Kenya is the economic and transport hub of East Africa. Internet use in Kenya is relatively high by regional standards, and submarine cables have boosted Kenya’s global connectivity. The widespread use of mobiles enables millions to access the web. However, actual Internet use in Kenya is largely concentrated in Nairobi, and significant action is still needed to address issues of access outside of the capital. Furthermore, the cost of mobile devices and internet subscriptions remains a stumbling block for many impoverished Kenyans.
With a 68% Internet penetration rate by the end of 2014, Kenya is well above the average rate in the African continent. A number of companies have become second-tier telcos by rolling out national and metropolitan fibre backbones and wireless broadband access networks. The cost of this work and the lower pricing which has resulted from competition has led to some merger activity in the market. Several major WiMAX deployments and Fibre-to-the-Premises (FttP) rollouts have been undertaken, which have pushed fast broadband connectivity to a greater number of subscribers. The number of FttP connections broached 100,000 by September 2015. Most broadband subscribers are via 3G mobile networks, and increasingly via Long-term Evolution (LTE) technology.
Kenya’s mobile market has witnessed phenomenal growth rates since the second GSM operator launched in 2000. Mobile phones now outnumber fixed lines by around 20:1. Enormous further potential remains. Meanwhile, Kenya’s broadband market has been transformed by a combination of increased investments in network upgrades among the key providers as well as the landing of four fibre-optic submarine cables. This international connectivity ended the country’s dependence on limited and expensive satellite services, while vastly increased bandwidth has led to wholesale prices tumbling to a fraction of the former rate. The development has helped make broadband services affordable for the mass market, while also providing the key backhaul network for the burgeoning mobile broadband sector. The Communications Commission of Kenya (CCK) is responsible for regulating both broadcast and online media.
While Kenya has a growing entrepreneurial middle class and faster growth, its economic and development trajectory is threatened by weak governance and corruption. Unemployment and under-employment are high, but reliable numbers are hard to find. Agriculture remains the backbone of the Kenyan economy, contributing 25% of GDP. Inadequate infrastructure continue to hamper Kenya’s efforts to improve its economic growth to the 8-10% range so that it can meaningfully address poverty and unemployment. Inflationary pressures and sharp currency depreciation peaked in early 2012 but have since abated following low global food and fuel prices and monetary interventions by the Central Bank. Chronic budget deficits, including a shortage of funds in mid-2015, hampered the government’s ability to implement proposed development programs, but the economy is back in balance with many indicators, including foreign exchange reserves, interest rates, inflation, and FDI moving in the right direction, while tourism is increasingly holding a significant place in Kenya’s economy.
Telkom Kenya is the formerly monopolistic telecommunications company. The company operates and maintains the infrastructure over which Kenya’s various Internet service providers operate. It also offers mobile GSM voice and high-speed Internet services under the Orange Kenya brand, in which it is the 3rd in market share. Due to the open market-based licensing process instituted in the country, competition is present in most segments of the telecommunications market. In 2007 France Télécom (now Orange S.A.) acquired 51% of Telkom Kenya’s shares. Now about 60% of the company’s shares are controlled by the Helios investment fund, a London-based private equity investing firm operating in Africa.