Why the cloud is the new frontier for small local enterprises
Enterprise
By
Peter Muiruri
| Oct 25, 2023
Early this month, ="https://www.standardmedia.co.ke/health/health-science/article/2001483875/rutocare-hard-questions-linger-on-new-health-plan">President William Ruto< opened the new development centre for the global tech firm Amazon Web Services in Riverside, Nairobi.
With coffee lounges, immaculate seating spaces and inviting wall decor, the new office echoes the newest vibe in working spaces away from the old, drab and colourless offices.
The flashy office look underscores the newest scrabble for Africa's small and medium companies and startups by global technology companies.
And with Africa touted as the second-largest region for startup business in the world, the tech firms hope to expand the number of businesses adopting cloud computing services.
"Amazon has chosen Kenya as the base from which to extend its global and African footprint, which affirms our country as an attractive global investment destination, recognizes our progress in consolidating Kenya's global and continental leadership in the field of information and communication technology," said President Ruto.
However, experts in the field say finding the right cloud computing skills is the biggest hindrance to the migration globally.
Robin Njiru, the public sector lead for West, East and Central Africa at AWS says creating highly skilled jobs in software development, cloud support, and software engineering will be key in the envisioned drive into the cloud space.
"The net impact of having more skills in the country means easier access by local public and private organisations and an accelerated pace of adoption towards cloud computing," he says.
In recent months, President Ruto has been on a charm offensive to lure Western tech firms to come to Kenya and make the country a launching pad for their continental operations.
In his ="https://www.standardmedia.co.ke/business/business/article/2001481673/ruto-pitches-kenyas-tech-plans-to-silicon-valley-amid-concerns">recent tour of the United States<, he took an extensive tour of Silicon Valley, America's technology hub with the now familiar message: making a "strong win-win case for American firms to choose Kenya in their own best strategic and business interests."
Kenya is regarded as the region's leader in matters of technology as evidenced by the rapid digitisation of over 5,000 government services, with more State firms lined up for the uptake in the near future.
The new centre in Nairobi reinforces the city's role as a prime global tech hub.
"With over 80 per cent of Kenyan businesses being SMEs and startups, this move offers significant potential. It provides access to a larger pool of skilled professionals, training resources, and cloud services. It will boost economic growth, facilitate innovation, and help local businesses expand to global markets, thereby tapping into Kenya's GDP and the continent's growing tech landscape," says Napa Omwusah, sub-Saharan Africa startup leader at AWS.
Riffat Manji-Gidoomal, managing director at 11 Degrees, says the faster firms can get into the cloud, the faster their business acceleration and an improved financial bottom line.
Her firm has helped several companies onboard cloud-based solutions.
"In Kenya, this growth in cloud computing is being witnessed in the manufacturing and financial sectors. However, there is a need to address the skills gap so that more companies can build capabilities for the migration," she says.
However, Manji-Gidoomal says this growth could be inhibited by some business players who are reluctant to adopt cloud technology by clinging to more traditional systems.
"You have a more traditional market where someone will say, 'look, I have my own data centre or two where I have invested time and money and 30 people manning them. I don't need to be on the cloud.' However, I tell them to just look at recent security scares in some big firms in Kenya where data was almost compromised. It might take some time before the thinking changes," she says.
A report released on the sidelines of an African meeting for startups held last month in Johannesburg, South Africa, states that Kenya has the potential to unlock Sh1.4 trillion of additional economic value over the next decade, or 0.56 per cent of ="https://www.standardmedia.co.ke/business/business/article/2001483748/treasury-mulls-including-unpaid-domestic-work-in-gdp-calculation">Kenya's cumulative GDP<, by accelerating adoption of cloud computing.
According to this report, Kenya added 0.08 per cent to the GDP, amounting to Sh12.9 billion of value in 2021.
"Over 91 per cent of this impact can be attributed to the national productivity gains or the so-called "spillover effects" on the economy.
The remaining nine per cent was driven by cloud spending from both public and private organisations in the sub-Saharan region," says the report.
An increase of one per cent in cloud adoption by Kenyan, organisations added the report, will yield an average GDP increase of 0.03 per cent above the region's average of 0.02 per cent but behind the regional leader, South Africa, where one per cent of cloud adoption yields 0.06 per cent GDP increase.
Amrote Abdella, the general manager for sub-Saharan Africa at AWS, said the report underscores the immense potential for sub-Saharan Africa to harness cloud computing and expedite economic growth by increasing the current average cloud penetration with the region looking to unlock additional economic value.
"With the current forecast, the economic impact of the cloud is undeniable and is poised as a key catalyst for economic prosperity. As such, it is important for businesses in the region to invest in cloud computing technology to stay competitive and boost their economic potential," added Ms Abdella.
Kenya has ambitious plans to diversify its economies through digitisation, with 26 per cent of organisations in the country adopting cloud computing in 2021, showcasing the country's potential in improving cloud penetration.