Kenya and the mixed expectations of technical investment

The wealthiest Kenyans are barely distinguishable from the poorest South Africans, yet East Africa is now a flurry of excitement as investors congregate.

In August, the first of three major undersea broadband cables which will link East Africa directly to the global telecommunications network went live. Seacom cables have a capacity of 1280 gigabits per second.  However, the best residential speed offered by Kenya's largest ISP remains capped at one megabit per second. That speed is available only at night and on weekends, for over $100 per month. Other cables, including Teams and Eassy, expected to come online soon may result in increased competition.

This is the same country where hospitals and health centres lack the basic drugs necessary to treat common ailments like colds and flu. Patients are being referred to private chemists to buy medicine.

Minister for Medical Services, Professor Anyang’ Nyong’o, said of the 3,500 doctors that graduated in 2008, only 50 are serving in the public sector, a problem he attributes to poor medical equipment in the country.  He then announced plans to lay off at least 500 workers from the Voluntary Counselling and Testing Centres countrywide by June 2009 due to lack of funding.

So, will the Internet save Kenya?

Altech CEO, Craig Venter, speaking about why they risked so much to take on South Africa’s then communications minister, Ivy Matsepe-Casaburri, to win the right to build their own networks: “We were aware as a company and as a board that the ICT industry in most countries can contribute up to 2% of GDP.”

Now that they’ve won, though, they have no interest network building in South Africa anymore.  “We believe that the other players are large and the cost of building a network in SA is heavy. Our emphasis and our focus is now East Africa.”

Just because individual companies see a financial opportunity does not mean that this is game-changing for Kenya, or the region.

Certainly, the Internet will allow producers to know where good prices can be fetched, but that doesn’t mean they can get their goods to those markets.

There are a grand total of 8,933 kilometres of paved roads in Kenya; that in a country only half the size of South Africa.  The north of Kenya is becoming a no-go area as roads are not only physically unsafe, but bandits regularly attack goods trucks.  According to Kenya’s Daily Nation, “This year, 63 people have been killed, 36 seriously injured and more than 11,500 livestock stolen in the region. In June alone, five police officers and one civilian were killed in fierce attacks by raiders.”

The impact means that logistical costs are going through the roof.  Hiring a truck to transport goods now costs over $300; a 50 kg bag of sugar now costs $1.50 more to move.  This makes it far more difficult to get goods to market.  In a nation where most people earn less than $3 a day, that is very expensive.

Private investment can only take a nation so far.  Safety, security and open trade access can only be secured by a functioning state.

A lot is demanded and expected of investors; they are held up as the gateway through which health, safety, education, roads, clean drinking water and electricity will arrive.  This is true, inasmuch that revenue derived from businesses goes to pay for all these things.  However, just because a certain amount of investment is happening, and businesses that do the investing are profitable, does not mean any material change to the quality of life of locals is guaranteed.

Instead of focusing on ways that business can be made easier for everyone, irrespective of the size of their investment, Kenya (like South Africa) focuses on specific industries.  So, telecommunications companies prefer Kenya to South Africa?  They don’t appear to like it for anything else.