Why Digital villages project ran out of steam

By -Macharia Kamau | Published Tue, May 21st 2013 at 00:00, Updated May 20th 2013 at 21:48 GMT +3

By Macharia Kamau

Nairobi,Kenya:A combination of factors including harassment by local council officials have resulted in the slowed growth of the digital villages project, a public private partnership initiative that was expected to deepen use of ICT in rural areas.

The entrepreneurs that received loans from the digital villages revolving kitty to set up the digital villages – referred to as pasha Centres – say the project has failed to take off as initially expected due to misunderstood nature of the centres by the local authorities and subject Pasha Centre owners to constant harassment.

The project, started in 2011, was meant to deepen use of ICT in the rural and bridge the digital divide with urban areas, and is implemented in a public private partnership fashion. Entrepreneurs are advanced loans from the digital villages revolving fund to operate the Pasha Centres.

A recent report commissioned by the Kenya ICT Board noted that more than half of the about 60 entrepreneurs that had been advanced loans to set up digital villages have been undergoing difficulties and are unable to service their loans.

Geoffrey Gitau, chair Pasha Centres Association of Kenya says many digital villages have been undergoing difficulties due to little or no support by government. He said failure by government to support the entrepreneurs in a true Public Private Partnership (PPP) model has resulted in stunted growth of the project.

Offer free access

Gitau – who also runs a Pasha Centre in Juja – said many licence fees that the centres have to pay as well as the structuring of the loan that entrepreneurs received to start of the digital villages has been crippling to the project.

“We have to pay for a variety of licences for all the services that we offer at the centres. These include licences for training, offering connectivity, not understanding that the Centres are social enterprises in nature. Some of these are public services aimed at deepening digital literacy and the Pasha Centres do not generate revenue from all these services as ICT knowledge is still dismal in the rural areas,” he said.

 “Pasha Centre owners have been subjected to all kinds of harassment by local authority officials in their respective towns and at times they go ahead and confiscate their equipment grounding their businesses,” he said.

“The ministry of education has threatened to close down many of the centres because they are not accredited to train but what Pasha Centres do is not educational training but digital literacy.”

Gitau wants the Government to adopt the Pasha Centres as a public project noting that despite being privately owned and run, the centres have a facet that offers social services that should be of interest to the government including ICT literacy.

“We feel the Government should have adopted the Pasha Centres as their own project from the go and give them a code such that the licence fees that they pay are reduced or waived.

“We have the task of making rural population digital-aware and this way, create demand for the products offered at the Pasha Centres. This means that we have to offer free access to Internet so that we can pull them in.”

Immaculate Mutuku who runs a Pasha Centre in Kitengela noted that the centres have been burdened with what should be a government function of deepening ICT literacy but have been getting marginal assistance from the government.

“The entrepreneurs are ambitious. Investing Sh1 million in an ICT facility in the rural areas should not be taken lightly. But the challenges that many have faced is now forcing them to scale down and offer just a few services that will guarantee them a return on investment and enable them to service their loans as well as to ward off the council officials,” she said.

She added that unfavourable conditions by the financial institution that disbursed the money from the revolving fund have also been a factor in the failure to take off by the digital villages.

“There are stringent rules to access the money once you have been approved, there are many other fees that we were not told in an upfront manner that have made the loans seem like other commercial despite,” she said.

The loan is advanced at a 10.5 per cent interest rate – far below the rates for commercial loans then that were at between 18 and 20 per cent. Despite the challenges that are seemingly grounding the project to a halt, the ICT Board – the government agency that houses the project – has put on a brave face and said the project was facing teething problems. It said it would identify the hurdles and device mechanisms to deal with them in the current and subsequent phases of the project implementation.

The Board said though its it has not lost money in the digital villages project but has expressed concerned that the digital centres established by entrepreneurs through cheap government loans are not doing as well as initially expected.

Revolving kitty

Paul Kukubo chief executive ICT Board said while the project may have been slow to pick, almost all entrepreneurs have been servicing their debts. “We have not lost money but we are also concern because they are not doing as well as we expected them to do,” said Kukubo.

“We have disbursed Sh53 million and had recovered Sh26 million as of April 30 which is evidence that the entrepreneurs are repaying their loans.”

He added that the challenges and lessons learnt in the first phase of the project would inform later stages of implementing the digital villages project.

“There is more money from the revolving kitty but we are taking lessons from the first two phases and feedback from the industry so that we can figure out how to make it better and stabilise the model,” he said.

He added that ICT centres modelled along the Pasha Centres model are now cropping up in areas where uptake of ICT was low. “The work of government is not business but support and stimulate businesses that can take up the model and run it profitably. So far we have seen some entrepreneurs copying the Pasha Centre idea and their centres are running successfully.”


 

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