Kenya’s Digital Economy Is On The Horizon

Kenya’s Digital Economy Is On The Horizon

As we reflect upon the achievements of the first year of the Kenya Kwanza Government, I would like to take stock of the Digital Superhighways’ contributions to the socio-economic transformation of our country, which is well and truly on course under the leadership and tutelage of H.E. the President, Dr. William Samoei Ruto CGH. 

Kenya’s Digital Masterplan 2022-2032 recognizes infrastructure as the foundation upon which all Information, Communication, and Digital Technologies and any progress emanating thereof are anchored. It is for this reason that under the Infrastructure Pillar, we have embarked on laying 100,000 kilometers of fibre-optic cable countrywide, including to currently unserved and under-served areas to provide access to an estimated 8.5 million homes and businesses, 1,450 wards, 400 police stations, 13,000 health facilities, 40,000 public schools, markets, and other public institutions over the next five years. Without Digital Infrastructure, Kenya cannot benefit from the Fourth Industrial Revolution and the disruptive technologies and trends such as the Internet of Things (IoT), robotics, virtual reality (VR), FIN-TECH, e-commerce, 5G technologies and artificial intelligence (AI) that are the new frontier for economic transformation globally.

Working with partners in the private sector over the last twelve months, I am pleased to report that the MIC-DE has successfully rolled out an additional 8,419 Kms of fiber-optic countrywide. Expanding our fibre optic cable nationwide is a significant precursor to our digital transformation journey. Having recently successfully negotiated World Bank Funding for the Kenya Digital Economy Acceleration Program (KDEAP) Worth USD.570M and additional funding worth Ksh.5B from the Universal Service Fund to support our programs, we project to add another 10–15,000 Kms in the next 1 year to NOFBI.

To realize the full utility value of the NOFBI, it must bring socio-economic transformation to citizens by opening up opportunities for job creation, support business, and e-commerce, education, innovation, access to online and GoK e-services, e-health, e-agriculture, and the creative economy while also spurring inclusive growth. This requires providing internet connectivity to the people via last-mile connectivity, which connects the main backbone and the users. Consequently, GoK, partnering with the private sector ISPs, is installing 25,000 free public WIFI hotspots in public places countrywide, providing affordable internet connectivity to millions of Kenyans. So far, the MIC-DE has installed 518 Free WIFI Hotspots countrywide. This is bound to expand exponentially as we expand NOFBI countrywide.  

The uptake and subsequent benefit from this ICT Infrastructure and its inherent technologies is directly proportionate to the ICT literacy of the users. Our Digital Masterplan emphasizes investing in digital skills to optimize digital opportunities and socio-economic transformation. Consequently, over the last 12 months, the MIC-DE has provided connectivity to 116 educational institutions, primarily TVETs and, equipped them with 11,400 internet access devices, and trained 390,968 individuals through the Jitume and Ajira programs. This has registered a tremendous success rate, with 119,462 youths gaining employment in digital and physical ICT-related jobs through this intervention. 

To further enhance access, promote innovation and use of emergent digital technologies, and offer ICT literacy, we purpose to establish 1,450 digital innovation hubs, one in each ward. To date, we have successfully operationalized 247 hubs with access to high-speed internet and learning centers with a capacity for 30 – 100 cohorts, workstations, innovation labs, Wi-Fi hotspots, and Co-working Spaces. These hubs can potentially train 300 youths and create a corresponding number of digital jobs at a minimum, giving an average of 1,500 digital jobs per constituency. The MIC-DE has been working with Members of Parliament to amend the NG-CDF Act to enable utilization of CDF for OPEX sustenance of the hubs. I’m pleased to report that Parliament has already passed the amendment and is now awaiting assent.

Thanks to enhanced connectivity and access, in the last 12 months, the MIC-DE has digitalized and fully onboarded 13,482 GoK services. Kenyans can now access GoK services from the comfort of their homes. The Presidency is also leading from the front in adopting Digital Services, and as of January 2023, all cabinet meetings have since gone digital. To enable citizens to access GoK and other digital services seamlessly and securely in both the public and private sectors, the GoK is pursuing a digital identity to facilitate virtual consumption of government services. We have also recently intervened in the market to facilitate inclusive connectivity and access by partnering with the private sector to facilitate local assembly and provision of affordable smartphones to MSMEs and those at the lower end of the economic pyramid. The manufacturing plant was launched by H.E. the President, on October 30, 2023, and is now operational, producing low-cost smartphones at around Ksh. 7,500. 

