Business Daily (Nairobi)
Kui Kinyanjui
17 January 2008
The information, communication and technology sector lost an estimated Sh2.5 billion in the post-election violence, industry insiders said.
The valuation came even as it emerged that the technology sector is still counting its losses with total extent of loss expected to be known at the end of the month.
"Skirmishes and violence will have adverse impact on future earnings. Damage to infrastructure, property and assets leads to unexpected and un-budgeted expenses that reduce earnings and ultimately profits," said Joshua Chepkwony, the chairman of the Telecommunications Network Operator Forum (TNOF).
While the impact of the violence is being felt in all facets of the ICT industry, small businesses are expected to bear the burden. Entrepreneurs have reported heavy losses arising from skirmishes that followed the disputed outcome of last month's presidential election.
Nearly 500 people have been killed and a quarter of a million displaced with devastating impact on business confidence. In the ICT sector, the cyber cafe operators have been hit hardest having been forced to close shop for several days.
"This is unbelievable. I have already sent home five workers leaving my family to run the business when we can open," said Lucy Makau, owner of a cyber café in downtown Nairobi.
Even before the crisis, Ms Makau said reduced profits had forced her to cut staff numbers and slightly increase charges to pay monthly bills. Cyber cafe earnings have been under increased pressure as competition intensifies with the entry of more providers.
Big ICT service providers have not been spared either.
"Service providers have lost some customers and have had to downgrade others particularly those in the tourism sector who have lost their clients and need to cut costs," said Jonathan Somen, chairman of the Telecommunications Service Providers Association of Kenya (TESPOK).
"The long term effect is that a slowdown of the economy will affect everyone," said Mr Somen. Last week, the telecoms service providers alone said they had lost Sh1 billion in infrastructural damage and supply chain disruption.
Business Process Outsourcing (BPO) operators have reported reduced income from international call centre clients scared by negative reports of ongoings in the country.
Safaricom, Celtel and Telkom have reported lower than normal earnings for the festive season due to depressed use of services such as SMS and call functions.
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