Leveraging country competitiveness through the ICT sector : the case of Kenya

Abstract

The recent development in the Information, Communications and Technology (ICT) has resulted in major changes in the social, cultural and economic changes globally. The impact of ICT investments has been noticed in developed countries such as Singapore and United States of America. This has stirred up an interest in developing economies, whereby governments are also perceived to be increasing a portion of their annual budgets towards ICT investment in an effort to improve national competitiveness. Several countries are implementing various government policy interventions to promote foreign direct investments (FDI) so as to build ICT clusters similar to the Silicon Valley model. One of the recent and successful clusters amongst the developing countries is the ICT cluster in Costa Rica, which is an ideal example for other developing countries to imitate. Amongst such developing countries is Kenya. The objective of this research was to gain an understanding on how the ICT policy has helped create an enabling environment for FDI, which further boosts national competitiveness within the context of an African country. A qualitative case study research design was adopted for the Kenyan case. A sample size of eight respondents consisting of representatives from multinational companies in ICT and government policy experts was used. The findings on the Kenya case study were later compared to lessons learnt from the Costa Rica case. The study identified the importance of adopting supporting and supplementing policies in relation to the National ICT policy. The mere supply of technology infrastructure is not enough, but as in the case of Kenya, the demand side of ICT adoption was equally important in order to shift the economy to the next stage of growth. Furthermore, as demonstrated by the findings in Costa Rica, an independent, non-political organisation plays a vital role in the effective implementation of ICT policies. Poor execution of ICT policy, re-introduction of VAT on ICT products and old school mentality were identified as factors, which are detrimental to the adoption of ICT policy. The findings indicated that political instability affects different industries at varying degrees. The results also outline the importance of multinational companies in managing relationships with governments especially during the times of government transition. A model was constructed in order to provide a guide for policy makers in adopting national ICT policies for national competitiveness.