In the media realm, the MIC-DE is already revitalizing the Kenya Broadcasting Corporation (KBC) by modernizing the TV Centre, increasing FM Radio coverage with 20 additional transmitters, and procuring new Outside Broadcasting TV and Radio vans. Ongoing efforts also envisage upgrading the Digital Terrestrial Broadcasting Infrastructure through a partnership between the Kenyan and Spanish governments.

On revitalization of the Postal Corporation of Kenya, the corporation is undergoing restructuring to ensure efficient and optimal operations. We are targeting e-commerce and financial services. On the other hand, enhanced marketing of POSTA’s services is bearing fruit. In the last year, the PCK has generated over Ksh.200 million in revenue through delivery of passports nationwide. It is also working with the Department of Immigration to offer a one-stop service when one applies for a passport. In the past year, PCK has earned Ksh. 600 million for logistics services provided to the Government, expanded its EMS (Expedited Mail Services) offering, and increased new contracts that will see a projected increase from Ksh.600M in FY 2022/2023 to Ksh.900M in 2023/2024. It also delivers medical and related supplies to medical facilities in collaboration with KEMSA. The contract is expected to be worth about Ksh.295M. 

To ensure the successful implementation of its programs, the MIC-DE recognizes that it must operate within a conducive legal, policy, and regulatory framework and has either developed or progressed vital legislation in this respect. Some key achievements in this regard are the approval and the gazettement of amendments to the National ICT Policy Guidelines 2020, which removed the mandatory requirement for foreign companies investing in the ICT sector in Kenya to seek 30% local shareholding and the National Addressing System Policy and Bill, among others. To further align the industry’s operations to its operating environment, we have recently constituted a sector working group to review sectoral legal and policy frameworks and recommend wide-ranging changes and alignments shortly.

While a lot of work remains to be done, the progress made so far is encouraging. According to the World Bank, Kenya’s ICT sector’s growth has outperformed every other sector, expanding by 23% annually during the last decade. The industry is now six times larger than it was at the beginning of the decade. With your participation and support, we look forward to an empowered, digitalized and globally competitive Kenyan society. Our Digital and 24-hour economy is in the horizon.

The writer is the Cabinet Secretary, Ministry of Information, Communications and the Digital Economy in Kenya.

Why The Digital Identity Is Imperative For Kenya’s Digital Transformation

Why The Digital Identity Is Imperative For Kenya’s Digital Transformation

By Eliud Owalo

Why The Digital Identity Is Imperative For Kenya’s Digital Transformation

Self-identification in Africa has sometimes been oppressive and humiliating. But it has also often fallen short of the intended purposes, making it ineffective. A new digital identity is a must, in the emerging global order. The old way of doing things is dying. Those who do not change with the rest of the world must accept to become irrelevant. National identification belongs here.

The origins of the Kenya personal national identification is traced back to colonial-times. An ordinance signed by Sir Henry Conway, the Colonial Governor in 1912–1917 made it mandatory for all adult males aged 16 and above to have official identity documents. Identification was largely for the purposes of controlling the movement of natives. It also  facilitated payment of hut tax and recruitment into colonial labour. They were issued with a registration document that was carried in a metallic container, attached to a chain and was worn around the neck at all times. This colonial ID, referred to as kipande, was designed to be a tool of exploitation.  Africans hated it. They saw it as a symbol of oppression and imposed servitude.

But if our great grandparents were overburdened and condemned to wearing the demeaning kipande around their necks, there has been little improvement. Consider this: despite quantum leaps in technology, an adult Kenyan carries an even greater burden of identification than their forefathers did. Our forefathers only  carried a single kipande. Today we variously carry up to twenty-five different forms of identification, to prove that we are whom we claim to be.

Almost every new critical service requires a new set of data from us, leading to issuance of an additional special purpose ID.  For example, the Inua Jamii program was introduced in 2004. It came with a new bank ID and a new token, to enable beneficiaries access their benefits.  Anticipated future services portend a rise in the number of IDs per individual.  Our ID items today include a national ID card, NSSF and NHIF cards, employers’ ID, passport, birth certificate, marriage certificate, driver’s license, academic certificates, health insurance card, bank card, disability card, birth certificate, passport photo, among others. In many cases you are required to carry them in triplicate copies, each certified by an advocate, or notary public.

