Yatani budget shows rising stature of tech in economy

As Treasury Secretary Ukur Yatani read the Sh2.7 trillion Budget last Thursday, one thing that came out was how technology is increasingly becoming a key part of every economic activity.

This trend, tech and economic analysts say, is set to continue as revolutionary innovations sweep across the globe.

Mr Yatan’s technology allocations include government shared services which got Sh700 million, while the digital literacy programme was given Sh800 million. Rehabilitation of the national optic fibre backbone phase 2 expansion received Sh1.2 billion.

Mr Yatani also made sizable allocation to the Konza Technopolis city which seeks to position Kenya as a world class ICT hub. The allocations to the project include Sh6.3 billion for infrastructure phase 1, Sh400 million for ongoing construction of the Konza Technopolis Complex phase 1B, while Konza Data Centre and Smart City Facilities Project were allocatedSh5.1 billion.

According to PwC post-budget analysis, the future growth of Kenya’s economy will be determined largely by the country’s ability to take full advantage of rapid technological advances.

“...the government continues to invest in technology to improve digital literacy and skills as well as expanded digital infrastructure to facilitate access to affordable broadband connectivity.”

PwC says government investment is in line with the digital economy blueprint launched by President Uhuru Kenyatta in May 2019, which comprises five key pillars — digitisation of government services, facilitation of digital businesses, as well as improvement of infrastructure, innovation-driven entrepreneurship and enhancement of digital skills.

“Technology investment is a cross-cutting priority for all sectors in this era of online and remote working and consumption. We carefully review the extent to which budgetary measures will advance Kenya’s position as a technology-enabled economy,” said Benson Okundi, PwC’s government and public sector leader for East Africa.

The government is also keen to leverage the ICT sector to increase revenue and streamline government operations. There is also the plan roll-out of an end-to-end e-procurement system by December 2020, whose benefits will include cost reduction, speed, transparency, accountability and visibility.

In the Budget, Sh1 billion is set aside for the implementation of National Integrated Identity Management System (NIIMS), popularly known as “Huduma Namba”.

The system had stalled following court injunctions around data protection, and is now in progress after the enactment of the Data Protection Act, 2019.

The budget also introduced 1.5 percent tax on transactions carried out through digital platforms. This follows the passing of provisions on taxing the digital market place through the Finance Act, 2019.

Businesses targeted will include those that sell electronic tickets for events, software programmes, web hosting services and downloadable digital content. Kenya ranks among top African countries in adoption of various forms of advanced technologies.

The past decade has seen the rise of fintech, agritech, e-commerce, and transport solutions. Technology and innovation have become the epicentre of every successful business.

And as the country grapples with impacts of Covid-19 pandemic, fresh focus has turned to technology, through which millions have been able to conduct e-learning, e-commerce, e-entertainment, and electronic financial transactions from their isolation spots, as government continues to juggle how best to effect social distancing, quarantine and isolation to prevent the spread of the pandemic.

The State has also been strategising how to open and revive the country’s economy dented by the effects of Covid-19 pandemic. Experts say the pandemic will catalyse adoption of technology by industries not just in Kenya but across the world.

Through the 2020/21 budgetary allocation presented last week by Mr Yatani, the economic stimulus programme to cushion the economy from effects of Covid-19 has taken into consideration the importance of the ICT sector by allocating Sh14.9 billion.