Kenya’s Digital Economy Projected To Contribute KSH662 Billion to GDP by

Kenya’s digital economy is estimated to contribute KSH662 billion to the GDP by 2028, according to a recent report by the GSMA.

The report titled “Driving Digital Transformation of the Economy in Kenya,” attributes the growth to strategic policy reforms targeting key sectors such as agriculture, manufacturing, transport, and trade.

The report also predicts the creation of 300,000 new jobs and an additional KSH150 billion in tax revenues.

Kenya has become a frontrunner in mobile financial services and digital innovation. Recognising this potential, the Government of Kenya has integrated digitalisation as a central component of its economic strategy, as outlined in Kenya Vision 2030 and the Bottom-Up Economic Transformation Agenda (BETA).

According to the GSMA’s findings, expanding digital adoption yields significant economic benefits, and the report provides a roadmap for maximising these gains through focused policy measures.

To maintain its economic trajectory and diversify its economy, Kenya is channelling efforts into digitalisation as a pivotal driver for growth, government revenue, and socio-economic development. This approach aims to enhance productivity and create quality job opportunities, especially for the youth and rural populations.

Launch of the Digital Africa Index Coinciding with the report on Kenya’s digital economy, the GSMA has unveiled the Digital Africa Index (DAI), a vital tool designed to gauge digital adoption and usage across the continent.

The DAI aims to assist policymakers in pinpointing areas for improvement necessary to accelerate digital transformation.

Notably, Kenya ranks among the top performers in Africa, demonstrating the impact of progressive policy frameworks that have facilitated its achievements in mobile broadband adoption and innovation.

The Digital Africa Index further underscores growth potential across the region, with Kenya scoring above 50, aligning with a few other African nations. This index, along with the Digital Policy and Regulatory Index (DPRI), identifies policy challenges and sets benchmarks for countries aspiring to enhance their digital economies.

Economic Impact of DigitalisationThe GSMA report emphasizes the transformative power of digitalisation in sectors responsible for 58% of Kenya’s GDP.

It anticipates that the adoption of digital technologies in agriculture, manufacturing, transport, and trade will substantially boost GDP, generate hundreds of thousands of jobs, and significantly increase tax revenues by 2028.

In 2023 alone, the mobile ecosystem contributed KSH1.2 trillion to Kenya’s GDP and KSH212 billion in government revenues.

However, the report indicates critical challenges that need addressing through bold policy initiatives. These initiatives should focus on stimulating demand, reducing operational costs, and attracting investments in mobile money services, telecommunications infrastructure, and a range of digital services.

Bridging the Internet Usage Gap Despite considerable advancements in mobile network coverage—where 99% of the population has access to 3G and 98% to 4G—only 33.5% currently engages in mobile internet usage, highlighting a significant gap.

The GSMA forecasts that this usage gap may narrow from 63% to 46% by 2028, potentially bringing over 1.5 million new users online and fostering widespread mobile money adoption.

The Importance of Smartphone AccessThe GSMA also released a complementary report, “Barriers to Smartphone Adoption: Kenya Case Study,” which examines the critical role of smartphone affordability and accessibility in enhancing digital inclusion.

High smartphone costs continue to restrict adoption among many Kenyans. To address this, the report suggests lowering taxes and expanding financing options, which could enable millions more to access mobile internet services by 2028.

Improved smartphone access is crucial for closing the internet usage gap and increasing the number of active mobile money accounts, further contributing to financial inclusion.

Strategic Policy Recommendations for Future GrowthThe GSMA outlines several policy recommendations essential for unlocking the full potential of Kenya’s digital transformation:

• Reducing Sector-Specific Taxes: Lowering taxes in the telecom sector to incentivise infrastructure investments and decrease consumer costs.
• Streamlining Licence Renewals: Accelerating the licence renewal process to enhance certainty and stimulate network expansion.
• Improving Device Affordability: Implementing policies to make smartphones and other internet-enabled devices more accessible to lower-income households.
• Supporting Digital Skills Development: Equipping the population with necessary digital skills to fully harness the benefits of digitalisation.

Angela Wamola, Head of Sub-Saharan Africa at GSMA revealed that Kenya has made remarkable strides in expanding mobile coverage and services.

However, substantial gaps persist.

“Bold policy initiatives are necessary to boost demand, lower supply costs, and foster investment in digital infrastructure. Such measures promise broad benefits beyond mobile, catalysing productivity across all sectors and generating myriad employment opportunities for Kenya.”

As Kenya forges ahead, the integration of digital strategies into its economic framework may well pave the way for sustainable growth and increased global competitiveness.