You often also require witnesses, or a sworn affidavits, as an additional layer of verification. Woe unto you should you lose any of these documents. You will begin the recovery process by re-authenticating yourself, possibly by visiting your local sub-chief for a letter of introduction, a police station for a police abstract and finally, a Huduma center, or some other government office, to complete forms in a prescribed manner. You  then wait for up to 14 days, or more, for the re-production and replacement of the physical document.

Despite efforts to identify ourselves using the national ID as we know it, the exercise is not full proof. A 2021 report by the credit rating agency TransUnion shows that Kenyan banks are losing to fraudsters over Ksh.13 billion ($121.49 million) every year, through identity theft and loan stacking.  It is also estimated that up to 47% of Kenyans using mobile money have reportedly lost funds through identity theft and other forms of related fraud.The country is also an unwilling host to hundreds of thousands of illegal immigrants with forged paper identification that gives them access to our resources at the expense of deserving citizens. The public service also has to cope with growing cases of ghost workers, because of inadequacies in authentication. Apart from ghost workers, ghost beneficiaries of social security benefits, insurance fraud, exam cheats and forged academic certificates are all outcomes of authentication failures that bring to question the aptness of our current analogue IDs.

The analogue ID increasingly risks losing trust. With a myriad photo and document manipulation applications readily available in the market, ID manipulation and editing is rampant. This is worrisome in an increasingly sophisticated digital economy where MPESA alone digitally moved Ksh.29.6 trillion in 2021/22 (8 times Kenya’s national budget) and in the process undertaking billions of ID authentications in an eco-system where there is a manifold increase in financial crimes and ID thefts.

 Under these circumstances, an ID that is read and interpreted by the naked eye and authenticated via human judgement across hundreds of thousands of agents, is increasingly open to human error, abuse, fraud or manipulation.  It is, therefore, insufficient as a trusted source of authentication. The diminishing trust level in the current analogue ID can be attributed to the fact that when it was ideated in 1900s, it was for a different purpose, operating in a different eco-system. It was never designed to be a transactional enabler operating in the new digital space that we occupy today.

In my estimation, the current pace of technological advancement and the advent of the Fourth Industrial Revolution, now automating and digitalizing every conceivable service and process, will render analogue paper IDs obsolete by 2030. Apart from the natural attrition that the analogue ID faces in the new digital world order, the role of a national identification system has also changed significantly, almost beyond recognition. Countries are, accordingly preparing for the consequences of this rapidly approaching digital revolution.

Of course the modern-day ID is totally different from the colonial ID and its immediate derivatives. Whereas the colonial ID contained basic foundational data to inform the colonial government of your exploitative utility value, a modern-day ID is a point of convergence between the citizen as a rights holder and the government as a duty bearer. It is also the citizen’s source of authentication to various stakeholders in the world at large. It is what identifies, profiles and defines the citizen to the world.

Through its linkages, the ID provides data about the citizen’s rights, entitlements, obligations and even credit-worthiness. According to the World Bank, it is also a crucial tool for achieving sustainable development, including bankers’ twin goals of ending extreme poverty and boosting shared prosperity. For this reason, ensuring that everyone has access to identification is the explicit objective of Sustainable Development Goal (SDGs) Target 16.9—to “provide legal identity for all, including birth registration” by 2030. It plays a central role in individual rights and access to basic services and entitlements in the physical and digital worlds. 

The modern day ID must be a functional official identification system provided by governments and recognized and trusted by all stakeholders with whom the citizen interacts. It is ideally going to be a platform that gives proof of identity and digital authentication services capable of meeting customer due diligence (CDD) requirements in new models where some government services are also outsourced to private sector entities.

With Kenya now digitalizing all Government services by mid-2023 and almost every financial service and business process being digitalized, you will require to be authenticated remotely for services virtually everywhere – in government and outside. The physical paper or plastic IDs are going to be increasingly irrelevant.

