Technology companies in Kenya gear up for windfall as ICT spend increases in counties

Technology companies in Kenya are caught up in a heated race to land lucrative multi-billion-shilling tenders in counties as the new administrative units seek to automate operations.

This comes as some of the 47 counties set aside millions of shillings for IT infrastructure in areas where little or no form of technology has existed for decades.

Last week, Kenya’s largest mobile service provider Safaricom, and technology firm Seven Seas Technologies launched a partnership to allow them strategically bid for a bigger slice of county ICT projects.

The partnership will see the two firms work together to provide integrated products in the fields of healthcare, security, education, agriculture, smart cities and county citizen services. It is also expected to give them a leg up on the competition.

“There are some things that we can provide well like network infrastructure, while there are some products that Seven Seas Technologies is good at, particularly last-mile connectivity, and that is why this partnership is necessary,” said Safaricom CEO Bob Collymore.

Upper hand

Global software vendor SAP, which has traditionally sold its enterprise resource planning (ERP) solutions to clients running complex manufacturing systems, has also set its sights on counties for emerging opportunities.

The company is now providing customised resource planning solutions and applications for database management that can be used in remote areas.

Earlier this year, SAP launched a mobile-based civil birth registration platform that allows for real-time creation of birth records from any part of the country.

The system utilises a combination of biometric scanning and cloud storage, and syncs the data with the Department of Civil Registration.

Another company looking to increase its offerings in Kenyan counties is IBM. Leveraging on its new cognitive computing system, Watson, which is located at the Catholic University of Eastern Africa, IBM is looking to develop solutions for counties using big data.

Huawei, Microsoft and Intel have also increased their spend and presence in the counties.

The creation of these administrative units last March presented a radical shift in the distribution of resources, and sought to correct a system previously seen to favour the capital city.

This saw up to a third of the national Budget sent directly to counties to meet unique needs. However, for most governors and senators, setting up new systems and improving revenue collection has proved more difficult than anticipated.

Large debts

First, counties inherited large debts from town and municipal council authorities, some spanning decades and with billions of shillings accrued in interest.

Second, the responsibilities of county governments, such as agricultural, roads and health management, have increased administrative costs, muting development spending.

Third, there has been little by way of investment in automated revenue collection systems, particularly in largely rural regions, so the initial capital required to increase revenue bases is huge.

According to a recent study by the Communications Authority of Kenya, 97 per cent of Kenya’s land mass is not connected to data services, while 66 per cent lacks voice services.

For Mahamud Hassan, who advises the Garissa County government on matters ICT, counties are starting from a very disadvantaged position as far as technology is concerned.

“When we got into office, we visited the largest hospital in Garissa and the hospital superintendent had a desktop computer whose only form of connectivity was a power cable plugged into a wall socket,” he said.

“The first issue we had even before we looked at fibre connectivity and servers was communication. How does the governor communicate with his MCAs, and how do the departments within the county administration communicate with each other, the central government and ministries?”

Most administrations also relied on free email providers like Yahoo and Gmail before the Government bought domain names for all county units.

However, getting a dedicated email address and a website is merely the first step in the long journey towards automation, said Mr Hassan, adding that setting up and providing cutting-edge IT solutions in the counties is a precarious balancing act.

“When you are starting out with a non-existent ICT infrastructure and limited budget, there are some questions you find yourself hard pressed to answer,” he said.

“For instance, do you first spend Sh50 million on a data centre and cabling at a district hospital or buy an X-ray machine?”

Secondary need

Such decisions make IT services for many counties a secondary need, but no less of a pressing one.

“Much as we may need boreholes and medicine kits, we also need automation, particularly in financial administration to maximise revenue collection and utilisation.”

The counties and central government use the integrated financial management information system (IFMIS) to provide a digital financial reporting solution aimed at reducing leakages and promoting efficiency.

However, IFMIS, which is the only form of financial automation present in all counties, is only handy at the last stage of procurement processes.

The other stages, which include floating tenders, sorting through applications, grading, awarding and monitoring the execution of bids, and payment, are all done manually despite the existence of solutions that can automate them.

And this is only in financial administration. Other areas like healthcare, education, agriculture and land administration are in dire need of automation to enhance access to information, hasten service delivery and assist with record keeping.

For county administrators to set up the appropriate digital infrastructure and software to digitise these systems, billions of shillings are needed. But this is money they do not have.

Set-up costs

According to Moses Nzioki, a software and networks expert at technology firm Masterpiece, IT infrastructure costs are prohibitive for cash-strapped counties and alternative options should be sought.

“The set-up costs for a modest data centre will include buying servers, cabling equipment, cooling systems, enhancing security for the hardware, employing specialised personnel to maintain these systems and buying the software to run on the hardware,” he said.

Depending on the number of users, the costs could be anywhere between Sh4 million and tens of millions of shillings.

And because technology keeps changing, counties would have to overhaul entire systems to instal new upgrades every two or three years, and often at higher prices.

One of the ways that counties can avoid the overhead costs is by renting or procuring software as a service, which is an upcoming trend in office automation solutions.

For instance, Microsoft recently launched the cloud-based Office 365 in the Kenyan market. The software allows businesses and organisations to avoid high capital expenditure on IT hardware and personnel.

All that is needed is an Internet connection and the purchase of a licence, which will allow users to access computing capabilities hosted in the cloud, saving between 30 and 70 per cent in capital expenditure.

Microsoft Country Manager Kunle Awosika said adopting software as a service is a shortcut for counties, which would allow them to redirect their finances to high priority areas.

“This power will enable counties cut down on their capital expenditure on mail servers and engage in pay-per-use technology models to manage their email, communication and storage needs,” he said.

“This is helping individuals, organisations and Governments consume technology rather than maintain it.”

Once revenue bases increase and development expenditure pays off, then counties can afford the luxury of using billions of shillings to set up more advanced infrastructure.