[Column] Patrick Ndegwa : Why fibre is key to accelerating Kenyan entrepreneurship
12-04-2021 12:20:00 | by: Nixon Kanali | hits: 5255 | Tags:

Today, any Kenyan entrepreneur with an Internet connection can promote their business, engage with customers, transact digitally, and leverage connected technologies to improve their operations or find new streams of revenue. Connectivity has also lowered the barriers to entry when it comes to international markets, allowing African businesses to access new markets for even greater returns. Being connected has clearly become one of the key enablers of Kenyan entrepreneurship in today’s digital age, but what role does fibre have to play?

The Communications Authority of Kenya’s sector report shows that nationwide fixed broadband subscriptions increased by 4.1% between the second and third quarters of 2020. While mobile broadband subscriptions remain the primary means of Internet access for most Kenyans, fibre still acts as the backbone of Kenya’s mobile networks. Direct fibre installations provide faster and more reliable bandwidth than mobile connections, which is especially beneficial for businesses. With more Kenyan entrepreneurs now getting connected, improving the quality of those connections is the next vital step.

Fibre costs are going down, bandwidth is going up

In the past, the lack of fibre infrastructure meant that Internet service providers had to rely on expensive satellite connections which made connectivity either too costly or inaccessible in many parts of Africa. The introduction of undersea fibre optic cables to East Africa in 2009, as well as increases in bandwidth over the years, has resulted in a significant fall in wholesale prices for direct fibre. 

Data traffic demands have also increased in Kenya over the last five years, which has required improvements to bandwidth capabilities. The SEACOM undersea fibre optic cable has gone from providing Kenya with 770 Gbps of bandwidth in 2015 to 2940 Gbps in 2020, making up nearly 40% of Kenya’s total available bandwidth capacity. The rise of technological adoption has led to more data being transferred, and this trend is set to continue. By 2025, sub-Saharan data traffic is expected to grow by a staggering 12 times, which is why investment in connectivity will become critical for businesses to meet growing digital demands.

Bridging the digital divide

Connectivity has the ability to bridge the economic divide by enabling access to education and digital skills that, in turn, create new entrepreneurial opportunities for underdeveloped communities. The sudden influx of more affordable low- to mid-range smartphones in rural markets has had a substantial impact on Internet penetration rates. Connectivity is also known to be a direct driver of economic growth; the World Bank estimates that low- and middle-income economies grow by 1.38% for every 10-percentage-point increase in broadband penetration.

While the initial cost of laying fibre to rural regions may be high, the overall cost of usage for fibre is lower than mobile broadband. A successful nationwide rollout, including last-mile fibre, would therefore make Internet more financially accessible in the long run. Government projects like the National Optic Fibre Backbone are an important part of this.

The new way of doing business

Nearly every business sector has adopted ICT to improve productivity, expand customer reach or reduce operational costs. ICT adoption has also accelerated since the start of the pandemic as customers have moved to online platforms and cloud-based services, and some businesses are operating remotely. While this migration wasn’t entirely optional or voluntary, many are beginning to realise benefits and have no intention of turning back.

Connectivity has also given rise to new business models, and some organisations are moving away from traditional business structures to remain competitive. Tech-enabled sectors, such as Kenyan eCommerce, have seen exceptional growth in recent years, giving entrepreneurs access to local and international markets. The finance sector has also changed drastically due to digital innovation, which has benefitted many emerging entrepreneurs. According to an AU report, mobile money services in Kenya have lifted 194,000 households out of extreme poverty and allowed 185,000 women to move from low-wage agriculture to small businesses or retail as their primary occupations. Today, the East African region has the highest rates of mobile money penetration in the world.

The future for Kenyan connectivity

The Communications Authority of Kenya has stated that the country’s Internet bandwidth will “continue to grow immensely as the demand grows for high speed Internet with online consumer behaviour change.” As more products and services are going digital, more businesses will begin to rely on the unique high-capacity, speed, and reliability of fibre if they want the digital side of their operations to perform optimally.

The technologies of tomorrow such as AI, IoT, cloud, and edge computing will all lead to increased data consumption and create new possibilities for businesses that we cannot yet imagine. If we truly want to enable entrepreneurs to use the transformative power of connectivity, we need to lay down the foundation of fibre first.

Patrick Ndegwa is Business Sales Lead for SEACOM East Africa.