Ideas & Debate

IBM lab registers Kenya for tough investment challenge


The IBM vice president research, Dr Robert Morris (right), with the Information ministry PS, Dr Bitange Ndemo, during a press conference in Nairobi on August 13 announcing the first IBM research lab in Africa. Photo/Diana Ngila

Kenya’s claim to being Africa’s leader in information and communication technology (ICT) got a boost last month, when IBM announced it would place its first African research lab in Nairobi.

The announcement, on August 13, is a feather in Kenya’s cap. Like other African nations, it is looking to the private sector to pad out national spending on research and development (R&D) and boost innovation.

By getting the lab, Kenya joins countries like Australia, Brazil, China, India, Ireland, Israel, Japan, Switzerland, and the United States, which host the computer giant’s other research units.

IBM Research – Africa will conduct basic and applied research in areas including the use of modern technology to improve government efficiency, root out corruption, and manage city services such as water utilities and traffic control.

The lab will serve Africa as a whole, and house IBM researchers alongside Kenyan and other African talent, selected and nurtured through a Resident Science Programme.

“The IBM research lab will not only rubber stamp Kenya as Africa’s leader in ICT, but will help the country to transform into a knowledge-based economy,” Information ministry PS Bitange Ndemo said in a press release.

But the decision means that other African countries with ambitions in ICT leadership will need to do some soul-searching to work out how to achieve their technological aspirations.

So why did IBM pick Kenya? Well, for a start the company has had a presence in the country for more than 50 years.

Strong reputation

But Nairobi is also the financial capital of East Africa, and Kenya’s ports make it a gateway to the continent.

Kenya has also been building a strong reputation in ICT innovation. The country’s e-banking system M-Pesa, is one oft-repeated success story.

The ease of doing business in Kenya, combined with a strong support for innovation, were key factors in the decision, an IBM spokeswoman told me. But some aspiring ICT leaders in Africa are not so happy with IBM’s choice.

“This may sound very sentimental, but I think Nigeria would have been the choice,” says Umar Bindir, director-general of Nigeria’s National Office for Technology Acquisition and Promotion. Bindir is not the only one to rue the decision.

Business Day, a Nigerian daily, ran an article last month saying that IBM’s decision showed that Nigeria was being “left behind” in ICT.

Nigeria’s supporters say IBM should have chosen their country on account of its larger domestic market and bigger university system.

Kenya’s entire economy is the same size as that of Nigeria’s capital Lagos, they say. And Nigeria’s population — and therefore domestic market — is seven times the size of Kenya’s.

But Nigeria has aspects counting against it. Security is one, corruption another. While these are also problems in Kenya, Nigeria fares worse on these measures in international rankings.

Speaking of rankings, there was another candidate. Small Rwanda has worked hard over the past decade to establish itself as an ICT hub, pouring money into ICT infrastructure.

Earlier this year, the US-based Carnegie Mellon University announced it would open a branch campus in the capital Kigali, focusing on ICT training. Work also started earlier this year on a technology park in the capital.

Rwanda scores higher

The technopole development, funded by the government of Rwanda and the African Development Bank, is designed to attract international investors just like IBM.

In fact, Rwanda scores much higher than both Kenya and Nigeria in the Global Competitiveness Report, produced by the World Economic Forum.
Rwanda also scores better on the international ‘‘networked readiness index’’, which measures connectivity, than both Kenya and Nigeria.

The country also benefits from low corruption.

So why didn’t IBM choose Rwanda? While the sheer size of Nigeria’s market was not enough to attract the company’s R&D cash, Rwanda’s tiny market is too small.

And while Rwanda has come far in training people and building ICT networks, it started with little and has not yet reached a level where it can challenge Kenya for this type of investment.

International companies

However, president Paul Kagame is optimistic about the country being able to attract this type of investment in the future. “I think we will soon get there,” he said in a tweet.

With African economies growing, there will be ample opportunity for Rwanda and other countries to prove themselves as key players in technology.
ICT is just one industry where international companies may want to invest in research capacity on African soil.

Agriculture is another growing sector, energy generation a second. Africa needs plenty of technology investments in addition to ICT.

So while this is Kenya’s time to bask in the sun, policymakers in Nigeria, Rwanda, and other technology-keen African countries can take heart from the fact that the African race for private sector R&D investments is not over. It has only just begun.

Nordling, a journalist, is based in Cape Town, South Africa