Muna Wahome
17 January 2006
Nairobi — Kenya plans to position itself as one of the world's leading outsourcing hubs for companies in North America and Europe looking to cut costs in their business processes.
Information and Technology Permanent Secretary Bitange Ndemo in an interview revealed a strategy to set up outsourcing incubators at local universities that are hoped to create up to 30,000 jobs.
Dr Bitange, who was head-hunted from the University of Nairobi, said in the coming six months, the Government hopes to engage some 10,000 students in an incubator venture modelled on a successful one by universities in north west Britain, called CallNorthWest and hosted by University of Central Lancashire (UCLan).
The new enthusiasm to push the Kenyan economy to the digital age follows last Thursday's approval of the long-awaited Information and Communications Technology (ICT) policy by President Kibaki's new Cabinet, at its second sitting.
The outsourcing strategy is part of a broader ICT development efforts that seek to make Kenya the regional hub by 2010 and increase the share of the It earnings to 10 per cent of the size of the Kenyan economy.
"We can produce a million jobs," said Dr Bitange, "The problem with us Kenyans is that we start counting (the 500,000 jobs the Kibaki administration promised to create) even before we have implemented anything."
Kenya's IT revolution is expected to be supported by an international fibre-optic cable link that is expected to reach Nairobi from Mombasa this April.
This is part of a projected named EASSy. The Kenyan fibre optic cable link will join with a sub-marine system ringing the continent, and set to go live in 2007. Japanese companies NEC and Fujitsu, US's Tyco and Alcatel of France have been invited to invest and tender evaluation is on. The private sector arm of the World Bank, the IFC Group, UK Department for International Development (DFID), African Development Bank (ADB), Development Bank of South Africa (DBSA) and the European Union are some of the donors expected to finance the project. The Fibre optic technology will provide broadband Internet access and reduce costs by about 40 per cent. This will make Kenya more competitive in the global real-time outsourcing business, which has so far been an expensive affair that confined existing players to the relatively expensive, Very Small Aperture Terminal (Vsat) technology.
India, China, Russia, Malaysia, Philippines and Bangladesh - considered leading global outsourcing hubs supported mainly by their cheap labour and technology advancement -are creating thousands of jobs out of outsourcing. The US, which outsourced $77 billion worth of business in 2004, followed by UK and the European Union, are the main consumers of the service. In Africa, Ghana and South Africa have gone all out to capture the outsourcing market.
Dr Bitange says the Government was now talking to the commercial attaches in embassies abroad to reorient themselves from merely "marketing ciondos" to promoting Kenya as an outsourcing destination. He believes this will easily overtake tourism as a source of foreign exchange. Beyond absorbing the Kenyan manpower including graduates numbering about 60,000 yearly, it would attract companies including transnational banks and airlines, which are outsourcing to countries like Ireland and South Africa. Today, Information Minister Mr Mutahi Kagwe will be at Sameer Park-based KenCall call centre on a familiarisation tour as they set out to implement their strategy.
Dr Bitange said the strategy involves setting outsourcing benchmarks for the country through engaging the universities. The strategy, an attempt to boost the Economic Recovery Strategy (ERS), would encourage participants to move out of Nairobi and set up businesses in other towns to spread the benefits.
Incentive
Under the ICT policy approved by the Cabinet, the new team made quick amendments recommending incentives to the sector including tax breaks meant to make Kenya an attractive outsourcing destination.
He says Kenya Revenue Authority should, for example, be ready to forfeit the VAT component in ICT and recover the same through the increased payroll tax. The PS said current operators who have to transport employees in the night due to varying global times need not only night security but also incentives to provide the transport. "We want this policy implemented to the letter," he said.
Dr Bitange said Telkom Kenya, whose reforming he believes is central to the strategy, should reduce its cost of bandwidth to attract more business and kick-start the sector.
Be the first to Write a Comment!
Copyright © 2006 The Nation. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
