from the top, the government must craft digital regulations accompanied by massive investment in digital infrastructure that allow seamless integration between government entities and private sector players,” the report adds.

But availability of realtime data on public service activities has been largely discouraged by civil servants who support paper-based status quo for their own selfish ends.

The study adds that businesses should also be supported to go digital with local IT startups encouraged to moot solutions for various users.

Contacted, software developers blamed government bureaucracy over lack of a platform to locally market their software.

TechnoBrain, CompuLynx, CoreTec, Cellulant, KAPS and Africa’s Talking are among successful tech companies selling software products but have a little or no local public footprint.

Payment gateways

Among their products picked by other companies include payment gateways, immigration and driving licence database management systems as well as saccos cloud-based solutions and parking ticketing systems.

The Google report observes that the tedious process of exporting and importing goods that requires players to process and meet multiple regulatory protocols could benefit from a single digital process.

“Kenya should incorporate key concerns such as cross-border data flows, non-taxation of electronic transmissions and intermediate liability issues into trade negotiations to support digital trade. A novel approach could include participating in multilateral digital trade agreements,” it says.

Unlike a national identity card that had an individual’s passport picture, fingerprints, birthplace details and residence as at time of application, the Huduma card includes a telephone number, marital information, realtime residence as well as access to one’s financial information.

The Huduma card is also application abroad on any ATM, bank or merchant outlet that displays the MasterCard acceptance mark.

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