, NAIROBI, Kenya, Oct 24 – The service sector has proven to be a major contributor to Kenya’s economy, propelling it over the last five years in the areas of transport, communication and financial services.
According to the IMF’s latest Regional Economic Outlook for Sub-Saharan Africa, Kenya’s ability to move up the value-added chain with its service sector, which has been the largest contributor to GDP growth and foreign exchange revenue since 2007, is significant considering its low-income status.
“Countries that do well in services tend to have much more income than Kenya does, but Kenya is managing to hold in services. When the income is where it is in Kenya, still below middle income is in itself a significant growth story,” Institute of Economic Affairs CEO Kwame Owino said during the report launch earlier in the week.
Kenya has a number of firms exporting high value off-shore services such as product development, research and development business ventures, insurance, accounting and BPO services.
With the country increasingly concentrated on high-tech communication and technology services, exports in ICT services already account for more than 10 percent of total service exports and close to 20 percent of total foreign direct investment inflows.
The IMF says upcoming projects such as the ICT Park for BPO is expected to further boost service exports.
According to the Kenya National Bureau of Statistics Second Quarter 2012 GDP release, services account surplus increased by 11.6 percent mainly due to increased foreign exchange receipts from tourism, transportation, communication and financial services.
Kenya ICT Board Chief Executive Officer Paul Kukubo said the country needs to maximize on this kind of growth by having more Small and Medium Enterprises adopt simple technologies in their daily business activities.
“I saw an application the other day which allows a small business to use a mobile phone to do stock-taking and receipting. Those are the kind of things we need to see,” he said.
Kukubo, who was speaking on the sidelines of this year’s AITEC East Africa ICT Summit on Wednesday, added that in order for ICT to effectively boost the economy it must add value at the government level in providing services, at the consumer level in use of applications, and at the developer level in generating income from their innovations.