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Telecommunication companies Reduce Poverty in KenyaAccording to World Bank records, Kenya’s poverty rate is expected to stand at 33.4% in 2022. In 2020, the COVID-19 pandemic pushed an additional 2 million Kenyan people into poverty amid disruptions to Kenya’s economic activity. School closures further exacerbated inequalities between rural and urban areas, especially with inadequate access to education being more pronounced in rural parts of the country. Over the past few decades, there has been evidence that telecommunication growth reduces poverty in Kenya by increasing opportunities for economic development. Overall, the industry is experiencing growth, generating 291 billion Kenyan shillings (KES) in 2019, equivalent to $2.7 billion, a 7.5% increase from the previous year.

Impact on Employment

The telecommunication sector in Kenya added 1,673 new employees in June 2019, corresponding to a 23.8% increase in jobs compared to the same period ending June 2018, making it the fastest growing sector in the country. Monthly salaries for people employed in telecommunication average 129,000 KES, equivalent to $1,082.85, with the lowest salary in this sector standing at 65,600 KES or $547.12.

The African Development Bank defines the middle class in Kenya as those whose yearly earnings are at least $3,900. With telecommunication companies’ salaries exceeding the latter, these employees are essential for reducing poverty in Kenya by increasing the middle class, representing around 44.9% of the overall population as of 2016. The middle class is known to encourage economic growth via increasing consumer spending: 2013 places Kenya’s market as one of Africa’s most significant, translating to $44 billion in annual consumption, according to World Bank data.

Impact on Infrastructure and Mobile Broadband

During the global COVID-19 pandemic, the telecommunication sector facilitated adoption of virtual learning, online financial transactions and remote working. To generate inclusive digital development, Kenya has initiated projects to increase the number of telecommunication towers in rural areas and install fiber infrastructure on a larger scale.

Since 2020, Kenya has issued licenses to initiate 5G trials to two telecommunication companies. In the first quarter of 2021, Kenya’s dominant telecommunication operator, Safaricom, activated 5G in four counties, including the capital, Nairobi, with additional plans to expand in other areas in 2022.

With improved mobile infrastructure, around 72% of Kenya’s population has access to the internet, making the country an ideal place to do business, according to the Kenya High Commission. In 2019, Foreign Direct Investment (FDI) inflows within the country rose by over $1.3 billion, and in 2020, FDI accounted for 0.4 as a percentage of GDP. This indicates economic growth within the country, evident through GDP growth rising from 5% in 2014 to 7.5% in 2021, the highest it has been since 2010, according to the World Bank.

Impact on E-Commerce

The market size of e-commerce in Kenya continues to grow, generating $1.7 billion in revenue for 2021 and placing the country as the 54th largest e-commerce market. In 2021, the e-commerce market in Kenya accounted for 15% of the global growth rate.

Telecommunication and technological improvements contribute to a fast-growing e-commerce market. Following Safaricom’s launch of M-Pesa for mobile money in 2007, the number of Kenyan mobile money users stood at 16 million by about 2011. Daily transactions exceeded two million, equating to a 17% contribution to GDP. With more telecommunication operators providing the service, such as Airtel and Orange, mobile money in Kenya facilitated 1.9 trillion transactions, valued at more than $55 billion, from January 2021 to November 2021.

In 2021, around 24% of Kenya’s population purchased at least one item through online platforms, indicating demand and potential market growth, according to an e-commerce database. Mydawa.com is a dominant player in the country’s e-commerce industry, generating around $9 million in revenue for 2021. According to a 2018 Business Today article, the e-commerce sector houses about 20,000 employees and will grow to 200,000 jobs by 2022 and reduce poverty in Kenya by encouraging employment and economic growth.

The telecommunication sector in Kenya has demonstrated pronounced benefits in improving the country’s economic structure. With a specific outlook on employment, mobile infrastructure and e-commerce expansion, it is evident how telecommunication growth reduces poverty in Kenya and provides long-term benefits necessary for standing as an economic player globally.

– Noor Al-Zubi
Photo: Flickr