Tech firms reap big as businesses shift to digital space

Ken Maina, a phone and laptop dealer in Nairobi’s central business district (CBD) has been reaping the benefits of the technology adoption wave brought on by Covid-19.

Over the past six months, the demand for laptops, desktops, tablets and their accessories went up as individuals began setting up their homes to work as makeshift offices.

“Schools were looking for alternatives to deliver content and people were working from home which meant they had to buy new machines,” he said.

According to the Communication Authority, learners continue to access Kenya Institute of Curriculum Development (KICD) e-content and lessons at home, as learning institutions remain partly closed.

Rajab Karume, a clothes vendor, had to create an online presence to complement his physical store as foot traffic declined with travel restrictions across the country. To get to his customers, he had to push content to them from their homes and offer delivery services.

The shift to online has spurred the need for digital services, and technology firms are reaping big. growth in the number of dig. The latest industry data from the Communication Authority of Kenya shows that the total number of domains increased to 95,974 for the full year 2019/20 compared to 87,807 the previous year.

Companies dominated the number of domains registered with a total 91,445, meaning 8,724 more companies registered the websites over the past financial year.

“Internet access has become a gateway to critical information, services and opportunities available to many people. The number of mobile Internet users will continue to grow due to an increased demand for access to information online as a result of the proliferation of digital services,” said CA.

“The number of data/Internet subscriptions continued to grow due to increased demand for access to information online, coupled with transfer of more services to the digital space. With the Covid-19 pandemic, many consumers continue adopt video-conferencing services as they work from home, access online entertainment and streaming Video-on-Demand services.”

The bandwidth capacity utilised locally was 2 terabytes per second (tbps) compared to 1.3 tbps in a similar quarter the previous financial period.

Similarly, large retailers had to ramp up efforts to get to their consumers with the option of online shopping and delivery to their doorstep.

According to Naivas Chief commercial officer Willy Kimani, e-commerce makes up two percent of the revenues. Though not yet profitable, he says it is an essential channel to have in the current operating environment.

Naivas and other retail chains including Carrefour, Quickmart and Tuskys have partnered with various delivery services to provide contactless shopping for their customers. This has been accounting for a high number of orders being channeled through the option, reducing the need to go to the stores.

The delivery space has become highly competitive with other firms in the e-hailing segment including Uber, Bolt and Little also venturing into grocery delivery to tap into the number of Kenyans option to shop online rather than visit physical stores.

Glovo indicated that the app had seen 20 to 25 percent more downloads in Kenya over the past few months as e-commerce becomes an alternative for store visits.

Data from Statista shows that revenue from e-commerce in Kenya is projected to reach $1 billion (Sh108 billion) with a compounding annual growth rate of 19.7 percent between 2020 and 2024.

“The market's largest segment is Electronics & Media with a projected market volume of US$431m in 2020. User penetration will be 29 percent in 2020 and is expected to hit 49.1 percent by 2024. The average revenue per user (ARPU) is expected to amount to US$70.11 (Sh7,572).” Said Statista.