A modern-day ID will create a virtual digital persona. Whereas the citizen’s foundational data remains the same, the functional aspects of the ID, which forms part of their digital persona, is not static. It recognizes their changing status, resulting from different stages of their life cycle.  A modern ID will be the equivalent of a social curriculum vitae. It will be continuously updated to capture your changing progressive life events and statuses, like acquisition of drivers’ license, marriage, new qualifications, etc.

Kenyans will not need to carry around over 25 different ID documents to prove their identity in 2023. But it is not Kenyans alone. The Fourth Industrial Revolution (4IR) is a real global disrupter. The digital technology is reordering everything. We are entering the age of  big data and connectivity, artificial intelligence, cryptography, blockchain technologies, biometrics, database technologies, cloud computing, analytics, human-machine interaction, and improvements in robotics. You only need to have a single digital ID that points to all this information, virtually and accessible by authorized persons even without your physical presence.

So how do we align our identification system to the new digital reality? The solution lies in collapsing all available authenticated foundational ID data about the individual into a single digital ID that provides biometric authentication. In our context, a digital ID is the body of verified information about an individual as defined in the Kenya Registration of Persons Act (foundational ID data) often arising from the Integrated Population Registry Service (IPRS), National Integrated Identity Management System (NIIMS) and the National Registration Bureau (NRB) and digitally linked to aggregated data from various official and trusted sources (functional ID data) such as the National Hospital Insurance Fund (NHIF), National Social Security Fund (NSSF) and the National Education Management Information System (NEMIS) among other trusted sources of information.

It will also be linked to the birth-to-death UPI, enabling a cradle to grave overview of the citizen. Equally, it will contain the individual’s embedded biometric data that is used to associate them with the data for the purposes of authentication. This would de-duplicated, cleaned up and integrated into a single digital source of truth. All government-held data about Kenyans will be linked to the digital identity, and all public services will be available through digital channels from one single source of truth.

What would all this mean? It means that all your authenticated foundational ID data is stored in a single, secure location digitally. Instead of you producing a physical ID, it is the service provider, or other interested party, who checks your data online (or in cases offline) upon your authorization and upon authentication, provides requisite services. Your authorization entails providing your biometric data (finger print, iris, voice etc.) to be compared with that stored and embedded in your online ID data from the single source of truth.

A biometric match between your physical and stored biometrics authenticates you in a foolproof manner, based on the principle that your biometrics are unique to you and cannot be misrepresented, or impersonated.  This foundational data is then linked to functional ID data e.g., NHIF, NSSF, NEMIS, KRA, NTSA, KNQA, CRBand the CRS (the Civil Registration Services) and is continually updated. The effect is that when you want to open a bank account, the bank will not necessarily require you to produce a physical ID. They will authenticate you via your biometrics and get all the pertinent information from the single source of truth and proceed to serve you, including when you apply for a loan, or wish to withdraw funds, thereby avoiding the risk of a fraudulent impersonator presenting a fake or photo-altered ID. This automated process will also be used to authenticate you to medical service providers and link you to your medical records seamlessly, without the need for a medical card or a hospital card with your medical history. The digital ID will also be key in authenticating citizens to access the over 5,000 Government services, currently being digitalized. The various Government agencies will be able to efficiently provide services to the correct persons without imposters, or fraudsters, coming in between as those requesting services will be authenticated online via their biometrics which are largely foolproof.

This aggregated data pooled together in one location will also provide useful and organized information to help the nation in development planning. Data stored digitally, in the correct format and in one location can provide useful insights if applied to various statistical analysis tools to inform development needs segmentation and profiling. It also promotes inclusivity. When well-designed, digital ID not only enables civic and social empowerment, but also makes possible real and inclusive economic gains.

Research by the McKinsey Global Institute (MGI) indicates that digital ID can create economic value for countries, primarily by enabling greater formalization of economic flows, promoting higher inclusion of individuals in a range of services, and allowing incremental digitization of sensitive interactions that require high levels of trust. An MGI analysis of Brazil, China, Ethiopia, India, Nigeria, the United Kingdom, and the United States indicates that individual countries could unlock economic value equivalent to between 3 and 13 percent of GDP by 2030 from the implementation of digital ID programs.

