Kenyan Tech Companies seek more involvement in govt projects

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For the last five years, there has been a common chorus among local tech companies; they want more of the large government contracts. We all want a piece of that large cake.

Most of the money spent on government tech projects has gone to large corporations like Oracle, SAP, IBM etc. With the big budgetary requirements, many companies are locked out of these projects.

The talk of technology transfer has been on for so long but the international companies just set up local branches, poach the guys from the local companies and move on. Its a competitive environment and the options look minimal.

However, a group of so called local companies came together to lobby for more local business. The vehicle is KITOS. The members are; Seven Seas Technology Techno Brain, Digital Divide data, Cambridge, Craft Sillicon, Compulynx, XRX, SamaSource, Business Connection, Africa BPO Academy, and Adept Technology among others.

When you look at the companies that are members of KITOS, not all are local, indeed, I counted less than five companies that are local. They all want business and it doesnt matter whether local or international because even Dimension Data can claim to be local by virtue of buying ICL east Africa.

Anyway, here is a list of some of the things KITOS members feel can be done to improve inclusion into the big boys club or the big contracts club. I will just copy paste it because they have articulated their issues better.

“Kenya IT and Outsourcing Services (KITOS) – Connected KE Business Roundtable

Key Policy recommendations

KITOS Roundtable sitting in Mombasa has the following requests to the Jubilee government

Procurement

Traditionally, procurement law has been designed to safeguard public interest from corruption, but has inadvertently become very punitive to local small business.  International and local companies compete on same level while in other markets, those countries  protect local businesses.  As a result, SMEs in IT and IT enabled industry have remained small, despite the fact that they contribute to creation and development of local human capita.  We therefore request that procurement law for state led procurement, donor led procurement and government to government procurement, provides preferential treatment for local companies including SMEs subject to certain threshold.  We therefore request that a mechanism be developed that will be supportive of local business by developing thresholds based on project scope.

Current Diplomatic Engagement in Trade

The Jubilee government is currently engage in Africa wide consultations aimed at improving Kenya’s balance of trade with African countries. The IT industry sees this as a perfect opportunity to position Kenya is an exporter of IT and IT enabled services in Africa.  We request that the IT industry be included in the current engagement, and that it be invited in future presidential and diplomatic visits.

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Vision 2030 and the Knowledge based Economy

IT and IT enabled services are key part of Vision 2030. The IT industry will develop, identify and position local IT flag carriers that will form the cornerstone of the knowledge economy of Africa.   The IT industry will also identify and develop IT solutions for government processes that will become e- government flag carriers.  These flag carriers will form part of the 100 top IT companies creating at least 50,000 jobs.  The investment promotion policy in Kenya generally provides specific incentives for foreign investors who promise to create jobs in the country.  The IT industry requests that incentives, including tax incentives, be put in place for IT and IT enabled services.  These incentives will include promoting research and development, development of IT intellectual property and export of IT and enabled services.

Private Public Partnership

When selecting projects that need to be implemented at a County and National level PPP must be looked at with preference for local companies. There is need to have a strategic view on developing intellectual property; local capacity; and employment, through a harmonised procurement process that takes into consideration local companies.  In a PPP a substantive local component must be utilised in tandem with Vision 2030 identified companies.

SME and Research and Development Funds

The government is in the process of creating the National Research fund, the Universal service fund and Kenya National Innovation Agency. We request that 50% of the funds are invested in R&D focusing on the Vision 2030 IT and Knowledge Economy agenda.  Currently in Kenya the venture capital market is very low. Private equity and Government funds are the main sources of funding which are not very suitable for SME development. We request that the above funds are ring-fenced into a venture capital knowledge fund for job creation and growth of intellectual property. The government will be a major investor in the Venture Capital Knowledge Fund and the industry will be matched Shilling for Shilling by venture capital investors in order to grow the research and development IT SME industry.  All existing and new SME funds should be run on Venture Capital principles.”

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