Mobile Money: Kenya's Competitive Industry?

Published on 27th November 2012

Mobile money transfer                                          P.Courtesy
“National prosperity is created, not inherited. It does not grow out of a country’s natural endowments, its labour pool, its interest rates, or its currency value…”

These are the words of Michael E. Porter, a professor of Economics and authority on strategy at Harvard Business school. His startling conclusion revealed through an article in the March-April 1990 issue of the Harvard Review challenged the prevailing thoughts on why nations prospered.

Before then, the standard thought dating back to the classical economists was that nations prospered owing to the exploitation of the factors of production which they have in abundance like land, labour, and natural resources.

He came up with “The Diamond of National Advantage, “a framework depicting four broad attributes of a nation, which individually and as a system created a level playing  ground on which companies are created and grow. These attributes-factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry determine the competitiveness of a nation’s industries.

Its been many years since, but some of the thoughts appear to be gaining relevance in Kenya-thousands of miles away from the ten world’s leading trading nations such as Germany, Denmark, UK, Switzerland, Italy, Japan, Korea, Singapore and the US among others where he based his study.

These thoughts are crystallizing through the happenings in no other industry than the mobile money. In the last few years, the industry has grown rapidly, registering double digit growth rates. This has come on the back of a number of factors among them being innovation.

The feeling that the industry is fast coming up as the Kenya’s real competitive industry in regional and international terms has been acknowledged by none other than the World Bank. A recent brief from the bank on global migration and remittances notes that Kenya is ahead of the curve in fostering mobile money services where it ranks with the likes of Philipines, another fast rising Asian giant, on this score.

Could mobile money and mobile telephony, thus, be Kenya’s elusive competitive industry or it is just a hype? A few reasons suggest it is not a mere hype.

First, mobile money is one of the few industries that have defied gloom and managed to be consistently innovative. Second, the industry is favoured by factor a condition in terms of skilled labour.Kenya’s human resource is undisputedly among the best in the continent. In addition, there have been significant efforts to put in place the right IT infrastructure as evidenced by the arrival of multiple fibre optic cables and enhanced connectivity around the country. The mushrooming of Ihub centres around Nairobi also attests to presence of necessary infrastructure in place.

Millions of Kenyans are migrating to other places either within or outside the country for work leaving behind other dependants hence the demand for mobile money remittance services is limitless. Demand condition is envisaged by Porter as one of the critical factors for an industry’s competitiveness.

The other reason is the presence of a growing profile of related and supporting industries in the country in form of banking and IT related ones such as software and apps productions that are quite competitive in the region. The corpus of these services can no doubt buttress an industry to reach the highest levels of competitiveness.

Finally, as was revealed recently in a New York Times article on information PS Bitange Ndemo and his role in the unfolding Kenya’s technological revolution, the government is very supportive to IT and mobile money companies: there isn’t much red tape.

By Wainaina Ngatia
[email protected]

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