Ideas & Debate

Internet speed failing Kenya’s small business

For impact on users, size and speed matter beyond just connectivity. FILE PHOTO | NMG
For impact on users, size and speed matter beyond just connectivity. FILE PHOTO | NMG 

In the past half-decade, Kenya has seen a surge in the amount of high-speed broadband adoption with the country’s Internet users growing exponentially.

The Kenya National Bureau of Statistics (KNBS) says in 2010, the total available bandwidth capacity was 202,720 Mbps. In 2016, it grew to two million, a nine-fold increase.

During same period, fixed fibre optic data subscriptions to homes and businesses have grown, reducing the cost of connectivity, and allowing more homes and businesses to be connected.

However, despite this impressive Internet adoption, many high-populated areas in downtown Nairobi and mainly residential Eastlands remain outside the high-speed fibre grid.

Laying of fibre optic cables in Nairobi and other major towns targeted upmarket areas, leaving out downtown and residential areas, which are not considered economically attractive.

It is assumed that upmarket areas will adopt services faster and spend more.

Given the informal nature of most businesses in downtown Nairobi, it is assumed they spend less, while there is no evidence that, provided with infrastructure, these businesses would not match upmarket businesses in spend.

The neglected sections offer a huge untapped potential for high value connections that can yield more high value contribution to the gross domestic product.

On the business front, this vast and busy area that includes the city’s Moi Avenue, Tom Mboya and Ronald Ngala streets moving outwards to Kamukunji and Gikomba districts are characterised by small and micro businesses that form a huge part of the city’s economic output.

A research conducted by the country’s ICT regulator, the Communications Authority (CA), and the KNBS in 2016 on how businesses access the Internet in their operations, found a lower capacity down the scale.

While 97 and 92 per cent of large and medium enterprises reported using fixed broadband, the proportion was much lower among micro-enterprises at 71 per cent.

This further translated into limited connectivity within small and micro businesses.

While 93 per cent of large businesses reported having a local area network, only 40 per cent of micro-enterprises reported the same.

This is important because research has shown that for Internet connectivity to have transformative value to users, size and speed matter beyond just connectivity.

The Alliance for Affordable Internet recently advised African countries to revise measurements for evaluating Internet connectivity from merely counting the individual number of SIM cards purchased but also looking at how many users can afford 1GB of data per month at less than two per cent of their monthly income.

This is because 1GB of data spread over a month is the amount considered to provide meaningful value to the user.

Higher Internet speeds and broadband capacity would mean faster transactions for online marketing — popular by the vast number of clothing, beauty and make-up accessories shops spread in downtown Nairobi.

Sustainable high-speed fibre networks also lay the foundation of evolving business practices such as teleconferencing and cloud computing to take root.

For some businesses, interconnecting their small shops (exhibition stores) will allow them to save on manpower, general running costs and allow them to open more shops.

For the big telecoms infrastructure players, laying the fibre will allow them to get faster returns but smaller businesses can overlay over these services.

For instance, with the reduction in connectivity costs, smaller wifi companies have come up, providing even cheaper services to users paying Sh2,000 or less per month.

In the home Internet space, demand for high-speed fibre has been boosted by the increased subscriptions to multimedia streaming services.

Service providers such as Netflix and ShowMax have ramped up their offerings in the country to tap into this demand. Media monitoring site Geopol recently found increased use of smart phones as second screens in homes.

The vast population in Nairobi’s Eastlands provides a big opportunity for service providers to plug residential estates such as Buru Buru, Umoja, Donholm, Ruai, Kasarani, Mwiki and Kayole to high-speed fibre networks. It is high time service providers shifted their focus downstream.

Ability to spend can no longer be determined by air-conditioned offices or well paved residential roads.

It is time to test Nairobi’s River Road area in terms of spend and ability to adopt new technology.

Rebecca Wanjiku, Chief executive officer, Fireside Group.