Foreign tech investors put Kenya back on top

Last month, Africa’s first software testing centre opened its doors in Nairobi. And while it generated little fanfare, it was a major achievement for Kenya’s ICT sector.

A partnership between Microsoft and Techno Brain, the facility is one of only four others globally, and will serve the African region.

The software and quality assurance centre is only the latest in a string of similar investments that have seen global tech giants pump hundreds of millions of dollars into specialised facilities in Nairobi.

At the same time, Facebook recently unveiled its NG_Hub in the capital, its first community hub space in Africa.

The hub is meant to attract new developer talent by providing workspaces, meeting rooms and event spaces.

These specialised centres, if well harnessed, could go a long way towards boosting Kenya’s talent and skills development, enabling the country to compete in a future where innovation is the key selling point.

“The deal with Microsoft makes us an extension of the company’s main campus where we’ll have young people sitting here testing Microsoft products for user experience features, functionality and bugs, among other things,” said Techno Brain CEO Manoj Shanker.

“This deal has so much potential for Kenya because if we go on and do a great job, it will open a plethora of opportunities for local companies.”

This could in turn increase the ICT sector’s output to the economy and provide jobs for the thousands of skilled but unemployed or underemployed IT graduates.

Kenya enjoys a strategic and geographic advantage that saw it become a landing site for one of the continent’s first sub-marine cables in 2009.

This paved the way for more connectivity through four more sub-marine cables that greatly expanded the country’s bandwidth capacity, opening it up to the world.

The total bandwidth capacity has grown more than 10 times in eight years, from 200,000 megabytes per second (MBps) in 2010 to more than 3.2 million MBps.

Information economy

This is the equivalent of having Kenya’s small path to the information economy expanded into an eight-lane superhighway.

The benefits of this have included the establishment of a vibrant software development ecosystem, with several globally acclaimed apps like M-Pesa and Ushahidi shifting the spotlight from the US Silicon Valley and drawing attention to Kenya.

It also gave multinationals like Google, Visa, Oracle and Bharti Airtel a major incentive to establish regional headquarters in Kenya.

Over the years, however, other countries in the region – such as Rwanda and Ethiopia – have steadily built their capacity to compete for foreign tech investment. Nairobi’s competitive edge, by virtue of being the pioneer, has slowly been blunted by rising tech hubs in Kigali, Lagos and recently Addis Ababa.

But the establishment of Microsoft’s software and quality assurance centre and Facebook’s community hub have provided a much-needed vote of confidence from global tech investors that Kenya’s strategic value still holds currency.

“We’re opening up in many countries across the region, but one thing that is remarkable about Kenya is the quality of graduates,” said Manoj.

The direct benefits of the centre will be talent development, with 100 engineers set to be employed at the onset and gradually expanded to 1,000 over the following years.

Many of these trained individuals will most likely transfer their expertise to others through peer partnerships or moving jobs – a common feature in the highly-mobile ICT labour market.

This will help build a competitive ICT talent pool and labour market, crucial for innovation and economic advancement.

Previous failures

This is, however, not the first time that Kenya has tried to transform the country into a major skills hub for the global tech industry.

Ten years ago, attempts to set up business process outsourcing (BPO) centres in Nairobi in the mould of India and China failed miserably.

Multinationals didn’t appear particularly convinced that the groundwork had been laid to make it cheaper to move their BPO centres from Asia to Nairobi.

The Government, on its part, failed to provide adequate policy and budgetary support.

There’s, therefore, need to learn from previous failures and ensure these new investments accrue the intended benefits this time round.

Tech investors have routinely asked the Government to look into incentives, such as tax rebates based on how many jobs companies create and VAT exemptions on production equipment, to enhance investment.

The private sector, in turn, needs to develop the ecosystem in a way that ensures meaningful skills for benefits that run into the long term.

This could take the form of stronger ties with universities and technical training institutes to align curriculums to real industry practice, as well as providing paid internships and work placements for trained graduates.

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