March 01, 2022

Why is policy important in the digital economy?

By Patrick Ndegwa, SEACOM East Africa Business Sales Lead

The digital economy is transforming our lives and the way we conduct business. It's driven by data and information and we're seeing more entrepreneurs take advantage of digitally enabled opportunities, giving big businesses a run for their money.

Larger businesses will face considerable competition if they do not embrace digital alternatives, given the flexible nature of startups and their capacity to adapt to change. Emerging technologies are also crucial and those that fully embrace digital transformation have a better chance of developing sustainable digital capabilities.

As a result, a digital economy will emerge that will provide opportunities for disruptive ideas and novel business models that will help to propel expansion in the digital age. If we are to help more sectors and businesses adapt, we may need to adopt a strategy that takes into consideration fundamental changes that may provide a short-term challenge to a country's competitiveness but deliver long-term benefits.

Locally, the digital economy has a lot to offer, but before Kenya can fully realise its potential, the country must first create ecosystems that support digital transactions on a national, regional and global scale. The Digital Economy Blueprint, published in 2019, proposes a framework for improving Kenya's and Africa's potential to accelerate economic growth.

Kenya's digital economy will be "premised on ubiquitous provision of universal broadband access that will drive digitally enabled services for a digital people and economy," according to the document.

This means that countries that are willing to harness digital technologies also require digital infrastructure, digital skills, digital platforms and digital entrepreneurship to support their digital ecosystems. As a result, digital-first policies and their underlying frameworks are critical for governments looking to transform their overall economic outlook.

Policies that encourage the development of new business models

To build vibrant, innovative digital ecosystems, we must first assess whether systems are responsive and agile enough, and whether new policies should be considered. To keep up with technological innovation and the expansion of the global digital economy, Kenya will require stronger digital foundations, which may include new regulations and policy guidelines designed to support the country's digital transformation.

According to the World Bank, connectivity in Kenya's rural areas is less reliable, prices are higher and the fibre network does not reach them in many cases. There is still a significant digital divide and widespread gaps in fundamental digital skills. This will necessitate public investment as well as progressive policy measures to encourage private sector investment and more inclusive innovative services.

Investment aimed at accelerating Kenya's dynamic and inclusive digital economy and policies that support business objectives and rapid digital market evolution are both critical for the country. Competition and consumer protection will follow once Kenya is able to adopt modern telecommunications regulations and empower an independent communications authority capable of streamlining regulatory procedures and enforcement to facilitate private sector investment.

A national ICT policy that takes into account modern, digital requirements is one of the most important policies needed to nurture digital businesses. This policy should be in line with the country's national priorities and include a quantifiable plan to enable everyone to participate in and profit from the digital economy.

The right policies are essential for Kenya’s successful digital transformation

Digital innovation promotes competition by encouraging active startup creation and product development. The digital economy has fostered an entrepreneurial ecosystem that takes advantage of technical advancements, creates future-oriented businesses and enables enterprises to contribute to overall economic growth and job creation.

To nurture this, entrepreneurs' access to financing must be improved, and existing tax and procurement regulations that aren't tailored to unique startup business models must be reassessed.

Companies are becoming increasingly reliant on networks and platforms to provide e-commerce and digital services to Kenyan consumers. This also encourages domestic and foreign investment in digital infrastructure. With the right policies, the result will be increased competition, decreased prices and a step closer to closing the digital divide. For more information or to get a quote for our various connectivity solutions, email us at or leave us a message.

SEACOM owns Africa’s largest network of information and communications technology (ICT) infrastructure, including fibre optic networks and subsea cables. We offer a wide range of industry-leading scalable ICT solutions for large companies that operate throughout the region.

SEACOM is privately owned - making it adaptable to the needs of the client. We are the preferred ICT and internet connectivity supplier for African enterprises. We can guarantee fast, reliable and secure internet and networking services at affordable prices.

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