Kenya is on the path to integrating digital technology into the heart of its economy, leveraging the power of mobile and digital services to drive growth, support public service delivery, and enhance socio-economic development. This position, highlighted in the country’s Vision 2030 plan as well as the Bottom-Up Economic Transformation Agenda, is built around the belief that digitalisation can unlock new avenues for inclusive prosperity. By focusing on sectors such as agriculture, manufacturing, healthcare, and Micro, Small, and Medium Enterprises (MSMEs), digital transformation aims to improve the efficiency, transparency, and productivity of Kenya’s economy.

At the forefront of this digital push is Kenya’s mobile telecom sector, which has already made significant strides by leading the world in mobile financial services through innovations like mobile money. Statistics have it that one in 10 global mobile transactions are done in Kenya. These services have opened the door for greater financial inclusion, enabling millions of Kenyans, especially those without traditional banking access, to conduct secure and easy transactions. Yet, while 4G network coverage reaches over 98% of the population, more than 65% remain unconnected due to challenges such as device affordability and lack of digital literacy. Addressing this “usage gap” is key to expanding the reach of Kenya’s digital economy. Policy interventions are critical to bridge this gap, including tax restructuring on telecommunications to reduce device costs and increase accessibility to digital services.

Digital transformation brings a host of benefits that extend well beyond the tech sector. Agriculture, which employs most Kenyans and is a significant contributor to the country’s GDP, can especially benefit from these advancements. Digital tools like precision agriculture have proven to increase crop yields by enabling more targeted resource usage, giving farmers access to valuable insights about weather patterns, soil health, and crop planning. Mobile platforms also provide smallholder farmers with real-time market information and mobile payment systems that simplify transactions and boost financial management. These innovations can enhance productivity and reduce waste, adding an estimated 3% to Kenya’s GDP through increased agricultural output while creating substantial job opportunities in the agri-tech space.

Digital technologies can also make a profound impact on manufacturing. By adopting advanced manufacturing capabilities through Industry 4.0 technologies like artificial intelligence (AI), cloud computing, and automation, Kenya can diversify its industrial output, improve productivity, and attract greater foreign investment. These changes are essential for expanding the country’s role in global value chains and encouraging the growth of industries like electronics and smart device production. In addition to this, local manufacturing of affordable smart devices could play a key role in closing the digital divide and empowering more Kenyans to participate in the digital economy.

Healthcare stands to benefit enormously from digital transformation as well. The implementation of telemedicine, electronic health records, and mobile payment options for health services can increase access to quality healthcare, especially for remote communities. Digital health platforms not only make it easier for healthcare providers to diagnose and treat patients, but they also reduce administrative costs, freeing up resources that can be redirected to improve services. By simplifying the enrolment and renewal processes for health insurance through mobile payments, more Kenyans may be encouraged to take up coverage, thus enhancing health outcomes across the country. The potential for improved healthcare through digitalisation could lead to a healthier, more productive population, further contributing to Kenya’s economic growth.

While the economic potential of digitalisation is vast, there are challenges that Kenya must address to realise its full benefits. One of the most pressing issues is the need to create a stable and predictable regulatory environment that encourages investment in digital infrastructure. Policy recommendations in the report call for supportive measures, such as providing tax incentives for telecom operators, reduced energy costs for infrastructure, and a streamlined license renewal process. These initiatives are essential for fostering a robust digital ecosystem that can support broader economic goals, including the integration of MSMEs into formal business sectors and the development of digital skills across the population.

MSMEs, which make up the majority of private enterprises in Kenya, are a vital component of this digital transition. Access to digital platforms and Information and Communication Technology (ICT) services can enhance their competitiveness by enabling better market reach, improved financial management, and more efficient business operations. Through digitalisation, MSMEs can more easily formalise their operations, helping to strengthen the economy and create jobs. Kenya’s Startup Act is already a step in this direction, providing incentives and support for tech hubs and startups, which serve as innovation engines for the economy.

Kenya’s ambitious digital transformation strategy offers a roadmap to foster economic diversification, enhance public service efficiency, and enable sustainable growth. Digitalisation is not only a path toward higher GDP but also a means to improve the lives of Kenyans by increasing access to essential services and creating economic opportunities in previously underserved areas. By harnessing the potential of mobile technology and digital services, Kenya is positioning itself as a leader in digital innovation in Africa, building a more resilient and inclusive future for all its citizens.