Why Kenya's digital infrastructure is failing to deliver stronger economic growth

Kenya must invest beyond digital infrastructure to unlock economic growth, a new report says. [iStockphoto]

Kenya needs to shift its digital strategy from funding raw infrastructure to ecosystems that boost economic growth through enhanced connectivity.

The latest report on the continent’s infrastructure lists Kenya among the countries struggling to connect the dots between investment in digital infrastructure and economic growth.

Ghana has been highlighted as the best example.

The State of Africa’s Infrastructure Report describes this gap as the missing middle, saying Africa’s digital infrastructure is no longer the primary constraint.

It says what determines whether connectivity generates economic value is not the infrastructure itself, but what sits on top of it, namely, the platforms, services, skills, and institutions that allow firms to operate digitally, scale, and compete.

“This layer is the ‘missing middle’. It is this that converts connectivity into output, linking infrastructure to firms, markets, and economic activity,” reads the report by Africa Finance Corporation (AFC). “Without the missing middle, digital infrastructure remains underutilised. With it, the same infrastructure becomes a driver of productivity growth, export expansion, and job creation.”

The report analysed 46 African countries between 2014 and 2024 to determine the relationship between changes in fixed broadband subscription – a proxy for access to quality connectivity and the changes in digitally delivered services exports per capita.

This analysis, it says, provides a way to move beyond measuring infrastructure deployment alone to assessing whether connectivity is translating into economic output.

“The economic implications of the missing middle are substantial, and best illustrated by countries that have successfully embarked on converting connectivity to productivity. For example, Ghana’s digitally delivered services exports now represent 6.3 per cent of gross domestic product (GDP), a ratio comparable to India and above the Philippines,” the report says.

It hypothesises that if Africa’s 10 largest economies matched this benchmark, total exports would rise from about Sh3.8 trillion (USD29 billion) today to Sh16.5 trillion (USD 127 billion).

Kenya’s export of digitally delivered services stood at Sh257.4 billion ($1.98 billion) in 2024, according to the World Economic Forum September 2025 publication.

With a GDP of Sh16.2 trillion in that period, digitally delivered services exports stood at 1.58 per cent, almost four times lower than that of Ghana.

“Across our sample, countries that expanded connectivity most rapidly did not, in most cases, generate corresponding growth in digitally delivered services exports,” says the report by AFC. “This relationship holds across multiple indicators, including internet adoption, mobile broadband penetration, and fixed broadband expansion.”

The report states that while connectivity measures the scale of infrastructure investment, digitally delivered services exports measure whether that infrastructure is being translated into tradable economic value.

“The absence of a relationship between the two indicates that expanding access, on its own, is not sufficient to drive export growth or productivity gains,” the report states.

The report states that to create an economically viable digital ecosystem, infrastructure should enable platforms to enable applications to generate the demand that sustains further infrastructure investment.

“Where these layers develop together, digital ecosystems emerge. Where they do not, infrastructure remains underutilised capital,” the report says. “What is required, therefore, is not to deprioritise infrastructure investment, but to rebalance the strategy toward utilisation.”

AFC points out that digital public infrastructure, enterprise platforms, skills development, and innovation ecosystems are not secondary to cables and data centres but the components that determine whether those assets will generate returns.

The digital economy is one of President William Ruto’s agenda items, as documented in his 2022 manifesto.

He has intended to construct 100,000 kilometres of national fibre optic connection, dubbed the digital superhighway, in addition to digitising government services as a catalyst to spur the economic contribution of the sector.

The World Economic Forum publication earlier referenced notes how Kenya’s digital economy is undergoing rapid growth, driven by gig work, business process outsourcing and digitally delivered services.

Titled Trade and Labour: Pathways for Decent Work in Kenya’s Digital Economy, the document, published in September 2025, explains how the sector is expected to reach Sh2.9 trillion ($23 billion) by 2025, accounting for 9.24 per cent of GDP.

This growth is being pegged on Kenya’s positioning as a regional leader in financial technology (fintech), cloud services and remote outsourcing, bolstered by a young, tech-savvy population and strong mobile infrastructure.

Then, an estimated 1.9 million Kenyans were engaged in digital jobs, including 1.2 million gig workers.

“Digitally delivered services now account for more than half of global services exports, while platform technologies and artificial intelligence (AI) are transforming the movement of goods, trade in services and the organisation of supply chains,” says WEF in the document.

It notes that these shifts are redrawing the geography of trade and creating new avenues for economic participation, especially for emerging markets.

“At the same time, they are disrupting traditional employment structures and raising urgent questions about labour rights, social protection and inclusion, as well as development,” it adds.