ICT sector sees first decline in growth since Covid

The information and communications sector grew by 7.8% in the first quarter of 2024, compared with 9.5% the previous year, marking the first slowdown in growth since the Covid-19 pandemic.

Kenya National Bureau of Statistics (KNBS) data shows that the sector has recorded a steady acceleration in year-on-year growth since March 2021, when it grew by 5.1%, and then increased to 8.1% over the same period in 2022.

The slowdown in ICT growth mirrors broadly sluggish growth in all other sectors of the economy during the period under review, with the exception of banking. Kenya’s economy grew at a slower rate of five per cent in the first three months of 2024 compared with 5.5 per cent in the same period last year, at a time when the business community was concerned about high interest rates.

KNBS data shows that all sectors except finance and insurance recorded slower growth in the first quarter of this year compared to the same period in 2023, indicating a difficult macroeconomic environment.

ICT services are the catalyst for backward and forward connections in all other commercial segments and the slowdown in the sector gives a boost to the state of the economy. For example, it supports financial services in aspects such as money transfers, e-commerce in the early stages, improved public services in the case of e-government, and also human capital development through e-learning.

The slowdown has come despite aggressive efforts by the state to spur the country’s digital revolution through a range of infrastructure and skills development programmes.

Among the projects underway is a five-year plan to lay at least 100,000 kilometres of national fibre-optic cable, set up 25,000 free Wi-Fi points in major markets and shopping malls across the country, and set up a digital hub in each of Kenya’s 1,450 counties.

The ICT sector has gained immense popularity amid the COVID-19 crisis, as society has massively shifted away from in-person interactions as part of government-backed measures to contain the spread of the deadly virus.

For example, the pandemic has led to an increase in the availability of a range of IT and communications services, as evidenced by the increase in demand for fixed-line internet as people have followed government recommendations to work from home and schools have adopted remote learning.

Since then, Kenya has seen continued and significant progress in digital transformation at a global level, with new breakthroughs ranging from innovations in real-time data collection and management to cybersecurity support systems and big data management.

Experts called on the government to accelerate investments in complementary services, such as access to high-quality electricity and the Internet.