Adopt new techs to stay afloat, companies advised

Speaking at a recent Strathmore Business School policy breakfast on implications of blockchain and fintech on business and society, tech experts said even though Kenya is ahead of its peers, especially in Africa, more investment is needed to boost infrastructure to create platforms to further entrench innovations.

University of Nairobi Business School associate professor Bitange Ndemo said technologies can resolve some of the intractable challenges that the society faces. He cited Red Cross, which he said had adopted blockchain technology to mitigate natural disasters in Isiolo.

“When they used blockchain, the cost was a fraction of what they used to spend,” he said.

Adoption of fintechs, Prof. Ndemo said, would make responses to emergencies cost-effective and more impactful to the victims.

“…when the crisis occurred they sent money to every citizen for them to buy what they want. They served the people in a much better way than when they appeared with what they assume the people in that area could eat.”

He however said that is only possible where there is a proper infrastructure.

Prof. Ndemo added that while some developments have been made to provide a conducive environment for new technologies such as fintechs to thrive, more needs to be done.

He commended the government for encouraging local roaming that allows the telcos to offer their services on one another’s infrastructure in cases where they lack transmission facilities.

“Google with Telekom Kenya is working to deploy balloons into the atmosphere such that there would be broadband Internet in every corner of this country,” he said.

Prof Ndemo said the area where most African countries lag is in putting in place identity infrastructure.

“The reason why our M-Pesa worked is that Kenya had a proper registration of people.”

Prof. Ndemo, who chairs the Artificial Intelligence and Blockchain task force, said there is a need to develop biometric for everyone like India did to create an identify the database and ease service delivery.

“It would become very easy for India to provide education and health services as well as get to know who is Kenyan or non-citizen. Identity would be very critical for any application that would come because it defines everything.”

The former Information PS warned that companies fail to adopt new technologies at their own peril. He cited Eveready, Uchumi and Nakumatt supermarkets that collapsed not only due to poor governance but also because they fell victim to technology disruption such as the rise of e-commerce.

He said tech-driven companies such as Uber, Facebook and Skype, among other over-the-top service providers, will thrive at the expense of their brick-and-mortar counterparts still stuck in the old good days.

“The bigger story is that most companies are going to die. As I speak to you today, they are going to die because they are not seeing the trend. If you read the newspapers today you will see the trend,” said Prof Ndemo.

“Manufacturers are questioning the logic of giving somebody inventory and that person asks them for 90-day credit while they can go directly to the customer.”

The banking and sector and other commercial service providers are also shifting to new technologies to retain existing customers and expand across Africa as fintechs create inclusivity that did not exist in the past.

However, Aarti Shah, a consultant at The Cobalt Partners, says governments need to play catch-up as far as using fintech for production is concerned.

“I don’t believe policymakers are radical enough in their thinking about how fintech should support SMEs. If we are not careful by 2034 it will be cheaper for robots to manufacture furniture in the United States than it will be along Ngong Road,” said Ms Shah.

“We are walking into a problem if we don’t start thinking about that now – 2034 is in our lifetime. One of the many reasons for this is the cost of finance.”
She also said it is important to invest more in research and development (R&D).

“If we do not increase funding of R&D in Kenya, productivity will remain low and our products will become irrelevant, and the government's target of 2% of GDP being spent on R&D will not be met” she told the participants.

Prof Jacqueline McGlade, the director of Sekenani Resilience & Space Research Centre at Maasai Mara University, said use of satellite data and mobile phones would benefit communities and help solve problems they face, especially small-scale farmers.

“What we see is real demand from farmers to be connected to a proper market, no middleman and more importantly, they also want to know how run a farm on a small scale in the face of climate change,” said the former UN chief scientist for environment, artificial intelligence and Big Data.

“It is becoming increasingly difficult to anticipate what will happen on the ground.”