The four largest contributors to direct economic value for individuals globally are increased use of financial services, improved access to employment, increased agricultural productivity, and time savings. The five largest sources of value for institutions in both government and the private sector as a benefit of operationalizing the digital ID are cost savings, reduced fraud, increased sales of goods and services, improved labor productivity, and higher tax revenue. Civil and population registers are a critical administrative source of demographics and vital statistics, which in turn provide essential evidence to support the ability of governments and the private sector to engage in long-term planning and policy making in areas such as public health and infrastructure. For example, civil registration with inputs from the health sector enables policymakers to monitor cause of death and maternal and infant mortality rates and to rapidly respond to epidemics e.g., the Corona Virus, HIV/AIDS and non-communicable diseases. It is also envisaged that a digital ID system would enhance good governance by reducing incidences of ghost workers and enhancing public savings.

The digital ID is also significant in creating the ability to confirm and authenticate citizenship and its derived rights and entitlements by ensuring a biometric linkage between parents and their offspring at birth, as is the practice in countries that have adopted digital IDs like Pakistan, where the National Database & Registration Authority (NADRA) uses relational databases that allows all data points to be tied to each other in pre-defined relationships. This means that illegal immigrants would find it difficult to just gain fraudulent citizenship without having being tied to a citizen at birth. Linkages can also be created in relationships through marriage, by relating spouses’ biometrics. Illegal immigration is a great security risk to any country, and also a strain to limited resources.

The digital ID will also be a great enabler of e-Commerce. It will help create digital trust by facilitating the authentication of an actor’s identity in e-commerce, through a connection between the identity attributes in the digital world and the real-world legal identity. E-commerce activities depend on digital trust to process transactions. Lack of a verifiable digital identity will preclude participation in these systems. The pre-requisite for e-Commerce transactions is the establishment of a digital trust relationship between a vendor and a buyer, so that both parties know who they are transacting with. The private sector –  including e-commerce platforms, digital banking, payment processing, and logistics –  provides key services that enable e-commerce and enhance digital trust. The success of e-commerce depends on digital trust, built through verification and authentication processes, especially during merchant and customer registrations and payments, as well as through rating systems. Strong digital trust generates a sense of security in a transaction—key to any e-commerce activity.

Given the fundamental need for secure and accurate online identification and authentication, digital ID and other trust services, such as e-signatures form part of the core foundation, or a “stack” needed for successful digital economies. When enabled by digital infrastructure that brings people and organizations online, digital ID and trust services can be leveraged by government and commercial platforms to facilitate a variety of digital transactions, including digital payments. Together, digital ID and payments platforms provide the means to move towards a cashless society, creating productivity gains, reducing corruption and fraud, and further improving user convenience.

Transition from the analogue to the digital ID is key in Kenya’s digital transformation agenda because it carries our citizens along with us in this journey whose time has come. Digitalization of our systems, processes, services and re-engineering how we do business will be incomplete unless the citizens can participate digitally. As indicated above, the benefits are manifold. It is estimated that this transformation has the potential to unlock economic value equivalent to between 3 and 13 percent of GDP by 2030 from the implementation of digital ID programs.

Digital ID can promote increased and more inclusive access to education, healthcare, and labor markets. It can aid safe migration and also contribute to greater levels of civic participation. For example, in Estonia, over 30 percent of individuals vote online, of whom 20 percent say they would not vote at a physical polling place. The envisaged benefits are immense. Digital ID is indeed paramount to increasing the adoption of formal financial services and identifying specific policy interventions. Implementation and usage of digital ID is therefore critical as an enabler for financial inclusion.

Finally, the concept of a digital ID is different from Kenya’s previously proposed Huduma Number that issued a physical ID card. There is no physical ID card associated with the digital ID. It will, instead, be an instrument for enabling citizens to be part of the new digital transformation in the world. The Digital ID unlike the Huduma Number is a dynamic social vitae, and tool for realizing citizens’ rights, enabling social and financial inclusion and carrying our citizenry along with us, on the journey of Kenya’s digital transformation. The digital ID will be very instrumental in helping us to remain socially, economically and technologically relevant in the new world order. It has been utilized effectively in India, Pakistan, Estonia, Belgium and many other parts of the world. Kenya as a country cannot be left behind in the new world order. This is my take.

Eliud Owalo is the Cabinet Secretary for Information, Communication and the Digital Economy.