Digital Kenya: A tale of too little too late

NAIROBI, KENYA: It was May 1890 when a regular postal service in British East Africa was introduced and post offices opened in Mombasa and the island of Lamu and in 1901 the Postal Services of British East Africa and Uganda were amalgamated.

But while in 1895, mail took a fortnight to cover the 394 km between Mombasa and Machakos; ten years later from Mombasa to Nairobi (426 km) it took 28 hours. The railway mainly facilitated this rapid development though runners were still employed.

70 years later the first personal computer is first introduced in 1971. Later that year, a computer engineer named Ray Tomlinson sent the first e-mail message.

Two years later the world’s first mobile phone call was made on April 3, 1973. The phone weighed a staggering 1.1kg and measured in at 228.6x127x44.4mm. With this prototype device, you got 30 minutes of talk-time and it took around 10 hours to charge. But it was not until 1999 that Kenya would register its first mobile operators.

Then in 1990, computer scientist Tim Berners-Lee would invent the World Wide Web.

The Digital revolution began.

Communication

The first results of this revolution in Kenya would be felt thirteen years later in 2003 when the government would begin massive retrenchments of staff of what were now called Postal Corporation of Kenya and Telkom Kenya.

These were organizations that were heavy in debt and not generating revenue sufficient enough to keep them afloat, leading the government to selling majority shareholding of Telkom Kenya to France Télécom in 2007.

Please note that ironically, in 2003, the total number of people remaining to be connected to telephone service in Kenya stood at 7 million. Emerging private mobile telephone companies provided service capacity, but remained too expensive for many citizens. Ten Years later, in 2014 Safaricom, Kenya’s leading Mobile Network Operator would have over 20million subscribers and was the most profitable company in Sub-Saharan Africa.

All over sudden a letter to your loved one via the post office was not the most romantic gesture anymore; an SMS did the magic. What’s more it was faster, delivery was assured and cheaper.

Businesses now didn’t rely on messengers and postal addresses; everybody had access to or owned a computer & had an email address.

Agriculture

In July 2006, the same script would play out in the country's top private-sector employer, the tea industry. Multinational companies were locked in a bitter dispute with the Kenya Plantation and Agricultural Workers Union, over the introduction of harvesting machines. Which collected 20 times more tea per day than manual pickers. Many Kenyans were once again at risk of loosing their jobs, their only source of livelihoods. Though the machines did not offer the high level of selectivity required, manufacturers complained that labour costs accounted for upto sixty-two per cent of their costs.

Financial

Back in the late 90’s many Kenyans had endured very unfriendly relationships with their Banks, high bank charges, transaction fees, high demands for minimum balances, high loan charges and interest rates with many being forced to close their accounts because they didn’t meet the minimum threshold to have them there. I remember my father complaining about communication he had received from his bank then, Barclays Bank.

In 2003 Mpesa was invented, and with 0 users in 2007 when it was launched, fast forward to 2016, it has 15.7million Active monthly users. Growing Kenya’s banked population from 26 percent in 2009 to 75 percent in 2016, taking on big-cap banks without opening a single branch. Making Kenya the top ranked country in Africa in terms of ease of access to financial services.

Then the Script repeats itself, with many Kenyans being retrenched from the banks, with handsome golden handshakes for some. All over a sudden, there are many mergers of smaller outfits and a lot of auditors and management consultants being brought, with the aim of reducing costs and increasing profitability.

But there’s a new act in this script, most banks began adopting an agent model, building mobile applications, online banking and driving their customers to what they are now calling digital banking. But of significant note is how the most of the banks despite remodeling their platforms to integrate with Mpesa, with Safaricom’s addition of MShwari, they realized these innovations were consistently catching them on their back foot.

So to stem the tide and share the spoils they have decided to regroup under their Kenya Bankers Association and set-up their own mobile money transfer platform. They have also introduced Mobile loan products some in partnership with Safaricom. More players have now joined the space with independent mobile applications offering similar micro-credit facilities.

Transport

Then when we all thought it wouldn’t hit closer to home. In June 2014, Uber rode into town, literally. Long time Taxi drivers in Nairobi were up in arms, a big furor that even politicians waded into. Like many other players in other countries where Uber had disrupted business, the battle was real. There were many casualties with Uber cars being stoned, burned, hijacked or stolen in some locations and some drivers losing their lives.

Local Taxi operators had perfected the art of protecting their territories with many scary stories about those who dared to defy the status quo and how they lost their lives. Like many other things in Kenya, Taxi Business in most thriving locations is run by cartels.

But here came an enemy they could not fathom how to fight it. It was killing their business. Kenyans in Nairobi had, had enough. They were choosing Uber, because it is convenient, the service is highly professional, the cars we high quality and well maintained, but above all and most importantly, their rates were much cheaper.

Gone were the extortionist rates Kenyans in Nairobi had to pay for short distance rides, in often-pungent smelling cars, which sometimes double up as bedrooms for some of the drivers or just due to lack of constant cleaning. Not to mention that most of the drivers are often rude and very dis-honest especially with their many lies of their location when you are waiting for them.

Media

Then with increasing mobile and Internet penetration in Kenya, now the Media Industry is grappling with disruption. Internet start-ups are siphoning off the lucrative print classifieds ads the industry called its “rivers of Gold.”

From the vintage point of 2016, print media lies shattered by a tsunami of digital disruption. Not to mention the effect of TV signal transmission from analogue to digital affected the revenues and profits of leading media companies in Kenya.

This media houses most are assuring their investors due to the increasing profits from their digital divisions with some growing by more than 200 per cent over the last one year.

But with the entry of Social Media, this is now the preferred mode news access and consumption by many Kenyans. With this are now an increasing number of blogs and independent news websites, increasing competition for talent, readership and revenues.

These changes will keep sweeping, more industry samples are there and more will keep coming up, such as the interruption of the Hospitality industry by Airbnb and the TV industry by Video on Demand service Netflix and the new VR trend, or new Kenyan online stocks investment company Abacus in the Financial Industry for capital markets.

The companies leading the charge are winning the battle for market share and profit growth; some are reshaping entire industries to their own advantage. But many businesses are struggling to evolve quickly enough. Globally workers in the most digitized industries enjoy wage growth that is twice the national average, while the majority of Kenyan workers face stagnant incomes and uncertain prospects, as has been the trend with the examples noted above. Digitization is not just about buying IT equipment and systems. The most explosive growth is now in usage as companies continue to integrate digital tools into an ever-widening variety of business processes.

However as guys at McKinsey will tell you, many business leaders are living in a heightened state of alert.

Most are selling the message of going digital but most of these executives have different ideas of what digital is all about, and with different executives singing from different hymn sheets in the organization, the results will be piecemeal initiatives or misguided efforts that lead to missed opportunities, sluggish performance, or false starts.

So what is Digital? And what is Digital Disruption? We take a look into the lens on this in our next piece.

Mungai Charles is a Digital Business & Marketing & Ecommerce Expert | @mungaicharles