[Kictanet] E-COMMERCE THE WAY FORWARD FOR KENYA and other articles on Kenya from Balancing Act

[alice at apc.org]

 * E-COMMERCE THE WAY FORWARD FOR KENYA (from Balancing Act)
>
> The way we do things has changed in the last few years mobile phones 
> became more affordable.
>
> Take, for example, the short message service, or SMS as it is popularly 
> known. It is now the medium of interaction in popular radio and TV 
> programmes or season's greetings and invitations. There is an addition to 
> our vocabulary - smsing.
>
> Our lives have been tremendously changed by technology. This is a perfect 
> illustration of the magnitude of change.
>
> A local beer company once held a competition that required participants to 
> send entries of bottle tops by post. A story is told of a gentleman who 
> went ballistic when he woke up one morning from a night of heavy drinking 
> to find his little son scattering his treasured collection of 
> "prize-wining" tops.
>
> Today such a humiliating quarrel over bottle tops would not arise since 
> all the old fellow needs to do is instantly SMS the details of entry to 
> the company server, and he will be notified of the outcome by SMS.
>
> And if this is what the simple SMS can do, what revolution would computers 
> and the internet cause if they were made accessible to more people?
>
> Advertisements along the road from a country's major airport to the city 
> centre is said to reflect its core economic activity.
>
> And what do we see from Jomo Kenyatta International Airport to Kenyatta 
> Avenue in Nairobi? An array of what the world calls ICT (information and 
> communication technology) messages are lined up to entice us - from mobile 
> phone handsets and wireless service providers, computers, TVs and so on to 
> radio stations.
>
> They are the gadgets and services that matter, and what George Gilder 
> calls "the vectors of growth, the sweet spots of finance" (Telescom: The 
> World After Bandwidth Abundance, Touchstone, 2002). So if the information 
> age is where the money is, who does not want to be there?
>
> One sector that is going to drive the next phase of the internet boom, or 
> Web 2.0, is e-commerce, which is doing business electronically without the 
> seller and the buyer being in physical contact.
>
> Lower communication costs is enabling people to reach wider markets and 
> making it possible for goods and services to be traded in a whole new way.
>
> For example, some women's groups in Tabaka, Gucha district, now sell their 
> soapstone artifacts to the world by simply taking digital pictures of 
> their new products and posting offers on their Web ite, 
> www.soapstoneafrica.com
>
> A firm in Eldoret that spins yarn and makes woollen products cannot 
> imagine business without the e-mail, which has made it easy for them to 
> reach the sophisticated western market at the click of the mouse.
>
> There are many more Kenyans making innovative efforts in the e-business, 
> especially in the service industries of consultancy and outsourcing. 
> People used to believe in duty-free shops as real bargains, but they now 
> say they are as cheap as the internet.
>
> Although e-commerce is the future of enterprise, consumer protection, 
> intellectual property rights, privacy and security are issues of grave 
> concern. For instance, on the internet you do not know whom you are 
> dealing with; it could be a robber or a con man.
>
> Thus, for e-business to grow, people must trust the technology. People are 
> not only buying and selling cars, computers and kiondos and other "brick 
> and mortar" goods online, but they are also dealing in information, music 
> and software, which are now categorised as products. There is an urgent 
> need to enact e-commerce laws. The law shoulddeal with if electronic 
> evidence is admissible in the court.
>
> Kenyans would do more business if there was legislation and the right 
> infrastructure for electronic transactions, and more tourists would be 
> happy to come and see the new wonder of the world at the Maasai Mara and 
> make payments online.
>
> Although it may be difficult to tame the Internet because of its 
> cross-border nature, all is not lost as there are tools of control. Recent 
> efforts by the Government and development partners to tackle reforms in 
> e-transaction and e-commerce laws are commendable, but more needs to be 
> done.
