Category Archives: EASSY

Kenya’s Money in the Past: Digital Kenya

Digital Kenya, by Bitange Ndemo and Tim Weiss, charts the rapid emergence of Kenya in the world of technology. Through stories and interviews with people in the sector, you learn about risk-taking and making policy from humble beginnings back in the mid-1990’s when the whole country shared 32 kbps, and the then telecom Kenya Posts & Telecommunications (KPTC) monopoly declared internet services as being illegal. At the time, KPTC was connecting about 10,000 users to the phone network, and with 77,000 potential customers waiting, they envisioned a 5% tele-density in Kenya by the year 2015. The tele-density in 2015 turned out to be 88% thanks to rapid changes that came after fibre cables and the cheaper mobile phones emerged.

One story is a narration of how, as a peace agreement was being signed in February 2008 to end the post-election violence in Kenya, the ICT Ministry managed to secure a guarantee to enable the laying of the TEAMS fibre cable that ultimately changed the face of ICT in Kenya. This came after the ministry had stepped back from another long-discussed bureaucratic cable project – one called EASSY. This was one of the examples of government officials circumventing red tape for a good outcome. Another was the roll-out of M-Pesa which is also cited here, ahead of regulations and thanks to some individuals in government giving it their cautious blessing. Not all of them turned out well, and one case cited is of officials at the Postal Corporation sabotaging a land deal that would have led to the establishment in Nairobi of the headquarters of a multinational telecommunications organization.

There are many other stories that show issues of privatization, race, the lack of vision & finance, tech startups, the need for skills to scale, and the disconnect between local capital & the tech sector. It also shows the disconnect of ICT with both formal banking and also with the agricultural sector, two crucial links yet to be adequately bridged in Kenya.

Thanks to the Ford Foundation, the Digital Kenya book is available free of charge and a book download can be obtained from a dedicated site.

Pepsi to Kenya?

. Nairumour that after an absence of many years, Pepsi will re-enter the Kenyan market in the near future to resume battle with Coca Cola, possibly through their South African partners. If so, it will cap a great year for investment to the country, and that despite 2008 being a relatively tough year for investors and companies, with the post-election violence, business disruption, high fuel and energy prices, depressed consumer spending, P & P madness (pirates and politicians) collapsing stockbrokers, there was a steady flow of new investments and new products that happened this year.

Re-cap of some notable ones

Banking
– Takeovers concluded – Ecobank take over of EABS, and Stanbic merger with CFC (now CFCStanbic)
– UBA licensed (2009)
– Gulf African and First Community (Shariah banking kicks off)

Beverages
– Summit Lager a new beer from Keroche Industries
– East African Breweries launched Alvaro (malted soft drink)
– Coca Cola launched Novidia (another malted soft drink) and also started selling Minute maid
– KETEPA launched Safari Iced Tea

Communications
– WPP buys into Scangroup
– 2008 saw the launch of two new mobile operators – Orange (France Telkom) and Yu (Essar/Econet) to battle Safaricom and a re-energized Zain
– Altech buys into KDN
– A long-running fight over one(EASSY)submarine cable, gave birth to three different ones being laid to Mombasa
– Wananchi launched Zuku (TV, Broadband, Phone)

Transport, Energy & Manufacturing
– Tiger brands buying into Haco
– An investment in the Kenya Oil Refinery at Mombasa was still under battle between Libyan and Indian Investors
– Jinchuan (China) to bail out Tiomin?
– Mirambo and PD Toll to salvage the Rift Valley Railways
– Delta Airlines (USA – but postponed to 2009)
– Air Arabia started flights to Kenya

Tourism
– Libyans took over the Grand (Laico) Regency
– The Tribe opens.

Exits
– Chevron (Caltex) sold out – bought by Total
– Unilever (de-listing from the NSE)
– Roy Puffet from rift Valley Railways

Urgent need for Sub Cable

Whether it will be EASSy or TEAMS, the urgent need for East Africa to have a submarine cable will become apparent within a few years.

The 2006 merger of Intelsat and PanAmSat, creating the worlds’ largest satellite provider, will have profound implications for Africa which is estimated to be 80% dependent on satellite communications. Higher costs can be expected from the giant company once existing agreements expire and ISP’s will have no choice but to pass these own to consumers.

The government of Kenya broke away from other African countries (in EASSy) and has committed to the TEAMS project, budgeted at $100 million. It committed to pay $15 million this financial year and has contracted Standard Chartered bank to raise additional funding from ICT operators in the private sector.

EASSY: The Masai – Zulu battle of 2006

Had nice week which started with an unplanned tour of snow-capped crater on Mt. Kilimanjaro courtesy of a South African Airways pilot to a Yvonne Chaka Chaka concert, among other fun activities in South Africa.

My comfort is that if the Highway Africa / Digital Indaba conferences’ were held in Kenya, the delegates would be drawn from Ministers, MD’s, and other senior corporate and government officials, and not ordinary journalists or mere mortals like myself.

Kenya vs. SA
One of the sessions covered this week was the controversial EASSy project which appears to have been now reduced to a Kenyan vs. South African affair.

South Africa traces its history, not to 1994, but to 1957 when Ghana become the first African country to gain independence. South Africa identifies with that milestone and thus immerses itself as a being proudly African and wanting to take the continent forward together though NEPAD and the African Union (AU) as a way to better all African lives and be more competitive with other continents. EASSy is NEPAD’s flagship project which is intended to bring down the cost of communication for the whole of Southern, Central and Eastern Africa.

SA’s leaders are largely drawn from the freedom-struggle movement are proudly African and strive to combat Afro-pessimism in all at forms. In economic terms, they are disciples of Joseph Stiglitz, who are wary of foreign aid and other donor-championed programs such as privatization, having seen how devastating they have been to many other African countries over the last 50 years.

South Africa proudly champions African solutions to African problems e.g. through NEPAD. It also proudly champions media coverage of Africa by Africans, not western media agencies. The South African Broadcast Corporation (equivalent of KBC) has spent 8 million rand and sent a staff crew of 60 to cover the recent elections in the DRC and already has foreign bureaus in Africa, Middle East, US and Europe and soon to open new ones in the Caribbean and China. Such coverage of the continent is something Kenyans may find unsettling.

Kenyans, on the other hand, have seen the OAU, East African Community (EAC), Preferential Trade Area (PTA), COMESA and other regional groups come and go with little impact. They are used to having neighbouring countries who are basket cases mired in wars, famines, or other problems and are happy to offer assistance militarily, hosting peace talks, foodwise, or hosting refugees. They are used to having to do things alone and the EASSy is just the latest example of this.

They view South Africa as new to the party, but eager to assume a superpower role and both economically and strategically dominate the continent. Thus they revel in small victories like when Kenya Breweries defeated Castle Breweries (SA) in the beer wars of the early 2000’s, denying MTN a cell phone license, or frustrating any South African company that tries to take over Uchumi.

Likewise, ordinary South Africans see Kenyans as having a problem with them. When I told an MTN employee that South Africa’s Telkom had been shortlisted to bid for the second national operator license in Kenya, she said Kenyans would never let a South African company win.

Also on Monday, the City Press a prominent black newspaper had two business headlines on Kenya titled Stock trading noise to end (referring to electronic trading on the NSE)and “Kenya credit rating hit by risk and corruption scandals” – an unfortunate spin on an otherwise positive assessment of Kenya by global markets.