Subsidy to Kenyan BPOs extended

January 15, 2010
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, NAIROBI, Kenya, Jan 15 – The Kenya ICT Board has said that it will now provide bandwidth capacity subsidy to companies that have been contracted to provide third party business functions until the end of March this year.

This follows the extension of the Sh530 million World Bank-funded support to outsourcing firms to help them meet the cost of internet connectivity that initially supported businesses from July 2007 to February 2009.

The project has now been extended to March this year.

“The Board wrote to the World Bank asking for an extension of the subsidy because the cost of bandwidth had not come down as it was expected with the arrival of the undersea fibre optic cables,” an official at the ICT Board who’s not authorised to speak to the media told Capital Business.

The subsidy program was put in place in three years ago when the government received credit from the International Development Association (IDA),  to enable Business Process Outsourcing (BPO) firms reduce their operative costs. It was to run until the landing of the undersea cables which was expected to significantly reduce connectivity costs.

This however did not happen as there was a delay in the arrival and operationalisation of the cables and later, telecommunications service providers declined to pass on the costs of the cables to Internet users.

The source said that the subsidy which will enable them to backdate the support to March last year when the first phase expired.

He said the BPO players who have in the last 10 months been meeting their internet connectivity costs will be audited by the board and then reimbursed.

The Board has disbursed Sh37.8 million to the operators between November 2008 and February 2009, he said.

“It is predicted that the extension of this support will significantly increase the uptake of the subsidy by industry players and give the industry the necessary boost to grow and be able to compete on a global scale,” ICT Board Chief Executive Officer Paul Kukubo had said in a statement sent earlier to newsrooms.

The subsidy is open to all firms offering outsourcing services but they are first required to register with the ICT Board after which an appraisal is done before disbursement is made.

“Increasing Kenya’s competitiveness in the global BPO sphere is vital for the growth of the industry. With the fibre Optic cables now in place, Kenya has become a significant competitor in the global BPO space,” the CEO added while expressing optimism that the high internet prices in the market will still come down.

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