> (SOURCE: The Nation)


 * KENYA GOVT MAY LET VTEL OFF 30% LOCAL STAKE AS IT CONSIDERS RULE CHANGE
>
> The government of Kenya is considering abolishing the rule that stipulates 
> that foreign companies investing in the telecommunication sector must 
> allocate at least 30 per cent shares to nationals.
>
> It is the government's response to the perennial disputes between local 
> and foreign investors that have frustrated the conclusion of major 
> telecommunications projects in the country, especially of late.
>
> The East African has learnt that the Ministry of Information and 
> Communication has already drafted a document with proposals for a more 
> liberal regime for foreign investors. The developments come in the wake of 
> a major falling out between the shareholders Vtel Holding Ltd - the 
> company that only recently won the bid for a major telecommunications 
> licence combining mobile and landline services - that has now plunged what 
> was regarded as the most promising deal in the telecommunications sector 
> in recent years into uncertainty.
>
> V-tel won the highly contested licence, for which it bid an impressive 
> Ksh12 billion ($169 million) - the single largest foreign direct 
> investment in Kenya in decades. Well-placed sources told The East African 
> that the government wants an arrangement where the 30 per cent local 
> shareholding rule will be made optional, on the understanding that foreign 
> investors have to sell the 30 per cent stake to the public through an IPO 
> after a stipulated period.
>
> Before the Dubai firm won the bid, the licensing of the second national 
> operator to compete with the lacklustre Telkom Kenya - the country's sole 
> fixed-line operator - had proved to be a messy affair mired in court cases 
> leading to several postponements.
>
> But hopes that the Vtel will hit the ground running seem to be fading 
> after it turned out that its local partners are unable to raise their 
> portion of the financial commitment.
> In a development that is eerily reminiscent of the woes plaguing Kenya's 
> third operator Econet Wireless, the dispute between Vtel and its Kenyan 
> partners seems destined for the courts, where it is likely to take years 
> to resolve.
>
> Legal experts who spoke off the record to The East African trace the 
> origins of the problem to a policy statement made by the government in 
> 1997. In November of that year, the government published the "postal 
> telecommunications sector policy statement," spelling out a new structure 
> for the industry. It was this document that introduced the threshold for 
> equity participation by local investors in privatised telecommunications 
> companies.
>
> Specifically, the document stipulated that "any company licensed to 
> provide telecommunications services in the liberalised market should have 
> at least 70 per cent of its equity owned by Kenyans." In subsequent years, 
> to make the regime more friendly to foreign investors, the rule was 
> revised to 60 per cent for foreigners and 40 for locals.
>
> In the year 2002, then Minister for Information and Telecommunications 
> Musalia Mudavadi published a gazette notice in which he changed the local 
> equity threshold to 70 per cent for foreign investors and a minimum of 30 
> per cent for locals.
>
> Another condition that has come to affect the process and which Vtel will 
> have to deal with is the requirement that the shareholding structure of 
> the winning bid's tender cannot be changed before the licence is issued. 
> This, say experts, is what has seen the South African-based Econet 
> Wireless Ltd locked in one case after another.
>
> Sources tell The East African that Vtel was facing a crisis that emerged 
> barely a fortnight after it won the tender, when it failed to formally 
> submit its licence application.
>
> It is believed that Vtel, a $1 billion holding company registered in the 
> United Arab Emirates, which serves as the investment arm of the 
> Palestinian Telecommunications Company (Paltel) in the Middle East, North 
> Africa and Asia, could easily pay its share of the licence fees, but was 
> being held back by its local partners.
>
> Sources say the firm stated as much in a letter to the Communications 
> Commission of Kenya (CCK) in which it sought an extension of the December 
> 8, 2006 deadline for formally applying for the licence.
>
> Subsequently, one of the local partners, Unitel, denied in a press 
> statement that they were unable to raise their share of the licence fee.
>
> Unitel's managing director Francis Makanga, insisted that the firm has the 
> required funds. He said the company's documents were completed on time and 
> are filed with the CCK and that it will have all financing ready for its 
> shares by the time the licence fee is to be paid.
>
> Vtel Holdings, the consortium's bid leader for the second national 
> operator, had written to the Communications Commission of Kenya notifying 
> their intention to drop its local partner owing to its inability to meet 
> its share of financial obligations.
>
> A profile of Vtel's local partners makes for intriguing reading. They 
> comprise Kirinyaga Construction, a leading road builder in Kenya 
> associated with tycoon Ephraim Maina; Unitel, which is said to be owned by 
> the family of former District Commissioner Ben Makanga; Kusco, the 
> umbrella body of more than 3,000 co-operatives; and businessman Michael 
> Kirui, Nairobi lawyer Fred Ngatia and Fairacres Ltd coming in as minority 
> shareholders. Loita Capital Partners International is the lead transaction 
> advisor.
>
> Sources say Vtel, in its letter to the CCK, was seeking the nod to drop 
> its partners on the grounds that they were facing difficulties coming up 
> with their share of the licence fees. The firm says it will not be able to 
> submit its application with Unitel as its partner, raising fears that the 
> matter could be headed for the courts.
>
> Econet, has been involved in damaging feud with its local partners, the 
> Federation of Co-operatives of Kenya and Corporate Africa after the two 
> failed to raise their share of the licence fees, which saw the matter end 
> up in court, where it is still stuck.
>
> Vtel's imminent falling out with its partners has put paid to a 
> declaration by its Chief Executive Officer Nour Atout that the consortium 
> will roll out both fixed line and mobile telephony networks at the same 
> time, making a record of sorts.
>
> The pledge saw Telkom, Vtel's principal competitor as a national operator, 
> declare it will also venture into the highly profitable cellphones sector, 
> drawing immediate protests from its partner Safaricom, the region's most 
> successful cellular phone company.
> (SOURCE: The East African)
>
>
> WEB AND MOBILE DATA NEWS
> _____________________________________________________________________
> * KENYAN PUPILS GET SCHOOL RESULTS THROUGH THE INTERNET AND MOBILE PHONES
>
> For the first time in KCPE history, candidates and their parents yesterday 
> received details of their results directly on their cellphones and through 
> the Internet. The results were accessible through the Kenya National 
> Examination Council (Knec) website www.examscouncil.org.ke or on the 
> cellphone after sending a prescribed short text message (sms) to 7070.
>
> Last February, Kenya Certificate of Secondary Education candidates were 
> able to access their results by logging on to the council website, but 
> yesterday was the first time the short text message was used to relay 
> examination results. This year's top candidate David Wamugi got a 
> breakdown of his results on the sms service.
>
> His father, James Wamugi, sat for his primary school examination 27 years 
> ago at Gathathiini primary school in Nyeri. But it took him a day to 
> receive his results from the school, unlike the instant services his son's 
> generation is enjoying. Last week, the senior Wamugi told the Nation: "I 
> didn't know that they had received the breakdown until I saw it on the 
> mobile phone. "In our days, it took a day to receive the results and then 
> one had to see the result slip to get a breakdown."
>
> The website appears to have been inundated with visitors and it often 
> failed to download the results, unlike the first instance in February this 
> year when KCSE candidates used it. The public also expressed concern that 
> strangers could access the results of any candidate whose index number 
> they held and suggested that a security measure be put in place to protect 
> the candidates.
>
> The tradition has been that provincial directors of education attend the 
> news conference where the Education minister was releasing examinations. 
> They were then expected to physically transport the results to their 
> respective offices where their juniors from the districts and head 
> teachers would collect them. Students in Nairobi would receive their 
> results the same day while those in other parts of the country would have 
> to wait for a day or more, depending on how far the school was from 
> Nairobi.
>
>
> In Mombasa, hundreds of parents jammed cyber cafes trying to know how 
> their children had performed but left frustrated as the Knec website was 
> yet to be updated.
> Boniface Otieno, who wanted to know how his sister had performed, said: "I 
> have spent three hours trying to refresh this website but there are no 
> KCPE results."
> (SOURCE: The Nation)
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